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Commodity Futures Trading Commission 

CEA CASES 

NAME: KROLL, DALON & CO., INC. AND STANLEY KROLL 

CITATION: 29 Agric. Dec. 877 

DOCKET NUMBER: 173 

DATE: AUGUST 12, 1970 

DOCUMENT TYPE: DECISION AND ORDER 

(No. 13,337) 

In re KROLL, DALON & CO., INC. and STANLEY KROLL. CEA Docket No. 173. Decided 

August 12, 1970. 

Financial requirements -- Segregation of funds -- Cease and desist -- 

Stipulation

Respondents consented to the issuance of an order requiring them to cease and 

desist from failing to meet the minimum financial requirements of the act and 

failing to segregate customers' funds. 

Earl L. Saunders for Commodity Exchange Authority. 

Respondents pro se. 

Decision by Thomas J. Flavin, Judicial Officer

PRELIMINARY STATEMENT

This is an administrative proceeding under the Commodity Exchange Act (7 

U.S.C., Chapter 1, 1964 ed., as amended, Supp. IV, 1969), instituted by a 

complaint and notice of hearing issued on May 14, 1970, under section 6(c) of 

the Act (7 U.S.C. Supp. IV, 13b). The respondents are charged with violating 

sections 4d and 4f of the Act (7 U.S.C. Supp. IV, 6d, 6f), and sections 1.17 (34 

F.R. 599), 1.20 and 1.21 of the regulations thereunder (17 CFR 1.20, 1.21). 

No hearing has been held in this proceeding. The respondents have filed a 

stipulation under section 0.4(b) of the rules of practice (17 CFR 0.4(b)) in 

which they (1) withdraw their answer 

previously filed, (2) admit the facts hereinafter set forth in paragraphs 1 and 

2 of the Findings of Fact, (3) admit, for the purposes of this proceeding and 

for such purposes only, the facts hereinafter set forth in paragraphs 3 and 4 of 

the Findings of Fact, (4) waive the report of the Hearing Examiner, and (5) 

consent to the entry of the order contained herein. 

FINDINGS OF FACT

1. Respondent Kroll, Dalon & Co., Inc., is now, and was at all times material 

herein, a corporation organized and existing under the laws of the State of New 

York, with offices at 25 Broad Street, New York, New York. At all times 

material herein up to on or about October 15, 1969, the said corporation engaged 

as futures commission merchant within the meaning of the term "futures 

commission merchant" as used in the Commodity Exchange Act. Throughout the year 

1969, the said corporation was registered as futures commission merchant under 

the Commodity Exchange Act. In accordance with the provisions of section 4f of 

the said Act (7 U.S.C. 4f, Supp. IV, 1969) and section 1.16 of the regulations 

thereunder (17 CFR 1.16), such registration expired on December 31, 1969, and 

the said corporation is no longer registered under the Commodity Exchange Act. 
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2. Respondent Stanley Kroll, an individual whose business address is the same 

as that of the corporate respondent, is now, and was at all times material 

herein, president of the corporate respondent. At all such times, the 

operations of the corporate respondent were under the direction and control of 

respondent Stanley Kroll. 

3. (a) At the times hereinafter stated, the respondent corporation, in the 

regular course of its business as futures commission merchant, carried accounts 

of customers who traded in commodity futures on contract markets subject to the 

provisions of the Commodity Exchange Act and regulations. Such accounts, the 

trading therein, and the handling and disposition of funds in connection 

therewith, were subject to the provisions of the said Act and regulations. At 

all such times, the corporate respondent had to its credit with banks or other 

depositories sums of money in varying amounts, held in segregated accounts and 

identified as customers' funds, representing deposits of margin by and trading 

profits accruing to such customers. 

(b) On 21 business days between July 14 and August 26, 1969, both inclusive, 

the respondent corporation was undersegregated in amounts ranging from $ 282.62 

on August 12 to $ 20,505.67 on August 15 -- that is, the total amount of 

customers' funds held in segregation as above described, was insufficient, by 

the aforesaid sums, to pay all credits and equities due to such customers. 

4. As of August 31, 1969, the respondent corporation, while engaged as a 

registered futures commission merchant under the Commodity Exchange Act, failed 

to meet the minimum financial requirements prescribed by section 1.17 of the 

regulations (34 F.R. 599) issued by the Secretary of Agriculture under the said 

Act. According to the report of the respondent corporation's financial 

condition (Form 1-FR) which it filed with the Commodity Exchange Authority as of 

August 31, 1969, the respondent corporation lacked approximately $ 265,000 of 

having enough working capital to meet such minimum financial requirements. 

CONCLUSIONS

By reason of the facts set forth in the Findings of Fact, it is concluded 

that, as charged in the complaint, the respondents violated sections 4d and 4f 

of the Commodity Exchange Act and sections 1.17, 1.20 and 1.21 of the 

regulations thereunder. The complainant states that the administrative 

officials of the Commodity Exchange Authority have carefully considered the 

stipulation submitted by the respondents. The administrative officials believe 

that the prompt entry of the proposed order would constitute a satisfactory 

disposition of this case, serve the public interest and effectuate the purposes 

of the Act. The complainant recommends, therefore, that the stipulation be 

accepted and the proposed order be issued. It is concluded that the 

complainant's recommendation should be adopted. 

ORDER

Respondent Kroll, Dalon & Co., shall cease and desist from: (1) failing to 

treat and deal with customers' funds as belonging to such customers as required 

by section 4d of the Commodity Exchange Act (7 U.S.C. 6d, Supp. IV, 1969) and 

the regulations thereunder; (2) failing to hold customers' funds in segregated 

accounts as required by section 4d of the Commodity Exchange Act (7 U.S.C. 6d, 

Supp. IV, 1969) and the regulations thereunder; and (3) engaging as futures 

commission merchant within the 

meaning of the Commodity Exchange Act without meeting the minimum financial 

requirements prescribed by section 1.17 of the regulations (34 F.R. 559) issued 

under the Commodity Exchange Act. 

Respondent Stanley Kroll shall cease and desist from wilfully causing, 

aiding, counselling, commanding or inducing respondent Kroll, Dalon & Co., Inc., 

or any other futures commission merchant, to engage in any act or practice from 
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which the said respondent corporation is directed to cease and desist by this 

order. 

This order shall become effective on the date of service of a copy thereof 

upon respondents. 

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