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Commodity Futures Trading Commission 

CEA CASES 

NAME: SECRETARY OF AGRICULTURE V. FORREST L. RALSTON 

DOCKET NUMBER: 22 

DATE: OCTOBER 1, 1940 

DOCUMENT TYPE: COMPLAINT 

UNITED STATES OF AMERICA 

BEFORE THE SECRETARY OF AGRICULTURE 

CE-A DOCKET NO. 22 

Secretary of Agriculture, Complainant, v. Forrest L. Ralston, Respondent. 

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

Act. 

There being reason to believe that the respondent has violated the Commodity 

Exchange Act (7 U.S.C., 1934 ed., and Supp. IV, § 1-17a) and the rules and 

regulations promulgated pursuant thereto, this complaint is issued alleging the 

following: 

1. 

Forrest L. Ralston is an individual trading and doing business under the firm 

name and style of F. L. Ralston Brokerage Company, a sole proprietorship owned 

by the respondent, at Sheridan, Wyoming. 

2. 

From August 2, 1937 to July 20, 1940, the respondent, acting by and through 

the means of F. L. Ralston Brokerage Company, a sole proprietorship owned by the 

respondent, engaged as a futures commission merchant in soliciting orders for 

the purchase and sale of 

commodities for future delivery involving contracts of sale of such commodities 

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

of Chicago, a contract market designated by the Secretary of Agriculture, 

pursuant to the provisions of the Commodity Exchange Act and while so engaged, 

failed to register with the Secretary of Agriculture as a futures commission 

merchant in violation of the Commodity Exchange Act. 

3. 

The respondent, while engaged as a futures commission merchant, received 

funds from customers to margin their trades in contracts of sale of commodities 

for future delivery on or subject to the rules of a contract market and received 

funds as a result of such trades made for the account of customers, and between 

August 2, 1937 and July 19, 1940, failed to account separately for such funds, 

and, in fact, commingled such funds with the funds of the respondent. On July 

19, 1940, the respondent was accountable to commodity customers for $ 2,775,00, 

and at that time had no funds segregated for the account of such customers. 

4. 

The respondent was, between August 2, 1937 and July 20, 1940, a correspondent 

of E. A. Pierce and Company, a member of the Board of Trade of the City of 

Chicago. 
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5. 

The respondent, while a correspondent of E. A. Pierce and Company, between 

August 2, 1937 and May 15, 1940, cleared numerous trades involving contracts for 

the purchase and sale of wheat for future delivery on or subject to the rules of 

the Board of Trade of the City of Chicago, through E. A. Pierce and Company, for 

the account of customers and on a number of these trades reported to customers 

executions at prices other than the prices at which the customers' orders were 

executed. Among the trades so reported were the following: 

Price Price reat which ported to

Date Customer Future trading executed customer 

9/2/37 Sheridan Flouring Mills Bot. 20 Dec. Wheat 105 5/8 105 7/8 

5/15/39 Jean Falxa Sold 5 July Wheat 88 87 

5/14/40 J. L. Kenney Sold 10 May Wheat 104 1/2 103 

4/17/40 W. E. Sonneman Bot. 5 July Wheat 108 1/2 108 5/8 

5/15/40 W. E. Sonneman Sold 5 July Wheat 89 87 

5/14/40 J. L. Kenney Sold 5 July Wheat 104 1/2 103 

5/15/40 Jean Falxa Sold 5 Sept. Wheat 88 1/4 88 

6. 

As a result of the incorrect reports referred to in paragraph 5, the 

respondent gained from his customers $ 256.25. 

7. 

The respondent, by reason of his actions and the facts alleged in paragraphs 

3, 4, 5 and 6, violated the Commodity Exchange Act in 

that in connection with orders to make and the making of futures contracts for 

grains, which are commodities named in the Commodity Exchange Act, on contract 

markets, which contracts may be used for hedging or determining the price basis 

of transactions in interstate commerce in the commodities involved, the 

respondent did attempt to cheat and defraud and did cheat and defraud persons 

for whom such contracts were made, wilfully made and caused to be made 

misleading and false reports and statements concerning such contracts to such 

persons and wilfully attempted to deceive and did deceive such persons in regard 

to such contracts and acts of agency performed with respect to such contracts. 

8. 

The respondent is now registered with the Secretary of Agriculture as a 

futures commission merchant but was not so registered during any part of the 

period covered by this complaint. 

THEREFORE, the respondent is hereby notified to be and appear before a 

referee, to be appointed by the Secretary of Agriculture, at a hearing to be 

held at 10 o'clock a.m. on October 28, 1940 in Room 1831, South Building, 

Department of Agriculture, Washington, D. C., or at such other times and places 

an may be determined by the referee and then and there show cause, if any there 

be, why an order shall not be made revoking the registration of the 

respondent as a futures commission merchant and directing that all contract 

markets, until further notice of the Secretary of Agriculture, refuse all 

trading privileges to the respondent. 

IT IS ORDERED that this complaint and notice of hearing be served on the 

named respondent by delivery of true and correct copies hereof to the 

respondent, by an employee of the Department of Agriculture or by registered 

mail, at least fifteen days prior to the date herein set for the hearing. 

IT IS FURTHER ORDERED that the respondent shall file with the hearing clerk, 

Office of the Solicitor, Department of Agriculture at Washington, D. C., within 
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ten days after the receipt of the complaint, an answer signed by the respondent 

fully and completely stating the nature of any affirmative defense and admitting 

or denying specifically, in detail, each material and relevant allegation of the 

complaint. The failure to file such answer within said ten day period may be 

deemed an admission of the truth of the allegations of the complaint for the 

purpose of this proceeding unless application for an extension of time in which 

to answer has been made by the respondent and granted by the Secretary of 

Agriculture or a referee designated by him to conduct the hearing herein. 

Done at Washington, D. C., this 1st day of October, 1940. Witness my hand 

and the seal of the Department of Agriculture. 

/s/ Grover B. Hill 

Assistant Secretary of Agriculture 

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