222 F.3d 1008 (D.C. Cir. 2000)
First American Discount Corporation, Petitionerv.Commodity Futures Trading Commission, Respondent
No. 99-1098
United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued January 19, 2000Decided August 18, 2000

[Copyrighted Material Omitted]
On Petition for Review of an Order of the Commodity Futures Trading Commission
Patrick G. King argued the cause and was on the briefs for  petitioner.
C. Maria D. Godel, Attorney, Commodity Futures Trading  Commission, argued the cause for respondent.  With her on  the brief were David R. Merrill and J. Douglas Richards,  Deputy General Counsel.
John J. Muldoon, III was on the brief for amicus curiae  FCM Coalition for Regulatory Fairness.
Before:  Henderson, Randolph, and Garland, Circuit  Judges.
Opinion for the Court filed by Circuit Judge Garland.
Separate statement concurring in the judgment filed by  Circuit Judge Randolph.
Garland, Circuit Judge:


1
First American Discount Corporation seeks review of an order of the Commodity Futures  Trading Commission (CFTC) holding the company jointly and  severally liable for the acts of a commodities broker whose  liabilities First American had agreed to guarantee.  First  American contends that the CFTC regulation pursuant to  which it entered into the guarantee agreement is substantively and procedurally invalid, and further argues that the  broker's customer waived the benefits of the guarantee.  The  CFTC rejected these claims, as do we.


2
* First American is regulated under the Commodity Exchange Act (CEA) as a "futures commission merchant"  (FCM).  See 7 U.S.C. S 1a(12).1  An FCM is the commodity  market's equivalent of a securities brokerage house, soliciting  and accepting orders for futures contracts and accepting  funds or extending credit in connection therewith.  See Timothy J. Snider, Regulation of the Commodities Futures and  Options Markets S 6.04 (2d. ed. 1997).  Prior to 1982, FCMs  did business with the public both through their own employees, known as "associated persons," and through loosely affiliated "agents."  S. Rep. No. 97-384, at 40 (1982).  The  main function of many such agents was to procure business  for FCMs.  See id. at 111.  These agents were largely  unregistered and unregulated.  See id. at 40.


3
In 1982, the CFTC advised Congress that the number of  agents was growing significantly, and that FCMs who used  them "have often disavowed any responsibility for violations  of the Act by these 'agents.' "  Id.  The Commission proposed  that "each 'agent' of a futures commission merchant be  required to register as an associated person of that futures  commission merchant."  Id.  Congress, however, did not  adopt the CFTC's recommendation.  As the Senate Committee on Agriculture, Nutrition, and Forestry explained:


4
[T]he Committee felt it would be inappropriate to (1)require these independent business entities to become branch offices of the futures commission merchants through which their trades are cleared or (2) to impose vicarious liability on a futures commission merchant for the actions of an independent entity .Id. at 41.  At the same time, Congress acknowledged the  need "to guarantee accountability and responsible conduct of  such persons," id., who "deal with commodity customers and,  thus, have the opportunity to engage in abusive sales practices," id. at 111.


5
To resolve this dilemma, Congress drafted legislation requiring all persons who solicit or accept customer orders for  FCMs to register with the CFTC, but permitting them to  register either as "associated persons" of the FCMs, or as  part of a new class of registrants called "introducing brokers."  Id. at 112.  The latter were conceived of as independent entities that solicited and accepted customer orders but  used the services of FCMs for clearing, record keeping and  retaining customer funds.  See id. at 41.  To guarantee the  accountability of introducing brokers, the Commission was  authorized to require them to meet "minimum financial requirements."  See id.


6
The new provisions were enacted as part of the Futures  Trading Act of 1982, Pub. L. No. 97-444, 96 Stat. 2294, which  amended the CEA.  Most significant for our purposes are  amended CEA section 1a, 7 U.S.C. S 1a, which creates the  category of "introducing brokers,"2 and amended section  4f(b), 7 U.S.C. S 6f(b), which directs the CFTC to ensure that  every introducing broker "meets such minimum financial  requirements as the Commission may by regulation prescribe  as necessary to insure his meeting his obligations as a registrant."3  In adopting the latter, the House Conference Report  stated:


7
[T]he conferees contemplate that the Commission will establish financial requirements which will enable [introducing brokers] to remain economically viable, although it is intended that fitness tests comparable to those required of associated persons will also be employed. The intent of the conferees is to require Commission registration of all persons dealing with the public, but to provide registrants with substantial flexibility as to the manner and classification of registration.


8
H.R. Conf. Rep. No. 97-964, at 41 (1982).


9
In April 1983, the CFTC responded to Congress' mandate  by publishing a notice of proposed rule making setting forth a  $25,000 "minimum adjusted net capital requirement" for introducing brokers.  48 Fed. Reg. 14,933, 14,942 (1983) (proposed rule).  In addition, those brokers whose capital reserve  decreased to less than an "early warning level" of 150% of  that amount would, under the proposed rule, be required to  notify the CFTC and file monthly financial statements.  Id. at  14,951.  The capital requirement, therefore, would effectively  have been $37,500.  See 48 Fed. Reg. 35,248, 35,262 (1983)  (final rule).  The CFTC stated that requiring introducing  brokers to have such a permanent capital base "not only  would establish a benchmark of economic viability, but would  also be an important element of customer protection."  48  Fed. Reg. at 14,942.  The proposed minimum would "provid[e] coverage for potential liabilities arising from business  operations, customer relations and the handling of proprietary accounts."  Id.


10
After publication of the notice, the CFTC received numerous comments, including many from the industry contending  that the proposed capital requirementswere excessive.  The  CFTC issued its final rule on August 3, 1983.  The final rule  took the industry's comments into account by reducing the  minimum net capital requirement to $20,000 and entirely  eliminating the proposed early warning requirement for introducing brokers.  See 48 Fed. Reg. at 35,249.  In addition,  adopting the suggestion of several FCMs, the Commission  announced an alternative method for complying with the  financial requirement.  Under this alternative, an introducing  broker may satisfy the requirement without maintaining any  net capital of its own, if it enters into a guarantee agreement  with an FCM under which the FCM agrees to:


11
guarantee[ ] performance by the introducing broker of, and ... be jointly and severally liable for, all obligations of the introducing broker under the Commodity Ex-change Act ... with respect to the solicitation of and transactions involving all commodity customer ... ac-counts of the introducing broker entered into on or after the effective date of [the] agreement.


12
CFTC Form 1-FR-IB (Part B);  see 17 C.F.R. S 1.3(nn);  48  Fed. Reg. at 35,249.4  The rule became effective on August 3,  1983.5


13
Taking advantage of the alternative compliance mechanism  contained in the final rule, First American entered into a  guarantee agreement with Wolf Futures Group, Inc., an  introducing broker.  Pursuant to the new regulations, the  agreement stated that First American would be jointly and  severally liable for all of Wolf's obligations as an introducing  broker under the CEA.  See Violette v. First Am. Discount  Corp., CFTC Doc. No. 97-R020, 1999 WL 92428, at *3 n.1  (Feb. 24, 1999).  Wolf Futures subsequently introduced Gregory Violette to First American to open a commodity futures  trading account in Violette's name.


14
On December 11, 1996, Violette filed a complaint with the  CFTC against Wolf Futures and its principal, Scott Allen  Wolf [hereinafter referred to collectively as "Wolf"]. On August 31, 1998, a CFTC Judgment Officer found that Wolf had  traded Violette's account without written authorization in  violation of CFTC Regulation 166.2, 17 C.F.R. S 166.2.  See  Violette v. First Am. Discount Corp., CFTC Doc. No.  97-R020, 1998 WL 552810 (Aug. 31, 1998).  The Officer  assessed damages of $13,438.50, plus prejudgment interest  and costs.  Most significant for our purposes, the Officer held  First American jointly and severally "liable for the acts of  Wolf by virtue of its status as guarantor."  Id. at *23.


15
First American appealed to the Commission, raising three  arguments:  (1) that the CFTC regulation providing for guarantor status was contrary to congressional intent and thus  invalid;  (2) that the regulation was void for lack of proper  notice under the Administrative Procedure Act (APA);  and  (3) that an exculpatory clause in a contract Violette signed with First American overrode the guarantee agreement.  The  Commission ruled against First American on all three claims  and affirmed the decision of the Judgment Officer.  See  Violette, 1999 WL 92428, at *1.  Pursuant to 7 U.S.C. S 18(e),  First American petitions this court for review of the Commission's order.

II

16
First American's initial claim is that the CFTC's final rule,  which sets forth minimum capital requirements and permits  the alternative of a guarantee agreement, contravenes the  1982 Act.  Our analysis of an agency's interpretation of a  statute is guided by the two-step framework of Chevron  U.S.A. Inc. v. NRDC, 467 U.S. 837, 842-43 (1984).  We first  ask "whether Congress has directly spoken to the precise  question at issue," in which case we "must give effect to the  unambiguously expressed intent of Congress."  Id.  If the  "statute is silent or ambiguous with respect to the specific  issue," however, we move to the second step and must defer  to the agency's interpretation as long as it is "based on a  permissible construction of the statute."  Id. at 843.


17
First American raises only a Chevron step one argument,  contending that the guarantee provision is "contrary to the  express intent of Congress."  First American Br. at 7.  We  can perceive no such express intent.  The 1982 Act authorizes  the CFTC to issue regulations prescribing "minimum financial requirements" to ensure that an introducing broker  meets "his obligations as a registrant."  7 U.S.C. S 6f(b).The statute is silent as to what such a financial requirement  might be, and certainly does not say that the CFTC may not  use an FCM's guarantee in satisfaction of that requirement. Instead, "Congress has explicitly left a gap for the agency to  fill" and has made "an express delegation of authority to the  agency to elucidate [the] specific provision of the statute by  regulation."  Chevron, 467 U.S. at 843-44.  We therefore  proceed to Chevron's step two.


18
Although First American does not address the second step  of Chevron, the CFTC does and we find its analysis compelling.  The question is whether the combination of a net  capital requirement, supplemented with the alternative of a  guarantee, reasonably falls within the undefined term, "minimum financial requirements."  The CFTC responds that the  statute authorizes it to impose such requirements to insure  that an introducing broker can meet "his obligations as a  registrant," and the Commission reasonably explains that the  guarantee alternative is, like the capital requirement, a way  of:  "(1) Insuring that introducing brokers are not judgment  proof;  and (2) providing coverage for potential liabilities of  introducing brokers arising from business operations and  customer relations."  48 Fed. Reg. at 35,264.


19
Recognizing the absence of support for its position in the  statutory language, First American asks us to retrace our  Chevron steps and reconsider step one by looking at the  legislative history of the 1982 Act.  That history, appellant  contends, expressly bars the guarantee provision at issue  here.  In support, First American cites the passage in the  Senate Report stating that the Committee felt it would be  inappropriate "to require" introducing brokers to become  branch offices of FCMs, or "to impose" vicarious liability on  FCMs for acts of introducing brokers.  S. Rep. No. 97-384, at  41.  First American contends that the guarantee provision is  inconsistent with this congressional concern, arguing that it  effectively requires an introducing broker to become a branch  office of its affiliated FCM, and effectively imposes vicarious  liability on an FCM for the conduct of its affiliated introducing broker.


20
The flaw in this argument is that the guarantee provision  does not "require" or "impose" anything:  it is merely an  option that either the introducing broker or the FCM is free  to reject.  Rather than seek out an FCM for a guarantee, an  introducing broker may instead choose to satisfy the capital  requirement itself.  And an FCM asked by an introducing  broker for a guarantee may simply decline, electing instead to  use its own employees or to work with introducing brokers  that can independently satisfy the capital requirement.  Accordingly, under the CFTC's regulation, the FCM's acceptance of liability through the guarantee is a voluntary choice, which nothing in the legislative history precludes the CFTC  from making available.


21
But, First American protests, the guarantee provision is  not truly an option.  In petitioner's view, the CFTC's $20,000  minimum capital requirement is so high that introducing  brokers are effectively "forced" to sign guarantee agreements.  It is this reality that assertedly contravenes both the  Senate Committee's distaste for imposing obligations upon  FCMs, and the Conference Report's contemplation "that the  Commission will establish financial requirements which will  enable [introducing brokers] to remain economically viable."H.R. Conf. Rep. No. 97-964, at 41.


22
We see nothing in the statute or legislative history, how ever, that would foreclose a $20,000 minimum capital requirement as "too high."  Both are silent on the question of what  the "minimum" in "minimum financial requirements" means. Moving again to Chevron's step two, we also see no ground  upon which the CFTC's standard could be viewed as an  impermissible interpretation of that term, or even of the  conferees' phrase, "economically viable."  The CFTC originally proposed an effective requirement of $37,500, cutting it  almost in half to $20,000 after considering industry comments. First American has offered no evidence whatsoever to substantiate its claim that a $20,000 requirement is still too high  to allow introducing brokers to remain economically viable, or  that it is so high as to force them to opt for an FCM  guarantee.6


23
Moreover, although it is true that the legislative history  reflects congressional concern that the economic viability of  introducing brokers be maintained, it also reflects Congress'  intent--as the statute itself says--that the financial requirements be set at a level that will ensure that an introducing  broker meets "his obligations as a registrant."  7 U.S.C.  S 6f(b).  The Commission was instructed to impose standards  sufficient "to guarantee accountability and responsible conduct," S. Rep. No. 97-384, at 41, and to ensure "that persons  handling orders for commodity trades cannot escape responsibility for their actions for lack of adequate capital," id. at 112.Implementing this congressional intent was precisely the  rationale the CFTC offered for finally settling upon a minimum requirement of $20,000.  See 48 Fed. Reg. at 35,261,  35,264.  And First American offers no basis for concluding  that such a requirement is too high to be reasonably related  to the goal of ensuring that customers' claims are not rendered moot because introducing brokers are judgment proof. If anything, the more than $13,000 in damages awarded in the  relatively small case now before us suggests that the facts are  to the contrary.


24
In sum, we conclude that the $20,000 minimum capital  requirement for introductory brokers is a permissible exercise of the CFTC's regulatory authority, and that it is equally  permissible for the Commission to provide the alternative of  entering into a guarantee agreement with an FCM.  Indeed,  providing such an option is faithful to Congress' direction that  the CFTC "provide the registrants with substantial flexibility  as to the manner and classification of registration."  H.R.  Conf. Rep. No. 97-964, at 41.

III

25
First American's second challenge to the CFTC's rule is  procedural.  Petitioner contends that the guarantee option  should be invalidated because it was not subject to notice and  comment prior to final issuance.  As we have discussed, the  notice of proposed rule making issued by the CFTC on April  6, 1983, stated that the Commission was contemplating a $25,000 capital requirement, which, when combined with the  proposed "early warning" requirement, would effectively require a minimum capital level of $37,500.  The possibility of a  guarantee option, later offered in the final rule, was not  mentioned.  Petitioner contends that this failure to publish  notice of the guarantee option violated the APA, which generally requires an agency to give at least thirty days notice of  and an opportunity to comment on "either the terms or  substance of the proposed rule or a description of the subjects  and issues involved."  5 U.S.C. S 553(b);  see id. S 553(c), (d).


26
The law does not require that every alteration in a proposed rule be reissued for notice and comment.  If that were  the case, an agency could "learn from the comments on its  proposals only at the peril of" subjecting itself to rule making  without end.  International Harvester Co. v. Ruckelshaus,  478 F.2d 615, 632 & n.51 (D.C. Cir. 1973);  see Fertilizer Inst.  v. EPA, 935 F.2d 1303, 1311 (D.C. Cir. 1991);  American  Medical Ass'n v. United States, 887 F.2d 760, 768 & n.7 (7th  Cir. 1989).  Instead, renewed notice is required only if the  final rule cannot fairly be viewed as a "logical outgrowth" of  the initial proposal.  Small Refiner Lead Phase-Down Task  Force v. EPA, 705 F.2d 506, 547 (D.C. Cir. 1983).  The test  for a "logical outgrowth," variously phrased, is whether a  reasonable commenter "should have anticipated that such a  requirement" would be promulgated, id. at 549, or whether  the notice was "sufficient to advise interested parties that  comments directed to the" controverted aspect of the final  rule should have been made, Fertilizer Inst., 935 F.2d at  1312.


27
In this case, the outcome of that test is a relatively close  question.  As we have said above, the guarantee agreement is  reasonably regarded as a form of minimum financial requirement, and was promulgated in response to suggestions that it  be offered as an alternative to the $25,000 capital requirement  originally proposed.  The fact that others in First American's  shoes--that is, other FCM's--did comment on and indeed  propose the guarantee option suggests that they, at least,  regarded it as a logical outgrowth.  See Comments of Abramson & Fox at 6 (proposal by law firm "retained by several major futures commission merchants" that "the carrying  FCM be permitted to assume full regulatory and financial  responsibility for the activities of the introducing broker");Comments of Heinold Commodities, Inc. at 2 (proposal by  registered FCM that, as an alternative to a capital requirement, the carrying FCM should be permitted to "stand as a  guarantor for the introducing broker's potential liabilities");Comments of Cargill Investor Services, Inc. at 1 (suggesting  that as long as "the FCM remains fully responsible to the  customer, there is no reason for [introducing brokers] to  fulfill a capital requirement" ).  On the other hand, it could  well be argued that a reasonable commenter would not have  thought to comment on a guarantee option since it is different  not only in degree but in kind from a financial requirement  denominated in dollars.  Under that view, the connection  between the original notice and the guarantee option would  be "simply too tenuous" for the latter to be regarded as a  "logical outgrowth" of the former.  Small Refiner, 705 F.2d  at 549.


28
We need not resolve this question, however, because  CFTC's failure to re-notice the guarantee option was at best  harmless.  The APA directs reviewing courts to take "due  account" of "the rule of prejudicial error."  5 U.S.C. S 706."As incorporated into the APA, the harmless error rule  requires the party asserting error to demonstrate prejudice  from the error."  Air Canada v. DOT, 148 F.3d 1142, 1156  (D.C. Cir. 1998) (citing 5 U.S.C. S 706);  see Steel Mfrs. Ass'n  v. EPA, 27 F.3d 642, 649 (D.C. Cir. 1994) (acknowledging  agency's failure to provide opportunity for comment on one  portion of a rule, but upholding the rule under APA's "harmless error" provision);  Cabais v. Egger, 690 F.2d 234, 237 n.4  (D.C. Cir. 1982) ("Even where notice and comment were  erroneously omitted, a regulation or rule need not be invalidated if it has no substantial impact.").  Assuming that the  notice provided by the CFTC was insufficient, we conclude  that First American suffered no prejudice as a result.


29
As we have discussed above, the portion of the rule to  which First American objectsis merely an alternative to the  primary compliance requirement of maintaining $20,000 in net capital.  That primary requirement is perfectly lawful, and  one upon which First American did have an opportunity to  comment.  First American was not required to accept the  guarantee alternative;  it was free to turn Wolf away and  instead to use its own employees or to deal only with introducing brokers who could meet the capital requirement. That First American did not do so evidences its view either  that the guarantee was not harmful, or that it was less  harmful than the primary requirement by which it would  otherwise have had to abide.  The lack of opportunity to  comment on the guarantee option therefore cannot be cause  for overturning the CFTC's regulation.


30
We also note that the concept of a guarantee option came  from FCMs looking for a way to give both their introducing  brokers and themselves an alternative to the minimum capital  requirement.  This indicates that FCMs regarded the guarantee as an alternative that was beneficial rather than harmful to their interests.  Although First American is not bound  by the views of its fellow FCMs, its own voluntary decision to  adopt the guarantee option makes clear that it regarded it the  same way.  This reinforces the conclusion that the CFTC's  failure to extend the rule making to provide an opportunity for  notice and comment on the guarantee option was at best  harmless error.


31
Finally, the fact that First American not only was not  harmed by, but rather affirmatively benefitted from, the  availability of the guarantee option suggests a second reason  for not countenancing its claim of procedural error.  Under  the doctrine of equitable estoppel, "a party with full knowledge of the facts, which accepts the benefits of a transaction,  contract, statute, regulation, or order may not subsequently  take an inconsistent position to avoid the corresponding obligations or effects."  Kaneb Servs., Inc. v. FSLIC, 650 F.2d  78, 81 (5th Cir. 1981).  Here, the CFTC gave First American  the option of guaranteeing the liabilities of Wolf, an introducing broker who could not otherwise have operated for lack of  sufficient capital.  First American had no obligation to make  the guarantee, but did so in exchange for the financial benefits both entities expected to reap from their joint arrangement.  Having received those benefits, First American will  not now be heard to attack the regulation that was their  source.  See Federal Power Comm'n v. Colorado Interstate  Gas Co., 348 U.S. 492, 502 (1955) ("[Respondent] cannot now  be allowed to attack an officially approved condition of the  merger while retaining at the same time all of its benefits.").

IV

32
First American's final challenge to the order holding it  liable for the conduct of its introducing broker is based on an  exculpatory clause included in an agreement that Violette  signed with First American after Wolf introduced the two. Paragraph 23 of the two-page, standard-form "Customer  Agreement" reads as follows:  "Customer hereby waives any  claim based upon First American's guarantee, if any, of  Introducing Broker's obligations under the Commodity Exchange Act or CFTC regulations."  J.A. at 27.  First American argues that this provision immunizes it from liability that  would otherwise attach under the guarantee agreement it  signed with its introducing broker.


33
The CFTC disagrees.  It states that its Regulation 1.10(j),  17 C.F.R. S 1.10(j), which permits an introducing broker to  satisfy its capital requirements through an FCM guarantee,  cannot be waived in this manner.  Whether or not an agency's regulation is waivable is a question of the agency's intent,  and just as we must defer to the agency's reasonable interpretation of the statutory scheme it was entrusted to administer, so too must we give its interpretation of its own regulation "controlling weight unless it is plainly erroneousor  inconsistent with the regulation."  Bowles v. Seminole Rock  & Sand Co., 325 U.S. 410, 414 (1945);  see Christensen v.  Harris County, 120 S. Ct. 1655, 1663 (2000);  Auer v. Robbins,  519 U.S. 452, 461 (1997).


34
The CFTC's interpretation of its regulation as non-waivable  is neither plainly erroneous nor inconsistent with the regulation.  Nothing in the text of the rule suggests that the  guarantee is waivable.  To the contrary, the mandatory form  agreement required by the rule states:  "This guarantee agreement is binding and is and shall remain in full force and  effect unless terminated in accordance with the rules, regulations or orders promulgated by the Commission with respect  to such terminations."  CFTC Form 1-FR-IB (Part B);  see  17 C.F.R. S 1.3(nn) (requiring guarantee to conform to Form  1-FR).7  Under the regulations, termination is permitted  (with prospective effect only) by mutual written consent of  the parties with prompt notice to the Commission, or by  either party with written notice to the other and to the  Commission.  See 17 C.F.R. S 1.10(j)(5)(iii).  The rules do not  permit termination by waiver of a customer, and First American does not argue that the events which do permit termination occurred in this case.


35
Moreover, the CFTC contends that permitting customer  waiver would "undermine[ ] the protections provided by the  guarantee agreement."  Violette, 1999 WL 92428, at *2.  The  purpose of the Commission's rule is to provide coverage for  the liabilities of introducing brokers and to ensure that they  are not "judgment proof."  48 Fed. Reg. at 35,264.  The  CFTC reasonably argues that if the guarantee were waivable--particularly through the kind of boilerplate contract at  issue here--that purpose would be wholly defeated.  See  Gray v. American Express Co., 743 F.2d 10, 16 (D.C. Cir.  1984) (declining to give effect to provision in card member  contract that would have effectively waived coverage of Fair  Credit Billing Act);  id. at 16 ("The rationale of consumer  protection legislation is to even out the inequalities that  consumers normally bring to the bargain.  To allow such  protection to be waived by boiler plate language of the  contract puts the legislative process to a foolish and unproductive task.").


36
Finally, and perhaps most telling, even if we were to hold a  guarantee agreement waivable by a customer, not even First  American contends that the CFTC's minimum capital requirement would itself be waivable in that manner.  See 7 U.S.C.  S 6f(b) (providing that each registered introducing broker  "shall at all times continue to meet" the minimum financial  requirements prescribed by the Commission).  Yet, to hold  the one is to hold the other.  As the rules make clear, a  guarantee agreement is entered into "in satisfaction of the  adjusted net capital requirements with which the introducing  broker otherwise would have to comply," and thus permits  the introducing broker to operate below the minimum level of  required net capital.  CFTC Form 1-FR-IB (Part B);  see 17  C.F.R. S 1.3(nn).  Although First American argues that the  guarantee may be waived, it does not suggest that the CFTC  may thereafter deregister the introducing broker if it cannot  muster $20,000 in capital.  But if the Commission cannot  deregister such a broker, permitting waiver would effectively  permit the broker to slip the bonds of the capital requirementaltogether.  The CFTC reasonably interprets its regulations  as not countenancing such blatant circumvention of their  purpose.


37
First American complains that even if the CFTC's nowaiver interpretation is correct, allowing the Commission to  apply it for the first time in this adjudication would be unfair.8We do not agree.  There is nothing in the language of the  regulation to suggest to a reasonable FCM that guarantees  are waivable, and the termination provision suggests quite the  opposite.  Court decisions dating back to at least 1991, five  years before Violette signed the waiver at issue here, hold  that waiver agreements purporting to invalidate identical  guarantee agreements are unenforceable as contrary to the  purpose of the statutory and regulatory framework.  See, e.g.,  Skipper v. Index Futures Group Inc., No.  91C1624, 1995 WL 493435 (N.D. Ill. 1995);  Resolution Trust Corp. v.  Krantz, No.  89C166, 1991 WL 148291 (N.D. Ill. 1991).9Moreover, even if it were unfair for the CFTC only now to  make clear that the regulatory requirement cannot be waived,  it would be at least as unfair to Violette to announce the  opposite rule.  Indeed, we cannot help but note the irony in  petitioner's claim that Violette--a retired postal worker-"voluntarily" entered into the boilerplate waiver agreement  with First American, while First American itself--a large  brokerage firm--was simultaneously "compelled" to enter  into the guarantee agreement with Wolf.10

V

38
We uphold the validity of the regulation permitting guarantee agreements as alternatives to minimum capital requirements, and further uphold the CFTC's interpretation of that  regulation as not permitting customer waivers.  Accordingly,  we have no ground for reversing the Commission's order  holding First American jointly and severally liable for the regulatory violations committed by its introducing broker. The petition for review is denied.



Notes:


1
 The CEA defines an FCM as:
an individual, association, partnership, corporation, or trust that--(A) is engaged in soliciting or in accepting orders for the purchase or sale of any commodity for future delivery on or subject to the rules of any contract market;  and (B) in or in connection with such solicitation or acceptance of orders, accepts any money, securities, or property (or extends credit in lieu thereof) to margin, guarantee, or secure any trades or contracts that result or may result therefrom.
7 U.S.C. S 1a(12).


2
  The statute defines an introducing broker as:
any person (except an individual who elects to be and is registered as an associated person of a futures commission merchant) engaged in soliciting or in accepting orders for the purchase or sale of any commodity for future delivery on or subject to the rules of any contract market who does not accept any money, securities, or property (or extend credit in lieu there of) to margin, guarantee, or secure any trades or con-tracts that result or may result therefrom.
7 U.S.C. S 1a(14).


3
  The amended statute bars registration of an introducing  broker unless the broker meets the CFTC's minimum financial  requirements, see 7 U.S.C. S 6f(b), and makes it unlawful to engage  in business as an introducing broker unless registered as such, see 7  U.S.C. S 6d.


4
  Introducing Brokers who register under this option are  known as "Guaranteed Introducing Brokers."  See 48 Fed. Reg. at  35,260.


5
  In 1996, citing inflation, the CFTC raised the floor from  $20,000 to $30,000.  See 61 Fed. Reg. 19,177, 19,183 n.31 (1996).


6
  The CFTC acknowledged that the SEC had established a  lower minimum net capital requirement ($5,000) for securities introducing brokers.  It explained, however, that a securities introducing  broker is required to maintain the higher of $5,000 or 62/3% of  aggregate indebtedness, "which could require such a firm to maintain more than $25,000 of net capital."  48 Fed. Reg. at 14,934 n.13.The CFTC also noted that its higher base amount was necessary  "because introducing brokers in commodities will have fewer restrictions on their activities than is the case for securities introducing brokers."  Id. at 14,942-43.


7
  See also 48 Fed. Reg. at 35,265 ("If the guarantee agreement  does not expire or is not terminated in accordance with the provisions of S 1.10(j)(4) or (5), it shall remain in effect indefinitely.").Guarantee agreements can expire (with prospective effect only) if  the FCM or introducing broker fails to renew its registration of if  such registration is suspended, revoked, or withdrawn.  See 17  C.F.R. S 1.10(j)(4)(i)-(ii).


8
  This is actually the second case in which the CFTC has so  ruled.  The CFTC issued its first opinion on the subject a month  earlier.  See Clemons v. McCabe, CFTC Doc. No. 97-R053, 1999  WL 46833, at *2 (Jan. 29, 1999).


9
  First American cites two cases in which it contends courts  upheld exculpatory waiver provisions in contracts between FCMs  and customers.  See Rothwell Cotton Co. v. Rosenthal & Co., 827  F.2d 246, 250-51 (7th Cir. 1987);  Cange v. Stotler and Co., 826 F.2d  581 (7th Cir. 1987);  id. at 596 (Easterbrook, J., concurring).  In  neither case, however, was there a guarantee agreement between  an FCM and an introducing broker, and hence in neither was the  waivability of the CFTC's regulation at issue.  See Cange, 826 F.2d  at 596 (Easterbrook, J., concurring) (arguing that waivers should  generally be upheld "[u]nless ... the CFTC forbids them by  regulation").  Moreover, in Cange the majority opinion suggested  that an exculpatory waiver provision signed prior to the initiation of  trading would not be enforceable.  See 826 F.2d at 594-95.


10
  We also note that First American has an indemnification  agreement with Wolf that will permit it to recover from the  introducing broker in the event it is held liable for the latter's  wrongdoing.  See Letter from Counsel for First American (Jan. 20,  2000).  CFTC regulations authorize such indemnification agreements.  See 48 Fed. Reg. at 35,264.


Randolph, Circuit Judge, concurring:

39
I concur in the  judgment and in all of the court's opinion except the portion  of Part III holding that the Commission's failure to give  notice amounted to harmless error.

