Miller v. Commodity Futures Trading Commission

MEMORANDUM *

Howard Miller petitions for review of an order of the Commodity Futures Trading Commission (“CFTC”) imposing a $350,000 civil monetary penalty for fraudulent solicitation in violation of the Commodity Exchange Act. The penalty was imposed on remand. See Miller v. CFTC, 197 F.3d 1227 (9th Cir.1999) (“Miller I”).

The CFTC’s choice of sanction is reviewed for abuse of discretion. Lawrence v. CFTC, 759 F.2d 767, 774 (9th Cir.1985). Every exercise of power by a federal agency must constitute “an act of reason grounded on the record before the agency.” Miller I, 197 F.3d at 1236 . While the agency must articulate a “rational connection between the facts found and the choice made,” Burlington Truck Lines v. United States, 371 U.S. 156, 168 , 83 S.Ct. 239 , 9 L.Ed.2d 207 (1962), courts “will uphold a decision of less than ideal clarity if the agency’s path may reasonably be discerned.” Bowman Transp., Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S. 281, 286 , 95 S.Ct. 438 , 42 L.Ed.2d 447 (1974).

Here, the Commission’s path may reasonably be discerned. The Commission first calculated the proved amount of loss to seven identified customers of Miller as a starting point…

dissenting:

I cannot agree with the majority’s conclusion that the Commission’s latest attempt to calculate a civil monetary penalty in this case is “an act of reason grounded on the record before the agency.” To the *185 contrary, the $350,000 penalty is clearly excessive and inconsistent with the Commission’s own precedent.

First, the Commission determined that the amount of loss suffered by the seven testifying customers was approximately $100,000. At oral argument, the government stated that the commissions Miller earned from those seven customers amounted to approximately half that amount, $50,000. The $350,000 penalty is therefore seven times the amount of Miller’s apparent gains from the seven customers in question.

Moreover, in its 1998 Opinion and Order, the Commission concluded that the total commissions earned by Miller from 1988 through 1991 totaled $637,519. 1 Accordingly, the $350,000 penalty amounts to approximately 55% of Miller’s total earnings during the four-year period or almost 220% of his average annual income. By contrast, as the Commission’s latest decision acknowledges, in several earlier cases it has imposed penalties amounting to a far smaller…