Troyer v. National Futures Association

Magistrate Judge did not err in granting defendant’s motion for summary judgment in plaintiff-investor’s action under section 25(b) of Commodities Exchange Act, alleging that defendant failed to enforce its own bylaw (Bylaw 301(a)(ii)(D)) by not disqualifying plaintiff’s broker (whom plaintiff alleged had made fraudulent solicitations of plaintiff‘s funds) from making trades through his membership in NFA, under circumstances where: (1) plaintiff alleged that his broker’s conduct was cause of “expulsion” of broker’s employer, which was subject of disciplinary action initiated by defendant; and (2) defendant should have immediately terminated broker’s membership in NFA as of 2011 date of broker’s employer’s settlement of disciplinary action that directed broker’s employer never to reapply for NFA membership or act as principal of any NFA member. Defendant did not fail to enforce Bylaw 301(a)(ii)(D) because employer’s agreement not to reapply for NFA membership that was focus of settlement did not constitute “expulsion” so as to trigger Bylaw 301(a)(ii)(D).