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Commodity Futures Trading Commission 

CEA CASES 

NAME: FRONTIER COMMODITIES, INC., AND EDWIN J. SCHUFFMAN 

DOCKET NUMBER: 191 

DATE: JUNE 1, 1972 

DOCUMENT TYPE: COMPLAINT 

UNITED STATES DEPARTMENT OF AGRICULTURE 

BEFORE THE SECRETARY OF AGRICULTURE 

In re: Frontier Commodities, Inc., and Edwin J. Schuffman, Respondents 

CEA Docket No. 191 

Complaint and Notice of Hearing Under the Commodity Exchange Act 

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

Exchange Act (7 U.S.C. 1 et seq.) and the regulations made pursuant thereto, and 

this complaint and notice of hearing is issued stating the charges in that 

respect as follows: 

I 

Respondent Frontier Commodities, Inc., a Tennessee corporation with its 

principal offices at 4110 Hillsboro Road, Nashville, Tennessee, was at all times 

material herein, a registered futures commission merchant under the Commodity 

Exchange Act. The respondent corporation is no longer a registrant under the 

Commodity Exchange Act. At all times material herein up until on or about 

February 9, 1972, the name of the respondent corporation was Frontier 

Securities, Inc. 

II 

Respondent Edwin J. Schuffman, an individual whose address is 532 Glengarry 

Drive, Nashville, Tennessee, is now, and was at all times material herein, the 

president and a director of the respondent 

corporation and the owner of 50 per cent of its capital stock. At all such 

times, respondent Schuffman had responsibility for the management,direction and 

control of the respondent corporation. 

III 

At all times material herein, the respondent corporation, in the regular 

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

customers who traded in commodity futures. 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, the respondent corporation had to its 

credit with a bank or other depository sums of money in varying amounts held in 

segregated account and identified as customers' funds, representing deposits of 

margin by and trading profits accruing to such customers. 

IV 

On January 7, 10, 12, 13, 18 and 31 and February 1, 2, 3 and 4, 1972, the 

respondent corporation was undersegregated within the range of $ 1,223.23 to $ 

30,988.30 -- that is, on the ten days mentioned the total amount of customers' 

funds held in segregation by the respondent corporation, as described in 
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paragraph III hereof, was from $ 1,223.23 to $ 30,988.30 less than the amount 

necessary to pay all credits and equities due to such customers. 

V 

During the period from October 31, 1971 through January 18, 1972, the 

respondent corporation engaged as a registered futures commission merchant under 

the Commodity Exchange Act while failing to meet the minimum financial 

requirements prescribed by section 1.17 of the regulations (17 CFR 1.17) issued 

by the Secretary of Agriculture under section 4f of the Act (7 U.S.C. 6f). The 

respondent corporation lacked $ 18,727.17 on October 31, 1971 and $ 109,528.42 

on January 18, 1972, of having enough working capital to meet such minimum 

financial requirements. 

VI 

Under the regulations issued pursuant to the Commodity Exchange Act (17 CFR 

1.10), the respondent corporation was obligated at all times material herein to 

prepare a written computation of its net worth at least once each month, and 

whenever any such computation showed, or the respondent corporation knew or had 

reason to believe, that its net worth had declined 20 percent or more from its 

net worth as shown in the report of its financial condition which it filed with 

the Commodity Exchange Authority as of September 30, 1971, the respondent 

corporation was obligated to notify immediately the Commodity Exchange Authority 

thereof. The respondent firm's computations of its net worth as of November 30 

and December 31, 1971, showed that its net worth had declined more than 20 

percent of 

its net worth as shown in its financial report as of September 30, 1971, but the 

respondent corporation failed or refused to notify the Commodity Exchange 

Authority thereof, as required under the above-cited section of the regulations. 

VII 

Under the regulations issued pursuant to the Commodity Exchange Act (17 CFR 

15.00(b) and (c), 17.00), the respondent corporation was obligated during the 

period specified below to report to the Commodity Exchange Authority for each 

business day with respect to any customer's account on its books which showed a 

position of 25 contracts or more in a single pork belly future, and with respect 

to any customer's account on its books which showed a position of 200,000 

bushels or more in a single soybean future. On December 14, 15, 20, 21, 1971 

and January 5, 6, 7, 10, 14, 17, 18, 19, 26, 31, and February 1, 1972, the 

respondent corporation carried customers' accounts which had such reportable 

positions, but the respondent corporation failed or refused to report to the 

Commodity Exchange Authority with respect to such accounts, as required under 

the above-cited sections of the regulations. 

VIII 

By reason of the facts alleged in this complaint, the respondents violated 

sections 4d, 4f, 4g and 4i of the Commodity Exchange 

Act (7 U.S.C. 6d, 6f, 6g, 6i) and sections 1.10, 1.17, 1.20, 1.21, 1.22, 15.00 

and 17.00 of the regulations thereunder (17 CFR 1.10, 1.17, 1.20, 1.21, 1.22, 

15.00, 17.00). 

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, 
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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 10:00 a.m., local time, on July 19, 1972, in Nashville, Tennessee, 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 directing that the respondents shall cease and desist 

from violating the Act and regulations in the manner alleged herein. 

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 1, 1972 

[SEE SIGNATURE IN ORIGINAL] 

Richard E. Lyng 

Assistant Secretary 

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