Merrill Lynch v. Curran, 456 U.S. 353 (1982)

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR

THE SIXTH CIRCUIT

Syllabus

The Commodity Exchange Act (CEA), which regulates commodity futures trading, was substantially amended by the Commodity Futures Trading Commission Act of 1974. Among other things, the Commodity Futures Exchange Commission was created to assume the regulatory and enforcement powers previously exercised by the Secretary of Agriculture and certain additional powers, and that Commission was authorized to grant reparations to any person complaining of a violation of the CEA or its implementing regulations committed by any futures commission merchant, floor broker, commodity trading adviser, or commodity pool operator. But the 1974 Act, like the original legislation and other amendatory enactments, was silent on the subject of private judicial remedies for persons injured by a violation of the CEA. These cases involve an action by an investor in commodity futures contracts against his futures commission merchant or broker for violation of an antifraud provision of the CEA, and three actions by speculators in futures contracts against the New York Mercantile Exchange and its officials and against futures commission merchants, claiming damages resulting from unlawful price manipulation that allegedly could have been prevented by the Exchange’s enforcement of its own rules. In each action, after the respective District Courts had ruled adversely to the plaintiffs, the respective Courts of Appeals held that the plaintiffs had implied rights of action under the CEA.

Held: A private party may maintain an action for damages caused by a violation of the CEA. Pp. 374-395.

(a) Where it is clear that an implied cause of action under the CEA was a part of the "contemporary legal context" in which Congress undertook a comprehensive reexamination and amendment of the CEA in 1974, the fact that the amendments left intact the provisions under which the federal courts had implied a cause of action is itself evidence that Congress affirmatively intended to preserve that remedy. Pp. 374-382.

(b) Moreover, a review of the legislative history of the 1974 enactment indicates that preservation of the remedy was indeed what Congress intended. Pp. 382-388.

(c) Purchasers and sellers of futures contracts have standing to assert both types of claims involved here -- violation of the statutory prohibition against fraudulent and deceptive conduct and of the provisions designed to prevent price manipulation. The legislative history clearly indicates that Congress intended to protect all futures traders from price manipulation and other fraudulent conduct violative of the statute. Since actions by investors against exchanges were part of the contemporary legal context that Congress intended to preserve, exchanges can be held accountable for breaching their statutory duties to enforce their own rules prohibiting price manipulation. It follows that those persons who are participants in a conspiracy to manipulate the market in violation of those rules are also subject to suit by futures traders who can prove injury from such violations. Pp. 388-395.

622 F.2d 216 and 638 F.2d 283, affirmed.

STEVENS, J., delivered the opinion of the Court, in which BRENNAN, WHITE, MARSHALL, and BLACKMUN, JJ., joined. POWELL, J., filed a dissenting opinion, in which BURGER, C.J., and REHNQUIST and O’CONNOR, JJ., joined, post, p. 395.