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December 13, 2012

CFTC wins major court victory

A federal judge Wednesday handed the Commodity Futures Trading Commission a major victory by rejecting an attempt by industry groups to overturn a rule on cost-benefit analysis grounds.

The CFTC acted well within its discretion and fulfilled its obligations to consider the costs and benefits of the rule, which requires investment companies to register with the agency, U.S. District Court for the District of Columbia Judge Beryl Howell said in a 93-page opinion.

Howell said the plaintiffs in the case —  the Investment Company Institute and the U.S. Chamber of Commerce —  “have thrown everything in the proverbial kitchen sink at the CFTC in their effort to stop the final rule. … The court is not persuaded by their arguments.””


“Last year an appeals court threw out the Securities and Exchange Commission’s so-called proxy access rule because of problems with its cost-benefit review.

One of the same attorneys for industry in that case and a few that preceded it — Gibson Dunn partner Eugene Scalia — also argued this CFTC challenge and another that the CFTC lost in September, though the  judge in the earlier CFTC case did not address the cost-benefit concerns.

Howell acknowledged the preceding cases in her opinion.”


“Financial reform advocates cheered the CFTC’s legal triumph.

“This is a total victory not just for the CFTC, but also for financial reform,” Better Markets President and Chief Executive Dennis Kelleher said. “Hopefully, the industry will see this as a sign to call off their war on regulation and the regulators.”

CFTC Chairman Gary Gensler said he was pleased the judge upheld the rule, “and in particular, the court’s affirmation of the agency’s consideration of costs and benefits.””


Read full Politico Pro article here (subscription required)

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