Page 1 

Commodity Futures Trading Commission 

CEA CASES 

NAME: HENRY H. CATE, JOHN J. BUTERIN, AND E. F. HUTTON & COMPANY 

DOCKET NUMBER: 90 

DATE: JULY 30, 1959 

DOCUMENT TYPE: COMPLAINT 

UNITED STATES DEPARTMENT OF AGRICULTURE 

BEFORE THE SECRETARY OF AGRICULTURE 

In re: Henry H. Cate, John J. Buterin, and E. F. Hutton & Company, Respondents 

CEA Docket No. 90 

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

Act 

There is reason to believe that respondents Henry H. Cate and John J. Buterin 

attempted to manipulate and did manipulate the price of a commodity for future 

delivery on or subject to the rules of a board of trade, and deceived or 

attempted to deceive customers in regard to orders or contracts for the sale of 

a commodity for future delivery on or subject to the rules of a contract market, 

in wilful violation of the Commodity Exchange Act (7 U.S.C. 1958 ed., Chapter 

1). There is also reason to believe that respondent E. F. Hutton & Company, 

because of its responsibility as the employer of respondents Cate and Buterin, 

and its responsibility as a registered futures commission merchant and a 

clearing member of the Chicago Board of Trade, also attempted to manipulate and 

did manipulate the price of a commodity for future delivery on or subject to the 

rules of a board of trade, in wilful violation of 

the said act. In accordance with section 6(b) of the said act (7 U.S.C. 1958 

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

that respect as follows: 

I 

Respondent Henry H. Cate an individual whose address is 111 West 10th Street, 

Kansas City, Missouri, was at all times material to this complaint an agent and 

employee of respondent E. F. Hutton & Company in its Kansas City office. 

II 

Respondent John J. Buterin, an individual whose address is 8229 Hamilton 

Street, Overland Park, Kansas, was at all times material to this complaint an 

agent and employee of respondent E. F. Hutton & Company in its Kansas City 

office. 

III 

Respondent E. F. Hutton & Company, hereinafter called Hutton, is a 

partnership with offices at 61 Broadway, New York 6, New York, and 111 West 10th 

Street, Kansas City, Missouri. The said respondent is now and has been at all 

times material to this complaint a 

clearing member of the Chicago Board of Trade and a registered futures 

commission merchant under the Commodity Exchange Act. 
Page 2 

IV 

The Chicago Board of Trade is now and has been at all times material to this 

complaint a duly designated contract market under the Commodity Exchange Act. 

V 

The transactions hereinafter described were carried out under the direction 

and supervision and by means of the acts of the said individual respondents in 

their capacities as agents and employees of the respondent partnership. 

Respondent Hutton, in its capacity as a futures commission merchant and clearing 

member, and as the employer of the individual respondents, was aware at all 

times of the results of the acts of the said individual respondents, executed 

the transactions ordered by them, cleared such transactions, carried the 

resulting positions on its books, and financed the wheat received on long 

positions in March 1959. Respondent Hutton was able at all times to control, 

change, and 

direct the acts of the individual respondents insofar as they pertained to 

transactions made through respondent Huttons positions carried on the books of 

respondent Hutton, and deliveries received and made pursuant to such positions. 

VI 

Between December 1958 and April 1959, respondents Cate and Buterin, as agents 

for respondent Hutton, engaged in active solicitation and acceptance of orders 

from customers for speculative transactions in March and May 1959 wheat futures 

on the Chicago Board of Trade, which orders were executed through the facilities 

of respondent Hutton. As the result thereof, respondent Hutton traded 

extensively in such futures during the said period for the accounts of such 

customers, and for agents and employees of the said firm, and developed large, 

concentrated, and dominant positions in such futures, which positions were 

carried on its books. 

VII 

As the result of the trading in March 1959 wheat futures described in 

paragraph VI, on December 31, 1958 respondent Hutton held a long position for 

customers in the March 1959 

Chicago wheat future in the amount of 6,300,000 bushels, representing 18.8 

percent of the total open interest in such future on the Chicago Board of Trade. 

By February 27, 1959, this position had increased to approximately 9,000,000 

bushels, representing 54 percent of the total open interest on the Chicago Board 

of Trade. Subsequent to February 27, 1959, respondent Hutton's holdings in the 

March 1959 wheat future were reduced, but at a rate less rapid than the 

reduction in the positions of other clearing members, with the result that 

respondent Hutton's proportion of the total open interest increased, and on 

March 18, 1959, the day before the expiration of trading in such future, it held 

65 percent of the total open interest in such future on the Chicago Board of 

Trade. During the above period, the long position of the Kansas City office of 

the said respondent in such future ranged between approximately 84 percent and 

92 percent of the entire long position in such future on the books of the said 

firm. 

VIII 

As a result of the respondent partnership's trading in the May 1959 wheat 

future, described in paragraph VI, on December 31, 1958, the said respondent 

held a long position in such future in 
Page 3 

the amount of 10,794,000 bushels, representing about 33 percent of the total 

open interest in that future on the Chicago Board of Trade. Subsequent thereto, 

the said respondent increased such position, and on March 19, 1959, it held over 

27,000,000 bushels long in the said future, or 62.6 percent of the total open 

interest in the May 1959 future on the Chicago Board of Trade. Between December 

31, 1958 and March 31, 1959, the long position in such future of the Kansas City 

office of the said respondent ranged between 63.8 percent and 81.9 percent of 

the entire long position in such future on the books of the said firm. 

IX 

During March 1959, respondent Hutton took delivery of 3,920,000 bushels of 

wheat in satisfaction of long positions in March 1959 Chicago wheat futures 

carried by its Kansas City office for the accounts of customers, agents, and 

employees. Such deliveries constituted approximately 99 percent of all 

deliveries in the March 1959 wheat future on the Chicago Board of Trade, and as 

of March 27, 1959, represented approximately 93 percent of the total stocks of 

wheat available in Chicago for delivery on futures contracts. 

X 

Due wholly or in part to the transactions of respondent Hutton in March 1959 

and May 1959, Chicago wheat futures, described above, the price of the March 

1959 Chicago wheat future advanced approximately 14 cents and the price of the 

May 1959 Chicago wheat future advanced approximately 10 cents. Such increases 

did not reflect conditions of supply and demand in the wheat market but were 

caused by the large, concentrated, and dominant interest in such futures carried 

by respondent Hutton. 

XI 

The trading in March and May 1959 wheat futures, described above, was 

initiated, managed, and carried out through the efforts of respondents Cate and 

Buterin, who solicited and accepted orders from customers and entered such 

orders for execution. In the course of such solicitation, respondents Cate and 

Buterin urgently recommended the purchase and holding of March 1959 and May 1959 

wheat futures, and assured their customers that such futures were controlled by 

the concentrated and dominant long positions on the books of respondent Hutton, 

that the available cash wheat 

supply in Chicago was also under its control, and that traders who were short in 

such futures would therefore be unable to deliver wheat in satisfaction of their 

contracts and would be compelled to come to the customers of respondent Hutton 

in order to buy futures to cover outstanding short positions, which would enable 

the respondents to fix the price at which sales of such futures would be made. 

Respondents Cate and Buterin, in the course of such solicitation, urged the said 

customers to retain their positions in March 1959 wheat futures, and to accept 

delivery of wheat in satisfaction thereof. The said respondents ignored the 

instructions of customers to liquidate such positions, failed to execute orders 

of customers to sell March futures and retender the wheat received on delivery, 

executed or caused the execution of transactions for the accounts of such 

customers which were not ordered by the customers, and failed to make sales of 

cash wheat of customers, despite instructions by such customers to do so. 

XII 

Respondents Cate and Buterin carried out the acts described above for the 

purpose and with the intent of raising the prices of the March 1959 and May 1959 

wheat futures on the Chicago Board of 

Trade and the price of deliverable wheat in Chicago by means of a squeeze, which 

was intended to be brought about by concentrating in the hands of the agents, 
Page 4 

employees, and customers of respondent Hutton a quantity of the current wheat 

future sufficient to constitute the major portion of the open interest in such 

future and to exceed supplies of wheat available for delivery in satisfaction 

thereof. Futures transactions in the March and May futures were made by the 

individual respondents for that purpose and with that intent, and customers were 

encouraged to make similar transactions with the expectation that such customers 

would be influenced by the example, suggestions, advice and recommendations of 

the individual respondents, would rely upon their superior knowledge of trading 

techniques, and would follow their lead in the hope of profiting financially, 

and such customers were in fact so influenced and did in fact so rely and did 

follow the said respondents' lead. The receipt of wheat in March 1959, 

described in paragraph IX, was encouraged and directed by respondents Cate and 

Buterin, or caused by these respondents to be undertaken and carried out, for 

the purpose and with the intent of aiding the squeeze by gaining control of the 

deliverable supply of wheat in Chicago and thereby increasing or preventing a 

decrease in the 

price of the March and May futures. The acts of the respondents brought about a 

squeeze and caused the price of March 1959 and May 1959 wheat futures on the 

Chicago Board of Trade to be at artificial and manipulated levels during March 

1959. 

XIII 

By reason of the acts described above, respondents Cate, Buterin, and Hutton 

attempted to manipulate and did manipulate the price of a commodity for future 

delivery on or subject to the rules of a board of trade, in wilful violation of 

sections 6(b) and 9 of the Commodity Exchange Act (7 U.S.C. 1958 ed., §§ 9, 13). 

By reason of such acts, respondents Cate and Buterin attempted to deceive and 

did deceive customers with regard to orders or contracts for the sale of a 

commodity for future delivery on or subject to the rules of a contract market, 

in wilful violation of section 4b of the said act (7 U.S.C. 1958 ed., § 6b). 

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

served upon each of the said respondents. The respondents 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 seven 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 not answered 

will be deemed admitted for the purpose of this proceeding. Failure to file an 

answer shall constitute an admission of all the material allegations of this 

complaint and a waiver of hearing. The respondents are hereby notified that 

unless hearing is waived either expressly or by failure to file an answer, a 

hearing will be held at 10:00 a.m., local time, on the 15th day of September 

1959, in New York, N. Y., at a place therein to be designated 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 order 

should not be made directing that all contract markets refuse all 

 

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

determined, and suspending or revoking the registration of respondent E. F. 

Hutton & Company as a 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. 

Done at Washington, D. C., this 

30th day of July, 1959. 
Page 5 

/s/ Clarence L. Miller 

Clarence L. Miller 

Assistant Secretary 

LOAD-DATE: June 12, 2008 
Page 6