Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Curran
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MERRILL LYNCH, PIERCE, FENNER & SMITH, INC.
v.
CURRAN ET AL.
Supreme Court of United States.
*354 Richard P. Saslow argued the cause for petitioner in No. 80-203. With him on the briefs was Douglas G. Graham. William E. Hegarty argued the cause for petitioners in No. 80-757. With him on the briefs were Maurice Mound, Charles Platto, Joseph W. Muccia, and Ruth D. MacNaughton. Gerard K. Sandweg, Jr., argued the cause for petitioners in Nos. 80-895 and 80-936. With him on the briefs for petitioner in No. 80-895 was W. Stanley Walch. Lawrence H. Hunt, Jr., Stuart S. Ball, Michael W. Davis, Donald G. McCabe, Edward J. Boyle, and Barbara A. Mentz filed briefs for petitioners in No. 80-936.
Robert A. Hudson argued the cause and filed a brief for respondents in No. 80-203. Leonard Toboroff argued the cause and filed a brief for Leist et al., respondents in Nos. *355 80-757, 80-895, and 80-936. Leonard M. Mendelson filed a brief for National Super Spuds, Inc., et al., respondents in No. 80-936.
Barry Sullivan argued the cause for the Commodity Futures Trading Commission as amicus curiae urging affirmance in No. 80-203. With him on the brief were Solicitor General Lee, Deputy Solicitor General Geller, Pat G. Nicolette, Gregory C. Glynn, and Mark D. Young.[]
JUSTICE STEVENS delivered the opinion of the Court.
The Commodity Exchange Act (CEA), 7 U. S. C. § 1 et seq. (1976 ed. and Supp. IV),[1] has been aptly characterized *356 as "a comprehensive regulatory structure to oversee the volatile and esoteric futures trading complex."[2] The central question presented by these cases is whether a private party may maintain an action for damages caused by a violation of the CEA. The United States Court of Appeals for the Sixth Circuit answered that question affirmatively, holding that an investor may maintain an action against his broker for violation of an antifraud provision of the CEA.[3] The Court of Appeals for the Second Circuit gave the same answer to the question in actions brought by investors claiming damages resulting from unlawful price manipulation that allegedly could have been prevented by the New York Mercantile Exchange's enforcement of its own rules.[4]
We granted certiorari to resolve a conflict between these decisions and a subsequent decision of the Court of Appeals for the Fifth Circuit,[5] and we now affirm. Prefatorily, we describe some aspects of the futures trading business, summarize the statutory scheme, and outline the essential facts of the separate cases.[6]
*357 I
Prior to the advent of futures trading, agricultural products generally were sold at central markets. When an entire crop was harvested and marketed within a short timespan, dramatic price fluctuations sometimes created severe hardship for farmers or for processors. Some of these risks were alleviated by the adoption of quality standards, improvements in storage and transportation facilities, and the practice of "forward contracting" the use of executory contracts fixing the terms of sale in advance of the time of delivery.[7]
When buyers and sellers entered into contracts for the future delivery of an agricultural product, they arrived at an agreed price on the basis of their judgment about expected market conditions at the time of delivery. Because the weather and other imponderables affected supply and demand, normally the market price would fluctuate before the contract was performed. A declining market meant that the executory agreement was more valuable to the seller than the commodity covered by the contract; conversely, in a rising market the executory contract had a special value for the buyer, who not only was assured of delivery of the commodity but also could derive a profit from the price increase.
The opportunity to make a profit as a result of fluctuations in the market price of commodities covered by contracts for future delivery motivated speculators to engage in the practice of buying and selling "futures contracts." A speculator who owned no present interest in a commodity but anticipated a price decline might agree to a future sale at the current market price, intending to purchase the commodity at a reduced price on or before the delivery date. A "short" sale of that kind would result in a loss if the price went up instead of down. On the other hand, a price increase would produce a gain for a "long" speculator who had acquired a contract to *358 purchase the same commodity with no intent to take delivery but merely for the purpose of reselling the futures contract at an enhanced price.
In the 19th century the practice of trading in futures contracts led to the development of recognized exchanges or boards of trade. At such exchanges standardized agreements covering specific quantities of graded agricultural commodities to be delivered during specified months in the future were bought and sold pursuant to rules developed by the traders themselves. Necessarily the commodities subject to such contracts were fungible. For an active market in the contracts to develop, it also was essential that the contracts themselves be fungible. The exchanges therefore developed standard terms describing the quantity and quality of the commodity, the time and place of delivery, and the method of payment; the only variable was price. The purchase or sale of a futures contract on an exchange is therefore motivated by a single factor the opportunity to make a profit (or to minimize the risk of loss) from a change in the market price.
The advent of speculation in futures markets produced well-recognized benefits for producers and processors of agricultural commodities. A farmer who takes a "short" position in the futures market is protected against a price decline; a processor who takes a "long" position is protected against a price increase. Such "hedging" is facilitated by the availability of speculators willing to assume the market risk that the hedging farmer or processor wants to avoid. The speculators' participation in the market substantially enlarges the number of potential buyers and sellers of executory contracts and therefore makes it easier for farmers and processors to make firm commitments for future delivery at a fixed price. The liquidity of a futures contract, upon which hedging depends, is directly related to the amount of speculation that takes place.[8]
*359 Persons who actually produce or use the commodities that are covered by futures contracts are not the only beneficiaries of futures trading. The speculators, of course, have opportunities to profit from this trading. Moreover, futures trading must be regulated by an organized exchange. In addition to its regulatory responsibilities, the exchange must maintain detailed records and perform a clearing function to discharge the offsetting contracts that the short or long speculators have no desire to perform.[9] The operation of the exchange creates employment opportunities for futures commission merchants, who solicit orders from individual traders, and for floor brokers, who make the actual trades on the floor of the exchange on behalf of futures commission merchants and their customers. The earnings of the persons who operate the futures market the exchange itself, the clearinghouse, the floor brokers, and the futures commission merchants are financed by commissions on the purchase and sale of futures contracts made over the exchange.
Thus, in a broad sense, futures trading has a direct financial impact on three classes of persons. Those who actually are interested in selling or buying the commodity are described as "hedgers";[10] their primary financial interest is in the profit to be earned from the production or processing of the commodity. Those who seek financial gain by taking positions in the futures market generally are called "speculators" or "investors"; without their participation, futures markets "simply would not exist."[11] Finally, there are the *360 futures commission merchants, the floor brokers, and the persons who manage the market; they also are essential participants, and they have an interest in maximizing the activity on the exchange. The petitioners in these cases are members of this third class whereas their adversaries, the respondents, are speculators or investors.
II
Because Congress has recognized the potential hazards as well as the benefits of futures trading, it has authorized the regulation of commodity futures exchanges for over 60 years. In 1921 it enacted the Future Trading Act, 42 Stat. 187, which imposed a prohibitive tax on grain[12] futures transactions that were not consummated on an exchange designated *361 as a "contract market" by the Secretary of Agriculture.[13] The 1921 statute was held unconstitutional as an improper exercise of the taxing power in Hill v. Wallace, 259 U. S. 44 (1922), but its regulatory provisions were promptly reenacted in the Grain Futures Act, 42 Stat. 998, and upheld under the commerce power in Chicago Board of Trade v. Olsen, 262 U. S. 1 (1923).[14] Under the original legislation, the principal function of the Secretary was to require the governors of a privately organized exchange to supervise the operation of the market. Two of the conditions for designation were that the governing board of the contract market prevent its members from disseminating misleading market information[15] and prevent the "manipulation of prices or the cornering of any grain by the dealers or operators upon such board."[16] The requirement that designated contract markets *362 police themselves and the prohibitions against disseminating misleading information and manipulating prices have been part of our law ever since.
In 1936 Congress changed the name of the statute to the Commodity Exchange Act, enlarged its coverage to include other agricultural commodities,[17] and added detailed provisions regulating trading in futures contracts. Commodity Exchange Act, ch. 545, 49 Stat. 1491. Among the significant new provisions was § 4b, prohibiting any member of a contract market from defrauding any person in connection with the making of a futures contract,[18] and § 4a, authorizing a *363 commission composed of the Secretary of Agriculture, the Secretary of Commerce, and the Attorney General to fix limits on the amount of permissible speculative trading in a futures contract.[19] The legislation also required registration of futures commission merchants and floor brokers.[20]
*364 In 1968 the CEA again was amended to enlarge its coverage[21] and to give the Secretary additional enforcement authority. Act of Feb. 19, 1968, 82 Stat. 26. The Secretary was authorized to disapprove exchange rules that were inconsistent with the statute,[22] and the contract markets were required to enforce their rules;[23] the Secretary was authorized to suspend a contract market[24] or to issue a cease-and-desist order[25] upon a showing that the contract market's rules were not being enforced. In addition, the criminal sanctions for price manipulation were increased significantly,[26] and any *365 person engaged in price manipulation was subjected to the Secretary's authority to issue cease-and-desist orders for violations of the CEA and implementing regulations.[27]
In 1974, after extensive hearings and deliberation, Congress enacted the Commodity Futures Trading Commission Act of 1974. 88 Stat. 1389. Like the 1936 and the 1968 legislation, the 1974 enactment was an amendment to the existing statute[28] that broadened its coverage[29] and increased the penalties for violation of its provisions.[30] The Commission was authorized to seek injunctive relief,[31] to alter or supplement a contract market's rules,[32] and to direct a contract market to take whatever action deemed necessary by the Commission in an emergency.[33] The 1974 legislation retained the basic statutory prohibitions against fraudulent practices and price manipulation,[34] as well as the authority to prescribe *366 trading limits. The 1974 amendments, however, did make substantial changes in the statutory scheme; Congress authorized a newly created Commodities Futures Trading Commission to assume the powers previously exercised by the Secretary of Agriculture, as well as certain additional powers. The enactment also added two new remedial provisions for the protection of individual traders. The newly enacted § 5a(11) required every contract market to provide an arbitration procedure for the settlement of traders' claims of no more than $15,000.[35] And the newly enacted § 14 authorized the Commission to grant reparations to any person complaining of any violation of the CEA, or its implementing regulations, committed by any futures commission merchant or any associate thereof, floor broker, commodity trading adviser, or commodity pool operator.[36] This section authorized the Commission to investigate complaints and, "if in its opinion the facts warrant such action," to afford a hearing before an administrative law judge. Reparations orders entered by the Commission are subject to judicial review.
The latest amendments to the CEA, the Futures Trading Act of 1978, 92 Stat. 865, again increased the penalties for violations of the statute.[37] The enactment also authorized the States to bring parens patriae actions, seeking injunctive or *367 monetary relief for certain violations of the CEA, implementing regulations, or Commission orders.[38]
Like the previous enactments, as well as the 1978 amendments, the Commodity Futures Trading Commission Act of 1974 is silent on the subject of private judicial remedies for persons injured by a violation of the CEA.
III
In the four cases before us, the allegations in the complaints filed by respondents are assumed to be true. The first involves a complaint by customers against their broker. The other three arise out of a malfunction of the contract market for futures contracts covering the delivery of Maine potatoes in May 1976, " `when the sellers of almost 1,000 contracts failed to deliver approximately 50,000,000 pounds of potatoes, resulting in the largest default in the history of commodities futures trading in this country.' "[39]
*368 No. 80-203
Respondents in No. 80-203 were customers of petitioner, a futures commission merchant registered with the Commission. In 1973, they authorized petitioner to trade in commodity futures on their behalf and deposited $100,000 with petitioner to finance such trading. The trading initially was profitable, but substantial losses subsequently were suffered and the account ultimately was closed.
In 1976, the respondents commenced this action in the United States District Court for the Eastern District of Michigan. They alleged that petitioner had mismanaged the account, had made material misrepresentations in connection with the opening and the management of the account, had made a large number of trades for the sole purpose of generating commissions, and had refused to follow their instructions. Respondents claimed that petitioner had violated the CEA, the federal securities laws, and state statutory and common law.
The District Court dismissed the claims under the federal securities laws and stayed other proceedings pending arbitration. App. to Pet. for Cert. in No. 80-203, pp. A-39 to A-49. On appeal, a divided panel of the Court of Appeals for the Sixth Circuit affirmed the dismissal of the federal securities laws claims,[40] but held that the contractual provision requiring respondents to submit the dispute to arbitration was unenforceable.[41] Judge Engel, writing for the majority, then sua sponte noticed and decided the question whether respondents *369 could maintain a private damages action under the CEA:[42]
"Although the CEA does not expressly provide for a private right of action to recover damages, an implied right of action was generally thought to exist prior to the 1974 amendment of the Act. Consistent with this view, no issue concerning the continuing validity of the implied right of action was raised in the court below, nor in this appeal. Nevertheless, to provide direction to the district court upon remand and to avoid further delay in this already protracted litigation, we review this issue and specifically agree that an implied private right of action survived the 1974 amendments to the Act." 622 F. 2d 216, 230 (1980) (footnotes omitted).
Judge Phillips dissented from this conclusion. Id., at 237. We granted certiorari limited to this question: "Does the Commodity Exchange Act create an implied private right of action for fraud in favor of a customer against his broker?" 451 U. S. 906 (1981).
Nos. 80-757, 80-895, and 80-936
One of the futures contracts traded on the New York Mercantile Exchange provided for the delivery of a railroad car lot of 50,000 pounds of Maine potatoes at a designated place on the Bangor and Aroostook Railroad during the period between May 7, 1976, and May 25, 1976. Trading in this contract commenced early in 1975 and terminated on May 7, 1976. On two occasions during this trading period the Department of Agriculture issued reports containing estimates that total potato stocks, and particularly Maine potato stocks, were substantially down from the previous year. This information *370 had the understandable consequences of inducing investors to purchase May Maine potato futures contracts (on the expectation that they would profit from a shortage of potatoes in May) and farmers to demand a higher price for their potatoes on the cash market.[43]
To counteract the anticipated price increases, a group of entrepreneurs described in the complaints as the "short sellers" formed a conspiracy to depress the price of the May Maine potato futures contract. The principal participants in this "short conspiracy" were large processors of potatoes who then were negotiating with a large potato growers association on the cash market. The conspirators agreed to accumulate an abnormally large short position in the May contract, to make no offsetting purchases of long contracts at a price in excess of a fixed maximum, and to default, if necessary, on their short commitments. They also agreed to flood the Maine cash markets with unsold potatoes. This multifaceted strategy was designed to give the growers association the impression that the supply of Maine potatoes would be plentiful. On the final trading day the short sellers had accumulated a net short position of almost 1,900 contracts, notwithstanding a Commission regulation[44] limiting their lawful net position to 150 contracts. They did, in fact, default.
The trading limit also was violated by a separate group described as the "long conspirators." Aware of the short conspiracy, they determined that they not only could counteract its effects but also could enhance the price the short conspirators would have to pay to liquidate their short positions by accumulating an abnormally large long position at the close of trading they controlled 911 long contracts and by creating *371 an artificial shortage of railroad cars during the contract delivery period. Because the long conspirators were successful in tying up railroad cars, they prevented the owners of warehoused potatoes from making deliveries to persons desiring to perform short contracts.[45]
Respondents are speculators who invested long in Maine futures contracts.[46] Allegedly, if there had been no price manipulation, they would have earned a significant profit by reason of the price increase that free market forces would have produced.
Petitioners in No. 80-757 are the New York Mercantile Exchange and its officials. Respondents' complaints alleged that the Exchange knew, or should have known, of both the short and the long conspiracies but failed to perform its statutory duties to report these violations to the Commission and to prevent manipulation of the contract market. The Exchange allegedly had the authority under its rules to declare an emergency, to require the shorts and the longs to participate in an orderly liquidation, and to authorize truck deliveries and other measures that would have prevented or mitigated the consequences of the massive defaults.
Petitioners in No. 80-895 and No. 80-936 are the firms of futures commission merchants that the short conspirators used to accumulate their net short position. The complaint alleged that petitioners knowingly participated in the conspiracy to accumulate the net short position, and in doing so violated position and trading limits imposed by the Commission and Exchange rules requiring liquidation of contracts *372 that obviously could not be performed.[47] Moreover, the complaint alleged that petitioners violated their statutory duty to report violations of the CEA to the Commission.
In late 1976, three separate actions were filed in the United States District Court for the Southern District of New York.[48] After extensive discovery, the District Court ruled on various motions, all of which challenged the plaintiffs' right to recover damages under the CEA.[49] The District Court considered it beyond question that the plaintiffs were within the class for whose special benefit the statute had been enacted,[50] but it concluded that Congress did not intend *373 a private right of action to exist under the CEA. The court granted summary judgment on all claims seeking recovery under that statute. National Super Spuds, Inc. v. New York Mercantile Exchange, 470 F. Supp. 1257, 1259-1263 (1979).
A divided panel of the Court of Appeals for the Second Circuit reversed. The majority opinion, written by Judge Friendly, adopted essentially the same reasoning as the Sixth Circuit majority in No. 80-203, but placed greater emphasis on "the 1974 Congress' awareness of the uniform judicial recognition of private rights of action under the Commodity Exchange Act and [its] desire to preserve them," Leist v. Simplot, 638 F. 2d 283, 307 (1980), and on the similarity between the implied private remedies under the CEA and the remedies implied under other federal statutes, particularly those regulating trading in securities, id., at 296-299. Judge Mansfield, in dissent, reasoned that the pre-1974 cases recognizing a private right of action under the CEA were incorrectly decided and that a fair application of the criteria identified in Cort v. Ash, 422 U. S. 66, 78 (1975),[51] required rejection of plaintiffs' damages claims. 638 F. 2d, at 323.
*374 We granted certiorari. 450 U. S. 910 (1981). For the purpose of considering the question whether respondents may assert an implied cause of action for damages, it is assumed that each of the petitioners has violated the statute and thereby caused respondents' alleged injuries.
IV
"When Congress intends private litigants to have a cause of action to support their statutory rights, the far better course is for it to specify as much when it creates those rights. But the Court has long recognized that under certain limited circumstances the failure of Congress to do so is not inconsistent with an intent on its part to have such a remedy available to the persons benefited by its legislation." Cannon v. University of Chicago, 441 U. S. 677, 717 (1979).
Our approach to the task of determining whether Congress intended to authorize a private cause of action has changed significantly, much as the quality and quantity of federal legislation has undergone significant change. When federal statutes were less comprehensive, the Court applied a relatively simple test to determine the availability of an implied private remedy. If a statute was enacted for the benefit of a special class, the judiciary normally recognized a remedy for members of that class. Texas & Pacific R. Co. v. Rigsby, 241 U. S. 33 (1916).[52] Under this approach, federal courts, *375 following a common-law tradition, regarded the denial of a remedy as the exception rather than the rule.[53]
Because the Rigsby approach prevailed throughout most of our history,[54] there is no merit to the argument advanced by *376 petitioners that the judicial recognition of an implied private remedy violates the separation-of-powers doctrine. As Justice Frankfurter explained:
"Courts . . . are organs with historic antecedents which bring with them well-defined powers. They do not require explicit statutory authorization for familiar remedies to enforce statutory obligations. Texas & N. O. R. Co. v. Brotherhood of Clerks, 281 U. S. 548; Virginian R. Co. v. System Federation, 300 U. S. 515; Deckert v. Independence Shares Corp., 311 U. S. 282. A duty declared by Congress does not evaporate for want of a formulated sanction. When Congress has `left the matter at large for judicial determination,' our function is to decide what remedies are appropriate in the light of the statutory language and purpose and of the traditional modes by which courts compel performance of legal obligations. See Board of Comm'rs v. United States, 308 U. S. 343, 351. If civil liability is appropriate to effectuate the purposes of a statute, courts are not denied this traditional remedy because it is not specifically authorized. Texas & Pac. R. Co. v. Rigsby, 241 U. S. 33; Steele v. Louisville & N. R. Co., 323 U. S. 192; Tunstall v. Brotherhood of Locomotive Firemen & Enginemen, 323 U. S. 210; cf. De Lima v. Bidwell, 182 U. S. 1." Montana-Dakota Co. v. Northwestern Pub. Serv. Co., 341 U. S. 246, 261-262 (1951) (dissenting opinion).
During the years prior to 1975, the Court occasionally refused to recognize an implied remedy, either because the statute in question was a general regulatory prohibition enacted for the benefit of the public at large, or because there was evidence that Congress intended an express remedy to provide the exclusive method of enforcement.[55] While the *377 Rigsby approach prevailed, however, congressional silence or ambiguity was an insufficient reason for the denial of a remedy for a member of the class a statute was enacted to protect.[56]
In 1975 the court unanimously decided to modify its approach to the question whether a federal statute includes a private right of action.[57] In Cort v. Ash, 422 U. S. 66 (1975), the Court confronted a claim that a private litigant could recover damages for violation of a criminal statute that had never before been thought to include a private remedy. In rejecting that claim the Court outlined criteria that primarily focused on the intent of Congress in enacting the statute under review.[58] The increased complexity of federal legislation[59] and the increased volume of federal litigation strongly supported the desirability of a more careful scrutiny of legislative intent than Rigsby had required. Our cases subsequent to Cort v. Ash have plainly stated that our focus must be on "the intent of Congress." Texas Industries, Inc. v. Radcliff Materials, Inc., 451 U. S. 630, 639 (1981).[60] "The *378 key to the inquiry is the intent of the Legislature." Middlesex County Sewerage Auth. v. National Sea Clammers Assn., 453 U. S. 1, 13 (1981). The key to these cases is our understanding of the intent of Congress in 1974 when it comprehensively reexamined and strengthened the federal regulation of futures trading.
V
In determining whether a private cause of action is implicit in a federal statutory scheme when the statute by its terms is silent on that issue, the initial focus must be on the state of the law at the time the legislation was enacted. More precisely, we must examine Congress' perception of the law that it was shaping or reshaping.[61] When Congress enacts new legislation, the question is whether Congress intended to create a private remedy as a supplement to the express enforcement provisions of the statute. When Congress acts in a statutory context in which an implied private remedy has already been recognized by the courts, however, the inquiry logically is different. Congress need not have intended to create a new remedy, since one already existed; the question *379 is whether Congress intended to preserve the pre-existing remedy.
In Cannon v. University of Chicago, we observed that "[i]t is always appropriate to assume that our elected representatives, like other citizens, know the law." 441 U. S., at 696-697. In considering whether Title IX of the Education Amendments of 1972 included an implied private cause of action for damages, we assumed that the legislators were familiar with the judicial decisions construing comparable language in Title VI of the Civil Rights Act of 1964 as implicitly authorizing a judicial remedy, notwithstanding the fact that the statute expressly included a quite different remedy. We held that even under the "strict approach" dictated by Cort v. Ash, "our evaluation of congressional action in 1972 must take into account its contemporary legal context." 441 U. S., at 698-699. See California v. Sierra Club, 451 U. S. 287, 296, n. 7 (1981).
Prior to the comprehensive amendments to the CEA enacted in 1974, the federal courts routinely and consistently had recognized an implied private cause of action on behalf of plaintiffs seeking to enforce and to collect damages for violation of provisions of the CEA or rules and regulations promulgated pursuant to the statute.[62] The routine recognition of a private remedy under the CEA prior to our decision in Cort v. Ash was comparable to the routine acceptance of an analogous remedy under the Securities Exchange Act of 1934.[63] The Court described that remedy in Blue Chip *380 Stamps v. Manor Drug Stores, 421 U. S. 723, 730 (1975) (footnote omitted):
"Despite the contrast between the provisions of Rule 10b-5 and the numerous carefully drawn express civil remedies provided in the Acts of both 1933 and 1934, it was held in 1946 by the United States District Court for the Eastern District of Pennsylvania that there was an implied private right of action under the Rule. Kardon v. National Gypsum Co., 69 F. Supp. 512. This Court had no occasion to deal with the subject until 25 years later, and at that time we confirmed with virtually no discussion the overwhelming consensus of the District Courts and Courts of Appeals that such a cause of action did exist. Superintendent of Insurance v. Bankers Life & Cas. Co., 404 U. S. 6, 13 n. 9 (1971); Affiliated Ute Citizens v. United States, 406 U. S. 128, 150-154 (1972). Such a conclusion was, of course, entirely consistent with the Court's recognition in J. I. Case Co. v. Borak, 377 U. S. 426, 432 (1964), that private enforcement of Commission rules may `[provide] a necessary supplement to Commission action.' "
Although the consensus of opinion concerning the existence of a private cause of action under the CEA was neither as old nor as overwhelming as the consensus concerning Rule 10b-5, it was equally uniform and well understood. This Court, as did other federal courts and federal practitioners, simply assumed that the remedy was available. The point is well illustrated by this Court's opinion in Chicago Mercantile Exchange v. Deaktor, 414 U. S. 113 (1973), which disposed of two separate actions in which private litigants alleged that an exchange had violated § 9(b) of the CEA by engaging in price manipulation and § 5a by failing both to enforce its own rules and to prevent market manipulation.[64] The Court held that *381 the judicial proceedings should not go forward without first making an effort to invoke the jurisdiction of the Commodity Exchange Commission, but it did not question the availability of a private remedy under the CEA.[65]
In view of the absence of any dispute about the proposition prior to the decision of Cort v. Ash in 1975, it is abundantly clear that an implied cause of action under the CEA was a part of the "contemporary legal context" in which Congress legislated in 1974. Cf. Cannon v. University of Chicago, 441 U. S., at 698-699. In that context, the fact that a comprehensive reexamination and significant amendment of the CEA left intact the statutory provisions under which the federal courts had implied a cause of action is itself evidence that *382 Congress affirmatively intended to preserve that remedy.[66] A review of the legislative history of the statute persuasively indicates that preservation of the remedy was indeed what Congress actually intended.
VI
Congress was, of course, familiar not only with the implied private remedy but also with the long history of federal regulation of commodity futures trading.[67] From the enactment of the original federal legislation, Congress primarily has relied upon the exchanges to regulate the contract markets. The 1922 legislation required for designation as a contract market that an exchange "provide for" the making and filing of reports and records, the prevention of dissemination of false or misleading reports, the prevention of price manipulation and market cornering, and the enforcement of Commission orders.[68] To fulfill these conditions, the exchanges promulgated rules and regulations, but they did not always enforce them. In 1968, Congress attempted to correct this flaw in the self-regulation concept by enacting § 5a(8), 7 U. S. C. § 7a(8), which requires the exchanges to enforce their own rules.[69]
*383 The enactment of § 5a(8), coupled with the recognition by the federal courts of an implied private remedy for violations of the CEA, gave rise to a new problem. As representatives of the exchanges complained during the hearing preceding the 1974 amendments,[70] the exchanges were being sued for not enforcing their rules. The complaint was taken seriously because it implicated the self-regulation premise of the CEA:
"In the few years [§ 5a(8)] has been in the present Commodity Exchange Act, there is growing evidence to indicate that, as opposed to strengthening the self-regulatory concept in present law, such a provision, coupled with only limited federal authority to require the exchanges to make and issue rules appropriate to enforcement of the Act may actually have worked to weaken it. With inadequate enforcement personnel the Committee was informed that attorneys to several boards of trade have been advising the boards to reduce not expand exchange regulations designed to insure fair trading, since there is a growing body of opinion that failure to enforce the exchange rules is a violation of the Act which will support suits by private litigants." House Report, at 46 (emphasis in original).[71]
*384 Congress could have removed this impediment to exchange rulemaking by eliminating the implied private remedy,[72] but it did not follow that course. Rather, it solved the problem by authorizing the new Commodity Futures Trading Commission to supplement exchange rules.[73] Congress thereby corrected the legal mechanism of self-regulation while preserving a significant incentive for the exchanges to obey the law. Only this course was consistent with the expressed purpose of the 1974 legislation, which was to "amend the Commodity Exchange Act to strengthen the regulation of futures trading."[74]
Congress in 1974 created new procedures through which traders might seek relief for violations of the CEA, but the legislative evidence indicates that these informal procedures were intended to supplement rather than supplant the implied judicial remedy. These procedures do not substitute for the private remedy either as a means of compensating injured traders or as a means of enforcing compliance with the statute. The reparations procedure established by § 14 is not available against the exchanges,[75] yet we may infer from the above analysis that Congress viewed private litigation against exchanges as a valuable component of the self-regulation *385 concept. Nor is that procedure suited for the adjudication of all other claims. The Commission may, but need not, investigate a complaint, and may, but need not, serve the respondent with the complaint. If the Commission permits the complaint to issue, it need not provide an administrative hearing if the claim does not exceed $5,000. The arbitration procedure mandated by § 5a(11) is even narrower in scope. Only members and employees of the contract market are subject to the procedure, and the use of the procedure by a trader is voluntary and is limited to claims of less than $15,000. There are other indications in the legislative history that the two sections were not intended to be exclusive of the implied judicial remedy. It was assumed by hearings witnesses that the informal procedures were supplementary.[76] Indeed, it was urged that complainant be put to the choice between informal and judicial actions.[77] A representative of one exchange urged Congress to place a dollar limit on claims arbitrable under § 5a(11) because there was an "economic impediment to Court litigation" only with small claims,[78] and such a limit was enacted. Chairman Poage described the newly enacted informal procedures as "new customer protection features,"[79] and Senator Talmadge, the Chairman of the Senate Committee on Agriculture and Forestry, stated that the reparations procedure was "not intended *386 to interfere with the courts in any way," although he hoped that the burden on the courts would be "somewhat lighten[ed]" by the availability of the informal actions.[80]
The late addition of a saving clause in § 2(a)(1) provides direct evidence of legislative intent to preserve the implied private remedy federal courts had recognized under the CEA. Along with an increase in powers, the Commission was given exclusive jurisdiction over commodity futures trading. The purpose of the exclusive-jurisdiction provision in the bill passed by the House[81] was to separate the functions of the Commission from those of the Securities and Exchange Commission and other regulatory agencies.[82] But the provision raised concerns that the jurisdiction of state and federal courts might be affected. Referring to the treble damages action provided in another bill that he and Senator McGovern had introduced, Senator Clark pointed out: "[T]he House bill not only does not authorize them, but section 201 of that bill may prohibit all court actions. The staff of the House Agriculture Committee has said that this was done inadvertently and they hope it can be corrected in the Senate."[83] It was. The Senate added a saving clause to the exclusive-jurisdiction provision, providing that "[n]othing in this section shall *387 supersede or li