Wall Street's bid to rein in U.S. derivatives regulation wasrejected by a federal judge in a significant victory for thegovernment's ability to police trading outside the country.

U.S. District Judge Paul Friedman threw out much of an industrychallenge questioning the legality of Commodity Futures TradingCommission (CFTC) guidelines that extend the regulator's reach intoswap deals handled in the U.K., Japan, and other foreigncountries.

The ruling “vindicates the CFTC's view of its broad authorityoverseas, in response to the 2008 financial crisis,” said JulianHammar, a former assistant general counsel at the agency who is nowof counsel in the Washington office of the Morrison & Foersterlaw firm. “It's an important decision.”

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