UNITED STATES OF AMERICA 

Before the 

COMMODITY FUTURES TRADING COMMISSION 

In the Matter of: 

CFTC Docket No. CRAA-12-02 

William S. Scott v. National Futures Association : OPINION and ORDER 

William S. Scott appeals a National Futures Association (the "NF A") Membership 

Committee (the "Committee") order (the "NF A Order") revoking his registrations as a 

commodity trading advisor ("CTA") and associated person ("AP"). The Committee revoked 

Scott's registrations under Section 8a(3)(M) of the Commodity Exchange Act ("CEA" or "Act"), 

7 U.S.C. § 12a(3)(M), for "good cause" because the Florida Supreme Court suspended Scott 

from practicing law for three years. See The Florida Bar v. William Sumner Scott, Case No. 

SCOS-1145 (June 10, 2010). 

Scott appeals the NF A's order by challenging the validity of the findings by the Florida 

Supreme Court. Throughout the hearing before the NF A, Scott repeatedly questioned the 

decision of the Florida Supreme Court, providing facts intended to demonstrate that the decision 

to suspend his law license was incorrect. The NF A applied collateral estoppel principles and did 

not look behind the Florida decision in revoking Scott's registrations. 

For the reasons below, the Commission affirms the NF A Order revoking Scott's 

registrations as an AP and CT A. 
BACKGROUND 

Scott was registered as an AP and CTA from July 8, 2005, until the NFA revoked his 

registration on October 5, 2011. On June 10, 2010, the Florida Supreme Court suspended Scott 

from the practice oflaw for three years. See The Florida Bar v. William Sumner Scott, Case No. 

SC05-1145 (June 10, 2010) (the "Florida Order"). The Florida Supreme Court suspended Scott 

because he violated professional conduct rules by representing the interests of a number of 

individuals and entities whose interests were all directly adverse to one another. The Florida 

Supreme Court's factual determinations underpinning the decision are summarized below. 

Beginning in 1995, Scott represented Private Research, Inc. ("PRI"), a company owned 

by Richard Maseri, in an injunctive action filed with the United States District Court for the 

Southern District of Florida by the Commission. The Commission's Complaint charged Maseri 

with fraud, conversion of customer funds, and registration violations. In 1997, the district court 

permanently enjoined Maseri and PRI from engaging in fraud. Florida Order at 2. 

In 1998, Maseri issued advertisements soliciting investors in a commodities brokerage 

venture. Steven Frankel responded to the advertisement. Id. In July 1998, Maseri hired Scott to 

represent him in negotiations with Frankel aimed at establishing a forex brokerage company. Id. 

at 3. Frankel, Maseri, and Scott met on August 4, 1998, to sign a stockholders' agreement for 

the venture, called the International Currency Exchange Corporation ("ICEC"). Before Maseri 

arrived, Frankel questioned Scott about Maseri. Scott did not tell Frankel of the Commission's 

suit against Maseri, the court order against him, or Maseri's criminal history. Id. Instead, Scott 

made statements that he admitted were intended to indicate to Frankel that Maseri was "an 

honest man" so as to preserve the agreement. Id. at 3, 11. 

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In November 1998, the district court entered a monetary judgment in favor of the 

Commission against Maseri in the PRI case. Due to Maseri's ownership interest in ICEC, the 

court froze ICEC's funds. Maseri, as ICEC's president and chief operating officer, hired Scott as 

ICEC's counsel to unfreeze ICEC's assets. Id. at 4. 

On January 15, 1999, the district court placed ICEC's assets in receivership. The 

receiver was able to distribute ICEC's assets to customers, although it would not make them 

whole. Scott filed a motion on behalf of ICEC to contest the distribution. 

Meanwhile, however, Scott represented at least three ICEC customers in related litigation 

over the next three years, claiming that Maseri and ICEC had acted illegally. Id. at 5-6. Scott 

also filed a separate action against Maseri and Frankel on behalf of an ICEC customer claiming 

that the customer had the right to a full distribution. Id. at 6-7. 

Based on these factual findings, the Florida Supreme Court determined that Scott violated 

professional conduct rules by representing the interests ofiCEC, Maseri, Frankel, and ICEC's 

customers. Id. at 10-16. Each ofthese parties had claims to the same pool of money, and their 

interests were all directly adverse to one another. Id. at 15. The Florida Supreme Court also 

ruled that Scott made a misrepresentation to Frankel when he indicated to Frankel that Maseri 

was an honest man. Id. at 16. The Florida Supreme Court further ruled that Scott's failure to tell 

Frankel about the CFTC suit against Maseri, the subsequent court order, or Maseri's criminal 

history constituted a misrepresentation. Id. at 17. 

On the basis of the suspension, the NFA's President issued a Notice oflntent to Revoke 

Registrations (the "Notice oflntent") to Scott on December 21, 2010. The Notice oflntent 

alleged that the Florida Supreme Court's suspension of Scott from practicing law constituted 

"good cause" to disqualify Scott from registration under Section 8a(3 )(M) of the Act. In his 

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Response to the NFA's Notice of Intent and at the subsequent hearing, Scott admitted that the 

Florida Supreme Court had suspended his law license for three years. However, he argued that 

the suspension did not constitute "good cause," and he attempted repeatedly to challenge the 

basis ofthe Florida Supreme Court's decision. 

Specifically, Scott stated at the hearing that he had never represented Frankel, and thus 

there was no basis for the Florida action. Transcript of Hearing before the Committee In the 

Matter of William Sumner Scott, NF A Case No. 1 0-REG-026 (April 20, 2011) at 25. He 

described the Florida Supreme Court decision as "nonsense," and "absurd," and argued that the 

suspension had no relation to his duty to serve the public as a registrant. Id. at 25, 31. Scott 

testified that he believed that ICEC had enough funds to pay customers back in full, and that it 

was unable to do so because of fees generated by the receiver. I d. at 52. When Scott realized 

that the customers would not receive all of their money back, he took it upon himself to return 

their money. Id. 52. 

On October 5, 2011, the Committee issued the NFA Order revoking Scott's registrations 

as aCTA and AP. The Committee found that the fact that Scott was subject to an outstanding 

order from the Florida Supreme Court suspending his license to practice law in Florida 

constituted good cause to disqualify him under Section 8a(3 )(M) of the Act. NF A Order at 13. 

In reaching this conclusion, the Committee followed "collateral estoppel principles" to reject 

Scott's challenges to the Florida Supreme Court decision itself. The Committee further found 

that Scott's conduct as described by the Florida Supreme Court and in evidence before the 

Committee demonstrated "a lack of honesty and an inability to comply with regulatory 

requirements, which constitute[ d] additional grounds to disqualify him from registration for other 

good cause .... " I d. 

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In his appeal, Scott continues to challenge the Florida Supreme Court decision. He 

argues that his obligations as a Series 3 holder required him "to take all actions available to 

achieve 100% restitution, plus interest, for the public customers." Scott Appeal Brief at 16. 

Scott further argues that "[t]he Florida Supreme Court ruled that Florida Bar Rules supersede a 

lawyer's obligation to protect public brokerage customers from loss. Nothing could be further 

from the truth." !d. at 17. 

Scott has also filed a number of motions related to the instant appeal. On October 13, 

2011, he filed a Motion for Stay of Revocation of Registrations. The NF A filed a response on 

October 24, 2011. On November 1, 2011, Scott filed a Motion to Strike NFA Response to Scott 

Motion for Stay. On December 11, 2012, Scott filed a Motion to Re-instate Series Three 

Designation. On September 12, 2013, Scott filed a Petition for Reinstatement of Series Three 

Designation. 

DISCUSSION 

I. The Committee's Application of Collateral Estoppel Principles to the Florida 

Supreme Court decision 

In his appeal, Scott argues that the NF A erred in not allowing him to "challenge the 

validity of the findings" by the Florida Supreme Court. !d. at 1-2. The NF A, conversely, argues 

that the Committee "properly refused to allow Scott to re-litigate the Florida Supreme Court 

case. Brief ofNational Futures Association (the "NFA Brief') at 7-9. 

The NF A argues that CFTC case law is clear that the NF A's Membership Committee is 

not the proper forum to consider the validity of a court order like the one at issue. See In re 

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Bryant, [1990-1992 Transfer Binder] Comm. Fut. L. Rep. (CCH) ~24,847 at 36,995 (CFTC Apr. 

18, 1990). The NF A further states that any challenges to the Florida Supreme Comi decision are 

better left to the Florida Supreme Court itself. NFA Brief at 7; Bryant at 36,995. 

The NF A argues that the Committee properly applied collateral estoppel principles to 

prevent Scott from re-litigating the issues decided by the Florida Supreme Court. In re Lama, 

[1987-1990 Transfer Binder] Comm. Fut. L. Rep. (CCH) ~24,294 at 35,287 (CFTC Aug. 2, 

1988); see also In re Clark, [1996-1998 Transfer. Binder] Comm. Fut. L. Rep. (CCH) ~ 27,032 at 

44,929-44,930 (CFTC Apr. 22, 1997). We agree. In Clark, the Commission described four 

factors to be considered in determining whether to apply collateral estoppel: 

(1) ... [W]hether the forum resolving the issue in the first case was a "judicial-like" 

decision-maker that was acting within its jurisdiction; (2) whether the issue was actually 

litigated; (3) whether the issue was actually and necessarily resolved; and ( 4) whether the 

issue that was resolved in the first case is in substance the same as the issue in the second 

case. 

As NF A argues, the Committee correctly determined that all four factors were met here. 

The Florida Supreme Comi is obviously a judicial decision-maker. The hearing in Florida was 

an adversarial proceeding conducted like a trial and actively litigated by the parties. Scott 

defended himself aggressively. The Florida Supreme Court resolved the matter by finding that 

Scott had violated professional conduct rules and issuing an order suspending him from 

practicing law in Florida for three years. Finally, it was Scott's suspension from the practice of 

law, resulting directly from his conduct with Maseri, Frankel, and ICEC investors, which formed 

the basis of his disqualification proceeding at NF A. For these reasons, NF A did not err in 

applying collateral estoppel principles and not considering evidence that the Florida Supreme 

Court's suspension of Scott was wrongly decided. Neither the NFA nor the CFTC is the proper 

forum to consider the validity of the Florida Supreme Court's order, as neither the NF A nor the 

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CFTC has jurisdiction over the practice oflaw in Florida. Bryant at 36,995. The NFA properly 

refused to disregard that court's resolution of these issues, as do we. 

Similarly, we reject Scott's argument that NFA ought to have admitted evidence that 

Scott offered in support of his argument that the Florida Supreme Court erred. Moreover, as 

NF A also points out, during the course of the NF A hearing, Scott admitted many of the facts 

which led to the Florida Supreme Court's decision. For example, Scott admitted that he led 

Frankel to believe that Maseri was an honest man and failed to disclose to Frankel various public 

facts about Maseri's legal and criminal history. There is, accordingly, no basis to overturn the 

Committee's decision. 

II. The Committee's Determination that Scott's Mitigation and Rehabilitation 

Evidence Failed to Overcome the Presumption of Unfitness for Registration 

The NF A found that Scott did not carry his burden by mitigating his underlying 

disqualification or showing that he had been rehabilitated. NF A Order at 16. Scott argues that 

his efforts to return customer money mitigate his professional misconduct. 

The NF A Order found that the Florida Supreme Court decision constituted "good cause" 

to statutorily disqualify Scott from registration under Section 8a(3 )(M). The NF A went on to say 

that "[p ]roof of a statutory disqualification raises a rebuttable presumption that the applicant is 

unfit for registration." I d. at 15. According to NF A, the burden then shifts to the applicant to 

show that, notwithstanding the statutory disqualification, his registration will not pose a 

substantial risk to the public. In re Antonacci, [1990-1992 Transfer Binder] Comm. Fut. L. Rep. 

(CCH) ~ 24,835 (CFTC Apr. 18, 1990); In re Horn [1990-1992 Transfer Binder] Comm. Fut. L. 

Rep. (CCH) ~ 24,836 (CFTC Apr. 18, 1990); In re Walter, [1987-1990 Transfer Binder] Comm. 

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Fut. L. Rep. (CCH) ~24,215 (CFTC Apr. 14, 1988); In re Akar, [1986-1987 Transfer Binder] 

Comm. Fut. L. Rep. (CCH) ~22,927 (CFTC Feb. 24, 1986). 

To demonstrate that he posed no risk to the public, Scott could provide evidence of 

mitigating circumstances relating to the wrongful conduct or evidence of rehabilitation. Walter 

at 35,013; Horn at 33,889; Antonacci at 36,933. NFA argues that Scott did not provide sufficient 

evidence of either. NF A points out that the "only potentially mitigating evidence Scott offered 

with respect to the suspension of his law license was that he was purportedly acting in the public 

interest when he ignored the attorney disciplinary rules prohibiting representations adverse to a 

former client." NF A Brief at 11. The NF A gave little weight to Scott's testimony in this regard 

due to his prior misrepresentations, and further rejected the argument as "another way of saying 

that the end justifies the means." NFA Order at 17. 

The Commission finds that the NF A did not err in finding that Scott had failed to provide 

sufficient evidence of mitigation or rehabilitation. The NF A reasonably found that Scott's 

explanation of a higher duty to investors that would supersede his duties in regard to conflicts 

was not sufficient to show mitigation. Scott cites nothing that supports the existence of a 

countervailing duty to investors that would somehow supersede his duty to his clients; even if 

such a duty existed, the conflicting representations undertaken by Scott would appear to 

compromise his ability to adequately protect ICEC investors. In regard to this issue in particular, 

Scott's conclusion that the NF A has failed to demonstrate that Scott is a threat to the public boils 

down to a claim that the NF A did not correctly weigh the evidence before it. Scott has not 

demonstrated that, as a matter of law, NF A could not find that Scott is subject to statutory 

disqualification from registration based upon the facts before it. 

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III. The Committee's Refusal to Consider Scott's Prior Regulatory History as 

Rehabilitation Evidence 

Scott argues that he should have been permitted by the NF A to "offer evidence of his 

regulatory history both prior and after the disqualifying event in mitigation to prove he is not a 

threat to the public." Scott Appeal Brief at 1. Specifically, Scott states that the Committee failed 

to take into account his forty years as aCTA and lawyer without any adverse regulatory issues. 

NF A responds that the Committee was correct in refusing to consider Scott pre-disqualification 

conduct, as such conduct does not qualify as rehabilitation. The NF A points out that the 

Commission only looks to rehabilitation evidence arising since the time of the wrongful conduct. 

In re Walter, [1987-1990 Transfer Binder] Comm. Fut. L. Rep. (CCH) ~24,215 at 35,010 (CFTC 

Apr. 14, 1988); In re Horn, [1986-1987 Transfer Binder] Comm. Fut. L. Rep. (CCH) ~ 23,731 at 

33,889 (CFTC July 21, 1987). 

The Commission finds that NF A did not err in prohibiting Scott from presenting 

rehabilitation evidence occurring before the date of his unlawful conduct, as case law is clear that 

such evidence does not indicate rehabilitation. 

IV. Scott's Pending Motions 

As described above, Scott moved for a stay ofthe NFA's revocation ofhis CTA and AP 

registrations pursuant to Commission Regulation 171.22(c), 17 CPR 171.22(c). Scott has failed 

to establish that a stay is necessary here. This motion is moot in light of the Commission's 

conclusion that the NFA did not err in revoking his registrations. Accordingly, Scott's motion is 

denied. Scott's motion to strike the NFA's response to his motion for a stay is also denied, as 

Scott has provided no legal support for the contention that the NFA's response should be 

stricken. 

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Finally, Scott has petitioned the Commission to reinstate his Series 3 designation. In 

support of his petition, Scott argues that he has completed his three-year suspension from 

practicing law in Florida and therefore is eligible for reinstatement. However, the NF A Order 

revokes Scott's registration for "good cause" under Section 8a(3)(M) of the Act. There is 

nothing in the Act or the NF A Order which limits the revocation to the time period of Scott's 

suspension from practicing law. Accordingly, Scott's petition to reinstate his Series 3 

designation is denied. 

CONCLUSION 

For the foregoing reasons, the Commission affirms the NFA's order revoking the 

registration of William Scott. The Commission also denies Scott's various ancillary motions as 

described above. 

IT IS SO ORDERED. 

By the Commission (Chairman GENSLER and Commissioners CHILTON, O'MALIA and 

WETJEN). 

Melissa D. Jurgens 

Secretary of the Commission 

Commodity Futures Trading Commission 

Date: November 22, 2013 

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