## Facts

- Prestwick Capital Management entities invested as limited partners in a commodity trading pool advised by Acuvest, an introducing broker in futures markets regulated by the Commodity Exchange Act (CEA).
- Peregrine Financial Group (PFG) was a futures commission merchant that, at different times, had contractual relationships with Acuvest affecting whether Acuvest’s obligations were guaranteed by PFG.
- In 2004, PFG and Acuvest entered a guarantee agreement under which PFG guaranteed Acuvest’s introducing-broker obligations under the CEA.
- In 2006, PFG and Acuvest terminated the 2004 guarantee and replaced it with a clearing agreement treating Acuvest as an independent introducing broker; the 2006 agreement stated it superseded and replaced all prior agreements.
- In 2008, PFG and Acuvest entered another agreement (effective July 8, 2008) restoring Acuvest’s guaranteed introducing broker status.
- Prestwick alleged Acuvest committed fraud and caused losses during the period between the 2006 termination and the effective date of the 2008 agreement, when Acuvest was independent and not guaranteed by PFG.
- Prestwick sued PFG and Acuvest-related defendants asserting CEA fraud, breach of fiduciary duty (against Acuvest parties), and guarantor liability (against PFG).
- The district court granted summary judgment to PFG on guarantor liability; Prestwick dismissed remaining defendants with prejudice to obtain a final judgment and appealed.

## Issues

1. Whether dismissal with prejudice of the alleged primary wrongdoers barred the appeal or released PFG from potential liability on a res judicata/derivative-liability theory.
2. Whether PFG was liable under the CEA and the parties’ agreements as guarantor for Acuvest’s alleged misconduct occurring after the 2004 guarantee was terminated and replaced by the 2006 clearing agreement.
3. Whether CEA consumer-protection policy or estoppel could extend PFG’s guarantor obligations beyond the clear termination and supersession language of the 2006 agreement.

## Decision

- The court denied PFG’s motion to dismiss the appeal based on res judicata/derivative-liability arguments.
- The court affirmed summary judgment for PFG on the merits.
- The court held PFG was not liable for Acuvest’s alleged fraud during the 2006–July 8, 2008 period because the guarantee had been terminated and Acuvest operated as an independent introducing broker under the 2006 agreement.
- The court rejected arguments that “existing accounts” remained covered after termination, and it declined to use policy or estoppel to extend an unambiguous, time-limited guarantee.

## Legal Principles

- Guarantor liability tied to introducing-broker activity under the CEA depends on the broker’s regulatory/contractual status and the temporal scope of the operative guarantee agreement.
- Clear integration and supersession clauses terminating and replacing prior agreements are enforced as written absent a contrary statutory command.
- CEA consumer-protection objectives do not, standing alone, expand contractual guarantor obligations beyond an unambiguous termination; courts will not rewrite definitive agreements on policy grounds.
- Estoppel cannot be used to avoid clear termination and supersession terms without proof of the required elements and a basis consistent with the governing contracts and regulatory structure.

## Conclusion

The Seventh Circuit held that PFG’s guarantor obligations ended when the 2004 guarantee was terminated and replaced by the 2006 clearing agreement making Acuvest an independent introducing broker, so PFG was not responsible for Acuvest’s alleged fraud during the intervening period, and dismissal of the Acuvest defendants with prejudice did not bar the appeal.


Prestwick Capital Mgmt., Ltd. v. Peregrine Fin. Grp., Inc., 727 F.3d 646 (7th Cir. 2013)