and foresman action against five defendants that we refer to collectively as monica's complaint alleges that monarchs is operating an illegal unregistered trading platform where members of the public can speculate on the price of precious metals the complaint also alleges that monica is defrauding those customers through false statements and material omissions the reason we're here today is because when the district court applied the relevant statutory provisions that sections sixty one and to see two d of the commodity exchange act the district court did not apply the text of the statute the court did not even purport to apply the text of the statu as a result it misinterpreted both provisions as a result it created a split of authority on both provisions and so the upshot is that not only did that the rail listen foresman action it's caused a great deal of confusion nationwide really about the scope of the statute so and in fact since the district court issued the decision to other district courts have rejected it outright so all we're asking the court to do simply is to end the confusion by restoring what congress wrote in two thousand and ten and what the president signed into law not what the district court eight years later fought the congress was really driving at in actual delivery the seller has to transfer possession and control of the commodity there has not been a circuit court decision on the issue of section sixty one the anti fraud statu e i i was going to start there and then move on to section two see to do but of course of the court has some other preference i can go that way our first argument is the simplest and it's a little bit hard to emphasize without belaboring and repeating ourselves but the text means what it says it prohibits any manipulative or deceptive device in connection with various commodity transactions there's only one way to read that it is a phrase with a very long pedigree congress borrowed it directly from section ten b of the securities exchange act of one nine hundred thirty four the district court acknowledged that but ultimately it did not give any weight to the plain meaning of the statute that the supreme court said three times was ambiguous and in that case the agency administering the statute which was the copyright office expressed quote substantial doubt about what the statute meant this is an unambiguous statute manipulative or deceptive there are no two ways to read that and the agency has no sure court said over mange and here again yeah it does i did miss the silver vs ballantine case  it was a statute that plausibly the use of or could have conferred a right on everybody on either side of the or i so it was about inheritance of the right to renew copyright and the statute said it belongs to the author but if the author is the seized then to the widow widower or children and the widow argued that this was an order of preference it went from the widow to the widow or through the preference would probably not both and in in the same case but the court said you know it appears more likely that congress meant that the right belong to any of these three people so widow could renew the copyright or the children could win renew the copyright it's a great leap from that to a situation where congress takes well established language seventy five years of  at the time congress adopted it and stretch this idea the congress is sometimes careless and writes war when it really means and and it in this particular case is manipulation off the table insist that we do not allege manipulation so it's this is any deceptive act it's it's traditional fraud the provision sixty one says something else that's very important which takes it completely out of this the silver sometimes congress's careless doctrine it delegates to the c f t c to define what constitutes a manipulative or deceptive device by regulation and we did that so the statute looks the relevant language just like section ten b of the securities exchange act so we drafted our regulation to look quite a bit like f c c rule ten b five in the case of an express delegation by congress the standard is very very high up and an agency's regulation of controls unless it is arbitrary and capricious or manifestly contrary to the statute this court has said that manifest contrary to the statute means that the statute must be clear unambiguous and in conflict with the regulation and there's simply no way to get there in this case you the statute is disjunctive the regulation is disjunctive the statute looks like section ten b the regulation looks like rule ten b five there is no way to meet the standard that these two are in irreconcilable conflict you know as for the regulation  it's it's not really even disputed that at least two of those quote could be read more broadly two to include fraud and we submit there's only one way to read those and that they do fraud  talked a little about the craft case which was a district court decision about at the northern district of illinois which said the only way to read one eighty point one a one was that it prohibits separately manipulation use of a manipulative scheme manipulative or excuse me fraudulent scheme fraudulent manipulation fraudulent device that's just one of these things and it's certainly at least wasn't manifest to that court monex doesn't meet that standard because the only thing that a transaction on this atlas platform results in is the delivery of a slip of paper a trade confirmation big picture is important here because the purpose of this statute is to distinguish between financial trading platforms for speculation that have gone you know there's been a long history of evasion here by various companies that try to do this and real bona fide vendors of commodities if you want to sell metal to customers who want to possess it that's fine so the sequence here in the causation matters a lot because the purposes of the actual delivery exception is to allow me to buy some metal and have them then ship it to me if the metal in this case as it is is sitting in the same vault the whole time before during and after the transaction but there is such a place that they have this metal correct which is a good start but having it so that you could deliver it to somebody in the future isn't good enough you have to make actual delivery as a result of the transaction where you have to put it in a different warehouse or whatever place they keep this mood for a warehouse a that way  it ok if you're actually selling metal the customers got to hear the customer gets no metal they can't go inside and look at it can't inspected the customer has no contractual relationship with the depository so yeah the metal exists but the test is not whether it exists it's whether the seller actually delivers it and i want to talk specifically about these shorter trains doesn't need to show up on their doorstep no no it could be an agent it could be no it doesn't have to go to their place of business but the seller has to relinquish control otherwise you're just running an unregulated trading platform all they have to do is register they could be in this business they register they conduct this business on a registered exchange it's fine so this is not to snuff out this this industry it's just to bring it into the regulatory light of the commodity exchange act and i don't want to eat up too much of my time without saving any for i don't understand exactly wh can they put that over in the corner and say this to smith and he can they get it they have not transferred physical possession then nor have they transferred control so and especially if it doesn't happen as a result of the transaction it doesn't meet any any real definition of actual delivery our definitions overlap we and the eleventh circuit say you have to transfer possession and control my next agrees that you have to transfer possession but mannix doesn't do that the metal sits in the same vault before during and after the transaction because it's a trading platform it's not a place to go and buy metal you know i don't know what a customer would want to do with it but it has to be transferred to the customer to the customer's agent to somebody acting on behalf of the customer it can't just sit there because congress has purpose was to accept businesses that actually deliver metal rather than conduct trading activity for the general public it's in the truck number ten this regular siding or something like that sure could i mean we have a similar example and the federal register releases of companies that sell home energy products and they build the customer periodically this is a finance transaction and those products actually get consumed so you know when i send if i'm a home heating oil company i send it to the customer they burn it i can't get it back but i run a credit check on this person i  do what companies ordinarily do when they finance something it's the meaning of these terms do not depend on what you are buying or how you are paying and the eleventh circuit talked about it they looked at it pla went to a dictionary figured out what actual delivery meant they said quite sensibly that requires you to transfer something possession of it and and control and that's just not enough neither of those things is happening here you can do that by additional if you if the buyer wanted the delivery to remain where i was could you do that through an agreement such that there would be actual delivery and i could go get it at some point if i wanted but maybe i don't want to well it isn't there if you have that ability if the customer can go and get it very directed to be gotten some sort of directed to be gotten directed to be gotten right i mean that that looks much more like an actual purchase of goods in articles rather than this set up where there is long and short during the short trades are particularly interesting because the fiction there is that it's the customer responsible for actually delivering the metal so it's metal that the customer never owned never possessed never had control over the fiction there is that the customer actually delivering it to mine x which it has to be actual delivery not a constructive  depository until the debt is paid that is what the regulation provides for and that is what congress specifically directed and that is what is in the finance sales and also an exception and an actual delivery has to be considered in that context the actual delivery also has to be considered in the context of what congress said  and i am talking about in terms of the committee that dealt with this and the committee transcript is the document to which the c f t c directed all industry participants to understand what congress meant and therefore we cited to the commission to the committee transcript of the house and the representative of the f a the national futures association was the sponsor of that act and dan roth made it quite clear that when he had actual delivery in mind he was thinking of monica and not only that you had congress and marshall and that was on a c r a c r two zero four and on top of that marshall congressman marshall also discussed actual delivery in terms of what monica was it is not ambiguous we wouldn't really be looking back at these various statements well what general dynamics says is that even before you get to chevron deference in the questions of ambiguity you take a look at the construct the devices that you apply to the statute itself and then you look at all the devices that the court has had its disposal to consider what congress men and in this case in addition to the taking a look at the fact that they had margin finance transactions involved that's how you have to look at it and you also need to look at also what they were suggesting when they were trying to get rid of the actual delivery to a depository they made that proposal to the senate it actually passed the senate and then it was rejected and what happened was and this very strong evidence of what congress meant and what happened was they wanted to do actual delivery as monica was doing and as was monica was doing it since one thousand nine hundred seventy and that's what that's what dan roth said we don't want to interfere in what monica is doing and not only was this specifically discussed in the committee meeting numerously numerous times but then congress and lawyer who is the chief of staff and get together and speak about coming up with what the statutes that look like and after discussing monica's actual of delivery lo and behold in the statute came actual or some gun bill relating and then they go to this warehouse because they didn't they can do that they get title they get title and that passes as required under the model code and they can pick up the metal whenever they want they have complete control of the metal in the depository complete control all they have to do is pay off what they owe and that's exactly what was contemplated and the thing that that you're holding right saying go ahead  ory any time they want yes they can take physical possession when ever they want all they have to do is pay what they owe it's not that i mean what they want i mean that's that's you know if they bought it on the marg then you know they can't they can take delivery until they pay off the margin right precisely well and then they can to go every you know that the they can't take physical possession is delivered under the statute to the deposit and title passes and that is where it's supposed to be delivered and not only that if you look at that example to under the the final guidance that we cited to that's exactly what the c f t c has said there's no at that if you take a look at s e r two seven three five and two seventy seven and look at example two you'll see it and in the same if you also look at the two thousand and eleven c f t c request for comments you'll see that the c f t c directed as i mentioned before all industry participants to go to this committee transcript which explains actual delivery which was based on the monex model and that it was and obviously you cannot give people who borrow fungible product i mean who buy a fungible product like gold you can't give it to them because then there would be no security for the lender and that's what congress had in mind and congress specifically the act was passed and it was consistent with what happened for the last twenty years before that there is no dispute about this and when they're talking about hunter what advice which was another case they came down after the is because you it's exactly the issue we're talking about because what congress was concerned about were all these ponzi schemes you know and they and they talked about it in the committee transcript which said there was delivery but it was constructive delivery it was an actual delivery like the case they're talking about hunter weiss there there was no actual delivery of the metal because hunter weiss never received than that all to deliver to the customers and what happened was and i'm sorry this is occurred in the air and the safety season pushing this what they're doing is they're attempting to use a decision that is not controlling in this case has nothing to do with this case and they've been using it in these other cases that they've been pushing we've been asking i'm asking we asked jet so now we ask this court to please take a look at the legislation and the legislative history and all the rules you apply when you're considering what the statute says and we think it's clear enough that can i move on to the killer here and so let's talk about this next issue and the next issue has to do about sixty one again we ask you to look at the statute that phrase in the context of the entire statute and understand what they're attempting to do i'm not going to get into in m of construction and how when you look at that when you look at this at the wording that they're relying on in the context of the statute itself their spin on that phrase taken out of context is implausible and silly and they haven't even responded to the fact that this read of sixty one would entirely know if i that part of the statute to that we also talk about i'm not going to go beyond this as you suggest sun already pointed out under their reading it would absolutely makes a perfectly with sixty three which it which deals with non fraudulent manipulation it is so clear it is so clear under the statute and any statutory construction that congress did not mean anything close to an expansion of s jurisdiction to cover every commodity being traded in grocery stores and which have nothing to do with the futures market it was always the law and always see f t c doctrine that jurisdiction over commodities and when i say commodities i mean cash commodities was for one limited purpose that was when it dealt with the bad actors trying to manipulate prices in the markets whether those markets be futures or or get cash commodity and that there's no dispute about that they'd knowledge that so when congress was considering the amendment both senator lincoln and senator cantwell were absolutely clear that it was designed to deal with an increasing problem with manipulation of the markets there is no suggestion in the statute or anywhere that the c f t c had jurisdiction general fraud jurisdiction was sixty one no suggesting and no suggestion that the expansion was for because we lack time we like the space to give you all the citations and all the discussion but that's on page three three four nine of the register but it's in the same group of comments and we also would direct you to tab or s or e r ninety eight which gives the that's ninety eight which views the explanation of what congress was doing and in that just t forty two that there was general anti fraud jurisdiction and talked about retail industry seven forty two by the way overruled the ninth circuit's decision of white pine and the quote and the caught what congress did in dodd frank was to make sure that fraud anti fraud would be in the act however what they did with respect to  seven fifty three which was the the act that dealt with the manipulation point they said nothing about fraud he made it would clear it was manipulation and also and that's all he said so if they wanted to make this section sixty one a general anti fraud statute they knew how to do it and they specifically in the other two sections discussed how they were making sure that the statutes dealt with retail consumer fraud they didn't do that was sixty one they never intended to do it and if you can if you need any further confirmation of this if you look at our brief and you look at the statements from the effort from the see in their one hundred point one interpretation it makes it real clear that they were talking about fraud and manipulation which impacts prices thank you i don't have too much time left i just want to point out that senator cantwell told the full senate chamber that this is to be interpreted like section ten b of the securities exchange act so to deny that that prohibits fraud is not only to assume that senator cantwell didn't know that ten b is an anti fraud statute but that all the rest of the senators the super majority that voted for the dodd frank act were also unaware or anybody who are to consider the speech i want to talk about if i don't have too much response to his comments on that example to see me do that and then if there's any other questions ok otherwise that would conclude your time example to says you have to deliver the commodity during the twenty eight days the twenty eight day period they're not doing that they are keeping it in a vault before during and after and the the interpretation talks about when you start counting the twenty eight days it says that you start  make arrangements for transfer which one might distinguish from delivery at any time i think you hear the word delivery in its ordinary sense used to the way sometimes one is you know if you bought something from me i take it over to the place of your choosing sometimes the thing as a mobile like you build a condo building and delivery is expected on you know summer two thousand and nineteen when delivery happens you can go in the condo and close the door so i think that's a fair reading  of delivery if the customer wants it there that's fine but in that sense there really is a transfer of control and not and neither one is if i transfer the title and ability to retrieve it is not enough title transfer and the ability to retrieve it would yeah i think so that doesn't happen here i mean monex tried to make the opinion that you can go and get it and make the point that you can go and get it whenever you want but you have to and you have to end the transaction before you can do that you cannot have a financed piece of metal and the idea that yes when you say they keep it locked up in the vault who do all this it is a third party with a contractual relationship only with monica so if the customer shows up and says i want to come inspect my metal make sure it's there the cut they don't know who the customer is so this is the fact that it's a company that is not the same company as really doesn't make any practical difference from the perspective of of the customer that answer your question judge yeah but what the customers like you and i it's only after that and you know it's important that the orders are the thing that result yeah sure the stuff was physically delivered to the vault at some point during the life of the building that acts as a deposit thank you thank you for the argument this morning u s commodity futures trading commission versus mine x is now submitted and we are enjoying thank you