CFTC responds to complaint brought by FX Cartel trader
About two months after Richard Usher, one of the traders involved in the so-called “FX Cartel”, filed a complaint against the Commodity Futures Trading Commission (CFTC) accusing it of Kafkaesque injustice, the regulator has responded to his claims.
Let’s recall that the Office of the Comptroller of the Currency (OCC) is pursuing administrative sanctions against Richard Usher. A jury acquitted him of criminal charges in 2018, but, despite this acquittal, the OCC has continued to prosecute this administrative action against him.
He has filed a complaint with the Columbia District Court to enforce a subpoena against the CFTC because it refuses to provide discovery for use in the OCC case. The OCC is seeking to bar Usher for life from banking and to seize $1.5 million from him. The OCC charges that Usher’s FX trading conduct—the same conduct that was at issue in the criminal case where he was acquitted—caused his bank, JPMorgan Chase, to enter into a settlement with the CFTC. It further alleges that Usher should be held liable and punished for “endangering the safety and soundness” of his bank by “causing” his former employer’s decision to settle with the CFTC.
The OCC’s charges rely, in part, on facts in the sole possession of the CFTC, Usher argues. Thus, the administrative law judge in the OCC case reasonably allowed Usher’s request to issue a subpoena for relevant documents from the CFTC. The subpoena seeks documents regarding the bank’s settlement with the CFTC, so he can contest the allegation that he caused the bank to settle and should be vicariously punished for that.
The CFTC has rejected in its entirety the subpoena from a sister government agency. According to Usher, the CFTC is cavalierly ignoring duly authorized process. In lieu of complying with the subpoena, the CFTC has claimed a defendant should file a Freedom of Information Act (FOIA), which is not a meaningful alternative. The CFTC is not above the law, the trader argues.
In its response, seen by FX News Group, the CFTC tries to play down Usher’s claims. According to the regulator, the subpoena is invalid because the administrative law judge lacks statutory or regulatory authority to issue subpoenas to the CFTC.
The regulator says that, as the Complaint seeks summary enforcement of the subpoena, it should be dismissed for lack of jurisdiction because the government has not waived its sovereign immunity for subpoenas to the CFTC in OCC administrative proceedings, and therefore this court lacks jurisdiction to enforce the subpoena.
”The subpoena is otherwise objectionable and unduly burdensome because it seeks privileged information and otherwise seeks third-party records and information that Plaintiff can seek from the respective third parties with less burden”, the CFTC concludes.
The lawsuit continues at the Columbia District Court.