Opinion ID: 779905
Heading Depth: 2
Heading Rank: 4

Heading: Excessive Trading of Customer Accounts

Text: 44 CFTC argues that the district court erred by finding that Defendants did not excessively trade client accounts without regard to client interest, in contravention of the Act. We do not agree. This churning claim stems from a specific trading strategy developed by Defendant Kowalski in 1998 known as synthetic futures. The details of that strategy were sufficiently explained in the District Court, see 173 F.Supp.2d at 1306-1309, and do not warrant repetition here. In order to succeed on a churning claim, CFTC had to establish that Defendants intentionally or recklessly traded client accounts in excess, without regard to client interest, and that Defendants controlled the accounts in question. See, e.g., Patch v. Concorde Trading Group, Inc., [1994-1996 Transfer Binder] Comm. Fut. L. Rep. (CCH) 26,253, 42,125 (CFTC Oct. 31, 1994). Unlike the Commercial and the Seminar, the churning claim is intimately connected with factual conclusions derived from witness testimony and credibility assessments made at the bench trial. For example, the requisite element of control over customer accounts in this case is an inquiry that turns upon the credit given to witnesses by the trier of fact. We have reviewed the District Court's analysis of this claim and cannot find that entering judgment in favor of Defendants on this claim was erroneous. 45