## Facts

- Judd B. Hirschberg was registered as a floor broker at the Chicago Mercantile Exchange beginning in 1985.
- In 1991, he was convicted of federal mail fraud and vehicle-identification-number tampering arising from an insurance fraud scheme; on appeal, the VIN-tampering convictions were reversed but the mail-fraud conviction was affirmed.
- He received probation and was ordered to pay restitution.
- In 1994, after administrative proceedings, the CFTC revoked his floor-broker registration, citing inadequate mitigation and also referencing prior exchange discipline for prohibited prearranged trading.
- In 2000, Hirschberg received a presidential pardon for the mail-fraud conviction.
- After the pardon, he reapplied for registration through the National Futures Association, which treated his prior felony and prior revocation as creating a rebuttable presumption of unfitness and denied the application for insufficient mitigation.
- The CFTC affirmed the denial, relying in part on Commodity Exchange Act (CEA) § 8(a)(2), which permits denial where prior registration has been revoked.

## Issues

1. Whether denying registration based on a pardoned conviction and its underlying conduct violates the Constitution’s Pardon Clause by imposing additional punishment.
2. Whether the post-pardon denial of registration violated due process.
3. Whether the CFTC exceeded its statutory authority under the CEA, including by relying on an earlier revocation as a current ground to deny registration.

## Decision

- The Seventh Circuit denied Hirschberg’s petition for review and affirmed the CFTC’s order denying registration.
- The court held that a presidential pardon does not erase the fact of conviction or the legal determination of guilt, and the CFTC could consider the conviction and underlying conduct in assessing fitness.
- The court concluded the denial was regulatory (public-protective), not punitive, and therefore did not violate the Pardon Clause.
- The court found no due process violation because Hirschberg had notice and an opportunity to be heard, and he lacked a constitutional entitlement to registration.
- The court upheld the CFTC’s interpretation and use of CEA § 8(a)(2), including reliance on the prior revocation without a statutory time limit.

## Legal Principles

- A presidential pardon relieves criminal penalties but does not expunge the historical fact of conviction or bar a regulator from considering the conviction and underlying conduct when evaluating fitness for licensure.
- Regulatory restrictions grounded in public protection and fitness assessments are permissible even when they rely on criminal conduct that has been pardoned, so long as the action is not imposed as punishment.
- Under the CEA, a prior registration revocation may be an independent basis to deny a later registration application; the statute need not be read to include an unstated temporal limitation.
- Agencies may apply a rebuttable presumption of unfitness based on fraud-related convictions and prior regulatory discipline, and may deny registration when the applicant fails to show sufficient mitigation or rehabilitation.
- Due process in this licensing context is satisfied by notice and an opportunity to respond; there is no constitutional right to obtain or regain a floor-broker registration.

## Conclusion

The Seventh Circuit upheld the CFTC’s denial of Hirschberg’s post-pardon registration application, ruling that the agency could rely on his prior revocation and the fact and conduct of his pardoned conviction as part of a nonpunitive fitness determination authorized by the Commodity Exchange Act and consistent with due process.


Hirschberg v. CFTC, 414 F.3d 679 (7th Cir. 2005)