June 23, 1999

A federal district judge distinguished between customized individual advice and making market views available in ruling that the Commodity Futures Trade Commission cannot require commodity software and newsletter publishers to register.

"This court concludes that the CFTC's application of the (Commodity Exchange Act's) registration requirement to the plaintiffs in this case constitutes an attempt to regulate speech, not a profession," said U.S. District Judge Ricardo Urbina in making the decision. "Their advice and recommendations are identical for every customer and their products are available to all who wish to purchase them. Moreover, the plaintiffs never have any personal contact with their customers. They never supplement their general recommendations directed at individual customers. They never make trades for their customers."

The government may regulate entry into a profession as along as the regulations imposed "have a rational connection with the application's fitness or capacity to practice the profession.' This is so even if the profession that the government seeks to regulate involves speech. There comes a point, however, where government legislation crosses the line between the regulation of a profession and the regulation of speech."

Scott Bullock, an attorney with the Institute for Justice, Washington, DC, called it a "slam-dunk victory for publishers, whether it's online publishers, software developers or traditional publishers. We were just really, really pleased with the decision. We see it as a real vindication for the free speech rights of publishers."

It was not known if CFTC would appeal the decision.