A federal judge here yesterday refused to block the operation of the Commodity Futures Trading Commission's consumer hotline that provides information over a toll-free telephone number about CFTC actions.
'the service's operation was challenged by the First Commodity Corporation of Boston, which was charged by the CFTC in a 23-count administrative complaint earlier this year with violating federal commodity laws.
First Commodity Corp., which has denied the allegations in the CFTC complaint, said it was unfair for the operators of the hotline to read a press release about the charges to persons who called the CFTC number. The firm's attorneys said the publication of the charges in that manner was unfair, and that the agency had no detailed guidelines in the manner the hotline information should be destributed.
John S. Stoppelman, who represented First Commodity in court yesterday, compared the hotline to a "runaway buffalo" that needed to be placed under tight control by agency regulations governing its operation.
U.S. District Judge John Garrett Penn disagreed, however, saying the CFTC had a right to tell consumers about public charges that had been filed against a commodity firm.
"The public interest lies in full and free dissemination of information as has been done by the Commodity Futures Trading Commission," Penn said in an oral ruling issued after a morning-long hearing yesterday.
Penn said the fact the company has charges pending against it is pertinent information that can be disseminated over the hotline number, and that the hotline operators are just stating "historical fact" when they tell about the pending case.
CFTC Associate General Counsel Gregory C. Glynn had argued that to deprive the public of the hotline information "would leave them naked to their seller and constitute an abrogation of the Commission's Congressional mandate to protect the national public interest. . ."
He said the information provided over the line is "factual and accurate. . .(and) a matter of public record."
The hotline is a telephone answering and information service provided to persons interested in purchasing contracts of commodities, and receives 50 calls a day.
The CFTC has charged First Commodity Corp. with violating a federal ban on selling commodity options, fraud in sales of four types of investment, failure to disclose information to customers, employing unregistered commodity sales people, and violating other regulations. In November, 1976, the firm signed a consent order enjoining the company and two officers from violating federal commodity laws and regulations.