                  FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

COMMODITY FUTURES TRADING              
COMMISSION,
                 Plaintiff-Appellee,
                v.
                                           No. 07-56629
WHITE PINE TRUST CORPORATION, a
California Corporation; RICHARD             D.C. No.
                                           CV-04-02093-J
MATTHEWS,
                        Defendants,          OPINION
               and
STEPHAN BAERE,
              Defendant-Appellant.
                                       
        Appeal from the United States District Court
          for the Southern District of California
        Napoleon A. Jones, District Judge, Presiding

                 Argued and Submitted
           March 4, 2009—Pasadena, California

                    Filed August 3, 2009

 Before: Diarmuid F. O’Scannlain, Pamela Ann Rymer, and
          Kim McLane Wardlaw, Circuit Judges.

               Opinion by Judge O’Scannlain




                            10071
10074       COMMODITY FUTURES TRADING v. BAERE




                        COUNSEL

Dirk T. Metzger, Esq., San Diego, California, argued the
cause for appellant and filed briefs.

Nancy R. Page, Assistant General Counsel, Commodity
Futures Trading Commission, Washington, D.C., argued the
cause for appellee and filed briefs; Terry S. Arbit, General
Counsel, and Bradford M. Berry, Deputy General Counsel,
Commodity Futures Trading Commission, Washington, D.C.,
were also on the briefs.


                         OPINION

O’SCANNLAIN, Circuit Judge:

   We must decide whether the Commodities Futures Trading
Commission has jurisdiction over certain activities involving
foreign currency.

                              I

  In 2000, Richard R. Matthews, Jr., formed White Pine
              COMMODITY FUTURES TRADING v. BAERE                 10075
Trust Corporation (“White Pine”) as a holding company for
investment funds, including the Pinnacle Capital Fund
(“Pinnacle”).1 Investors in Pinnacle were told that they had
accounts representing investments in the trading of the fund.
Investors were not to place orders for specific products;
instead, White Pine claimed in its Prospectus that it would
manage the accounts in the fund according to one of two trad-
ing strategies. These strategies combined trading in the spot
and options markets for foreign currency. White Pine also told
customers it would keep the money customers invested in
Pinnacle segregated into individual accounts.

  In 2002, Matthews hired Stephen Baere as the Director of
Business Development for White Pine. Part of Baere’s job
was to solicit money from the public to invest in Pinnacle. He
solicited in person at trade shows and elsewhere and through
White Pine’s website.

   As it turned out, Pinnacle, and White Pine in general, did
not do much trading. Instead, the parties agree, Matthews
stole the money of investors for himself. Indeed, the accounts
to which investors contributed were commingled with general
funds, over which Matthews had control. Though he claims
not to have known that Matthews was pocketing Pinnacle
funds, Baere concedes that he solicited money from investors
by, in part, lying to them at Matthews’ direction.

   After some preliminary investigation, the Commodity
Futures Trading Commission (“CFTC”) filed a civil proceed-
ing against White Pine and Matthews in October of 2004,
adding Baere as a defendant one month later. The CFTC
sought and obtained a preliminary injunction against Baere to
freeze his assets, to make his assets and records available to
the CFTC for discovery, and to prohibit Baere from destroy-
ing records.
  1
   The facts as we state them come either from the district court’s sum-
mary or from uncontroverted portions of the record before the district
court.
10076        COMMODITY FUTURES TRADING v. BAERE
   The government had also initiated criminal prosecutions
against all three defendants. Soon after the CFTC added Baere
as a defendant, he accepted a plea agreement. While admitting
that he actively solicited investments in Pinnacle by misrepre-
sentating facts, Baere did not concede that White Pine offered
foreign currency options.

                               A

   The CFTC’s First Amended Complaint (the operative com-
plaint) rested the agency’s jurisdiction on several provisions
of the Commodity Exchange Act (“the Act”), the statute gov-
erning the reach of the CFTC and commodities regulation.
Whether this provision actually supports the CFTC’s jurisdic-
tion over this case is the central issue on appeal. The CFTC
sought injunctive relief pursuant to 7 U.S.C. § 13a-1, which
authorizes such relief against persons who have violated, are
violating, or are about to violate any provision of the Act or
the regulations thereunder. The agency also sought disgorge-
ment and restitution.

   The complaint charged Baere, Matthews, and White Pine
with one count of fraud by misappropriation and solicitation
in violation of 7 U.S.C. § 6c(b) and 17 C.F.R. §§ 1.1, 32.9(a)
and (c), and one count of offer and sale of illegal off-
exchange options contracts in violation of 7 U.S.C. § 6c(b)
and 17 C.F.R. § 32.11(a). The cases against White Pine and
Matthews soon resolved themselves without much litigation.

                               B

   As the litigation in Baere’s case proceeded to discovery, the
CFTC refused to respond to some of his interrogatories and
requests for admission. Baere successfully moved to compel
responses to all of the discovery requests pertaining to the
jurisdictional issue—whether he traded in or offered transac-
tions to others in foreign currency options. The CFTC
responded as directed, but Baere remained unsatisfied. He
                COMMODITY FUTURES TRADING v. BAERE                       10077
argued that the CFTC had to provide an expert analysis of 400
pages of documents pertaining to White Pine’s trading activ-
ity to determine whether options trading actually occurred.
The magistrate refused to compel the CFTC to perform the
analysis and Baere objected.

   The district court overruled this objection. It concluded that
the CFTC’s jurisdiction does not turn on whether White Pine
actually traded options, because the CFTC only alleges that
Baere offered options transactions to clients. In any event, the
district court ruled that even if the CFTC did have to prove
actual trading, it had met its discovery obligations by produc-
ing over “400 pages of trading documents identified by Bates
Stamp number.”

   In the meantime, the CFTC had moved for summary judg-
ment, which the district court granted. Baere timely appeals
from such judgment along with the district court’s denial of
his motion to compel. Significantly for our purposes, Baere
only contests the district court’s determination that the CFTC
has jurisdiction to bring this case.2 He does not challenge the
  2
    Baere has framed his argument as a challenge to the jurisdiction of the
district court over this case. Indeed, he ties his attack on the district court’s
grant of summary judgment to the initial motion to dismiss that he made
under Federal Rule of Civil Procedure 12(b)(1) (dismissal for want of
subject-matter jurisdiction).
   But the CFTC brought its complaint under a federal law (the Commod-
ity Exchange Act), and thus there is federal question jurisdiction under 28
U.S.C. section 1331 unless “the alleged claim under the . . . federal stat-
ute[ ] clearly appears to be immaterial and made solely for the purpose of
obtaining jurisdiction or where such claim is wholly insubstantial and friv-
olous.” Bell v. Hood, 327 U.S. 678, 682-83 (1946); see also Black v.
Payne, 591 F.2d 83, 86 n.1 (9th Cir. 1979) (noting that the contention that
a given instrument is not “a security” and therefore a securities fraud
action would not lie goes to whether plaintiff states a claim, not whether
the court has subject-matter jurisdiction). His argument that the CFTC
lacks jurisdiction to bring the case is thus akin to a claim that there is no
cause of action provided by the statute, an argument that at the motion to
10078           COMMODITY FUTURES TRADING v. BAERE
district court ruling that, as a matter of law, he engaged in
actionable fraud under the relevant statutes. We therefore
assume that he has.

                                      II

   The CFTC claims it has jurisdiction to bring this case under
three sections of the Act: 7 U.S.C. §§ 2(c)(2)(B), 6c(b), and
13a-1. For reasons that will appear, we address the statutory
provisions in reverse order.

   [1] In its complaint, the CFTC sought injunctive relief, civil
fines, and disgorgement and restitution under 7 U.S.C. § 13a-
1. That section provides that:

     [w]henever it shall appear to the Commission that
     any . . . person has engaged, is engaging, or is about
     to engage in any act or practice constituting a viola-
     tion of any provision of this chapter or any . . . regu-
     lation . . . thereunder, . . . the Commission may bring
     an action in the proper district court of the United
     States . . . to enjoin such act or practice, or to enforce
     compliance . . . and said courts shall have jurisdic-
     tion to entertain such actions.

§ 13a-1(a). The statute also allows the CFTC to seek, and
allows the court to impose, civil penalties “[i]n any action
brought under [the same] section.” § 13a-1(d)(1).3 Standing

dismiss stage would be brought under Rule 12(b)(6), not Rule 12(b)(1).
We therefore read Baere to argue, at the summary judgment stage, that the
CFTC cannot bring this action under its statute, rather than that there is
no subject-matter jurisdiction.
   The language of the CFTC statute, however, speaks in terms of jurisdic-
tion. But this refers to the jurisdiction of the CFTC. While we adopt the
statutory terms, we clarify that they speak only of the CFTC’s power to
bring its claims, not of the federal courts’ jurisdiction to hear the case.
   3
     Again, although the statute purports to grant the district court jurisdic-
tion to entertain certain actions, in fact it is stating the relief available to
the CFTC regarding the claims it is permitted to bring.
             COMMODITY FUTURES TRADING v. BAERE            10079
alone, these subsections grant no jurisdiction; the CFTC must
allege and, on summary judgment, show a violation of the Act
or of its regulations.

    [2] Indeed, the CFTC alleges Baere violated 7 U.S.C.
§ 6c(b) and 17 C.F.R. §§ 1.1, 32.9(a) & (c), and 32.11(a), all
of which prohibit fraud and misrepresentation in the solicita-
tion or offering of options. These substantive provisions, how-
ever, do not confer jurisdiction on the CFTC by themselves.
Section 6c(b) of the Act merely prohibits anyone from “offer-
[ing] to enter into, enter[ing] into or confirm[ing] the execu-
tion of, any transaction involving any commodity regulated
under this chapter which is of the character of, or is com-
monly known to the trade as, an ‘option’ . . . contrary to any
. . . regulation of the Commission prohibiting any such trans-
action.” § 6c(b) (emphases added).

   [3] Section 6c(b), then, only prohibits those transactions in
options contrary to CFTC regulations if they are regulated
under the Act, that is, if Congress has granted jurisdiction to
the CFTC to regulate them and to bring civil actions pertain-
ing to them. Such regulations, of course, cannot go beyond
the jurisdictional limits of the statute. Even if they could, the
regulations incorporate by reference the same limits that sub-
section 6c(b) does. See 17 C.F.R. § 32.1(a) (“The provisions
of this part . . . shall apply to all commodity option transac-
tions . . . pursuant to [7 U.S.C. § 6c(b)] and the regulations
promulgated thereunder.”); 17 C.F.R. § 1.1(a) (“The provi-
sions of this section shall be applicable to accounts, agree-
ments, contracts, or transactions described in section 2(c)(1)
of the Act, to the extent that the Commission exercises juris-
diction over such accounts, agreements, contracts and transac-
tions as provided in section 2(c)(2)(B) of the Act.”).

   [4] Thus, all roads lead back to section 2 of the Act, which
is captioned “Jurisdiction of Commission.” 7 U.S.C. § 2. Sec-
tion 2(c) exempts from the statute’s coverage “agreement[s],
contract[s], [and] transaction[s] in” certain financial instru-
10080         COMMODITY FUTURES TRADING v. BAERE
ments, including foreign currency. § 2(c)(1)(A).4 Subsection
(c)(2)(B), on which the CFTC bases its jurisdictional claims,
restores coverage over a specific subset of transactions in for-
eign currency. In particular, it grants the CFTC jurisdiction
over “an agreement, contract, or transaction in foreign cur-
rency that is a contract of sale of a commodity for future
delivery . . . or an option . . . ; and is offered to, or entered
into with, a person that is not an eligible contract participant,
unless the counterparty . . . is [certain types of entities].”
§ 2(c)(2)(B)(i)(I)-(II). The parties do not dispute that Baere
never solicited money from any “eligible contract partici-
pants” within the meaning of the statute and that White Pine
was not one of the exempted counterparties. Therefore, it
seems the CFTC can bring its action only if it can show “an
agreement, contract or transaction in foreign currency . . . that
is . . . an option[ ] and is offered to, or entered into with, [a
retail investor].” Id. (emphasis added).

                                  III

   We discern three lines of reasoning in Baere’s argument
that there remain genuine issues of material fact precluding
summary judgment in favor of the CFTC on this required
jurisdictional showing. First, the CFTC has not shown any
trading in actual options; second, White Pine did not offer
options but rather offered the service of discretionary account
management; third, any trading would have included trades in
the spot as well as option markets.

                                  A

  [5] Baere first claims that subsection 2(c)(2)(B)(i) grants
  4
    We note that Congress amended Subsection (2)(c) in 2008. See Pub.
L. 110-234, § 13101(a), and Pub. L. 110-246, § 13101(a). The amend-
ments did not change the language to which we refer in this opinion, but
it did rearrange the numbering of some of the relevant statutory subsec-
tions. We employ the current numbering.
             COMMODITY FUTURES TRADING v. BAERE             10081
the CFTC jurisdiction only over offers of options if the
offeror actually completes a trade in them. He points to the
language of the provision, which extends the Act’s coverage
over “agreements, contracts, and transactions in foreign cur-
rency” that meet two requirements. First, they must be
options. § 2(c)(2)(B)(i)(I). Second, they must be offered or
entered into with someone other than an eligible contract par-
ticipant. § 2(c)(2)(B)(i)(II). Baere argues that the first require-
ment means that any offer have an actual option behind it. In
other words, Baere maintains that the CFTC has no jurisdic-
tion when someone offers options without ever conveying any
options or even without ever having access to options to con-
vey. As the CFTC correctly points out, this would mean that
the Act does not regulate “fraudulent options solicitations
simply because the funds obtained were stolen rather than
invested as promised.”

   But the logic of the statutory language does not compel
such a counterintuitive result. Clause (I) seems merely to
require that what is “offered” under clause (II) be, in fact, an
option (or other contract of sale of a commodity for future
delivery), as opposed to a trade in actual foreign currency.
One can offer something without actually possessing or hav-
ing any intention to convey to the offeree the thing offered.
Take the example of someone who says, “I will give you a car
if you give me $100,” but then pockets the money and flees
the country. There is a car that is offered—the hypothetical
car that the offeror deceived the offeree into believing was for
sale—even though no actual car-for-money trade ever
occurred and even though the offeror never even had a car to
sell. In other words, if someone offers to sell a car without
having the car to sell, he still offers a car (as opposed to, for
example, a bicycle) for sale; he just did so fraudulently.

   Baere’s reading also risks making clause (II) incoherent.
Such clause extends the CFTC’s jurisdiction over any option
that is offered to or entered into with certain persons. If offers
of options had to end in actual entry into options transactions,
10082           COMMODITY FUTURES TRADING v. BAERE
then the separate provision in clause (II) for a transaction “en-
tered into” would be redundant. It is generally disfavored to
interpret statutes to create redundancy. See TRW Inc. v.
Andrews, 534 U.S. 19, 31 (2001) (“It is a cardinal principle
of statutory construction that a statute ought, upon the whole,
to be so construed that, if it can be prevented, no clause, sen-
tence, or word shall be superfluous, void, or insignificant.”
(internal quotation marks omitted)). All the more so where the
redundant interpretation also strains common sense.5

   [6] We therefore reject Baere’s contention that the CFTC
must show that he offered to trade an option and actually
traded an option in order to bring this case. Under subsection
2(c)(2)(B)(i), there must be an offer (§ 2(c)(2)(B)(i)(II)) of an
option (§ 2(c)(2)(B)(i)(I)); the CFTC need not show a con-
summated options trade or the possession by the offeror of an
option for sale or purchase.

                                     B

                                      1

   Baere next claims that by soliciting money for White Pine
he was not offering customers any particular financial prod-
uct, whether options or anything else, but rather a service—
discretionary investing. He insists that, because subsection
2(c)(2)(B)(i) requires “an option” that “is offered,” it is not
enough to solicit money for a discretionary management
account that may invest in options. In other words, Baere
argues, White Pine was not selling goods, it was selling its
   5
     Of course, it might be that an option “that is offered” refers to cases
where the offeror has an option to sell but the sale is never consummated,
as opposed to a case, like this one, where the offeror has no option to sell
and never intends any sale. But nothing in the statute requires us to split
hairs in such a bizarre and apparently pointless fashion. If the best that one
can say for Baere’s proposed interpretation is that it is possible in theory
but absurd in practice, then we must decline the proposal.
               COMMODITY FUTURES TRADING v. BAERE                  10083
services as a money-managing agent for putative investor-
principals.

   The CFTC’s responses to this argument have been surpris-
ingly unclear and muddled. The CFTC seems to argue that the
standard practice in the industry is not for retail investors to
purchase options directly from the grantor of those options.
The Act contains some evidence of this view. It recognizes
that so-called “futures commission merchants” may offer
dealer options, granted by others, for sale to investors.6 7
U.S.C. § 6c(d). The merchant acts like a brokerage firm—an
intermediary between the grantor of the dealer option and the
retail investor. Id. at § 6c(d)(2)(B). Thus, it seems most grant-
ors of dealer options do not offer options directly to investors
the way a traveling salesman hawks his wares directly to his
customer. See also 1 Derivatives Regulation § 1.06[1] (“The
futures commission merchant is at the heart of the selling
effort in the commodity futures industry . . . . The futures
commission merchant, if in the securities business, would
probably be called a brokerage house.”).

   But to accept that idea is not to resolve this case. Although
the CFTC suggested at oral argument that White Pine essen-
tially acted as an unregistered futures commission merchant,
White Pine does not appear to have acted as a broker or any-
thing similar. White Pine offered to manage the money of
investors, not to place orders on options or any other financial
instrument. White Pine offered its customers investments in
what we have previously referred to as a “discretionary com-
modities trading account.” Cf. Lopez v. Dean Witter Reynolds
Inc., 805 F.2d 880, 884-85 (9th Cir. 1986) (holding that dis-
cretionary commodities trading account with individualized
  6
   Dealer options are options on physical commodities (as opposed to
options on futures) which do not trade on a registered exchange. 1 Philip
McBride Johnson & Thomas Lee Hazen, Derivatives Regulation
§ 1.02[10] (2004). The parties do not dispute that White Pine purported to
deal in the off-exchange market.
10084          COMMODITY FUTURES TRADING v. BAERE
accounts was not a commodity pool under the Act). While it
might make sense to view a broker, who accepts a specific
order for options, as offering options when he solicits inves-
tors, we cannot say the same of a fund or discretionary
account manager.7

   The CFTC points out that White Pine’s solicitation materi-
als stated that it might invest customers’ money in options,
but the materials’ recitals do not thereby offer options. In
order to see why, we return to the precise language of the Act.

   [7] Subsection 2(c)(2)(B)(i) gives the CFTC jurisdiction in
this context only over “an agreement, contract, or transaction
in foreign currency that is . . . an option [and] . . . is offered
to” a retail customer. The Act defines “option” as “an agree-
ment, contract, or transaction that is of the character of, or is
commonly known to the trade as, an ‘option’, ‘privilege’,
‘indemnity’, ‘bid’, ‘offer’, ‘put’, ‘call’, ‘advance guaranty’, or
‘decline guaranty’.” 7 U.S.C. § 1a(26). While this definition
may not seem particularly helpful, it does tell us that an “op-
tion” for purposes of the Act is not a term of art. In the trade,
an option means the contract whereby the creator (or writer)
of the option grants to the purchaser “the right, for a specified
period of time, to either buy or sell the subject of the option
   7
     Indeed, some staff members of the CFTC appear to have recognized
the difference between an entity like White Pine and a futures commission
merchant. A letter from the agency’s Division of Trading and Markets
noted that “[g]enerally, a firm that, for compensation or profit, advises
others as to the value of or advisability of trading in futures or options
contracts, or issues analyses or reports concerning the foregoing, is a com-
modity trading advisor . . . . Advising others includes exercising discre-
tionary trading authority over a customer’s account.” CFTC Staff Letter
No. 01-91, [2000-2002 Transfer Binder] Comm. Fut. L. Rep. (CCH)
¶ 28,705 (CFTC Div. Trading & Markets Dec. 12, 2001); cf. 7 U.S.C.
§ 1a(6) (defining “Commodity Trading Advisor”). We express no position
on whether the CFTC could have sought relief on the argument that White
Pine was an unregistered Commodities Trading Advisor doing business
illegally. Cf. 7 U.S.C. § 6n.
               COMMODITY FUTURES TRADING v. BAERE                    10085
at a predetermined price.” 1 Derivatives Regulation
§ 1.02[10].

   [8] Though asked numerous times to do so at oral argu-
ment, counsel for the CFTC could not clearly point to the
“agreement, contract or transaction in foreign currency,” in
this case, “that is an option” in this sense. Whatever agree-
ment White Pine entered into with its customers pursuant to
the Prospectus could not have been an option because it
merely would have allowed White Pine to trade the money of
its customers at the discretion of its fund managers. It would
have permitted White Pine to respond to the offers of others—
perhaps futures commission merchants—to purchase options.
But the agreement between White Pine and its customers was
not itself the option that was offered.8

                                     2

   [9] Though we accept Baere’s distinction between options
and discretionary trading accounts, it proves rather more than
he bargained for. This is because subsection 2(c)(1), the
jurisdiction-stripping provision, uses similar language as sub-
section 2(c)(2)(B), the jurisdiction-restoring provision. In
other words, though subsection 2(c)(2)(B)(i) does not restore
jurisdiction to the CFTC over accounts involving options, it
does not have to do so because subsection 2(c)(1) never with-
drew the jurisdiction in the first place. The latter provision
removes jurisdiction over “agreement[s], contract[s], or trans-
action[s]” but not accounts, “in (A) foreign currency.” 7
U.S.C. § 2(c)(1). Thus the reach of subsection 2(c)(2)(B),
which partially returns the jurisdiction removed, turns out not
  8
    We have previously held that a discretionary commodities trading
account is not a security within the meaning of the Securities Act of 1933.
See, e.g., Lopez, 805 F.2d at 884-85; Mordaunt v. Incomco, 686 F.2d 815,
817 (9th Cir. 1982). This bears some weight, for it shows that a discretion-
ary account that may trade in a financial instrument is not the same thing
as the instrument itself.
10086          COMMODITY FUTURES TRADING v. BAERE
to matter. What does matter is whether the Act applies to off-
exchange trading through discretionary trading accounts in
foreign currency options in the first place. Here Baere makes
the dispositive argument. We asked the parties to brief
whether any provision of the Act (other than subsections
2(c)(1) or 2(c)(2)(B)) would grant the CFTC jurisdiction, and
the CFTC pointed to section 6c(b), one of the other portions
of the statute on which it relied in its complaint.9 Section
6c(b) prohibits anyone from “offer[ing] to enter into . . . any
transaction involving any commodity regulated under this
chapter which is of the character of . . . an ‘option.’ ” 7 U.S.C.
§ 6c(b). But as we have explained, subsection 6c(b) is not a
jurisdiction-granting statute. While the CFTC suggests that
foreign currency is a commodity “regulated under” the Act by
virtue of subsection 2(c)(2)(B), that is the very provision we
have just explained does not apply to Baere.

   [10] We are persuaded that neither subsection 2(c)(2)(B)
nor subsection 6c(b) grants the CFTC jurisdiction over discre-
tionary trading accounts in foreign currency options. Congress
may well have considered providing jurisdiction to the CFTC
over fraudulent solicitations of the kind at issue here. But the
CFTC has not been able to point to any language in the Act
that bears such interpretation. Therefore, we must conclude
that it does not have power to bring this action.10
  9
   Baere’s motion to enlarge his supplemental brief is hereby granted.
  10
    We express no opinion on whether other jurisdictional provisions of
the Act extend coverage to discretionary commodities accounts. Because
the CFTC did not base its jurisdictional claim on subsection 2(a)(1)(A),
we do not reach the question of whether the CFTC’s jurisdiction “with
respect to accounts . . . involving contracts of sale of a commodity for
future delivery,” 7 U.S.C. § 2(a)(1)(A), applies to a discretionary trading
account like the one at issue in this case.
  Because it is unnecessary, under the circumstances, we do not reach
Baere’s third argument, that the CFTC lacked jurisdiction because he only
solicited investments in spot trades, not in options trades.
             COMMODITY FUTURES TRADING v. BAERE          10087
                              IV

   [11] We have concluded that the CFTC lacks the power to
bring this action. Baere is therefore entitled to have the case
dismissed. In this posture, Baere’s appeal of the district
court’s denial of his motion to compel discovery is moot.

                              V

   For foregoing reasons, we REVERSE the district court’s
grant of summary judgment and REMAND with instructions
to DISMISS the case.
