Commodity Futures Trading Comm'n v. British Am. Commodity Options Corp., 788 F.2d 92 (2d Cir. 1986). · Go Syfert
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Commodity Futures Trading Comm'n v. British Am. Commodity Options Corp., 788 F.2d 92 (2d Cir. 1986). Cases Citing This Book View Copy Cite
54 citation events (23 in the last 25 years) across 14 distinct courts.
Strongest positive: Sec. & Exch. Comm'n v. Tome, 638 F. Supp. 596 (S.D.N.Y. 1986)
Treatment trajectory · 1986 → 2026 · click a year to view as-of
1986 2006 2026
Statutes interpreted (leading-cases list)
#2 17 C.F.R. § 32.3 cited 2× in this case · 12 total citations of statute #7 7 U.S.C. § 6m cited 1× in this case · 29 total citations of statute
How cited ↗
Cited for
At page 93 Determining proper disgorgement amount from lawful and illegal profits15 citing casesholding that although generally, the party seeking disgorgement must distinguish between legally and illegally derived profits where benefits result from both lawful and unlawful conduct, cases involving systematic and pervasive fraud, as opposed to isolated instances of fraud, are different3 citing courts put it this way
  • Sec. & Exch. Comm'n v. Lemelson, 596 F. Supp. 3d 227 (D. Mass. 2022).published
    The court explained that “[t]here should be a cut-off date” in cases where “the sellers have an opportunity to take remedial action.” Id. at 54 . “[I]n order to establish a proper disgorgement amount, ‘the party seeking disgorgement must d…
  • Sec. & Exch. Comm'n v. W.Y.L.Y., 56 F. Supp. 3d 260 (S.D.N.Y. 2014).published 2 cites
    Commodity Options Corp., 788 F.2d 92, 93 (2d Cir.1986).
  • SEC v. Razmilovic, No. 18-772 (2d Cir. Nov. 26, 2013).published
    Thus, in order to establish a proper disgorgement amount, "the party 13 seeking disgorgement must distinguish between the legally and illegally derived profits," CFTC v. 14 British American Commodity Options Corp., 788 F.2d 92, 93 (2d Cir.…
  • Sec. & Exch. Comm'n v. Razmilovic, 738 F.3d 14 (2d Cir. 2013).published
    Thus, in order to establish a proper disgorgement amount, “the party seeking disgorgement must distinguish between the legally and illegally derived profits,” CFTC v. British American Commodity Options Corp., 788 F.2d 92, 93 (2d Cir.), cer…
  • Sec. & Exch. Comm'n v. True North Fin. Corp., 909 F. Supp. 2d 1073 (D. Minn. 2012).published
    Commodity, 788 F.2d 92, 93-94 (2d Cir.1986).
  • SEC v. W. Anthony Huff, 455 F. App'x 882 (11th Cir. 2012).unpublished
    (holding that where fraud is “pervasive,” disgorgement of “all” profits is warranted)
  • Sec. & Exch. Comm'n v. Razmilovic, 822 F. Supp. 2d 234 (E.D.N.Y. 2011).published
    (holding that although generally, the party seeking disgorgement must distinguish between legally and illegally derived profits where benefits result from both lawful and unlawful conduct, cases involving systematic and…)
  • Sec. & Exch. Comm'n v. Huff, 745 F. Supp. 2d 1284 (S.D. Fla. 2010).published
    Servs., 908 F.Supp. 718, 734 (C.D.Cal.1995) (disgorgement should include “all gains flowing from the illegal activities"); CFTC v. British Am. Commodity Options Corp., 788 F.2d 92, 93-94 (2d Cir.), cert, denied, 479 U.S. 853 , 107 S.Ct. 18…
  • Sec. & Exch. Comm'n v. K.W. Brown & Co., 555 F. Supp. 2d 1275 (S.D. Fla. 2008).published
    Commodity Options Corp., 788 F.2d 92, 93-94 (2d Cir.), cert. denied, 479 U.S. 853 , 107 S.Ct. 186 , 93 L.Ed.2d 120 (1986).
  • Sec. & Exch. Comm'n v. Graystone Nash, Inc., 820 F. Supp. 863 (D.N.J. 1993).published
    Commodity Options Corp., 788 F.2d 92, 93 (2d Cir.), cert. *876 denied, 479 U.S. 853 , 107 S.Ct. 186 , 93 L.Ed.2d 120 (1986), unless the fraud was systematic and pervasive.
Show 5 more citing cases
  • Sec. & Exch. Comm'n v. First City Fin. Corp., 890 F.2d 1215 (1st Cir. 1989).published 2 cites
    Commodity Options Corp., 788 F.2d 92, 93 (2d Cir.), cert. denied, 479 U.S. 853 , 107 S.Ct. 186 , 93 L.Ed.2d 120 (1986).
  • United States v. Bonanno Organized Crime Fam. of La Cosa Nostra, 683 F. Supp. 1411 (E.D.N.Y. 1988).published 2 cites
    (court should try to separate legally and illegally derived profits unless entire property interest is attributable to unlawful activity)
  • U.S. Sec. & Exch. Comm'n v. GEORGE SLOWINSKI, No. 1:19-cv-03552 (N.D. Ill. Nov. 29, 2020).
    (disgorgement of all sole shareholder’s profits from brokerage is appropriate even without dollar for dollar accounting of illegally deprived profits where fraud was systemic and pervasive)
  • Commodity Futures Trading Comm'n v. Wilshire Inv. Mgmt. Corp., 407 F. Supp. 2d 1304 (S.D. Fla. 2005).published
    See, e.g., CFTC v. British American Options Corp, 788 F.2d 92, 93-94 (2d Cir.1986).
  • Sec. & Exch. Comm'n v. Bilzerian, 814 F. Supp. 116 (D.D.C. 1993).published
    First City Fin., 890 F.2d at 1231 ; see also Commodities Futures Trading Comm’n v. British American Commodity Options Corp., 788 F.2d 92, 93 (2d Cir.), cert. denied, 479 U.S. 853 , 107 S.Ct. 186 , 93 L.Ed.2d 120 (1986); SEC v. Texas Gulf S…
At page 94 Support for disgorgement as a remedy for regulatory violations15 citing cases“the purpose of depriving the wrongdoer of his ill-gotten gains and deterring violations of the law.”2 citing courts quote it · 13 listed here
  • Sec. & Exch. Comm'n v. Tome, 638 F. Supp. 596 (S.D.N.Y. 1986).published
    (disgorgement serves the purpose of depriving the wrongdoer of his ill-gotten gains and deterring violations of law.)
  • Commodity Futures Trading Comm'n v. Wilshire Inv. Mgmt. Corp., 531 F.3d 1339 (11th Cir. 2008).published
    (finding that disgorgement is a “necessary and appropriate” remedy under the CEA and that it “effectuates the purpose underlying the [CEA]—protection of the investor)
  • Commodity Futures Trading Comm'n v. Carnegie Trading Grp., Ltd., 450 F. Supp. 2d 788 (N.D. Ohio 2006).published
    Commodity Corp., 788 F.2d 92, 94 (2d Cir.1986).
  • United States v. Philip Morris USA, Inc., 321 F. Supp. 2d 72 (D.D.C. 2004).published
    Corp., 788 F.2d 92, 94 (2d Cir.1986).
  • Gelb v. Am. Tel. & Tel. Co., 150 F.R.D. 76 (S.D.N.Y. 1993).published
    SEC v. Rind, 991 F.2d 1486, 1493 (9th Cir.), petition for cert. filed, 62 U.S.L.W. 3061 (U.S. Aug. 3, 1993) (93-97); CFTC v. American Metals Exchange Corp., 991 F.2d 71 , 76 (3rd Cir.1993); CFTC v. British American Commodity Opt., 788 F.2d…
  • Commodity Futures Trading Comm'n v. Am. Metals Exch. Corp., 991 F.2d 71 (3d Cir. 1993).published 2 cites
    Commodity Options Corp., 788 F.2d 92, 94 (2d Cir.1986), cert. denied, 479 U.S. 853 , 107 S.Ct. 186 , 93 L.Ed.2d 120 (1986).
  • Sec. & Exch. Comm'n v. Hasho, 784 F. Supp. 1059 (S.D.N.Y. 1992).published
    Commodity Options Corp., 788 F.2d 92, 94 (2d Cir.), cert. denied, 479 U.S. 853 , 107 S.Ct. 186 , 93 L.Ed.2d 120 (1986).
  • United States v. Furlett, 781 F. Supp. 536 (N.D. Ill. 1991).published 2 cites
    Corp., 788 F.2d 92, 94 (2d Cir.), cert. denied, 479 U.S.. 853, 107 S.Ct. 186 , 93 L.Ed.2d 120 (1986); Tamari v. Bache & Co. (Lebanon) S.A.L., supra, 730 F.2d at 1106 .
  • Commodity Futures Trading Comm'n v. Am. Bd. Of Trade, Inc., 803 F.2d 1242 (2d Cir. 1986).published 3 cites
    We reject both sides' contentions. 73 It is clear that the district court had the power to order disgorgement as a remedy for violations of the Act, for "the purpose of depriving the wrongdoer of his ill-gotten gains and deterring violatio…
  • Comm'n Futures Trading Comm'n v. Am. Bd. of Trade, Inc., 803 F.2d 1242 (2d Cir. 1986).published 3 cites
    It is clear that the district court had the power to order disgorgement as a remedy for violations of the Act, for “the purpose of depriving the wrongdoer of his ill-gotten gains and deterring violations of law.” CFTC v. British American C…
Show 3 more citing cases
  • Ping He (Hai Nam) Co. v. Nonferrous Metals (U.S.A.) Inc., 22 F. Supp. 2d 94 (S.D.N.Y. 1998).published 2 cites
    See CFTC v. British Am. Commodity Options Corp., 788 F.2d 92 (2d Cir.1986) (ordering disgorgement as penalty for defendant’s failure to register as FCM and systematic fraudulent conduct); CFTC v. American Bd. of Trade, Inc., 803 F.2d 1242…
  • Cary Oil Co. v. MG Refining & Mktg., Inc., 230 F. Supp. 2d 439 (S.D.N.Y. 2002).published
    See Ricci v. Chicago Mercantile Exchange, 409 U.S. 289, 303 , 93 S.Ct. 573 , 34 L.Ed.2d 525 (1973) (“[T]he express will of Congress is that to deal in commodity futures one must either be, or deal through, a member of a board of trade havi…
  • Sec. & Exch. Comm'n v. Amx, Int'l, Inc., William B. Clark, 7 F.3d 71 (5th Cir. 1993).published 2 cites
    Comm'n v. Blatt, 583 F.2d 1325, 1335 (5th Cir.1978); see also Commodities Futures Trading Comm'n v. British American Commodity Options Corp., 788 F.2d 92, 94 (2d Cir.), cert. denied, 479 U.S. 853 , 107 S.Ct. 186 , 93 L.Ed.2d 120 (1986).
Other citing cases1 with no pin cite or quoted language on record
Retrieving the full opinion text from the archive…
COMMODITY FUTURES TRADING COMMISSION, Plaintiff-Appellee,
v.
BRITISH AMERICAN COMMODITY OPTIONS CORPORATION and John Forma, Defendants, Appeal of John FORMA, Defendant-Appellant
19-4216.
Court of Appeals for the Second Circuit.
Apr 15, 1986.
Published opinion
788 F.2d 92
1986 U.S. App. LEXIS 24514
Paul Chernis, New York City (Lowy & Chernis, New York City, on brief), for defendant-appellant John Forma., Edward S. Geldermann, Atty., Commodity Futures Trading Com’n, Washington, D.C. (Pat G. Nicolette and Whitney Adams, Deputy General Counsels, Washington, D.C., on brief), for plaintiff-appellee.
Mansfield, Timbers, Meskill.
Cited by 34 opinions  |  Published
PER CURIAM:

Appellant John Forma, the sole shareholder of British American Commodity Options Corp. (“BACO”), appeals from an order entered April 17, 1985 in the Southern District of New York, Lee P. Gagliardi, District Judge, requiring appellant to disgorge the income which he received from BACO in 1977. Appellant claims that the court erred in requiring disgorgement because the Commission failed to establish a nexus between the proceeds from BACO and the wrongful conduct, and because BACO's failure to register as a futures commission merchant is not a proper basis for disgorgement of proceeds.

Since October 1975 when BACO commenced operations as an options broker, the Commodity Futures Trade Commission (“Commission”) has attempted to bring BACO’s activities within the requirements of the Commodities Exchange Act and the regulations promulgated thereunder. [1] The instant action stems from the Commission’s complaint against BACO which alleged that since January 17, 1977, BACO, with the aid of appellant Forma, had engaged in the options trading business without registering as a futures commission merchant (“FCM”) in violation of the Commission’s regulations, 17 C.F.R. § 32.3(a) and (b)(1) (1985), and that from December 9, 1976 appellant and BACO had conducted a fraudulent options scheme. The district court conducted extensive hearings in April and May of 1977. In an opinion dated August 31, 1978, CFTC v. BACO and John Forma [1977-80] Comm.Fut.L.Rep. (CCH) ¶20,662 (S.D.N.Y.1978), the district court found abundant evidence that BACO and appellant had violated flagrantly both the registration requirements and the anti-fraud provisions of the Commodities Exchange Act. BACO and appellant, according to the court, seriously misrepresented the risks, guarantees, costs, mechanics of commodities investments, as well as BACO’s status and expertise. The court issued an injunction against BACO. A receiver, authorized to make application for disgorgement, was appointed. Following a series of depositions and hearings on the issue of disgorgement of proceeds from appellant individually, the district court ordered disgorgement of $1,023,375, the income from BACO which appellant declared on his 1977 income tax return.

Essentially, appellant argues on appeal that the Commission must establish, dollar for dollar, the proceeds that were derived from fraudulent conduct. Appellant also argues that failure to register as an FCM is not an appropriate ground for disgorgement. We disagree.

Generally, where benefits result from both lawful and unlawful conduct, the party seeking disgorgement must distinguish between the legally and illegally derived profits. See, e.g., SEC v. Texas Gulf Sulphur Co., 446 F.2d 1301, 1308 (2 Cir.), cert. denied, 404 U.S. 1005 (1971); SEC v. Willis, 472 F.Supp. 1250, 1276 (D.D.C.1978). The instant case differs, however, since appellant was involved not in isolated instances of fraud, but in systematic and .pervasive fraud. In addition, appellant’s conduct— his failure to register as an FCM—[*94] also was a violation of the Commission’s regulations. [2] The problem in this case is finding any activity that was lawful. Accordingly, all of the profits earned from BACO’s 1977 activities were illegally derived.

Precedent in other circuits, and precedent in this Court in the securities law context, support disgorgement in this case involving both fraud and regulatory violations. In CFTC v. Co Marketing Group, Inc., 502 F.Supp. 806, 819 (C.D.Cal.1980), aff'd, 680 F.2d 573 (9 Cir.1982), the court ordered disgorgement where the corporation had violated the prohibition against sales of gasoline futures except through authorized boards of trade. In CFTC v. Hunt, 591 F.2d 1211, 1222-23 (7 Cir.), cert. denied, 442 U.S. 921 (1979), the court held disgorgement appropriate where the statutory and regulatory limitations on soybean futures contracts were exceeded. Violations of the Commodities Exchange Act and the Commission’s regulations in these cases did not necessarily involve fraudulent conduct. We have recognized that disgorgement serves the purpose of depriving the wrongdoer of his ill-gotten gains and deterring violations of law. SEC v. Texas Gulf Sulphur Co., supra, 446 F.2d at 1307-09 (SEC’s power not limited to injunctive relief; disgorgement was remedial in nature); SEC v. Manor Nursing Centers, Inc., 458 F.2d 1082, 1103 (2 Cir.1972) (where equity jurisdiction was properly invoked, court had the necessary power to fashion an appropriate remedy; disgorgement of proceeds allowed).

Disgorgement not only deprives the wrongdoer of benefits derived from unlawful conduct but it also effectuates the purpose underlying the Commodities Exchange Act — protection of the investor. In view of BACO’s pervasive fraudulent conduct and its failure to comply with the Commission’s regulations, we hold that the district court’s disgorgement order was necessary and appropriate. We affirm substantially for the reasons set forth in Judge Gagliardi’s opinion of April 17, 1985.

Affirmed.

1

. On July 22, 1976 the Commission sought, but was denied, an injunction to prevent BACO from selling London options without first registering and obtaining approval to act as a commodities trading advisor as required by 7 U.S.C. § 6m (1982). On appeal by the Commission to this Court, we held that, since the Commission had established a prima facie violation and likelihood that such violations would continue, an injunction against BACO must issue. CFTC v. British American Commodity Options Corp., 560 F.2d 135 (2 Cir.1977). BACO began shutting down operations on September 7, 1977.

2

. The Commission initially sought disgorgement of proceeds derived from BACO since December 9, 1976. Because of the Commission’s inability to specify the fraudulently derived funds received in December, however, the court denied this request. Regulation 32.3, 17 C.F.R. § 32.3, which requires registration of FCMs with the Commission, took effect on January 17, 1977. From that date, BACO was operating in violation of the regulation.

We reject Forma’s argument that BACO’s unregistered operation as an FCM was somehow immunized by the district court’s refusal to enjoin BACO’s unregistered operation as a commodities trading advisor ("CTA"). The FCM registration regulations imposed requirements additional to and distinct from those imposed by the CTA registration statute. Furthermore, as we noted in our opinion reversing the district court on the CTA matter: ”[T]o the extent that British American’s business activities have succeeded through the unlawful [operations] while not registered, British American [and Forma have] been acting at [their] own peril.” CFTC v. British American Commodity Options Corp., supra, 560 F.2d at 143.