Investor Who Blamed NFA For Trader’s Acts Falls Short on Appeal

An investor lost his bid to convince the Seventh Circuit to give him another chance to hold a regulator liable for not banning a trader who allegedly fraudulently solicited him for funds to purchase commodities futures.

The National Futures Association failed to enforce its bylaws when it didn’t disqualify the trader after his former firm agreed to withdraw its membership, investor Dennis Troyer argued. But the district court correctly determined that the NFA didn’t “expel” the firm, so nothing triggered the bylaw, the U.S. Court of Appeals for the Seventh Circuit said.

Troyer first invested through the trader, Thomas Heneghan, ...