                           PUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT


COMMODITY FUTURES TRADING              
COMMISSION,
                Plaintiff-Appellee,
                 v.
ESFAND BARAGOSH, a/k/a Esfandiar
Baragosh,
             Defendant-Appellant,
                and
NOBLE WEALTH DATA INFORMATION
SERVICES, INCORPORATED, a/k/a Noble
Wealth, Incorporated, a/k/a Nobel
Wealth, Incorporated; INTERNATIONAL              No. 00-1488
ADVANCED INVESTMENT(S),
INCORPORATED; NOBLE WEALTH
DEVELOPMENT, LTD.; BULL & BEARS,
LTD., a/k/a Bull & Bears
International Investment, Ltd.;
CURREX INTERNATIONAL CORPORATION,
                         Defendants,
                 v.
EBC FULTON ENTERPRISES,
INCORPORATED; RALPH S. TYLER,
                Parties in Interest.
                                       
           Appeal from the United States District Court
            for the District of Maryland, at Greenbelt.
                 Peter J. Messitte, District Judge.
                        (CA-98-3316-PJM)

                      Argued: November 2, 2001

                      Decided: January 22, 2002
2            COMMODITY FUTURES TRADING v. BARAGOSH
     Before WILKINSON, Chief Judge, and WILLIAMS and
                  MOTZ, Circuit Judges.



Affirmed in part and vacated and remanded in part by published opin-
ion. Judge Motz wrote the opinion, in which Judge Wilkinson joined.
Judge Williams wrote an opinion concurring in part and concurring
in the judgment.


                            COUNSEL

ARGUED: Matthew G. Kaiser, Student Counsel, Appellate Litiga-
tion Program, GEORGETOWN UNIVERSITY LAW CENTER,
Washington, D.C., for Appellant. C. Maria Dill Godel, Office of the
General Counsel, COMMODITY FUTURES TRADING COMMIS-
SION, Washington, D.C., for Appellee. ON BRIEF: Steven H. Gold-
blatt, Director, Wendy M. Marantz, Supervising Attorney, Rita
Graham, Student Counsel, Darren P. Nicholson, Student Counsel,
Erin Roth Bohannon, Student Counsel, Appellate Litigation Program,
GEORGETOWN UNIVERSITY LAW CENTER, Washington, D.C.,
for Appellant. Kirk T. Manhardt, Deputy General Counsel, Office of
the General Counsel, COMMODITY FUTURES TRADING COM-
MISSION, Washington, D.C., for Appellee.


                            OPINION

DIANA GRIBBON MOTZ, Circuit Judge:

   In 1998, the Commodity Futures Trading Commission filed a com-
plaint alleging that Esfand Baragosh was a controlling person of
Noble Wealth Data Information Services and several related compa-
nies (collectively "Noble Wealth"), which operated as a sham futures
exchange in violation of the Commodity Exchange Act. See 7
U.S.C.A. § 1 et seq. (West 1999), amended by Commodity Futures
Modernization Act (CFMA), Pub. L. No. 106-554, 114 Stat. 2763
              COMMODITY FUTURES TRADING v. BARAGOSH                   3
       1
(2000). The district court entered a default judgment against the com-
panies and subsequently granted summary judgment to the Commis-
sion against Baragosh. The court ordered Baragosh to make
restitution of $5,264,251 plus pre- and post-judgment interest, and
assessed a civil penalty of $1,211,058 plus post-judgment interest
against him. CFTC v. Noble Wealth Data Info. Sys., 90 F. Supp. 2d
676 (D. Md. 2000). The court also issued several injunctions against
Baragosh. On appeal, Baragosh argues that the Commission lacked
jurisdiction to regulate Noble Wealth’s activities, and, in any event,
that he was not a controlling person of Noble Wealth and therefore
is not liable for Noble Wealth’s illegal activities. We affirm in part,
and vacate and remand in part.

                                   I.

   Noble Wealth, which was incorporated in California in 1993, has
never been designated as a contract market for the trading of foreign
currency futures contracts nor ever registered with the Commission in
any capacity. In 1994, the company opened an office in Atlanta,
Georgia, and began to operate the foreign currency trading scam at
issue in this suit. In 1996, it expanded the scam by opening an office
in Bethesda, Maryland; and it expanded again in 1998, to a third
office in Duluth, Georgia.

   To lure its victims, Noble Wealth placed "help wanted" ads in gen-
eral circulation newspapers, claiming that it was "looking for [per-
sons] to be trained to become consultants." Those who replied were
invited to visit Noble Wealth, and ultimately encouraged to attend a
training program. The program consisted of four sessions, each no
longer than two hours, during which videotapes describing investment
strategies and the mechanics of trading currency through Noble
Wealth were shown. Trainees were told that they could become trad-
ers by opening an account of $10,000 or more with Noble Wealth,
and were urged to solicit their families and friends to open accounts
and become "customers" of Noble Wealth.
  1
    Congress enacted several important changes to the CEA in 2000. See
CFMA. Unless otherwise noted, all references and citations to the CEA
are to the pre-2000 statute. We also note the post-2000 location of each
statutory section the first time we cite that section.
4             COMMODITY FUTURES TRADING v. BARAGOSH
   To whet the trainees’ appetites, Noble Wealth distributed brochures
informing them that its traders had earned returns as high as 31.15%
in a few days, 192.5% in one month, 906% in three months, and
532% in six months. The brochures explained that these exceptional
returns were possible because Noble Wealth had well-placed contacts
in the interbank market, allowing it to offer the "best buy-sell quota-
tion for clients all over the world." Assertedly, trades would be placed
through Noble Wealth’s Hong Kong subsidiary ("Noble Wealth
HK"), which the brochures described as a "licensed Financial Broker-
age House with daily turnovers in excess of 100 million dollars."
Finally, the brochures promised that customer accounts would be
overseen by "highly trained investment consultants."

   Those who opened an account were entitled to use Noble Wealth’s
"trading floor," where rows of computer monitors were set up to dis-
play current prices of various foreign currencies. When a trader saw
a desirable price, he or she completed a Noble Wealth order ticket
describing the number of contracts to be bought or sold, the foreign
currency to be traded, and the price reflected on the computer moni-
tor. The trader brought the ticket to a Noble Wealth employee (called
a "dealer"), who assertedly called Noble Wealth HK for a price quote
and then relayed the quote to the trader. If the trader accepted the
price, the dealer completed the order ticket by filling in the execution
price for the trade. Periodically, Noble Wealth issued detailed account
statements, which purported to track commissions, fees, and move-
ments in the value of customer contracts.

   This was all an elaborate hoax. Noble Wealth HK was not a
licensed brokerage house, and there is no evidence that Noble Wealth
actually purchased any foreign currency contracts that corresponded
to customer orders. Rather, as Baragosh testified at the hearing in
which the Commission sought a preliminary injunction, Noble
Wealth’s Maryland office passed its traders’ currency contract orders
to a "head dealer" at Noble Wealth HK who attempted to match cus-
tomer buy and sell orders every half hour. In other words, Noble
Wealth operated a bucket shop, taking the opposite side of a custom-
er’s order rather than openly and competitively executing the order on
an exchange. Noble Wealth’s customers lost the bulk of the funds
they invested, which were diverted to pay operating expenses, salaries
              COMMODITY FUTURES TRADING v. BARAGOSH                  5
and commissions, and the personal expenses of Noble Wealth
employees.

   Baragosh oversaw training and recruitment at the Georgia and
Maryland offices. He placed Noble Wealth’s "help wanted ads,"
appeared in its training videos, walked the floor advising the traders
on strategy, and exhorted traders to "trade, trade, trade." In return,
Baragosh received a personal commission of two dollars for every
trade executed at Noble Wealth.

   The Commission charged and the district court found that Bara-
gosh and the companies had: (1) misappropriated customer funds and
committed fraud in violation of 7 U.S.C. § 6b(a)(i)-(iii); (2) bucketed
customer orders in violation of 7 U.S.C. § 6b(a)(iv); and (3) offered
to sell commodity futures contracts other than on a board of trade des-
ignated as a contract market in violation of 7 U.S.C. § 6(a). Only
Baragosh appeals.

                                  II.

   Baragosh’s principal contention on appeal is that Congress did not
intend Noble Wealth’s admittedly fraudulent activities to be regulated
by the Commodity Exchange Act ("CEA" or "the Act"). Resolving
this question requires an understanding of the CEA’s history and pur-
pose.

                                  A.

   From its enactment in 1936 through all periods material to this
case, the CEA required futures contracts on certain commodities to be
traded only on government-approved public exchanges, termed "con-
tract markets." See Commodity Exchange Act, Pub. L. No. 74-675,
§ 4, 49 Stat. 1491, 1492 (1936), amending Grain Futures Act, Pub. L.
No. 67-331, § 4, 42 Stat. 998 (1922); compare 7 U.S.C.A. § 6(a)
(West 1999) (same). See also Lynn A. Stout, Why the Law Hates
Speculators: Regulation and Private Ordering in the Market for OTC
Derivatives, 48 Duke L.J. 701, 722 (1999). Contract markets, in turn,
were required to conduct business according to standards set forth in
the Act. Two of those standards are important in this case.
6             COMMODITY FUTURES TRADING v. BARAGOSH
   First, the CEA contained anti-fraud measures designed to protect
both small investors and the market as a whole. See CEA § 4b, 49
Stat. at 1493 (making it unlawful for persons associated with a con-
tract market to "cheat or defraud," "willfully to make or cause to be
made . . . any false report or statement . . . or false record," or "will-
fully to deceive or attempt to deceive . . . by any means whatsoever").
These measures complemented and strengthened existing provisions
that already applied to futures trading in grain markets. See Grain
Futures Act, § 5(c), 42 Stat. at 1000 (requiring contract markets to
adopt internal rules "prevent[ing] . . . dissemination by the board or
any member thereof, of false or misleading or knowingly inaccurate
reports concerning crop or market information or conditions that
affect or tend to affect the price of grain").

   Second, the CEA made it unlawful for any member of a contract
market to "bucket" an order. See CEA § 4b(D), 49 Stat. at 1493.
"Bucketing" is commonly done by a so-called "bucket shop": a busi-
ness that allows customers to speculate on movements in commodity
prices by entering into contracts with the shop rather than by finding
a trading partner on the floor of an exchange. See Armando T. Belly,
The Derivative Market in Foreign Currencies and the Commodity
Exchange Act — The Status of Over-the-Counter Futures Contracts,
71 Tul. L. Rev. 1455, 1473 (1997). In effect, a bucket shop "assumes
the risk of the transaction that would be assumed by the market in an
exchange transaction." Id. Such shops are viable only so long as they
maintain a rough balance between the value of their buy and sell con-
tracts and customers pay any debts they owe. When a shop miscalcu-
lates, as inevitably occurs, its owners are likely to close shop without
settling accounts. Id. In the first decades of the twentieth century, the
common law disfavored bucket shops by refusing to enforce their
contracts with speculators, and many state legislatures imposed civil
or criminal penalties on bucket shop operators. Stout, Why the Law
Hates Speculators, 48 Duke L.J. at 721. Federal law effectively
banned bucket shops from grain futures trading beginning in 1921,
see Future Trading Act, §§ 2(a), 4, Pub. L. No. 67-66, 42 Stat. 187
(1921); Grain Futures Act, 42 Stat. at 998-1000, and the CEA
extended the prohibition to several new commodity markets. William
L. Stein, The Exchange Trading Requirement of the Commodity
Exchange Act, 41 Vand. L. Rev. 473, 486-92 (1988) (reviewing his-
tory of bucket shop prohibition).
              COMMODITY FUTURES TRADING v. BARAGOSH                    7
   In 1968, the CEA’s anti-bucketing provision and its new anti-fraud
rules were amended, so that they applied not only to persons associ-
ated with contract markets but also to "any person[s]" acting "in or
in connection with any order to make, or the making of" futures con-
tracts in a regulated commodity. See An Act to amend the Commodity
Exchange Act, § 5(a)(2), Pub. L. 90-258, 82 Stat. 26, 27 (1968)
(emphasis added), relevant sections codified as amended at 7
U.S.C.A. § 6b(a)(i)-(iv).

   Over time, the number of covered commodities was also enlarged.
When it was first enacted in 1936, the CEA applied only to futures
markets in a few agricultural commodities, such as grain, butter, eggs,
and Irish potatoes. CEA § 3(a), 49 Stat. at 1491. Over the next several
decades, Congress expanded the Act’s reach commodity by commod-
ity: "wool tops in 1938; fats and oils, cottonseed, cottonseed meal,
peanuts, soybeans, and soybean meal in 1940; wool in 1954; onions
in 1955; and livestock, livestock products, and frozen concentrated
orange juice in 1968." Belly, Derivative Market in Foreign Curren-
cies, 71 Tul. L. Rev. at 1475. By 1974, Congress decided that the
"growing importance of futures markets" merited a comprehensive
regime of regulation. See S. Rep. No. 93-1131 (1974), reprinted in
1974 U.S.C.C.A.N. 5843, 5858-60 (noting that "many large and
important futures markets [we]re completely unregulated by the Fed-
eral Government" and that the value of futures trading had already
"substantially exceed[ed] the value of securities trading on the various
stock exchanges").

   Therefore, the legislature modified the CEA in two important
respects. First, Congress expanded the CEA’s jurisdiction to include
futures trading on "all other goods and articles . . . and all services,
rights and interests in which contracts for futures delivery are pres-
ently or in the future dealt in." Commodity Futures Trading Commis-
sion Act of 1974, Pub. L. No. 93-463, 88 Stat. 1389, 1395 (1974)
(amending CEA) (currently codified at 7 U.S.C.A. § 1a(3) (West
Supp. 2001)). Second, Congress created a new commission, the Com-
modity Futures Trading Commission, invested with broad power to
enforce the Act. See Merrill Lynch, Pierce, Fenner & Smith, Inc. v.
Curran, 456 U.S. 353, 365-66 (1982) (noting that the Commission
was authorized to investigate complaints and grant reparations for
violations of the law; seek injunctive relief; alter or supplement a con-
8             COMMODITY FUTURES TRADING v. BARAGOSH
tract market’s rules; and "direct a contract market to take whatever
action [was] deemed necessary by the Commission in an emer-
gency"). According to the House Committee on Agriculture, these
changes were intended to "significantly increase public confidence in
the futures markets by providing the same protection to the unregu-
lated commodity customers that is now afforded the regulated com-
modity customers." H.R. Rep. No. 93-975, at 62 (1974).

  Citing the same objective, the Senate expressly identified foreign
currency futures trading as an activity it intended to bring within the
Act:

    While the futures markets in a number of agricultural com-
    modities have been regulated in varying degrees since 1922,
    many large and important futures markets are completely
    unregulated by the Federal Government. These include . . .
    the highly sensitive silver market and markets in a number
    of foreign currencies. A person trading in one of these
    unregulated futures markets should receive the same protec-
    tion afforded to those trading in the regulated markets.

S. Rep. No. 93-1131, reprinted in 1974 U.S.C.C.A.N. at 5859
(emphasis added). While the bill was pending, however, the Depart-
ment of Treasury sent a letter to the Senate Committee with jurisdic-
tion over the bill, expressing concern about the effect that CEA
regulation could have on one part of the foreign currency futures mar-
ket. The letter advised the Committee that:

    [v]irtually all trading in foreign currencies in the United
    States is carried on through an informal network of banks
    and dealers. This dealer market, which consists primarily of
    the large banks, has proved highly efficient in serving the
    needs of international business in hedging the risks that stem
    from foreign exchange rate movements. The participants in
    this market are sophisticated and informed institutions,
    unlike the participants on organized exchanges, which, in
    some cases, include individuals and small traders who may
    need to be protected by some form of governmental regula-
    tion.
               COMMODITY FUTURES TRADING v. BARAGOSH                   9
Id. at 5887-88 (emphasis in original).

   Treasury argued that regulation by the new Commission would
only burden and confuse traders in the informal dealer market without
improving market fairness or transparency. Id. at 5888-89. To protect
this segment of the market, Treasury proposed an amendment that
would "make clear" that the Commission’s jurisdiction over foreign
currency futures was limited to "organized exchanges." Id. at 5889.
The suggested amendment provided, in pertinent part, that "[n]othing
in this Act shall be deemed to govern or in any way be applicable to
transactions in foreign currency . . . unless such transactions involve
the sale thereof for future delivery conducted on a board of trade." Id.

   It appears that the Senate Committee was persuaded. Except to
delete "puts and calls for securities" from the list of exempted transac-
tions, the Committee accepted the proposed language without change
(so that the text adopted has come to be known as the "Treasury
Amendment"). In its report, the Committee repeatedly stated that the
amendment was intended to protect banks and other sophisticated
traders by exempting all foreign currency transactions not on orga-
nized exchanges:

    [T]he Committee amendment provides that inter-bank trad-
    ing of foreign currencies and specified financial instruments
    is not subject to Commission regulation . . . .

Id. at 5848.

       Also, the Committee included an amendment to clarify
    that the provisions of the bill are not applicable to trading
    in foreign currencies and certain enumerated financial
    instruments unless such trading is conducted on a formally
    organized futures exchange. A great deal of the trading in
    foreign currency in the United States is carried out through
    an informal network of banks and tellers. The Committee
    believes that this market is more properly supervised by the
    bank regulatory agencies and that, therefore, regulation
    under this legislation is unnecessary.
10            COMMODITY FUTURES TRADING v. BARAGOSH
       Likewise, the Committee believes that regulation by the
     Commission of transactions in the specified financial instru-
     ments . . ., which generally are between banks and other
     sophisticated institutional participants, is unnecessary,
     unless executed on a formally organized futures exchange.

Id. at 5863-64 (emphasis added).

   The Senate Committee’s report was not Congress’ final word on
the Treasury Amendment. A Conference Committee subsequently
met to reconcile House and Senate versions of the proposed legisla-
tion, and apparently dropped the Senate Committee’s distinction
between on-exchange and off-exchange trading. Instead, the Confer-
ence Committee’s report explained that the Treasury Amendment
"provides that interbank trading of foreign currencies . . . is not sub-
ject to Commission regulation." Conf. Rep. No. 93-1383 (1974),
reprinted in 1974 U.S.C.C.A.N. 5894, 5897 (emphasis added). With
this understanding, Congress enacted the amendment language that
had been submitted by the Senate.

                                   B.

   Baragosh and the Commission agree that the Noble Wealth trans-
actions were "in foreign currency" and that the Treasury Amendment,
therefore, exempted these transactions from regulation under the CEA
unless the transactions were "conducted on a board of trade." 7
U.S.C.A. § 6(a)(1) (West 1999).

   From its inception through the time of the events at issue here, the
CEA, like its statutory predecessors, included an exceedingly broad
definition of "board of trade." Thus, during all relevant periods, the
statute provided that the term "board of trade" meant "any exchange
or association, whether incorporated or unincorporated, of persons
who are engaged in the business of buying or selling any commodity
or receiving the same for sale on consignment." 7 U.S.C.A. § 1a(1)
(West 1999), amended by 7 U.S.C.A. § 1a(2) (West Supp. 2001).
Compare Future Trading Act, 42 Stat. 187 (1921) (CEA predecessor
statute) ("board of trade" is "any exchange or association, whether
incorporated or unincorporated, of persons who shall be engaged in
the business of buying or selling grain or receiving the same for sale
              COMMODITY FUTURES TRADING v. BARAGOSH                  11
on consignment"). This definition encompassed virtually every situa-
tion in which futures were or ever could be traded. See, e.g., CFTC
v. Frankwell Bullion Ltd., 99 F.3d 299, 302 (9th Cir. 1996) ("Almost
all transactions in futures contracts could be characterized as occur-
ring on a board of trade involving informal associations of people
engaged in the business of buying and selling commodities.") (inter-
nal quotation marks and citation omitted).

   The breadth of this definition evidences Congress’ general purpose
to regulate futures trading in covered commodities as fully as possi-
ble. But, of course, for over five decades foreign currency was not a
covered commodity. When Congress determined to regulate foreign
currency in 1974, it did so with the specific understanding that certain
transactions — trading "between banks and other sophisticated insti-
tutional participants" not "conducted on a formally organized futures
exchange" — would not be subject to regulation under the CEA. See
S. Rep. No. 93-1131, reprinted in 1974 U.S.S.C.A.N. at 5863-64.
Hence, the Treasury Amendment. See 7 U.S.C. § 2(i).

   Using the broad statutory definition of "board of trade" in constru-
ing the Treasury Amendment would, as one of our sister circuits
recently noted, "render[] the Treasury Amendment meaningless."
Frankwell Bullion, 99 F.3d at 302. If the definition were inserted, the
Amendment would exempt all futures transactions in foreign currency
from the CEA unless such transactions were "conducted on any
exchange or association whether incorporated or unincorporated of
persons who are engaged in the business of buying or selling any
commodity or receiving the same for sale or consignment." In effect,
the Amendment’s first clause would exempt all foreign currency
transactions from the CEA, and its second clause would sweep all, or
almost all, such transactions back in.

   Such an interpretation would be directly at odds with a cardinal
rule of statutory construction — "that a statute should be interpreted
so as not to render one part inoperative." Mountain States Tel. & Tel.
v. Pueblo of Santa Ana, 472 U.S. 237, 249 (1985) (quoting Colautti
v. Franklin, 439 U.S. 379, 392 (1979)). We are particularly loathe to
violate this rule in construing the Treasury Amendment, because the
Supreme Court has recently made plain that it does not regard the
Amendment as surplusage. See Dunn v. CFTC, 519 U.S. 465, 472,
12            COMMODITY FUTURES TRADING v. BARAGOSH
473 (1997) (rejecting an interpretation of the Treasury Amendment
that would have left it "without any significant effect at all" because
"legislative enactments should not be construed to render their provi-
sions mere surplusage.") (citation omitted).

   This use of § 1a(1) in interpreting the Treasury Amendment would
also frustrate the Amendment’s very purpose. "Congress’ broad pur-
pose in enacting the Treasury Amendment was to provide a general
exemption from CFTC regulation for sophisticated off-exchange for-
eign currency trading." Dunn, 519 U.S. at 473. To insert § 1a(1) in the
Amendment would eliminate this "general exemption from CFTC
regulation." Id.

   Perhaps for these reasons, not even the Commission suggests that
§ 1a(1)’s definition should be inserted wholesale into the Treasury
Amendment to eliminate the Amendment’s exemption and provide
the Commission with jurisdiction over all foreign currency trading.
Rather, like Baragosh, the Commission looks to the purpose and his-
tory of the Treasury Amendment to discern the scope of the exemp-
tion. However, the parties use the same tools of statutory construction
to reach very different results.

   Baragosh, relying heavily upon the Treasury letter and Senate
Report, contends that Congress intended to exempt all futures trading
"unless such trading is conducted on a formally organized futures
exchange." S. Rep. No. 93-1131, reprinted in 1974 U.S.S.C.A.N. at
5863. Recently, the Ninth Circuit adopted a position similar to that
urged by Baragosh. See Frankwell Bullion, 99 F.3d at 304 ("We find
that the legislative history [i.e., the Senate Committee Report and the
Treasury letter] conclusively determines that Congress intended the
term ‘board of trade’ in the Treasury Amendment to mean on-
exchange.").

   In reply, the Commission concedes that the Treasury Department
and the Senate Committee on Agriculture may have intended to
exempt all off-exchange trading, but argues that the Conference Com-
mittee report, which neither Baragosh nor the Frankwell Bullion court
discuss, better describes Congress’ intent. Although we respect the
view of our sister circuit, we are persuaded for the reasons that follow
that the Commission’s position on this question is correct.
              COMMODITY FUTURES TRADING v. BARAGOSH                    13
   A Conference Committee report is generally acknowledged as the
best guide to legislative intent short of the statute itself, because it
"represents the final statement of terms agreed upon by both houses
of Congress." Davis v. Lukhard, 788 F.2d 973, 981 (4th Cir. 1986).
Moreover, in this case, the Conference Committee’s account of the
Treasury Amendment also accords with Congress’ broader purpose in
passing the 1974 amendment. See Food and Drug Admin. v. Brown
& Williamson Tobacco Corp., 529 U.S. 120, 133 (2000) (noting that
courts strive to "interpret [each] statute ‘as a symmetrical and coher-
ent regulatory scheme,’ and [to] ‘fit, if possible, all parts into an har-
monious whole’") (citations omitted).

   When Congress amended the CEA in 1974, its main purpose was
to extend the Act’s regulatory protections to previously uncovered
futures markets, so as to "provide . . . viable market[s] in which the
public can have confidence." S. Rep. No. 93-1131, reprinted in 1974
U.S.C.C.A.N. at 5859. See also id. at 5859 ("A person trading in one
of the [] unregulated markets should receive the same protection
afforded to those trading in the regulated markets."); Senate Comm.
on Agric. and Forestry, 93d Cong., 2d Sess., Commodity Futures
Trading Commission Act of 1974 at 6 (Comm. Pr. 1974) (statement
of Chr. Talmadge) ("[I]t was the intent of the [Conference Commit-
tee] to fill all regulatory gaps"). Near the core of those regulatory pro-
tections was a ban on bucket shops and firm hostility toward fraud
and manipulation, both of which had been part of the CEA and its
predecessors for more than fifty years. See, e.g., 7 U.S.C.A. § 6(a)
(West 1999) (prohibiting futures trades outside contract markets); 7
U.S.C.A. § 6b(a)(i)-(iv) (West 1999) (prohibiting fraud and bucket-
ing); 7 U.S.C.A. § 7(3) (West 1999) (requiring contract markets to
adopt anti-fraud rules).

   If Congress had enacted a broad loophole for foreign currency trad-
ing, through which bucket shops and fraudulent marketing could
freely escape regulation, it would have left the foreign currency mar-
ket substantially unprotected and undermined its basic purpose with
respect to that market. Although obviously the Treasury Department
did persuade Congress to protect sophisticated individuals and institu-
tions from regulatory interference by the Commission, we would
expect Congress to have enacted an exemption no larger than neces-
14             COMMODITY FUTURES TRADING v. BARAGOSH
sary. And this, the Conference committee report tells us, is exactly
what Congress did.

   Of course, the exempted "interbank" market consists of more than
banks. When legislators discussed this market, they spoke of "an
informal network of banks and tellers," or of "banks and other
sophisticated institutional participants." S. Rep. No. 93-1131,
reprinted in 1974 U.S.C.C.A.N. at 5963-64 (emphasis added). Like-
wise, the Treasury letter referred to a network of "banks and dealers,"
or "sophisticated and informed institutions." Id. at 5887, 5888
(emphasis added). What distinguished interbank market participants
was not their institutional form, but their wealth, experience in the
market, and knowledge of finance. They could trade in "informal net-
works" among themselves, while the general public was able to trade
foreign currency futures only with the assistance of formal institutions
that provided standard contracts, margin trading, and a means of find-
ing other traders. Id.

   Accordingly, as we have previously held, "it [wa]s the nature of the
trade (whether a standardized trade within an organized market or an
individually negotiated private deal) . . . that determine[d] whether a
trade [wa]s within the Act." Salomon Forex, Inc. v. Tauber, 8 F.3d
966, 977 (4th Cir. 1993). Transactions in foreign currency were not
subject to Commission jurisdiction in the period at issue in this case
if they were "large-scale, customized, negotiated, bilateral transac-
tions between sophisticated financial professionals." Id. But they were
subject to its jurisdiction if they were small, standardized, offered as-
is, and mass marketed to individuals.2 Under this standard, the trades
at Noble Wealth were certainly not exempted by the Treasury
Amendment, but rather included within the CEA’s jurisdiction.
  2
   We recognize that there is language in Tauber that might be read to
suggest that the Treasury Amendment exempts all off-exchange trading.
This language is dictum. As the Tauber panel noted: "We hold only that
individually-negotiated foreign currency option and futures transactions
between sophisticated, large-scale foreign currency traders fall within the
Treasury Amendment’s exclusion from CEA coverage." Tauber, 8 F.3d
at 978 (emphasis added). Any question about the Amendment’s applica-
tion to bucket shops, like Noble Wealth, was therefore reserved.
              COMMODITY FUTURES TRADING v. BARAGOSH                  15
   Finally, we note that after this litigation began, Congress enacted
the Commodity Futures Modernization Act (CFMA), "to clarify the
jurisdiction of the Commodity Futures Trading Commission over cer-
tain retail foreign exchange transactions and bucket shops that may
not otherwise be regulated." CFMA § 2(5), Pub. L. No. 106-554, 114
Stat. 2763 (2000). Under the CFMA, the Commission has jurisdiction
over foreign currency futures "offered to or entered into" with any
person who is not an "eligible contract participant." CFMA § 102, 114
Stat. at ___, codified at 7 U.S.C.A. § 2(B)(ii) (West Supp. 2001).
Among those not eligible to be contract participants are persons with
less than $10 million in total assets (or $5 million, if the purpose of
the transaction is to manage risk rather than to speculate on move-
ments in price), and who are not registered as futures or securities
professionals. CFMA § 102, 114 Stat. at ___, codified at 7 U.S.C.A.
§ 1a(12) (West Supp. 2001). There is no question that trades entered
into by Noble Wealth meet this test. Although a legislative enactment
is not an authoritative guide to the meaning of previous legislation,
we do note that our approach here is consistent with that taken by its
recent effort to "clarify the jurisdiction" of the Commission in the
CFMA.

   In sum, we reject Baragosh’s principal challenge to the Commis-
sion’s jurisdiction over Noble Wealth’s trades and hold that Congress
did empower the Commission to regulate those transactions.3 Accord-
ingly, the district court did not err in imposing a civil penalty of
$1,211,058 on Baragosh, three times the salary and commissions that
he received from Noble Wealth, for his individual violations of the
Act while employed by Noble Wealth. Nor did the court err in issuing
injunctions against him. See 7 U.S.C.A. § 13a-1 (West 1999).

                                  III.

  Alternatively, Baragosh contends that the district court erred in
holding as a matter of law that he was a controlling person of Noble
  3
   Baragosh additionally challenges the Commission’s jurisdiction on
the ground that Noble Wealth transactions were spot contracts and the
CEA governs only futures contracts. We reject this argument for the rea-
sons ably set forth by the district court. See Noble Wealth, 90 F. Supp.
2d at 688.
16             COMMODITY FUTURES TRADING v. BARAGOSH
Wealth, and therefore liable for more than five million dollars in resti-
tution arising from the company’s violations of the CEA.

    The CEA provides now, as it did during all periods relevant to this
litigation, that an individual who "directly or indirectly" controls a
corporation that has violated the CEA "may be held liable for such
violation in any action brought by the Commission to the same extent
as such controlled [corporation]." 7 U.S.C.A. § 13c(b) (West 1999);
7 U.S.C.A. § 1a(16) (West 1999) (currently at 7 U.S.C.A. § 1a(28)
(West Supp. 2001)). For liability to attach, the Commission must
prove: (1) that a corporation violated the Act; (2) that the defendant
"directly or indirectly" controlled that corporation; and (3) that the
controlling person "did not act in good faith or knowingly induced,
directly or indirectly, the act or acts constituting the violation." 7
U.S.C.A. § 13c(b).

   Baragosh does not dispute that Noble Wealth violated the CEA or
that he had at least constructive knowledge of Noble Wealth’s viola-
tions. See JCC, Inc. v. CFTC, 63 F.3d 1557, 1568 (11th Cir. 1995)
(noting that constructive knowledge sufficient for a finding of know-
ing inducement). The first and third elements of controlling person
liability are therefore established. Baragosh maintains, however, that
a question of fact remains as to whether the Commission has proved
the second element — that he directly or indirectly controlled Noble
Wealth.

   To establish that a defendant controlled a corporation for purposes
of § 13c(b), the Commission must show that the defendant "actually
exercised general control over the operation of the entity principally
liable" and "possessed the power or ability to control the specific
transaction or activity upon which the primary violation was predi-
cated, even if such power was not exercised." Monieson v. CFTC, 996
F.2d 852, 859 (7th Cir. 1993) (quoting Donohoe v. Consol. Operating
& Prod. Corp., 982 F.2d 1130, 1138 (7th Cir. 1992), and interpreting
In re Spiegel, No. 85-19, 1988 WL 232212 (C.F.T.C. Jan. 12, 1988);4
  4
   The district court stated this test in abbreviated form; a fuller account
would have been clearer. Citing Monieson and Spiegel, the district court
noted that "[m]erely possessing the authority to direct policy suffices to
              COMMODITY FUTURES TRADING v. BARAGOSH                  17
see also In re Johns, No. 01-22, 2001 WL 951733 at *3 (C.F.T.C.
Aug. 21, 2001) (same). Whether a defendant had such control
depends on all the facts and circumstances: an officer or director may
not "control" a corporation for purposes of this section, see CFTC v.
Avco Fin. Corp., 28 F. Supp. 2d 104, 114, 117 (S.D.N.Y. 1998), opin-
ion modified by CFTC v. Avco Financial Corp., 1998 WL 524901
(S.D.N.Y. Aug 21, 1998), and aff’d in part rev’d in part on other
grounds by CFTC v. Vartuli, 228 F.3d 94 (2nd Cir. 2000) (researcher
with title of "vice president," who helped produce software used in
fraud, was not controlling person), while a non-officer family member
may control the corporation. See In re Apache Trading Corp., No. 87-
14, 1992 WL 52596 at *1-2, 5 (C.F.T.C. Mar. 11, 1992). Because
control may be exercised jointly by a group, several persons may
simultaneously be controlling persons of the same corporation. JCC,
Inc., 63 F.3d at 1557 (three controlling persons in fraudulent solicita-
tion scheme).

   But, in every case, "the controlling person must have actually exer-
cised general control over the operation of the entity principally lia-
ble." Monieson, 996 F.2d at 859 (internal quotation and citation
omitted) (emphasis added). Thus, controlling person liability reaches
those who actually direct a corporation or cause it to act, but would
otherwise hide behind formalities of ownership or title. See Apache
Trading Corp., 1992 WL 52596 at *5 (C.F.T.C.). For those lower
down the corporate ladder, the Act provides a different form of sec-
ondary liability, aiding and abetting liability under 7 U.S.C. § 13c(a).
The Commission’s choice of a charge determines its evidentiary bur-
den and the scope of relief if the charge is proved. Here, the Commis-
sion charged Baragosh only as a controlling person of Noble Wealth,
not as an aider and abetter of the company.

   The undisputed evidence in the record undoubtedly demonstrates
that Baragosh was a key employee in Noble Wealth who knew of the

meet the standard; a controlling person need actually not exercise that
authority to be found liable under Section 13(b)." Noble Wealth, 90 F.
Supp. 2d at 691. In fact, as Monieson makes clear, the Commission can
establish controlling person authority only by making the two-part show-
ing described above and supra.
18            COMMODITY FUTURES TRADING v. BARAGOSH
company’s fraud and enthusiastically furthered it. Baragosh testified
that he "overs[aw]" the corporation’s trading operations in Maryland
and Georgia. He placed ads in newspapers to recruit traders; plied
traders with fraudulent brochures and sales scripts; walked Noble
Wealth’s trading floors exhorting traders to "trade, trade, trade." Bara-
gosh was also indisputably a signatory on several Noble Wealth bank
accounts and wrote checks to pay operating expenses, commissions,
and personal expenses. He appeared on the company’s behalf at an
arbitration hearing, and, at some point, received the title of vice presi-
dent. The day before the Commission raided Noble Wealth, he signed
a lease on the company’s behalf.

   But there is also evidence — particularly Baragosh’s testimony —
that others had tight control over all important decisions at Noble
Wealth and afforded him no meaningful discretion. Baragosh testified
that he did not record trades or keep trading accounts; he did not set
commission rates or trading fees; he could not open or close customer
accounts; and he could not hire or fire employees. According to Bara-
gosh, he wrote checks only when his superior, Nawab Khan, was not
on the premises, and then only pursuant to Khan’s express instruc-
tions. Indeed, Baragosh maintained that his "oversight" was not "man-
aging" so much as "just . . . taking orders." He testified that Nawab
Khan called two or three times each day to hear reports and give
instructions, and that Nawab then conferred with his brother Murad.
According to Baragosh, the two brothers made all the important deci-
sions. For example, Baragosh testified, without contradiction, that the
Khans decided to expand the company from Los Angeles to Atlanta
and Maryland, and only later told him about their decision.

    The present evidentiary record provides some circumstantial cor-
roboration for Baragosh’s account of his role. It is undisputed, for
example, that the Khans did not hire Baragosh until after they had
established Noble Wealth in Los Angeles. And although Baragosh
was later given the title "vice president," corporate documents in the
record give no indication that he was an officer or director of Noble
Wealth, or owned stock or had any voting rights in the company. Nor
is there evidence that Baragosh received a pay increase to accompany
his "promotion" to vice president, or that he was authorized to hire,
fire or discipline any Noble Wealth employees. Rather, Baragosh tes-
tified (and the Commission has not disputed) that the Noble Wealth
              COMMODITY FUTURES TRADING v. BARAGOSH                  19
dealers who actually placed calls to Hong Kong and kept the trading
records in the Maryland office, were hired by the Khans and answer-
able to them.

   Given this record, we cannot agree with the district court that the
uncontroverted material facts establish that Baragosh controlled
Noble Wealth for purposes of 7 U.S.C. § 13c(b). Crediting Bara-
gosh’s testimony and giving him the benefit of every reasonable infer-
ence, as we must at this juncture, the facts as to whether he "exercised
general control" over Noble Wealth’s operations, Monieson, 996 F.2d
at 859 (internal quotation and citation omitted) (emphasis added), and
so was a controlling person for purposes of § 13c(b), are very much
in dispute.

   It is useful to compare the present record to cases where defendants
have been held controlling persons of a company or scheme under the
Act. In most such cases, defendants have exercised nearly complete
authority. See, e.g., In re Arnold, No. 97-12, 2000 WL 1146371
(C.F.T.C. Aug. 14, 2000) (Arnold was "the sole principal and share-
holder of [the company]"); In re Kim, No. 00-24, 2000 WL 873545
(C.F.T.C. June 29, 2000) (Kim "was the President of [the company]
and the sole person responsible for the day-to-day operations of [the
company]"); In re Slusser, No. 94-14, 1999 WL 507574 (C.F.T.C.
July 19, 1999) ("Slusser was sole owner, treasurer and chairman of
the board of [the company], ran the organization, and had the ultimate
say-so . . . and was the signatory authority on most, if not all of [the
company’s contracts].") (internal quotations and citation omitted).

   Of course, a defendant need not exercise such undiluted authority
to qualify as a controlling person of a company, but we have found
no case where control is based solely on facts similar to those now
uncontroverted as to Baragosh. Indeed, in at least one recent enforce-
ment proceeding, a manager whose position was strikingly similar to
that which Baragosh claims for himself was neither charged with con-
trol of a fraud scheme nor found to be in control. See In re Global
Currencies Ltd., No. 97-13, 2000 WL 136068 (C.F.T.C. Feb. 14,
2000).

   The Commission nevertheless suggests that controlling person lia-
bility may attach simply because a defendant is extensively involved
20            COMMODITY FUTURES TRADING v. BARAGOSH
in training, and cites JCC, Inc., 63 F.3d at 1567-70, in support. But
in that case, the defendant whose controlling person authority was liti-
gated had not only trained personnel, but also served as the CEO and
president of the commodities trading firm, and had "personally hired
many of [the firm’s associated persons], established their pay and
benefits, and covertly monitored their sales solicitation efforts." Id. at
1568. In addition, the defendant had "required [them] to utilize sales
scripts . . . taught [them] to read the scripts verbatim . . . wrote some
of these scripts, and . . . reviewed and approved all [the scripts]." Id.;
see also In re JCC, Inc., No. 89-4, 1991 WL 272672 (C.F.T.C. Dec.
13, 1991) (discussing operation in greater detail). In contrast, Bara-
gosh contends that he did not hire, fire, set employees’ salaries, write
scripts, or serve as president.

   Nor, contrary to the Commission’s contention, was Baragosh’s
appearance at an arbitration hearing on behalf of Noble Wealth unam-
biguous evidence that he controlled the company. At that hearing,
Baragosh testified mainly about the nature of foreign currency trading
and the mechanics of Noble Wealth’s trading operation, giving out
the same information that he regularly supplied as a "trainer." He
stated that his position as vice president was "just kind of a nomina-
tion that they give to me" as a "good gesture from the company."
Indeed, he testified that he was not even an employee of Noble
Wealth, but rather an "independent contractor" who took instructions
from Nawab Khan. We note that, at the time of the arbitration pro-
ceeding, the Commission had not yet filed its complaint and Baragosh
lacked any apparent incentive to downplay his authority.

   For these reasons, we vacate the district court’s grant of summary
judgment to the Commission on the issue of whether Baragosh was
a controlling person of Noble Wealth. Of course, this does not mean
that the Commission will be unable to prove Baragosh is a controlling
person, only that at this juncture the undisputed facts do not establish
this. On remand, factual disputes may be resolved against Baragosh
and, upon review of all relevant evidence and after making the neces-
sary credibility determinations, the fact finder may conclude that
Baragosh was indeed a controlling person of Noble Wealth.5 We also
  5
   If Baragosh is found to be a controlling person, the fact finder must
also determine when he attained that status. Under controlling person
               COMMODITY FUTURES TRADING v. BARAGOSH                     21
vacate and remand the district court’s holding that Baragosh bucketed
orders in violation of 7 U.S.C. § 6b (a)(iv) and its order directing
Baragosh to pay restitution to Noble Wealth customers. Both of these
rulings depend on the district court’s conclusion that Baragosh was a
controlling person of Noble Wealth and should be reconsidered in
light of the court’s ultimate holding on that question.

                                    IV.

  For the foregoing reasons, the judgment of the district court is

      AFFIRMED IN PART AND VACATED AND REMANDED IN
                                             PART.

WILLIAMS, Circuit Judge, concurring in part and concurring in the
judgment:

   I concur in Parts I, III and IV of Judge Motz’s opinion, and concur
in the result with respect to Part II. I write separately because I
believe that the language of the CEA itself, read in the most natural
manner, authorizes the CFTC to regulate the transactions at issue in
this case. Because the legislative history does not clearly suggest that
transactions such as the ones at issue in this case were meant to be
exempted from CFTC jurisdiction, there is no need to address a
potential conflict between text and legislative history. I therefore con-
cur in the result reached by Part II of the majority opinion.

provisions in federal securities law, which are persuasive authority for
interpreting 7 U.S.C. § 13c(b), see Rosenthal & Co. v. CFTC, 802 F.2d
963, 966 (7th Cir. 1986), controlling person liability attaches only to acts
committed by the primary actor during a period of control. See Brown v.
Enstar Group, Inc., 84 F.3d 393, 397 (11th Cir. 1996); Louis Loss and
Joel Seligman, Securities Regulation 4472 (3d ed. 1992). We see no rea-
son to vary that principle in applying the CEA.
