U.S. Commodity Futures Trading Commission v. Hall , 632 F. App'x 111 ( 2015 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 14-2099
U.S. COMMODITY FUTURES TRADING COMMISSION,
Plaintiff - Appellee,
v.
NEAL E. HALL, d/b/a SHOWMEMYFUTURE.COM,
Defendant - Appellant.
Appeal from the United States District Court for the Middle
District of North Carolina, at Greensboro. James A. Beaty, Jr.,
Senior District Judge. (1:11-cv-00434-JAB-LPA)
Submitted: November 30, 2015 Decided: December 9, 2015
Before DUNCAN, AGEE, and KEENAN, Circuit Judges.
Affirmed by unpublished per curiam opinion.
David W. McDonald, HICKS, MCDONALD & NOECKER, LLP, Greensboro,
North Carolina, for Appellant. Jonathan L. Marcus, General
Counsel, Robert A. Schwartz, Deputy General Counsel, Nancy R.
Doyle, Martin B. White, Assistant General Counsel, UNITED STATES
COMMODITY FUTURES TRADING COMMISSION, Washington, D.C., for
Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
The United States Commodity Futures Trading Commission
(“CFTC”) brought this suit against Neal E. Hall, alleging that
Hall improperly acted as a commodity trading advisor (“CTA”) in
violation of the Commodity Exchange Act (“CEA”), 7 U.S.C.
§ 6m(1) (2012), and its regulations, 17 C.F.R. § 4.41(a)(3),
(b)(1) (2015). The district court adopted the recommendation of
the magistrate judge, granted summary judgment to CFTC, and
imposed a permanent injunction and a monetary penalty in the
amount of $210,000. 1 We affirm.
As an initial matter, we find that Hall failed to preserve
several of the claims he raises on appeal. “[T]o preserve for
appeal an issue in a magistrate judge’s report, a party must
object to the finding or recommendation on that issue with
sufficient specificity so as reasonably to alert the district
court of the true ground for the objection.” United States v.
Midgette, 478 F.3d 616, 622 (4th Cir. 2007). Although Hall’s
1Hall argues that the amended judgment could be read as
granting judgment in his favor. The district court’s order
granting CFTC’s motion for summary judgment granted CFTC
monetary and injunctive relief. The amended judgment stated
that pursuant to this order, CFTC’s motion for summary judgment
was granted and the case was dismissed. Hall argues that the
amended judgment’s use of the term “dismissed” means that CFTC
was awarded no relief. We disagree with this interpretation,
which contradicts the district court’s indisputable intention to
award CFTC relief, and find that the amended judgment
incorporates the relief provided in the summary judgment order.
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objections stated generally that the information on his website
was protected speech and that the magistrate judge’s
interpretation of the 17 C.F.R. § 4.14(a) (2015) exemptions
violated his right to free speech, he did not assert his present
arguments that § 6m(1)’s registration requirement constituted an
improper prior restraint on his speech and that the disclaimers
required by § 4.41 constituted compelled speech. 2 Likewise,
Hall’s objections did not assert his present claims that the
magistrate judge improperly relied on allegedly involuntary
inculpatory statements and that the relief recommended by the
magistrate judge was excessive. Finally, although Hall
challenged the magistrate judge’s denial of an exemption under
17 C.F.R. § 4.14(a)(9) based on a finding that Hall needed to
satisfy subsections (9)(i), (9)(ii), and (10), he did not
challenge the magistrate judge’s denial of an exemption under
subsection (10) or the holding that Hall held himself out as a
CTA under a similar provision in § 6m(1). Because Hall did not
assert these issues in his objections to the magistrate judge’s
2Hall did preserve a general argument that the magistrate
judge’s interpretation of § 4.14(a)(9) violated his free speech
rights; to the extent he asserts this argument on appeal, we
find that it is meritless because the magistrate judge’s finding
that Hall did not qualify for this exemption was based on Hall’s
conduct in performing trades on his clients’ accounts rather
than on his speech. See Willis v. Town of Marshall, 426 F.3d
251, 257 (4th Cir. 2005) (holding First Amendment does not
protect nonexpressive conduct).
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recommendation, we find that he has waived appellate review of
these claims. Midgette, 478 F.3d at 622.
Hall did preserve his argument that the district court
erred by finding that he was not exempt from the CEA’s
registration requirement under 17 C.F.R. § 4.14(a)(9). Section
4.14(a) provides in relevant part:
(a) A person is not required to register under the
[CEA] as a commodity trading advisor if:
. . .
(9) It does not engage in any of the following
activities:
(i) Directing client accounts; or
(ii) Providing commodity trading advice
based on, or tailored to, the commodity
interest or cash market positions or
other circumstances or characteristics
of particular clients; or
(10) If, as provided for in section 4m(1) of the
Act, during the course of the preceding 12
months, it has not furnished commodity
trading advice to more than 15 persons and
it does not hold itself out generally to the
public as a commodity trading advisor.
17 C.F.R. § 4.14(a)(9), (10).
We agree with Hall that the magistrate judge erred by
requiring him to satisfy both subsections (9) and (10) to
qualify for an exemption. 3 However, we conclude that this error
3 We note that Hall’s argument below focused on his claim
that he only had to satisfy either subsection (9)(i) or
subsection (9)(ii). The magistrate judge correctly found that
Hall had to satisfy both parts of subsection (9) to obtain an
exemption under that subsection, although he erroneously
extended this ruling to encompass the separate exemption
provided by subsection (10).
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is harmless. “[I]n order to find a district court’s error
harmless, we need only be able to say with fair assurance, after
pondering all that happened without stripping the erroneous
action from the whole, that the judgment was not substantially
swayed by the error.” United States v. Johnson, 617 F.3d 286,
292 (4th Cir. 2010) (internal quotation marks omitted). The
magistrate judge found that Hall did not qualify for a
subsection (9) exemption because he directed client accounts,
not because he failed to satisfy subsection (10). Although the
magistrate judge erroneously found that Hall’s direction of
client accounts precluded a subsection (10) exemption, the
magistrate judge’s finding that Hall did not qualify for an
exemption under the nearly identical language of 7 U.S.C.
§ 6m(1) conclusively indicates that the magistrate judge would
not have found that subsection (10) applied even if he had
separately considered it.
Hall also argues that the magistrate judge erred by finding
that he did not qualify for an exemption under § 4.14(a)(9)
because he directed customer accounts. “Direct, as used in the
context of trading commodity interest accounts, refers to
agreements whereby a person is authorized to cause transactions
to be effected for a client’s commodity interest account without
the client’s specific authorization.” 17 C.F.R. § 4.10(f)
(2015). Hall admitted that his website offered “managed
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accounts” or “auto trade accounts,” and the evidence included
correspondence he sent to his managed account holders that
indicated that Hall’s clients gave him general authorization to
trade according to his system, and did not specifically
authorize each trade. The only evidence Hall submitted on this
issue was an affidavit submitted after the magistrate judge made
his recommendation, and this affidavit did not indicate whether
the authorization Hall received from his clients was general or
specific. Because this evidence indicated that Hall’s clients
gave him general, rather than specific, authorization to conduct
trades on their accounts, we find that the district court
correctly granted summary judgment to CFTC.
Accordingly, we affirm the judgment of the district court.
We dispense with oral argument because the facts and legal
contentions are adequately presented in the materials before
this court and argument would not aid the decisional process.
AFFIRMED
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