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U.S. Code as of:
01/03/05
Section 25. Private rights of action
(a) Actual damages; actionable transactions; exclusive remedy
(1) Any person (other than a registered entity or registered
futures association) who violates this chapter or who willfully
aids, abets, counsels, induces, or procures the commission of a
violation of this chapter shall be liable for actual damages
resulting from one or more of the transactions referred to in
subparagraphs (A) through (D) of this paragraph and caused by such
violation to any other person -
(A) who received trading advice from such person for a fee;
(B) who made through such person any contract of sale of any
commodity for future delivery (or option on such contract or any
commodity); or who deposited with or paid to such person money,
securities, or property (or incurred debt in lieu thereof) in
connection with any order to make such contract;
(C) who purchased from or sold to such person or placed through
such person an order for the purchase or sale of -
(i) an option subject to section 6c of this title (other than
an option purchased or sold on a registered entity or other
board of trade);
(ii) a contract subject to section 23 of this title; or
(iii) an interest or participation in a commodity pool; or
(D) who purchased or sold a contract referred to in
subparagraph (B) hereof if the violation constitutes a
manipulation of the price of any such contract or the price of
the commodity underlying such contract.
(2) Except as provided in subsection (b) of this section, the
rights of action authorized by this subsection and by sections
7(d)(13), 7a-1(b)(1)(E), and 21(b)(10) of this title shall be the
exclusive remedies under this chapter available to any person who
sustains loss as a result of any alleged violation of this chapter.
Nothing in this subsection shall limit or abridge the rights of the
parties to agree in advance of a dispute upon any forum for
resolving claims under this section, including arbitration.
(3) In any action arising from a violation in the execution of an
order on the floor of a registered entity, the person referred to
in paragraph (1) shall be liable for -
(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) where the violation is willful and intentional, 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.
(4) Contract enforcement between eligible counterparties. - No
agreement, contract, or transaction between eligible contract
participants or persons reasonably believed to be eligible contract
participants, and no hybrid instrument sold to any investor, shall
be void, voidable, or unenforceable, and no such party shall be
entitled to rescind, or recover any payment made with respect to,
such an agreement, contract, transaction, or instrument under this
section or any other provision of Federal or State law, based
solely on the failure of the agreement, contract, transaction, or
instrument to comply with the terms or conditions of an exemption
or exclusion from any provision of this chapter or regulations of
the Commission.
(b) Liabilities of organizations and individuals; bad faith
requirement; exclusive remedy
(1)(A) A registered entity that fails to enforce any bylaw, rule,
regulation, or resolution that it is required to enforce by
sections 7 through 7a-2 of this title, (B) a licensed board of
trade that fails to enforce any bylaw, rule, regulation, or
resolution that it is required to enforce by the Commission, or (C)
any registered entity that in enforcing any such bylaw, rule,
regulation, or resolution violates this chapter or any Commission
rule, regulation, or order, shall be liable for actual damages
sustained by a person who engaged in any transaction on or subject
to the rules of such registered entity to the extent of such
person's actual losses that resulted from such transaction and were
caused by such failure to enforce or enforcement of such bylaws,
rules, regulations, or resolutions.
(2) A registered futures association that fails to enforce any
bylaw or rule that is required under section 21 of this title or in
enforcing any such bylaw or rule violates this chapter or any
Commission rule, regulation, or order shall be liable for actual
damages sustained by a person that engaged in any transaction
specified in subsection (a) of this section to the extent of such
person's actual losses that resulted from such transaction and were
caused by such failure to enforce or enforcement of such bylaw or
rule.
(3) Any individual who, in the capacity as an officer, director,
governor, committee member, or employee of registered (!1) entity
or a registered futures association willfully aids, abets,
counsels, induces, or procures any failure by any such entity to
enforce (or any violation of the chapter in enforcing) any bylaw,
rule, regulation, or resolution referred to in paragraph (1) or (2)
of this subsection, shall be liable for actual damages sustained by
a person who engaged in any transaction specified in subsection (a)
of this section on, or subject to the rules of, such registered
entity or, in the case of an officer, director, governor, committee
member, or employee of a registered futures association, any
transaction specified in subsection (a) of this section, in either
case to the extent of such person's actual losses that resulted
from such transaction and were caused by such failure or violation.
(4) A person seeking to enforce liability under this section must
establish that the registered entity (!2) registered futures
association, officer, director, governor, committee member, or
employee acted in bad faith in failing to take action or in taking
such action as was taken, and that such failure or action caused
the loss.
(5) The rights of action authorized by this subsection shall be
the exclusive remedy under this chapter available to any person who
sustains a loss as a result of (A) the alleged failure by a
registered entity or registered futures association or by any
officer, director, governor, committee member, or employee to
enforce any bylaw, rule, regulation, or resolution referred to in
paragraph (1) or (2) of this subsection, or (B) the taking of
action in enforcing any bylaw, rule, regulation, or resolution
referred to in this subsection that is alleged to have violated
this chapter, or any Commission rule, regulation, or order.
(c) Jurisdiction; statute of limitations; venue; process
The United States district courts shall have exclusive
jurisdiction of actions brought under this section. Any such action
shall be brought not later than two years after the date the cause
of action arises. Any action brought under subsection (a) of this
section may be brought in any judicial district wherein the
defendant is found, resides, or transacts business, or in the
judicial district wherein any act or transaction constituting the
violation occurs. Process in such action may be served in any
judicial district of which the defendant is an inhabitant or
wherever the defendant may be found.
(d) Dates of application to actions
The provisions of this section shall become effective with
respect to causes of action accruing on or after the date of
enactment of the Futures Trading Act of 1982 [January 11, 1983]:
Provided, That the enactment of the Futures Trading Act of 1982
shall not affect any right of any parties which may exist with
respect to causes of action accruing prior to such date.
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