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Commodity Futures Trading Commission 

CEA CASES 

NAME: JAMES E. BAGGOT JR., DONALD W. MORRISON, AND BAGGOT AND MORRISON 

DOCKET NUMBER: 93 

DATE: APRIL 27, 1960 

DOCUMENT TYPE: COMPLAINT 

UNITED STATES DEPARTMENT OF AGRICULTURE 

BEFORE THE SECRETARY OF AGRICULTURE 

In re: James E. Baggot, Jr. Donald W. Morrison, and Baggot and Morrison, 

Respondents 

CEA Docket No. 93 

Complaint and Notice of Hearing Under Section 6(b) of the Commodity Exchange 

Act 

There is reason to believe that James E. Baggot, Jr., and Donald W. Morrison, 

doing business as Baggot and Morrison, have violated the Commodity Exchange Act 

(7 U.S.C. 1958 ed., Chapter 1) and the rules and regulations made pursuant 

thereto, and in accordance with the provisions of section 6(b) of said act (7 

U.S.C. 1958 ed., § 9), this complaint and notice of hearing is issued stating 

the charges in that respect as follows: 

I 

Respondents James E. Baggot, Jr., and Donald W. Morrison, individuals, are 

now and were at all times material to this complaint partners, doing business 

under the firm name of Baggot and Morrison, with offices and a place of business 

at 141 West Jackson Boulevard, Chicago, Illinois. The said partnership is now 

and was at all such times a registered futures commission merchant under the 

Commodity Exchange Act. Each of the said individual respondents is now and was 

at all such times a member of the Board of Trade of the City of Chicago, and 

since 

June 29, 1959, respondent James E. Baggot, Jr., has been a registered floor 

broker under the Commodity Exchange Act. 

II 

The Board of Trade of the City of Chicago, hereinafter called the Chicago 

Board of Trade, is now and was at all times material to this complaint a duly 

designated contract market under the Commodity Exchange Act. 

III 

At the times hereinafter stated, respondent Baggot and Morrison, in the 

regular course of the partnership business, had on its books accounts of 

customers who were trading in commodities for future delivery on or subject to 

the rules of the Chicago Board of Trade. Such accounts, the trading therein, 

and the handling and disposition of funds in connection therewith, were subject 

to the provisions of the Commodity Exchange Act and the rules and regulations 

issued thereunder. At all such times, respondent Baggot and Morrison had to its 

credit with a bank and with the Board of Trade Clearing Corporation, money and 

securities in varying amounts, held in segregated accounts and identified as 

customers funds, representing deposits of margin by and trading profits 

belonging to such customers. 
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IV 

On the following days, respondent Baggot and Morrison was in an 

undersegregated condition, that is, the total amount of customers' funds held in 

segregation by the firm, as described in paragraph III, was insufficient to pay 

all credits and equities due to such customers: 

(a) On October 31, 1958, respondent Baggot and Morrison was undersegregated 

in the amount of approximately $ 5,620. The said deficit was called to the 

attention of respondents James E. Baggot, Jr., and Donald W. Morrison by the 

Commodity Exchange Authority and the matter was discussed with the said 

respondents. 

(b) On each business day between March 30, 1959, and April 9, 1959, both 

inclusive, respondent Baggot and Morrison was undersegregated in amounts ranging 

from approximately $ 736 to approximately $ 5,281. The said deficits were 

called to the attention of respondents James E. Baggot, Jr., and Donald W. 

Morrison by a representative of the Commodity Exchange Authority, who again 

discussed with the said respondents the necessity for maintaining sufficient 

funds in segregation to meet the requirements of the Commodity Exchange Act and 

the pertinent regulations. 

(c) On forty (40) business days between October 27, 1959, and December 31, 

1959, both inclusive, respondent Baggot and Morrison was undersegregated in 

amounts ranging from approximately $ 291 to approximately $ 37,416. Within this 

period, the firm was continuously undersegregated from October 27 through 

December 1, 1959, and on each day during November 1959 the amount of 

undersegregation exceeded $ 19,000. Respondents James E. Baggot, Jr., and 

Donald W. Morrison were aware of such undersegregated conditions at all times 

during such periods. 

(d) On February 29, 1960, respondent Baggot and Morrison was undersegregated 

in the amount of approximately $ 498. 

V 

By reason of the acts described in paragraph IV, respondents James E. Baggot, 

Jr., Donald W. Morrison, and Baggot and Morrison knowingly failed to treat and 

deal with customers' funds as belonging to such customers, knowingly failed to 

segregate and to account separately for such funds, and knowingly used funds to 

margin and guarantee the trades and secure and extend the credit of customers 

other than those for whom such funds were held, in wilful violation of section 

4d(2) of the 

Commodity Exchange Act (7 U.S.C. 1958 ed., § 6d(2)), and sections 1.20, 1.21, 

and 1.22 of the rules and regulations (17 CFR 1.20, 1.21, 1.22). 

Wherefore, it is hereby ordered that this complaint and notice of hearing be 

served upon each of the said respondents. The respondents will have twenty (20) 

days after the receipt of this notice of hearing in which to file with the 

Hearing Clerk, United States Department of Agriculture, Washington 25, D.C., an 

answer with an original and five copies, fully and completely stating the nature 

of the defense and admitting or denying, specifically and in detail, each 

material and relevant allegation of this complaint. Allegations not answered 

will be deemed admitted for the purpose of this proceeding. Failure to file an 

answer will constitute an admission of all the material allegations of this 

complaint and a waiver of hearing. The respondents are hereby notified that 

unless hearing is waived, either expressly or by failure to file an answer and 

request a hearing, a hearing will be held at 10:00 a.m., local time, on the 23rd 

day of June, 1960, in Chicago, Illinois, at a place therein to be specified 

later, before a referee designated to conduct such hearing. At such hearing the 

respondents will have the right to appear and show cause, if any there be, why 

an order should not be made 
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suspending or revoking the registration of respondent Baggot and Morrison as a 

futures commission merchant and the registration of respondent James E. Baggot, 

Jr., as a floor broker, and directing that all contract markets refuse all 

trading privileges to all the respondents for such period of time as may be 

determined. 

It is ordered that this complaint and notice of hearing be served on the 

respondents at least twenty (20) days prior to the date set for hearing. 

Done at Washington, D.C., 

April 27th , 1960. 

/s/ Clarence L. Miller 

Clarence L. Miller 

Assistant Secretary 

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