FX Cartel trader sues CFTC for “Kafkaesque injustice”
Several days after Richard Usher launched a lawsuit against the Department of Justice (DOJ) over access to evidence, the former JPMorgan Forex trader has launched a similar action against the United States Commodity Futures Trading Commission (CFTC).
According to Usher, his case demonstrates “the Kafkaesque injustice that could result when an agency of the United States Government obstructs a defendant’s request for exculpatory evidence”. This evidence is relevant to a highly punitive administrative enforcement action that another agency is prosecuting.
Let’s recall that the Office of the Comptroller of the Currency (OCC) is pursuing administrative sanctions against Richard Usher, who is one of the traders involved in the so-called “FX Cartel”. 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.
The OCC claims that the “four corners” of the JPMorgan settlement agreement with the CFTC establishes that Usher was the cause of the CFTC settlement agreement and thereby endangered the liquidity of his bank. But Usher maintains, and intends to show in the OCC proceeding, that JPMorgan’s various settlements were not in fact tied to his conduct as a matter of legal causation.
Usher argues that he did not commit—and the OCC does not plan to argue otherwise—the various violations of law that purportedly underlie the CFTC settlement with JPMorgan. Moreover, by agreeing to its settlements, JPMorgan received repose, resolving exposures unrelated to Usher.
To counter the OCC’s assertion that Usher “caused” JPMorgan’s settlements, Usher needs access to the documents and communications relating to those settlements. Among other things, he needs access to the documents and communications that led up to the JPMorgan- CFTC settlement.
Instead, in response to the administrative law judge’s subpoena, the CFTC informed Usher by letter from Raagnee Beri, citing “sovereign immunity,” that it does not consider itself bound by the administrative law judge’s Subpoena at all.
In short, Usher is displeased that one U.S. government agency (the CFTC) in possession of documents essential to Usher’s defense before another government agency (the OCC) has refused to recognize that enforcing agency’s authority to compel production of such documents.
The plaintiff says that the CFTC’s refusal to produce the documents Usher needs: (a) violates Usher’s due process rights to compulsory process to defend himself; (b) is wrong as a matter of law; and (c) raises separation of powers concerns.
Usher therefore asks the Court to require the CFTC to respect Usher’s due process rights and the authority of sister federal agencies by complying with the Subpoena.