CFTC v. Deutsche Bank AG: Court Order Demands Further Argument Before Considering Consent Motion.
In CFTC v. Deutsche Bank AG, No. 1:16-cv-06544-WHP, 2016 BL (S.D.N.Y. Sept. 22, 2016), the Court considered a Consent Motion sought on behalf of the U.S Commodity Future Trading Commission (“CFTC”). The proposed Consent Motion requested a preliminary injunction, appointment of an independent monitor, and other equitable relief. Instead of giving a ruling on the proposed Consent Motion, the Court issued a further order directing the Plaintiff, CFTC, to file a memorandum citing authority supporting the proposed Consent Order. Specifically the Court requested the CFTC to marshal authority to explain why the Consent Order would be “fair, reasonable, adequate, and in the public interest.”
This action commenced on August 18, 2016 when CFTC filed a complaint against Deutsche Bank AG for (1) permanent injunction, (2) civil penalties and, (3) other equitable relief for violations of the Commodity Exchange Act, 7 U.S.C. §§ 1-26 (2012), and the Commission’s Regulations, 17 C.F.R. 1.1. Additionally, on August 18, 2016, CFTC filed a Proposed Consent Motion. In response to this Motion, the Court issued the Order at the heart of this discussion.
A consent order should be “fair, reasonable, adequate, and in the public interest.” Citigroup Global Mkts., Inc., 753 F.3d 285, 294 (2d Cir. 2014). Furthermore, regulatory agencies such as CFTC should be afforded deference. Consumer Financial Protection Bureau v. Sprint Corp., No 14-cv-9931 (WHP), 2015 WL 3395581 (S.D.N.Y. May 19, 2015).
The Court ruled that the minimum legal threshold for granting a Consent Order had not been established. Here the Court acknowledged the substantial deference that is granted to enforcement agencies in proposing a consent motion. Yet, the Motion submitted by CFTC did not provide an argument as to why an order would be fair and reasonable. Rather it simply resembled what the CFTC would envision the Consent Order to look like. As such, the Court issued an Order for the CFTC to bolster its Motion.
The Court conducted a hearing on October 6, 2016 to consider entry of the proposed consent order.
The primary material for this case can be found on the DU Corporate Governance Website.