The Commodity Futures Trading Commission brought two separate enforcement actions in Florida federal courts against purported precious metals dealers, charging they misappropriated retail customer funds and committed fraud. One action named Mark Olsen Mining Company and Betty Lee Grimes, while the other named Omega Knight 2, LLC, Aviv Michael, its owner and president, and Erez Hen. The CFTC brought these actions relying on its view of the prohibition against manipulative or deceptive device or contrivance provision of law enacted under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Click here to access 7 U.S.C. §9(1)), as well as its traditional anti-fraud authority in connection with futures contracts (click here to access 7 U.S.C §6b(a)(2)(A-C)). The CFTC charged that these transactions were just like futures contracts (and thus its traditional anti-fraud authority applied) because they were offered on a leveraged basis and no delivery was made within 28 days (click here to access 7 U.S.C. §2(c)(2)(D)(iii)). The CFTC’s view of its Dodd-Frank authority was recently rejected by a California federal court. (Click here for background on this decision in the article “California Federal Court Dismissal of CFTC Monex Enforcement Action Upsets Stable Legal Theories” in the May 6, 2018 edition of Bridging the Week.)