ACI – Financial Markets Association

Dear councillors

ACI – Financial Markets Association (ACI FMA) continues to believe that important issues are raised by the Mark Johnson case that require resolution. Dealers globally have a right to have legal certainty when executing trades and confidence in the legal agreements they use. ACI FMA believes the current verdict denies them that certainty and this could have profound repercussions for the US FX market and implications for any trades that use the United States Dollar.

This is the second Amicus Brief we have filed and you can read our comments regarding the first Amicus Brief in this link:

In this further brief to the Supreme Court, we state at the beginning –

“A reasoned analysis of the undisputed evidence before the district court makes it highly implausible that Defendant-Petitioner could have believed his bank’s handling of the Cairn fix order contravened any governing contract, law, regulation or ethical market standard. On the contrary, he had every reason to believe that his actions were in accord with longstanding and widely published market codes of conduct. Defendant-Petitioner’s necessary awareness of these codes, combined with the absence of any provision of governing contracts or applicable financial law and regulation proscribing his actions, is of direct relevance not only to the issue of fraudulent intent (scienter) requisite to conviction under 18 U.S.C. §§ 1343 and 1349, but to his due process right to adequate notice of the law.”

“Moreover, the upholding of Defendant-Petitioner’s conviction for wire fraud under the Second Circuit’s incongruous application of the “right to control” theory creates a minefield of unforeseeable legal outcomes for counterparties to transactions with even marginal connections in New York. This conviction, upheld upon a single “promise” uttered by Defendant-Petitioner which was explicitly disclaimed by subsequent mutual written agreement prior to the transaction, under circumstances in which no actual or potential economic harm to the alleged victim can be proven, is a model presentation of the problem.”

We trust this Amicus Brief will enable the Supreme Court to re-establish the primacy of trading contracts and legal certainty when negotiating trades.

Promotion of ethical conduct and good market practices is a core value for ACI FMA and, therefore, we fully support codes of conduct such as the FX Global Code (a set of global principles of good practice in the foreign exchange market).

We firmly believe that implementation of the principles of this code provides effective and practical guidance for a well-functioning of the FX Market where all Market Participants are able to confidently and effectively transact at competitive prices that reflect available market information and in a manner that conforms to acceptable standards of behaviour.

We would like to thank Jack Drohan, President of ACI America, the Chair of the CFP, David Woolcock, and the Chair of the FXC, for their instrumental work on this important document.

Kind regards,

Bruno Langfritz (Chairman ACI FMA) and Kim Winding Larsen (President Delegate ACI FMA)