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September 16, 2014

Federal Court Rejects Wall Street’s Attack on Financial Reform, Upholding Key Regulation of Cross-Border Derivatives Trading

Washington, D.C., September 16, 2014 – Today, a federal court in Washington, D.C. dealt a serious blow to Wall Street’s derivatives dealers’ relentless campaign to defeat financial reform.  With one small exception, the Court firmly rejected the plaintiffs’ challenges to the Commodity Futures Trading Commission’s (CFTC) cross-border guidance and rules on derivatives transactions overseas, said Better Markets President and CEO, Dennis Kelleher.

“This decision is a very big win for financial reform and for transparent derivatives markets that Wall Street can’t evade merely by moving their swaps books overseas. On economic analysis, the court agreed with us that the scrutiny is minimal as set out in the statute. While this was remanded to the CFTC for further proceedings, the fact the court refused to vacate or stay the CFTC’s actions here shows, as the Court stated, that the CFTC is “likely” to satisfy its obligations on remand and “reach the same result,” said Kelleher.

“In the ninety-seven detailed page opinion, the court spelled out the other key point: the guidance is in fact policy and therefore not subject to the lengthy rule making process. This is a huge defeat for Wall Street’s war on financial reform and a huge win for U.S. taxpayers, who won’t have pay the bill for unregulated risky derivatives activities overseas,” added Kelleher.

“The largely unregulated, wild west derivatives market played a key role in the financial and economic explosions of 2008.  As the Lehman and AIG blowups almost 6 years ago to the day showed, much of that was done overseas. Today’s court action upholds Congress’s intent and the CFTC’s actions to make sure that doesn’t happen again. This is a huge step forward to protect U.S. taxpayers and ensure that Wall Street’s derivatives gamblers aren’t able to once again place the entire U.S. economy on an international roulette wheel,” said Kelleher.

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Better Markets is an independent, nonprofit, nonpartisan organization that promotes the public interest in financial reform in the domestic and global capital and commodity markets. Better Markets advocates for transparency, oversight and accountability with the goal of a stronger, safer financial system that is less prone to crisis and failure thereby eliminating or minimizing the need for more taxpayer funded bailouts. To learn more, visit www.bettermarkets.com.

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