                                        In the

           United States Court of Appeals
                         For the Seventh Circuit
                              ____________________
No. 07-3057
LAKE SHORE ASSET MANAGEMENT LIMITED,
                                                                        Petitioner,
                                           v.
COMMODITY FUTURES TRADING COMMISSION,
                                                                      Respondent.
                              ____________________
                       Petition for Review of an Order of the
                      Commodity Futures Trading Commission
                              ____________________
No. 07-3070
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.
                              ____________________

   ARGUED OCTOBER 23, 2007 — DECIDED DECEMBER 28,
                        2007∗

       ∗   This opinion is being released in typescript. A printed version will fol-
low.
Nos. 07-3057 & 07-3070                                                Page 2


                        ____________________

     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 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. The district judge entered an ex parte order of in-
definite duration not only requiring Lake Shore to produce the
records that the CFTC sought but also freezing all of its assets
(including customers’ funds). We reversed, 496 F.3d 769 (2007),
holding that Lake Shore is entitled to a hearing before any re-
lief may extend past 20 days, and that an asset freeze is appro-
priate only if customers otherwise are at a demonstrable risk of
injury. Lake Shore, although located in the United States, spe-
cializes in giving advice to affiliates and customers elsewhere.
Our opinion concluded: “The principal dispute in this case ap-
pears to concern the extent to which transactions by or on be-
half of foreign investors, carried out on exchanges in London,
must be disclosed to the CFTC; there is no apparent reason
why all of these businesses must be shut down while that dis-
pute is resolved.” 496 F.3d at 773.
     After our opinion issued, the district court suggested that
its ex parte order remained in effect, and the CFTC contended
that it would be entitled to bring a series of motions, each of
which would support a new 20-day asset freeze without need
for a hearing. This led to a petition for a writ of mandamus, and
on August 8, 2007, we issued this order:
   On August 2, 2007, this court issued an opinion vacating the ex parte
   injunction that the district court had issued. We issued the man-
   date the same day, so that our decision took effect immediately.
   According to the “Motion to Enforce Mandate” that Lake Shore
   Asset Management ﬁled on August 7, however, the CFTC and the
   district judge believe that the injunction remains in effect. It does
   not. To clarify matters, we add the following to our opinion. If nec-
   essary, we will enforce these rulings by issuing a writ of mandamus,
   though we trust that it will not be necessary.
       1. No injunction is currently in force in this litigation, and none
       has been in force since August 2, 2007.
Nos. 07-3057 & 07-3070                                             Page 3


       2. No further ex parte order, or other temporary restraining or-
       der, may be issued in this case, because the 20-day limit set by
       Fed. R. Civ. P. 66(b) has been exhausted.
       3. If the CFTC believes that a preliminary injunction is war-
       ranted, it may move for such relief. The district court may not
       issue such an injunction until after an opportunity for an evi-
       dentiary hearing has been afforded to Lake Shore Asset Man-
       agement.
       4. A preliminary injunction may include limitations on how
       Lake Shore Asset Management and its customers hold or dis-
       pose of assets only if the CFTC establishes, by a preponderance
       of the evidence at a hearing, that customers’ assets otherwise
       would be in jeopardy.
The district court then held a hearing and concluded that Lake
Shore must turn over the records that the Commission wants
to see. The court also issued a new injunction imposing an asset
freeze, finding that customers’ funds are in jeopardy. The prin-
cipal support for this finding is that Lake Shore has told poten-
tial customers that it manages more than $1 billion, and that
customers’ accounts have earned more than 20% annually, but
that no more than $230 million can be located at depositary in-
stitutions and clearing corporations, which hold most of cus-
tomers’ money in derivatives transactions. This means, the dis-
trict court concluded, that customers have been losing money
(exposing Lake Shore’s statements as false or deceptive), that
someone has made off with customers’ money, or both. 2007
U.S. Dist. LEXIS 65559 (N.D. Ill. Aug. 28, 2007). There are two
other possibilities that the district court did not consider: first,
Lake Shore may have been exaggerating the amount originally
invested; second, the billion-dollar reference may have been to
the notional amount of the derivatives rather than to the
money customers had placed under Lake Shore’s management.
The notional amount in a futures transaction is the face value
of the contract (say, 100 times the level of the Standard &
Poor’s 500 Index) rather than the amount of customers’ equity.
In derivatives transactions, customers rarely hand over more
than the margin, which runs between 2% and 20% of the con-
tract’s notional value. A court can’t distinguish among these
possibilities, however, without access to Lake Shore’s records.
    Lake Shore asked for a stay of the new injunction; we de-
nied that motion without opinion. Meanwhile the National Fu-
tures Association concluded that Lake Shore was out of com-
pliance with its rules. The NFA directed Lake Shore to freeze
Nos. 07-3057 & 07-3070                                               Page 4


all assets belonging to customers. In re Lake Shore Asset Manage-
ment Ltd., No. 07-MRA-007 (Aug. 6, 2007). Lake Shore asked
the CFTC to stay this directive’s enforcement until the agency
rules on its petition for review; Lake Shore argued that the
NFA lacks the legal authority to enter the kind of order that it
did. The CFTC denied the application for a stay. Lake Shore As-
set Management Ltd. v. National Futures Association, No. CRRA
07-02, 2007 CFTC LEXIS 64 (Aug. 30, 2007). Lake Shore’s peti-
tion for review of the NFA’s order remains on the CFTC’s
docket.
     We consolidated an appeal from the district court’s injunc-
tion (No. 07-3070) with Lake Shore’s petition for review of the
CFTC’s order (No. 07-3057). While the parties were preparing
their briefs, the litigation continued in the district court. Lake
Shore refused to provide the records, and the district court
then appointed a receiver in order to ensure compliance. 2007
U.S. Dist. LEXIS 74615 (N.D. Ill. Oct. 4, 2007). Another appeal
(No. 07-3408) has been filed from that order. Lake Shore asked
for a stay, and on October 15, 2007, we issued this decision:
   The district court entered an injunction that froze the assets of
   Lake Shore Asset Management and afﬁliated ﬁrms and directed
   them to make books and records available to the CFTC. We de-
   clined to stay that injunction pending appeal, but Lake Shore Asset
   Management nonetheless failed to comply. The district court found
   that books and records have not been made available; indeed, Lake
   Shore refuses to tell the court where they are. The status of cus-
   tomers’ assets likewise is unclear, as the court and the CFTC need
   access to the books to determine whether customers’ accounts are
   in jeopardy. What is more, Lake Shore has ﬁled actions in other na-
   tions collaterally attacking the district court’s judgment and asking
   those nations’ judges to give Lake Shore permission to disobey the
   injunction.
   The district judge concluded that this contumacious behavior is in-
   tolerable and appointed a receiver to take over Lake Shore’s opera-
   tions and bring it into compliance with the injunction. Injunctions
   must be obeyed; there is no other alternative. Lake Shore is in con-
   tempt of court, and no district judge is obliged to look the other
   way.
   Fed. R. Civ. P. 65(d) provides that an injunction binds “the parties
   to the action, their ofﬁcers, agents, servants, employees, and attor-
   neys, and upon those persons in active concert or participation with
   them who receive actual notice of the order by personal service or
   otherwise.” This includes Lake Shore’s offshore afﬁliates. If, as Lake
   Shore maintains, laws of other nations set limits on its disclosures
   of books and records, that would have been a reason to write a dif-
   ferent injunction (or an argument in support of a stay); it is not a
Nos. 07-3057 & 07-3070                                                 Page 5


   reason to disobey an injunction actually issued, once this court de-
   nied the motion for a stay. Moreover, because the injunction is
   binding in personam on foreign afﬁliates under common manage-
   ment, the initiation of litigation in other nations’ courts in an effort
   to evade compliance with the injunction is itself a form of con-
   tempt, and the district judge is entitled to halt the deﬁance by em-
   powering the receiver to withdraw all litigation initiated by Lake
   Shore and its afﬁliates in other judicial systems.
   The district court’s order could be read to limit Lake Shore’s ability
   to pursue this appeal (and the others already on ﬁle, and scheduled
   for oral argument on October 23). The CFTC agrees with Lake
   Shore that a district court cannot prevent appeals of its own orders.
   We therefore treat the order as not interfering with Lake Shore’s
   efforts, through current management, to obtain appellate review. So
   understood, the district court’s order is unlikely to be reversed on
   appeal, and a stay is unwarranted. The motion for a stay is denied.
The district court has since found Lake Shore in contempt of
both the preliminary injunction and the receivership order.
2007 U.S. Dist. LEXIS 90963 (N.D. Ill. Dec. 10, 2007). We as-
sume that yet another appeal is in the offing.
    Our decision of October 15 says pretty much everything
needed to explain why the injunction entered against Lake
Shore must remain in effect. The company’s briefs in No. 07-
3070 scarcely engage with the language of 7 U.S.C. §6n(3)(A)
and 17 C.F.R. §§ 1.31, 4.23, and 4.33, on which the order princi-
pally rests. Instead Lake Shore devotes most of its energies to
denying that the CFTC may regulate acts that occur outside
the borders of the United States. That’s true enough—
authority for extraterritorial regulation must be express, see
EEOC v. Arabian American Oil Co., 499 U.S. 244 (1991), while 7
U.S.C. §6n does not mention activities that domestic firms
conduct in other nations—but beside the point.
    Lake Shore transacts its business in the United States. It
voluntarily registered with the CFTC and joined the NFA. It
assures customers that it is subject to U.S. law, doubtless think-
ing that submitting to regulation in this nation would make its
promises credible. Some of the trades occur on exchanges in
the United States; some customers’ assets are held here. Federal
law controls how Lake Shore must conduct itself within the
United States, even though other companies in the same affili-
ated group do their business outside, and even though most of
the group’s business is with investors from other nations. Hav-
ing registered with domestic agencies—and having assured the
NFA as a condition of membership that no foreign secrecy law
Nos. 07-3057 & 07-3070                                      Page 6


prevents compliance with this nation’s disclosure require-
ments—Lake Shore must abide by federal law, including the
record-keeping-and-disclosure rules.
    Lake Shore maintains that the freeze is invalid, even if the
disclosure order is proper, because the CFTC has failed to
prove that any of its customers relied on a misrepresentation.
But the CFTC need not show reliance by private investors in
order to obtain relief. See Slusser v. CFTC, 210 F.3d 783 (7th Cir.
2000). Reliance is an element in a private action for damages;
proof of reliance is not required in a regulatory agency’s suit—
or for that matter a criminal prosecution. See United States v.
Rosby, 454 F.3d 670 (7th Cir. 2006).
    As for the CFTC’s denial of interlocutory relief from the
NFA’s order: That’s not even within our subject-matter juris-
diction. Courts review final decisions, and an agency’s resolu-
tion of one legal issue—such as whether the NFA has the
authority to freeze a member’s assets—is not a “final decision”
while other aspects of the proceeding are ongoing before the
agency. See, e.g., FTC v. Standard Oil Co. of California, 449 U.S.
232 (1980). We have not been able to find any opinion discuss-
ing how the finality rule applies to the relation among the NFA,
the CFTC, and the courts of appeals. But substitute a self-
regulatory organization in the securities business for the NFA,
and the SEC for the CFTC, and the answer is known.
    Allan v. SEC, 577 F.2d 388, 392–93 (7th Cir. 1978), holds that
the SEC’s decision not to stay disciplinary sanctions imposed
by a self-regulatory organization is not ﬁnal and thus is not re-
viewable until the agency has resolved the matter fully. The ju-
risdictional statute at issue in that case, 15 U.S.C. §78y(a)(1), is
almost identical to the statute at issue here, 7 U.S.C. §21(i)(4).
Cf. Cheng Fan Kwok v. INS, 392 U.S. 206 (1968) (denial of a stay
of deportation is not a ﬁnal order of deportation and therefore
is not reviewable). What’s more, the CFTC has yet to decide
whether the NFA enjoys the authority it claims. A litigant can’t
use a motion for a stay (followed by a petition for judicial re-
view) to force an agency to make an instant decision on a com-
plex issue. The CFTC may address the subject after full delib-
eration, and judicial review must await the agency’s final dispo-
sition of the entire dispute presented by Lake Shore’s petition
to review the NFA’s order.
Nos. 07-3057 & 07-3070                                       Page 7


    Having said all this, however, we must confess that in one
important respect our decision of October 15 was imprecise.
We observed that under Fed. R. Civ. P. 65(d) an injunction
against Lake Shore Asset Management, Ltd., binds all those
acting in concert with it—which means other members of the
corporate group. But it does not follow that a litigant’s affiliates
may be named in an injunction. The only defendant in the
CFTC’s suit is Lake Shore Asset Management, which must be
the sole addressee of the injunction. See Zenith Radio Corp. v.
Hazeltine Research, Inc., 395 U.S. 100, 110–11 (1969). The injunc-
tion may direct Lake Shore to do things within its power—such
as turning over its books and records—but may not impose ob-
ligations directly on other members of the corporate group.
    Any of Lake Shore’s affiliates is bound, to be sure, by an in-
junction against Lake Shore, but a district court must not direct
Lake Shore to do things that only some other member of the
group, not named as a defendant, could perform. And whether a
particular person or firm is among the “parties’ ofﬁcers, agents,
servants, employees, and attorneys; [or] other persons in active
concert or participation with” them (see Fed. R. Civ. P.
65(d)(2)(B), (C)) is a decision that may be made only after the
person in question is given notice and an opportunity to be
heard. (This language comes from the version of Rule 65 that
became effective on December 1, 2007l the language quoted in
our order of October 15 is from the version of Rule 65(d) that
was then current. There is no substantive difference.)
    The district judge evidently was confident that other mem-
bers of the Lake Shore Group of Companies are “in active con-
cert or participation with” Lake Shore Asset Management, and
that may well be true. But so far none of these other entities
has been served with process and given an opportunity to pre-
sent evidence. That is essential before any enforcement action
may be taken against a non-litigant. Zenith Radio held that even
a defendant’s concession that some additional entity is the de-
fendant’s alter ego does not a warrant an injunction against that
entity, until it has been served with process and offered the op-
portunity to say whether it agrees with the original defendant’s
concession. See also, e.g., Chase National Bank v. Norwalk, 291
U.S. 431, 436–37 (1934); Scott v. Donald, 165 U.S. 107, 117 (1897).
    The injunction that the district court entered imposes obli-
gations on “Lake Shore [Asset Management] Limited, individu-
ally and as part of the Lake Shore common enterprise”. The
Nos. 07-3057 & 07-3070                                    Page 8


phrase “individually and as part of the Lake Shore common en-
terprise” must be deleted wherever it occurs in the injunction,
so that the order’s only addressee is Lake Shore Asset Manage-
ment, the sole defendant. Rule 65(d)(2) specifies who other than
Lake Shore must comply, and before any person or entity is
deemed to be “in active concert or participation with” Lake
Shore, notice and an opportunity for a hearing must be pro-
vided. Of course, other members of the Lake Shore Group of
Companies act at their peril if they disregard the commands of
the injunction, for, if the district court ultimately determines
that they are in concert with Lake Shore, then they will be in
contempt of court. But that is an issue for another day, if any
additional member of the group (or any of the entities’ officers)
should be named as a party. See In re Teknek, LLC, No. 07-1498
(7th Cir. Dec. 28, 2007).
    The petition to review the CFTC’s order is dismissed for
want of jurisdiction. The judgment of the district court is af-
firmed to the extent it concerns Lake Shore Asset Management
(and is within its power to perform) but is vacated to the extent
the injunction imposes duties on other entities, and the case is
remanded for proceedings consistent with this opinion.
