Document Type
Article
Publication Date
2010
Publication Information
104 Nw. U.L. Rev. 799 (2010).
Abstract
A company markets computer software that provides day traders with real-time data and recommendations for buying and selling futures on commodities markets. In a late night infomercial, the firm touts the spectacular "certified" profits that purchasers would have earned had they been using this one-of-a-kind system over the past seven years. What the suntanned host does not tell viewers at home is that these "certified" results are not based on actual trades, but simulations of what the system would have produced based on historical data. A regulator initiates administrative proceedings against the firm, charging that this omission "defrauded" customers under the terms of the statute governing commodities trading. In the proceedings, a critical question is whether this omission is significant enough to satisfy the "materiality" element of the law of fraud. The reviewing agency concludes that it is and levies a substantial fine. The firm seeks review in a federal court of appeals. If the fraud question is a close one, the court must decide how much respect to give the agency's legal conclusion. On the one hand, what it means to "defraud" customers here is a statutory question, and Chevron U.S.A., Inc. v. Natural Resources Defense Council indicates that courts should defer to an agency's reading of an ambiguous statute it implements, so long as that interpretation is "reasonable." On the other hand, in interpreting the term "defraud," the agency simply applied the elements of the common law of fraud. In doing so, it faced the kind of legal question courts frequently confront and reached a decision that would be reviewed de novo if made by a district court.
Recommended Citation
Jeffrey Pojanowski,
Reason and Reasonableness in Review of Agency Decisions,
104 Nw. U.L. Rev. 799 (2010)..
Available at:
https://scholarship.law.nd.edu/law_faculty_scholarship/1866
Comments
Abstract from introduction.