FI L ED U.S. COURT OF APPEAL S EL EVENTHCI RCUI T J uly 21, 2009 THOMAS K. KAH

N CL ERK [PUBLIS H]
IN THE UN ITED STATES COURT OF APPEALS FOR THE ELE VENTH CIRCUIT

__ __ __ __ __ __ __ __ __ __ __ __ No. 0 6- 14 27 0

__ __ __ __ __ __ __ __ __ __ __ __ D. C. Dock etNo. 0 4- 80 13 2- CV-WPD COMM ODITY FUTURES TRADING COMMISS ION,
Pl ai nt iff -Ap pe ll an t,
ve rs us GIBRALTAR MONETARY CORP., INC., CHARLES I. FREMER , THOMAS J. CLANCY, EDWARD T. JOHNSON, FOREX CAPITAL MARKETS, LLC, JAYSON KLINE,
Defen da nt s- App el le es .

__ __ __ __ __ __ __ __ __ __ __ __ App eal fro m

th e Uni te d S ta te s Di st ric t Co urt fo r th e So uthe rnDis tri ctof F lo rid a

__ __ __ __ __ __ __ __ __ __ __ __ _ (J ul y 21 , 20 09 )Befo re BI RCH an d M ARCUS, Ci rcu itJu dg es , andFORRESTER, Dis tri ctJu dg e. * PER CURI AM: App el la nt , th e Co m

m od ity Fu tu res Trad in g C omm is si on (“ CFTC” ), ap pe al s fro m th e d is tri ctco urt’s n on -jury tria l o rd er g ran ti ng jud gm en t i n fa vo r of App el le e, Fo rex Cap it al Mark et s (“ Fx CM” ), on th e CFTC’s cl ai m th atFx CM sh ou ldbe he ldvi cari ou sl y li ab le un de r 17 C.F.R. § 1.2 forGib ral ta r Mo ne ta ry Co rp or at io n, In c.’s (“ GMC” ) vi ol at io ns of t he Co m m od it ie s Ex ch an ge Act (“ CEA”) an d C FTC Reg ul at io ns , 17 C.F.R. § 32 .9(a ) an d (c ). The d is tri ctco urt 1 fo un d tha t (1 ) th e v ic ari ou s l iabi li ty pro vi si on in th e CEA, 7 U.S.C. § 2(a )(1 )(B) , on whi ch th e CFTC r el ie d d idno t ap pl y to th e tr an sa ct io ns in vo lv edin th is m at te r; (2 ) th e id en ti cal ly w or de d v ic ari ou s l iabi li ty regu la ti on , 17 C.F.R. § 1.2 co ul d b e ap pl ie d t o t he tra ns act io ns in th is m at te r; ( 3) th e st an da rdforvi cari ou s l iabi li ty
un de r ei th er the vi cari ou s l iabi li ty regu la ti on or t he CEA is th e co m m on law t es t
Ho n o rable J
. Owen For

rester , United States District J udg e for the Norther n District of * Geor g ia, sitting by

designation. § 32.9 entitled, “F raud in c onnection with commodity option transactions” state s: 1 It shall be unlawful f or any person dire ctly

or indirec tly : (a) To che at or de fra

ud or attempt to che at or de fra ud any other pe rson; (b) To make or cause to be made to any other person any false repor t or statement there of or cause to be en t ere d for any person any false rec ord there of; (c ) To dece ive or attempt to dece ive any other person by any means whatsoeve r; in or in connec tion with an offe r to enter into, the entry into, o r the confirmation of the execution of, any commodity

option transaction. 2fo r ag en cy ; an d (4 ) Fx CM c ou ldno t b e h el d v ic ari ou sl y li ab le as GM C’s pr in ci pa l
un de r th is tes t. On ap pe al , th e CFTC a rg ue s tha t (1 ) bo th th e v ic ari ou s l iabi li ty statut e an d th e v ic ari ou s l iabi li ty regu la ti on ap pl y to th is m at te r; ( 2) th e te stforvi cari ou s li ab il it y un de r ei th er o f th es e p ro vi si on s i s a “ to ta li ty of th e ci rcu m st an ces ” st an da rd ; an d (3 ) un de r ei th er a “ to ta li ty of th e ci rcu m st an ces ” o r a co m m onlaw ag en cy st an da rdth e d is tri ctco urt co m m it te d c le ar erro r in fin di ng th atGMC was
no t ac ti ng as F xC M’s ag en t. Fo r th e rea so ns setforthbe lo w, we affi rm th e d is tri ct
co urt’s jud gm en t i n fa vo r of Fx CM a ndho ldth atun de r 7 U.S.C . § 2 (a)( 1) (B) a nd 17 C.F.R. § 1.2 , th e te stfor vi cari ou s l iabi li ty is co m m on law ag en cy , andth e di st ric t co urt d idno t co m m itcle ar erro r in fin di ng un de r th is tes t tha t GMC was
no t ac ti ng as F xC M’s ag en t wh enitvi ol at edth e CEA. I. Ba ck gr ou nd App el la ntCFTC i s an in de pe nd en t fe de ral reg ul at ory ag en cy th at adm in is te rs an d e nf

or ces th e CEA an d the reg ul at io ns pro m ul ga te d u nd er i t. Defen da ntGMC was a Fl or id a co rp or at io n wh ic h s ol ic it edm em be rs of the publ ic to in ve stan d t rad e infor ei gn cu rren cy op ti on s an d a dv is edth es e m em be rs on tra di ng . GMC was no t an d was no t re qu ire d t o b e reg is te redwith t he CFTC. Defen da nt s J ay so n Kl in e, Ch arl es Frem er, Edwa rdJo hn so n, an d Th om as Cla nc y 3were o ffi cers an d e m pl oyees o f GMC. Pri orto th e in co rp or at io n o f GMC, Kl in e, Frem er, an d J oh ns on were i nv ol ve d wi th ot he r co m pani es ch arg edwith fr au d b y th e CFTC. Atth e ti m e rel ev an t t o t hi s ac ti on , Kli ne was und er an en fo rcem en t
or de r an d c eas e an d d es is t o rd er fro m th e CFTC. Fx CM i s t he worl d’s l arg es t
no n- bankfutur es co m

m is si on m erch an t o r “ FCM ” d eal in g e xc lu si ve ly in re ta il fo rei gnex ch an ge , or fo rex . FxC M i s re gi st eredas a n F CM wi th th e CFTC andth e NFA. FxC M trad es sp otfor ex an d fo rex op ti on s i n p rin ci pa l-t o- pr in ci pa l t rad es . On Ap ril 11 , 20 02 , FxC M an d GM C s ig ne d a n In tro du ci ng Agre em en t (“ th e Agr eem en t” ) an d e nt eredin to a bu si ne ss rel at io ns hi p. Un de r th e te rm s o f th e Agr eem en t, GMC ag reedto so li ci t cu st om ers to en ga ge in for ex op ti on s tra ns act io ns an d t o re fer t he m ex cl us iv el y

to Fx CM t o trad e. Every ti m e a GMC
cu st om er m ad e a trad e wit h F xC M, Fx CM wo ul d p uta co m m is si on in anacco un t fo r GMC. Fx CM c la im s t ha t i t d idno t i nv es ti ga te GMC b efo re en te rin g i nt o t hi s rel at io ns hi p a ndth atitwas u na ware t ha t i ts off ic ers an d e m

pl oyees h adpre vi ou sl y be ench arg edwith fr au d. Un de r th e te rm s o f th e Agr eem en t, Fx CM d idno t “ (a)
co nt ro l Gi br al ta r’s lo cat io n; (b) co nt ro l o r supe rv is e th e h iri ng of Gi br al ta r
em pl oyees; (c) trai n, s up erv is e, ordi sc ip li ne Gib ral ta r em pl oyees; (d) co nt ro l, de ve lo p, o r supe rv is e th e tr ad in g s tra te gi es of Gi br al ta r; ( e) co nt ro l, d ev el op , or

4supe rv is e Gib ral ta r’s m ark et in g p ract ic es ; (f ) sh are c omm on em

pl oyees wi th Gib ral ta r; o r (g ) sp li t co m m is si on s wi th Gib ral ta r.” (R-2 87 at 6 ). GMC s ol ic it edcu st om ers ba se d upo n F xC M’s cu st om er qua li fic at io n st an da rd s. GMC sen t ea ch cu st om er a p ack ag e o f fo rm s n eces sa ry to op ena tra di ng acco un t wi th Fx CM. Th is pa ck ag e in cl ud eda Ri skDis cl os ur e St at em en t, a Not ic e to Trad ers , a Trad er Ag reem en t, anFX Agre em en t, an Acco un t 2 3

This form stated: 2 FxCM does not control, an d cannot endorse or vouch for the acc urac y or completene ss of any information or advice Trade r may have rec eived or may rec eive in the future from Refer

ring Ag ent or from any other person not employed by FxCM reg ardingfore ign c urre ncy or exchang e (“For ex”) tradingor risks involved in such trading
. I f R ef

erri ng Ag ency or any other third party provides Trade r with information or advice reg arding For ex trading , FxCM shall in no way be responsible fo r any loss to Trade r resulting from Trade r’s use of such information or advice
. Trade r understands that Refer ring Ag ent and many t h i rd p arty vendors of trading sy stems, course s, programs, rese arc h or rec ommendations are not regulat ed by a g overnme nt ag ency . (R-287 at 7). This agree ment stated: 3 Trade r fully acknow ledg es that should Trade r grant trading authority or control over Trade r’s acc ount to a third party (“Tr ading Ag ent”) , whether on a discretionar y or non-discre tionary basis, FxCM shall in no way be responsible for revie wing Trade r’s choice of s u c h T r a d ing Ag ent nor making any rec ommendations with respe ct there to. Trade r understands that FxCM makes no war ranties nor repr esenta

tions conce rning the Trading Ag ent, that FxCM shall not be responsible for any los s to Trade r occa sioned by the actions of the Trading Ag ent and that Fx C M does not, by implication or otherwise, endorse or approve of the opera ting method of the Trading Ag ent. I f Trade r g ives Trading Ag ent authority to exercise any of its rights over Trade r’s a ccount( s), Tra der unde rstands that Tra der doe s so at Trade r’s own risk. (R-287 at 8). 5App li cat io n F orm , anda Lim it edPo wer o f Att orne y Fo rm . The cu st om ers m ai le d

4 th ei r m on ey

to Fx CM a ndth ei r co m

pl et edform s t o GM C, whi ch ch eck edov er th em to en su re the cu st om er h adfil le d t he m ou t co rrec tl y , andth enforward ed th em on to Fx CM. Aft er the cu st om ers were s ig ne d up, GMC advi se d the m on tra de s an d t he cu st om ers ha d a cces s t o o nl in e res earc h thr ou gh Fx CM. GMC ha d 27 3 c li en ts ; o nl y

th irt een pro fit edfro m

th ei r in ve st m en t wi th Fx CM; m os t o th ers lo stth ei r en ti re i nv es tm en t. On Fe brua ry

10 , 20 04 , th e CFTC f

il edanen fo rcem en t ac ti on ag ai ns t Fx CM
an d n am edGMC, Kli ne , Frem er, Ch an cy , andJo hn so n a s d efen da nt s. Th e CFTC ch arg edth atGMC fraudul en tl y so li ci te d c us to m ers to tra de off -ex ch an ge op ti on s wit h F xC M an d i n d oi ng so vi ol at edth e CEA, 7 U.S.C. § 1, et seq . , andth e reg ul at io ns pro m

ul ga te d u nd er i t, 1 7 C .F.R. §§ 1, et seq . The co m

pl ai ntch arg ed GMC wi th de riv at iv e li ab il ity forit s emplo y ees ’ frau d u nd er a t he ory of
res po nd eatsupe rio r an d F xC M wit h d eri va ti ve li ab il it y forth is same fraudun de r
anag en cy

th eo ry . The co urt u lt im at el y en te redde fau ltjud gm en t ag ai ns t GMC
. Cl an cy , as GM C’s co m

pl ia nc e o ffi cer, ex ecu te d aco ns en t o rd er an d a gr eedto te st ify for the CFTC. The in st an t ap pe al ari se s o utof t he no n- jury tria l o f th e

FxCM mandated i n the Agree ment that GMC require all customers to sign the Power of 4 Attorney
. 6rem ai ni ng th ree i nd iv idua l d efen da nt s an d F xC M tha t o ccu rredbe twee n

Aug us t 3 0 a ndSep te m

be r 12 of 2 00 5. The ev id en ce attri al co ns is te d p rimaril y of t he tes ti m on y

of s ev enGMC
cu st om ers , on e st at e se cu rit ie s co m pl ia nc e o ffi cer, o ne CFTC i nv es ti ga to r, two rep res en ta ti ve s fr om

Fx CM, two ex pe rt wi tn es se s, Cl an cy , andrem ai ni ng in di vi du al de fen da nt s J ay so n Kl in e, Ch arl es Frem er, an d EdwardJo hn so n. The sev enGMC cu st om ers tes ti fie d a t tria l ab ou t wh atth ey were t ol d b y GMC ab ou t fo rex in ve st m en t. The ir t es ti m on y rev eal edth at(1) GMC d eem ph as iz edth e ri skof f

or ex in ve stm en t an d (2 ) em be ll is he d t he po te nt ia l fo r ga in s
an d t he ga in s t ha t t he ir e xi st in g c us to m ers were ex pe rie nc in g. GMC ag en ts pe rs ua de d c us to m ers to bu y for ei gn ex ch an ge op ti on s fo r rea so ns ass oc ia te d wi th
cu rren t ev en ts su ch as S ep te m be r 11 , 20 01 , andth e Ira q war . GMC em pl oyees d id
no t ex pl ai n t o c us to m ers th at(1) th ere was a ch an ce tha t t he ir o pt io ns wou ld
ex pi re wo rth le ss ; (2 ) cu rren t ev en ts were al read y fact or edin to th e p ric e o f fo rex op ti on s; (3) ne arl y

all Gib ral tar in ve st or s wer e lo si ng m on ey onth ei r in ve stm en ts ; (4 ) se ve ral em

pl oyees a t GMC ha d wo rk edforin ve st m en t fi rm s tha t wer e
sa nc ti on edforsal es frau d; an d (5 ) a p erm an en t i nju nc ti on an d c eas e an d d es is t
or de r ha d b een en te redag ai ns t Kl in e to en joi n h im forco m m it ti ng co m

m od it ie s frau d.
7The cu st om ers ’ te st im on y als o re ve al edth at(1) GMC ag en ts co ach ed
cu st om ers on whatto say to GM C’s co m pl ia nc e o ffi cer wh enqu es ti on edab ou t th ei r un de rs tand in g o f th e ri skass oc ia te d wi thfor ex tra di ng ; (2 ) so m e o f GMC’s
cu st om ers be li ev edth atGMC an d F xC M were work in g t og ethe r; ( 3) so m e
cu st om ers th ou gh t t he ir i nv es tm en t wo ul d b e sa fer b ecau se Fx CM was li cen se d
an d re gu la te d; (4) so m e cu st om ers co nt act edFx CM d ire ct ly for i nf orm at io n o n
acce ss in g o nl in e tr ad in g a cco un ts an d t ax advi ce o n l os s wri te -o ffs ; an d (5 ) so m e
cu st om ers co m

pl ai ne d d ire ct ly to Fx CM abo utGMC’s m an ag em en t o f th ei r
acco un ts . One cu st om er t es ti fie d t ha t h e as ke d F xC M wh ethe r he co ul d t rad e di rect ly w it h F xC M u si ng th e acc ou ntth atwas c reat edwhen GMC ac te d a s h is ag en t; Fx CM i nf

orm edhi m

th athe wou ldha ve to op ena ne w acco un t. In20 02 , th e Uta h Dep art m en t o f Co m m erce in ve st ig at edGMC, an d a n i nv es ti ga to r po se d
as anin te res te d c li en t. At tria l, the in ve st ig at or tes ti fie d t ha t a GM C ag en t m ad e
co m m en ts to he r si m il ar t o t ho se tes ti fie d t o b y th e rea l GMC cu st om ers . Whe n fo rm er co m

pl ia nc e o ffi cer C la nc y

tes ti fie d a t t ria l, h is tes ti m on y
rev eal edth atGMC re fere nc edFx CM’s re gi st eredan d re gu la te d s ta tu s t o m ak e
cu st om ers m or e rel ax edab ou t p la ci ng tra de s t hr ou gh GMC an d t ha t i f GMC
cu st om ers co m

pl ai ne d t o F xC M, th enFx CM d ire ct edth e co m pl ai nt s b ackto

8GMC. On e p art ic ul ar e- m ai l m es sa ge fro m Fx CM t o C la nc y

fol lo win g a
co m pl ai ntby a GMC cu st om er, o n wh ic h the co urt re li ed , st at ed : [a]s y oureca ll , we hav e al read y di sc us se d t he ne edfor

y ougu y s t o m on it ory ou r m ark et in g a dv ert is in g m etho ds , andI feel th atI m us t re em ph as iz e th is . As th es e co m pl ai nt s re fle ctonth e way we do bu si ne ss . I m

us t n ow as k youto gi ve m e a wri tt ende sc rip ti onof t he ki ndof a dv ert is in g/m ark et in g m etho ds y ouare u si ng , in cl ud e a co py of an y m at eri al y oum ay

us e. (R-2 87 at 2 5) . Clan cy

expl ai ne d t he no rm al pro cedur e fo r pl aci ng a tr ad e: He
wou ldcal l t he Fx CM o rd er d es k a ndgi ve Fx CM t he cli en t’s n um be r, qu an ti ty of pu rch as e, an d m on thof e xp ira ti on ; t he Fx CM e m pl oyee res po nd edwith ast rik e pr ic e; an d h e g en eral ly accep te d t he pri ce o ffer edwitho utm ak in g aco un te ro ffer
. He ex pl ai ne d t ha t GMC sel ect edth e ex pi rat io n d at e o f th e o pt io n, wh il e th e
cu st om ers sel ect edth e qua nt it y of o pt io ns to pu rch as e. On t he ba si s o f th e ab ov e fac ts an d t es ti m on y , th e d is tri ctco urt fo un d t ha t (1 ) Defen da ntJo hn so n v io la te d 7 U.S.C. § 6 c(b ) an d 1 7 C .F.R. § 3 2.9 (a) & (c); 5 6 (2 ) Defen da nt s Kl in e an d F rem er v io la te d 7 U.S.C. § 1 3c (b ) an d C FTC 7
This section makes it unlawful for a person to enter into any commodities option transac tion 5 “contr ary to any rule, reg

ulation, or order of the [C FTC] prohibiting any such transac tion or allowing any such transac tion un d er s u ch t er m s and conditions as the [C FTC] shall presc ribe.” 7 U.S.C. 6c(b) . The unde rly

ing r ule violated her e is Regulation 32.9. As stated in note 1, supra , section (a ) prohibits cheating or defr auding in connec tion with 6 a commodity

option transaction, and se ction (c) prohibits deceivingby any means whatsoever. Any person who, direc tly or indirectly , controls any person who ha s 7 violated any provision of this chapte r or any of the rules, regulations, 9Reg ul at io n 1 .2; an d (3 ) Defen da ntKli ne vi ol at ed7 U.S.C. § 9. The co urt o rd ered 8 Defen da nt s Kl in e, Frem er, an d J oh ns on to pa y m or e th an$2 ,75 2,3 77 .50 in
res ti tu ti on to 25 3 o f GMC’s cu st om ers . The co urt al so en te redciv il pe na lt ie s ag ai ns t t he se in di vi du al s an d g ran te d i njunc ti ve rel ie f. The co urt d ecl in edto ho ldFx CM v ic ari ou sl y li ab le forth e act io ns of GM C
an d i ts em

pl oyees. Th e co urt fo un d t ha t t he vi cari ou s l iabi li ty pro vi si on of t he CEA di d n otap pl y

to th e rel at io ns hi p b etweenFx CM a ndGMC, b utth atth e id en ti cal ly w or de d v ic ari ou s l iabi li ty regu la ti on pro m ul ga te d b y

th e CFTC d id ap pl y . The d is tri ctco urt d is cu ss edth e st an dardforvi cari ou s l iabi li ty usi ng th e la ng ua ge of b oth c omm onlaw ag en cy an d t he “ to ta li ty of th e ci rcu m st an ces .” 9 The co urt u lt im at el y

rel ie d, h owe ve r, on a th ree- pa rt t es t i t drew fro m W eb st er v.

or orde rs issued pursuant to this chapter may be held liable f

or such violation in any action brought by the Commi ssion to the same extent as such controlled person. In such action, the Commi ssion has the burden of proving that the controlling person did not act in g ood faith or knowing ly induced, direc tly or indirectly , the act or acts constituting the violation. 7 U.S.C. § 13c(b). This section entitled, “Exclusion of perso n s f ro m p riv il e g e o f ‘ re g is ter e d e ntities,’ proce dure 8 for exclusion; revie w by court of appea ls,” grants the Commi ssion the power to revoke and suspend tradingprivileg es and r eg istration. 7 U.S.C. § 9. The district court’s opinion addre ssed both appar ent and implied actua l authority and found 9 neither. The parties’ arguments on appea l focuse d on implied actua l authority , and we addre ss only that portion of the district cour t’s opinion here. 10Aiel lo , No. 9 8- R0 05 , 98 -R0 09 , 98 -R0 10 , R07 5, 1 99 9 C FTC Lex is 26 at * 97 -9 8

(CFTC Feb . 1, 1 99 9)
. 1 0 To d em on st rat e th e ex is te nc e o f im pl ie d a ctua l au th or it y , a pa rty m us t pr ov id e ev id en ce tha t: (1) th e p ur po rte d a ge ntan d p ur

po rte d pr in ci pa l ac qu iesc ed to th e rel at io ns hi p, (2 ) th e p ur po rte d p rin ci pa l ga ve su ff ic ie nt su pp or t to th e p ur

po rte d a ge nt , and(3) th e p ur po rte d pr in ci pa l exer cise d c on tr ol ov er the pu rp orte d a ge nt . (R-2 87 at 4 0 (e m

ph as is ad de d) ). The di stric t co urt fo un d t ha t t he parti es ha d n otacqui es cedto a rel at io ns hi p be cau se th e rec or d c on ta in edno ev id en ce tha t Fx CM aut ho riz edor c on do ne d t he
us e o f it s n am e b y

GMC o r th atGMC i nd ic at edto po te nt ia l cl ie nt s t ha t i t was Fx CM’s ag en t. The co urt co nc lu de d t ha t Fx CM d idno t p ro vi de GMC wi th
su ffi ci en t s up po rt b ecau se th ere was no ev id en ce i n t he reco rdth atFx CM pr ov id edGMC wi th m ark etan d re se arch rep orts , m anua ls to be us edin da y -to -d ay bu si ne ss op erat io ns , or c us to m er l ead s. Fi na ll y an al y zi ng co nt ro l, the co urt fo un d th atFx CM e xe rci se d fa r le ss co nt ro l o ve r GMC t ha n i n o th er ca se s wh ere t he pu rp orte d a ge ntwas d et erm in edto ha ve be enact in g aut on om ou sl y . The co urt fo un d i t p art ic ul arl y

rel ev an t tha t GMC an d F xC M were in co rp or at ed

The dist rict court opinion actua lly cites t o Buck ner v. Refco, In c. , C FT C Docke t No. 00- 1 0 R12 2 , 2 0 0 1 C FT C L exis 53 (CFTC April 25, 2001), and pag es 97-98. Buck ner does not contain these pag es or this authority
. We presume that the di strict court m eant W ebster g iven t he contex t and the pa g es cited. 11in de pe nd en tl y , m ai nt ai ne d s ep arat e o wne rs hi p, h adno co m m on em pl oyees, an d di d n otco or di na te th ei r sa le s ef fo rts . The CF TC ap pe al ed
. II . Dis cus si on W e m us t d et erm in e whe th er the di st ric t co urt co rrec tl y art ic ul at edth e te st fo r vi cari ou s l iabi li ty und er the vi cari ou s l iabi li ty statut e an d v ic ari ou s l iabi li ty reg ul at io n a t i ss ue an d wh ethe r th e d is tri ctco urt cl earl y erre d i n app lying th at st an da rdto fin d t ha t GMC was n otact in g a s Fx CM’s ag en t wh enitvi ol at edth e CEA. On ap pe al , th e CFTC a rg ue s tha t t he di st ric t co urt erredwhen itrequi red th atth e CFTC d em on st rat e th atFx CM “ co nt ro ll ed ” GMC i n o rd er t o e st ab li sh vi cari ou s l iabi li ty. The CF TC in si st s t ha t wh il e co nt ro l i s a r el ev an t fa ct oritis 1 1
no t d is po si ti ve , andth e CFTC h as tra di ti on al ly con si de reda m uc h b ro ad er ra ng e of ev id en ce i n C EA case s an d h as ap pl ie d ato ta li ty of th e ci rcu m st an ces tes t. The CFTC m ai nt ai ns th atha d t he co urt ap pl ie d t hi s “ to ta li ty of th e ci rcu m st an ces ” te st , itwou ldha ve fou ndFx CM v ic ari ou sl y li ab le . In the alt ern at iv e, th e CFTC
co nt en ds th atth e d is tri ctco urt erredin fin di ng th atFx CM d idno t co nt ro l GMC
.

Fx C M co n tends that the CFTC waived its argument that the vicarious liability standard 1 1 under the CEA is broade r than common law liability
. It appea rs that the CFTC properly prese rved this argument in the district court. ( See DE 332 at 87) (“Under 2(a) (1) the case law is we don’t need to show control. Under

common law ag ency

we do.” ). 12The di stric t co urt’s d et erm in at io n o f th e co rrec t s ta nd ardforvi cari ou s

li ab il it y un de r th e rel ev an t v ic ari ou s l iabi li ty pro vi si on s i s a m at te r of law wh ic h
we rev ie w de no vo . Uni te d Sta tes v. Tr ai no r , 37 6 F .3d13 25 , 13 30 (11 th Cir
. 20 04 ). The d is tri ctco urt’s d et erm in at io n re ga rd in g t he sco pe of v ic ari ou s l iabi li ty
an d t he pri nc ip al -ag en t re la ti on sh ip is a qu es ti on of f act . W oo d v . Hol id

ayInn s, In c. , 50 8 F .2d16 7, 1 73 (5t h C ir. 1 97 5) (“ The ex is te nc e an d s co pe of p rin ci pa lag en t re la ti on sh ip is ge ne ral ly for the jury to de te rm in e.”). We revi ew a d is tri ct
co urt’s fi nd in gs of f

actforcle ar erro r. Arch er v. Tra ns/Amer ic an Se rvs., Ltd. , 83 4 F.2 d 1 57 0 (1 1t h C ir. 1 98 8) ; Na vi er a N ep tu no S.A. v. All

Int ern. Fr ei

gh t Forwa rder

s, In c. , 70 9 F .2d66 3, 6 65 (11 th Cir . 19 83 ). Thi s s ta nd ardis ve ry de fere nt ia l an d we wi ll no t re ve rs e th e d is tri ctco urt u nl es s we fi ndth ataft er
m ak in g a ll cred ib il it y

ch oi ces in fav orof t he fact -fi nd er an d re vi ewin g the reco rd
as a who le , itis cle ar tha t a m is ta ke ha s b eenm ad e. Hal e Co nt ai ne r Li ne, Inc . v. Hou st on Se a Pa cki ng

Co ., Inc
. , 13 7 F .3d14 55 , 14 73 (11 th Cir . 19 98 ). Und er cl ear e rro r rev ie w, th e d is tri ctco urt’s d et erm in at io n m us t b e aff irmed “ so lo ng as i t is pl au si bl e in li gh t o f th e rec or d v ie wedin it s en ti rety .” Merri ll St even s Dr

y Doc k Co . v. M/V Y

EOCOMICO II

, 32 9 F .3d80 9, 8 16 (11 th Cir . 20 03 ) (quo ta ti on m ark s
om it te d) . In o th er wo rd s, “ whe re the re are two pe rm is si bl e v ie ws o f th e ev id en ce,

13th e fac tfi nd er’s ch oi ce b etweenth em can no t b e cl earl y

erro ne ou s.” Jemiso n v . Nagl e , 15 8 F ed . App x. 2 51 , 25 3, 2 00 5 WL 33 59 10 3, * 1 (1 1t h C ir. 2 00 5)
. A. Dis tri ct Co urt Co rrec tly Appli ed Co m m on La w Rule s o f Age ncy W e h av e d is cu ss edvi cari ou s l iabi li ty und er the CEA on a nu m be r of
oc cas io ns ; h owe ve r, th is is th e fi rs t t im e we h av e b een cal le d o n t o d et erm in e whe th er i t re qu ire s an ele m en t o f co nt ro l. Se e CFTC v . Si do ti , 17 8 F .3d11 32 1 2 (1 1t h C ir.1 99 9) (ho ld in g b ro ke rag e h ou se gu il ty for fraudof i ts ag en ts , sa le sp eo pl e o r reg is te red“ as so ci at edpe rs on s” un de r Reg ul at io n 1 .2 an d s ect io n 2( a)(1 )); JCC

, Inc . v. CFTC , 62 F.3d15 57 (11 th Cir .19 95 ) (s am e); Clay to n Bro kerag e v. Co mmodit

y Fut ur es Tra di ng

Co mmis si on , 79 4 F .2d57 3, 5 81 (11 th Ci r. 19 86 ) (ad dr es si ng em pl oyee an d e m

pl oyer si tu at io n a ndqu ot in g H.R. Re p. No. 5 65 PartI, 97 thCo ng ., 2dSes s. 1 05 , re pr in te d i n 19 82 U.S. Cod e Co ng . & Ad. News 38 71 , 39 54 (fi nd in g t ha t CEA “pr ov id es res po nd eatsupe rio r an d ge ne ral pri nc ip al -ag en t s ta nd ard s fo r im po si ng li ab il it y

onem pl oyers an d pr in ci pa ls forth e act s o f th ei r em pl oyees o r ag en ts ”)).
Be cause the district court deter mined that 7 U.S.C. § 2(a) (1)( B) could not be applied to the 1 2 instant matter, the district cour t analy zed vicarious liability

under Regula

tion 1.2; howeve r, as the district court acknow ledg ed, when a statute and a regulation contain virtually identi ca l l an gu age, interpre tations of one may be used to analy ze the other. (R-287 at 39 n.8). There fore , our holdings on the proper standard for vicarious liability under the CEA will apply to both the statute provision, 7 U.S.C. § 2(a) (1)( B) , and CFTC Regulation 1.2. We do not find it nece ssary to rule in this matter whether the district court corr ectly found that section 2(a) (1)( B) could not be applied to the instant case . 14Num ero us ot he r co urts of app eal ha ve co ns id eredth e st an da rdforvi cari ou s

li ab il it y un de r th e CEA. A m ajor it y of t he se de ci si on s, l ik e th e d is tri ctco urt op in io n h ere, u se lan gu ag e whi ch co nf la te s t he to ta li ty of th e ci rcu m st an ces tes t
an d t he co nt ro l t es t fo r co m m on law ag en cy . A surve y of t hi s ap pe ll at e cas e la w
rev eal s n o c le ar p rece de ntas t o wh ethe r th e v ic ari ou s l iabi li ty statut e an d reg ul at io n a re b ro ad er tha n t he co m m on law as th e CFTC s ug ge st s. On e g ro up of
cas es us es a m ix tu re o f to ta li ty of th e ci rcu m st an ces , res po nd eatsupe rio r, an d
co m m on law ag en cy

lan gu ag e wit ho utex pl ic it ly addres si ng co ntro l; on e g ro up 1 3 of cas es ad dr es se s fa ctua ll y si m il ar, b utleg al ly dis ti ng ui sh ab le cir cu m st an ces , and fin ds co nt ro l n eces sary ; an d afin al cas e ad dr es se s fa ctua ll y si m il ar b utleg al ly 1 4

Stotler & Co. v. CFTC , 855 F.2d 1288, 1292 (7th Cir. 1988) (apply ing totality of the 1 3 circ umstances approa ch without mentioning control); Rosenthal & Co. v. CFTC , 802 F.2d 963, 966 (7th Cir. 1986) (Posner, J .) (explaining CEA section 2(a) (1) en ac t s v ar iant of common law responde at superior

and usingtotality

languag e). See Asa-Brandt, Inc. v. ADM Inve stor Servs., Inc. , 344 F.3d 738, 743 (8 th Cir. 2003) 1 4 (finding that “[d] eter

mining whether an ag ency relationship exis ts hinge s on the principal’s right to exercise control over the activities of the ag ent” without discussing section 2(a) ); Gunderson v. ADM Inve stor Servs., Inc

. , 230 F.3d 1363, 1363 ( 8th Cir. 2000) (same)
. 15di st in gu is habl e ci rcu m st an ces an d fi nd s co nt ro l u nn eces sa ry . Dis tri ctco urts , as 1 5
ex pe ct ed , are s pl iton th is is su e as well
. 1 6 Giv enth e u nc le ar n atur e o f th e fed eral cas e la w, th e p art ie s en co ur ag e u s t o lo okat C FTC ad m in is tra ti ve cas e la w to est ab li sh whet he r co nt ro l i s re qu ire d t o pr ov e ag en cy

by im pl ie d a ctua l au th or it y . The b ul k o f th e CFTC c as e law
su gg es ts th atwhi le co nt ro l i s re le va nt , itis no t d is po si ti ve an d c ou rts sh ou ld
as se ss ag en cy

ba se d o n ato ta li ty of th e ci rcu m st an ces . W hi le we fin d t he se 1 7
cas es , m an y

of wh ic h a re i ni ti al op in io ns is su edby A dm in is tra ti ve Law Ju dg es Dohmen-Ramirez v. CFTC , 837 F.2d 847, 858 (9th Cir. 1988) (while appea ring to addre ss 1 5 appar ent rathe r than actua l ag ency expli citly finding “[i] t is not nece ssary to show control to establish ag ency under the CEA”). Compare In re Amaranth Natural Gas Commodities Liti g. , 587 F. Supp. 2 d 513, 531-32 1 6 (S.D.N.Y. 2008) (apply

ing common law test based on a rea ding of Rosenthal); CFTC v. Equity Fin. Group, L L C, No. 04-1512, 2006 WL 3751911 at *9 (D.N.J. Dec
. 18, 2006) (apply co m m o n law control based on rea ding of Rosenthal), with CFTC v. Int’l Fin. Serv. , 323 F. Supp. 2d 482, 499 n.12 (S.D.N.Y. 2007) (citing Rosenthal and ref erring to the totality of the ci rc u m s t an ces) ; CFTC v. Emerald W

orldwide Holdings, Inc. , No. 03-8339, 2005 U.S. D ist. L EXI S 42893 at *23 (C.D. Cal. April 19, 2005) (re lying on CFTC case s and employing totality of the circ umstances) ; Aspacher v. K r etz , No. 94 C 6741, 1997 U.S. Dist. L EXI S 8000 at *17-20 (N.D. I ll. J une 3, 1997) (relying o n Rosenthal and lookingat the totality of the c ircumstance s). See Buck ner v. Refco Inc. , No. 00-R122, 2001 CFTC L exis 53, at *3 n.7 (CFTC April 25, 1 7 2001) (noting in proce durally distinguishable circ umstances CFTC has reje cted idea that control is essential); W

ebst er, 1999 CFTC L exis 26, at *97 (finding that control is probative but not dispositi ve); Ree d v. Sage Group, Inc. , CFTC Docke t No. 85R-312, 1987 CFTC L EXI S 161 (CFTC Oct. 14, 1987) (finding ag ency depends upon totality of the circ umstances and using languag e that indicates that control is not require d); Lobb v. J.T. McKerr & Co. , CFTC Docke t No. 85R-185, 1989 CFTC L EXI S 608, *23 (CFTC Dec
. 14, 1989) (supporting totality test); Bogard v. Abraham-Re itz & Co. , CFTC Docke t No. R 77-315, 1984 CFTC L exis 332, *13 (CFTC J uly 5, 1984) (control is not dispositi ve); but see Pacific Trading Group, Inc. v. Global Futures & Forex Ltd. , CFTC Docke t No. 02-R080, 2004 CFTC L exis 151, *15 (CFTC Nov. 16, 2004) (citing two-prong test including control from the Restate ment to define a g ency under 2( a)( 1)(B )). 16rathe r th anfin al de ci si on s i ss ue d b y th e CFTC B oardit se lf, t o b e h el pf ul , we fin d th e h is to ry

of v ic ari ou s l iabi li ty in the co m m od it ie s co nt ex t t o b e m or e so . Co ng res s fi rs t u se d t he cu rren t l an gu ag e o f th e CEA vi cari ou s l iabi li ty pr ov is io n a ndCFTC v ic ari ou s l iabi li ty regu la ti on on Sep te m be r 21 , 19 22 , when it
en act edth e Grai n F utur es Act (“ GFA”), 6 7 P .L. 33 1, 4 2 S ta t. 9 98 (19 22 ). In
se ct io n 2 (a) o f th e GFA un de r a h ead in g e nt it le d, “ [p ]rinc ip al s re sp on si bl e fo r act s of ag en ts ,” Co ng res s i nc lu de d t he lan gu ag e o f th e cu rren t p ro vi si on s: The act , om is si on , or fa il ur e o f an y off ic ia l, ag en t, o r ot he r pe rs on act in g fo r an y

in di vi du al ass oc ia ti on , partn ers hi p, co rp or at io n, o r trus t wit hi n t he sco pe of h is em pl oym en t o r of

fic e sh al l b e d eem edth e act , om is si on , or fa il ur e o f su ch in di vi du al , ass oc ia ti on , partn ers hi p, co rp or at io n, o r trus t, as well as o f su choff ic ia l, ag en t, o r ot he r pe rs on . Co ng res s re ta in edth e la ng ua ge fou rte eny ears lat er wh enitpa ss edth e CEA in
or de r to ex pandit s juris di ct io n o ve r co m m od it ie s t rad in g a ndin tro du ce ad di ti on al
m ech an is m s t o p rev en t fr au d a ndm an ip ul at io n. 7 4 P .L. 67 5, 4 9 S ta t. 1 49 1 (J un e 1 5, 1 93 6) . Con gr es s re affi rm edth e la ng ua ge ag ai n i n 1 97 4 wh enitpa ss ed th e Co m m od it ie s Fu tu res Trad in g Act(“ CFTA”), 9 3 P .L. 46 3, 8 8 S ta t. 1 38 9 (1 97 4) , est ab li sh in g the CFTC an d e xp an di ng th e CEA to no n- ag ric ul tu ral
co m m od it ie s. Dun n v . CFTC , 51 9 U.S. 4 65 , 46 9 (1 99 7) . Whe n C on gr es s p as se d th e CFTA i t g av e n o i nd ic at io n t ha t t he CFTC s ho ul d c ha ng e th e st an da rdfor

17vi cari ou s l iabi li ty in an y way or t ha t the re was a gap i n wh ic h t he ag en cy ne ed ed to reg ul at e. Ther efo re, o n J anua ry 21 , 19 76 , when th e CFTC p ro m ul ga te d Reg ul at io n 1 .2 co nt ai ni ng th e ex actvi cari ou s l iabi li ty lan gu ag e o f th e o rig in al GFA an d C EA, the CFTC ad op te d t he m ean in g g iv ento th is lan gu ag e in th os e earl ie r st atut es . This hi st ory in di cat es th atCo ng res s co nc ei ve d o f th is lan gu ag e as a st an da rdgo ve rn in g p rin ci pa ls an d a ge nt s, o r a co m m on law ag en cy

st an da rd , and th atCo ng res s h adno t al te redth e co nc ep ti on de sp it e th e ch an ge s i n c omm od it ie s reg ul at io n. No th in g h as ch an ge d wi th res pe ctto vi cari ou s l iabi li ty in the
co m m od it ie s co nt ex t s in ce 1 92 2. Itap pe ars cle ar t o u s t ha t t he vi cari ou s l iabi li ty st atut e an d re gu la ti onco di fy co m m on law p rin ci pa l ag en t l iabi li ty. Und er the co m

m on law ac tu al ag en cy , eit he r im pl ie d o r ex pr es s, re qu ire s: (1 ) co ns en t t o t he ag en cy by bot h p rin ci pa l an d a ge nt ; an d (2 ) th e co nt ro l o f th e ag en t b y th e p rin ci pa l. Res ta te m en t (S eco nd ) of Agen cy § 1 (19 58 ); W

he ts to ne Ca nd y Co . v. Kra

ft Foo ds , Inc
. , 35 1 F .3d10 67 , 10 77 (11 th Cir . 20 03 ). The t hr eepa rt t es t arti cu la te d b y

th e d is tri ctco urt re lying on lan gu ag e in W eb st er , CFTC Doc ke t No . 98 -R0 00 9, 1 99 9 C FTC Lex is 26 at * 97 -9 8, u se s “ acqui es cen ce” a nd

“ su ffi ci en t s up po rt” to ad dr es s co ns en t an d re qu ire s co nt ro l. Alt ho ug h we f in d

18W

eb st er it se lf t o b e v ery weakau th or it y , we fin d t ha t t he di st ric t co urt co rrec tl y 1 8 art ic ul at edth e te stforco m m on law ag en cy , andth us for vi cari ou s l iabi li ty in the
co nt ex t o f th e CEA. B. Dis tri ct Co urt Di d Not Comm it Cl ea r Err or W e wil l ex am in e th e ev id en ce i n t he reco rdwith re sp ectto co ns en t an d
co nt ro l. As t o c on se nt , we no te th atFx CM wen t t o g reatpa in s t o d is cl ai m an y ag en cy rel at io ns hi p wi th GMC. The Agre em en t b etweenth e p art ie s co nt ai ns
m ul ti pl e p ro vi si on s s pe ci fic al ly dis cl ai m in g a ny agen cy rel at io ns hi p, an d m an y

of th e d oc um en ts pre se nt edto GMC’s cl ie nt s, i nc lu di ng th e Lim it edPo wer o f Att orne y Fo rm , th e Not ic e to Trad er Do cu m en t, an d the Trad er Ag reem en t,
co nt ai n s im il ar d is cl os ur es . FxC M’s o ffi cers tes ti fie d a t t ria l tha t t he y em pl oyed
co un se l wi th anex pe rti se in CFTC l aw to dra ft t he se do cu m en ts forth e sp eci fic pu rp os e o f en su rin g t he y

di d n oten te r in to anag en cy rel at io ns hi p. (DE 3 29 at 14 5, 1 96 -9 7; DE 33 0 a t 1 47 -4 8) . Whi le “ [e]xp res s d is cl ai m ers of a ge nc y do no t
ne ces sa ril y

eli m in at e th e ex is te nc e o f anag en cy rel at io ns hi p,” Ca rr

v. St il lw at er

s Dev. Co ., L.P. , 83 F. Sup p. 2 d 1 26 9, 1 27 9 (1 1t h C ir. 1 99 9) , th e fac t t ha t Fx CM
W ebster is an initial administrative law opinion written by an administrative law judge
. In 1 8 re Three Eight Corp. , [1992-1994 Transf er Binde r] Comm. Fut. L
. Rep. (CCH) ¶ 25,749 at 40,444 (C FTC J une 16, 1993) (“A s we have noted befor e, howeve r, unless the rea soning of an initia l decision is specific ally

adopted by

the Commiss ion, it does not repre sent Commis sion prece dent. It is cer t ai n l y not an appropriate basis for inferring limit ations on rea soning included in a Commi ssion decision.”). 19ex pe nd edsu ch co ns id erab le effo rts to av oi d a n a ge nc y de si gn at io n i s p al pabl e
ev id en ce tha t Fx CM d idno t i nt en d t o c on se ntor a cqui es ce t o an a ge nc y rel at io ns hi p wi th GMC. Beyon d t he lan gu ag e o f th e d oc um en ts , add it io na l
ev id en ce s up po rts a la ckof c on se ntor s up po rt. As th e d is tri ctco urt n ot es , FxC M sh aredno em

pl oyees wi thGMC, s pl itno co m m is si on s wi th GMC, an d p ro vi de d GMC wi th no m ean in gf

ul m ark etres earc h o r tr ad e in fo rm at io n. Se e St ot le r , 85 5 F.2 d a t 1 29 2- 93 (fi nd in g a ge nc y ba se d o n fa ctth atFCM’s i nt ern al bu si ne ss
reco rd s l is te d a n a ss oc ia te d p ers on as asal es m an , th e co m pa ny ass ig ne d h im

a
sa le sm annu m

be r, FCM ga ve hi m

it s o wn l it eratur e an d fo rm s t o d is tri bu te to th e pe op le he so li ci te d, FC M p ro vi de d a ss oc ia te d p ers on with fi fty perc en t
co m m is si on onall tra de s, an d F CM p erm it te d h im to pl ace trad es di rect ly thro ug h th e cl erk s o n t he flo or s o f th e co m m od it ie s ex ch an ge li ke th e FCM 's b ro ke rs
wou ld ); Ros en th al , 80 2 F .2dat 9 67 -6 8 (f in di ng itrel ev an t FC M d es ig na te d a n
as so ci at edpe rs on as abra nc h m an ag er, l eas edoff ic e sp ace t o h im , des cri be d t he
as so ci at edpe rs on as a“ sa le sp ers on ,” an d s pl itco m m is si on s wi th hi m); Reed , No. 85 R-3 12 , 19 87 CFTC Lex is 16 1 a t * 25 -2 8 (f in di ng ag en cy

wher e FCM pro vi de d al l d oc um en ts to op encu st om er ac co un ts an d re se arch an d trad in g i nf orm at io n fo r
cu st om ers ). GMC d idag ree t o s en d i ts cu st om ers ex cl us iv el y to Fx CM. Su ch an
ex cl us iv it y

ag reem en t i s o fte n i nd ic at iv e o f ag en cy . Se e CFTC v . Mil le ni um 20Tr ad in g Gr ou p, In c. , No. 0 7- CV-1 16 26 , 20 07 U.S. Dist . Lexi s 6 57 84 at * 11 -1 2 (E.D. Mic h. Se pt . 6, 2 00 7) (rel y in g o n t he factth atbro ke r in tro du cedat l eas t twen ty-fiv e cu st om ers to FCM e xc lu si ve ly); Reed , No. 8 5R -3 12 , 19 87 CFTC Lex is 16 1 a t * 26 -2 7 (s ta ti ng factth atbro ke r di d e ss en ti al ly all b us in es s t hr ou gh FCM rai se d d oubt s as to whet he r th ey were i nd ep en de ntbu si ne ss en ti ti es ). Here, ho wev er, thi s ex cl us iv it y is jus t o ne fact oram on g m an y , andwitho utm or e, we
can no t fi ndth atitex cl us iv el y est ab li sh es ag en cy . The d is tri ctco urt’s co nc lu si on th atFx CM d idno t co ns en t t o arel at io ns hi p wi th GMC i s ce rta in ly plaus ib le in li gh t o f th e rec or d a s a wh ol e. 1 9 As t o c on tro l, i t i s u nd is pu te d t ha t Fx CM p la y edno rol e in hi rin g, t rai ni ng , supe rv is in g, o r di sc ip li ni ng GMC’s em pl oyees. Se e Mil le ni um Tr ad in g Gr ou p, In c. , No. 0 7- CV-1 16 26 , 20 07 U.S. Dist . Lexi s 6 57 84 at * 11 -1 2 (f in di ng ag en cy whe re ag en t ag reedto no ti fy FCM, i n wri ti ng , of a ny cus to m er co m pl ai nt s, o r pe nd in g o r th reat en edact io ns , in ve st ig at io n, l aws ui t, o r pr oc eed in g i ns ti tu te d b y
an y cu st om er, reg ul at ory

ag en cy , exc ha ng e, orbo ardof trad e an d a gr eedto
co op erat e wit h F CM b y

furni sh in g a ll do cu m en ts ne ces sa ry to co nduc t an in ve st ig at io n a ndde fen d acla im in vo lv in g i t); Reed , No. 8 5R -3 12 , 19 87 CFTC
Although w e find the fac tual analy sis in Ree d and Millenium to be useful f or the purpose 1 9 of analy zing the fac ts here , we note that both case s wrong ly employed a totality of the circ umstances approa ch rather than the common law test for ag ency . 21Lex is 16 1 a t * 26 -2 7 (f in di ng ag en cy

wher e ag en t was requi redto co m pl y with a ll pr es en t an d fu tu re p ol ic ie s o f FCM , to refra in fro m m ak in g any sta te m en t in co ns is te ntwith F CM’s ac co un t-r el at eddo cu m en ts , to rep ort al l co m pl ai nt s
rece iv edto FCM a ndaidFCM i n i nv es ti ga ti ng th em , to co ll ecton m arg in cal ls is su edby FCM, an d t o i nd em ni fy FCM f or all cla im s ar is in g fr om

in tro du ced
acco un ts ). Furth er, the re i s n o e vi de nc e th atFx CM s up erv is edor c on tro ll ed GMC’s trad in g s tra te gi es or h ada ri gh t t o i ns pe ctGMC’s b oo ks an d re co rd s. Se e Reed , No.8 5R -3 12 , 19 87 CFTC Lex is 16 1 a t * 26 -2 7 (f in di ng ag en cy

wher e FCM ha d t he po wer t o o bt ai n d oc um en ts rel at in g t o a ge nt , th e g en eral po wer t o i ns pe ct
an d aud itall of i ts bo ok s, re co rd s, an d fa ci li ti es , andth e p owe r to rev ie w lo gs of
co nv ers at io ns be twee n i t an d i ts cu st om ers ). It i s cl ear t ha t Fx CM h adth e p owe r to m an da te th atGMC s en d c ert ai n m at eri al s t o i ts pro sp ect iv e em pl oyees, tha t Fx CM h adth e ri gh t t o i nqui re as to GMC’s b us in es s p ract ic es , andth atGMC
so li ci te d a ll it s cu st om ers ba se d upo n c rit eri a es tabl is he d b y Fx CM. Se e Mil le ni um , No. 0 7- CV-1 16 26 , 20 07 U.S. Lexi s 6 57 84 at * 11 -1 2 (f in di ng factth at FCM setcu st om er cr it eri a si gn ifi can t). Th es e fac ts witho utm or e, ho wev er, are
no t i nd ic at iv e o f co nt ro l. The di st ric t co urt’s co nc lu si onth atFx CM d idno t
co nt ro l GMC is cert ai nl y pl au si bl e in li gh t o f th e rec or d a s a wh ol e.

22II I. Con cl us io n

Fo r th e rea so ns setforthab ov e, we AFFIR M the di st ric t co urt’s jud gm en t i n fav orof F xC M an d h ol d t ha t u nd er ei th er 7 U.S.C. § 2 (a)( 1) (B) o r 17 C.F.R. 1 .2 th e te stforvi cari ou s l iabi li ty is co m m on law ag en cy

an d t he di stric t co urt d idno t
co m m itcle ar erro r in fin di ng un de r th is tes t tha t GMC was n otact in g a s Fx CM’s ag en t wh enitvi ol at edth e CEA.

23