UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF INDIANA

FORT WAYNE DIVISION

DENNIS TROYER,

Plaintiff,

vs.

NATIONAL FUTURES ASSOCIATION,

Defendant.

Civil Action No. 16-CV-146

MAGISTRATE JUDGE SUSAN L. 

COLLINS

DEFENDANT NATIONAL FUTURES ASSOCIATION’S JOINT MEMORANDUM 

IN OPPOSITION TO PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT 

AND IN SUPPORT OF ITS MOTION FOR SUMMARY JUDGMENT

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TABLE OF CONTENTS

Introduction......................................................................................................................................1

Summary Of Undisputed Facts........................................................................................................3

A. The Parties. ..........................................................................................................................3

NFA................................................................................................................................3

Troyer.............................................................................................................................5

B. Troyer Places Investments Through Heneghan. ..................................................................5

C. NFA’s Disciplinary Action Against Statewide FX..............................................................7

D. NFA’s Discipline Of Heneghan...........................................................................................8

Legal Standard .................................................................................................................................8

Argument .........................................................................................................................................8

I. The Undisputed Facts Demonstrate That Troyer’s Claim Is Meritless. ....................................8

A. This Court Should Grant Summary Judgment To NFA Because NFA Did Not 

Expel Statewide FX. ............................................................................................................8

B. This Court Should Grant Summary Judgment To NFA Because Heneghan Was 

Not “A Cause Of” The Statewide FX Disciplinary Action. ..............................................12

C. This Court Should Grant Summary Judgment To NFA Because It Did Not Act In 

Bad Faith............................................................................................................................14

NFA’s Actions Complied With The CFTC’s Direction In Peterson...........................15

Application Of Bylaw 301(a)(ii)(D) Involves Discretion............................................16

D. This Court Should Grant Summary Judgment to NFA Because NFA Did Not 

Cause Troyer’s Losses. ......................................................................................................20

II. This Court Should Grant Summary Judgment To NFA Because Troyer’s Claim Is TimeBarred.......................................................................................................................................21

Conclusion .....................................................................................................................................24

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TABLE OF AUTHORITIES

CASES

American Home Products Corp. v. Liberty Mut. Ins. Co.,

748 F.2d 760 (2d Cir. 1984) ..................................................................................................... 20

Billhofer v. Flamel Techs., SA ,

663 F. Supp. 2d 288 (S.D.N.Y. 2009) ..................................................................................... 20

Bosco v. Serhant, 

836 F.2d 271 (7th Cir. 1987) ............................................................................................. passim

Braman v. CME Grp., Inc., 

149 F. Supp. 3d 874 (N.D. Ill. 2015)........................................................................................ 18

Brawer v. Options Clearing Corp., 

807 F.2d 297 (2d Cir. 1986) ..................................................................................................... 20

Cameron v. I.R.S., 

593 F. Supp. 1540 (N.D. Ind. 1984), aff’d, 773 F.2d 126 (7th Cir. 1985)................................ 18

Celotex Corp. v. Catrett, 

477 U.S. 317 (1986).................................................................................................................... 8

Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 

467 U.S. 837 (1984).................................................................................................................. 11

Chicago Bd. Options Exch., Inc. v. Sec. & Exch. Comm’n, 

889 F.3d 837 (7th Cir. 2018) .................................................................................................... 11

Collins v. BAC Home Loans Servicing LP, 

912 F. Supp. 2d 997 (D. Colo. 2012)........................................................................................ 15

Commodity Trend Serv., Inc. v. Commodity Futures Trading Comm’n, 

233 F.3d 981 (7th Cir. 2000) .................................................................................................... 11

D’Alessio v. N.Y. Stock Exch., Inc., 

258 F.3d 93 (2d Cir. 2001) ................................................................................................... 3, 16

Daniel v. Board of Trade of City of Chicago, 

164 F.2d 815 (7th Cir. 1947) .................................................................................................... 19

Dietchweiler by Dietchweiler v. Lucas, 

827 F.3d 622 (7th Cir. 2016) ...................................................................................................... 8

Dyer v. Miller Lynch, Pierce, Fenner & Smith, Inc., 

928 F. 2d 238 (7th Cir. 1991) ................................................................................................... 22

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ii

Holladay v. CME Grp., 

2012 WL 3096698 (N.D. Ill. July 30, 2012)............................................................................. 18

Hupp v. Gray, 

500 F.2d 993 (7th Cir. 1974) .................................................................................................... 22

Limestone Development Corp. v. Village of Lemont, 

520 F.3d 797 (7th Cir. 2008) .................................................................................................... 23

Martin v. City of Fort Wayne, 

No. 15-CV-274, 2017 WL 131724 (N.D. Ind. Jan. 12, 2017).................................................... 8

Peterson v. National Futures Association, 

No. CRAA-91-1, 1992 WL 289773 (CFTC Oct. 7, 1992)................................................ passim

Sam Wong & Son, Inc. v. New York Mercantile Exchange, 

735 F.2d 653 (2d Cir. 1984) ..................................................................................................... 19

Shultz v. S.E.C., 

614 F.2d 561 (7th Cir. 1980) .................................................................................................... 16

Teamsters Local 282 Pension Trust Fund v. Angelos, 

624 F. Supp. 959 (N.D. Ill. 1985)....................................................................................... 22, 24

Tomlinson v. Goldman, Sachs & Co., 

682 F. Supp. 2d 845 (N.D. Ill. 2009).................................................................................. 22, 24

Troyer v. Nat’l Futures Ass’n, 

290 F. Supp. 3d 874 (N.D. Ind. 2018) ............................................................................... passim

W. Capital Design, LLC v. New York Mercantile Exch., 

180 F. Supp. 2d 438 (S.D.N.Y. 2001), aff’d, 25 F. App’x 63 (2d Cir. 2002)........................... 18

Zimmerman v. Chicago Board of Trade, 

360 F.3d 612 (7th Cir. 2004) .............................................................................................. 18, 19

STATUTES

7 U.S.C. § 12a....................................................................................................................... 4, 5, 10

7 U.S.C. § 17(m)........................................................................................................................... 10

7 U.S.C. § 21......................................................................................................................... 1, 3, 11

7 U.S.C. § 25(b).................................................................................................................... 1, 9, 20

7 U.S.C. § 25(c) ...................................................................................................................... 22, 23

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OTHER AUTHORITIES

In re Lake Shore Asset Management Limited, 

NFA Case No. 09-BCC-004 (May 14, 2009)........................................................................... 11

In re Portfolio Managers, Inc., 

NFA Case No. 15-BCC-034 (Feb 25, 2016) ............................................................................ 11

In re Statewide FX, Inc., 

NFA Case No. 10-BCC-036 (Jul. 28, 2011)............................................................................. 11

NFA Bylaw 1101 .......................................................................................................................... 10

NFA Bylaw 301 ..................................................................................................................... passim

REGULATIONS

17 C.F.R. § 170.15........................................................................................................................ 10

17 C.F.R. § 170.17........................................................................................................................ 10

17 C.F.R. Pt. 3, Appx. A............................................................................................................... 12

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GLOSSARY

In support of NFA’s Joint Memorandum in Opposition to Plaintiff’s Motion For 

Summary Judgment And In Support Of Its Motion For Summary Judgment, the following 

abbreviations shall be used:

NAME ABBREVIATION

INDIVIDUAL ASSOCIATED WITH MEMBER AND 

REGISTERED WITH CFTC

AP

INDIVDUAL ASSOCIATED WITH MEMBER AND MEMBER 

OF NFA

ASSOCIATE

ATLANTIS TRADING CORP. ATC

BACKGROUND AFFILIATION STATUS INFORMATION 

CENTER

BASIC

NFA BUSINESS CONDUCT COMMITTEE BCC

GREGORY M. BOYLE DECLARATION BOYLE 

COMMODITY EXCHANGE ACT CEA

COMMODITY FUTURES TRADING COMMISSION CFTC

DANIEL A. DRISCOLL DECLARATION DRISCOLL

JACK CARL ASSOCIATES, INC. JCA

NATIONAL FUTURES ASSOCIATION NFA

NFA MEMBER FIRM NFA MEMBER

NEW YORK MERCANTILE EXCHANCE NYMEX

PEREGRINE FINANCIAL GROUP INC. PFG

PLAINTIFF’S MEMORANDUM OF SUPPORT FOR MOTION 

FOR SUMMARY JUDGMENT

PL. BR.

PORTFOLIO MANAGERS, INC. PMI

PLAINTIFF’S STATEMENT OF FACTS PSOF

NFA’S REGISTRATION, LEGAL, AND COMPLIANCE 

COMMITTEE

RCL 

COMMITTEE

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NAME ABBREVIATION

SECOND AMENDED COMPLAINT SAC

SECURITIES AND EXCHANGE COMMISSION SEC

NFA STATEMENT OF MATERIAL FACTS SOF

NFA STATEMENT OF GENUINE DISPUTES SOGD

SELF-REGULATORY ORGANIZATION SRO

STATEWDE FX, INC. STATEWIDE FX

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INTRODUCTION

This Court’s February 14, 2018 ruling dismissed all but one of Plaintiff Dennis Troyer’s 

claims in this case. His sole surviving claim seeks damages under Section 22(b) of the Commodity 

Exchange Act (CEA), 7 U.S.C. § 25(b), based on NFA’s alleged bad-faith failure to terminate 

Thomas Heneghan’s as an Associate Member of NFA1 in July 2011. Both parties have moved for 

summary judgment. Because the undisputed facts establish that Troyer’s claim fails as a matter of 

law, this Court should grant summary judgment to NFA. 

Troyer’s only path to recovery is a narrow one. As a “registered futures association” under 

the CEA, see 7 U.S.C. § 21, NFA plays a central and unique role in Congress’ plan for regulating 

futures trading. But that role requires breathing room to balance priorities, exercise discretion, and 

apply expert judgment, with oversight coming principally from “the CFTC, the federal 

government’s regulator for the futures industry,” rather than from courts and juries in litigation. 

Troyer v. Nat’l Futures Ass’n, 290 F. Supp. 3d 874, 881 (N.D. Ind. 2018). Recognizing as much, 

Congress carefully limited the available damages claims against registered futures associations 

such as NFA. 

To establish liability under the CEA, a plaintiff must prove (i) that the association “fail[ed] 

to enforce [a] bylaw or rule that is required under section 21 of [the CEA],” (ii) that the association 

“acted in bad faith in failing to take action or in taking such action as was taken,” and (iii) that 

“such failure or action caused the loss.” 7 U.S.C. § 25(b)(2), (4). Here, the undisputed evidence 

establishes that no reasonable fact finder could conclude that Troyer can prove any of these 

elements. Troyer’s claim rests on NFA Bylaw 301(a)(ii)(D), which prohibits the continued 

membership of any Associate who “was . . . a cause of” the “expulsion” of a Member. (See SAC 

 1 NFA Members are firms and NFA Associates are individuals who are associated with NFA 

Members.

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¶¶ 65, 92.) With the benefit of hindsight, Troyer argues that NFA improperly failed to enforce 

that bylaw against Heneghan after he allegedly “contributed to [NFA’s] expulsion of Statewide 

FX.” (Pl. Br. 12.) But the undisputed evidence shows that NFA did not expel Statewide FX—

eliminating the critical factual predicate of Troyer’s theory. In fact, NFA reached an agreement 

with Statewide FX that it would never reapply for NFA membership. Troyer seeks to conflate the 

two sanctions, but the CFTC—NFA’s regulator and the appellate tribunal for NFA’s decisions and 

orders—has specifically held that the two sanctions are distinct, and confirmed that distinction in 

interpretive guidance. That CFTC construction of the CEA is entitled to deference by this Court 

and, in any event, is binding on NFA. Thus, Troyer is simply incorrect that NFA had an obligation 

to enforce Bylaw 301(a)(ii)(D) at all in this case. 

The undisputed evidence also establishes that any failure to enforce that bylaw could not 

have been in bad faith. Troyer argues that the “bad faith” element requires a showing only of 

negligence. (Pl. Br. at 14–17.) But first, even if that standard applied, it could not be negligent 

for NFA to hew to the approach adopted by the CFTC: Surely it was at least reasonable for NFA 

to interpret its rules in light of the controlling authority from its federal regulator. Second, Troyer 

is wrong to equate “bad faith” with “negligence” in the context of this case in the first place. The 

summary judgment record eliminates any doubt that NFA not terminating Heneghan’s 

membership was, if not compelled by the CFTC’s legal rulings, at least “an exercise of [NFA’s] 

discretionary power” to interpret and apply its own rules. Troyer, 290 F. Supp. 3d at 885. 

Accordingly, Troyer must prove NFA’s knowledge and ulterior motive; negligence is not enough. 

But his allegations on both of those points—which this Court assumed to be true at the motion-todismiss stage, see id., have now proved to be false. 

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Still more, Troyer has failed to introduce any evidence of causation, and has admitted that 

he cannot. (PSOF ¶ 21.) In fact, it is undisputed that more than $160,000 of Troyer’s alleged 

losses occurred before the time NFA allegedly failed to enforce Bylaw 301. (SOF ¶¶ 34–37.) And 

Troyer offers no evidence to satisfy his burden that NFA’s actions rather than other factors (such 

as market forces) caused his damages. 

Finally, and regardless of Troyer’s failure of proof, his claim is plainly barred by the CEA’s 

two-year statute of limitations. All the information that Troyer offers to support his claim was 

known to him or publicly available by no later than April 2013—more than three years before he 

filed suit in 2016. For that reason alone, this Court should grant summary judgment to NFA.

SUMMARY OF UNDISPUTED FACTS2

A. The Parties.

NFA

NFA is the industry-wide, independent, congressionally authorized, SRO for the 

derivatives industry, and has been registered with the CFTC as a futures association under the 

CEA, 7 U.S.C. § 21, since September 22, 1981. (SOF ¶ 1.) SROs “perform[] regulatory functions 

that would otherwise be performed by” an agency like the CFTC or SEC. See D’Alessio v. N.Y. 

Stock Exch., Inc., 258 F.3d 93, 105 (2d Cir. 2001) (citation omitted). NFA’s regulatory activities 

include screening, rulemaking, auditing, investigation, and enforcement functions for the futures 

industry. (SOF ¶ 2.) NFA has maintained a public website since 1997, and since 1999, the website 

has linked to BASIC, which publicly displays information regarding NFA regulatory actions, 

CFTC actions, futures exchange disciplinary actions, and other non-disciplinary information such 

 2 To avoid unnecessary duplication, NFA incorporates by reference the facts in its SOF, and 

provides below facts specific to the arguments made in this memorandum.

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as CFTC registration and NFA membership status and history, business addresses and identities 

of principals. (Id. ¶¶ 25–26.)

NFA is comprised of approximately 3,600 Members and 49,000 Associates. (Id. ¶ 4.) Its 

operations are carried out by a staff that has ranged in size from approximately 300 employees 

between 2008 and 2013, to over 500 employees today. (Id. ¶ 5.) Several groups, departments, and 

committees within NFA play critical roles in performing its regulatory functions, including the 

Registration Department, Fitness Investigations Group, and Compliance Department. (See id. 

¶¶ 11–17.) Each year, these departments process an average of approximately 1,000 Member and 

10,000 Associate registrations, initiate an average of over 1,300 fitness investigations, and conduct 

approximately 550 regulatory examinations. (Id. ¶¶ 12–13, 15.) 

Through a series of delegation orders beginning on August 3, 1983, the CFTC delegated 

to NFA the responsibility to process registrations for futures commission merchants, commodity 

pool operators, commodity trading advisors, and introducing brokers, along with APs of those 

entities. (Id. ¶ 8.) On August 1, 1985, with CFTC approval, NFA implemented and began 

enforcing Bylaw 301(b), and pursuant to Bylaw 301(b), all individuals then currently registered as 

APs, and all individuals subsequently registering as APs, became NFA Associates, subject to NFA 

Requirements. (Id. ¶¶ 9, 10, 51.)

Sections 8a(2) and (3) of the CEA set forth specific standards for the CFTC to apply when 

considering whether an individual is fit for AP registration. See generally 7 U.S.C. §§ 12a(2), (3). 

For example, those sections provide that a person’s registration can be denied or revoked if they 

have been convicted of felony criminal offenses or have been found in a proceeding brought by 

certain governmental agencies or other governmental bodies to have violated the CEA or federal 

securities laws. See id. Because the CFTC has delegated its registration duties to NFA, and 

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because CFTC registrants are required to be NFA Members or Associates, the standards of 

Sections 8a(2) and (3) effectively apply to all NFA’s registration and membership decisions. (SOF 

¶¶ 8–10.) Those standards for registration with the CFTC are also mirrored in NFA bylaws, which 

generally provides notice to Members and APs of what facts could be the basis for revoking or 

refusing NFA Membership or Associate Membership. (Id.) The provision of Bylaw 301 relevant 

here provides in part that “no person shall be eligible to become or remain a Member or associated 

with a Member who . . . was, by the person’s conduct while associated with a Member, a cause of 

any suspension, expulsion” or is himself subject to a suspension, expulsion or permanent bar from 

membership. NFA Bylaw 301(a)(ii)(D) (emphasis added).

NFA itself is subject to CFTC oversight, including CFTC review of NFA policies and 

procedures, rule changes, and of its decisions in disciplinary matters or final orders in registration 

actions. NFA Members and Associates may appeal NFA disciplinary decisions and final 

registration orders to the CFTC, and the CFTC maintains the right to initiate its own proceedings 

and to review NFA’s decisions and final orders. (SOF ¶¶ 27–28.)

Troyer

Troyer is a business owner and former banker in Indiana. (Id. ¶¶ 29–30.) He has financial 

market investment experience dating back to the 1990s. (Id. ¶ 31.) Since the early 2000s, Troyer 

has invested hundreds of thousands of dollars in financial derivatives through NFA Members and 

their APs, and continues to hold hundreds of thousands of dollars in securities investments today. 

(Id. ¶ 31.) Troyer is familiar with the risks attendant with investing in the financial markets. (Id.)

B. Troyer Places Investments Through Heneghan.

In approximately October 2008, Troyer received an unsolicited call from Heneghan, who 

made investment recommendations to Troyer. (Id. ¶ 33.) From October 2008 through March 

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2011, Troyer deposited more than $160,000 into trading accounts with two NFA Member firms, 

Statewide FX and ATC. (Id. ¶¶ 34.) Heneghan recommended trades for Troyer to make, and 

Troyer authorized Heneghan to make trades on his behalf. (Id. ¶ 35.) Troyer received account 

statements showing that these investments were consistently losing value. (Id. ¶ 36.) Despite 

losing more than 97% of his investment between 2008 and 2011, Troyer continued accepting 

Heneghan’s investment advice and depositing money in his trading accounts until around March 

2011. (Id. ¶¶ 36–37.) 

Troyer then stopped investing with Heneghan for two years. (Id. ¶ 38.) However, in or 

about April 2013, Heneghan contacted Troyer again to solicit additional investment funds from 

Troyer. (Id. at ¶ 43.) Troyer then began sending money to Heneghan personally, purportedly so 

Troyer could continue to trade based on Heneghan’s recommendations while taking advantage of 

fee discounts available to Heneghan as a trading firm employee. (Id. ¶¶ 43–44.) Between April 

2013 and April 2015, based on requests from Heneghan, Troyer sent Heneghan $82,000. (Id. 

¶¶ 45, 46.) Unlike before, where Troyer sent checks directly to NFA Member firms that held his 

accounts, the checks Troyer sent between 2013 and 2015 were in Heneghan’s name and went 

directly to Heneghan’s home. (Id. ¶¶ 43–44.) And also unlike before, Troyer did not receive a 

single account statement during this period. (Id. ¶ 48.) Troyer admits that while he was never 

“completely comfortable” with this arrangement with Heneghan in 2013 through 2015, and while 

knowing that Heneghan was lying to him about the value of his investments, Troyer nonetheless 

voluntarily continued to send Heneghan money until 2015. (Id. ¶¶ 47–48.) 

By no later than 2003, Troyer knew about, had access to, and at times visited NFA’s 

website, which provided access to the information contained in BASIC. (Id. ¶ 32.) At no time 

before or during the time that Troyer invested with Heneghan did Troyer access BASIC, nor did 

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he use any other means to seek information regarding Heneghan or the firms with which Heneghan 

was affiliated. (Id. ¶ 50.) Troyer admits that knowing the history of Heneghan’s affiliation with 

various NFA firms would have had no impact on his decision to invest. (Id. ¶ 53.)

C. NFA’s Disciplinary Action Against Statewide FX.

On or about June 7, 2010, NFA’s Compliance Department commenced an unannounced 

examination of Statewide FX. (Id. ¶ 73.) The examination included an analysis of all Statewide 

FX traders’ activity between February and May 2010, customer interviews, and employee 

interviews. (Id. ¶ 74.) The Compliance Department reported the results of the examination to 

NFA’s BCC on October 26, 2010 and recommended disciplinary action against Statewide FX, its 

two principals, and three of its APs (though not Heneghan), and on December 9, 2010, while 

Statewide FX was in the process of voluntarily withdrawing its NFA membership, the BCC issued 

a disciplinary complaint. (Id. ¶ 75.)

Although NFA’s examination included an analysis of trades made by all of Statewide FX’s 

APs, 15 of those APs, including Heneghan, were not named in the complaint. (Id. ¶¶ 74–75.) Like 

a prosecutor or government enforcement attorney, NFA exercises its discretion in evaluating what 

charges it brings and against whom it brings them based on several factors, including among other 

things the quality of the proof, such as witness testimony or documentary evidence that NFA’s 

enforcement attorneys might present to the neutral BCC and hearing panel charged with deciding 

the case. (Id. ¶¶ 22, 76, 78.)

On or about July 28, 2011, pursuant to a settlement offer, and having already voluntarily 

withdrawn its membership with NFA, Statewide FX agreed never to reapply for NFA membership. 

(Id. ¶ 79.) Statewide FX was not expelled. (Id. ¶¶ 79–81.) 

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D. NFA’s Discipline Of Heneghan.

Heneghan became an AP of PMI on or about October 16, 2012. (Id. ¶ 89.) On December 

21, 2015, after PMI had already terminated Heneghan’s association with it, the BCC issued a 

complaint against PMI, Amanda Murphy, Christopher Hogan, Andrew Zhukov, and Heneghan, 

alleging, among other things, the use of “high-pressure sales tactics” and “materially misleading 

and deceptive statements during sales solicitations.” (Id. ¶ 92.) Heneghan never responded to the 

complaint, and on February 26, 2016, NFA issued a decision “permanently bar[ring] . . . Heneghan 

from NFA membership . . . .” (Id. ¶ 94.) Troyer filed this action on May 8, 2016. (Dkt. 1.)

LEGAL STANDARD

“Summary judgment is appropriate when there are no genuine issues of material fact and 

the moving party is entitled to judgment as a matter of law.” Dietchweiler by Dietchweiler v. 

Lucas, 827 F.3d 622, 627 (7th Cir. 2016). “If it is clear that a plaintiff will be unable to satisfy the 

legal requirements necessary to establish his or her case, summary judgment is not only 

appropriate, but mandated.” Martin v. City of Fort Wayne, No. 15-CV-274, 2017 WL 131724, at 

*2 (N.D. Ind. Jan. 12, 2017) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)). 

ARGUMENT

I. THE UNDISPUTED FACTS DEMONSTRATE THAT TROYER’S CLAIM IS 

MERITLESS.

A. This Court Should Grant Summary Judgment To NFA Because NFA Did Not Expel 

Statewide FX.

Troyer’s claim against NFA is grounded in his theory that Heneghan was “a cause” of a 

purported expulsion of Statewide FX from NFA membership in 2011, and therefore, NFA not 

terminating Heneghan’s membership constituted an actionable failure to enforce NFA Bylaw 

301(a)(ii)(D). (SAC ¶¶ 71, 77; Pl. Br. 20.) But the undisputed evidence demonstrates that NFA 

did not expel Statewide FX.

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To establish liability under the CEA, Troyer must prove that NFA “fail[ed] to enforce [a] 

bylaw or rule that is required under section 21 of [the CEA].” 7 U.S.C. § 25(b)(2), (4). Here, 

Troyer alleges that NFA failed to enforce NFA Bylaw 301(a)(ii)(D). (SAC ¶ 72.) That bylaw 

provides that “no person shall be eligible to become or remain a Member [of NFA] or associated 

with a Member who. . . was, by the person’s conduct while associated with a Member, a cause of 

any suspension, expulsion” or is himself subject to a suspension, expulsion or permanent bar from 

membership. In alleging that NFA failed to enforce Bylaw 301(a)(ii)(D) against Heneghan, Troyer 

asserts that “NFA permanently expelled Statewide FX from as [sic] an NFA Member.” (PSOF 

¶ 16.) In support of that contention, Troyer cites Part IV of NFA’s decision in the Statewide FX 

disciplinary action, which states in relevant part that “Statewide [FX] . . . submitted [an] Offer[] 

in which [it] neither admitted or denied the allegations and proposed to settle the charges against 

[it]” by “agree[ing] that Statewide FX shall never reapply for NFA membership or act as a principal 

of an NFA Member, effective immediately.” (Id. (citing Pl. Ex. 17 at 4); (Pl. Ex. 7 at 2.).) But the 

sanction set forth in that decision was not an “expulsion” under well-established CFTC authority 

that NFA is required to follow. Because NFA did not expel Statewide FX, Bylaw 301(a)(ii)(D) 

does not apply by its own terms. As such, Troyer has not shown that NFA failed to enforce a 

bylaw, and summary judgment should be granted to NFA.

The distinction between an “expulsion” and Statewide FX’s agreement to voluntarily 

withdraw and never reapply for membership is straightforward. An expelled member does not 

have to make any promises not to reapply; rather, the expulsion order, by its own force, prevents 

the member from regaining membership. Here, by contrast, the Statewide FX order contains no 

penalty expelling Statewide FX from NFA membership. (Driscoll Ex. 7.) Instead, Statewide FX 

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agreed never to reapply, and it was that agreement, rather than an NFA order of expulsion, that is 

the legal basis for preventing Statewide FX from reapplying in the future. 

Binding CFTC authority confirms that an expulsion is not the same as an agreement to 

withdraw from membership and not reapply. In Peterson v. National Futures Association, No. 

CRAA-91-1, 1992 WL 289773, at *3 (CFTC Oct. 7, 1992), NYMEX, an exchange and SRO, 

charged Leslie Peterson with violating certain exchange rules. Id. at *1–2. Peterson settled those 

charges without admitting or denying wrongdoing, but withdrew from and agreed never to reapply 

for NYMEX membership, which both NFA and the CFTC characterized as agreeing to a 

permanent bar from NYMEX membership—a bar indistinguishable from the bar imposed on 

Statewide FX in this case. Id.. Peterson then applied for CFTC registration.3 Id. NFA denied 

Peterson’s registration application because it found that “an agreement to a permanent bar from an 

exchange membership” “should be treated like an expulsion,” which is a statutory disqualification 

from registration under Section 8a(3)(J) of the CEA, 7 U.S.C. § 12a(3)(J). Peterson, 1992 WL 

289773 at *1–*2. 

The CFTC reversed NFA’s order. Id. at *3. The CFTC expressly rejected NFA’s argument 

that “there is no significant distinction between expulsion from an exchange and agreement to a 

permanent bar from exchange membership,” holding that NFA’s argument would “eliminate 

 3 Although Peterson involved CFTC registration rather than NFA membership, it is nonetheless 

directly applicable here. NFA is responsible for processing both NFA membership and CFTC 

registration. (SOF ¶¶ 8–10.) The fitness standards for NFA membership and CFTC registration 

are effectively the same because NFA membership is compulsory and the effect of a denial of NFA 

membership is the same as a denial of CFTC registration. (SOF ¶ 14.) See 7 U.S.C. § 17(m)

(registered futures association may, with CFTC approval, enact rules requiring all CFTC 

registrants to be association members); 17 C.F.R. §§ 170.15, 170.17 (requiring membership in a 

registered futures association for futures commission merchants, introducing brokers, commodity 

pool operators, and commodity trading advisors); see also NFA Bylaw 1101 (mandating 

membership by prohibiting NFA Members from doing business with non-members).

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11

distinctions reflected in the language Congress adopted.” Id. It further reasoned that conflating a 

permanent bar with an expulsion “fail[ed] to give appropriate weight to the bargain struck by the 

parties to the NYMEX settlement.” Id. It noted that “Peterson apparently bargained for a sanction 

that would not raise a presumption of unfitness for registration or membership in NFA,” and that 

NFA could not “in effect, unilaterally rewrite the terms of the parties' agreement.” Id. 

NFA is legally required to follow Peterson: CFTC decisions are binding on NFA. See 

generally 7 U.S.C. § 21. Consistent with that obligation, NFA’s disciplinary decisions are careful 

to distinguish between and precisely describe which of the two penalties is being imposed. 

Compare In re Lake Shore Asset Management Limited, NFA Case No. 09-BCC-004 (May 14, 

2009) (Boyle Ex. 13) (“Lake Shore [Asset Management Limited] is permanently expelled from 

NFA as of the effective date of this Decision”) (emphasis added) with In re Statewide FX, Inc., 

NFA Case No. 10-BCC-036 (Jul. 28, 2011) (Driscoll Ex. 7) (“Statewide [FX] is ordered never to 

reapply or act as a principal of an NFA Member, effective immediately”); accord In re Portfolio 

Managers, Inc., NFA Case No. 15-BCC-034 (Feb 25, 2016) (Boyle Ex. 14) (“PMI shall withdraw 

from NFA membership and, thereafter, shall be permanently barred from NFA membership.”) 

Moreover, even if NFA was authorized to disagree with the CFTC, it had no basis for doing so: 

the CFTC’s interpretation of “expulsion” in Peterson is reasonable, and is hence entitled to 

deference by NFA in the same way it is entitled to Chevron deference by this Court. Commodity 

Trend Serv., Inc. v. Commodity Futures Trading Comm’n, 233 F.3d 981, 987 (7th Cir. 2000) (“The 

CFTC’s construction of the CEA is entitled to Chevron deference.”) (citation omitted); see also

Chicago Bd. Options Exch., Inc. v. Sec. & Exch. Comm’n, 889 F.3d 837, 841 (7th Cir. 2018)

(SEC’s interpretation of the Securities Exchange Act of 1934 was entitled to deference under 

Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 842 (1984)). 

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This analysis dooms Troyer’s case. NFA never expelled Statewide FX; rather, Statewide 

FX successfully bargained for an order in which it agreed not to reapply for membership. Troyer’s 

argument hinges on the theory that “there is no significant distinction between expulsion from an 

exchange and agreement to a permanent bar from exchange membership,” which is the exact 

argument that the CFTC has rejected. See Peterson, 1992 WL 289773 at *3.4 NFA therefore did 

not “fail to enforce” NFA Bylaw 301(a)(ii)(D), as required for Troyer to establish liability under 

the CEA, and NFA’s summary judgment motion should be granted.

B. This Court Should Grant Summary Judgment To NFA Because Heneghan Was Not 

“A Cause Of” The Statewide FX Disciplinary Action.

NFA Bylaw 301(a)(ii)(D) prohibits the continued membership of any member who “was 

. . . a cause of” the “expulsion” of another member. Troyer’s claim should be dismissed on the 

independent ground that he has not met his burden to show that Heneghan’s conduct was a “cause” 

of NFA’s disciplinary action against Statewide FX.

To support his claim that Heneghan’s conduct was “a cause” of NFA’s disciplinary action, 

Troyer’s brief relies exclusively on NFA’s documents; he conducted no deposition discovery and 

has no supporting declarations. (Pl. Br. 12–14.) None of the documents upon which Troyer relies 

even arguably proves that Heneghan was a cause of NFA’s discipline of Statewide FX.

 4 The CFTC reaffirmed this distinction between the two penalties in 1996, when it amended its 

Interpretative Statement With Respect to Sections 8a(2)(C) and (E) and Section 8a(3)(J) and (M) 

of the Commodity Exchange Act (“Interpretative Statement”). 17 C.F.R. Pt. 3, Appx. A. 

Consistent with Peterson, rather than interpreting an agreement to withdraw and not to reapply as 

an expulsion that by its own force allows for disqualification, the CFTC instead stated that a 

subsequent breach of such an agreement by failing to withdraw or reapplying would be an 

independent basis for disqualification. Id. (“The failure to withdraw or the attempt to register in 

the face of such an undertaking would indicate the lack of fair and honest dealing which the 

Commission believes constitutes ‘other good cause’ for denying, revoking or conditioning 

registration under the Act.”). No such statement would have been necessary if an agreement to 

withdraw and to not reapply was equivalent to an expulsion. 

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Troyer first cites the allegation in NFA’s complaint against Statewide FX that 95% of 

Statewide FX’s customers lost money in 2009, along with an exhibit NFA used in an evidentiary 

hearing against one of Statewide FX’s APs. From those documents, Troyer concludes that, 

because Heneghan’s customers were among the 95% who lost money in 2009, Heneghan must 

have been a cause of the purported expulsion of Statewide FX. (Pl. Br. 12–14.) That is wrong. 

NFA charged Statewide FX and its two principals with developing a plan in which the principals

instructed Statewide FX APs as to which trades to make for customers based on what would 

generate the highest commissions to Statewide FX. (SOF ¶¶ 73–77.) NFA additionally charged 

only three APs who NFA was able to show engaged in extreme actions in trying to coerce trades, 

including lying to a customer about his education level and experience as a trader. (Id.) Heneghan 

was not one of the APs charged. No fair reading of the Statewide FX complaint supports Troyer’s 

assertion that Heneghan was a cause of Statewide FX’s discipline.

Troyer also contends that two pre-complaint NFA analyses of all Statewide FX traders’ 

activity show that Heneghan was a cause of the purported expulsion of Statewide FX. (Pl. Br. 12–

14.) Troyer again is wrong. The fact that NFA analyzed a wide range of transactions of all 

Statewide FX APs, including Heneghan, does not show that Heneghan was a cause of Statewide 

FX’s discipline. To the contrary, NFA’s complaint offers no suggestion that Heneghan’s conduct 

caused NFA to take disciplinary action against Statewide FX.

Finally, Troyer cites an NFA memorandum dated February 9, 2011 (i.e., after the Statewide 

FX complaint date), in which former NFA staff member Mark Arnold discusses the results from a 

preliminary investigation of ATC, the NFA Member with which Heneghan was associated after 

Statewide FX. (Id.) Troyer argues that this document proves that two NFA Members that 

employed Heneghan used similar trading strategies, and therefore, that Heneghan was a cause of 

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the earlier Statewide FX disciplinary action. Troyer offers no evidence to support that leap of 

logic, and there is none. 

Following Arnold’s memorandum, NFA initiated an examination of ATC. (SOGD ¶ 15.) 

That examination showed that many of the signs of abusive trading practices identified in Arnold’s 

memorandum no longer existed at ATC. (SOF ¶ 87.) As part of its examination of ATC, NFA 

interviewed customers of the firm, including Troyer. (Id. ¶¶ 39–41.) Despite having lost 

significant amounts of money, Troyer had nothing negative to say regarding Heneghan. (Id.) After 

his initial interview with NFA, Troyer was unwilling to assist NFA further with its examination of 

ATC. (Id. ¶ 42.) Following the examination, NFA decided to send ATC a staff letter and place 

the firm on investigative monitoring; it did not decide to take any disciplinary action against ATC 

or any of its APs, including Heneghan.5 (Id. ¶¶ 87–88.) The Arnold memorandum, therefore, 

does not demonstrate that Heneghan was a cause of NFA’s disciplinary action against Statewide 

FX.

Because Troyer can put forth no facts to tie the purported expulsion of Statewide FX to 

Heneghan’s conduct, this Court should deny his motion for summary judgment, and grant NFA’s 

motion for summary judgment.

C. This Court Should Grant Summary Judgment To NFA Because It Did Not Act In 

Bad Faith.

At the motion to dismiss stage, this Court held that Troyer could meet his burden of proof 

by showing that NFA was merely negligent in enforcing Bylaw 301(a)(ii)(D) if NFA’s actions 

were not discretionary in nature. See Troyer, 290 F. Supp. 3d. at 885. This Court need not decide 

 5 Throughout his motion, Troyer alleges that NFA failed to investigate Heneghan and certain NFA 

Members at various points. Troyer ignores the several other instances in which NFA did review 

Heneghan’s registration. (SOF ¶¶ 51–72.)

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whether a negligence standard applies in this case, because even if that standard does apply, it was 

not negligent for NFA to follow the CFTC’s regulatory directive in Peterson and subsequent 

interpretive guidance. In any event, NFA’s actions here were discretionary, thus requiring 

application of a more stringent bad-faith standard that Troyer cannot satisfy.

NFA’s Actions Complied With The CFTC’s Direction In Peterson.

Even if a negligence standard applied, NFA’s decision to follow binding authority from its 

regulator was not negligent.

NFA acts through a grant of authority from the CFTC, which includes an express 

delegation to NFA to make registration decisions. (SOF ¶¶ 8–10.) Pursuant to that grant of 

authority, and because NFA membership is mandatory, the standards NFA applies to registration 

decisions and membership decisions are effectively the same. (Id. ¶ 12.) The CFTC regulates 

NFA, reviewing and approving NFA’s rules, and oversees NFA’s performance of its duties 

through periodic audits. (Id. ¶¶ 27–28.) As shown above, supra at 9–12, in reviewing NFA’s 

decision in Peterson, the CFTC expressly rejected NFA’s treatment of an agreed sanction to 

withdraw from and never reapply for exchange membership as the equivalent of an expulsion. 

1992 WL 289773, at *3. In doing so, the CFTC directed that NFA registration and membership 

determinations recognize a distinction between the effect of such an agreed sanction and an 

expulsion. Id.

Here, it is undisputed that Statewide FX voluntarily withdrew from and agreed never to 

reapply for NFA membership. (SOF ¶ 79.) Under Peterson, therefore, NFA was not permitted to 

treat that agreement as an expulsion.

Acting in a manner consistent with the CFTC’s direction demonstrates neither “bad faith” 

nor negligence: it shows that NFA followed the law. Cf. Collins v. BAC Home Loans Servicing 

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LP, 912 F. Supp. 2d 997, 1017 (D. Colo. 2012) (holding that company’s compliance with FCRA 

could not have been negligent). Troyer’s contrary view—that an SRO can act in “bad faith” when 

it follows its regulator’s decisions—would undermine the entire regulatory rubric Congress 

established through the CEA. SROs would be paralyzed if following their regulators’ guidance 

could expose them to liability in private suits. Because NFA’s decision to follow the CFTC’s 

guidance was not negligence—let alone bad faith—summary judgment should be granted to NFA.

Application Of Bylaw 301(a)(ii)(D) Involves Discretion.

In any event, the appropriate standard here is traditional bad faith, not negligence. A badfaith standard, going beyond mere negligence, applies if “the [SRO] [allegedly] injures a trader 

through the exercise of a discretionary power.” Bosco v. Serhant, 836 F.2d 271, 278 (7th Cir. 

1987); see Troyer, 290 F. Supp. 3d at 885. At the motion to dismiss stage, this Court held that it 

was unable to determine whether NFA’s alleged actions with respect to Heneghan were 

discretionary in nature. Troyer, 290 F. Supp. 3d at 885. The fully developed factual record now 

demonstrates that NFA’s actions were an exercise of its discretionary authority. 

First, NFA plainly did not have the nondiscretionary duty to ignore its regulator’s 

guidance. Even if there was some scenario in which NFA could disregard the CFTC, which there 

is not, NFA would at least have to exercise discretion to take that extraordinary step.

Second, Troyer’s claim is that NFA failed to enforce Bylaw 301(a)(ii)(D), which prohibits 

the membership of any person who was “a cause” of any suspension or expulsion of another 

member. (Pl. Br. 13.) What it means to be “a cause” is not defined in NFA’s rules or in the CEA. 

As a result, interpreting and applying Bylaw 301(a)(ii)(D) necessarily requires NFA to exercise 

discretion when deciding whether an individual was “a cause” of a prior suspension or expulsion. 

See D’Alessio, 258 F.3d at 106 (noting that interpreting and enforcing Exchange Act rules and 

regulations involves the exercise of discretion); Shultz v. S.E.C., 614 F.2d 561, 571 (7th Cir. 1980)

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(affirming finding that appellant violated SRO rules and noting that “because these are rules of the 

[SRO], the [SRO] should be allowed discretion in determining their meaning”). Where, as here, 

the documentary record does not state whether an individual is a “cause” of a suspension or 

expulsion, the question of whether someone was “a cause” will require NFA to exercise its 

regulatory discretion to interpret its rules based on the facts before it to determine whether Bylaw 

301(a)(ii)(D) applies. Such a determination is discretionary.

Troyer’s reliance on Bosco to avoid that conclusion is misplaced. (Pl. Br. 14.) In Bosco, 

the plaintiff investors alleged that the defendant SRO (an exchange) failed to enforce a rule 

requiring the defendant trader to include certain customer information on orders the trader placed 

by telephone to a floor broker at the exchange “at the time of execution.” 836 F.2d at 277. The 

exchange had previously interpreted its rule to allow for recording customer information shortly 

after order execution. Id. However, evidence showed that the defendant often waited hours after 

order execution to note the information, violating even the exchange’s own interpretation of its 

rule, and that the exchange was aware of the often hours-long delays, thus eliminating any 

discretionary element of the plaintiff’s claim in Bosco. Id. at 277–78. The court therefore held 

that because “there was no scope for the exercise of discretion [there was] hence no excuse” for 

the exchange failing to enforce its own interpretation of the rule. Id. at 278. Here, by contrast, 

there was more than an “excuse”—there was binding CFTC guidance in Peterson and the 

Interpretive Statement—and even setting aside that guidance, the “causation” determination was 

imbued with discretion.

Because NFA’s decision was discretionary, Troyer must establish bad faith by NFA, not 

mere negligence—and he plainly cannot do so here. Under the traditional bad faith standard, 

Troyer must prove that NFA “knew that a rule [it] [was] required to enforce was being violated 

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or—what is in fact a form of knowledge—deliberately closed [its] eyes so that [it] would not 

discover what [it] strongly suspected was going on.” Braman v. CME Grp., Inc., 149 F. Supp. 3d 

874, 891–92 (N.D. Ill. 2015) (citing Bosco, 836 F.2d at 276); see also Holladay v. CME Grp., No. 

11-CV-8226, 2012 WL 3096698, at *4 (N.D. Ill. July 30, 2012) (“negligent indifference . . . is 

insufficient to state a claim under Section 22(b) of the CEA.”); W. Capital Design, LLC v. New 

York Mercantile Exch., 180 F. Supp. 2d 438, 442 (S.D.N.Y. 2001), aff’d, 25 F. App’x 63 (2d Cir. 

2002). Troyer also must show that “self-interest or other ulterior motive unrelated to proper 

regulatory concerns. . . constitute[d] the sole or the dominant reason for” NFA’s actions. See

Zimmerman v. Chicago Board of Trade, 360 F.3d 612, 624 (7th Cir. 2004); accord Holladay, 2012 

WL 3096698, at *4. Troyer can satisfy neither requirement of the bad faith standard because 

Troyer has not even attempted to introduce evidence as to NFA’s motives for its alleged actions 

between 2011 and 2016.

Instead, Troyer argues that NFA’s registration activity related to Heneghan between 1985 

and 2000 demonstrates that NFA acted in a manner that would “meet the heightened standard of 

unreasonableness set forth in the Bosco case.” (Pl. Br. 16–17 (emphasis added).) That is wrong 

for several reasons. As an initial matter, the sole claim that Troyer pleads in his complaint focuses 

specifically on NFA’s alleged failure to enforce “Bylaw 301(a)(ii)(D) [because] NFA should have 

terminated Heneghan’s registration when it expelled Statewide FX on July 28, 2011.” (SAC ¶ 72.) 

NFA’s conduct before the Statewide FX disciplinary action is irrelevant to Troyer’s claim that 

NFA failed to enforce Bylaw 301(a)(ii)(D) as to Heneghan after the Statewide FX disciplinary 

action.6 Moreover, no court has ever applied this purported “unreasonableness” standard; Bosco

 6 In addition, Troyer’s attempt to expand his claim in his summary judgment motion beyond what 

he pled in his complaint is improper, and this Court should disregard it. See Cameron v. I.R.S., 

593 F. Supp. 1540, 1555 (N.D. Ind. 1984), aff’d, 773 F.2d 126 (7th Cir. 1985) (limiting analysis 

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was merely describing the holdings of the two leading cases it cited—both of which require 

knowledge (or willful blindness) and ulterior motive. See Sam Wong & Son, Inc. v. New York 

Mercantile Exchange, 735 F.2d 653, 670–71 (2d Cir. 1984); Daniel v. Board of Trade of City of 

Chicago, 164 F.2d 815, 819–20 (7th Cir. 1947). And the Bosco court itself rejected this argument, 

holding that an exercise of discretion that “was incorrect or even unreasonable [] would not be in 

bad faith under the demanding standard suggested.” 836 F.2d at 277 (emphasis added).

And, in any event, Troyer wholly fails to meet the distinct requirement of showing that 

NFA’s sole or dominant motive was “ulterior.” It is well-established that “[i]n order to constitute 

bad faith, [Troyer] must show that self-interest or other ulterior motive unrelated to proper 

regulatory concerns is alleged to constitute the sole or the dominant reason for the exchange 

action.” Zimmerman, 360 F.3d at 624 (quotation marks omitted; emphasis in original). Although 

not discussed in Troyer’s motion, the only allegation of motive contained in the SAC is that NFA 

continued to permit Heneghan’s registration after the Statewide FX disciplinary action in order to 

collect fees from Heneghan’s trades. (SAC ¶ 92.) Even if Troyer had evidence of the fees NFA 

collected from Heneghan’s trades (which he does not), such evidence cannot, as a matter of law, 

be sufficient to establish bad faith because if it were, the heightened bad-faith requirement would 

be meaningless, collapsing into negligence. “[T]here should not be liability [for SROs] simply 

because the action has the incidental effect of advancing their [] interests.” Zimmerman, 360 F.3d 

at 624 (quoting Sam Wong, 735 F.2d at 677) (internal quotation marks omitted). This is so even 

though SROs “may to a degree have potentially mixed motives in taking action,” Zimmerman, 360 

F.3d at 624, because “[i]f such a degree of self-interest were allowed to demonstrate bad faith, 

 

of summary judgment motion only to allegations in complaint where party’s “Memorandum in 

Support of his summary judgment motion expands the claim” and includes theories not identified 

in the complaint). 

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[SROs] . . . would inevitably be subject to bad-faith charges, and the concept of [] self-regulation 

would be undermined.” See Brawer v. Options Clearing Corp., 807 F.2d 297, 303 (2d Cir. 1986)

(internal citation omitted). 

Because Troyer lacks any evidence that NFA acted in bad faith or any evidence reflecting 

NFA’s alleged ulterior motive, this Court should deny his motion and grant summary judgment to 

NFA.

D. This Court Should Grant Summary Judgment to NFA Because NFA Did Not Cause 

Troyer’s Losses.

Finally, Troyer cannot show that NFA’s conduct caused his losses. 7 U.S.C. § 25(b)(2). 

Troyer cannot meet his causation burden for the simple reason that he has admitted that he does 

not know who—or what—caused him to lose his investments. (PSOF ¶ 21.) Even if it were not 

for that fatal admission, the undisputed facts show that NFA’s alleged failure to enforce Bylaw 

301(a)(ii)(D) as to Heneghan in 2011 did not cause Troyer’s alleged losses.

First, as to the more than $160,000 Troyer invested through Heneghan before NFA’s 

disciplinary proceeding against Statewide FX, it is impossible for NFA’s subsequent alleged 

failure to enforce Bylaw 301(a)(ii)(D) to have caused those losses. That is, Troyer cannot say that 

his losses from October 2008 through June 2011 were caused by NFA’s alleged failure in July 

2011; to do so would defy the “inescapable rule of causality that a cause must precede its effect.” 

See Billhofer v. Flamel Techs., SA, 663 F. Supp. 2d 288, 297 (S.D.N.Y. 2009); see also American 

Home Products Corp. v. Liberty Mut. Ins. Co., 748 F.2d 760, 765 (2d Cir. 1984). 

Second, as to the $82,000 Troyer sent to Heneghan between April 2013 and April 2015, 

again, Troyer offers no evidence that NFA’s alleged failure to enforce Bylaw 301(a)(ii)(D) is what 

caused his losses. In fact, Troyer admits that he has no idea what caused his losses. (PSOF ¶ 21.) 

Troyer bears the burden of proving that in a world in which NFA did discipline or deny registration 

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to Heneghan soon after July 2011, Troyer’s losses from April 2013 to April 2015 would not have 

occurred. Troyer has offered literally no evidence on that score. 

To the contrary, the evidence shows that Troyer would have done exactly the same things 

that he did, regardless of whether NFA had disciplined or denied registration to Heneghan before 

April 2013. Troyer would not have known about this discipline or denial of registration: he has 

admitted that he never once did any research regarding Heneghan or NFA Member firms (SOF 

¶ 50), and that Heneghan’s registration history would not have impacted Troyer’s investment 

choices (Id. ¶ 53). Moreover, even if Heneghan’s registration had been denied, nothing would 

have prevented Troyer from doing exactly what he actually did: contacting Troyer and convincing 

him to voluntarily send $82,000 in checks to Heneghan personally at his home address. (Id. ¶¶ 43–

47.) Additionally, even if NFA’s alleged failure to discipline or deny NFA Associate membership 

to Heneghan was a cause of Troyer’s losses, Troyer has put forward no evidence of what portion 

of those losses was caused by NFA’s actions, as opposed to other factors like market forces or 

poor investment decisions. In fact, he has admitted that he does not know. (PSOF ¶ 21.) 

Troyer’s case appears to be premised on the intuition that if Heneghan’s registration had 

been denied, things would have gone differently for Troyer in some unspecified way. But as the 

plaintiff, Troyer bears the burden of proving causation. Having put forward zero evidence on what 

would have happened in the alternate world where Heneghan’s registration had been denied, no 

reasonable fact-finder could conclude that Troyer met his burden as to causation. 

II. THIS COURT SHOULD GRANT SUMMARY JUDGMENT TO NFA BECAUSE 

TROYER’S CLAIM IS TIME-BARRED.

Finally, NFA’s summary judgment motion should be granted because Troyer’s claim is 

time-barred.

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Claims under the CEA are subject to a two-year limitations period. 7 U.S.C. § 25(c). A 

plaintiff must file their lawsuit within two years of when they became aware of—or with the 

exercise of diligence could have become aware of—the facts that give rise to their claim. See Dyer 

v. Miller Lynch, Pierce, Fenner & Smith, Inc., 928 F.2d 238, 240 (7th Cir. 1991). The limitations 

period begins when a plaintiff knows or should know of the facts underlying his claim. Id. at 240 

(limitations period begins when “in the exercise of reasonable diligence [plaintiff] should have 

known of defendant’s alleged misconduct.”). A prospective plaintiff bears the obligation to 

conduct diligence into their potential claims. See Hupp v. Gray, 500 F.2d 993, 996 (7th Cir. 1974)

(“the statutory period does not await appellant’s leisurely discovery of the full details of the alleged 

scheme.”) (internal quotation marks omitted); Tomlinson v. Goldman, Sachs & Co., 682 F. Supp. 

2d 845, 846 (N.D. Ill. 2009) (similar). This is especially so when there are red flags that would 

have alerted an ordinary person to their potential claim. Teamsters Local 282 Pension Trust Fund 

v. Angelos, 624 F. Supp. 959, 964 (N.D. Ill. 1985) (holding that the plaintiff cannot “ignore obvious 

danger signals . . . [and] [t]here is ‘no license to ignore events giving rise to strong suspicion’”).

The gist of Troyer’s claim is that he lost money because NFA failed “to have terminated 

Heneghan’s registration based upon the fact [that] [sic] he contributed to its decision to expel 

Statewide FX.” (Pl. Br. 20.) The undisputed facts show that the alleged misconduct was complete, 

and all the facts that form the basis of Troyer’s claim were either known by or readily available to 

him by April 2013. 

No later than April 2011, Troyer was aware that Heneghan had been associated with 

Statewide FX between 2007 and 2010 because Troyer had received monthly investment statements 

from Statewide FX related to his investments with Heneghan. (SOF ¶ 36; SAC ¶ 17.) 

Additionally, prior to April 2011, NFA’s Rulebook, which contains the text of Bylaw 

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301(a)(ii)(D), was (and still is today) available on NFA’s website. (SOF ¶¶ 24–26; SAC ¶ 66.) 

NFA’s records of its disciplinary action against Statewide FX, including the NFA complaint and 

the decision that Troyer cites throughout his complaint, were available publicly on NFA’s website 

no later than July 2011. (SOF ¶¶ 24–26; SAC ¶¶ 71–72.) Thus, by no later than July 2011, Troyer 

knew or with reasonable diligence could have known that (a) Heneghan had been associated with 

Statewide FX, (b) NFA initiated a disciplinary action against Statewide FX, (c) Statewide FX had 

agreed never to reapply for membership with NFA, (d) NFA operated pursuant to Bylaw 

301(a)(ii)(D), and (e) that Heneghan remained an NFA Associate after NFA disciplined Statewide 

FX. (See SAC ¶¶ 67, 70–72.) 

On April 1, 2013, Troyer began making purported investments again with Heneghan, and 

losing money on those investments. (SOF ¶ 43.) Thus, shortly after April 1, 2013, Troyer knew 

or could have known of all the facts underlying his claims here.

Not only could Troyer have discovered his potential claim in or around April 2013, under 

his own theory, there were ample red flags that should have alerted him to his claim here. Troyer 

admits that he thought his arrangement with Heneghan between April 2013 and April 2015 was 

suspect, and that he believed that Heneghan was lying to him about the value of his investments. 

(SOF ¶¶ 47–49.) Despite these red flags, Troyer took no steps to discover his claim.7 

As a result, Troyer had until April 2015 to file this action. Because Troyer did not file this 

suit until May 2016, his claim is barred by the CEA’s statute of limitations, 7 U.S.C. § 25(c). See 

 7 All elements of Troyer’s claim were fixed by April 2013, the first time that Troyer lost investment 

funds after NFA’s alleged failure to expel Heneghan. That Troyer experienced additional 

investment losses after April 2013 does not impact the running of the statute of limitations. See 

Limestone Development Corp. v. Village of Lemont, 520 F.3d 797, 801 (7th Cir. 2008) (“The 

statute of limitations begins to run upon injury . . . and is not tolled by subsequent injuries.”).

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Tomlinson, 682 F. Supp. 2d at 848; Teamsters Local 282 Pension Trust Fund, 624 F. Supp. at 

964–5.

CONCLUSION

For the foregoing reasons, this Court should deny Troyer’s motion for summary judgment 

and grant summary judgment in favor of NFA.

Dated: February 8, 2019 Respectfully submitted,

NATIONAL FUTURES ASSOCIATION

By: /s/ Gregory M. Boyle

Gregory M. Boyle (pro hac vice)

David P. Saunders (pro hac vice)

Amit B. Patel (pro hac vice)

JENNER & BLOCK LLP

353 N. Clark Street

Chicago, IL 60654-3456

Phone: (312) 222 9350

Facsimile: (312) 527-0484

Attorneys for Defendant

USDC IN/ND case 1:16-cv-00146-SLC document 102 filed 02/08/19 page 31 of 32
CERTIFICATE OF SERVICE

The undersigned, an attorney of record in this case, hereby certifies that on February 8, 

2019, a true and correct copy of the foregoing DEFENDANT NATIONAL FUTURES 

ASSOCIATION’S JOINT MEMORANDUM IN OPPOSITION TO PLAINTIFF’S 

MOTION FOR SUMMARY JUDGMENT AND IN SUPPORT OF ITS MOTION FOR 

SUMMARY JUDGMENT was served on counsel of record for Plaintiff by this Court’s 

CM/ECF system.

Dated: February 8, 2019

/s/ Gregory M. Boyle

USDC IN/ND case 1:16-cv-00146-SLC document 102 filed 02/08/19 page 32 of 32