The following amicus curiae brief was filed by Better Markets, the Consumer Federation of America (CFA), and the Institute for Agriculture and Trade Policy (IATP) on August 28, 2023, urging the Supreme Court to review and reverse a lower court decision that dramatically limited protections against manipulation in the commodity markets, in the case of Laydon v. Cooperatieve Rabobank U.A., No. 23-80. 

INTERESTS OF AMICI¹

Better Markets, Inc. (“Better Markets”) is a nonprofit, nonpartisan organization that promotes the public interest in the financial markets through comment letters on proposed rules, litigation, independent research, and public advocacy. It fights for a stable financial system, fair and transparent financial markets, and measures that effectively protect investors from fraud and abuse, so that all Americans can achieve greater economic prosperity. Better Markets has filed hundreds of comment letters with the federal financial regulators, including the Commodity Futures Trading Commission (“CFTC”), and dozens of amicus briefs in the federal courts supporting strong financial regulation. Much of Better Markets’ advocacy has focused specifically on the derivatives markets, including the importance of position limits in those markets to curb excessive speculation and the need for strong cross-border application of the rules under Title VII of the Dodd-Frank Act governing swaps. See generally Better Markets, http://www.bettermarkets.org (including an archive of comment letters, briefs, and reports).

The Consumer Federation of America (“CFA”) is an association of more than 250 nonprofit consumer organizations. CFA was established in 1968 to advance the consumer interest through research, advocacy, and education. CFA works to ensure that the millions of Americans who rely on investments to fund their retirement or other life goals can count on a fair financial marketplace that provides strong protections against fraud, manipulation, and abuse, and meaningful remedies when they are victims of wrongdoing.

The Institute for Agriculture and Trade Policy (“IATP”) is a nonprofit, nonpartisan organization founded in 1986, headquartered in Minneapolis, Minnesota, with offices in Washington, DC and Berlin, Germany. IATP’s research and advocacy support economically and environmentally sustainable agriculture and food policy. To realize this mission through the derivatives markets, IATP has submitted 46 comment letters to the CFTC since 2010. Market manipulation and excessive speculation in derivatives contracts disrupt price formation and weaken the ability of derivatives markets to provide reliable price benchmarks used by physical commodity producers, processors, and traders in the forward contracting and auctioning of raw materials used in consumer and industrial goods in the United States and internationally. Agricultural lenders and traders likewise depend on interest rate and foreign exchange derivatives to be uncorrupted benchmarks to facilitate remunerative lending and trade. IATP commented on three versions of the CFTC’s proposed cross-border trading rule to help prevent regulatory evasion and support CFTC enforcement activities.

The Petitioners have persuasively established multiple grounds warranting the grant of certiorari, including: (1) the stark conflict that the Second Circuit’s decision has created with the Ninth and Seventh Circuits; (2) the lower court’s unfounded attempt to graft additional requirements onto this Court’s test for ascertaining the territorial reach of a law established in Morrison v. National Australia Bank Ltd., 561 U.S. 247 (2010); and (3) its misreading of the Commodity Exchange Act (“CEA”), which plainly does focus on manipulation on designated contract markets in the U.S.—the precise counterparts of the domestic securities exchanges analyzed in Morrison.

The amici here wish to emphasize the enormous importance of this case. The Second Circuit’s decision, unless reversed, threatens to immunize unquestionably illegal and harmful manipulation in the U.S. commodity futures markets, simply because it was carried out from overseas locations. By in effect encouraging manipulation, the Second Circuit’s decision will undermine the integrity of U.S. futures markets, hurt the countless businesses that rely on them as hedging and price discovery tools, and ultimately burden millions of American consumers who are unwittingly forced to pay more for the essential goods they need in everyday life, from gasoline to groceries. At stake, then, are fair and transparent financial markets, as well as the economic well-being of all Americans, interests of direct relevance to the amici’s missions.

To read the full amicus curiae brief, please download a copy.