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Commodity Futures Trading Commission 

CEA CASES 

NAME: WALSTON & CO., INC., PAT G. NOEL, AND CARLTON M. SMITH 

CITATION: 24 Agric. Dec. 1289 

DOCKET NUMBER: 130 

DATE: OCTOBER 7, 1965 

DOCUMENT TYPE: DECISION AND ORDER 

(No. 10,152) 

In re WALSTON & CO., INC., PAT G. NOEL, AND CARLTON M. SMITH. CEA Docket No. 

130. Decided October 7, 1965. 

Suspension of registration -- Denial of trading privileges -- Stipulation as 

to corporate respondent

Respondent Walston & Co., Inc., consented to the issuance of an order 

suspending its registration as futures commission merchant for 15 days and 

denying trading privileges to it for a like period, these sanctions to be held 

in abeyance, for deceiving customers by selectively closing out offsetting long 

and short positions of such customers. 

Mr. Earl L. Saunders for Commodity Exchange Authority. 

Respondent Walston & Co., Inc. pro se. 

Decision by Thomas J. Flavin, Judicial Officer

DECISION AND ORDER WITH RESPECT TO WALSTON & CO., INC.

PRELIMINARY STATEMENT

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

U.S.C. 1 et seq.), instituted by a complaint and notice of hearing issued under 

section 6(b) of the act (7 U.S.C. 9) by the Assistant Secretary of Agriculture. 

Respondent Walston & Co, Inc. is one of three respondents in this proceeding. 

The respondents are charged with deceiving certain customers of the corporate 

respondent in wilful violation of section 4b of the Commodity Exchange Act (7 

U.S.C. 6b), and with applying and closing out offsetting long and short 

positions of such customers in wilful violation of section 1.46 of the 

regulations issued under the act (17 CFR 1.46). 

No hearing has been held with respect to any of the respondents. On 

September 29, 1965, respondent Walston & Co., Inc. submitted for filing in the 

record, under section 0.4(b) of the Rules of Practice (17 CFR 0.4(b)), a 

stipulation in which it admits the facts hereinafter set forth, waives hearing 

on the charges in the complaint, and consents to the entry of the order 

contained herein. 

FINDINGS OF FACT

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

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

Delaware, with its principal office and place of business at 74 Wall Street, New 

York, New York, and branch offices at Houston, Texas, and various other cities 

throughout the United States. The said corporation is now and was at all such 

times a clearing member of the Chicago Board of Trade and various other contract 

markets, and a registered futures commission merchant under the Commodity 
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Exchange Act, trading in commodity futures on such contract markets for the 

accounts of its customers. 

2. The respondent Pat G. Noel, an individual whose address is 202 Renoir 

Drive, Houston, Texas, was at all times material herein and until April 23, 

1965, employed by the corporate respondent as an account executive in its 

Houston, Texas, office. 

3. Respondent Carlton M. Smith, an individual whose address is 7900 West 

Heimer Street, Houston, Texas, was at all times material herein and until July 

15, 1964, employed by the corporate respondent as an account executive in its 

Houston, Texas, office. 

4. The contracts referred to herein were contracts for the purchase or sale 

of soybean futures on the Chicago Board of Trade, a duly designated contract 

market under the Commodity Exchange Act. Such contracts could have been used 

for hedging transactions in interstate commerce in soybeans or the products 

or byproducts thereof, or for determining the price basis of transactions in 

interstate commerce in such commodity, or for delivering such commodity sold, 

shipped, or received in interstate commerce. 

5. During the period from on or about September 16, 1963, through on or about 

May 5, 1964, by reason of the actions and instructions of respondents Pat G. 

Noel and Carlton M. Smith, acting in their capacities as account executives of 

respondent Walston & Co., Inc., in its Houston, Texas, office, respondent 

Walston & Co., Inc., selectively closed out certain offsetting long and short 

soybean futures contracts for the accounts of certain customers (Accounts No. 

76-01-865, 76-01-756, 76-02-131 and 76-02-079). The selective closing out of 

such contracts caused larger profits or smaller losses than actually existed to 

be reported to such customers, thereby for a period of time concealing from each 

of such customers the actual amount of his losses. n1 

n1 As indicated in the Preliminary Statement, this Decision and Order is 

with respect only to respondent Walston & Co., Inc., and the facts stated 

in the Findings of Fact are verbatim the admissions of fact contained in 

the stipulation filed by respondent Walston & Co., Inc. Such findings, 

however, have no binding effect on respondents Noel and Smith. 

CONCLUSIONS

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

that respondent Walston & Co., Inc., in connection with the disposition and 

execution of contracts of sale of a commodity for future delivery on or subject 

to the rules of a contract market, and in regard to acts of agency performed 

with respect to such contracts, deceived the persons on behalf of whom such 

contracts were made in wilful violation of section 4b of the Commodity Exchange 

Act (7 U.S.C. 6b), and that respondent Walston & Co., Inc. applied and closed 

out offsetting long and short positions of such persons in wilful violation of 

section 1.46 of the regulations (17 CFR 1.46). 

The complainant states that the administrative officials of the Commodity 

Exchange Authority have carefully considered the proposed stipulation and the 

terms of the order to which respondent Walston & Co., Inc. proposes to consent. 

It is the opinion of the administrative officials that in the circumstances the 

proposed order would be adequate, and that the prompt entry of such an order 

would constitute a satisfactory disposition of the case as against the said 

respondent, serve the public interest, and effectuate 

the purposes of the Commodity Exchange Act. The complainant recommends, 

therefore, that the stipulation and waiver be accepted and that the proposed 

order be issued. It is so concluded. 
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ORDER

The registration of respondent Walston & Co., Inc., as a futures commission 

merchant under the Commodity Exchange Act is hereby suspended for a period of 15 

days, and all contract markets are hereby directed to refuse all trading 

privileges to the said Walston & Co., Inc., for the said period of 15 days, 

Provided, However, that the aforesaid suspension of registration and refusal of 

trading privileges shall not become effective unless, after complaint, and 

hearing in accordance with established procedure, respondent Walston & Co., 

Inc., should be found to have violated the Commodity Exchange Act within one 

year from the date of entry of this order, in which event the Secretary of 

Agriculture may, without further notice to respondent Walston & Co., Inc., issue 

a supplemental order making effective forthwith the aforesaid suspension of 

registration and refusal of trading privileges. 

A copy of this Decision and Order shall be served on each of the respondents 

and on each contract market. 

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