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Commodity Futures Trading Commission 

CEA CASES 

NAME: BEAR, STEARNS & CO. AND NORMAN G. FINE 

DOCKET NUMBER: 232 

DATE: JUNE 25, 1974 

DOCUMENT TYPE: COMPLAINT 

UNITED STATES DEPARTMENT OF AGRICULTURE 

BEFORE THE SECRETARY OF AGRICULTURE 

In re: Bear, Stearns & Co. and Norman G. Fine, Respondents 

CEA Docket No. 232 

Complaint and Notice of Hearing Under the Commodity Exchange Act 

There is reason to believe that the respondents have violated the Commodity 

Exchange Act as amended (7 U.S.C. Chapter I), and, in accordance with the 

provisions of sections 6(b), and 6(c) of the Commodity Exchange Act (7 U.S.C. 9, 

13b), this Complaint and Notice of Hearing is issued stating the charges in that 

respect as follows. 

I 

(a) Bear, Stearns & Co., a partnership organized in the state of New York 

with its principal place of business at 55 Water Street, New York, New York, is 

now and was at all times material herein a registered futures commission 

merchant under the Commodity Exchange Act. 

(b) Norman G. Fine, an individual whose business address is the same as that 

of Bear, Stearns & Co., is now and was at all times material herein a general 

partner of respondent Bear, Stearns & Co. and was responsible for the 

management, direction and control of its activities relating to the trading of 

customers in regulated commodities. 

II 

Respondents are now and were at all times material herein engaged in the 

business of futures commission merchant and, in the regular course of such 

business, carried accounts of customers who traded in commodity futures on 

contract markets subject to the provisions of the Commodity Exchange Act and the 

regulations thereunder. Such accounts, the trading therein, and the handling 

and disposition of funds in connection therewith, were subject to the provisions 

of the Act and regulations. At all such times, the respondent firm had to its 

credit with banks or other depositories, 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. 

III 

During the period from December 17, 1973 to February 27, 1974, respondents 

failed on 24 business days to make any computation or permanent record, as of 

the close of the market on each such business day, of the amount of money, 

securities, and property required to be held in segregated account in order to 

pay all credits and equities due to its customers, as provided in section 1.32 

of the regulations under the Commodity Exchange Act (17 CFR 1.32). 

IV 
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On February 11, 1974, February 12, 1974, March 8, 1974, March 11, 1974, and 

April 3, 1974, the respondent firm was undersegregated; that is, on the days 

mentioned the total amount of customers' funds held in segregation as described 

in paragraph II was less than the amount necessary to pay all credits and 

equities due to such customers. As of the dates mentioned, such deficits 

amounted to approximately $ 133,730, $ 1,207, $ 45,133, $ 100,040, $ 48,667 

respectively. 

V 

On December 13, 1973, Mr. T. Reed McMinn, Director, Eastern Region, Commodity 

Exchange Authority sent to respondents a letter calling attention to the fact 

that as of November 26, 1973, the firm had not prepared a daily segregation 

record for any day in November 1973 up to that date. The letter stated that its 

purpose was to notify the futures commission merchant and its general partner, 

Norman G. Fine, of these findings and "to afford your firm the opportunity to 

take the necessary corrective action in order to achieve compliance with 

[section 1.32 of the regulations under the Commodity Exchange Act]." Such letter 

was received by respondents on December 17, 1973. 

VI 

By reason of the facts alleged in this Complaint, the respondents willfully 

violated section 4d(2) and 4g of the Commodity Exchange Act (7 U.S.C. 

6d(2), 6g) and sections 1.20(a), 1.23 and 1.32 of the regulations of the 

Secretary of Agriculture thereunder (17 CFR 1.20(a), 1.23, 1.32). 

WHEREFORE, it is hereby ordered that this Complaint and Notice of Hearing be 

served on the respondents. The respondents will have twenty (20) days after the 

receipt of this Complaint in which to file with the Hearing Clerk, United States 

Department of Agriculture, Washington, D.C. 20250, an answer with an original 

and four copies, fully and completely stating the nature of the defense and 

admitting or denying, specifically and in detail, each allegation of this 

Complaint. Allegations not answered will be deemed admitted for the purposes of 

this proceeding. Failure to file an answer will constitute an admission of all 

the allegations of this Complaint and a waiver of hearing. The filing of an 

answer in which all of the material allegations of fact contained in the 

Complaint are admitted likewise shall constitute a waiver of hearing unless a 

hearing is requested. The respondents are hereby notified that unless hearing 

is waived, a hearing will be held at a time and place to be specified later, 

before an Administrative Law Judge 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 appropriate order should not be issued in accordance with the 

Commodity Exchange Act, (1) prohibiting the respondents from trading on or 

subject to the rules of any contract market, and directing that all contract 

markets 

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

be determined, (2) directing that the respondents shall cease and desist from 

violating the Commodity Exchange Act in the manner alleged herein, and (3) 

suspending or revoking the registration of respondent Bear, Stearns & Co., as 

futures commission merchant. 

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. 

June 25 1974 

[SEE SIGNATURE IN ORIGINAL] 

RICHARD L. FELTNER 

Assistant Secretary 
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