Judge J. Paul Oetken
Russian citizen Loginovskaya sued a Nevis-based hedge fund, principal Batratchenko and associated entities under §§4o and 22(a) of the Commodity Exchange Act. Batratchenko asserted that purchase of ownership interest in the funds was not "domestic" under Morrison v. Nat’l Australia Bank and Absolute Activist Value Master Fund v. Ficeto. In Morrison the Supreme Court upheld that, absent contrary intent, legislation by Congress applies only in the United States. In Absolute Activist Second Circuit ruled that in deciding if the purchase and sale of securities was "domestic" the only relevant consideration was whether the parties became bound to effect the transaction in the United States. In dismissing Loginovskaya’s lawsuit, the court held a private plaintiff lacks a claim under §§4o and 22(a) if the complained of transaction is not domestic, even if the defendant is a regulated entity in the United States and there are other significant U.S. contacts. For a private litigant to assert a viable §4o claim, one or more transactions enumerated in §22 must be domestic in nature. Because the court applied the Absolute Activist "transactional" test to §22, rather than §4o’s anti-fraud provision, defendants’ status as regulated entities was immaterial.
