## Facts

- Jeffrey L. Silverman worked as an account executive for a commodity futures commission merchant in Chicago.
- In 1970–71 (and related conduct in 1972), Silverman placed multiple unauthorized futures transactions (including eggs, hogs, and pork bellies) in several customer accounts.
- A disciplinary proceeding under the Commodity Exchange Act resulted in findings that Silverman willfully violated the Act’s antifraud provision, 7 U.S.C. § 6b, and the CFTC imposed a two-year suspension of his trading privileges.
- While the disciplinary matter was pending, Silverman applied for registration as an “associated person” under 7 U.S.C. § 6k and disclosed the pending proceeding; the CFTC granted registration.
- After the fraud findings became final (including affirmance on judicial review), the CFTC initiated a separate proceeding and revoked Silverman’s associated-person registration.
- Silverman petitioned for judicial review of the revocation order.

## Issues

1. Whether the CFTC had statutory authority to revoke an associated-person registration based on previously adjudicated willful fraud under the Commodity Exchange Act.
2. Whether the CFTC was barred (including by estoppel) from revoking registration because it had granted registration with knowledge of the then-pending disciplinary proceeding.
3. Whether the revocation sanction was arbitrary, capricious, or an abuse of discretion under the applicable standard of review.

## Decision

- The court denied the petition for review and affirmed the CFTC’s revocation order.
- The CFTC could rely on prior, final adjudications of willful antifraud violations as the basis for determining unfitness to remain registered as an associated person.
- The CFTC was not estopped from revoking registration merely because it previously granted registration while related charges were unresolved.
- The revocation was a rational public-protection measure and was not arbitrary, capricious, or an abuse of discretion.

## Legal Principles

- A licensing regulator may revoke a registration when prior, final agency findings establish willful statutory fraud relevant to fitness, without relitigating the underlying misconduct.
- Government estoppel is disfavored in public-protection licensing regimes; a prior license grant does not prevent later revocation when subsequent adjudication confirms serious violations.
- In reviewing agency sanctions, courts apply a deferential standard and uphold sanctions reasonably related to the misconduct and the statute’s protective purposes.

## Conclusion

The Seventh Circuit upheld the CFTC’s revocation of Silverman’s associated-person registration because final findings of willful antifraud violations demonstrated unfitness, and the earlier issuance of a license during pending charges did not bar later corrective regulatory action.


Silverman v. Commodity Futures Trading Comm’n, 562 F.2d 432 (7th Cir. 1977)