                                    In the

       United States Court of Appeals
                     For the Seventh Circuit
                          ____________________
No. 07-2790
COMMODITY FUTURES TRADING COMMISSION,
                                  Plaintiff-Appellee,
                                       v.
LAKE SHORE ASSET MANAGEMENT LIMITED,
                                 Defendant-Appellant.
                          ____________________
             Appeal from the United States District Court for the
               Northern District of Illinois, Eastern Division.
              No. 07 C 3598 — Blanche M. Manning, Judge.
                          ____________________

 SUBMITTED AUGUST 1, 2007 — DECIDED AUGUST 2, 2007†
                          ____________________

  Before EASTERBROOK, Chief Judge, and BAUER and
MANION, Circuit Judges.
    EASTERBROOK, Chief Judge. The Commodity Futures Trad-
ing Commission believes that Lake Shore Asset Management, a
commodity-pool operator and adviser in the derivatives busi-
ness, has failed to produce on demand the records required by 7
U.S.C. §6n(3)(A) and the corresponding regulations, 17 C.F.R.
§§ 1.31, 4.23, and 4.33. On June 27, 2007, the day after the CFTC
filed its complaint, the district court issued an ex parte order re-
quiring Lake Shore to comply with the CFTC’s view of its re-
cords-related obligations. The order also freezes all assets of
Lake Shore and other firms under common control. Four enti-
ties fit that description; they do business outside the United

   †   This opinion is being issued in typescript. A printed copy will follow.
No. 07-2790                                                Page 2


States but are covered by the order. The freeze affects more
than $200 million in customers’ property.
    The judge did not explain her reason for issuing the order or
the thinking behind the asset freeze in particular. Both Lake
Shore and its customers—principally large and sophisticated
businesses, such as the Royal Bank of Canada—are dissatisfied
with the freeze and asked the district court for relief. Liquidity
is valuable to customers in the derivatives business, and the
freeze prevents customers from trading or cashing out their po-
sitions for an indefinite period. But on July 13 the judge ex-
tended the injunction, with only modest changes in language,
“until further order of Court.” The court set a briefing schedule
that will last until August 23 and promised a ruling by mail. It
did not, however, hold or schedule an evidentiary hearing.
    A temporary restraining order that remains in force longer
than 20 days must be treated as a preliminary injunction, which
allows an appeal under 28 U.S.C. §1292(a)(1). See Granny Goose
Foods, Inc. v. Teamsters, 415 U.S. 423, 433 (1974); Chicago United
Industries, Ltd. v. Chicago, 445 F.3d 940, 943 (7th Cir. 2006). An
immediate appeal is proper under these decisions. Carson v.
American Brands, Inc., 450 U.S. 79 (1981), which the CFTC in-
vokes for the proposition that we lack appellate jurisdiction,
addressed the question whether, by refusing the parties’ request
to enter a consent decree, and calling for further submissions,
the district court had “denied” anyone’s motion for an injunc-
tion. There is no doubt here that the district court has issued
an injunction; nothing more is required under §1292(a)(1).
    Passage of 20 days without an evidentiary hearing usually
means that a TRO must be vacated, for 20 days is the limit on ex
parte relief set by Fed. R. Civ. P. 65(b). The CFTC argues, how-
ever, and the district judge held, that Rule 65(b) is inapplicable
because this injunction is authorized by §6c of the Commodity
Exchange Act, 7 U.S.C. §13a–1(a). That statute does not set a
time limit for ex parte orders, and as a consequence such orders
may last indefinitely, the district judge concluded.
    That approach would pose serious constitutional problems.
It would allow a business to be destroyed without giving the
affected party any opportunity to present evidence. Rule 65(b)
permits emergency action while ensuring that district courts
use an adversarial, rather than an inquisitorial and ex parte ap-
proach, as soon as time allows. There is no longer any emer-
No. 07-2790                                                   Page 3


gency in this case; the district court has had ample time to offer
Lake Shore a hearing, and the fact that some statute does not
compel a hearing does not imply that the court may ignore the
defendant’s evidence and arguments.
    Section 13a–1(a) does not say that hearings are unnecessary,
let alone that they are forbidden. It is silent on the question.
Like hundreds if not thousands of similar provisions in the
United States Code, it authorizes district courts to provide eq-
uitable relief but does not cover judicial procedure. Such a stat-
ute alters the common law—for example, it dispenses with the
need to show irreparable injury, see CFTC v. Hunt, 591 F.2d 1211,
1220 (7th Cir. 1979)—but that effect on the substantive rules of
decision does not imply that norms for the conduct of litigation
have been discarded. The absence of a statutory time limit for
ex parte relief no more implies that such relief may last forever
than a statute’s failure to mention an answer or testimony at a
hearing implies that defendants are forbidden to answer the
complaint or offer evidence when a hearing finally is held.
Likewise a statute that authorizes a district court to award
damages but does not mention juries does not forbid jury trials;
other laws and rules set out how damages will be ascertained.
See Curtis v. Loether, 415 U.S. 189 (1974).
   A statute that does not speak to procedural matters leaves
the Federal Rules of Civil Procedure to govern as usual. See
Fed. R. Civ. P. 1, 81 (rules apply to all civil actions except to the
extent Rule 81 provides otherwise, and Rule 81 does not create
an exception for actions under the Commodity Exchange Act).
Any doubt is removed by the supersession clause of the Rules
Enabling Act, 28 U.S.C. §2072(b), which says that, when the
federal rules and some other law conflict, the rules prevail. See
Henderson v. United States, 517 U.S 654 (1996). Congress could of
course supersede §2072(b) and the rules in turn, but §13a–1(a)
does not do so. Rule 65(b) applies to this litigation.
    Because the ex parte order has lasted more than 20 days, it
must be vacated. The district court should hold a prompt hear-
ing to consider whether a preliminary injunction is appropri-
ate—and, if so, what terms the injunction should have.
    It is difficult to read §13a–1(a) to authorize an asset freeze as
a “remedy” for a firm’s decision not to hand over everything the
CFTC wants to see. Cf. Grupo Mexicano de Desarrollo, S.A. v. Alli-
ance Bond Fund, Inc., 527 U.S. 308 (1999). The statute authorizes
No. 07-2790                                                           Page 4


district courts to enjoin acts or practices that violate the Com-
modity Futures Act and the CFTC’s regulations. Injunctions
should be tailored to the violation. Here is §13a–1(a) in full:
   Whenever it shall appear to the Commission that any registered en-
   tity or other person has engaged, is engaging, or is about to engage
   in any act or practice constituting a violation of any provision of
   this Act or any rule, regulation, or order thereunder, or is restrain-
   ing trading in any commodity for future delivery, the Commission
   may bring an action in the proper district court of the United States
   or the proper United States court of any territory or other place
   subject to the jurisdiction of the United States, to enjoin such act or
   practice, or to enforce compliance with this Act, or any rule, regula-
   tion or order thereunder, and said courts shall have jurisdiction to
   entertain such actions: Provided, That no restraining order (other
   than a restraining order which prohibits any person from destroy-
   ing, altering or disposing of, or refusing to permit authorized repre-
   sentatives of the Commission to inspect, when and as requested,
   any books and records or other documents or which prohibits any
   person from withdrawing, transferring, removing, dissipating, or
   disposing of any funds, assets, or other property, and other than an
   order appointing a temporary receiver to administer such restrain-
   ing order and to perform such other duties as the court may con-
   sider appropriate) or injunction for violation of the provisions of
   this Act shall be issued ex parte by said court.
The CFTC and the district judge appear to have read the pro-
viso as a source of authorization to issue ex parte asset freezes in
every situation. That is not what the proviso says, however. It
says that record-keeping and asset-freeze orders are the only
kinds of relief that may be adopted ex parte, not that district
courts should employ these kinds of relief in every case. The
court may “enjoin [the] act or practice” that violates the Act;
on the CFTC’s view, that “act or practice” is the failure to dis-
close required records.
    An asset freeze would be appropriate only if the evidence
suggests that customers’ financial interests otherwise would be
in jeopardy. The district court did not find, however, that a
freeze is required for the customers’ protection, and it appears
to harm them by denying them control over their investments.
The Commission’s response in this court does not suggest that
the agency has any evidence that customers’ assets are endan-
gered. As far as we can tell, no customer has complained about
the way Lake Shore and affiliated firms have handled their in-
vestments. The principal dispute in this case appears to con-
cern the extent to which transactions by or on behalf of foreign
investors, carried out on exchanges in London, must be dis-
No. 07-2790                                              Page 5


closed to the CFTC; there is no apparent reason why all of these
businesses must be shut down while that dispute is resolved.
    The ex parte order is vacated. The mandate will issue imme-
diately.
