§ 18. — Complaints against registered persons.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 7USC18]
TITLE 7--AGRICULTURE
CHAPTER 1--COMMODITY EXCHANGES
Sec. 18. Complaints against registered persons
(a) Petition for actual damages
(1) Any person complaining of any violation of any provision of this
chapter, or any rule, regulation, or order issued pursuant to this
chapter, by any person who is registered under this chapter may, at any
time within two years after the cause of action accrues, apply to the
Commission for an order awarding--
(A) actual damages proximately caused by such violation. If an
award of actual damages is made against a floor broker in connection
with the execution of a customer order, and the futures commission
merchant which selected the floor broker for the execution of the
customer order is held to be responsible under section 2(a)(1) of
this title for the floor broker's violation, such futures commission
merchant may be required to satisfy such award; and
(B) in the case of any action arising from a willful and
intentional violation in the execution of an order on the floor of a
registered entity, punitive or exemplary damages equal to no more
than two times the amount of such actual damages. If an award of
punitive or exemplary damages is made against a floor broker in
connection with the execution of a customer order, and the futures
commission merchant which selected the floor broker for the
execution of the customer order is held to be responsible under
section 2(a)(1) of this title for the floor broker's violation, such
futures commission merchant may be required to satisfy such award if
the floor broker fails to do so, except that such requirement shall
apply to the futures commission merchant only if it willfully and
intentionally selected the floor broker with the intent to assist or
facilitate the floor broker's violation.
(2)(A) An action may be brought under this subsection by any one or
more persons described in this subsection for and in behalf of such
person or persons and other persons similarly situated, if the
Commission permits such actions pursuant to a final rule issued by the
Commission.
(B) Not later than two hundred and seventy days after October 28,
1992, the Commission shall propose and publish for public comment such
rules as are necessary to carry out subparagraph (A). In developing such
rules, the Commission shall consider the potential impact of such
actions on resources available to the reparations system established
under this chapter and the relative merits of bringing such actions in
Federal court.
(b) Rules and regulations; control over right of appeal
The Commission may promulgate such rules, regulations, and orders as
it deems necessary or appropriate for the efficient and expeditious
administration of this section. Notwithstanding any other provision of
law, such rules, regulations, and orders may prescribe, or otherwise
condition, without limitation, the form, filing, and service of
pleadings or orders, the nature and scope of discovery, counterclaims,
motion practice (including the grounds for dismissal of any claim or
counterclaim), hearings (including the waiver thereof, which may relate
to the amount in controversy), rights of appeal, if any, and all other
matters governing proceedings before the Commission under this section.
(c) Bond requirement when complainant is nonresident; waiver
In case a complaint is made by a nonresident of the United States,
the complainant shall be required, before any formal action is taken on
his complaint, to furnish a bond in double the amount of the claim
conditioned upon the payment of costs, including a reasonable attorney's
fee for the respondent if the respondent shall prevail, and any
reparation award that may be issued by the Commission against the
complainant on any counterclaim by respondent: Provided, That the
Commission shall have authority to waive the furnishing of a bond by a
complainant who is a resident of a country which permits the filing of a
complaint by a resident of the United States without the furnishing of a
bond.
(d) Enforcement of reparation award
If any person against whom an award has been made does not pay the
reparation award within the time specified in the Commission's order,
the complainant, or any person for whose benefit such order was made,
within three years of the date of the order, may file a certified copy
of the order of the Commission, in the district court of the United
States for the district in which he resides or in which is located the
principal place of business of the respondent, for enforcement of such
reparation award by appropriate orders. The orders, writs, and processes
of such district court may in such case run, be served, and be
returnable anywhere in the United States. The petitioner shall not be
liable for costs in the district court, nor for costs at any subsequent
state of the proceedings, unless they accrue upon his appeal. If the
petitioner finally prevails, he shall be allowed a reasonable attorney's
fee, to be taxed and collected as a part of the costs of the suit.
Subject to the right of appeal under subsection (e) of this section, an
order of the Commission awarding reparations shall be final and
conclusive.
(e) Review
Any order of the Commission entered hereunder shall be reviewable on
petition of any party aggrieved thereby, by the United States Court of
Appeals for any circuit in which a hearing was held, or if no hearing
was held, any circuit in which the appellee is located, under the
procedure provided in sections 9 and 15 of this title. Such appeal shall
not be effective unless within 30 days from and after the date of the
reparation order the appellant also files with the clerk of the court a
bond in double the amount of the reparation awarded against the
appellant conditioned upon the payment of the judgment entered by the
court, plus interest and costs, including a reasonable attorney's fee
for the appellee, if the appellee shall prevail. Such bond shall be in
the form of cash, negotiable securities having a market value at least
equivalent to the amount of bond prescribed, or the undertaking of a
surety company on the approved list of sureties issued by the Treasury
Department of the United States. The appellee shall not be liable for
costs in said court. If the appellee prevails, he shall be allowed a
reasonable attorney's fee to be taxed and collected as a part of his
costs.
(f) Automatic bar from trading and suspension for noncompliance; effect
of appeal
Unless the party against whom a reparation order has been issued
shows to the satisfaction of the Commission within fifteen days from the
expiration of the period allowed for compliance with such order that
either an appeal as herein authorized has been taken or payment of the
full amount of the order (or any agreed settlement thereof) has been
made, such party shall be prohibited automatically from trading on all
registered entities and, if the party is registered with the Commission,
such registration shall be suspended automatically at the expiration of
such fifteen-day period until such party shows to the satisfaction of
the Commission that payment of such amount with interest thereon to date
of payment has been made: Provided, That if on appeal the appellee
prevails or if the appeal is dismissed, the automatic prohibition
against trading and suspension of registration shall become effective at
the expiration of thirty days from the date of judgment on the appeal,
but if the judgment is stayed by a court of competent jurisdiction, the
suspension shall become effective ten days after the expiration of such
stay, unless prior thereto the judgment of the court has been satisfied.
(g) Predispute resolution agreements for institutional customers
Nothing in this section prohibits a registered futures commission
merchant from requiring a customer that is an eligible contract
participant, as a condition to the commission merchant's conducting a
transaction for the customer, to enter into an agreement waiving the
right to file a claim under this section.
(Sept. 21, 1922, ch. 369, Sec. 14, as added Pub. L. 93-463, title I,
Sec. 106, Oct. 23, 1974, 88 Stat. 1393; amended Pub. L. 94-16, Sec. 3,
Apr. 16, 1975, 89 Stat. 77; Pub. L. 95-405, Sec. 21, Sept. 30, 1978, 92
Stat. 875; Pub. L. 97-444, title II, Sec. 231, Jan. 11, 1983, 96 Stat.
2319; Pub. L. 102-546, title II, Secs. 209(b)(7), 222(b), 224, title IV,
Sec. 402(11), Oct. 28, 1992, 106 Stat. 3607, 3615, 3617, 3625; Pub. L.
106-554, Sec. 1(a)(5) [title I, Secs. 118, 123(a)(23)], Dec. 21, 2000,
114 Stat. 2763, 2763A-403, 2763A-410.)
Amendments
2000--Subsec. (a)(1)(B). Pub. L. 106-554, Sec. 1(a)(5) [title I,
Sec. 123(a)(23)(A)], substituted ``registered entity'' for `` contract
market''.
Subsec. (f). Pub. L. 106-554, Sec. 1(a)(5) [title I,
Sec. 123(a)(23)(B)], substituted ``registered entities'' for `` contract
markets''.
Subsec. (g). Pub. L. 106-554, Sec. 1(a)(5) [title I, Sec. 118],
added subsec. (g) and struck out former subsec. (g) which read as
follows: ``The provisions of this section shall not become effective
until fifteen months after October 23, 1974: Provided, That claims which
arise within one year immediately prior to the effective date of this
section may be heard by the Commission after such 15-month period.''
1992--Subsec. (a). Pub. L. 102-546, Sec. 224, designated existing
provisions as par. (1), redesignated former pars. (1) and (2) as
subpars. (A) and (B), respectively, and added par. (2).
Pub. L. 102-546, Sec. 222(b), substituted ``awarding--'' and pars.
(1) and (2) for ``awarding actual damages proximately caused by such
violation.''
Subsec. (e). Pub. L. 102-546, Sec. 209(b)(7), made technical
amendment to reference to sections 9 and 15 of this title to reflect
change in reference to corresponding section of original act.
Subsec. (g). Pub. L. 102-546, Sec. 402(11), substituted ``15-month''
for second reference to ``fifteen months''.
1983--Subsec. (a). Pub. L. 97-444, Sec. 231(1), substituted
provisions relating to complaints against violations by persons
``registered under this chapter'' for provisions relating to complaints
against persons ``registered or required to be registered under section
6d, 6e, 6j, or 6m of this title'', and substituted provisions for
application to Commission for an award of actual damages caused by such
violation, for provisions authorizing application to Commission by
petition, and forwarding of complaint, if warranted, to respondent for
satisfaction or answer.
Subsec. (b). Pub. L. 97-444, Sec. 231(2), substituted provisions
relating to promulgation by Commission of rules, regulations, and orders
necessary or appropriate for administration of this section, including
rules of practice and procedure governing proceedings before the
Commission, for provisions relating to investigation and service of
complaint by Commission, and hearing thereon before an Administrative
Law Judge, except that where amount claimed as damages did not exceed
$5,000, hearing need not be held, and proofs could be supplied by
deposition or verified statements of fact.
Subsec. (c). Pub. L. 97-444, Sec. 231(3), (4), redesignated subsec.
(d) as (c). Former subsec. (c), which provided that after opportunity
for hearing on complaints where the damages claimed exceeded the sum of
$5,000 had been provided or waived and on complaints where damages
claimed did not exceed the sum of $5,000 not requiring hearing as
provided herein, Commission would determine whether or not the
respondent had violated any provision of this chapter or any rule,
regulation, or order thereunder, was struck out.
Subsec. (d). Pub. L. 97-444, Sec. 231(4), (5), redesignated subsec.
(f) as (d) and substituted ``subsection (e)'' for ``subsection (g)''.
Former subsec. (d) was redesignated (c).
Subsec. (e). Pub. L. 97-444, Sec. 231(3), (4), redesignated subsec.
(g) as (e). Former subsec. (e), which provided that if, after a hearing
on a complaint made by any person under subsection (a) of this section,
or without hearing as provided in subsections (b) and (c) of this
section, or upon failure of the party complained against to answer a
complaint duly served within the time prescribed, or to appear at a
hearing after being duly notified, the Commission determined that the
respondent had violated any provision of this chapter, or any rule,
regulation, or order thereunder, the Commission would unless the
offender had already made reparation to the person complaining,
determine the amount of damage, if any, to which such person was
entitled as a result of such violation and would make an order directing
the offender to pay to such person complaining such amount on or before
the date fixed in the order, and that if, after the respondent had filed
his answer to the complaint, it appeared therein that the respondent had
admitted liability for a portion of the amount claimed in the complaint
as damages, the Commission under such rules and regulations as it would
prescribe, unless the respondent had already made reparation to the
person complaining, could issue an order directing the respondent to pay
to the complainant the undisputed amount on or before the date fixed in
the order, leaving the respondent's liability for the disputed amount
for subsequent determination, with the remaining disputed amount to be
determined in the same manner and under the same procedure as it would
have been determined if no order had been issued by the Commission with
respect to the undisputed sum, was struck out.
Subsec. (f). Pub. L. 97-444, Sec. 231(4), (6), redesignated subsec.
(h) as (f), made certain grammatical changes, and inserted provision
allowing party against whom a reparation order has been issued to show
compliance by payment of the full amount of the order or any agreed
settlement thereof.
Subsecs. (g) to (i). Pub. L. 97-444, Sec. 231(4), redesignated
subsecs. (g), (h), and (i), as (e), (f), and (g), respectively.
1978--Subsec. (a). Pub. L. 95-405, Sec. 21(1), substituted ``who is
registered or required to be registered'' for ``registered''.
Subsecs. (b), (c). Pub. L. 95-405, Sec. 21(2), (3), substituted
``$5,000'' for ``$2,500'' wherever appearing.
1975--Subsec. (i). Pub. L. 94-16 substituted ``fifteen months'' for
``one year'' in two places, and ``one year'' for ``nine months''.
Effective Date of 1983 Amendment
Amendment by Pub. L. 97-444 effective 120 days after Jan. 11, 1983,
or such earlier date as the Commission shall prescribe by regulation,
see section 239 of Pub. L. 97-444, set out as a note under section 2 of
this title.
Effective Date of 1978 Amendment
Amendment by Pub. L. 95-405 effective Oct. 1, 1978, see section 28
of Pub. L. 95-405, set out as a note under section 2 of this title.
Section Referred to in Other Sections
This section is referred to in sections 6m, 25 of this title.