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Commodity Futures Trading Commission 

CEA CASES 

NAME: EDWARD A. COX, JR. AND GEORGE F. FREY, JR. 

DOCKET NUMBER: 192; 75-16 

DATE: JUNE 30, 1972 

DOCUMENT TYPE: COMPLAINT 

NOTE: LATER BECAME CFTC DOCKET # 75-16 

UNITED STATES DEPARTMENT OF AGRICULTURE 

BEFORE THE SECRETARY OF AGRICULTURE 

In re: Edward A. Cox, Jr., and George F. Frey, Jr., Respondents 

CEA Docket No. 192 

Complaint and Notice of Hearing Under Sections 6(b) and 6(c) of the Commodity 

Exchange Act 

There is reason to believe that the respondents, Edward A. Cox, Jr. and 

George F. Frey, Jr., have violated the Commodity Exchange Act (7 U.S.C. 1 et 

seq.), and the regulations made pursuant thereto (17 CFR, Chapter I), and in 

accordance with the provisions of sections 6(b) and 6(c) of the said act (7 

U.S.C. 9 and 13b), this complaint and notice of hearing is issued stating the 

charges in that respect as follows: 

I 

Respondent Edward A. Cox, Jr., an individual whose address is 48 Devonshire 

Drive, Oak Brooks, Illinois 60521 is now, and was at all times material to this 

complaint, a member of the Board of Trade of the City of Chicago and a 

registered floor broker under the Commodity Exchange Act. 

II 

Respondent George F. Frey, Jr., an individual whose business address is 1730 

Board of Trade Building, Chicago, Illinois 60604, 

is now, and was at all times material to this complaint, a member of the Board 

of Trade of the City of Chicago and a registered floor broker under the 

Commodity Exchange Act. 

III 

The Board of Trade of the City of Chicago, hereinafter referred to as the 

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

of trade duly designated as a contract market under the Commodity Exchange Act. 

IV 

The futures transactions and positions referred to in this complaint relate 

to the May 1971 wheat future on the Board of Trade. The last day for trading in 

the May 1971 wheat future on the Board of Trade was May 19, 1971. 

V 

The futures transactions and positions of the respondents referred to in this 

complaint were speculative and did not constitute hedging transactions or 

positions. 

VI 
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At all times material to this complaint, the stocks of deliverable soft red 

wheat and of yellow hard wheat in deliverable position in Chicago constituted 

substantially all of the wheat available for delivery on the May 1971 wheat 

future on the Board of Trade. As of May 19, 1971, such stocks amounted to 

approximately 780,000 bushels. 

VII 

On May 19, 1971, at the beginning of trading on the Board of Trade, the 

positions owned or controlled by the respondents in the May 1971 wheat future 

totalled 2,200,000 bushels, representing 46.1 percent of the total open 

interest. Of such holdings, 1,440,000 bushels were held in respondent Cox's 

name, including 30,000 bushels against which notices that delivery would be made 

on May 19, 1971, had been received and stopped, and 760,000 bushels were held in 

respondent Frey's name. Between 11:10 and 11:31 a.m. on that day, 10,000 

bushels of such holdings held in respondent Frey's name were sold by another 

floor broker at a price of $ 1.69 per bushel. Subsequently, at 11:31 a.m. on 

that day, respondents' holdings in the May 1971 wheat future represented 97 

percent of the total open interest. 

VIII 

During the period from May 7 through May 18, 1971, respondent Cox took 

delivery of 550,000 bushels of wheat in satisfaction of a part of a long 

position held by him in the May 1971 wheat future on the Chicago Board of Trade 

and, in addition, received and stopped notices that delivery would be made to 

him of an additional 30,000 bushels on May 19, 1971. Such deliveries 

constituted all of the wheat delivered on the May 1971 wheat future up until May 

19, 1971, and as a result of taking such delivery and stopping such delivery 

notices, respondent Cox, as of May 19, 1971, owned or controlled approximately 

75 percent of the total stocks of wheat available in Chicago for delivery on the 

May 1971 wheat futures contract. 

IX 

At all times on May 19, 1971, there was an insufficient supply of deliverable 

wheat in deliverable position not owned or controlled by the respondents, and of 

long May wheat futures held by persons other than the respondents to permit 

holders of short contracts in the May 1971 wheat future to satisfy such short 

contracts without purchasing from the respondents May wheat futures or 

deliverable wheat. Such fact was known to the respondents. 

X 

On May 19, 1971, the price of the May 1971 wheat future ranged from $ 1.61 

1/2 to $ 1.70 per bushel, and expired at a price of $ 1.70 per bushel. This 

last price was within 3/4 of a cent of the highest price permitted under the 

rules of the Board of Trade for the May 1971 wheat future on May 19, 1971. 

XI 

From about 11:31 a.m. on May 19, 1971, until the expiration of the May 1971 

wheat future at 12:00 noon that day, respondents sold a total of 2,020,000 

bushels of May 1971 wheat futures at a price of $ 1.70 per bushel, of which 

sales 1,495,000 bushels were made for the account of respondent Cox and 525,000 

bushels for the account of respondent Frey. 

XII 

The respondents, acting in accordance with an understanding or arrangement 

between them initiated and carried out the transactions described above for the 

purpose and with the intent of causing prices 
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in the May 1971 wheat future which were arbitrary and artificial, and demanded 

and received such prices in the May 1971 wheat future. By reason thereof, the 

respondents attempted to manipulate and did in fact manipulate the price of a 

commodity for future delivery on or subject to the rules of the Board of Trade 

in wilful violations of sections 6(b) and (c) and 9 of the Commodity Exchange 

Act (7 U.S.C. 9, 13b and 13). 

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

served upon the respondents and this proceeding shall be governed by sections 

0.1, 0.2, 0.4(b), 0.5 through 0.22 and 0.28 of the rules of practice under the 

Commodity Exchange Act (17 CFR 0.1, 0.2, 0.4(b), 0.5 through 0.22, 0.28). 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 purpose of this proceeding. Failure to 

file an answer will constitute an admission of all 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 this complaint are admitted likewise shall 

constitute a waiver of hearing unless a hearing is requested. The 

respondents are hereby notified that unless a hearing is waived, a hearing will 

be held at 10:00 a.m., local time, on August 9, 1972, 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 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 registrations of the respondents as 

floor brokers. 

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. 

June 30, 1972 

[SEE SIGNATURE IN ORIGINAL] 

Richard E. Lyng 

Assistant Secretary 

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