United States v. Clark: Vagueness Challenges Rejected for Honest-Services Kickbacks and CEA “Fictitious Sales” and Misappropriation-Based Insider Trading; CFTC Criminal Rulemaking Upheld Under Intelligible-Principle Review

1. Introduction

In United States v. Clark (5th Cir. Mar. 13, 2025) (per curiam) (unpublished), the Fifth Circuit affirmed the convictions of Matthew Clark, a Company B employee who pleaded guilty to a set of fraud- and commodities-related offenses stemming from two schemes (2010–2019). The first involved steering Company B’s trading business to a favored broker (Classic Energy, LLC) in exchange for kickbacks. The second involved sharing Company B’s confidential trading intentions so coconspirators could take offsetting positions and profit.

On appeal—preserved via a conditional guilty plea—Clark challenged the indictment and his convictions on three constitutional grounds: (i) that honest-services fraud under 18 U.S.C. § 1346 is unconstitutionally vague; (ii) that key Commodity Exchange Act (CEA) provisions and a CFTC rule are unconstitutionally vague (including “fictitious sale,” “true and bona fide price,” and “manipulative or deceptive device or contrivance”); and (iii) that Congress violated separation of powers and the nondelegation doctrine by attaching criminal penalties to violations of CFTC rules without an intelligible principle.

2. Summary of the Opinion

The Fifth Circuit rejected all three challenges and affirmed. It held that (1) the vagueness attack on § 1346 is foreclosed by Skilling v. United States, which upheld § 1346 as applied to kickback schemes; (2) the challenged CEA terms are sufficiently definite—“fictitious” and “not a true and bona fide price” are ordinary terms connoting deception, and “manipulative or deceptive device or contrivance” carries a settled meaning borrowed from securities law and applied to misappropriation-based insider trading; and (3) Congress may criminalize violations of agency regulations so long as it defines the offense and fixes punishment, and here the CFTC’s authority is guided by an intelligible principle rooted in settled Supreme Court constructions.

3. Analysis

3.1. Precedents Cited

Skilling v. United States, 561 U.S. 358 (2010)

Skilling was decisive for Clark’s § 1346 argument. The Supreme Court “construe[d], not condemn[ed]” § 1346 by limiting it to bribery and kickback schemes, thereby curing vagueness concerns for that core category. The Fifth Circuit treated Skilling as controlling “last word” precedent that squarely validates § 1346’s application to kickbacks—precisely the type of honest-services conduct alleged in Clark’s first scheme.

United States v. Davis, 588 U.S. 445 (2019)

Clark leaned on Davis for its skepticism toward aggressive “saving constructions” to avoid vagueness. The panel acknowledged Davis but held it did not displace Skilling; disfavoring a method of statutory rescue is not the same as overruling a prior narrowing construction already adopted by the Supreme Court. Davis also supplied the panel’s framing that vagueness doctrine serves both due process and separation-of-powers values.

Percoco v. United States, 598 U.S. 319 (2023) (Gorsuch, J., concurring in the judgment)

The court noted that “two justices have expressed doubt” about honest-services fraud, citing Justice Gorsuch’s concurrence in Percoco. But concurrences do not overrule Supreme Court holdings; the citation served to acknowledge ongoing debate while reaffirming the lower court’s obligation to follow Skilling.

United States v. Rahimi, 117 F.4th 331 (5th Cir. 2024) (Ho, J., concurring)

The panel invoked Rahimi (Ho, J., concurring) for a hierarchical-courts principle: inferior courts cannot “adjust or amend” Supreme Court precedent. This reinforced the panel’s disposition of Clark’s attempt to reopen § 1346’s constitutionality notwithstanding Skilling.

United States v. De Bruhl, 118 F.4th 735 (5th Cir. 2024)

Cited for the standard of review—constitutional challenges to criminal statutes are reviewed de novo—De Bruhl provided the analytical lens but did not materially control the outcomes.

Beckles v. United States, 580 U.S. 256 (2017)

Beckles furnished the two core vagueness requirements: fair notice (ordinary people can understand what is prohibited) and constraints on arbitrary and discriminatory enforcement. These criteria framed the court’s evaluation of the CEA and CFTC provisions.

United States v. Williams, 553 U.S. 285 (2008)

The court relied on Williams to emphasize that vagueness review uses “traditional rules for statutory interpretation,” signaling that ordinary meaning and established interpretive tools (rather than free-floating policy concerns) would drive the analysis.

Sackett v. Env't Prot. Agency, 598 U.S. 651 (2023)

Sackett was used for the interpretive starting point: “as we always do, with the text.” The panel used that principle to anchor its reliance on ordinary meanings of “fictitious” and “bona fide,” and to treat the securities-law transplant as meaningfully constraining.

Taggart v. Lorenzen, 587 U.S. 554 (2019)

The panel quoted Taggart for the “old soil” canon: when Congress borrows a legal term from an established source, it carries its settled meaning. This was critical to rejecting vagueness challenges to “manipulative or deceptive device or contrivance” in the commodities-insider-trading context, given its origin in securities law.

United States v. O'Hagan, 521 U.S. 642 (1997)

O'Hagan supplied the substantive content of the “manipulative or deceptive device” phrase: misappropriating confidential information for trading purposes, in breach of a fiduciary duty, constitutes deception because it “feign[s] fidelity” to the information source. By treating the CEA language as an “exact transplant” from securities law, the panel imported O'Hagan as an authoritative construction that defeats vagueness.

Salman v. United States, 580 U.S. 39 (2016)

Salman reinforced that, under § 10(b) and Rule 10b-5, undisclosed trading on inside information by someone owing a duty of trust and confidence is prohibited. The Fifth Circuit used Salman (citing O'Hagan) to underscore that the misappropriation theory is settled, thus providing notice and constraining enforcement discretion in the commodities analog.

Loving v. United States, 517 U.S. 748 (1996)

Loving anchored the delegation holding. The Supreme Court recognized no absolute bar to Congress delegating authority relevant to criminal punishment, so long as Congress makes the violation of regulations a criminal offense, fixes punishment, and the regulations stay within the statute’s field. The Fifth Circuit applied that test to the CEA provisions that criminalize willful violations of CFTC rules.

3.2. Legal Reasoning

3.2.1. Honest-services fraud (§ 1346): Skilling forecloses vagueness attacks where kickbacks are alleged

Clark’s first challenge was treated as essentially a request for the Fifth Circuit to revisit the constitutional status of § 1346. The panel declined, holding the argument “foreclosed” by Skilling, which preserved § 1346 by narrowing it and explicitly upheld it “as to kick-back schemes.” The court’s reasoning was institutional as much as doctrinal: whatever later cases say about the advisability of narrowing constructions (and whatever individual justices may question), lower courts must follow the controlling Supreme Court holding until it is overruled.

3.2.2. CEA “fictitious sale” / “true and bona fide price” (§ 6c): ordinary meaning provides clear notice

For § 6c, the court conducted a straightforward textual/ordinary-meaning analysis, bolstered by dictionary definitions (“fictitious” as false/feigned/pretended; “bona fide” as honest/sincere/without deceit). On that basis, the panel concluded that the terms “plainly contemplate deception,” and therefore are not vague in the constitutional sense.

A notable move in the opinion is its reframing of Clark’s vagueness claim: if these provisions are vague, then “the very concept of falsity” would be too vague for Congress to prohibit. The panel rejected that as incompatible with basic legislative power to prohibit deception. The court also relied on an oral-argument concession: Clark’s theory would invalidate any statute that prohibited falsifying price information.

3.2.3. “Manipulative or deceptive device or contrivance” (§ 9(1) and 17 C.F.R. § 180.1): securities-law transplant supplies settled meaning

The panel treated the statutory and regulatory phrase as an “exact transplant” from § 10(b)-5. Applying Taggart’s borrowing canon, the court imported the settled securities-law interpretation—especially O'Hagan’s misappropriation theory— to conclude the phrase is not vague when used to prohibit trading on misappropriated confidential information. Because the Supreme Court has already articulated how such conduct is “deceptive” (feigned loyalty, breach of confidentiality), the court reasoned that the commodities-law analog provides adequate notice and enforcement boundaries.

3.2.4. Delegation and criminal penalties: CFTC rulemaking sustained under Loving and intelligible-principle review

Clark’s separation-of-powers and nondelegation arguments targeted Congress’s decision to criminalize willful violations of CFTC rules, and to reference CFTC rules in defining prohibited “manipulative or deceptive” conduct. The panel relied on Loving to reject any categorical claim that Congress may not do so. It emphasized that Congress (a) made violations of certain regulations criminal and (b) fixed punishment—meeting Loving’s requirements.

On nondelegation, the court found an “intelligible principle” in the already-settled meaning of “manipulative or deceptive device or contrivance.” In other words, the CFTC is not legislating in a vacuum; it is operating within a concept that Supreme Court precedent has given determinate content, particularly around misuse of confidential information for personal advantage.

3.3. Impact

  • Reinforces § 1346 stability post-Skilling: Even amid continuing academic and judicial skepticism, Fifth Circuit panels will treat vagueness challenges to honest-services kickback prosecutions as effectively closed unless and until the Supreme Court revisits Skilling.
  • Strengthens textual/ordinary-meaning responses to CEA vagueness attacks: The opinion signals that challenges to § 6c’s “fictitious” and “bona fide” terminology face an uphill climb because deception-based terms are treated as inherently comprehensible.
  • Aligns commodities “insider trading” with securities misappropriation doctrine: By treating the CEA/CFTC anti-manipulation language as a securities-law transplant and importing O'Hagan/Salman, the decision encourages future prosecutions (and defenses) to litigate commodities insider-trading theories through securities-law analogies.
  • Delegation challenges remain difficult where statutes criminalize willful regulatory violations: The combination of Loving plus “intelligible principle” supplied by settled judicial constructions suggests that, at least for CFTC anti-manipulation authority, nondelegation arguments are unlikely to succeed under current Supreme Court doctrine.

4. Complex Concepts Simplified

  • Void for vagueness: A criminal law is unconstitutional if people of ordinary intelligence cannot tell what it forbids, or if it is so open-ended that police/prosecutors can enforce it arbitrarily.
  • Honest-services fraud (18 U.S.C. § 1346): A type of fraud focused on depriving another (often an employer or the public) of the offender’s “honest services.” After Skilling, it is limited mainly to bribery and kickback schemes.
  • “Fictitious sale” / “true and bona fide price” (CEA § 6c): Terms targeting sham or deceptive trades and false price reporting—i.e., conduct that creates fake market signals rather than genuine supply/demand pricing.
  • “Manipulative or deceptive device or contrivance”: A broad anti-fraud concept borrowed from securities law. Under the “misappropriation theory” (O'Hagan), it covers trading on confidential information taken in breach of a duty of trust or confidentiality.
  • Separation of powers / nondelegation / “intelligible principle”: Congress cannot hand off its lawmaking power without guidance. But under the modern “intelligible principle” test, Congress may delegate rulemaking so long as it sets a guiding standard; courts have upheld many delegations, including ones affecting criminal liability, where Congress defines the offense and penalties and cabins the agency’s field.

5. Conclusion

United States v. Clark is a reaffirmation opinion: it reasserts that Skilling v. United States controls honest-services vagueness challenges in kickback cases; it treats deception-laden CEA terms (“fictitious,” “bona fide”) as readily understandable under ordinary meaning; it imports the settled securities-law misappropriation framework (United States v. O'Hagan, Salman v. United States) to defeat vagueness attacks on CEA/CFTC anti-manipulation language; and it sustains Congress’s criminalization of willful CFTC-rule violations under Loving v. United States and the intelligible-principle standard. The case thus strengthens continuity between securities and commodities anti-fraud regimes and underscores the limited room lower courts have to revisit Supreme Court-settled constitutional constructions.