What’s The DFPI Doing In Federal Court? – Finance and Banking

United States: What’s The DFPI Doing In Federal Court?

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Enforcement actions by the California Department of Financial Protection typically involve either administrative proceedings or civil actions in the California state courts. Recently, however, the DFPI announced that it and 26 other state regulators had filed a civil complaint in the US District Court. The complaint alleged violations of Section 6(c)(1) of the Commodity Exchange Act, 7 USC § 9(1), and Commodity Futures Trading Commission Regulation 180.1(a)(1)-(3), 17 CFR § 180.1( a)(1)-(3) (2021). How is that the DFPI is seeking enforcement of federal laws and regulations?

The first part of the answer can be found in Section 6(d)(1) of the CEA (7 USC § 13a-2(1) which confers on state attorney generals and securities administrators the authority to bring an action at law or suit in equity to enforce compliance with the CEA or the regulations of the CFTC. The second part of the answer can be found in Section 25536(a) of the California Corporations Code which authorizes the Commissioner to take “such actions as are authorized by Section 6d [sic]of the federal Commodity Exchange Act. . .”.

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