U.S. Commodity Futures Trading Commission v. Crombie, No. 13-17403 (9th Cir. 2019)
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In 7 U.S.C. 13(a)(4), a provision within the Commodity Exchange Act, "willfully" must have the traditional meaning ascribed to the term in the context of criminal prohibitions against fraud: intentionally undertaking an act that one knows to be wrongful. This appeal arose from a civil enforcement action brought by the Commission against defendant, the co-founder of the Paron investment firm.
The Ninth Circuit affirmed the district court's grant of summary judgment to the Commission and, after applying the correct meaning of "willfully," held that there were no genuine issues of material fact as to whether defendant acted willfully when he made three separate false statements to the National Futures Association (NFA) during its investigation of Paron. The panel also held that the district court properly awarded restitution. However, the court vacated in part the district court's order issuing a permanent injunction against defendant and remanded for further explanation as to certain parts of the permanent injunction.
Court Description: Commodity Exchange Act The panel affirmed in part and vacated in part the district court’s judgment in favor of the Commodity Futures Trading Commission (the “Commission”) in a civil enforcement brought against James D. Crombie, concerning false statements made to the National Futures Association (“NFA”) during a March 2011 investigation. The Commission alleged that by making misstatements to the NFA, Crombie violated 7 U.S.C. § 13(a)(4) of the Commodity Exchange Act, which makes it unlawful “willfully” to make false statements or provide false documents to certain regulatory organizations, including the NFA. The district court determined that Crombie on four separate occasions willfully violated § 13(a)(4). The panel held that the district court erred in applying the civil meaning of “willfully,” not the generally applicable criminal meaning. The panel further held that the meaning of “willfully” as used in § 13(a)(4) cannot sensibly vary depending on whether it is relied upon directly, in a criminal fraud case, or by incorporation into § 13a-1(a), in a civil case. The panel concluded that in § 13(a)(4) “willfully” must have the traditional meaning ascribed to the term in the context of criminal prohibitions against fraud: “intentionally undertaking an act that one knows to be wrongful.” United
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