## Facts

- The Commodity Futures Trading Commission (CFTC) brought a civil enforcement action against Ross Erskine and Goros, LLC, alleging fraud and omissions in soliciting customers to trade foreign currency.
- In 2001–2002, about 20 customers deposited roughly $472,822 and granted Goros powers of attorney to trade forex on their behalf.
- Goros executed trades through two registered futures commission merchants (FCMs), Gain Capital, Inc. and FX Solutions, in an over-the-counter forex environment described as a negotiated (non-public) market.
- The FCMs generated indicative prices using software that processed bank quotes rather than using standardized exchange prices.
- Although the FCMs offered suggested “unit batches” (e.g., 1,000 or 100,000 units), customers could trade any quantities, including odd lots.
- The transactions involved trading in actual currency, and the FCM agreements stated that each purchase or sale anticipated delivery.
- The CFTC asserted the trades were “futures contracts” under the Commodity Exchange Act (CEA) and thus within its enforcement jurisdiction; defendants characterized them as spot or forward transactions outside that jurisdiction.
- The district court granted summary judgment to defendants, holding the transactions were not futures contracts; the CFTC appealed.

## Issues

1. Whether the CFTC’s interpretation of “futures contract” under the CEA was entitled to Chevron deference.
2. Whether the forex transactions were “futures contracts,” rather than forward or spot transactions, such that they fell within the CFTC’s jurisdiction under the CEA.

## Decision

- The Sixth Circuit affirmed summary judgment for defendants.
- The CFTC was not entitled to Chevron deference for its proposed definition of “futures contract.”
- The forex transactions were forward (or spot-like) contracts, not futures contracts, and therefore were not subject to the CFTC’s asserted CEA futures-jurisdiction.

## Legal Principles

- Chevron deference is unavailable where an agency (a) fails to preserve the deference argument, (b) lacks a clear congressional delegation to define the term with binding effect, or (c) offers only a litigation position rather than a prior rulemaking or adjudicatory interpretation.
- For CEA purposes, a futures contract is characterized by standardization and fungibility that permits exchange trading; it is typically a standardized agreement to buy or sell a stated unit quantity of a stated commodity at a stated unit price for performance at or before a stated future time.
- A forward contract is a present transaction with future delivery, distinguished from a futures contract’s standardized, exchange-tradable structure.
- In classifying forex instruments under the CEA, courts may consider structural features (standardization, fungibility, trading venue, and delivery obligations), not solely subjective intent regarding delivery.

## Conclusion

The Sixth Circuit held that the challenged forex trades lacked the standardization and exchange-traded fungibility associated with futures contracts and instead reflected present agreements involving actual currency and anticipated delivery; the CFTC therefore lacked the asserted CEA jurisdiction, and summary judgment for defendants was affirmed.


Commodity Futures Trading Comm’n v. Erskine, 512 F.3d 309 (6th Cir. 2008)