UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

Commodity Futures Trading Commission, )

)

Plaintiff, )

)

V. ) Case No. 20-3758

)

Long Leaf Trading Group, Inc., ) Hon. Thomas A. Durkin

James A. Donelson, Timothy M. Evans, )

Jeremy S. Ruth, and Andrew D. Nelson, )

Defendants. )

MOTION FOR SUMMARY JUDGMENT

and states as follows:

FACTS

Defendant Jeremy Ruth is not liable for fraud under 7 U.S.C. § 6c(b) and C.F.R. § 33.10

because Defendant did not make false or misleading material statements or omissions to

customers and did not act with scienter. Defendant is also not liable for aiding or abetting Long

Leaf in committing fraud under 7 U.S.C. § 6 (1) and 7 U.S.C. § 13c(a) because Long Leaf was

ugh his

own authority.

The CFTC should not be granted summary judgment because it has failed to show that

motion omits many indisputable facts. Long Leaf is a full-service brokerage that employed a

structured trading approach to enter the futures options markets in a self-directed/broker assisted

environment for some customer accounts titled Time Means Money during the time

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period Defendant was employed by Long Leaf. The TMM accounts were all individual nondiscretionary accounts. , Michael J.

Bruno of Westchester, IL, and the others mentioned by name by the CFTC, were not

unsophisticated investors.

When a potential customer was interested in joining TMM, Long Leaf sent them

documents that made full risk disclosures and required the customer to certify that they were

using genuine risk capital to fund their account. After opening an account, customers had to

approve, deny, or modify every trade, Long Leaf Brokers just executed them. Customers

received daily and monthly statements. Customers had the ability at any time to withdraw their

money or to stop making trades.

mischaracterizes the trading

recommendations that made up the TMM A TMM

customer would typically receive four recommended commodities options trades per month.

These could be in the form of many kinds of trades, not just four out-of-the-money options as

CFTC claims. The recommendations were customized for each customer according to their risk

tolerance and their goals. Defendant never created or customized any recommendations for

customers. Defendant made the recommendations to customers at the direction of Defendant

Evans. Defendant worked at Long Leaf for approximately 2 years and 5 months and did not

work there at any time when Defendant James Donelson was the principal or associated with

Long Leaf Trading Group in any capacity. Defendant Ruth has never met Defendant Donaldson.

monthly loss does not reflect whether they that they could actually reflect, for example, modest

wins on three small trades and a large

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The evidence the CFTC

cites is a snapshot of one moment in time and does not reflect the full history of any particular

account.

he was not the only AP who worked

with TMM customers. The CFTC

time at Long Leaf. Which customers? Lost at what point? Did those customers lose money after

earning money on successful trades? The CFTC does not say whether customers

lost money or

making money. Again, an overall loss is a snapshot of one moment in time and does not illustrate

what happened with any one account. The CFTC has not shown which customers actually lost

money and when, or to show whether or not any of the losses were atypical of the commodity

market at the time.

It is misleading for the CFTC to connect

The commodities market, like any

whether a future customer will lose or win on his own options, adjusted to his own wishes.

The CFTC has distorted the facts and has failed to show how any of the statements made

by Defendant were false or misleading or how Defendant aided and abetted fraud. Its motion for

summary judgment should not be granted as many facts are disputed and as it has not proven its

claims.

SUMMARY JUDGEMENT

The CFTC should be granted summary judgment only if there is no question of genuine

material fact and if CFTC is entitled to win as a matter of law.

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ARGUMENT

I. Count I: Fraud in violation of Section 4c(b) of the Act, 7 U.S.C. 6c(b) (2018), and C.F.R.

33.10 (2019).

A. Defendant did not make false or misleading statements.

Whether a statement or omission is misleading depends on overall message

See Commodity Futures Trading

Comm'n v. R.J. Fitzgerald & Co., 310 F.3d 1321, 1328 (11th Cir. 2002)

material if there is a substantial likelihood that a reasonable investor would consider it important

CFTC v. Rosenberg, 85 F.Supp.2d 424 (D. N.J. 2000).

The CFTC does not demonstrate

actually false or misleading. It only argues that many customers lost money and two complained

to Defendant.

Out of thousands of pages of written communications and many hours of recorded phone

calls, the CFTC identifies 5 statements made by Defendant Ruth which it states were false or

misleading. These five statements were made to three different customers, which the CFTC does

not clearly explain in its motion

defendant.

when he said,

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This statement conveys

to Patel the mathematical structure of TMM options position design and has absolutely nothing

to do with results, past or present. There is no evidence that this statement is misleading or

untrue.

was also misleading. The CFTC

does not explain what about this statement is false. This statement was made in the context of a

larger conversation about how the math behind a TMM trade design works using the

hypothetical numbers discussed above. Defendant is personally embarrassed for the CFTC that

they would represent otherwise. It s mind boggling to Defendant that the people of the agency

that has been charged with regulating the commodity markets clearly does not know much about

the markets they are to regulate Or this is intentional twisting the events that occurred by the

CFTC to present evidence to the court to support its baseless claims. This statement was not a

guarantee of a 12% return or a representation that TMM accounts in the past had made 12%

annual returns. The CFTC does not show how it is false or misleading to make this statement.

The

statements. In the time that passed between the statements and the losses, Mr. Patel approved

four trades per month for 18 months trades, received daily and monthly account statements, and

opted to continue his business with Long Leaf every month. The CFTC has no evidence of what

with his

statements to other custom

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profitable f Again the CFTC does not explain how this statement is false. The overall

losses the CFTC relies on does not show the whole picture

sell four options, there is a strong statistical likelihood you will win three of them, giving you a

would likely experience

three option trades. think these statements to be a

guarantee of profits or success.

The final two allegedly misleading statements were made to a potential customer Dale

the ones that make money are the ones that keep emotions out of the process. The only time I see

people lose money is when they bring emotions into t

very easy

A reasonable person would not take these

statements to be promises or precise statements of the TMM progr

again, the CFTC does not explain how these statements are false. The statements refer to

decision-making processes and the philosophy behind the TMM strategy. In addition, these

particular statements are not material because they do not relate to profit potential or risk, and a

reasonable person would recognize these statements to be subjective claims and would not give

these statements importance when making their decision to invest.

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Rather than explain why any of these statements were false or misleading, the CFTC

than

However, the

time at Long Leaf does not reflect whether

customers at various points during that time period were false or misleading. The CFTC cites the

case CFTC v. Kratville, 796 F.3d 873, 892 (8th Cir. 2015). The defendants in that case sent their

investors false information that showed

were. CFTC v. Kratville, 796 F.3d 873, 892 (8th Cir. 2015). They outright lied to their investors

about how long the fund had been trading and who their trading houses were and said they had

had offers to buy their trading system when the system was not proprietary and they had never

received offers to buy it. Id. at 884. Defendant did not make any statements similar to those made

in the Kratville case.

In a New Jersey case, a broker was found liable for fraud when he told a customer he

would place a requested trade but never did, did not send the customer monthly account

statements as required

CFTC v. Rosenberg, 85 F.Supp.2d 424 (D. N.J. 2000). Again,

to the actions in that case.

Whether a statement is material to a reasonable investor is a question for a jury. Silverman v.

Motorola, Inc., 798 F. Supp. 2d (N.D. Illinois, July 25, 2011). The CFTC argues that Defendant

The CFTC does not present evidence of what actual

percentage of Defendant customers lost money overall or what percentage of

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customers ever made money at any point during the life of their account. Instead, it makes a

vague statement about customer losses during a two-year time period.

Defendant was not required by law to disclose whether other TMM customers lost money,

and past performance does not indicate future results. That information would not provide a

prospective customer with guidance anyway, because it would not indicate the rate at which the

past trades were successful and because the trades in the past would not necessarily be

recommended again in the future. sts for a track record because

there was no such thing as a general TMM track record because each TMM customer executed

different trade options scaled to their preference.

C. Defendant did not act with scienter.

The CFTC also must show that Defendant acted with scienter. Scienter is established if

Defendant intended to defraud, manipulate, or deceive, or if Defendant's conduct represents an

extreme departure from the standards of ordinary care. Commodity Futures Trading Comm'n v.

R.J. Fitzgerald & Co., 310 F.3d 1321, 1328 (11th Cir. 2002)

mental state embracing an intent to deceive, manipu Rosenberg at 448. In the

similar context of federal securities law, we have previously stated that scienter is met when

present a danger of misleading [customers] which is either known to the Defendant or so obvious

Id.

Defendant did not intentionally or recklessly mislead or defraud customers. First, the

CFTC itself says Defendant was always following the policies set by Long Leaf, not acting out

of his own motivation. The CFTC does not offer any evidence that Defendant believed the

scripts from Long Leaf to be misleading. As a new financial broker, Defendant had no reason to

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think that his statements presented a danger of fraudulently misleading customers because the

statements had been approved by Evans,

National Futures Association. Defendant had never worked in finance before working for Long

Leaf and had only become a Series 3 broker around the same time he began working at Long

Leaf. There was no reason for the CFTC to argue that Defendant should have questioned Long

knew or should have known that the statements in the script were misleading

even though they had been approved by people whose role was to make sure the statements

complied with the law.

necessarily indicate that potential customers would not earn money in the future. For example,

sses in July 2017

10k account my clients Target $500 to $1000 per month. Obviously there are going to be months

Patel

participated in the TMM program from approximately January 2016 through July 2017 with an

investment that would begin sometime after July 25, 2017. These two customers had different

advice, past performance does not predict future results. Knowledge of

does not show that Defendant thought Mr. Zolton would never meet the stated targets but told

him he could anyway. T and

Defendant does not believe he was the broker of record for any and or the majority of Mr.

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Zolton s trading. More importantly, the statements made to Zolton were not misleading.

Defendant specifically balanced Mr. Zolton s potential for gains with potential for losses.

here are many questions of fact,

should therefore not be granted summary judgment as a matter of law on Count I.

II. Count II: Aiding and Abetting Fraud in violation of 7 U.S.C. 6 (1) (2018) and 7

U.S.C. 13c(a).

fraud. The elements for proving that Defendant aided and abetted

the principal's ... intent to commit a violation of the Act; (2) had the intent to further that

Damato v.

Hermanson, 153 F.3d (7th Cir. 1998).

Long Leaf is not CTA.

motion for summary judgment against it. Defendant agrees with the argument presented by

Defendant Donaldson & Long Leaf Trading Group.

Second, if Long Leaf was a CTA, Defendant still would not be liable for aiding and

abetting any fraud it committed because Defendant had no reason to believe Long Leaf intended

to commit fraud. The CFTC does not attempt to show in its motion that Defendant actually knew

fraud. Defendant had no management responsibility or decision-making authority at Long Leaf.

in accordance to the scripts provided

officer

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and Long Leaf s compliance officer represented to all Long Leaf AP s that the National Futures

Association approved the sales materials used for solicitation. Defendant had no reason to

believe that Long Leaf was committing fraud through the statements in its scripts. Therefore,

Defendant did not knowingly associate with an unlawful venture.

In addition, Defendant had no intent to further any violation by Long Leaf. The CFTC

does not have any basis for the allegation that Defendant knew Long Leaf had fraudulent

intentions but also that Defendant himself acted with the intent to further that fraud. The CFTC

motion on Count II should be denied.

CONCLUSION

is entitled to judgment.

judgment.

s/Jeremy S. Ruth

Jeremy S. Ruth

Pro se

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CERTIFICATE OF SERVICE

I, Jeremy S. Ruth, hereby certify that on March 4th, 2022, I provided service to the persons listed

below via email:

Defendants:

Andrew D. Nelson

Pro se

adnelson0503@gmail.com

James M. Falvey

Attorney for Defendant

James A. Donelson & Long Leaf Trading

jimfalvey@yahoo.com

:

Ashley J. Burden

Senior Trial Attorney

aburden@cftc.gov

Joseph C. Platt

Trial Attorney

jplatt@cftc.gov

Elizabeth M. Streit

Chief Trial Attorney

estreit@cftc.gov

Joseph J. Patrick

Investigator

jpatrick@cftc.gov

s/Jeremy S. Ruth

Jeremy S. Ruth

Pro se

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