                      FOR PUBLICATION

      UNITED STATES COURT OF APPEALS
           FOR THE NINTH CIRCUIT


 CHENLI CHU,                                  No. 13-73294
                        Petitioner,
                                           CFTC No. 07-R029
                 v.

 U.S. COMMODITY FUTURES                          OPINION
 TRADING COMMISSION,
               Respondent.


          On Petition for Review of an Order of the
          Commodity Futures Trading Commission

                Submitted November 17, 2015*
                  San Francisco, California

                       Filed May 25, 2016

  Before: M. Margaret McKeown, Johnnie B. Rawlinson,
          and Andre M. Davis,** Circuit Judges.

                  Opinion by Judge McKeown



  *
    The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
  **
     The Honorable Andre M. Davis, Senior Circuit Judge for the U.S.
Court of Appeals for the Fourth Circuit, sitting by designation.
2     CHU V. COMMODITY FUTURES TRADING COMM’N

                           SUMMARY***


         Commodity Futures Trading Commission

    The panel denied an investor’s petition for review of an
order of the Commodity Futures Trading Commission
(“CFTC”), determining that an independent commodity
trading advisor “had actual knowledge and apparent
authority” to conduct certain trades of commodities futures
on behalf of the investor.

    The panel held that it reviews CFTC’s findings under
7 U.S.C. § 9 for substantial evidence. The panel also held
that substantial evidence supported CFTC’s decision that the
independent commodity trading advisor made no material
misrepresentation or omission, that there was no unauthorized
trading, and that the record did not support a finding of fraud.


                             COUNSEL

Robert E. Thompson, San Francisco, California, for
Petitioner.

Jonathan L. Marcus, General Counsel, Robert A. Schwartz,
Deputy General Counsel, Mary T. Connelly, Assistant
General Counsel, Commodity Futures Trading Commission,
Washington, D.C., for Respondent.




  ***
      This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
      CHU V. COMMODITY FUTURES TRADING COMM’N                        3

                             OPINION

McKEOWN, Circuit Judge:

     This appeal arises from the Commodity Futures Trading
Commission’s (“CFTC” or “Commission”) determination
that an independent commodity trading advisor “had actual
and apparent authority” to conduct certain trades of
commodities futures on behalf of an investor. Chenli Chu, a
retiree with significant trading experience, received $500,000
following her husband’s death. After consultation with
Jennifer Huang, her long-time commodity trading advisor,
and James Kelly, an account executive at her futures
commission merchant (“FCM”), Peregrine Financial Group
(“Peregrine”), Chu decided to place the funds in a new
account with Peregrine.1 Chu claims Kelly and Peregrine
disregarded her account instructions and permitted Huang to
conduct unauthorized trades in the account, in violation of
7 U.S.C. § 6b(a) and 17 C.F.R. §§ 166.2–166.3. The initial
decision by the Administrative Law Judge (“ALJ”) was in
favor of Chu, but the CFTC reversed. We deny the petition
for review of the CFTC’s Order.

                          BACKGROUND

   Chu traded commodities with Huang for fifteen years
before she opened the first of six trading accounts at

 1
    A commodity trading advisor is an individual who, for compensation,
advises others on the trading of commodity futures and other financial
instruments. 7 U.S.C. § 1a(12). An FCM is an entity that solicits or
accepts orders and money for the purchase or sale of commodity futures.
7 U.S.C. § 1a(28); First Am. Disc. Corp. v. CFTC, 222 F.3d 1008, 1010
(D.C. Cir. 2000) (“An FCM is the commodity market’s equivalent of a
securities brokerage house . . . .”).
4    CHU V. COMMODITY FUTURES TRADING COMM’N

Peregrine. Huang acted as her trading agent and commodity
trading advisor and dealt with Kelly, a senior vice president
for business development at Peregrine. For her first Peregrine
account, Chu signed a customer agreement and risk
disclosure statement. For the next four accounts, following
standard industry practice, she signed a generic second
account request form that authorized Peregrine “to use the
account forms that [Chu had] already executed [for an older
account] as the account forms for the new account” and
provided that “all statements in those forms shall apply to the
new account as if [Chu] had executed a complete set of new
forms.”

    Chu also signed limited power of attorney documents for
two accounts, naming Huang as Chu’s trading agent and
authorizing Peregrine to follow Huang’s instructions in
almost “every respect.” Chu expanded that power of attorney
by granting Huang blanket trading authority on all accounts
with Peregrine, “as well as any future accounts that I might
open.” With those authorizations in place, both Chu and
Huang regularly placed trading orders in Chu’s accounts,
with Chu closely monitoring activity and occasionally
sending Kelly specific instructions.

    After the death of her husband, Chu raised the idea of
generating interest from the $500,000 she received. Kelly
advised her that to earn interest, she would have to move
money to one of her existing accounts, or to a new account to
purchase a Treasury Bill (“T-Bill”). On March 18, 2005, Chu
opened the account that is the subject of this appeal. She
signed a standard second account request form, stating that
Peregrine should open the account incorporating forms from
one of her older accounts. On that form she added
handwritten instructions to “move $500K T-Bill” to the
      CHU V. COMMODITY FUTURES TRADING COMM’N                           5

account, though she never ordered a T-Bill. She also wrote
that commissions and fees for trades in the account would be
fifty cents “one way” for each buy or sell order. She further
asked Peregrine to “link margin” for the account and two
others, meaning that Chu authorized Peregrine to move assets
among the three accounts to satisfy margin calls for trading
losses.

    On March 21, 2005, $500,000 was transferred to the new
account and multiple transactions were later conducted using
Chu’s unique electronic access key or by Huang via phone.
Chu disputed only one of the trades at the time. By early
June 2005, Chu had suffered a net loss of over $500,000, and
Huang sent an email to Kelly requesting that the account be
closed.

    Two years later, Chu filed an administrative complaint
against Peregrine and Kelly, alleging that she had opened the
account to earn interest, not to trade, and that Kelly and
Peregrine had ignored her instructions and permitted
unauthorized trading. The ALJ agreed, finding that: (1)
Peregrine and Kelly executed unauthorized trades requested
by Huang, who lacked actual and apparent authority; (2)
Peregrine failed to supervise the account; and (3) Peregrine
and Kelly recklessly failed to follow Chu’s instructions and
failed to disclose material facts. Those violations resulted in
a loss to Chu of $500,000.

   The CFTC stayed Chu’s claims with respect to Peregrine
pending the outcome of its bankruptcy proceedings.2 The



   2
     The automatic stay provision of the bankruptcy code, 11 U.S.C.
§ 362(a)(1), was in place because Peregrine filed for bankruptcy while the
6    CHU V. COMMODITY FUTURES TRADING COMM’N

CFTC reversed as to Kelly, finding ample undisputed
evidence that Huang had actual and apparent authority to
conduct the trades at issue with funds deposited in the
account. The CFTC further concluded that Kelly had not
misrepresented that a T-Bill would be purchased and that the
funds would remain untraded.

                           ANALYSIS

I. STANDARD OF REVIEW

     We first address the standard of review. When enacted in
1922, 7 U.S.C. § 9 provided that “findings of the commission
as to the facts, if supported by the weight of evidence, shall
in like manner be conclusive.” Grain Futures Act, ch. 369,
§ 6(b), 42 Stat. 998, 1002 (1922) (codified as amended at
7 U.S.C. § 9). This provision was first enacted as part of the
Grain Futures Act. The Commission now referred to in
7 U.S.C. § 9 is the CFTC, a successor of the Grain Futures
Administration. Commodity Futures Trading Commission
Act of 1974, Pub. L. No. 93-463, 88 Stat. 1389 (codified as
amended at 7 U.S.C. § 9). With respect to the CFTC, we
reiterated the evidentiary standard: “[o]n appeal to this court,
the factual findings of the CFTC are conclusive ‘if supported
by the weight of evidence.’” Morris v. CFTC, 980 F.2d 1289,
1292 (9th Cir. 1992) (citing 7 U.S.C. § 9). We interpreted the
“weight of evidence” standard as equivalent to the




appeal before the CFTC was pending. As Chu acknowledges, her claims
against Peregrine are not before this court.
      CHU V. COMMODITY FUTURES TRADING COMM’N                            7

preponderance of the evidence test. Id. (citing Dohmen-
Ramirez v. CFTC, 837 F.2d 847, 856 (9th Cir. 1988)).3

    In 2010, § 9 was amended by the Dodd-Frank Wall Street
Reform and Consumer Protection Act (“Dodd-Frank”), Pub.
L. No. 111-203, § 753(a), 124 Stat. 1376, 1750–54 (2010).
The revised section grants the courts of appeals authority to
“affirm, set aside, or modify [an] order of the Commission”
but, unlike the previous iteration, does not specify a standard
of review. See 7 U.S.C. § 9(11)(B)–(C).

    Although the text is unambiguous, we note that Dodd-
Frank’s legislative history provides no insight into the
rationale for dropping the “weight of evidence” standard.
The House version of the legislation did not amend 7 U.S.C.
§ 9 at all. H.R. 4173, 111th Cong. (as passed by House, Dec.
11, 2009). Instead, the text of Section 753 was first
introduced as an amendment to the draft bill in the Senate on


   3
      Not all circuits agreed that “weight of evidence” equated to the
preponderance standard. Compare Crothers v. CFTC, 33 F.3d 405, 409
(4th Cir. 1994) (“Under this standard we will uphold the Commission’s
findings if we deem them to have been justified.”), Purdy v. CFTC, 968
F.2d 510, 518–19 (5th Cir. 1992) (applying substantial evidence review),
and Gimbel v. CFTC, 872 F.2d 196, 199 (7th Cir. 1989) (stating that under
the weight of evidence standard, the court “will uphold the Commission’s
findings if we deem them to have been justified”), with Guttman v. CFTC,
197 F.3d 33, 39 (2d Cir. 1999) (“These liability findings are conclusive if
supported by the weight, or preponderance, of the evidence.”), JCC, Inc.
v. CFTC, 63 F.3d 1557, 1564 (11th Cir. 1995) (“This standard requires
that the factual findings be supported by the preponderance, or greater
weight, of the evidence.”), and Monieson v. CFTC, 996 F.2d 852, 858 (7th
Cir. 1993) (relying on the weight of evidence as the standard of review
without further definition, but noting that “[s]everal courts have equated
the ‘weight of the evidence’ standard with the ‘preponderance of the
evidence’ standard used in other contexts”).
8    CHU V. COMMODITY FUTURES TRADING COMM’N

May 4, 2010, largely in its final form, but retaining the
“weight of evidence” standard of review. 111 Cong. Rec.
S3100 (daily ed. May 4, 2010) (statement of Sen. Maria
Cantwell). That amending language was adopted in the final
version passed by the Senate on May 20, 2010, again with the
standard of review intact. H.R. 4173, 111th Cong. (as passed
by Senate, May 20, 2010). During the reconciliation process,
however, the standard of review was stripped out. See H.R.
Rep. 111-517, at 386. Not only was the standard deleted, the
Conference Committee also revised the first half of the final
sentence in section 753, from which it deleted the standard of
review, replacing the language that an appropriate court
“shall have jurisdiction to affirm, set aside, or modify the
order of the Commission” with language that a court “may
affirm, set aside, or modify the order of the Commission.”
Compare H.R. 4173, 111th Cong. at 868 (Conference Report)
(emphasis added), with H.R. Rep. 111-517, at 386 (emphasis
added).

    It bears noting that other provisions of Dodd-Frank do
make specific reference to a standard of review. For
example, § 718, which concerns determination of the status
of novel derivative products, states that, on review, “[t]he
court, in considering a petition filed pursuant to paragraph
(1), shall give no deference to, or presumption in favor of, the
views of either Commission.” § 718(b)(3), 124 Stat. at 1654
(codified at 15 U.S.C. § 8306(b)(3)). Section 748 creates a
new CFTC whistleblower program and specifies that courts
of appeals should review award determinations by the CFTC
“in accordance with section 706[] of title 5, United States
       CHU V. COMMODITY FUTURES TRADING COMM’N                          9

Code.”4 See § 748, 124 Stat. at 1742 (codified at 7 U.S.C.
§ 26); see also § 922(a), 124 Stat. at 1844 (codified at 15
U.S.C. § 78u-6(f)) (creating a similar program for the
Securities and Exchange Commission and also providing that
awards should be reviewed “in accordance with section 706
of Title 5”).

    In light of the plain text of the statute, the precise
revisions of the Conference Committee and Congress’s
inclusion of a standard of review in other parts of the statute,
we read the deletion of the “weight of evidence” standard as
purposeful, not accidental. Thus we have no license to
disregard the plain text of the statute. “Only when it is
patently obvious to a reasonable reader that a drafting mistake
has occurred may a court correct the mistake.” King v.
Burwell, 135 S. Ct. 2480, 2504–05 (2015). Such is not the
case here. It is “‘beyond our province to rescue Congress
from its drafting errors, and to provide for what we might
think . . . is the preferred result.’” Lamie v. U.S. Tr., 540 U.S.
526, 542 (2004) (alteration in original) (quoting United States
v. Granderson, 511 U.S. 39, 68 (1994) (concurring opinion)).

    Where Congress does not specify a standard of review, an
agency’s factual findings are reviewed for substantial
evidence under the Administrative Procedure Act, 5 U.S.C.
§ 706. See Dickinson v. Zurko, 527 U.S. 150, 154 (1999)
(holding that a court reviewing agency action “must apply the
APA’s . . . review standards in the absence of an exception,”
in recognition of “the importance of maintaining a uniform


   4
       Section 748 states that determinations should be reviewed “in
accordance with section 7064 of title 5, United States Code,” which does
not exist. As noted in the published U.S. Code, the section 7064 reference
“probably should be ‘section 706.’” 7 U.S.C. § 26 (2012).
10   CHU V. COMMODITY FUTURES TRADING COMM’N

approach to judicial review of administrative action”);
Ninilchik Traditional Council v. United States, 227 F.3d
1186, 1194 (9th Cir. 2000) (“We read Justice Breyer’s
majority opinion in Dickinson to mean that § 706 of the APA
functions as a default judicial review standard.”); 3 Charles
H. Koch, Jr., Administrative Law and Practice § 8.10 (3d ed.
2010) (“Judicial review of agency action starts with the
judicial review sections of the APA . . . . These provisions
. . . act as an auxiliary to the judicial review expressly
established by that scheme or fill the void where the statutory
scheme fails to provide for review.”).

    Section 706 provides that a reviewing court must “hold
unlawful and set aside agency action, findings, and
conclusions found to be . . . unsupported by substantial
evidence in a case subject to sections 556 and 557 of this title
or otherwise reviewed on the record of an agency hearing
provided by statute . . . .” 5 U.S.C. § 706(2). Under well
established principles of administrative law, “[s]ubstantial
evidence means more than a mere scintilla but less than a
preponderance; it means such relevant evidence as a
reasonable mind might accept as adequate to support a
conclusion.” Gebhart v. SEC, 595 F.3d 1034, 1043 (9th Cir.
2010) (citing NLRB v. Int’l Bd. of Elec. Workers, Local 48,
345 F.3d 1049, 1053–54 (9th Cir. 2003)). Although we
interpret § 9 as subject to the substantial evidence standard,
we would deny the petition under the preponderance standard
as well.

II. REVIEW OF CFTC PROCEEDINGS

    The essence of Chu’s claim rests on a theory of
unauthorized trading, namely that she never gave permission
for Huang to conduct trades in the account and that Kelly, in
      CHU V. COMMODITY FUTURES TRADING COMM’N                      11

following Huang’s directives, violated 17 C.F.R. § 166.2.
The regulation prohibits transactions by any futures
commission merchant or its associated persons unless the
customer gives (1) specific authorization, including the
precise interest and exact amount to be purchased or sold, or
(2) written general authorization “to effect transactions in
commodity interests for the account without the customer’s
specific authorization . . . .” 17 C.F.R. § 166.2. The FCM
may “make trades ordered by someone other than the
customer himself when that someone is designated by the
customer to control the customer’s account” or otherwise
“has either actual or apparent authority to make the trades.”
Peltz v. SHB Commodities, Inc., 115 F.3d 1083, 1088 (2d Cir.
1997).

    Here, the CFTC’s conclusion that Huang had actual
authority to trade in the account is supported by substantial
evidence. Chu gave Huang blanket trading authority over any
future accounts, and when she opened the disputed account,
incorporated the power of attorney documents from an older
account.5 Those authorizations came in the context of a long-
standing relationship between Chu and Huang, with Huang
trading on Chu’s behalf in her other Peregrine accounts. In
addition, close in time to opening the account in dispute, there
was a series of emails between Chu and Huang and Chu and
Kelly in which Chu confirmed that she wanted Huang to keep
trading for her. These affirmative grants of authority easily


 5
    Chu argues that Peregrine never ascertained whether she understood
the account opening documents. However, Chu regularly communicated
with Peregrine and Kelly through Huang and Huang’s staff, who
translated between English and Taiwanese, and Chu never claimed that
she did not understand a document or that something was inaccurately
translated.
12    CHU V. COMMODITY FUTURES TRADING COMM’N

fall within the definition of actual authority. Actual authority
“is created by direct manifestations from the principal to the
agent, and the extent of the agent’s actual authority is
interpreted in the light of all circumstances attending these
manifestations, including the customs of business, the subject
matter, any formal agreement between the parties, and the
facts of which both parties are aware.” Id. (citation omitted).

    Chu’s fraud allegations fare no better. She claims that
Kelly encouraged her to open the account with the
representation that it would be used to generate interest
through the purchase of a $500,000 T-bill, but then ignored
her instructions and allowed the account to be traded to a total
loss.

   Under 7 U.S.C. § 6b(a)(2), it is unlawful for a person to
“cheat or defraud” a customer through trades, or to willfully
“deceive or attempt to deceive the other person . . . .”
Liability under § 6b contains an element of scienter which is
more than “[m]ere negligence, mistake, or inadvertence.”
Wasnick v. Refco, Inc., 911 F.2d 345, 348 (9th Cir. 1990).

    This case appears to be—at worst—one of
misunderstanding on Chu’s part, not Kelly’s intentional
disregard for Chu’s instructions. Chu never ordered a T-Bill,
and had there been one in the account, Peregrine would have
had to cash the bill to satisfy margin calls.6 Chu’s
specification that “margin be linked” among the accounts was


 6
    Chu argues that the one-page account opening form did not contain a
required risk disclosure statement, but fails to acknowledge that the form
incorporated the risk disclosure statement for an older account. Chu used
the same account opening form for all of her older accounts without
objection.
     CHU V. COMMODITY FUTURES TRADING COMM’N               13

thus inconsistent with her claim that the account was to be an
interest-only account. Nor did Kelly commit fraud in failing
to inform Chu that Huang was trading in the account. The
Commission noted in its Order that “Chu’s purported desire
to generate interest in the account and use a T-Bill from
another account . . . does not establish that Chu limited
Huang’s trading authority.” None of Chu’s emails to Kelly
reference any trading limitation, nor did the notation about
the T-Bill limit or change Chu’s explicit instructions, as
outlined above, that Huang had blanket trading authority.
Chu was clearly aware of the ongoing trading, having
objected to one trade in which a risk manager had placed a
stop. Accordingly, substantial evidence supports the CFTC’s
decision that Kelly made no material misrepresentation or
omission, that there was no unauthorized trading, and that the
record does not support a finding of fraud.

   PETITION DENIED.
