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Commodity Futures Trading Commission 

CEA CASES 

NAME: HERALD E. GIBBS 

DOCKET NUMBER: 87 

DATE: SEPTEMBER 2, 1958 

DOCUMENT TYPE: COMPLAINT 

UNITED STATES DEPARTMENT OF AGRICULTURE 

BEFORE THE SECRETARY OF AGRICULTURE 

In re: Herald E. Gibbs, Respondent 

CEA Docket No. 87 

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

Act 

There is reason to believe that the respondent, Herald E. Gibbs, has violated 

the provisions of the Commodity Exchange Act (7 U.S.C., 1952 ed., Chapter 1), 

and the rules and regulations issued thereunder (17 CFR, Part 1). In accordance 

with the provisions of section 6(b) of the Commodity Exchange Act (7 U.S.C., 

1952 ed., § 9), this complaint and notice of hearing is issued stating the 

charges in that respect as follows: 

I 

Respondent Herald E. Gibbs, an individual whose address is 700 Bittersweet 

Place, Chicago, Illinois, 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 

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 

(A) On April 22, 1957, the respondent, acting as floor broker on an order 

received from E. F. Hutton and Company, a registered futures commission 

merchant, sold 10,000 bushels of old July 1957 wheat futures on the Chicago 

Board of Trade to one William J. Mallers, also a registered floor broker, at $ 

2.11 per bushel for the account of the said E. F. Hutton and Company, and 

purchased the same quantity of the same future at the same price for his 

personal account from the said William J. Mallers, the said trades being 

consummated by means of negotiation between the respondent and the said William 

J. Mallers, who acted for his personal account in each instance. 

(B) On April 24, 1957, the respondent, acting as floor broker on an order 

received from the said E. F. Hutton and Company, bought 5,000 bushels of old 

July 1957 wheat futures on the Chicago Board of Trade from the said William J. 

Mallers at $ 2.10 1/2 per bushel for the account of the said E. F. Hutton and 

Company, and sold the 

same quantity of the same future at the same price for his personal account to 

the said William J. Mallers, the said trades being consummated by means of 
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negotiation between the respondent and the said William J. Mallers, who acted 

for his personal account in each instance. 

The above trades were capable of being used for hedging transactions in 

interstate commerce in wheat or the products or by products thereof, or for 

determining the price basis of transactions in interstate commerce in wheat, or 

for delivering wheat sold, shipped, or received in interstate commerce. By 

reason of such transactions the respondent wilfully and knowingly, and without 

the prior consent of his principal, the said E. F. Hutton and Company, became 

the buyer with respect to a selling order of the said principal, and the seller 

with respect to a buying order of the said principal, in violation of section 

4b(D) of the Commodity Exchange Act (7 U.S.C., 1952 ed., s 6b(D)); and failed to 

execute futures trades openly and competitively by open outcry in the trading 

pit of the Chicago Board of Trade, in wilful violation of section 1.38 of the 

rules and regulations under the Commodity Exchange Act (17 CFR 1.38). 

IV 

In the transactions listed below, the respondent, having in hand orders from 

his principals, registered futures commission merchants, 

to purchase quantities of old July 1957 wheat futures on behalf of said 

principals, and other orders from such principals to sell quantities of old July 

1957 wheat futures on their behalf, executed such orders on the Chicago Board of 

Trade by selling quantities of the said future for the account of a principal to 

an opposite broker and, in each instance, purchasing the same quantity of the 

same future for the account of the same or a different principal from the 

opposite broker, the said trades being consummated by means of negotiation 

between the respondent and the respective opposite brokers. The dates, the 

principals for whom the respondent acted, the quantities sold and purchased, the 

prices, and the opposite brokers and opposite accounts were as follows: 

Date Bought Sold Opposite Opposite 

1957 (Bushels) (Bushels) Principal Price Broker Account 

4/22 10,000 Hutton $ 2.11 W. J. Mallers W. J. Mallers 

4/22 10,000 Goodbody 2.11 1/8 W. J. Mallers W. J. Mallers 

4/23 5,000 Goodbody 2.10 1/2 W. J. Mallers W. J. Mallers 

4/23 5,000 Hutton 2.10 1/2 W. J. Mallers W. J. Mallers 

4/23 20,000 Goodbody 2.11 W. J. Griffin W. J. Griffin 

4/23 20,000 Goodbody 2.11 W. J. Griffin W. J. Griffin 

4/23 5, 000 Hutton 2.10 A.A. Nolan, Jr. A.A. Nolan, Jr. 

4/23 5,000 Goodbody 2.10 A.A.Nolan, Jr. A.A. Nolan, Jr. 

The aforesaid trades were capable of being used for hedging transactions in 

interstate commerce in wheat or the products or by products thereof, or for 

determining the price basis of transactions 

in interstate commerce in wheat, or for delivering wheat sold, shipped, or 

received in interstate commerce. 

By reason of such transactions, the respondent filled orders by offset in 

wilful violation of section 4b(D) of the Commodity Exchange Act (7 U.S.C., 1952 

ed., § 6b(D)); entered into cross trades, in wilful violation of section 4c(A) 

of the Commodity Exchange Act (7 U.S.C., 1952 ed., § 6c(A)); and failed to 

execute futures trades openly and competitively by open outcry in the trading 

pit of the Chicago Board of Trade, in wilful violation of section 1.38 of the 

rules and regulations under the Commodity Exchange Act (17 CFR 1.38). 

Therefore, the said respondent, Herald E. Gibbs, is hereby notified to appear 

and be at a hearing to be held at 10:00 a.m., local time, on the 23rd day of 

October, 1958, in Room 1200, Board of Trade Building, 141 West Jackson 

Boulevard, Chicago, Illinois, before a referee designated to conduct such 

hearing, and then and there show cause, if any there be, why an order should not 
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be made suspending or revoking the registration of respondent Herald E. Gibbs as 

a floor broker and directing that all contract markets refuse all trading 

privileges to the said respondent for such period of time as may be determined. 

The respondent 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 that are 

not answered will be deemed admitted for the purpose of this proceeding. 

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

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

Done at Washington, D. C., this 

2nd day of September, 1958. 

/s/ True D. Morse 

True D. Morse 

Acting Secretary 

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