CFTC judge dismisses TradeStation customer case and rejects broker’s fee claim

A CFTC administrative judge dismissed a customer’s complaint against TradeStation Securities and the broker’s counterclaim for legal fees in an initial decision dated 26 October. The ruling rejects the customer’s case while preserving the distinction between defeating a complaint and charging the complainant for having brought it.[1]

David Kaminski sought about $577,000 in alleged losses connected with trading by a third-party adviser. Judge Kavita Kumar Puri found the complaint failed to state viable claims under the Commodity Exchange Act or CFTC rules; she also found it untimely. The decision rejected the asserted basis for treating the adviser as TradeStation’s agent.[1]

Reparations access constrains the fee claim

TradeStation relied on an indemnity in a third-party trading authorisation to seek its defence costs. The judge concluded that applying it this way would chill or effectively foreclose access to CFTC reparations, contrary to Rule 166.5(c)(3). Both the complaint and counterclaim were dismissed with prejudice.[1]

The underlying rule protects the right to seek reparations in covered customer agreements made before a dispute arises. Its definition of customer excludes eligible contract participants, so its scope should not be generalised to every institutional agreement. It is an existing dispute-resolution protection, rather than a new fee rule created by this case.[2]

The forum and procedural stage matter

CFTC eligibility guidance requires a complaint to identify a violation of the Commodity Exchange Act or CFTC regulations that caused account losses, against a firm or individual meeting the programme’s registration condition. It asks for supporting records such as account-opening forms, statements and trading records. A trading loss alone does not establish that jurisdictional and evidential basis.[4]

The programme allows respondents to counterclaim where their claim arises from the same facts. The CFTC describes a disputed debit balance as a typical example. That procedural opportunity does not establish that every contractual demand made in response to a complaint is recoverable.[3]

The published ruling is an initial decision. Under the CFTC’s procedure, parties in formal and summary proceedings can seek Commission review; the Commission may affirm, modify or reverse the result. The document should therefore be read at that procedural stage, without treating it as a final Commission determination.[3]

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