i hope to reserve two or three minutes for rebuttal and i'll keep my eye on the clock your honour's this is a case of first impression under the commodity exchange act specifically section four  which in pertinent part provides that it will be a violation of the act for any person to violate an exchange if that rule has been approved by the commission and the order in this case found the petitioner violated and exchanged speculative the one that provision and imposed a sanction of one hundred ten thousand dollars civil monetary penalty a thirty day trading prohibition on all exchanges and a cease and desist order in reaching it decision to find a violation the commission considered what would be discussing a first occurrence situation where the petitioner exceeded the excess of the limit set forth in rule eighty three to evade that is to say he violated the rule well i think the issue comes down to what's a violation and how do you determine a violation under rule eighty three zero two you're wanting to argue that he may not even have violated the rule even though he held in excess of the rules kept during the relevant period i would argue one of the one of the three reasons that i think the commission erred one is the first reason is that in essence in order to find a violation of for a e you have to have a violation of eighty three zero two e and rule four forty three what the commission did is they looked only at eighty three o two easy which simply states that no person shall own or control a position  of and then it delineates all the particular circumstances relating to that speculative limit there is no word in eighty three to a we that says this is a violation you have to read eighty three  be in the car in conjunction with rule four forty three which is in title speculative and hedge position limit violation you're saying that while the rule may be clear if you read far order to determine a violation to find that violation you have to look at eighty three o two and four forty three now the important aspect is that for forty three states unequivocally that the first occurrence of exceeding the limit will result in a warning letter and will not be recorded as a violation not be recorded as a violation unfortunately i'm having a hard time following your argument in the sense that for eighty three zero two sets the limits and if you go over the limit you can reach that can't unring that bell your client is over that limit at the perscribe time that's correct case you don't ring a bell forty eight for it either then says if you have a violation it will be a violation of this chapter to violate any rule contract market so if you violated if you've now over the limit you violated the contract rules so you've now made a violation according to for any well that's our position away before you get your position are you saying at that moment forget spices to determine the violation you look at four forty three and four forty three said i what i meant what we what happened before a need for a just the statute in order to have a violation of the statute you have to have a just a second if you've got an eight eighty three zero to be overage and your contract correct and it says you can't do that you should choose shall not and then if if for a he says it'll be a violation if you violate a rule you now have a violation at that point i think i would say that you have to look at four forty three because for forty three provides this the violation if such is for the remedy to the via through provides for the sanction for the violation or act ok well don't you have to get a vike why would i go to a sanctioned statute before i went to see it without a violation well because that sanction statute t's our first argument your honor in terms of why we think that the the order knew much an expert that's the second argument and which if you accept the commission's construction that they can consider a first occurrence a violation as a violation of the act i think you result in creating a situation where you've set up to standards you've set up to standards one of which you go under the exchange rule and you have basically a warning letter approach and no recorded violation and then under the other scheme you have a violation which is prosecuted by the administrative agency resulting in dire sanctions so you've created basically a two tier or two track system where you  accept that definition and the result that's not unusual securities litigation a violation of and the regulation can result in civil penalties and can result in the n a s be cancelling the registration of the broker dealer well they can your honor i'm not disputing that but you can't just arbitrarily have a situation where you're saying ok under one track some people are going to be treated one way one of the federal government can say i don't see anything consistent with that what do you think is unconstitutional i do i think the i think it's there's no what's the specific text of the constitution which you point due process i think that basically you have a situation right now it will not notice there is the third argument that i would submit is basically the lack of notice what you have here in terms of our third argument is that you have a situation where the commission through its rulemaking has basically told the participants in the marketplace that this is what constitutes a violation and these are the related penalties but i think we've got a  it is your honor but let me let me explain the exchange i mean the regulatory framework because this is critical to the analysis in one thousand nine hundred eighty one the commodity exchange act through rulemaking basically said we're going to pass this rule it's one point sixty one and from henceforth all exchanges have to submit have to impose limits submit limit rules and sort of and submit enforcement rules that's nine hundred eighty one hundred eighty one limits were only done by the commission and they were sat on a handful of agricultural commodities in they were inforced by the commission now subsequent to eighty one or right about the same time the commission amended requests to congress to amend section four and they came up with for easy so that they couldn't force exchange limit violations now those rules were approved by the commission pursuant to the commission's rule review authority and they became part of the exchange rule book and the commission basically has articulated articulated at that time and his continued to articulate and it's part of the commodity exchange act that the exchanges have the primary responsibility for enforcing their rules and that the commission will have oversight so it's in that context that these rules have to be viewed we have so we have a situation where the commission approved these rules they became part of the exchange rule book and every trader a participant in the marketplace the individual of average intelligence is going to look to those rules and and be bound by them and the issue here in our third argument which i think and four forty three basically demonstrate what the violation what the limit is what the violation is how it's going to be treated what the penalties are and what we have here is basically the commission coming along and saying not to worry just ignore it for forty three it's our interpretation that this has nothing to do with it we can ignore it and the consequences i could live with that if there was some articulated criteria for making a determination you know maybe i'm missing something for forty three talks about a customer of your client a customer yesterday yes let's assume we follow this through and assume there was a violation jump into four forty three as you as you ask you're arguing that you should just got a warning letter that's correct or only it's not only that we should have gotten a warning letter but if there are different consequences we should have but they should be adopted pursuant to noticed god i just really i understand your argument you would claim you got a warning letter now the question did a little bit different to you didn't they they say they've barred him from all mar all speculative markets so there's a whole different remedy it seems as though your remedy under four forty three as to the chicago exchange is one letter reprimand it seems as though all markets because he's a speculator for ten years was all markets now there's a whole different standard there he had two different things going with the chicago exchange rule for forty three doesn't apply to other exchanges correct ok but just national maybe i'm missing something here the chicago exchange rule for forty three is going to plight ashikaga exchanged not to any exchange in new york los angeles or anywhere else correct but the commission went further and saying i find a violent we have you had let's put it you had an overage ok for a three applies across the united states right ok so they fly across united states at the commission level there is definitely discrimination here and and an element of of fundamental unfairness because it's being applied to the petitioner is a customer and it's customer a nonmember when in fact the members are not prosecuted they they fall under four forty three in the prosecuted by the exchange but they can be prosecuted by the federal basically says that none of these situations has been referred to the exchange on behalf of a member only customers are you are you arguing selective prosecution absolutely is that in your brief yes it's basically it's the unfair testimony that basically there's some sort of unwritten feeling or an articulated feeling that well we can't do everything that we think we can do with respect to a customer because they're not a member the reality of it is we have a dual system here that it's terribly unfair members get a warning letter and this customer get not only gets the warning letter and  that we're not going to refer to the business conduct committee because we don't think it warrants a bar from the market but then he gets prosecuted and he gets a penalty and he gets these sanctions imposed on what's and in the context of the sanctions as we've argued in the briefs that they're an abuse of discretion compare the sanctions that result to the nonmember petition or against the sanctions that apply under four forty three i think what's your best argument is the sanctions here are excessive because they found that he intentionally entered an order for more pork bellies after he was told that he was holding too many pork belly contracts now isn't there a problem of factual problem there that he was in fact told he according to the transcript is that he did this intentionally and flower that's an exacerbating factor your honor i agree the issue is a lot of it's undisputed well the timing of the tie there's no to when the phone call was made allegations are in complaints pages between six and thirteen and thirty two and thirty seven of our of our opening brief lay out the facts relating to the communications it is our position that the evidence the weight of the evidence is not in favor of mr kirk i'm having communicated with  what is the the commission in terms of the intentional conduct it has to be supported by the weight of the evidence let me ask you this question one last time how do we view the evidence do we give deference to the trial to the examiner's findings or do we look at the record and with the evidence a new the no you give deference unless there's a you know  is that there's not a dual or bifurcated system but an extra supplemental layer of discipline that the chicago mercantile exchange places upon its members and affiliates and other organizations under rule for fourth rate the only evidence in this case today is the testimony of a very senior disciplinary official aircooled at the chicago mercantile exchange that they took a look the way their rules are written traders can only come into them for one purpose when something like this happens they don't have the ability as we do under arrest actually her graduated penalties they could have done and absolute trading down on him they thought about doing that and the testimony of mr will which is on eighty six percent and any one of these factors was enough to trigger a four for three c and it's under two of them and the third one is where the division of market regulation deems the violation to constitute a severe violation of rules and the only record here the collector to second guess their decision not soon after chatting back and i can i can i stop you there because you've hit right exactly where i am a four four three four four three talks about a customer trading more than one with more than one clearing members so you're talking about a customer and a clearing member which would be a member of the c m e right and if there's a violation a letter issues a letter warning to both the customer speculum after receiving the two warning letters then my result in a hearing to deny access to the market the market obviously is the chicago mercantile exchange is that's right ok so what you're telling me  onto the c f to say in effect i don't want to say he got past a break from the exchange but they didn't go as far as they could because the only thing they could do was push that ban button and they decided no they pass it to the staff to see where we have given him more than a four for a first warning letter is that based on the factual finding that he bought ten contracts after he got a warning no no your honor and  came some twenty four minutes after the trade had been placed in chicago for the additional ten contracts for pork bellies yes  nine forty nine c s t that would be seven forty nine p s t on the morning of august fourteenth so barry and her told phone call for ten short august two thousand and four frozen pork  contracts and it was executed nine fifty two the testimony is the berries broker who gave him the notice that is the winner was quote between eight and eight thirty the man transaction and he was following the instructions given to him by the cmu official and that was tell your clients he's over fifty and it applies to all accounts and your honor not only which give me the first one years and i think this it's designed to kind of bring back a little bit of focus to my argument that related to the application of for forty three counsel for the commission has stated that somehow for forty three doesn't apply to public customers it only applies to  members of the exchange and that simply is not the case the linchpin to the commission's system of exchange speculative limit is a delegation they the exchanges are required to adopt the rules and enforce the rules there's it's the same a quantum run of self regulation is that it has to apply to everybody there's nothing in or in the statute or in the rule making that says that these rules only relate to members and that they don't relate to the public of course they do and i you're over your minute if you like to wrap up that would be great in fact they have to otherwise the whole system would fall