U.S. COMMODITY FUTURES TRADING COMMISSION 

Three Lafayette Centre 

Office of Proceedings 

DIRK L. WITTER, 

Complainant, 

v. 

1155 21st Street, NW, Washington, DC 20581 

www.cftc.gov 

* 

* 

* 

* 

* CFI'C Docket No. o8-R45 

* 

ROBERT SEAN SKELTON, and * 

TRANSACf FUTURES * 

f/k/a YORK BUSINESS ASSOCIATES, * 

Respondents. * 

* 

INITIAL DECISION ON REMAND 

Introduction 

The Commission vacated the initial dismissal on grounds that I had erroneously 

denied Complainant an opportunity for discovery to test Respondents' contention that 

they had not recorded the crucial August 16, [2007] 11:30 p.m. conversation, during 

which Witter contends, and Skelton disputes, that Witter instructed Skelton to cancel all 

open S&P orders.• The Commission remanded this matter with the direction "to permit 

discovery sufficient to determine whether, more likely than not, the August 16, [2007] 

11:30 PM call between Dirk Witter and Robert Skelton was recorded and thus to 

determine whether an adverse inference is warranted, based on the criteria set out [in 

Smith v. Napolitano, 626 F. Supp. 2d 81 (D.D.C. 2009)]." Slip opinion, page 8. 

1 The reader's familiarity with the procedural summary set out in part 2 (pages 3 to 5) of the "Background" 

section of the Commission's remand order is presumed. In this summary, the Commission noted: "On 

appeal, Witter states that 'this case is centered on one thing, did I tell Skelton, as I assert, to put in a stop 

loss and remove all other orders.' We confine our review to that issue." Slip opinion, at footnote 3, page 3. 
In addition, the Commission observed: 

Further discovery may obviate the need for the Judgment Officer to rely on 

[the initial credibility determination favoring respondents], or it may 

cause him to revise his view. On the other hand, if further discovery 

proves fruitless, we would find no clear error on the existing record and 

would defer to the Judgment Officer's determination. 

Slip opinion, page 9· Pursuant to the Commission's order, Complainant conducted 

additional discovery2 and produced new evidence,J and both sides submitted closing 

arguments.4 

As discussed below, after reviewing the Respondents' discovery replies, 

Complainant's new evidence, and both sides closing arguments, I have concluded that 

the additional round of discovery has not yielded sufficient information to cast 

additional doubt on TransAct's explanation for the lack of a recording available for 

production, and thus I have decided: one, to leave undisturbed the initial determination 

to not impose an adverse inference sanction based on Skelton's and TransAct Futures' 

non-production of the recording; and two, to leave undisturbed the initial assessment of 

Witter's and Skelton's relative credibility.s Accordingly, the complaint in this matter 

has been dismissed. 

Conclusions 

1. Whether an Adverse Inference is Justified 

In connection with respondents' non-production of a recording of the pivotal call, 

the Commission noted that "evidence of bad faith could conceivably justify [an adverse] 

2 See Order dated Julys, 2013; Complainant's discovery requests titled Motion for Discovery, filed July 

23, 2013; Respondents' Responses to [Complainant's] Motion for DiscovenJ, filed July 30, 2013; Notice 

dated August 30, 2013; and Thompson e-mail to Complainant, dated September 25, 2013. 

3 See Complainant's Request to Submit Evidence, and the seven sets of documents attached thereto; and 

Respondents' Response to [Complainant's] Request to Submit Evidence. 

4 See Respondents' Evidentiary Summaries and Closing Arguments; and Complainant's Evidentiary 

Summary and Closing Arguments. 

s See last paragraph (pages 8 to 9) of the Discussion section in the Commission's remand order. 

2 
inference against the non-producing party, and might have been revealed through 

reasonable discovery." Slip opinion, page 7,6 The Commission further stated that 

when determining whether to draw an adverse inference, the Commission found 

instructive the criteria set out by the U.S. District Court for the District of Columbia in 

Smith v. Napolitano, 626 F. Supp. 2d 81, at 101: 

(1) The party having control over the evidence had an obligation to preserve it; 

(2) the destruction or loss was accompanied by a culpable state of mind; and 

(3) the evidence that was destroyed or altered was relevant to the claims or 

defenses of the party seeking the discovery of the spoliated evidence, to the 

extent that a reasonable factfinder could conclude that the lost evidence 

would have supported the claims or defenses of the party that sought it. 

Slip opinion, pages 7 to 8. 

As for the first element of the Smith test - i.e., the obligation to preserve any 

recording if it existed -- when viewed separately and collectively, Respondents' discovery 

replies and Complainant's new evidence fail to show that Witter's August 16, 2007 11:30 

p.m. call with Skelton was more likely than not recorded. According to Respondents, at 

the relevant time, TransAct Futures' multi-handset telephone system provided intraoffice and inter-office communication via standard copper wire technology. Individual 

handsets were assigned to agents who handled calls with clients. Calls on these 

handsets were recorded, using handset adaptors to capture the call for storage on a 

central server and replication offsite. For better or for worse, the phone system was 

configured so that if a TransAct agent's recorded line was busy the Merlin Legend PBX 

system would automatically bounce any new incoming call to a second line. This second 

6 The factual summary set out in part 1 (pages 1 to 3) of the "Background" section of the Commission's 

remand order is hereby incorporated by reference, and the reader's familiarity with that summary is 

presumed. 

3 
line was connected to the Merlin Legend PBX system, but was not connected to an XTR 

Universal Adaptor, and thus any calls on this line would not be recorded. 

Respondents do not dispute Witter's principal evidence which shows that a single 

phone using Merlin Legend PBX and XTR Universal Adapter technologies is capable of 

recording multiple lines.7 However, although not disputed, this evidence is not relevant 

since it pertains to technology in which one phone line has the capability to record 

multiple calls, which is not the type of multi-handset system used by Skelton and 

TransAct. This evidence also does not show that Skelton and TransAct were confined to 

a single-handset phone system. Therefore, Witter has failed to show by a 

preponderance of the evidence that his August 16, 2007 11:30 p.m. call with Skelton 

more likely than not was recorded.S 

As for the second element of the Smith test, no new evidence produced in 

discovery or sought for admission by Witter shows that nonproduction of the recording 

was accompanied by a culpable state of mind. Similarly, no evidence shows that Witter 

was singled out, that an unrecorded line was slyly configured for particular calls, or that 

7 See Complainant's Request to Submit Evidence, and List of Evidence, pages 19-20 of Complainant's 

Evidentiary Summary and Closing Arguments. For example, Witter's e-mail exchange with Don Clark 

and the question posed to "Just Answer" were based on hypothetical factual scenarios not related to this 

case. Also, the reply by Just Answer confirms that the Just Answer employee is "utterly without 

knowledge or reference sources" on matters pertaining to configuring a Merlin Legend PRI/ISDN line. 

s The Commission, in its procedural summary, further noted: 

Although Witter continues to assert "Misrepresentation" on the ground that TransAct's 

Customer Agreement states "that they recorded [all] telephone calls," the Customer 

Agreement states only that [the customer agrees that all] customer calls "may" be 

recorded. Thus, there was no misrepresentation as alleged by Witter. 

Slip opinion, at footnote 3, page 4 (bracketing added for clarification). In his closing arguments, Witter 

has tried to re-cast his misrepresentation claim as a breach of contract claim. Witter's claim is based on 

the same tortured and unconvincing reading of a clause which in fact clearly does not promise that all 

conversations will be recorded. Rather, the term "may" in this contractual clause can reasonably only be 

interpreted to be a modal verb indicating possibility, but nnt certainty, that any conversation out of all 

conversations potentially will be recorded. Accordingly, there was no contractual obligation to record all 

conversations as alleged belatedly by Witter. 

4 
any actions were taken to erase a recording after the call with Witter. As a result, the 

new evidence does not justify modifying or disturbing the initial determination not to 

impose adverse inferences. 

2. Whether a revision in the initial credibility assessment should be revised 

The expanded evidentiary record neither reduced the credibility of Skelton and 

TransAct nor increased the credibility of Witter. In this connection, Witter has 

produced no new evidence showing that Witter in fact offered clear instructions to 

Skelton to cancel all working orders or that Skelton knowingly or negligently 

disregarded such instructions. As a result, Complainant has not shown that the initial 

assessment finding that Skelton's testimony was relatively more reliable than Witter's 

testimony should be revised. 

ORDER 

The new evidence discovered and produced by Complainant does not compel 

revising the initial credibility assessment and does not compel disturbing the initial 

determination not to impose an adverse inference sanction for the non-production of a 

recording of the August 16, 2007 11:30 p.m. conversation between Witter and Skelton. 

Accordingly, the complaint is hereby dismissed. 

r 10,2014. 

5