ABSTRACT
The district court dismissed fraud claims under the Commodity Exchange Act and the federal securities laws where the plaintiffs, residing in Costa Rica, opened a commodity trading account for US futures contracts with a Costa Rican corporation. Price mirages have also been of concern under the Commodity Exchange Act. The Securities and Exchange Commission (SEC) attacked manipulative trading as a form of fraud under the federal securities laws. The SEC tried to avoid imposition of the scienter requirement in its own injunctive actions despite the decision of the Supreme Court in Hochfelder. The Commodity Futures Trading Commission (CFTC) noted that many commodity market participants had unequal access to market-moving information that was proprietary to their businesses. The CFTC and SEC, such as the Chicago Mercantile Exchange, filed competing reports on the cause of the stock market crash of 1987. The CFTC offered an alternative to this legislation that would have allowed it to attack such practices through its rule-making powers.
