Opinion for the Court filed by Circuit Judge HARRY T. EDWARDS.
Opinion concurring in part and dissenting in part filed by Circuit Judge STARR.
HARRY T. EDWARDS, Circuit Judge:
Drexel Burnham Lambert Inc. (“Drexel”) and one of its former brokers, David Ra-gan, petition for review of a decision by the Commodity Futures Trading Commission (“Commission”) ordering them to pay San-som Refining Company (“Sansom”) approximately $1.3 million plus interest and costs for trading losses. The Commission found Drexel liable for the losses in Sansom’s account because Richard Robinson, the Sansom employee who initiated the unprofitable trades, lacked actual and apparent authority to buy or sell commodity futures on Sansom’s behalf, and because Sansom never ratified these trades. The Commission further ruled that Sansom was not estopped from claiming injury.
We affirm the Commission’s decision in substantial part. We agree that Ragan’s reckless response to Robinson’s unauthorized trading orders violated section 4b of the Commodity Exchange Act, 7 U.S.C. § 6b, and that Drexel was liable for his actions under section 2(a)(1)(A) of the Act, 7 U.S.C. § 4. We have concluded, however, that the Commission erred in ruling that the petitioners violated section 4d(2) of the Act, 7 U.S.C. § 6d(2). Accordingly, we grant the petition for review with respect to the latter finding and reverse the Commission’s decision on that point. The Commission also failed to address Drexel's argument that it should not bear the entire loss because Sansom failed to mitigate damages. We therefore remand the case [744]*744to the Commission for further findings on this issue.
I. Background
In 1980, Sansom was engaged in the business of buying precious metal as scrap, refining it, and reselling the purified product to larger refiners. Its two officers were Jackson Loughridge, President and Treasurer, and Albert Waterman, Vice-President and Secretary. Each owned 45% of Sansom’s stock. In March 1980, Lough-ridge discussed various means of reducing Sansom’s income tax liabilities with Drexel brokers. Throughout these discussions, Loughridge considered the advice of Richard Robinson, a Sansom employee.1 Robinson apparently knew more about tax law and commodity trading than did Lough-ridge, and Loughridge often consulted with him in such matters.
In April 1980, Loughridge and Robinson met with Ragan at Drexel’s Houston office. Ragan suggested that Sansom establish an interest rate arbitrage program involving the purchase and sale of Treasury bills and Treasury bill futures, in order to convert its profits from ordinary income to long-term capital gains. Shortly thereafter, Loughridge agreed on Sansom’s behalf to accept Ragan’s proposal, which entailed an initial commitment of between $300,000 and $500,000. In early May 1980, Lough-ridge and Waterman executed Drexel’s standard account-opening documents. They granted Ragan discretionary authority to trade Sansom’s account. They also signed a corporate resolution form provided by Drexel, which Loughridge modified (with Waterman’s permission) to authorize Loughridge alone — not Waterman as well — to trade the account. Although the corporate resolution form permitted Lough-ridge “to appoint any other person or persons to do any and all things which [he] is hereby empowered to do, and generally to do and take all action necessary in connection with the account,” Appendix (“App.”) at 812, neither Robinson nor any other person was ever authorized by Loughridge to initiate trades on Sansom’s behalf.
On May 15, 1980, Ragan began buying Treasury bills for Sansom’s account. Ra-gan telephoned Loughridge to report these initial purchases, and Drexel sent Sansom a statement, marked “Attn. Jack Lough-ridge,” confirming the transactions. After several telephone calls, Loughridge told Ragan not to call him to report his dealings in the account; all telephonic reports, he said, should be made directly to Robinson. After reviewing the first few written account statements, Loughridge apparently ceased reading them as well. Instead, he relied on Robinson to monitor the statements and to inform him of the account's status every week or so. Between May 15 and June 10,1980, Sansom deposited $400,-000 in its account with Drexel.
On June 11, 1980, Robinson telephoned Ragan and placed an order to sell 48 pork belly futures for Sansom’s account. Ra-gan executed the order, without asking Loughridge whether he had authorized the sale or delegated to Robinson his exclusive authority to trade. Ragan had good reasons to be suspicious of the order, both because he had never been advised that Robinson had authority to trade for San-som, and because the order was patently at odds with the well-understood tax goals of the client’s account.
On June 19, 1980, Ragan, Robinson and Loughridge met in Philadelphia. Ragan spoke very generally about Sansom’s trading program and reported that all was well. Ragan did not mention the sale of pork belly futures he had made eight days before at Robinson’s behest, although at that meeting he could easily have verified Robinson’s authority to initiate trades. Ragan also furnished Loughridge with a list of transactions in Sansom’s account through June 11. Significantly, however, the list did not include the sale of pork belly futures on June 11 that Robinson had requested, even though three other transac[745]*745tions involving Treasury bills were listed for that date.
On July 9, 1980, Robinson directed Ra-gan to offset half of the pork belly futures at a loss of more than $77,000. Ragan did so, again without telephoning Loughridge to confirm Robinson’s authority to initiate trades. During the rest of July, Robinson ordered numerous other unprofitable trades in pork belly and live cattle futures. In August and September, he speculated even more heavily, accumulating huge losses.
At no time did Ragan ask Loughridge whether Robinson was authorized to trade for Sansom. When Sansom’s losses began to mount, however, he did express his worries to Robinson, who stated that Sansom had hedged the unprofitable trades through orders placed at Bache Halsey Stuart Shields Inc. (“Bache”). Ragan telephoned a broker at Bache to confirm Robinson’s story. He was told that Sansom’s account at Bache enjoyed a surplus roughly equal to Sansom’s aggregate losses at Drexel. The Bache broker refused to tell Ragan, however, what trades had been made through that account. Hence, Ragan could not corroborate Robinson’s assertion, although his fears were somewhat allayed. In fact, Sansom’s account at Bache was not used to hedge Robinson’s trades at Drexel.
Throughout this period, Drexel regularly sent account statements to Sansom, marked to the attention of Loughridge. The statements requested the client to report any inaccuracies immediately. San-som never complained about the unauthorized trades, because Loughridge trusted Robinson to read the statements and apprise him of the account’s status, and Robinson never mentioned the unauthorized, speculative commodity trades that he had placed with Ragan. Sansom deposited over $1.3 million in the account between July and September 1980 in order to cover its losses. Most of the checks were signed by Waterman. Neither Loughridge nor Waterman questioned Robinson when he presented the checks for their signatures.
In mid-September 1980, Ragan and Loughridge discussed a gold trade that Ra-gan had made for Sansom’s account. It is unclear who initiated the call, or how Loughridge learned of the trade. However, it is clear that, as soon as Loughridge became aware of the unauthorized trade, he was explicit in instructing Ragan not to trade in gold. Even though Loughridge expressed concern about commodity trading in the company’s account, Ragan never volunteered any information about the orders that had been placed by Robinson, nor did he use the occasion of their September discussion to inquire regarding the efficacy of the commodity trades.
On September 21, 1980, Robinson finally confessed to Loughridge that he had speculated in Sansom’s account and had incurred colossal losses. Loughridge promptly closed out all the open commodity contracts the following day. Sansom maintained its account at Drexel, however, so as not to lose the tax benefits it expected to reap from its Treasury bill spreads.
On June 3, 1982, Sansom filed a reparations claim with the Commission against Drexel and Ragan. Sansom’s complaint alleged violations of section 4b of the Commodity Exchange Act, 7 U.S.C. § 6b.2 The Administrative Law Judge (“AU”) who [746]*746conducted a hearing on Sansom’s complaint ruled in favor of Drexel and Ragan and dismissed Sansom’s action on May 27, 1986.3 He found that, although Robinson lacked both actual and apparent authority to initiate trades in Sansom’s account, San-som was estopped from claiming injury from the unauthorized trades because San-som had not complained of them to Drexel despite having received reports of the transactions and having paid $1.3 million to meet its margin requirements.
Sansom appealed and the Commission reversed.4 The Commission agreed that Robinson lacked actual and apparent authority to trade Sansom’s account. Having found that Ragan accepted orders even though Robinson had no actual or apparent authority to trade for Sansom, the Commission ruled that Sansom could not be estopped from claiming injury. The Commission concluded that “Ragan was unreasonable under the circumstances to allow Robinson to begin trading the account and remained unreasonable in allowing trading to continue, even in light of Sanson’s failure to protest and payment of margin_” Commission Op. at 34,108. In the Commission’s view, “Ragan’s conduct amountfed] to willful disregard of whether he was acting in accordance with Sansom’s instructions,” and thus constituted a violation of section 4b. Id. at 34,108 n. 10.
The Commission also found Drexel and Ragan liable under section 4d(2), 7 U.S.C. § 6d(2).5 According to the Commission, section 4d(2) “places the burden on the commodity professional to ascertain the authority of an individual purporting to act for a customer. If the associated person fails to take reasonable steps to learn the limits of an individual’s authority, and the futures commission merchant fails to take reasonable steps to prevent, detect, and correct such employee errors, complainants will not be denied recovery merely because they could have done a better job of protecting their own interest.” Commission Op. at 34,108. Without considering whether Sansom had failed to mitigate damages, the Commission ordered Drexel and Ragan to pay Sansom $1,322,074.50 with interest from September 22, 1980. Drexel and Ra-gan seek review of the Commission’s decision.
II. Analysis
A. Standard of Review
The Commodity Exchange Act provides that “the findings of the Commission as to the facts, if supported by the weight of evidence, shall ... be conclusive.” 7 U.S. C. § 9. In Great Western Food Distribs. v. Brannan, 201 F.2d 476, 479-80 (7th Cir.), cert. denied, 345 U.S. 997, 73 S.Ct. 1140, 97 L.Ed. 1404 (1953), the Seventh Circuit stated that a reviewing court’s function under this standard
is something other than that of mechanically reweighing the evidence to ascertain in which direction it preponderates; it is rather to review the record with the purpose of determining whether the finder of the fact was justified, i.e. acted reasonably, in concluding that the evidence, including the demeanor of the witnesses, the reasonable inferences drawn therefrom and other pertinent circumstances, supported his findings.
This circuit endorsed the preceding gloss on the “weight of evidence” standard in Schor v. CFTC, 740 F.2d 1262, 1272 (D.C. Cir.1984), vacated and remanded on other grounds, 473 U.S. 922, 105 S.Ct. 3551, 87 L.Ed.2d 674 (1985), reinstated, 770 F.2d 211 (D.C.Cir.1985), rev’d on other grounds, 478 U.S. 833, 106 S.Ct. 3245, 92 L.Ed.2d 675 (1986). We may only set aside the Commission’s factual findings, and the legal con-[747]*747elusions they entail, if they are not reasonably supported by the record.
It is also clear that it is the decision of the Commission, not that of the AU, that is subject to judicial review. And when, as in the instant case, the Commission and an AU disagree on factual inferences to be drawn from the record, the Supreme Court has told us that the question to be decided is not whether the agency has “erred” in “overruling” the AU’s findings, but whether its own findings are reasonably supported on the entire record. See, e.g., FCC v. Allentown Broadcasting Corp., 349 U.S. 358, 364, 75 S.Ct. 855, 859, 99 L.Ed. 1147 (1955); Universal Camera Corp. v. NLRB, 340 U.S. 474, 492-97, 71 5.Ct. 456, 466-69, 95 L.Ed. 456 (1951).6
In this case, the Commission and the AU disagreed in their views of the record with respect to several critical points, including the significance of Robinson’s lack of actual or apparent authority to trade; Ragan’s unreasonableness in simply assuming that Robinson was authorized to trade; and Ragan’s failure to act on his suspicions and inquire regarding Robinson’s unauthorized trades, especially when he knew them to be inconsistent with the tax goals of Sansom’s account. In weighing the evidence in the record, the principal differences between the initial decision of the AU and the final judgment of the Commission are the findings (1) that Ra-gan’s conduct constituted a willful disregard of whether he was acting in accordance with Sansom’s instructions, and (2) that Sansom could not be estopped from denying Robinson’s authority to trade when both the AU and the Commission agreed that Robinson had neither actual nor apparent authority to place orders for Sansom. These are the findings — including the underlying inferences drawn by the Commission and its weighing of the entire record of testimony — that are before this court on review. Unless otherwise restricted by statute or rule, an administrative agency “is not bound by [an AU’s] ‘secondary inferences,’ or ‘derivative inferences,’ i.e., facts to which no witness orally testified but which the [AU] inferred from facts orally testified by witnesses whom the examiner believed. [An agency] may reach its own ‘secondary inferences,’ and we must abide by them unless they are irrational_” NLRB v. Universal Camera Corp., 190 F.2d 429, 432 (2d Cir.1951) (Frank, J., concurring) (footnote omitted).7 If the Commission’s findings are reasonably supported by the record, then the petition for review must be rejected.
With respect to “a pure question of statutory construction,” however, such as the Commission’s reading of section 4d(2), “our first job is to try to determine congressional intent, using ‘traditional tools of statutory construction.’ If we can do so, then that interpretation must be given effect-” NLRB v. United Food & Commercial Workers Union, Local 23, — U.S. -, 108 S.Ct. 413, 421, 98 L.Ed.2d 429 (1987) (quoting INS v. Cardoza-Fonseca, 480 U.S. 421, 107 S.Ct. 1207, 1221, 94 L.Ed.2d 434 (1987)). If, on the other hand, “the statute is silent or ambiguous with respect to the specific issue,” Chevron U.S.A. Inc. v. Natural Resources Defense Council, 467 U.S. 837, 843, 104 S.Ct. 2778, 2781, 81 L.Ed.2d 694 (1984), then the question for us becomes whether the Commission’s construction of the statute is “permissible,” id., that is, one that is “rational [748]*748and consistent with the statute.” United Food & Commercial Workers, 108 S.Ct. at 421.
B. Violations of Section 4b
Section 4b renders it unlawful “to cheat or defraud” or “willfully to deceive” any person in regard to any commodity contract in interstate commerce. Other circuits that have construed this provision are agreed that “mere negligence, mistake, or inadvertence” fails to meet section 4b’s scienter requirement; “a degree of intent beyond carelessness or negligence” is necessary to violate this provision. Hill v. Bache Halsey Stuart Shields Inc., 790 F.2d 817, 822 (10th Cir.1986); see also Greenwood v. Dittmer, 776 F.2d 785, 789 (8th Cir.1985); Haltmier v. CFTC, 554 F.2d 556, 562 (2d Cir.1977). The question here is whether section 4b encompasses reckless conduct.
We hold that recklessness is sufficient to satisfy section 4b’s scienter requirement. A reckless action, as the First Circuit said in reaching the same result, “is one that departs so far from the standards of ordinary care that it is very difficult to believe the [actor] was not aware of what he was doing.” First Commodity Corp. v. CFTC, 676 F.2d 1, 7 (1st Cir.1982). The language of section 4b, together with the virtually unanimous agreement among the circuits that recklessness may serve as the predicate for liability under the analogous provisions of section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5, see, e.g., Rolf v. Blyth, Eastman Dillon & Co., 570 F.2d 38, 46 (2d Cir.), cert. denied, 439 U.S. 1039, 99 S.Ct. 642, 58 L.Ed.2d 698 (1978); McLean v. Alexander, 599 F.2d 1190, 1197-98 (3d Cir.1979), convinces us that reckless inattention to obvious dangers to a client’s interests in arranging a purchase or sale for the client’s account triggers liability under section 4b. As Drexel’s counsel acknowledged at oral argument before this court, the Commission’s finding that “Ragan’s conduct amounts to willful disregard of whether he was acting in accordance with Sansom’s instructions,” Commission Op. at 34, 108 n. 10, plainly fulfills section 4b’s scienter requirement if it is supported by the weight of evidence.
In our view, the Commission’s determination is firmly rooted in the record before it. Loughridge was the only San-som officer authorized to trade Sansom’s account, apart from the discretionary authority vested in Ragan with respect to the purchase and sale of government securities to attain Sansom’s tax objectives. Lough-ridge modified the corporate resolution form provided by Drexel to so provide, and Ragan was or should have been aware of this fact. At no time, moreover, did Loughridge inform Ragan or Drexel that he had delegated to Robinson his authority to trade. Nor did Ragan avail himself of numerous opportunities to ascertain Robinson’s authority to initiate trades when he placed commodity futures orders, even though he had reason to be suspicious of those orders. As the Commission noted, Loughridge initiated no trades himself, and those that Robinson ordered “were unmistakably intended for speculative purposes in commodities bearing no relation to San-som’s tax goals.” Commission Op. at 34,-107. Ragan was also aware that Lough-ridge was not knowledgeable about commodity trading, and he had no reason to surmise that Loughridge was eager to speculate with the money he hired Ragan to shield from income tax. Under these circumstances, the Commission properly concluded that it was highly irresponsible for Ragan to place Robinson’s orders without verifying his authority. Yet, he did not even call Loughridge — not when Robinson phoned in his first trade, and not even when Sansom’s losses ran to hundreds of thousands of dollars. Ragan did not mention the first pork belly futures trade when he met with Loughridge and Robinson on June 19, 1980, and the list of trades he tendered to Loughridge that day inexplicably omitted the pork belly futures trade, despite the fact that Treasury bill transactions on the same day were included. He further failed to mention Robinson’s commodity futures trades when Loughridge rebuked him for trading in gold in mid-September. Given this record, the Commission had ample support for the finding that [749]*749Robinson lacked both actual and apparent authority to trade Sansom’s account. See ALJ Op. at 32,198; Commission Op. at 34,-107. Furthermore, we deem the evidence adduced by the Commission more than sufficient to sustain its conclusion that Ra-gan’s conduct constituted “willful disregard of whether he was acting in accordance with Sansom’s instructions,” in clear violation of section 4b. Commission Op. at 34,108 n. 10.
The AU “concluded that Ragan, with some justification believed that Robinson had authority to trade on behalf of San-som.” AU Op. at 32,201. But the Commission weighed the evidence entirely differently when it found that, “[i]n light of the facts available to Ragan, he was unreasonable in simply assuming that Robinson was authorized to trade the account. At a minimum, Ragan should have sought clarification from Loughridge, an individual Ra-gan knew and to whom he had reasonable access.” Commission Op. at 34,107. In short, if the AU thought that Ragan had “some justification” for his unauthorized dealings with Robinson, the Commission found it to be both “unreasonable” and reflective of a “willful disregard of whether he was acting in accordance with San-som’s instructions.” Because the Commission’s findings are reasonably supported by the record, we are bound to accept these determinations.8
The Commission also expressly noted that the AU’s estoppel ruling, which derived from the same facts that the AU thought warranted Ragan’s erroneous belief that Robinson had been empowered to trade Sansom’s account, was “fundamentally inconsistent with the judge’s prior determination that Ragan did not reasonably rely on statements or activity attributed to Sansom in allowing Robinson to trade.” Commission Op. at 34,108. The Commission further rejected the claim that San-som’s failure to protest and its continued payment of margin rendered reasonable Ragan’s persistent neglect to inquire into Robinson’s authority to trade. See id. In support of this conclusion, the Commission pointed out that Ragan’s awareness that Loughridge looked to Robinson to supervise the account “diminishe[d] the weight he could reasonably attribute to the failure to protest.” Id. at 34,108 n. 8. It also noted that Ragan decided not to contact Loughridge when Robinson’s trades produced large losses, but instead contented himself with a hasty and unsatisfactory inquiry into the status of Sansom’s account at a rival investment bank — a decision which the Commission, in its expert judgment, found unjustifiable. See id. Finally, the Commission reasoned that Sansom’s payment of amounts in excess of $500,000 to maintain its account “are not persuasive evidence of approval of Robinson’s trades in light of the complex nature of the straddle strategy at issue. It is not uncommon that margin requirements will be underestimated in the course of soliciting participation in such programs.” Id. at 34,108 n. 9.
In view of the deference we owe to an agency’s factual determinations, including the reasonable inferences drawn therefrom, we conclude that the Commission’s finding that Ragan acted with “willful disregard” of whether he was heeding San-som’s instructions is reasonably supported by the great weight of the evidence in the record of this case. That the Commission cast the relevant facts in a different light and drew different inferences than the AU is not in itself reason for us to gainsay the Commission’s judgment, provided — as is here the case — that it was reasonable. See notes 6 and 7 supra and accompanying text. The Commission’s conclusion fully accords with its findings of fact, and its explication of that conclusion suffices, particularly given the inconsistency at the heart of the AU’s opinion.9
[750]*750C. Ratification
As a possible affirmative defense against a finding of liability, Drexel and Ragan contend that Sansom ratified Robinson’s unauthorized trades when it continued to fund its account, without protest, after receipt of Drexel’s confirmation statements. This contention is insupportable in view of the prevailing legal standard and the facts of this case. The Commission has held that a customer ratifies unauthorized trading for his account “only where it is clear from all the circumstances presented that the intent of the customer was to adopt as his own and for all time the trades executed for his account without authorization.” Sherwood v. Madda Trading Co., [1977-1980 Transfer Binder] Comm.Fut.L. Rep. (CCH) 1120,728 at 23,020 (CFTC Jan. 5, 1979). Circuit courts that have confronted the issue have also deemed knowledge of the relevant facts and an intent to approve the unauthorized action after its occurrence to be preconditions to ratification. See, e.g., Hill v. Bache Halsey Stuart Shields Inc., 790 F.2d 817, 827 (10th Cir.1986); Karlen v. Ray E. Friedman & Co. Commodities, 688 F.2d 1193, 1198 (8th Cir.1982); Thropp v. Bache Halsey Stuart Shields, Inc., 650 F.2d 817, 822 (6th Cir.1981); Shearson Hayden Stone, Inc. v. Leach, 583 F.2d 367, 369-70 (7th Cir.1978).
We embrace the Commission’s standard for the affirmative defense of ratification, and agree with the Commission that Drexel and Ragan have failed to meet it in this case. Commission Op. at 34,107. There is no evidence that either Loughridge or Waterman was aware that the checks they signed were to fund Robinson’s trading losses rather than the Treasury bill arbitrage program they were pursuing. See AU Op. at 32,198-99; Commission Op. at 34,107. Indeed, Loughridge’s decision to close out all commodity positions as soon as Robinson confessed his unauthorized dealings, despite the heavy losses Sansom thereby incurred, strongly supports the finding that he was ignorant of Robinson’s trading and that he did not intend to approve it after the fact. See id. Furthermore, Loughridge’s decision to maintain Sansom’s account at Drexel after Robinson’s trading was discovered, in order not to lose the tax advantages he sought, cannot be deemed ratification of those trades Loughridge did not authorize. See AU Op. at 32,198.
D. Estoppel
Drexel and Ragan also argue that Sansom is estopped from claiming injury because it failed to protest upon receipt of Drexel’s account statements listing the unauthorized trades, because it repeatedly sent checks to Drexel to cover Robinson’s trading losses, and because it was aware of Robinson’s history of gambling and embezzlement whereas Drexel was not.
We reject this argument. Normally, four elements must be present to establish the affirmative defense of estoppel: (1) the party to be estopped must have known the facts; (2) the party against whom estoppel is asserted must have acted in a manner that caused the other party reasonably to believe that it intended whatever action it is allegedly estopped from citing as the basis of its claim; (3) the party asserting [751]*751estoppel must have been justifiably ignorant of the relevant facts; and (4) the party asserting estoppel must have relied on the other party’s conduct to his injury. See Sherwood v. Madda Trading Co., [1977-1980 Transfer Binder] Comm.Fut.L.Rep. (CCH) 1120,728 at 23,021 (CFTC Jan. 5, 1979). The Commission found, and we agree, that both the second and third elements were absent in this case.
Drexel and Ragan manifestly lacked a reasonable belief that Sansom sanctioned Robinson’s trades. Both the ALJ and the Commission found that Robinson lacked actual and apparent authority to initiate trades. If Robinson had neither actual nor apparent authority to trade, then Ragan and Drexel are hard-pressed to suggest that they reasonably believed that Robinson’s orders were authorized. Furthermore, the Commission pointed out that Ra-gan was aware of Loughridge’s reliance on Robinson and that he knew or should have realized that Loughridge and Waterman might have signed the checks necessary to maintain Sansom’s account because they were ignorant of the details of Ragan’s trading program and did not know how much money was necessary to finance it. See Commission Op. at 34,108 & nn. 8-9. Hence, Drexel and Ragan cannot plausibly contend that their asserted belief in San-som’s acquiescence in Robinson’s speculative trading was justified by Sansom’s failure to protest and its payment of margin requirements. Ragan had clear instructions that only Loughridge had the authority to trade for Sansom, and these instructions were never amended during the course of Robinson’s unauthorized trading.
Moreover, Ragan’s failure to inquire into Robinson’s authority to trade precludes the petitioners from claiming that they were justifiably ignorant of Sansom’s disapproval of Robinson’s trades. A party urging estoppel must show that it took reasonable steps to discover relevant facts. See Keller v. Scoular-Bishop of Missouri, Inc., [1986-1987 Transfer Binder] Comm.Fut.L. Rep. (CCH) 1123,128 at 32,336 (CFTC June 26, 1986); Sherwood, 1120,728 at 23,021.10 The petitioners failed to do so. Ragan could easily have ascertained, at any time, whether Robinson had been authorized to trade. See Commission Op. at 34,108. Moreover, he plainly had a duty to verify Robinson’s authorization, both because Robinson did not possess even apparent authority to trade and because his commands were highly suspicious, given that the speculative commodity trades Robinson ordered would not advance the objectives of Sansom’s Treasury bill arbitrage program. Under the circumstances, Ragan did not display reasonable diligence in determining Robinson’s authority or lack thereof, and a modicum of effort — a brief telephone call, or a single question to Loughridge when they met in person on June 19, 1980 — would have revealed that Robinson did not possess authority to place orders for commodity futures. The Commission was therefore correct in ruling that Drexel and Ragan were not justifiably ignorant of Sansom’s disapproval of Robinson’s trades, and thus that Sansom was not estopped from claiming injury.
E. Mitigation of Damages
In addition to their claims with respect to ratification and estoppel, Drexel and Ra-gan also assert that Sansom should bear at least part of the losses incurred because it failed to take reasonable steps to mitigate damages.11 The Commission has recog[752]*752nized that “each of these defenses is slightly different,” Sherwood v. Madda Trading Co., [1977-1980 Transfer Binder] Comm. Fut.L.Rep. (CCH) 1120,728 at 23,018 (CFTC Jan. 5, 1979), yet no judgment was offered in this case on the claim of mitigation.
Although Commission precedent admits of some confusion on this point,12 it would appear that the doctrine of mitigation of damages, unlike that of estoppel, looks solely to the conduct of the party requesting damages. As was noted in Sherwood,
[c]omplaining to the responsible officer or agent of one’s futures commission merchant is, in the Commission’s view, the mandatory first step which a customer must take to mitigate damages upon discovery of unauthorized trading.
Id. at 23,021.13 Often, as in Sherwood, judgments on ratification and estoppel appear to subsume the inquiry on mitigation, even though the doctrinal analyses are distinct. Nonetheless, as is also clear from Sherwood, there are cases in which different results may obtain with respect to different trades, depending upon whether the complainant “was aware that unauthorized trades had been credited to his account.” Id. The Commission must reach a determination on this question in order to dispose of the claim of mitigation. Accordingly, we will remand the case for the Commission’s ruling on this issue.
F. Violations of Section bd(2)
The final issue before us concerns the Commission's purported reliance on section 4d(2) in finding Drexel and Ragan liable under the Act. Section 4d(2) requires a futures commission merchant to “treat and deal with all money ... received by [him] to margin, guarantee, or secure the trades or contracts of any customer ... as belonging to such customer.” 7 U.S.C. § 6d(2). The Commission ruled that Ra-gan’s trading in accordance with Robinson’s unauthorized orders violated section 4d(2). The Commission explained:
Section 4d(2) of the Act ... places the burden on the commodity professional to ascertain the authority of an individual purporting to act for a customer. If the associated person fails to take reasonable steps to learn the limits of an individual’s authority, and the futures commission merchant fails to take reasonable steps to prevent, detect, and correct such employee errors, complainants will not be denied recovery merely because they could have done a better job of protecting their own interest.
Commission Op. at 34,108. In support of this claim, the Commission cited its decision in Hunter v. Madda Trading Co., [1980-1982 Transfer Binder] Comm.Fut.L.Rep. (CCH) 1121,242 at 25,204 (CFTC Sept. 2, 1981).
The Commission’s reading of section 4d(2) is unpersuasive. Neither the express terms of the statute nor the legislative history of section 4d(2) buttresses the Commission’s assertions. Contrary to the Commission’s ill-defended claims in Hunter, section 4d(2) was intended for one purpose: to prevent an unscrupulous broker from commingling clients’ margin funds with his own and then using those funds to speculate for the broker’s own account, thereby imperiling his clients’ prospects of obtaining a refund of their margin deposits should the broker’s gambles fail. See 80 Cong.Rec. 6162, 6612-13, 7910-12 (1936); see also Craig v. Refco, Inc., 624 F.Supp. 944, 946-47 (N.D.Ill.1985) (recounting legislative history), aff'd, 816 F.2d 347 (7th Cir.1987); [753]*753Marchese v. Shearson Hayden Stone, Inc., 644 F.Supp. 1381, 1384 (C.D. Cal.1986) (same), aff'd, 822 F.2d 876 (9th Cir.1987). It does not reach every failure by a broker to act in accordance with a client’s orders.
Moreover, as the petitioners and amicus point out, the Commission’s construction of section 4d(2) would eviscerate section 4b, rendering nugatory its scienter requirement. For if the Commission’s interpretation of this section were correct, the innocent or negligent mishandling of client funds, which the Commission recognizes is immune from liability under section 4b in virtue of its scienter requirement, see Hunter, 1121,242 at 25,204 n. 8, would automatically generate liability under section 4d(2). Congress cannot have intended this irrational result. Hence, we reverse the Commission’s decision that Drexel and Ra-gan are liable under section 4d(2).
III. Conclusion
We deny Drexel and Ragan’s petition for review with regard to the Commission’s finding that the petitioners violated section 4b of the Commodity Exchange Act by dint of Ragan’s reckless compliance with Robinson’s orders without attempting to verify Robinson’s authority to trade Sansom’s account. The Commission was also correct in ruling that Sansom was not estopped from claiming injury. We find, however, that the Commission’s construction of section 4d(2) was erroneous. We therefore grant the petition for review insofar as it concerns the petitioners’ liability under that section. Finally, we remand this case to the Commission with instructions to consider whether Sansom failed to mitigate damages.14
So ordered.