Swaps Rules Challenged in Court

Wall Street trade groups sue the CFTC to curb overseas reach of its regulations.

Wall Street’s biggest lobbying groups banded together to sue the Commodity Futures Trading Commission (CFTC), seeking to curb the overseas reach of its rules and rein in a regulatory barrage by its departing Chairman Gary Gensler.

The suit, filed yesterday in federal court in Washington, seeks to overturn guidance the CFTC approved in July. The trade associations, which represent Goldman Sachs Group Inc., JPMorgan Chase & Co., Deutsche Bank AG, and other swap dealers, say the agency illegally set regulations by issuing guidance documents and staff advisories rather than formal commission-approved rules.

According to one person briefed on the ISDA board meeting when the suit was authorized last month, the association’s attorneys said they would consider it a victory if the guidance was delayed for a year.

The person, who asked for anonymity because the meeting was private, said ISDA Chief Executive Officer Robert Pickel told the board that while there was a potential the case would push the CFTC to take an even stronger stance against Wall Street, joining the other trade groups would highlight the strength of the opposition.

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