video may just end there we all take the time needed to make these things work we've managed to do that in the us and we can do that without it costing any of you any of your time i will let you know josie some broke may please the court this appeal concerns whether the c e o we can avoid liability despite well pleaded allegations that the financial products that that the material included in the appendix that you tendered be considered or not the district court thought it was not appropriate so it did not base its ruling as they understand it on that material ye s we do believe judge one that the complaint adequately don't mention is loss actual loss and i can explain that in some detail however we also believe that the court may not cost long on this question because there is a clear path that in the event a quarter agrees with us on other issues pertaining to the ca claim it's easy enough to re shown the specifics of why the ultimate price that was taken at the end whether in the capacity as a purchaser seller of these ferries instruments was manipulated mean markets of course manipulation but that's really not entirely accurate what we did your honor is going to we had detailed models that were described in the complaint and these detail models took into account the direction of the manipulation in determining the specific days of which the plaintiffs were injured what instruments they traded on those days and we allege specifically on those days that the plaintiffs direction of the manipulation on any given settlement date but we describe the models we describe how what models accounted for the direction of the manipulation and we just said we don't apply the models to the didn't hold their instruments to some day everybody who holds to settle ok but that would seem to include for each day that you say there was manipulation and i gather that's every settlement day over that ten year period that presumably would include people who both were victims of an beneficiaries of the alleged manipulation right s g r there are two theories of harm wh directionality of the of the manipulation has anything to do with the fact that it was going to help some people who held them hurt others if you're right about the manipulation no your honor we  netting of those trades when we get to the stage of class certification but for purposes of alleging an actual loss we've and went further and we applied the models to all of our plaintiff trades and we were able to determine metamorphosed in the basco opinion to meg whitman's you know particularly given not only just the well understood white meaning of bad faith in the law but also some legislative history laid out don't seem to be a hard fit for bad faith but there is language in the opinion that perhaps is dicta perhaps unnecessary when once you start talking about should have known should have done mine i think when i say is that pasco did hold that in mandatory duty plus they should have known it is the law in the circuit b and it is more than negligence i waive mossville itself characterized that as a standard that's higher than negligence and eight we believe here and decade of failure in a core area of c e o s responsibility readily meets the st test in boston this is one issue that the district court did get right but school also applied and you have army can you give us an example of an enforcement duty does not involve discretion i think the one here i think there is a clear duty on the part of an exchange them up to maintain an orderly market and to prevent manipulation that's the st and foremost doesn't that doesn't involve discretionary judgments ma discretionary judgment about whether they're going to prosecute in any individual cases but the core duty to maintain an orderly exchange is to st and foremost do need of any exchange so yes i believe this was  there are many mechanisms that in exchange could use as ways of trying to assure that the market is a market with integrity and so forth and that choice and of course the e is using some of them it's not like they just went to sleep for a decade they aren't doing enough in your view or they didn't do enough historically and then finra comes along maybe some things change but surely there is discretion in deciding how much to invest in this market monitoring what mechanisms seem to you the best ones to use i see a lot of discretion there much more than just are we going to prosecute this obvious case of particularly in circumstances where the exchange does not carry out a duty that it is obligated to enforce so i wonder if you could talk a little bit about proximate cause too because of course the thing that we're carefully not saying that you just alluded to is the fact that there certainly are parties who might culpable if there was manipulation going on in this exchange that's namely your joe defendants who i assume are back in the district court i'm not sure if anything's happening there but this is a fifty four b appeal  then the exchange is going to avoid c b of a liability always because someone else did it minute the trader but then why didn't congress gimmicks and express cause of action against the exchange itself up i meet proximate causation always consequence that there could be more than one cause and congress specifically gave us a private right of action against in exchange for failing to enforce a duty if that's the case that the exchange of always has been  a voice liability because someone else does in the nebula to trade and then there could never be a claim against the extent and that whole approach to simply doesn't work it's inconsistent with the text and purposes of the prime cause action that congress has conferred upon private parties now i would suspect too if i could address the issue of speculation we think you know it's a matter of common sense that when substantially subsided when there was a cop on the street corner in foreseen goals and so we think that's very important piece of data and to state a claim and to explain why i think it's useful just to walk through exactly what it is that the plaintiffs are alleging here in terms of causation so clannish theory of the case is that an unknown john doe next related to an use of this is so cute the special opening quotation process given the timing of it and all the rest was was just an open invitation to manipulation which was indeed accepted by this small number of companies so they could arrange that this final quote was in the position where they wanted it to be so if that's true is that something the exchange should have should have forbidden the use of that thing or s have said you need to design a different way of handling these these instruments so i don't think that's actually plaintiff's allegations for purposes at least at the cea claim that this was designed  failure to enforce the rules is and what rules we're talking about and whether those rules if fully enforced would have prevented manipulations on the exchange but i thought that this is so cute played a central role in it as it lot i bet you would help my colleagues are using more real words in fewer initialisms it would make your argument easier to follow i'm sorry on your i'll do that i'm going forward on this i think  punish those people and that would have served as a deterrent to john doe's who allegedly harmed clinton's and when friend in those terms i don't think plaintiffs have adequately have latched causation because of the very speculative nature of the allegations and it's interesting in pla counsel's opening remarks and the argument was made that if you put police officers on street corners crime goes down well maybe that's true at a high level of generality but i don't think that someone who you know when they wakes up in the morning and has a broken window in their house failure to put more cops on the street because they're lost it's very speculative in any particular case to say well if you know twenty more police officers had been hired my locker room and yes what would it take to allege causation sufficiently in your view particularly since the twenty five b cause of action does presume innocence or a more hopeful after yes that is correct so there are actually lots of actor in which the exchange failed to enforce its rules which basically open that and fail to disable that bad actor from engaging in its bad acts which open the door for that specific bad actor continue engaging in its wrongful conduct that's not what is legit here there's no allegation that the john doe's who would have been helped to have violated the rules are the same john doe's or even if they did the same thing in general it's quite possible that there is different types of manipulation on different occasions point of complaint that's not the only way though i think that i can imagine a scenario if there is an allegation that there is some specific conduct and there's a policy of not enforcement with respect to some specific conduct maybe the right allegations in that ballpark would get over the threshold that's actually not what's  here st of all there's no specific conduct manipulations just an umbrella term for lots of things and more importantly plaintiffs actually don't latch that was derelict in enforcing its rules to the contrary they allege that siebel wasn't forcing its rules and that's just a sign that cbla knew about the manipulation is that players are speculating about sort of the incremental marginal effects of additional units of enforcement not unlike the police officer at that level and that we think it's too speculative state claim settlement price or value excuse me to go up or down in jail and so without an allegation that plaintiff's position was opposite to the direction of manipulation plaintiffs couldn't plead on and then in the nd version of the oh yes i can see the conclusion without a clear direction and without specification of the affected transactions the plaintiffs can't plead harm from a particular transaction wedge that manipulators redoing the us to make profits for themselves and if the manipulators were making more it ought to follow that other people were making less i certainly understand that point and maybe in the aggregate statistically speaking one might say that all plaintiffs collectively statistically suffered harm but i don't think that's enough to get over that pleading threshold i think that each individual plaintiff has to show that they state a claim and i don't think they can say well statistically at least i think that's true under the commodity factor as well as under the securities exchange act there is no special pleading requirement under the commodities act stash tory element has to be adequately pleaded and if you can't rebut your actual losses resulting from such a transaction and you haven't stated a claim and it's not enough to stay with that collectively among all the plaintiffs and all the accused traits statistically at least one of them or at least some subset resulted in harm i think that each plaintiff stands on their own and has to show that they suffered harm each plaintiff and if you're just guessing in any individual transaction whether you are armed that that means you haven't plausibly stated a claim and you know complaint and they didn't include it and then plaintiffs could have been moved to file an amended complaint and they needed permission from the court to do that because they've already filed an amended late and they decided to short circuit that process and instead attach this material without seeking that the material in the appendix doesn't seem to me to be so far afield from the material in the amended complaint we do allow people facing twelve b six type motions to support what they're doing say you know yes this is a plausible complaint because here are the kinds of facts we're prepared to prove so i wonder if you could comment on that and the nd thing is just is it your position that even if we had a particular plane if we knew what the purchase price was and we know what the sale price was in the person lost money that there is an additional requirement to show that they lost money because of this manipulation not because you know covert nineteen dollars is raging through the world or you know whatever you know incidents of the day might have might have caused markets to fluctuate up or down did we need to heal that part away and get into the manipulation  so let me take those questions in order on the st question i think it's sort of case dependent i think there's discretionary component as to whether a district judge would permit a plaintiff to do that or not i think the facts in this case are a little bit extraordinary because the so i think based on i'm sorry ron you know i was just thinking that's a sort of thing obviously reminds me of lots of any trust cases you know where you need expert testimony to the sec doubt the contributing the contributing factors that lead to a particular loss but they say they're prepared to do that well i don't think it's i mean it's not alleged adequately i think that if you're if plaintiffs are just not willing to latch up versus down in their complaint and i don't want to speculate on the reasons why judge hamilton the possibility that class is very broad includes everybody who traded in these derivatives might be one reason we don't really know why but whatever the reason we just went out of their way in the district court to say they didn't have to do that and then they say that again on the and you claim i don't think it's enough to say well i would we wouldn't have been harmed unless we were out of state and so you can infer that the allegation is there i think you have to include it and say that allegation and if you're not willing to put in a complaint then you take the risk that your complaints can be dismissed and i think that's ultimately the risk that materialized in this case i'd like to say a word about bad faith which came up in the st part of the arguments morning as well and the cia were mindful that the last two cases a binding panel can talk prior comic precedent realize that what we do think that the boss the case is distinguishable and facts and so it's not necessary to decide whether bos a lot of wrong in the court can simply say that the standard doesn't apply here so that the bosco case distinguish between non discretionary duties and discretionary so that in the former case the court said you can apply neck which is standard and in the latter case the court says traditional bad be wise so on the facts of the boston case the rule was a very mechanical rule that merely required certain information be written on the face of certain documents and i think what the court was saying was in that scenario when this mechanical obvious easy to enforce rule just isn't being enforced perhaps an inference of bad faith can be drawn by that i think this case is worlds apart because there's so much discretion well that the macro and micro scale and policing manipulation present at the microscale remember the plaintiffs are just alleging that cboe should have  these aggregate data shows on any particular day that that manipulation occurred there's clearly a discretionary component in the decision st of all going to signal what inferences to draw from this aggregate trading data and nd whether to allocate resources to manipulation but the devil is really in the details it's one thing to have a rule against manipulation it's another thing to decide when it's what extents to investigate enforce it and which facts are sufficient to start an investigation that that has it substantially discretionary  profit so i guess you know allegedly benefited from the allegedly manipulative trades to the same extent as other trades but i don't think that that's enough to show not true your motives especially when you kind of walk back and examine just what it's plaintiff's are saying  process which had these subtle clues that would have you know cause manipulators to know that they can manipulate in the same time siebel also expected that the very sophisticated market participants who trade in these two events wouldn't have realized that and would also flock to these exchanges to be the unwitting victims of the manipulators and apparently siebel also thought at the same time that it could get this passed to regulators because both this s b c and the c f t c concluded for numerous plaintiffs and the other point i wish to make is to really to go back to this question of causation whether the losses were caused by a regulatory failure and our burden here as i said before when things are started investigating the behavior patterns thank you thank you very much the case is taking under advisement