The US Court of Appeals for the Second Circuit upheld a lower-court's decision to dismiss a private civil action brought under the anti-fraud provisions of the U.S. Commodities Exchange Act ("CEA"), 7 U.S.C. § 1, et seq., by an investor against an international financial services organization, based in New York (that managed investment programs focused on commodity futures and real estate), several of its affiliates who were registered participants in the U.S. commodities markets, and two of its principals.
The Second Circuit's decision in Loginovskaya v. Batratchenko, 13-1624-CV (2d Cir. N.Y. Sept. 4, 2014) represents an application of Morrison to commodities fraud claims and significantly limits the ability of a foreign resident plaintiff to bring a claim under the CEA in U.S. federal courts. Under the rule announced in Loginovskaya, private victims of commodities fraud will be required to allege a separate domestic commodities transaction even if they adequately plead a violation of § 4o, which does not require such a transaction.
For a more detailed briefing on the case from John O'Donnell in our New York office, click here.
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