                                                                                         In the

        United States Court of Appeals
                                               For the Seventh Circuit
                                                           ____________________  

No.  14-­‐‑3133  
COMMODITY  FUTURES  TRADING  COMMISSION,  
                                                                                                        Plaintiff-­‐‑Appellee,  
                                                                                                v.  

NIKOLAI  S.  BATTOO,  et  al.,  
                                                                                                               Defendants.  
Appeal  of:  
    HADLEY  CHILTON  and  JOHN  J.  GREENWOOD,  as  Liquidators  
    of  certain  investment  funds  registered  in  the  British  Vir-­‐‑
    gin  Islands  
                                                           ____________________  

                       Appeal  from  the  United  States  District  Court  for  the  
                         Northern  District  of  Illinois,  Eastern  Division.  
                          No.  12  C  7127  —  Edmond  E.  Chang,  Judge.  
                                                           ____________________  

               ARGUED  APRIL  21,  2015  —  DECIDED  JUNE  23,  2015  
                          ____________________  

   Before   EASTERBROOK   and   RIPPLE,   Circuit   Judges,   and  
REAGAN,  District  Judge.*  

                                                                                                     
    *  Of  the  Southern  District  of  Illinois,  sitting  by  designation.  
2                                                               No.  14-­‐‑3133  

    EASTERBROOK,   Circuit   Judge.   The   Commodity   Futures  
Trading   Commission   and   the   Securities   and   Exchange  
Commission  have  concluded  that  Nikolai  Battoo  committed  
fraud.   Battoo   and   his   companies,   all   located   outside   the  
United  States,  have  defaulted  in  the  two  agencies’  suits,  and  
the   district   judge   froze   all   assets   they   controlled   pending   a  
final  decision  about  who  owns  what.  Given  the  defaults,  that  
preliminary   injunction   was   issued   without   an   adversarial  
presentation.  The  district  court  appointed  a  Receiver  to  mar-­‐‑
shal   the   remaining   assets   and   try   to   determine   ownership;  
the   Receiver   has   been   recognized   as   the   assets’   legitimate  
controller   in   several   other   nations,   including   China   (Hong  
Kong),  Guernsey,  and  the  Bahamas.  
     Battoo   defied   the   injunction   and   transferred   control   of  
some   investment   vehicles,   located   in   the   British   Virgin   Is-­‐‑
lands,  to  court-­‐‑appointed  Liquidators,  who  asked  the  district  
judge  to  modify  the  injunction  and  allow  them  to  distribute  
assets  immediately.  (The  assets  in  question  are  located  in  the  
United  States  or  England,  where  the  funds  had  placed  them,  
and  thus  are  effectively  controlled  by  the  Receiver  while  the  
injunction  lasts.)  The  Liquidators  maintain  that,  because  Bat-­‐‑
too  no  longer  calls  the  shots,  the  justification  for  freezing  the  
assets   has   lapsed.   The   district   court   assumed   that   even  
though   Battoo   had   arranged   for   the   Liquidators’   appoint-­‐‑
ment,  they  are  now  under  judicial  control.  Still,  it  declined  to  
modify   the   injunction,   ruling   that   the   funds   should   remain  
available  so  that  an  eventual  master  plan  of  distribution  can  
treat  all  investors  equitably.  The  Liquidators  contend  that  we  
should  order  all  of  the  assets  that  passed  through  the  British  
Virgin  Islands  funds  surrendered  to  their  control  immediate-­‐‑
ly   for   prompt   distribution   under   whatever   system   British  
Virgin  Islands  law  specifies.  
No.  14-­‐‑3133                                                                3  

     The   CFTC   alleges—and   given   the   defaults   we   must   as-­‐‑
sume—that   Battoo   persuaded   approximately   800   persons  
throughout   the   world   to   invest   about   $340   million   in   his  
funds.   Some   250   of   these   persons   resided   in   the   United  
States;   they   invested   in   commodity   pools   that   Battoo   styled  
Private   International   Wealth   Management.   Battoo   solicited  
investments  through  materials  distributed  in  this  nation;  the  
Liquidators  do  not  deny  that  this  subjected  Battoo  to  the  re-­‐‑
quirements  of  federal  commodities  and  securities  laws.  This  
is  not  necessarily  a  reason  to  disturb  the  distribution  priori-­‐‑
ties   of   other   nations’   investors,   but   the   CFTC   believes,   and  
the   district   court   provisionally   found,   that   commingling   of  
assets   makes   it   hard   to   know   whose   money   ended   up   in  
which  vehicle.  
     According   to   the   complaint,   Battoo   stole   some   of   the   in-­‐‑
vestors’   money   (fraud   #1)   and   placed   the   rest   in   a   web   of  
funds,   all   of   which   he   controlled   directly   or   indirectly.   He  
moved  the  money  freely  across  funds,  or  from  one  portfolio  
to  another  within  any  given  fund,  in  a  way  that  made  tracing  
of  each  investment  difficult.  In  2008  Phi  R  Master,  one  of  the  
funds,   suffered   significant   losses,   which   Battoo   hid   from  
both   current   investors   and   potential   new   investors   (fraud  
#2).   Later   in   2008   several   funds   sustained   further   losses  
when   it   came   to   light   that   Bernard   Madoff   (with   whom   be-­‐‑
tween   7%   and   20%   of   each   Battoo   fund’s   assets   had   been  
placed)   had   been   running   a   Ponzi   scheme.   Yet   Battoo   told  
existing   and   potential   new   investors   that   “the   current  
Madoff   situation   will   have   practically   no   impact   to   [sic]   its  
portfolios”   (fraud   #3).   In   September   2009   Battoo   provided  
some   investors   with   false   verifications   of   their   assets’   value  
(fraud  #4),  and  in  late  2011  he  suspended  redemptions  after  
falsely  telling  investors  that  the  collapse  of  commodity  bro-­‐‑
4                                                                  No.  14-­‐‑3133  

ker   MF   Global,   Inc.,   prevented   operations   (fraud   #5,   since  
Battoo’s  funds  did  not  depend  on  MF  Global,  whose  failure  
had   no   material   effect   on   their   status).   Even   without   trans-­‐‑
fers  among  the  funds,  this  sequence  shows  the  potential  dif-­‐‑
ficulty   in   sorting   out   who   owns   what,   because   investments  
that  preceded  any  given  fraud  would  be  affected  differently  
from  investments  made  later.  This  is  a  simplified  version  of  
the   CFTC’s   allegations;   more   detail   is   not   necessary   to   un-­‐‑
derstand   the   district   court’s   decision   and   the   Liquidators’  
appeal.  
     In  denying  the  Liquidators’  motion,  the  district  judge  ob-­‐‑
served  that  releasing  the  assets  would  lead  to  distribution,  a  
step  that  the  judge  thought  premature  because  the  Receiver  
has  yet  to  ascertain  all  investors’  interests  in  each  particular  
fund  and  propose  a  plan  about  how  the  losses  will  be  shared  
across  the  different  groups  of  investors.  The  judge  stated  re-­‐‑
peatedly   that   it   remains   to   be   determined   who   gets   what—
and  that  the  Liquidators,  like  any  other  interested  party,  will  
be   entitled   to   full   judicial   review   (by   the   district   judge   and  
the  court  of  appeals)  before  the  Receiver’s  eventual  proposal  
is  implemented.  
    The   Liquidators’   appeal   reflects   a   view   that   there   is   no  
reason  to  keep  funds  frozen  now  that  Battoo  is  no  longer  in  
control.   One   could   say   the   same,   we   suppose,   for   all   funds  
under   the   Receiver’s   management,   but   no   one   would   think  
that   this   implies   that   the   Receiver   should   distribute   the  
funds   immediately.   Who   owns   what,   and   how   the   frauds   af-­‐‑
fected  each  investment’s  value,  need  to  be  worked  out.  The  
Liquidators   are   confident   that   they   know   the   answers   to  
those  questions,  at  least  for  the  British  Virgin  Islands  funds,  
No.  14-­‐‑3133                                                                        5  

but   they   have   not   demonstrated   that   the   district   judge   is  
obliged  to  share  their  optimism.  
     The  Liquidators  tell  us  that  a  court  should  grant  a  motion  
to   modify   a   preliminary   injunction   when   the   movant   “has  
demonstrated   that   changed   circumstances   make   the   contin-­‐‑
uation   of   the   injunction   inequitable.”   Winterland   Concessions  
Co.  v.  Trela,  735  F.2d  257,  260  (7th  Cir.  1984).  It  is  not  clear  to  
us   that   this   is   the   right   standard.   It   parallels   Fed.   R.   Civ.   P.  
60(b)(5),   which   says   that   a   district   judge   may   modify   a  
judgment  when  “applying  it  prospectively  is  no  longer  equi-­‐‑
table”.  See  also,  e.g.,  Rufo  v.  Inmates  of  Suffolk  County  Jail,  502  
U.S.  367  (1992);  Horne  v.  Flores,  557  U.S.  433  (2009).  Yet  Rule  
60(b)  as  a  whole  governs  requests  to  modify  final  decisions.  
The  district  court  has  not  made  a  final  decision  in  this  litiga-­‐‑
tion.   On   the   way   to   final   decisions,   district   judges   usually  
may  modify  their  tentative  views.  Certainly  when  crafting  a  
final  injunction,  a  district  judge  is  not  stuck  with  the  prelim-­‐‑
inary   order   in   the   absence   of   a   finding   that   it   is   “inequita-­‐‑
ble”;   the   judge   is   not   constrained   at   all   by   the   preliminary  
disposition  when  selecting  the  final  remedy.  
    At   the   same   time,   the   fact   that   a   final   injunction   lies  
ahead   reduces   the   cost   of   sticking   with   the   preliminary   in-­‐‑
junction.   Preliminary   relief   will   be   superseded   by   the   final  
decision.  Instead  of  devoting  resources  to  refining  an  interim  
order,  a  district  judge  is  entitled  to  spend  available  time  fig-­‐‑
uring   out   whether   permanent   relief   is   justified   and,   if   so,  
what   its   terms   should   be.   Fiddling   with   a   preliminary   in-­‐‑
junction’s  terms  may  do  damage  if  it  postpones  the  final  de-­‐‑
cision.   We   do   not   doubt,   however,   that   a   district   judge   has  
discretion   to   revise   a   preliminary   remedy   if   persuaded   that  
change  had  benefits  for  the  parties  and  the  public  interest.  
6                                                                  No.  14-­‐‑3133  

     We   need   not   decide   whether   the   “no   longer   equitable”  
standard  applies  to  preliminary  injunctions.  The  CFTC  con-­‐‑
tends  that  judges  should  look  for  “a  change  in  ‘the  totality  of  
the   circumstances’   surrounding”   the   events,   and   as   we’ve  
just   mentioned   there   are   other   possibilities   too.   No   matter  
the  standard,  we  must  ask  whether  the  district  court  abused  
its  discretion  by  leaving  the  injunction  as  originally  written.  
See,  e.g.,  Horne,  557  U.S.  at  447.  
     We  do  not  see  any  abuse  here—in  part  for  the  reason  the  
district   judge   gave   (that   it   is   too   soon   to   know   whether   the  
Liquidators  are  right  to  think  that  some  investment  interests  
can  be  disentangled  reliably  from  those  affected  by  Battoo’s  
frauds   against   U.S.   investors)   and   in   part   because   there   are  
no   apparent   costs   to   waiting.   The   Liquidators   have   not   ar-­‐‑
gued   that   any   investor   suffers   from   delay.   If   the   Receiver  
were   investing   the   funds   poorly,   then   releasing   them   (or  
reaching   a   final   decision   with   dispatch)   might   be   necessary  
to  prevent  further  injury  to  the  investors.  But  the  Liquidators  
have  not  argued  that  any  investor  is  suffering  loss  as  a  result  
of  the  Receiver’s  investment  decisions.  And  if  there  is  both  a  
potential  for  gain,  and  no  potential  for  loss,  from  keeping  the  
assets  in  the  Receiver’s  hands  for  now,  it  cannot  be  an  abuse  
of  discretion  for  the  district  court  to  do  just  that.  
                                                                     AFFIRMED  
