Court Opinion

ID: 3161219
Source: CourtListenerOpinion
Date Created: 2015-12-09 20:00:49.550828+00
Date Added: 2024-06-11T11:59:11.022994
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                            No. 14-2099

U.S. COMMODITY FUTURES TRADING COMMISSION,

                Plaintiff - Appellee,

          v.

NEAL E. HALL, d/b/a SHOWMEMYFUTURE.COM,

                Defendant - Appellant.

Appeal from the United States District Court for the Middle
District of North Carolina, at Greensboro. James A. Beaty, Jr.,
Senior District Judge. (1:11-cv-00434-JAB-LPA)

Submitted:   November 30, 2015            Decided:   December 9, 2015

Before DUNCAN, AGEE, and KEENAN, Circuit Judges.

Affirmed by unpublished per curiam opinion.

David W. McDonald, HICKS, MCDONALD & NOECKER, LLP, Greensboro,
North Carolina, for Appellant.     Jonathan L. Marcus, General
Counsel, Robert A. Schwartz, Deputy General Counsel, Nancy R.
Doyle, Martin B. White, Assistant General Counsel, UNITED STATES
COMMODITY FUTURES TRADING COMMISSION, Washington, D.C., for
Appellee.

Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:

      The      United    States      Commodity   Futures     Trading      Commission

(“CFTC”) brought this suit against Neal E. Hall, alleging that

Hall improperly acted as a commodity trading advisor (“CTA”) in

violation       of    the   Commodity     Exchange    Act    (“CEA”),      7   U.S.C.

§ 6m(1)     (2012),      and   its   regulations,     17    C.F.R.   § 4.41(a)(3),

(b)(1) (2015).          The district court adopted the recommendation of

the   magistrate        judge,    granted   summary    judgment      to    CFTC,    and

imposed a permanent injunction and a monetary penalty in the

amount of $210,000. 1          We affirm.

      As an initial matter, we find that Hall failed to preserve

several of the claims he raises on appeal.                    “[T]o preserve for

appeal an issue in a magistrate judge’s report, a party must

object    to    the     finding   or   recommendation       on   that     issue    with

sufficient specificity so as reasonably to alert the district

court of the true ground for the objection.”                     United States v.

Midgette, 478 F.3d 616, 622 (4th Cir. 2007).                      Although Hall’s

      1Hall argues that the amended judgment could be read as
granting judgment in his favor.       The district court’s order
granting CFTC’s motion for summary judgment granted CFTC
monetary and injunctive relief.      The amended judgment stated
that pursuant to this order, CFTC’s motion for summary judgment
was granted and the case was dismissed.     Hall argues that the
amended judgment’s use of the term “dismissed” means that CFTC
was awarded no relief.     We disagree with this interpretation,
which contradicts the district court’s indisputable intention to
award  CFTC   relief,   and   find  that  the   amended  judgment
incorporates the relief provided in the summary judgment order.

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objections stated generally that the information on his website

was       protected       speech     and    that      the      magistrate         judge’s

interpretation        of    the    17   C.F.R.    § 4.14(a)      (2015)         exemptions

violated his right to free speech, he did not assert his present

arguments that § 6m(1)’s registration requirement constituted an

improper prior restraint on his speech and that the disclaimers

required     by    § 4.41    constituted        compelled      speech. 2        Likewise,

Hall’s objections did not assert his present claims that the

magistrate        judge    improperly      relied   on      allegedly      involuntary

inculpatory statements and that the relief recommended by the

magistrate        judge     was    excessive.         Finally,       although          Hall

challenged the magistrate judge’s denial of an exemption under

17 C.F.R. § 4.14(a)(9) based on a finding that Hall needed to

satisfy      subsections      (9)(i),      (9)(ii),      and    (10),      he    did    not

challenge the magistrate judge’s denial of an exemption under

subsection (10) or the holding that Hall held himself out as a

CTA under a similar provision in § 6m(1).                      Because Hall did not

assert these issues in his objections to the magistrate judge’s

      2Hall did preserve a general argument that the magistrate
judge’s interpretation of § 4.14(a)(9) violated his free speech
rights; to the extent he asserts this argument on appeal, we
find that it is meritless because the magistrate judge’s finding
that Hall did not qualify for this exemption was based on Hall’s
conduct in performing trades on his clients’ accounts rather
than on his speech.    See Willis v. Town of Marshall, 426 F.3d
251, 257 (4th Cir. 2005) (holding First Amendment does not
protect nonexpressive conduct).

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recommendation, we find that he has waived appellate review of

these claims.        Midgette, 478 F.3d at 622.

     Hall      did   preserve      his    argument      that   the    district       court

erred     by   finding      that    he     was    not    exempt      from    the     CEA’s

registration requirement under 17 C.F.R. § 4.14(a)(9).                             Section

4.14(a) provides in relevant part:

     (a) A person is not required to register under the
         [CEA] as a commodity trading advisor if:
     . . .
           (9) It does not engage in any of the following
                activities:
                (i) Directing client accounts; or
                (ii) Providing   commodity   trading   advice
                     based on, or tailored to, the commodity
                     interest or cash market positions or
                     other circumstances or characteristics
                     of particular clients; or
           (10) If, as provided for in section 4m(1) of the
                Act, during the course of the preceding 12
                months, it has not furnished commodity
                trading advice to more than 15 persons and
                it does not hold itself out generally to the
                public as a commodity trading advisor.

17 C.F.R. § 4.14(a)(9), (10).

     We    agree     with    Hall     that      the   magistrate     judge    erred     by

requiring      him   to     satisfy      both    subsections      (9)   and    (10)     to

qualify for an exemption. 3              However, we conclude that this error

     3 We note that Hall’s argument below focused on his claim
that he only had to satisfy either subsection (9)(i) or
subsection (9)(ii).   The magistrate judge correctly found that
Hall had to satisfy both parts of subsection (9) to obtain an
exemption   under  that   subsection, although  he   erroneously
extended this ruling to encompass the separate exemption
provided by subsection (10).

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is    harmless.           “[I]n    order     to       find    a    district      court’s          error

harmless, we need only be able to say with fair assurance, after

pondering      all        that    happened       without          stripping      the       erroneous

action from the whole, that the judgment was not substantially

swayed by the error.”                United States v. Johnson, 617 F.3d 286,

292 (4th Cir. 2010) (internal quotation marks omitted).                                               The

magistrate         judge     found     that        Hall       did       not     qualify         for    a

subsection (9) exemption because he directed client accounts,

not because he failed to satisfy subsection (10).                                    Although the

magistrate         judge     erroneously          found      that       Hall’s       direction         of

client      accounts        precluded       a     subsection            (10)    exemption,            the

magistrate         judge’s       finding    that       Hall       did    not    qualify         for    an

exemption      under        the    nearly        identical         language          of    7     U.S.C.

§ 6m(1) conclusively indicates that the magistrate judge would

not    have    found       that    subsection          (10)       applied      even       if    he    had

separately considered it.

       Hall also argues that the magistrate judge erred by finding

that   he     did    not     qualify       for    an    exemption            under    § 4.14(a)(9)

because he directed customer accounts.                            “Direct, as used in the

context       of     trading       commodity          interest          accounts,         refers       to

agreements whereby a person is authorized to cause transactions

to be effected for a client’s commodity interest account without

the    client’s       specific       authorization.”                    17    C.F.R.       § 4.10(f)

(2015).            Hall    admitted        that       his     website         offered          “managed

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accounts” or “auto trade accounts,” and the evidence included

correspondence        he    sent    to    his      managed     account       holders   that

indicated that Hall’s clients gave him general authorization to

trade    according         to   his      system,      and      did     not   specifically

authorize each trade.              The only evidence Hall submitted on this

issue was an affidavit submitted after the magistrate judge made

his recommendation, and this affidavit did not indicate whether

the authorization Hall received from his clients was general or

specific.     Because this evidence indicated that Hall’s clients

gave him general, rather than specific, authorization to conduct

trades   on   their        accounts,      we       find   that    the    district      court

correctly granted summary judgment to CFTC.

      Accordingly, we affirm the judgment of the district court.

We   dispense   with       oral     argument        because      the    facts   and    legal

contentions     are    adequately         presented       in     the    materials     before

this court and argument would not aid the decisional process.

                                                                                 AFFIRMED

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