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Commodity Futures Trading Commission 

CEA CASES 

NAME: HENRY S. SHATKIN 

CITATION: 34 Agric. Dec. 261 

DOCKET NUMBER: 211 

DATE: FEBRUARY 14, 1975 

DOCUMENT TYPE: DECISION AND ORDER 

(No. 16,264 

In re HENRY S. SHATKIN. CEA Docket No. 211. Decided February 14, 1975. 

Herbert R. Bader, for complainant. 

Philip M. Bloom, Chicago, Ill., for respondent. 

Decision by Dorothea A. Baker, Administrative Law Judge.

DECISION AND ORDER

[This initial decision by the Administrative Law Judge became final when the 

Judicial Officer filed an Order (which follows this decision) granting the 

complainant's motion to withdraw its appeal on the condition that this case is 

not to be regarded as a precedent in any future proceeding.] 

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 on 

April 3, 1973. The Complaint, filed on April 3, 1973, alleges, inter alia, that 

Respondent, 

"On August 26, 1971, Henry S. Shatkin violated the speculative daily trading 

limit of 3,000,000 bushels in soybean futures fixed by the Commodity Exchange 

Commission, by buying a total of 3,300,000 bushels on 

or subject to the rules of the Chicago Board of Trade as follows: 

Purchases 

Future (In thousands of bushels) 

September 1971 1,345

November 1971 1,910

January 1972 20

May 1972 25

Total 3,300"

On April 16, 1973 the Complainant moved to amend paragraph III of the 

Complaint by deleting therefrom the date of August 26, 1971, and adding in lieu 

thereof the date of August 27, 1971. Said Motion was granted on April 27, 1973. 

The Complaint, as amended, alleges in substance that Henry S. Shatkin, both a 

member of the Board of Trade of the City of Chicago and a registered floor 

broker under the Commodity Exchange Act, did, on August 27, 1971, violate the 

speculative daily trading limit in soybean futures, as fixed by the Commodity 

Exchange Commission, by purchasing a total of 3,300,000 bushels of soybean 

futures, in all futures combined, on or subject to the rules of the Board of 

Trade of the City of Chicago. Such act is alleged to have been willful, and in 
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violation of Section 4a of the Commodity Exchange Act (7 U.S.C. 6a) and Section 

150.4 of the orders of the Commodity Exchange Commission (17 CFR 50.4). n1 

n1. Such regulation, as herein pertinent, and as set forth in 17 GFR 

150.4, sets forth: 

"150.4 Limits on position and daily trading in soybeans for future 

delivery. 

The following limits on the amount of trading under contracts of sale of 

soybeans for future delivery on or subject to the rules of any contract 

market, which may be done by any person, are hereby proclaimed and fixed, 

to be in full force and effect on and after June 26, 1971: 

(a) Position limit. The limit on the maximum net long or net short 

position which any person may hold or control in soybeans on or subject to 

the rules of any one contract market is 3 million bushels in any one future 

or in all futures combined. 

(b) Daily trading limit. The limit on the maximum amount of soybeans 

which any person may buy, and on the maximum amount which any person may 

sell, on or subject to the rules of any one contract market during any one 

business day is 3 million bushels in any one future or in all futures 

combined." 

In his Answer filed May 8, 1973, Respondent admits the jurisdictional 

allegations of the Complaintbut denies having violated the speculative daily 

trading limit, and asserts that he 

did not "willfully, knowingly, nor intentionally purchase soybean futures on 

[August 27, 1971] in violation of the [daily speculative trading limit] ." The 

Respondent avers that "the filing of this Complaint is barred by lapse of time 

from the date of the alleged violation to the institution of this action, and 

further asserts laches as an additional defense to this Complaint." 

Paragraph VI of the Answer sets forth, inter alia, "Respondent asserts that 

the violation alleged in the Complaint is not claimed to be wilful n2 nor one in 

which the public health, interest or safety was endangered, and despite the lack 

of such allegations, the Secretary of Agriculture instituted these proceedings 

without calling the alleged violation to the attention of the Respondent, in 

writing, and affording him the opportunity to demonstrate or achieve compliance 

with all lawful requirements pursuant to Section 0.3(c) of the rules of practice 

under the Commodity Exchange Act." n3 

n2. The Complaint filed on April 3, 1973 did not allege willfulness. It 

was subsequently amended to do so, as set forth hereinabove. 

n3. As herein pertinent, that provision provides: 

"Provided, That in any case, except one of wilfulness or one in which 

the public health, interest or safety otherwise requres, prior to the 

institution of a proceeding for the suspension or revocation of a 

registration or license, facts or conditions which may warrant such action 

shall be called, in writing, to the attention of the person complained 

against, and such person shall be accorded opportunity to demonstrate or 

achieve compliance with all lawful requirements. * * *" 

A Motion for Discovery of Information and Production of Documents was filed 

May 15, 1973, to which Complainant filed objection on May 25, 1973. The 

Administrative Law Judge denied the Motion June 18, 1973 with the proviso: 

"However, if at the oral hearing, after the Complainant has presented its 

case, the Respondent can show that it has been misled by the pleadings, has been 
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taken by surprise, has been inadequately informed as to the nature of the 

charges, or otherwise stands to suffer procedural prejudice, a Motion for 

Continuance not to exceed 20 days therefrom will be entertained in order to 

permit the Movant adequate time to prepare a defense to the Complainant's case. 

Such opportunity more than satisfies procedural due process and the requirements 

of a full and fair hearing." 

No such showing nor Motion was made at the oral hearing. 

On August 15, 1973 a prehearing conference was held in Chicago, Illinois. 

The parties exchanged the names and addresses of prospective witnesses, and it 

was agreed that there would be a mutual exchange of documentary evidence prior 

to the hearing, 

with copies to the Administrative Law Judge and a mutually convenient date for 

the oral hearing was agreed upon. At the prehearing conference counsel for the 

Complainant indicated that he would file a Motion to Amend the Complaint with a 

view to alleging "willfulness." Said Motion was filed August 20, 1973. 

Respondent was given an opportunity to respond thereto. The Motion to Amend the 

Complaint was granted October 19, 1973. 

Oral hearing was held in Chicago, Illinois, on October 30 and 31, 1973, and 

both sides offered oral and documentary evidence. At the hearing it was agreed 

that the Respondent could request from Complainant, within three (3) weeks after 

hearing, information, not then available, to be introduced in the record as an 

additional exhibit. There was reserved No. 12 for such exhibit. The 

Complainant received no such request and asked on brief that Exhibit No. 12 no 

longer be reserved (See Tr. 421). The Complainant's request is hereby granted. 

The record herein consists of eleven (11) exhibits submitted on behalf of 

Complainant and one (1) exhibit submitted on behalf of Respondent. 

At the oral hearing, Judge Dorothea A. Baker, Administrative Law Judge, 

United States Department of Agriculture, presided. The Respondents were 

represented by Philip M. Bloom, Esquire and Michael Barton, Esquire, Bloom & 

Denberg, Ltd., Chicago, Illinois. Darrold A. Dandy, Esquire and Herbert R. 

Bader, Esquire, Office of the General Counsel, United States Department of 

Agriculture, appeared as counsel for the Complainant. In due course, the 

Complainant submitted its initial brief on January 21, 1974. The Respondent, 

pursuant to extension submitted its initial brief on April 8, 1974, and the 

Complainant filed its reply brief on May 10, 1974. 

FINDINGS OF FACT

1. The Respondent, herein, Henry S. Shatkin, is an individual whose business 

address is 141 West Jackson Boulevard, Chicago, Illinois 60604. He is now and 

was at all times material herein, a registered floor broker under the Commodity 

Exchange Act and a member of the Board of Trade of the City of Chicago. 

2. The Board of Trade of the City of Chicago ("The Chicago Board of Trade") 

is now, and was at all times material herein, a duly designated contract market 

under the Commodity Exchange Act. 

3. On August 27, 1971 Respondent was a partner in the firm of 

 Shatkin Trading Company, a partnership registered as a futures commission 

merchant, and remained a partner until March 2, 1973, when the status of the 

partnership was changed to that of a corporation of the same name, registered as 

a futures commission merchant. Mr. Shatkin was, as herein pertinent, and still 

is presently the President, Chairman of the Board of Directors, and a twentypercent shareholder of Shatkin Trading Company. The corporation has the same 

name and address, and is engaged in basically the same business as was the 

partnership. 
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4. On August 27, 1971 the speculative daily trading limit in soybean futures, 

as fixed by the Commodity Exchange Commission, was three million (3,000,000) 

bushels in any one future or in all futures combined. n4 Respondent, on August 

27, 1971, and at all times pertinent hereto, knew, and was at all times aware of 

this limit as well as having knowledge of and concern for the pertinent rules 

and regulations of the Commodity Exchange Commission. 

n4. This limit was increased from 2,000,000 bushels, effective June 26, 

1971. 

5. The Respondent maintains, and there is evidence to support such 

contention, that he "was not fully knowledgeable in reporting procedures 

required under the Act in certain instances." It was the Respondent's 

responsibility to be, or to become, fully knowledgeable of the reporting 

procedures required by the Act. 

6. The Respondent in November 1969, and September 1970, hired two general 

clerks, Victor Kastil and James O. Ryan, to perform independently certain duties 

and specifically to inform him of his net position and amount of volume 

throughout the trading day, or when it approached the daily speculative trading 

limit, and to serve as a double-check on Mr. Shatkin's own count. The 

Respondent had impressed upon his clerks the importance of relaying to 

Respondent a correct count of his position in the market and to keep track of 

Respondent's position so he would not exceed the speculative limits. Mr. Kastil 

obtained membership on the Chicago Board of Trade in April of 1970 and started 

to trade for his personal account. Mr. Ryan was hired in September of 1970 to 

assist the former in the discharge of his duties. Mr. Ryan was hired as an 

Assistant Clerk and in April of 1971 assumed the clerical duties of Mr. Kastil. 

During the week of August 23, 1971, Mr. Ryan was on vacation and Respondent 

requested Mr. Kastil to substitute for Mr. Ryan. On August 27, 1971, Mr. Kastil 

picked up the Respondent's trading cards at approximately 10:00 a.m. or 10:15 

a.m. 

 7. During the week of August 23-30, 1971, which includes the date on which the 

alleged violation occurred, and while Mr. Ryan was on vacation, Mr. Kastil 

believes he performed his duties in substantially the same way that he had 

always performed them in addition to trading on the Chicago Board of Trade. Mr. 

Kastil had with him Mr. Shatkin's trading cards that he used to keep track of 

Respondent's position by putting down on the cards what he had counted. n5 

n5. The witness Kastil's testimony was that: 

"Q And did you at that hour communicate with him at all in any way 

regarding the volume of trades that he had made? 

"A I don't believe I did. 

"Q Did you then go up to the key punch operator, as you have described 

in the past? 

"A I probably didn't on that day. I probably kept it in my pocket and 

gave it to one of our runners, who picks up cards, and they brought it up. 

"Q Do you have a recollection, as you sit here now, how often you 

stopped to take Mr. Shatkin's card from him on that day, to total his net 

position and the amount of trades he had made? 

"A I have no recollection, but I don't see why that day would have any -

- would be any different than any other day that I did it. I would imagine 

three or four times. 

"Q And during none of those times did you communicate to Mr. Shatkin 

what his volume of trades were for that trading day? 

"A I guess I didn't see a problem. I don't think that I did." 
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8. On August 27, 1971, Victor Kastil counted Respondent's trading cards and 

had a card of his own which reflected the conclusion of his count. After 

trading closed Mr. Kastil further matched up the Clearing House run-back with 

his previously compiled Recapitulation Sheet (hereinafter referred to as Recap 

Sheet) prepared by Mr. Kastil for comparison, and found the Clearing House 

confirmation to be considerably higher than his own count. Thereafter Mr. 

Kastil re-added all of the Respondent's trading cards and found the Clearing 

House confirmation to be correct and his own count of Respondent's trades in 

error, and the appropriate corrections to the Recap Sheet were made. The 

following morning Mr. Kastil prepared a CEA Form 203 and forwarded the report to 

the Commodity Exchange Authority. It was regarded as "filed" on August 30, 

1971, that being the date it was received. 

9. Trading in soybean futures on the Chicago Board of Trade is conducted 

between the hours of 9:30 a.m. and 1:15 p.m. Trading is done on a competitive 

basis and all bids and offers are required to be by open outcry normally 

resulting in a noisy, and sometimes confusing, situation during trading hours. 

Traders on the floor of the Chicago Board of Trade are required to show all 

transactions made on trading cards or other records. Respondent used his 

trading cards to maintain records of his daily volume and open position. 

10. On August 27, 1971 Respondent exceeded the speculative daily trading 

limit in soybean futures, as fixed by the Commodity Exchange Commission, by 

purchasing a total of three million three hundred thousand (3,300,000) bushels 

of soybean futures in all futures combined, on or subject to the rules of the 

Chicago Board of Trade. n6 

n6. The testimony indicates that Respondent attributes his exceeding of 

the speculative limits to: "And this was due to a clerical error on the 

part of one of his clerks. He [Respondent] stated that he usually has two 

clerks independently total his trading during the trading hours. However, 

on this particular week, one of the clerks was on vacation." (Tr. 225) 

"Q Mr. Shatkin stated to you that there was a clerical error concerning 

the trading of August 27th? 

"A That's correct. 

"Q He stated to you that he normally employed clerks to assist him in 

determining his trading limit, his trading volume and positions during the 

trading hours? 

"A I don't know if he said anything about position. I think he said he 

had clerks tabulate or total the number of trades he made, as far as the 

trading, you know, in connection with the trading limits. 

I don't know if anything was mentioned about position. 

"Q You don't have a recollection at this time?" 

"A No. 

"Q Did you at any time seek to verify whether Mr. Shatkin did or did not 

employ clerks to assist him in totaling the volume of his trading during 

the day? 

"A No, I had no reason to doubt Mr. Shatkin." (Tr. 236) 

The witness Kastil testified: 

"A I would give him counts during the day to give him his position, and 

to keep track of the volume count. And I'd later, I would check my count 

with the confirmations that we received after the trading cards had been 

handed in. Then the following morning I would hand in the Government 

book." 

* * * * 
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"A I'd start about 10:00 o'clock in the morning or 10:10, 10:15. First 

of all, to go back, I'd start off by giving Mr. Shatkin his starting 

position for the day. 

"Q What time of the day would you normally do that? 

"A I'd probably stick it in his pocket about 9:00 o'clock in the 

morning." 

* * * * 

"Q Go ahead. 

"A Okay. Then about 10:00 o'clock or 10:15, I'd go down and take the 

trading cards from Mr. Shatkin. I'd total them up, give him a new 

position, and also keep a record of my own to his volume. 

"Q Now, you would go down at about 10:00 or 10:15 o'clock, where would 

you go? 

"A I'd go down to the soybean pit and ask him for his cards, and he'd 

give them to me. He would also give his position card that I'd given him 

about 9:00 o'clock. 

I'd change his position to the new positions, and give it back to Mr. 

Shatkin, take the cards, go back up to the office. I also had my card with 

his account, and go back up to the office to the key punch room. 

"Q You said you'd have your card with his count? 

"A Yes. 

"Q Would you explain that. 

"A I would also keep tract of what he was doing for my own record, to 

see if he was approaching the limit, so I could warn him. 

"Q When you said 'approaching the limit,' what limit are you referring 

to? 

"A Either position or trading volume limit. 

"Q Did you keep a record then of both of those limits? 

"A Right. 

"Q On your card?" 

* * * * 

"Q When you say you would give him his position, what position are you 

referring to?" 

* * * * 

"A Like if he started out the day long, a hundred November soybeans, and 

short a hundred February soybeans, I would take his card back and now maybe 

it's only 50 November soybeans long and short January beans." 

11. CEA Form 203 discloses that the Respondent exceeded the daily speculative 

trading limit fixed by the Commodity Exchange Commission. At the end of the 

trading day of August 27, 1971, Respondent held a position in excess of two 

hundred thousand (200,000) bushels in soybean futures, in the January future, on 

or subject to the rules of the Chicago Board of Trade. The Act requires any 

trader who holds an open position of more than two hundred thousand (200,000) 

bushels in soybean futures, in any one future, on any contract market, at the 

end of the trading day, to submit CEA Form 203 to the Commodity Exchange 

Authority. 

12. On August 27, 1971 the Respondent did exceed the speculative daily 

trading in soybean futures, as established by the Commodity Exchange Commission 

by purchasing a total of three million three hundred thousand (3,300,000) 
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bushels of soybean futures in all futures combined, on or subject to the rules 

of the Chicago Board of Trade. The Respondent so admitted in his testimony: 

"I would also like to add along this line that I know I have traded over the 

limit on August 27, 1971. And I feel extremely bad about it, because I violated 

a rule, but morally I don't feel I have done the wrong thing in that my methods 

and style of trading is what I consider to be an assist to the market, as 

opposed to something which would affect the market adversely." (Tr. 420) 

13. Because of Mr. Kastil's error during the trading hours in calculating 

Respondent's trading cards and then giving Respondent an erroneous count, Mr. 

Shatkin inadvertently and accidentally exceeded the daily trading limit in 

soybean futures. 

14. The persuasive testimony and evidence of record shows that Respondent did 

not consciously, deliberately, or intentionally exceed the speculative daily 

trading limit in soybean 

futures. The record as a whole establishes that the speculative daily trading 

limit was exceeded by accident and inadvertence, most probably attributable to 

clerical error. Contrary to Complainant's arguments, the record does not 

establish disregard or negligence on the part of Respondent. 

15. On January 4, 1961 n7 a letter was sent to Respondent by the Chicago 

office of the Commodity Exchange Authority, in response to CEA Form 203 filed by 

Respondent, covering his transactions in soybean futures on the Chicago Board of 

Trade for January 3, 1961, which stated that the Respondent exceeded the daily 

speculative trading limit established by the Commodity Exchange Commission. The 

letter advised Mr. Shatkin of this violation and quoted the orders of the 

Commodity Exchange Commission as they apply to the speculative trading limit in 

soybean futures. A guide to speculative trading and position limits under the 

Commodity Exchange Act was attached. On February 21, 1961 another letter was 

sent to the Respondent informing him that he had apparently violated the daily 

trading limits on January 31, 1961, February 1, 1961, and February 2, 1961. The 

date of January 31, 1961 was a clerical error committed by the Commodity 

Exchange Authority. The correct date was January 3, 1961. No evidence was 

adduced at the oral hearing to show that violations on any of the aforesaid 

dates did in fact exist. Mr. Clark, Director of the Central Region, Commodity 

Exchange Authority, does not believe that the CEA Form 203 report by itself is 

proof of an actual violation. 

n7. The Respondent's attorney objected to the receipt into evidence of 

matters pertaining to alleged violations occurring over a ten-year period 

prior to the alleged violation of August 27, 1971, the date in question. 

The Administrative Law Judge overruled his objections but not without 

appreciation for the merits of his objections. Further attention will be 

given this contention hereinafter. However, it is believed the Judge's 

initial rulings are correct. The Complainant seeks to show by such 

documentary and testimonial evidence that the Respondent had been "warned," 

not that prior violations had occurred. Anyway, this is the only correct 

legal position. The Complaint filed herein does not allege violations 

prior to August 27, 1971 and it would be legally improper to allow 

Complainant to attempt to do so. Whether or not such prior "warnings" are 

sufficient to satisfy the statutory and regulatory provisions is crucial to 

a correct determination of the matters in this proceeding. 

16. On August 6, 1962, Respondent filed with the Commodity Exchange Authority 

a report on CEA Form 203, covering his transactions in soybean futures on the 

Chicago Board of Trade, which stated that the Respondent exceeded the daily 

speculative trading limit established by the Commodity Exchange Commission. On 
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August 16, 1961, Mr. John Carpenter and Mr. Robert M. Ollquist, of the Commodity 

Exchange Authority, met with Mr. Shatkin and discussed his prior apparent 

violations, the rules concerning the speculative daily trading limit, and left 

with Mr. Shatkin a copy of the Commodity Exchange Act and a 

 

guidesheet to the speculative limits. Mr. Shatkin explained that a "clerk 

goofed" and there were no actual violations. 

17. On or about October 3, 1966 the Respondent filed with the Commodity 

Exchange Authority a report on CEA Form 203 covering the transactions in soybean 

futures on the Chicago Board of Trade for September 30, 1966, which indicated 

that the Respondent had exceeded the daily speculative trading limit in soybean 

futures. On October 4, 1966, a letter was sent to Respondent advising him that 

he had exceeded the speculative daily trading limit fixed by the Commodity 

Exchange Commission on September 30, 1966. The letter further advised the 

Respondent of the speculative trading limit in soybean futures and had attached 

to it a guide sheet which showed the limit for regulated commodities as 

established by the Commodity Exchange Commission. On October 5, 1966 the 

Respondent wrote a letter in reply to the aforementioned letter in which he 

advised that he had not violated the speculative daily trading limits on 

September 30, 1966 but that his clerk had made an error in filling out the 

report and a corrected Commodity Exchange Authority Form 203 was enclosed. On 

October 20, 1966 a representative of the Commodity Exchange Authority requested, 

by telephone, Respondent's appearance in his office for a discussion with 

respect to an apparent limit violation which allegedly occurred on October 18, 

1966 as reflected in CEA Form 203 for that day. The problem reflected therein 

was an outtrade of October 17, 1966 which did not clear until October 28, 1966 

and was included in the sales reported in the CEA Form 203 for October 3, 1966. 

The Commodity Exchange Authority accepted the explanation of Respondent and 

concluded that no violation occurred on either September 30, 1966 or October 18, 

1966. 

18. On or about February 13, 1967, in response to a CEA Form 203 report 

submitted by Mr. Shatkin on or about January 31, 1967, which reflected a 

reportable position and a long position in soybean futures apparently in excess 

of the daily speculative trading limit, the Respondent attended a meeting at the 

Commodity Exchange Authority in the presence of Mr. Clark and Mr. Shiner, a 

Commodity Exchange Authority employee. The meeting was held to verify whether 

or not the CEA Form 203 report was correct and advise Mr. Shatkin of the limit 

and reporting procedure. Mr. Shatkin's explanation was that possibly sales made 

on January 31, 1967 to reduce the long position were not reported on the January 

31, 1967 report and therefore did not show a reduction in the long procedure 

that a holdout trade, a 

 

 trade made on one day that for some reason does not clear on that day but on a 

later day, would be reported on the day it is cleared. The Respondent also 

stated that the CEA Form 203 report was probably filled out incorrectly because 

the regular clerk was away at key punch school. Shortly after the aforesaid 

meeting Mr. Clark sent Mr. Shiner to Respondent's office where he found that, 

according to trading card records of Mr. Shatkin, the trades and positions had 

been incorrectly reported on CEA Form 203 report for January 31, 1967 or 

February 1, 1967, the date on which the trade in question cleared. 

19. On or about July 21, 1971, Respondent filed with the Commodity Exchange 

Authority, a report on CEA Form 203, covering his transactions in soybean 

futures on the Chicago Board of Trade for July 20, 1971, which stated that the 

Respondent exceeded the daily speculative trading limit fixed by the Commodity 

Exchange Commission. On July 22, 1971, a letter was sent to Mr. Shatkin, by 

certified mail return receipt requested, advising him that he had exceeded the 

speculative daily trading limit on July 20, 1971. The Respondent was further 

advised of the speculative daily trading limit in soybean futures, and attached 
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to this letter was a guidesheet showing the limit for all regulated commodities 

as established by the Commodity Exchange Commission. Although CEA Form 203 

indicated Respondent had exceeded the daily speculative trading limit on July 

20, 1971, an examination of Respondent's records by one of Complainant's 

employees indicated that the report itself was in error. 

20. The evidence of record clearly establishes that the Respondent knew the 

speculative daily trading limits in soybean futures. 

21. The persuasive evidence of record shows that Respondent, or the employees 

under his direction and control were less than accurate in their reporting 

procedures to the Commodity Exchange Authority. 

22. The documentary evidence of record which could be considered written 

"warnings" permitting the Respondent the opportunity to demonstrate or achieve 

compliance with all lawful requirements were issued in instances where there had 

been clerical, bookkeeping and tabulation deficiencies in reporting: 

(1) Complainant's Exhibit 2 n8 is a letter dated July 22, 1971. It was 

 

 subsequently determined that Respondent's CEA Form 203 was in error. 

(2) Complainant's Exhibit 3 n9 is a letter dated October 4, 1966, and was 

likewise premised on faulty reporting by Respondent on his Form 203. 

(3) Complainant's Exhibit 5 n10 is a letter dated February 21, 1961, and 

refers to alleged violations on January 31, February 1, and February 2, 1961 and 

contains the warning: "* * * if there are continued instances on 

 

your part of exceeding such limits we would have to consider taking formal 

action, as provided under the Commodity Exchange Act, looking toward the denial 

to you of trading privileges on all contract markets." 

n8. Exhibit 2 is a letter addressed to Respondent from the Commodity 

Exchange Commission, dated July 22, 1971, which sets forth inter alia:

"We call your attention to Section 150.4(b) of the orders of the 

Commodity Exchange Commission which establishes for soybeans a speculative 

trading limit of 3,000,000 bushels. That is the maximum amount of 

contracts which any trader may buy or sell speculatively in any one soybean 

future or in all soybean futures combined, during a single business day. 

"Attached is a copy of the guide sheet, 'Speculative Limits on Position 

and Daily Trading Under the Commodity Exchange Act.' The maximum amounts 

shown on the guide sheet should be kept clearly in mind, so that you may 

avoid any further instance of exceeding a speculative limit established by 

the Commodity Exchange Commission." 

n9. Exhibit 3 is a letter dated October 4, 1966 which sets forth, inter 

alia:

"* * * You reported that you purchased 2,545,000 bushels and sold 

2,730,000 bushels in all soybean futures combined on that day. 

"We call to your attention Section 150.4(b) of the Order of the 

Commodity Exchange Commission which establishes for soybeans a speculative 

daily trading limit of 2,000,000 bushels. That is the maximum amount of 

contracts any trader may buy or sell speculatively in any one contract 

market during a single business day. Attached is a copy of the guide 

sheet; Speculative Limits on Trading and Positions Under the Commodity 

Exchange Act. 
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"The maximum amounts shown on the guide sheet should be kept clearly in 

mind, so you may avoid any further instance of exceeding the speculative 

limits established by the Commodity Exchange Commission." 

n10. By letter dated February 12, 1961 the Respondent was advised by 

the Commodity Exchange Authority that: 

"* * * 

"The purpose of this letter is to emphasize to you that it is a 

violation of the Commodity Exchange Act to exceed the speculative limit 

applicable to daily trading, and that it is important for you to take steps 

to avoid any repetition. 

"It is the responsibility of this agency to enforce speculative limits 

established by the Commodity Exchange Commission, and if there are 

continued instances on your part of exceeding such limits we would have to 

consider taking formal action, as provided under the Commodity Exchange 

Act, looking toward the denial to you of trading privileges on all contract 

markets." 

The terminology of such warning did not appear in Exhibits 2 and 3. 

(4) Complainant's Exhibit 6 is a letter dated January 4, 1961, and is more in 

the nature of advice as to the applicability of the terms "net" and "gross." 

23. Evidence other than that enumerated in Finding of Fact 22, supra, and 

relied upon by Complainant, would not suffice to show that there had been 

written warning since such evidence consists of inter or intra office memoranda, 

"for files," or alleged oral conversations. n11 

n11. For instance, Exhibit 7, is an inter-office memorandum dated 

February 14, 1967 and, inter alia, sets forth: 

"Mr. Shatlin was questioned by Messrs. Robert W. Clark and Robert P. 

Shiner in our office on February 13, 1967 concerning his Form 203 soybean 

report which showed a long March position of 2,060,000 bushels as of 

January 31, 1967. No further action on this matter is planned, because the 

information furnished by Mr. Shatkin indicates that he did not violate the 

speculative position limits in soybeans on January 31, 1967." 

Exhibit 11 is a memorandum for "files" and is dated August 20, 1962, and 

reflects, among other things, 

"* * * I advised him that he should impress upon his clerk the 

importance of keeping him accurately informed in this regard so as to make 

sure that additional violations do not occur, stating that he is 

responsible in such matters, not his clerk. He appeared to be impressed 

and said he would be sure to cut off his trading at sublimit levels in the 

future. 

"We left with him another copy of the Commodity Exchange Act and the 

Guide to Speculative Limits, in addition to the impression, I think, that 

any future violation would not be handled so informally and would 

necessarily be referred to Washington. Mr. Shatkin appeared to understand 

fully the speculative limits on trading and positions." 

24. The documentary evidence of the entire record, including that set forth 

in Finding of Fact 22, does not show that the Complainant provided the 

Respondent with written notification of the facts and conduct which would 

warrant the institution of these Agency proceedings as contemplated by the 

regulations and the Administrative Procedure Act. 

25. The record evidence does not establish that the excess of the daily 

speculative trading limit in soybean futures by Respondent on August 27, 1971, 

caused or influenced any sudden 

 
Page 11 

or unreasonable fluctuations or unwarranted changes in the price of soybean 

futures. 

26. The Respondent has not shown that the lapse of time or laches preclude 

these proceedings. 

CONCLUSIONS

The basic question involved herein is whether or not the Complainant has 

established that the Respondent exceeded the daily speculative trading limits in 

soybean futures in willful violation of Section 4a n12 of the Commodity Exchange 

Act and Section 150.4 of the Orders of the Commodity Exchange Commission 

establishing limits on positions and trading in soybean futures. 

n12. As herein pertinent, Section 4a of the Commodity Exchange Act 

provides: 

(1) Excessive speculation in any commodity under contracts of sale of 

such commodity for future delivery made on or subject to the rules of 

contract markets causing sudden or unreasonable fluctuations or unwarranted 

changes in the price of such commodities, is an undue and unnecessary 

burden on interstate commerce in such commodity. For the purpose of 

diminishing, eliminating, or preventing such burden, the Commission shall, 

from time to time, after due notice and opportunity for hearing, by order, 

proclaim and fix such limits on the amount of trading which may be done or 

positions which may be held by any person under contracts of sale of such 

commodity for future delivery on or subject to the rules of any contract 

market as the Commission finds are necessary to diminish, eliminate, or 

prevent such burden * * * 

(2) The Commission shall in such order fix a reasonable time (not to 

exceed ten days) after the order's promulgation; after which, and until 

such order is suspended, modified, or revoked, it shall be unlawful for any 

person -- 

(a) directly or indirectly to buy or sell, or agree to buy or sell, 

under contracts of sale of such commodity for future delivery on or subject 

to the rules of the contract market or markets to which the order applies, 

any amount of such commodity during any one business day in excess of any 

trading limit fixed for one business day by the Commission in such order 

for or with respect to such commodity; * * * 

The regulation of the Commodity Exchange Commission which fixes daily 

speculative trading limits in soybean futures has been set forth, supra.

Careful study and consideration of the entire record herein shows that there 

is no dispute that on August 27, 1971 the Respondent purchased three million 

three hundred thousand (3,300,000) bushels of soybean futures in all futures 

combined on or subject to the rules of the Chicago Board of Trade. The 

 

Respondent admits this, but maintains that he exceeded the daily speculative 

trade limits because of inadvertence and accident. In support thereof, and the 

record shows, that the Respondent had engaged clerical help, and admonished such 

clerical help to keep him informed of his market position. Considerable 

evidence was adduced relating to the circumstances surrounding the working 

conditions and activities of Respondent's employee Mr. Kastil on the day in 

question, namely, August 27, 1971. This evidence is persuasive in that it shows 

that what transpired was not the result of deliberate or intentional direction 

of Respondent, but rather of inadvertence or inattention on the part of Mr. 

Kastil. Of course, the Respondent must bear the burden of the acts and omissions 

of his employees. 

The Respondent is considered a "spreader" n13 who trades in the "pit" the 

conditions of which he described as "extremely hectic and difficult with "fast" 
Page 12 

markets. He has a "particular style of trading" that required him to have a 

high volume. He was aware and acknowledged that he traded dangerously close to 

the speculative limits. Respondent utilizes three-by-five "trading cards." At 

about 10 a.m. he gives his clerk all the cards which have trades written on 

them. His instructions to his clerical help were: 

"A His instructions are mutual to all things. All three things that he's 

doing are of equal importance. In that the volume count he knows is something 

that can't be ignored. I mean, I have explained to him the problem that I have 

about volume. He knows the rule, and he knows that it's obviously my 

responsibility as far as to the Exchange and to the Commodity Exchange 

Authority, but it is his responsibility to me to give me an accurate volume 

count and generally speaking that volume count is extremely accurate. 

"The clerks that I have used are mainly because of their mathematical 

ability. And so that I, very seldom have I had a problem along this line. The 

method of trading that I employ has, more often than not, caused me not to be 

able to trade a full day." (Tr. 414) 

n13. Respondent described his activities as: 

"Initially there are different kinds of spreads that have varying 

amounts of volatility. The spreads that I trade in, basically, are not of 

that nature, in that I trade in spreads within a crop year as opposed to 

trading in spreads that encompass two different years, in which case the 

volatility and the risk factor becomes much higher. 

"And my method of trading is that when a market move is affected in one 

particular area of the pit, and by that I mean in one section where a 

certain commodity future is traded, such as January soybeans, or March, or 

May or whatever it may be, when something happens in that section that I 

feel would affect the market, I'll try to use a reaction factor, try to go 

the same way that that move is taking place in a different option. 

"For instance, if a large selling order were to come in to January 

soybeans, I might go, and while the broker is trying to sell the January 

soybeans, I might be trying to sell March or May or November. And if I'm 

successful, then try and get back and buy what I think the quantity would 

have been that this man is trying to sell, the broker in the initial option 

that I referred to. 

"In the time to explain what -- earlier we spoke about having a position 

overnight. During the day I very seldom have a position. That is, I 

really don't feel that I have enough knowledge of soybeans, or whatever I 

happen to be trading in at the time, usually soybeans, I really don't feel 

I know enough about soybeans where I can take a position one way or the 

other. 

"But I do feel I have a feeling of how the market is going to react for 

15 seconds, 30 seconds, or a minute. 

"So during a given day, I never have a position for longer than -- have 

a net position, my guess is, for longer than a minute or two, depending on 

the market situation. For the most part, I'll say 90 percent of the time, 

I'd be completely even, during any given period, during any given day. 

"If my system of trading, going back to the example I used before, if 

there was a large quantity of January beans being sold, and I went and sold 

what I thought would be a corresponding amount of March and May, 

corresponding to what I think would be left, other people bought what they 

wanted in January, and I went back to the January and somebody had also 

bought all that were for sale, leaving me with a short position, from the 

March and May that I had sold, I would immediately either pay up, pay a 

higher price to buy the January, and would likely get it from the person or 

persons who had bought the January, from their broker, at a lower price. 
Page 13 

"Or if I couldn't, or if they didn't want to sell it at a higher price, 

I would immediately go back to what I'd sold and try and establish either 

scratch the trade and at the same price that I bought it, or take a loss 

and get the trade over again and start all over again. 

"I'm not a speculator. And I don't presume to know that much about the 

market that I can sit there and risk losing a lot of money, because I may -

- I'd made a mistake in judgment. And where I thought I was to be over 

from the January, from the broker who had a large selling order, when I 

made a mistake like that, I just assume that that trade is over with, and I 

take my loss and start over again." (Tr. 392-394) 

Further description of trading procedures was supplied by the witness Robert 

W. Clark, Director, Central Region, Commodity Exchange Authority, where he 

testified: 

"Q Okay. You mention the trading card. Could you tell us briefly what is a 

trading card and what it contains? 

"A Well, a trading card is a card, I guess, about 3 x 5 inches, which 

normally a trader would hold a supply of these cards on his person and carry 

them in his hand, usually, and then, as he made a trade, he would fill out the 

card. 

"The card would have to show his own name, the name of the clearing member 

that he's clearing his trades through, would have to show, the commodity and the 

price at which the trade was made, the future and the quantity and the opposite 

clearing member; that is, the clearing member that the opposite side of the 

trade is using and then, also, the identity of the Floor broker on the other 

side of the trade. 

"Q And all of this information is written down when? Is this the supplement 

that's filled out at the end of the day, or exactly when is a trading card 

prepared? 

"A The trading card would be prepared usually at the time of the trade, 

although, when you have a fast Market and a trader is making many trades, let's 

say, in a very short period of time, why, he may not fill out all the 

information on the card right at that moment. Maybe a few minutes later. 

"I would think normally certainly before the end of the day. 

"Q Once these trading cards have been prepared, what then happens as far as 

the transaction is concerned? In other words, what happens to the trading cards 

after they are prepared on the Floor? 

"A Normally the trader then would send the trading card or take it himself. 

It probably would normally go by runner back to his firm's office where the 

information from the trading card then is keypunched into a trade confirmation 

card, which in turn is sent before the end of the day to the clearinghouse of 

the Chicago Board of Trade and then the clearinghouse takes that card, let's say 

the card is a buy card, they would make sure before the end of the day is over 

that they can match that buy card; that is, to make sure that for every buyer 

there is a seller." 

The record evidence, as a whole, does not show that Respondent traded with a 

"reckless abandon" or "a careless disregard" of the limit, as alternatively 

asserted by Complainant on brief (p. 16). 

On brief, Complainant further suggests that elaborate precautions by 

Respondent against a violation of this limit should not be sufficient to show a 

lack of willfulness on his part; that the elaborate precautions taken by 

Respondent did not include supervision of his agent, whose negligence could have 

reasonably been foreseen; that Respondent is aware of his propensity to approach 

the speculative daily trading limit; and, that he should not be able to place 
Page 14 

his responsibility on a clerk who "goofed" or a clerk in "keypunch school" or a 

clerk "on vacation." 

However, in its Reply Brief (p. 5), Complainant asserts that it 

 

was not by accident but "carelessness" that Respondent continued to trade on 

August 27, 1971. A careful analysis and study of the entire record shows that 

on August 27, 1971, the Respondent inadvertently and accidentally exceeded the 

limit in soybean futures. In substance, the Respondent admits that he so did. 

On the other hand, the Complainant maintains that the Respondent willfully 

violated the speculative daily trade limits in soybean futures in that the 

record discloses that the Respondent voluntarily traded in soybean futures on 

August 27, 1971 and that as a result of such trade Respondent's soybean futures 

purchases were in excess of the speculative trade limits for that date. [Until 

amendment thereof, the Complaint did not allege willful violation.] It is 

Complainant's position that this is sufficient to establish a willful violation 

within the meaning of Section 558(c) of the Administrative Procedure Act (5 

U.S.C. 558(c)) and Section 0.3 of the regulations under the Commodity Exchange 

Act (17 CFR Section 0.3)). The. Complainant maintains this position 

irrespective of whether the Respondent relied on erroneous advice or the lack 

thereof, with respect to his trading position on August 27, 1971. According to 

the Complainant's argument, "willfulness," as applied to both the Administrative 

Procedure Act and the Commodity Exchange Act should be defined as: (1) 

intentionally doing an act which is prohibited, irrespective of evil motive or 

reliance on erroneous advice; or (2) acting with careless disregard of the 

statutory requirements. Essentially, such a position, when translated into the 

realities of the present proceeding, means that once the daily speculative 

trading limits have been exceeded, such action is per se willful and the 

Department is relieved of the necessity of any further proof, including why it 

declined to send out a warning letter. Likewise, the alleged violator would 

never be accorded the opportunity to demonstrate or achieve compliance. If such 

a contention is correct then no written "warning" letter was required. See KWK 

Radio, Inc. v. F.C.C., 337 F.2d 540 (D.C. Cir., 1964), cert. den., 380 U.S. 910. 

Furthermore, it is evident from Complainant's brief that it no longer seeks 

to rely upon letters addressed to the Complainant during the years 1961, 1966 

and July 22, 1971 as being sufficient to satisfy the requirements of the 

Administrative Procedure Act. The Respondent objected to the receipt into 

evidence of documents relating to past transactions. Counsel for Complainant 

admitted that such documentary evidence was "directed to the question of 

willfulness." Since Complainant has abandoned such 

 

argument, it is suffice to say that such evidence relating to past transactions 

did not meet the directives of the statutory and regulatory mandate as to 

written notice. The letters, inter- or intra-office memoranda, and testimony 

relevant to past transactions are remote in time (except as to the July 1971 

letter) and no prior violations were shown. 

Section 558 of the Administrative Procedure Act, provides, inter alia,

"§ 558. Imposition of sanctions; determination of applications for licenses; 

suspension, revocation, and expiration of licenses

"(a) This section applies, according to the provisions thereof, to the 

exercise of a power or authority. 

"* * * 

"(c) When application is made for a license required by law, the agency, with 

due regard for the rights and privileges of all the interested parties or 

adversely affected persons and within a reasonable time, shall set and complete 

proceedings required to be conducted in accordance with sections 556 and 557 of 
Page 15 

this title or other proceedings required by law and shall make its decision. 

Except in cases of willfulness or those in which public health, interest, or 

safety requires otherwise, the withdrawal, suspension, revocation, or annulment 

of a license is lawful only if, before the institution of agency proceedings 

therefor, the licensee has been given -- 

(1) notice by the agency in writing of the facts or conduct which may warrant 

the action; and 

(a) opportunity to demonstrate or achieve compliance with all lawful 

requirements." 

In applying and interpreting such provisions, there are precedent cases which 

essentially adopt the view that "willfulness" means the intentional doing of the 

act charged. n14 

n14. It is interesting to note that the original version of Section 9(b) 

of the Administrative Procedure Act relating to sanctions and powers 

initially contained the language "Except in cases of clearly demonstrated 

willfulness." At the time of its enactment the legislation had been changed 

to omit the term "clearly demonstrated." The reason for this is not crystal 

clear. Senate Report No. 752, 79th Cong., 1st Sess. 25 would indicate that 

"willfulness must be manifest," the same being true of "public health, 

interest, or safety," such standard meaning a situation requiring immediate 

action irrespective of the equities or injuries to the licensees. House 

Report No. 1980, 79th Cong. 2nd Sess. 20 reflects the same reasoning. It 

is further interesting to note that the text of the Secretary of 

Agriculture's report of May 15, 1945 reflects: 

"The provision in section 9(b) prohibiting, with certain exceptions, the 

revocation of licenses until persons shall be accorded a reasonable 

opportunity to demonstrate or achieve compliance with all lawful 

requirements would present many administrative problems and might be 

considered as placing a premium on non-compliance. Even though a broad 

discretion appears to be placed in the agencies in regard to its 

application, extreme difficulty would be encountered in determining the 

existence of clearly demonstrated willfulness or that public health, 

morals, or safety manifestly require summary action. Furthermore, under 

the judicial review provided by a subsequent section, the courts would 

prevent any arbitrary or capricious action with respect to an instance of 

noncompliance of an unintentional or technical nature. Therefore, the 

deletion of the matter beginning with the word 'except' on page 14, line 

20, and ending with the word 'requirements' on page 15, line 4, is 

recommended." 

The hearings before the Committee on the Judiciary, House of 

Representatives, 79th Cong., 1st Sess., on the subject of "Federal 

Administrative Procedure" (June 21, 25 and 26, 1945, Serial No. 19) also 

reflects that it was the opinion of some authorities submitting statements 

that willfulness was to be "clearly demonstrated." 

The Complainant argues that the meaning of the term "willfulness" in the 

Administrative Procedure Act was focused upon and decided in Eastern Products 

Co. v. Benson, 278 F.2d 606 (3rd Cir., 1960). The Complainant maintains that 

the court therein refused to subscribe to the proposition that the test of 

willfulness is evil purpose or criminal intent, and supported its decision by 

citing the following language in United States v. Illinois Central R. Co., 303 

U.S. 239: 

"* * * In statutes denouncing offenses involving turpitude, 'willfully' is 

generally used to mean with evil purpose, criminal intent or the like. But in 

those denouncing acts not in themselves wrong, the word is often used without 

any such implication. Our opinion in United States v. Murdock, 290 U.S. 389, 

394, shows that it often denotes that which is 'intentional, or knowing, or 
Page 16 

voluntary, as distinguished from accidental,' and that it is employed to 

characterize 'conduct marked by careless disregard whether or not one has the 

right so to act.' [Emphasis supplied] 

Both parties on brief have cited cases which they believe support their 

respective contentions as to whether the facts in this case establish 

"willfulness." 

Among those relied upon by Complainant are: David G. Henner, 30 Agric. Dec. 

1151 (30 A.D. 1151) (1971); Arthur N. Economou, 32 Agric. Dec. 14 (32 A.D. 14) 

(1973); Glover Livestock Comm'n Co., 30 A.S. 179 (1972); modified and aff'd 454 

F.2d 109 (8th Cir., 1972), rev'd Butz v. Glover Livestock Comm'n Co., 411 U.S. 

182 (1973). 

Without reviewing in detail each case relied upon by the Complainant, its 

position is that "willful" conduct can refer to either intentional conduct or 

conduct that was merely careless or 

 

negligent. On brief, Complainant states, among other things, "On August 27, 

1971, Mr. Shatkin was voluntarily trading futures, and it was not by accident 

but by carelessness that he continued to voluntarily trade * * *." [Emphasis 

supplied] Thus, Complainant contends that Respondent's carelessness was 

equatable with legal willfulness. 

The Respondent believes that the court's view in Great Western Food 

Distributors v. Brannan, 201 F.2d 476 (7th Cir., 1953) was that a determinative 

element was the intent of the parties during trading. Respondent also relies 

upon Schwebel v. Orrick, 153 F.Supp. 701 (D.C. Cir., 1957) for the proposition 

that knowledge and intent must be implicit in the facts and that willfulness 

connotes intent to do the act charged. As noted by Complainant on reply brief 

the United States District Court for the District of Columbia stated in that 

decision: 

"Whether the intentional acts described in various charges constitute such 

unethical or improper professional conduct as would warrant suspension or 

revocation of an attorney's permission to practice before the [Securities 

Exchange] Commission, is not a question which the Court may determine in this 

action." 

Although it found on the facts that compliance with the notice requirements 

had been achieved, the court, in the Schwebel case adopted the interpretation of 

"willfulness" as being the intentional doing of the act charged. 

The Administrative Law Judge has also studied and analyzed the case of Great 

Western Food Distributors v. Brannan, supra, cert. den., 345 U.S. 997, where the 

evidence sustained the Department's findings that the petitioners therein had 

cornered the egg market on the Chicago Mercantile Exchange and that such program 

was intentionally undertaken. The contention was raised that the order 

(sanction) was violative of the Administrative Procedure Act because the 

petitioners were not notified in writing of the charges being contemplated 

against them. In disposing of this argument, the court stated, inter alia, "* * 

* Assuming, arguendo, that this section is applicable to proceedings such as 

this, in view of the evidence that petitioners wilfully violated the act, i.e., 

that they intentionally set out to widen the spread between December and January 

futures, its relevance, is by its own terms, excluded in this instance." 

[Emphasis supplied] 

The Eastern Products case related to a suspension of a license under a 

Perishable Agricultural Commodities Act (7 U.S.C. 

 

499a). In that case, there was a specific finding that the licensees failed or 

refused truly and correctly to account and make full payment promptly for 

numerous shipments of perishable agricultural commodities over a five-month 
Page 17 

period. The court, in its opinion, did not seek to equate neglect and 

willfulness, but rather, "* * * that notorious neglect of explicit provisions of 

law may be evidence of willfulness," and that repeated violations justified the 

finding of willfulness therein. In Cargill, Inc. v. Hardin, 452 F.2d 1154 (8th 

Cir., 1971) cert den., 392 U.S. 906, the court found, among many other things, 

that the facts presented in that case showed intentional action on the part of 

Cargill and that certain manipulative actions caused severe fluctuations and 

"such severe fluctuations constitute a threat to a free and orderly market." 

The Department of Agriculture, through its Judicial Officer, has consistently 

n15 taken the position which is argued by the Complainant herein. In the case 

of David G. Henner, 30 Agric. Dec. 1151 (30 A.D. 1151) (1971), the Judicial 

Officer found that the Respondent's violation was willful. This was concluded 

because: 

"The respondent is an experienced trader, and the inference is inescapable 

that he intentionally paid more than he had to for November shell egg futures." 

n15. The one exception is American Fruit Purveyor's Inc., 30 Agric. Dec. 

1542 (30 A.D. 1542) (1971) where the Judicial Officer of the Department, in 

overruling this Judge stated in part: 

"In determining whether the respondent violated the Act, we start with 

the proposition that the respondent is not required to conduct its business 

activities in a manner that will make it easiest for the complainant to 

determine whether it has complied with the Act. The respondent must do 

only what the Act and lawful regulations require it to do -- no more, no 

less." 

* * * * 

"Under the complainant's construction of section 9(b), if a person 

violates the Perishable Agricultural Commodities Act by failing to pay 

promptly on one or more occasions, the complainant's only obligation is to 

notify the person in writing of the violation, and if he cannot demonstrate 

that he did not violate the Act, the complainant may institute an action to 

suspend or revoke his license without any further violation after the 

"notice" letter. The complainant contends that there is no obligation in 

this type of case to permit the person to "achieve compliance" with the Act 

because, in the complainant's view, the violation has already occurred and 

it is impossible to achieve compliance with respect to that violation. 

"The complainant would give meaning to the provision for achieving 

compliance only in the case of a continuing violation, such as a packing 

plant which had unsanitary conditions, in violation of Federal law, in 

which case the plant could achieve compliance with the sanitation 

requirements by correcting the unsanitary conditions. As to all violations 

of a non-continuous nature, the complainant contends that section 9(b) 

merely requires a letter to be sent to the alleged violator to give him an 

informal chance to demonstrate that he did not violate the Act before a 

formal action is instituted against him (Oral Arg. pp. 81-90). 

"That construction misses the point of the change that section 9(b) made 

as to licensing programs subject to the Administrative Procedure Act. 

There is no basis in the language of the Administrative Procedure Act or 

its legislative history for limiting the major benefit of section 9(b) to 

continuing violations. Except in cases of willfulness or those meeting the 

other specified exceptions, all licensees must be given a warning, i.e., a 

second chance, before an action is instituted to suspend or revoke a 

license because of a violation of law." 

* * * * 

"In H. P. Lambert Co. v. Secretary of Treasury, 354 F.2d 819, 821, fn. 2 

(C.A. 1), the Court stated that "Rule 9(b) may well allow the dog one bite 
Page 18 

* * *." This is consistent with the legislative history and the foregoing 

views as to the construction of section 9(b). <26> 

"There is no basis in the language of the Administrative Procedure Act, 

its legislative history, or in logic for the complainant's argument 

limiting the "second chance" benefits of section 9(b) to those licensees 

who are engaged in a continuing violation. Whether the violation is a 

continuing violation (such as an unsanitary packing plant) or a single 

violation (such as failure to pay promptly or misbranding), in either 

instance, the past violation has occurred and nothing that is done in the 

future can alter the fact that the Act has been violated in the past. But 

whether the violation is of a continuing nature or of a single instance 

nature, the licensee can "achieve compliance with all lawful requirements" 

by complying with the Act in the future. In the case of a continuing 

violation, such as an unsanitary plant, he can "achieve compliance with all 

lawful requirements" by eliminating the unsanitary condition. In the case 

of a prompt payment violation or a misbranding violation, he can "achieve 

compliance with all lawful requirements" by paying promptly or branding 

properly in the future. <27> (Footnotes omitted) 

"With respect to a non-continuing violation, such as failure to pay 

promptly, the complainant's construction of section 9(b) reduces the 

benefits of the Administrative Procedure Act merely to an opportunity for 

an informal hearing before the agency brings a formal action to suspend a 

person's license. But where Congress intends to enact such an informal 

settlement type of procedure, it uses clear language to provide for it, and 

it does not also give the violator an opportunity to "achieve compliance 

with all lawful requirements." 

* * * * 

"The construction of section 9(b) of the Administrative Procedure Act in 

this decision is contrary to that set forth in In re Harrisburg Daily 

Market, Inc., 20 Agriculture Decisions 955, 974-977, affirmed without any 

specific discussion as to section 9(b), 309 F.2d 646 (C.A.D.C.), certiorari 

denied, 372 U.S. 976. I am reluctantly forced to disagree with the 

construction of the Act in the Harrisburg case. The Harrisburg case relied 

on the case of Schwebel v. Orrick, 153 F. Supp. 701, 706 (D.C.D.C.), 

affirmed on other grounds, 251 F.2d 919 (C.A.D.C.), certiorari denied, 356 

U.S. 927, in which the Court said that section 9(b) of the Administrative 

Procedure Act "requires only that before suspension or revocation of any 

license the licensee shall be given written notice of the charges against 

him and an opportunity to meet such charges, unless willfulness of the 

licensee or the public interest requires summary action." But for the 

reasons stated above, I do not agree that section 9(b) requires only 

written notice with an opportunity to meet the charges. It requires, in 

addition, a second chance, that is, an opportunity to achieve compliance 

with the Act in the future. 

"It is clear that only one notice is required by section 9(b) of the 

Administrative Procedure Act, that is, once a licensee has been adequately 

warned, if he subsequently violates the Act, the agency may proceed to 

suspend his license without any further warning, notice, or opportunity to 

demonstrate informally that he did not violate the Act." (Emphasis 

supplied) 

 It was concluded therein by the Judicial Officer that since the Respondent 

intentionally traded in a manner to cause the closing price to be artifically 

high such intention connoted willfulness. The authorities relied upon by the 

Department in support of that contention are set forth therein. 

In Economou and Economou & Co., 32 Agric. Dec. 14 (32 A.D. 14) (Januuary 15, 

1973), reversed F.2d (2nd Cir., March 28, 1974), the Respondents were 

denied trade privileges on all contract markets for a period of 90 days where 
Page 19 

the evidence, as found by the Judicial Officer, showed that the Respondents had 

violated the Act and the Regulations. In that case, the Judicial Officer (the 

individual to whom the Secretary has delegated final authority in these matters) 

acknowledged that the Respondents therein had received no written notice prior 

to the original complaint issued in that case and, relying upon the legal 

authorities cited therein [essentially the same as are relied upon by the 

Complainant in this proceeding], it was concluded that a violation is willful if 

a violator does an act which is prohibited, irrespective of evil motive or 

reliance on erroneous advice or if such individual acts with careless disregard 

of statutory requirements. The Department's position was that willfulness means 

no more than that the person charged with the duty knows what he is doing and it 

does not 

 

mean that, in addition, he must suppose that he is breaking the law. 

In reversing the Department of Agriculture in the Economou case, the Court of 

Appeals for the Second Circuit stated in a per curiam decision, inter alia:

"* * * the essential finding of willfulness, now passionately protested, was 

made in a proceeding instituted without the customary warning letter, which the 

Judicial Officer conceded might well have resulted in prompt correction of the 

claimed insufficiencies. Under those circumstances, the finding of willfulness 

appears erroneous on the record taken as a whole, and the sanctions imposed 

unwarranted." 

In Capitol Packing Company v. United States, 350 F.2d 67 (10th Cir., 1965) an 

adjudicatory proceeding under the Packers and Stockyards Act was subject to 

review. Among the many issues involved therein was that of "willfulness" since 

the written notice provisions of the Administrative Procedure Act had not been 

satisfied. The Judicial Officer had made no specific finding of willfulness. 

Upon review the Tenth Circuit noted that the Department of Agriculture sought to 

rely upon past admitted violations of which the registrants were not charged in 

the proceeding under review. Arguments and contentions as are made in the 

present proceeding were argued in Capitol Packing, e.i., "* * * willfulness is 

shown because the petitioners intentionally committed a prohibited act, * * *." 

[Emphasis supplied] In commenting upon Goodman v. Benson, 286 F.2d 896 the Tenth 

Circuit noted that the Seventh Circuit in the Goodman case found that the "* * * 

violations constituted clear violations of the Act and that he was not acting in 

good faith. The remainder of the cases cited by the Government in support of its 

interpretation also show a gross disregard of the law. * * *" [Emphasis 

supplied] The court in Capitol Packing n16 found that the facts therein 

justified the finding of willfulness, i.e., an intentional misdeed or such gross 

neglect of a known duty as to be the equivalent thereof. Thus, although finding 

willfulness, the element of intent was not vanished from the court's mind. 

n16. The Judicial Officer in discussing Capitol states that the 

definition of willfully adopted by the Court in Capitol "would seem to be 

rendered nugatory by the [Supreme] Court's decision in Butz v. Glover 

Livestock Comm'n Co., 441 U.S. 182, 185,187 (1973), citing inter alia at 

411 U.S. 187, fn. 5" 

"'Wilfully' could refer to either intentional conduct or conduct that 

was merely careless or negligent." [Emphasis supplied] 

In the subject proceeding no warning letter was sent out, nor has Complainant 

advanced any reason as to why it was not. A 

 

reading of Complainant's briefs might lead one to reasonably conclude that it is 

Complainant's position that none was required inasmuch as, in Complainant's 

view, the mere occurrence of the acts giving rise to the violation are per se

evidence of wilfulness. If Complainant does not intend to send out warning 
Page 20 

notices n17 and seeks to rely upon establishing "willfulness" as an alternative 

thereto, then, in such event, it must be held to strict rules of proof and the 

application of legal principles must be carefully and meticulously employed. 

n17. The record does not disclose the Complainant's policy in this 

regard. However, note is made of the Department's statement, "* * * Even 

though a broad discretion appears to be placed in the agencies * * * 

extreme difficulty would be encountered in determining the existence of 

clearly demonstrated willfulness * * *." See Secretary Claude R. Wickard's 

letter of June 21, 1945 to Senator Pat McCarran, Chairman, Committee on the 

Judiciary. 

Attentive reading of the decisions in the Henner and Cargill cases, supra,

reveals an apparent "intent" or "purpose" surrounding the actions complained of. 

The evidence herein does not establish that the Respondent Shatkin had any 

"intent" or "purpose" attached to his exceeding the trading limits. Rather, the 

excessive trading was caused by accident or inadvertence. Respondent admits 

that he was knowledgeable of the rules and regulations, including the trading 

limits, but to infer intent, purpose, or design from such knowledge would be to 

engage in unwarranted conjecture and speculation. The Complainant has described 

Respondent's action as "carelessness," but the evidence of record does not 

establish that Respondent was careless in his trading procedures, even though 

his particular modus operandi was to trade close to the limit. Nor may we 

impute ill-doing because of Respondent's propensity to approach the trading 

limit. The Respondent describes himself as a successful trader and attributes 

this to his unique style of trading. The evidence does show that on more than 

one occasion Respondent or his employees improperly filled out the CEA Form 203 

report. The Complaint filed herein does not allege this to be a matter in issue 

or a violation, and indeed, it is not a matter in issue. 

Basically, what must be determined herein is whether actions of inadvertence 

or accident are sufficient evidence of "willfulness" as that term is used in the 

Administrative Procedure Act and the Complainant's regulations, both cited 

above. 

Despite the guidelines set forth in the above-mentioned cases 

 

the term "willful" is commonly employed in averring or describing an act, or in 

denoting the quality or intensity of the act. As with all terminology it is 

susceptible of different shades of meaning and may be used in different contexts 

depending on the nature of the subject. It has been said that the term 

"willful" means nothing more than that the person, about whom the expression is 

used, knows what he is doing, intends what he is doing, and is a free agent. 

Another view is that the term implies a conscious act of the mind and denotes an 

attitude of the mind and will but that something more than a mere exercise of 

the will is imparted in that there is included, when used in connection with an 

act forbidden by law, the idea of consciousness or knowledge of all the 

circumstances. Thus, one view of the meaning of "willfulness" would carry the 

idea that, with knowledge, the will consented to, designed and directed the act. 

The determination of whether the Respondent's actions in exceeding the 

trading limits violated the Act is not an easy one for the Administrative Law 

Judge to make. Departmental policy as discerned from the published Agricultural 

Decisions and the court cases which have sustained the Department would tend to 

support the contentions of Complainant in the absence of a close scrutiny of the 

cases which reveals the presence of the element of intent or of purpose or 

design. In none of those cases was the violation in question the result of 

accident or inadvertence. This difference in the factual circumstances is 

deemed to be of material importance. In Economou, supra, the Second Circuit did 

not elaborate on the specific reasons for reversal. 

After having given careful thought and consideration to the entire record 

herein, it is believed that the interests of justice and the statutory mandate 
Page 21 

of the Administrative Procedure Act required the issuance of a warning letter in 

this case, and that in the absence of such letter, the Complainant has not 

established a "willful" violation. To conclude otherwise would be tantamount to 

avoidance of the statutory provisions providing for a warning letter in 

instances of minor or unavoidable infractions devoid of intent, design or 

purpose. This was not intended by the Congress in enacting the Administrative 

Procedure Act and the Administrative Law Judge perceives it an improper function 

to attempt to enlarge upon or modify Congressional intent. 

In all probability, the conclusions reached herein will be reversed by the 

Judicial Officer. In the event this case is reviewed by a Federal Court, and 

since this initial decision will become part 

 

of the record, it is suggested that it would be of great value were the Court to 

be so lenient as to comment, among other things, on the necessity or nonnecessity of warning letters in non-continuing violations such as the factual 

circumstances present in this case. Such indulgence would provide a valuable 

guideline for Administrative Law Judges, including this one, when they are 

presented with factual situations similar to the subject case. 

Other matters raised in this proceeding are summarized hereinafter. However, 

in view of the Administrative Law Judge's determination that "willfulness" has 

not been shown in this case and that no "warning letter" was issued with respect 

to the violation in question, the following contentions are concisely set forth. 

Anticipating a finding of fact that the Respondent's action of exceeding the 

daily trading limit was the result of a "clerical error," Complainant submits 

that such fact should not mitigate the requested sanction. In support thereof, 

it premises its position on certain intimations: 

(1) A spreading broker, such as the Respondent, has a beneficial balancing 

effect on the commodity market, 

(2) The volume traded on the Chicago Board of Trade on August 27, 1971, was 

heavy, causing great confusion, and 

(3) The violation was due, "only," to a clerical error and was not done 

through any fault of Respondent. 

Arguing from such hypothesis the Complainant argues that it should be 

permitted to impose its sought for sanction, in any event, so as to dissuade 

violations of the daily speculative trading limit and in order to comply with 

the intent of Section 4a of the Act. 

Basically, Complainant's argument in this connection is that, notwithstanding 

the statutory requirements for "willfulness" or the issuance of warning letter, 

a sanction must still be imposed in this case. In support of this contention 

Complainant argues that Respondent has been characterized, by several of his 

witnesses, as a spreading broker. Mr. Kirshbaum, a member of the Chicago Board 

of Trade for 41 years, testified that a spreading broker is what the Commodity 

Exchange Authority desires. In fact Mr. Kirshbaum says that this type of broker 

adds a balancing factor to the market, could have no adverse effect on any 

market conditions and would never cause undue price fluctuations. Mr. 

 

Kirshbaum testifies further that with regard to spreading brokers, "Congress 

doesn't really understand." 

Section 4a of the Commodity Exchange Act reads in part: 

"Sec. 4a(1) 

* * * * 
Page 22 

"Nothing in this section shall be construed to prohibit the commission from * 

* * exempting transactions normally known to the trade as 'spreads' * * * or 

from fixing limits applying to such transactions * * * different from limits for 

other transactions * * *." 

Complainant suggests that the Commodity Exchange Commission has drawn on the 

expertise of the Commodity Exchange Authority and has found that spreaders can 

and will have an adverse effect on the market, should they cumulatively violate 

the speculative daily trading limit. The Commodity Exchange Commission has not 

granted preferential treatment to spreaders and a violation should be treated 

with sufficient sanctions. 

In support of this line of reasoning, the Complainant maintained that the 

volume traded on the Chicago Board of Trade on August 27, 1971 was no more than 

a normal trading day for that period in time; the average daily volume of 

soybean futures in all futures combined traded on the Chicago Board of Trade, 

for the month of July 1971, was seventy-three million seven hundred and twentyseven thousand (73,727,000) bushels; on eleven of the twenty-one trading days in 

that month the volume exceeded that of August 27, 1971; during this period there 

were only two apparent violations of the speculative daily trading limit; and 

that although there may be an increase in possible error where the volume is 

very high, August 27, 1971 was an average trading day, and volume was not a 

factor herein. 

Assuming clerical error the Complainant states that to allow a trader's 

violation of the speculative daily trading provisions of the Commodity Exchange 

Act to be excused because of clerical error would render impotent this provision 

of the Act. Thus, according to Complainant's argument, in order to avoid undue 

price fluctuations, the Commodity Exchange Act provides for limits on both the 

daily speculative volume and the open position a trader may have in any 

regulated commodity. When a violation of these limits occur, sufficient 

sanctions must be imposed in order to dissuade subsequent violation. 

In response to this argument of Complainant, the Respondent 

 

maintains that "spreaders," unlike speculators, create balance, operate for the 

benefit of the public, and their operations "stabilize" the market by not 

disturbing price. Respondent interprets the language of Section 4a of the 

Commodity Exchange Act as unequivocally illustrating Congressional intent in 

enacting this provision, the force of which is "to diminish, eliminate, or 

prevent an undue and unnecessary burden on interstate commerce." In subsection 

(1) of Section 4a, such burden is defined as "excessive speculation in any 

commodity * * * causing sudden or unreasonable fluctuations or unwarranted 

changes in the price of such commodities * * *." Section 150.4 simply defines 

excessive speculation as in excess of 3,000,000 bushels. The pertinent inquiry, 

according to Respondent, is whether one who exceeds the aforesaid limit does 

cause such fluctuations or changes in price, and whether he does it willfully. 

Respondent's assertion of the legal issues herein are the more correct. The 

record evidence fails to establish that Respondent's actions on August 27, 1971 

caused or influenced any sudden or unreasonable fluctuations or unwarranted 

changes in the price of soybean futures, the act Congress intended to prevent. 

The record evidence in this proceeding does not establish that Respondent's 

action in exceeding the daily trading limit produced any adverse price 

fluctuation. The witness, Clark testified that the only study made was a 1930 

study on price manipulation; n18 that no general study ever was made on the 

single factor of the effect on market 

 

price by trading in excess; and that the Commodity Exchange Authority made no 

analysis or study of what effect, if any, the alleged excess trading by 

Respondent on August 27, 1971 had on the price of soybean futures on that day 

nor did it try to determine whether Respondent's trading affected prices or the 
Page 23 

effect severe sanctions might have upon potential violators of the daily volume 

limit rule. He indicated that a trader may unintentionally exceed the limit 

without affecting price. n19 

n18. The witness Clark's testimony relative thereto is as follows: 

"A There have been studies made in the past. Of course, the problem in 

making studies now is you do have speculative limits, so therefore you hope 

there is not much trading in excess of the speculative limits. So 

therefore how do you really measure something that doesn't happen very 

often? 

"So most of the studies that have been done by the CEA in the past were 

done back in the days before speculative limits. They were done back in 

the 19 -- in the 20's and 30's. And I have read a lot of that material, 

and the conclusions that were reached and the data collected at that time 

was summarized. And from that information it was clear to the CEA and the 

Commodity Exchange Commission at that time, that when you did have large 

trades frequently occurring in excess of the limits, that certainly there 

was an over-all price effect, and adverse price effect. 

"Q That was back in the 30's? 

"A Yes." 

"Q But you have made no studies of the effect on prices by trading in 

excess of the daily limits, is that correct? 

"A No general study, no, and not considering only that factor. 

"Q And you have no individual study on any individual cases involving 

trading in excess of the daily limit, not involved with price manipulation? 

"A No, I don't recall making such a study. 

"Q Do you have any current information, other than the 1930 reports that 

you mentioned, that you could support your opinion, or base your opinion 

on, that daily trading in excess of the limit causes an unwarranted price 

fluctuation? 

"A Well, the most current investigation, or information, I think would 

be these cases we have investigated over the years involving price 

manipulation. 

"Q But not limited to daily trading in excess of the limits without 

manipulation involvement? 

"A No. I don't recall any current studies on that, that I have been 

involved in. 

"Q Now, notwithstanding all of that, you still have the opinion that 

excessive speculation on a given day would result in an unwarranted price 

fluctuation? 

"A Yes. 

"Q Does it matter the type of trading that the individual might employ?" 

n19. The witness Clark, Director, Central Region, CEA, gave testimony 

which set forth, inter alia:

"A Speculative limits are very, very important for protecting the 

functions of the futures markets. The primary functions of the futures 

markets are two. The first function is the pricing function of the 

markets. Also you have the hedging function of the Market. These 

functions are and were recognized in the Commodity Exchange Act and it's 

because of these economic functions that are served by the futures markets 

that we have the regulation of the futures markets, because, going back 

before the Commodity Exchange Act was passed, the first law was passed in 

1922 under the name of the Grand Futures Act. 
Page 24 

"The question then before Congress was whether the futures markets 

should be allowed to continue to exist." 

Further testimony was to the effect: 

"The people that we are concerned with, the groups that are mentioned in 

the law and in the legislative history are the producers, first of all; 

that is, the people who actually produce the commodities have certainly a 

lot of interest in the prices registered by the futures markets, because 

these futures prices are so important in establishing the price of 

soybeans, for example, as it moves from the consumer to the hands of the 

customers themselves, and this is in interstate commerce. That is, these 

prices are important all over the country; so, in order to protect this 

pricing function and prevent unwarranted price changes, that might result 

from the actions of an individual trader; that is, buying or selling too 

much on one day, so this is trades that would have possibly some price 

affect or by establishing a position that's too large where perhaps he 

dominates the Market or establishes a corner on the Market or some other 

manipulative technique, in order to protect the Market against the 

activities of large traders and in order to insure that the Market is 

competitive; that is, it does consist of many, many traders trying to buy 

and sell rather than having a few traders dominate the trading and, 

therefore, exerting excessive effect on price or unwarranted affect on 

price. The law then provides for the establishment of speculative limits." 

* * * * 

"A I think the speculative limits have been effective in reducing the 

activities of market plungers and people who would be making rapid 

reductions of large positions, and it's limited their activities to reduce 

the adverse price affects that would result if the limits were not in 

effect. 

"Also I think the speculative limits have been effective in helping to 

reduce the occurrence of Market corners, for example, and other types of 

price manipulation that might result from large positions." 

 

On the other hand, Mr. Kirshbaum did review the prices for soybean futures on 

August 27, 1971 and found the entire range in price from high to low to be 

approximately four cents a bushel. He further reflected the fact that the 

volume of trading on October 30, 1973, the day prior to his testimony was 

slightly over one-half of the volume on August 27, 1971 and that the fluctuation 

between high and low was approximately thirty to forty cents a bushel, 

illustrative of the fact that the price range on August 27, 1971 was normal. 

In the absence of persuasive proof that Respondent's trading in 

 

excess of the daily limit on August 27, 1971 did cause an undue price 

fluctuation or other adverse effect upon the market, or reasonably might have 

been expected to cause one, as opposed to conjecture and influence, it cannot be 

found that such undue price fluctuation occurred. The evidence of record 

indicates the contrary. 

We next consider Respondent's argument that the filing of the Complaint is 

barred by laches in that it took the Department of Agriculture seventeen (17) 

months after it received Respondent's CEA Form 203 to bring the Complaint. Both 

parties have set forth argument relative to whether or not the case was immersed 

in public interest and whether the Complainant pursued the matter in its 

sovereign capacity. The theory of estoppel is likewise argued. Respondent's 

contention that he "detrimentally suffered" because of the Complainant's alleged 

delay is not persuasive. 
Page 25 

Without deciding whether or not the Complainant proceeded in its sovereign 

capacity to protect the national public interest under the Commodity Exchange 

Act, the record as a whole does not establish laches to the extent that it would 

constitute an affirmative defense to bar the Government from proceeding herein. 

Admittedly, there may have been less than quick, expeditious action. Among 

explanations given by the Complainant for the apparent delay were those 

attributable to a large workload, accommodating to a "large backlog of 

investigations" and because as the "* * * Regional Director I had to make sure 

that sufficient personnel were assigned to these price manipulation 

investigations, and this means then that lower priority cases or cases of a type 

that are considered lower priority than price manipulation have to be deferred, 

and this type of case was one that's considered lower priority than price 

manipulation, so I didn't pull people off the price manipulation investigations 

to work on this case." Such testimony, however, is not evidence of lack or 

diligence nor unreasonable or arbitrary inaction. 

To be a bar to the institution of this proceeding, the delay on the part of 

the Government would have had to been shown to have been materially detrimental 

to Respondent and unreasonable in length. This has not been done. 

The final matter in this proceeding which deserves extended discussion 

relates to Complainant's request for sanctions. In its proposed Order the 

Complainant seeks an Order to the effect that Respondent shall cease and desist 

from exceeding the trading and position limits fixed by the Orders of the 

Commodity Exchange 

 

Commission and that the registration of Respondent as a floor broker under the 

Commodity Exchange Act be suspended for a period of six (6) months. Respondent 

would be prohibited from trading on or subject to the rules of any contract 

market for a period of six (6) months, and all contract markets would refuse 

trading privileges to the Respondent during this period. Such prohibition and 

refusal would apply to all trading done and positions held directly by the 

Respondent, either for his own account or as agent or representative of any 

other person or firm, and also to all such trading done and positions held 

indirectly through persons or firms owned wholly or in a substantial amount by 

the Respondent or in any way subject to his direction or control, wholly or 

substantially, including but not limited to Shatkin Trading Company. 

Both the Complainant's regulations and the Administrative Procedure Act cited 

hereinabove contemplate that except in cases of willfulness the withdrawal, 

suspension, revocation, or annulment of a license is lawful only if a written 

warning has been given the registrant.

On the basis of the facts of this case we have found neither willfulness nor 

a written warning. Accordingly, it is believed that any suspension of 

Respondent's registration would be illegal and erroneous. 

However, we find no such prohibition with respect to a cease and desist 

order. In view of Respondent's admission that he did exceed the daily trading 

limit in soybean futures and after consideration of the entire record, the 

interests of fairness and justice will best be served by the issuance of the 

Order below. 

All contentions and arguments of the parties were weighed, analyzed, and 

considered. Those not specifically discussed were deemed not to require 

extended discussion. 

The briefs, proposed findings, and conclusions filed by the parties and the 

evidence of the entire record were considered in making the findings and 

conclusions set forth above. To the extent that some are inconsistent with the 

findings and conclusions set forth in this decision, they are denied. 

ORDER
Page 26 

1. The Respondent, Henry S. Shatkin, shall cease and desist from exceeding 

the trading and position limits fixed by the orders. 

 

rules, and regulations of the Commodity Exchange Commission. 

2. Such Order shall become effective on the date this Decision and Order 

become final. 

3. Pursuant to the amended Rules of Practice governing proceedings under the 

Commodity Exchange Act, this Decision and Order become final without further 

procedure 35 days after service hereof, unless appealed by the Secretary or by a 

party to the proceedings within 30 days after service, as provided in § 0.16 and 

§0.18 of the amended Rules of Practice published in the Federal Register of 

August 20, 1973 (38 F.R. 22381). 

4. A copy of this Decision and Order shall be served on each of the parties. 

(No. 16,265) 

In re HENRY S. SHATKIN. CEA Docket No. 211. Decided February 14, 1975. 

Order granting motion to withdraw appeal 

Herbert R. Bader, for complainant. 

Philip M. Bloom, Chicago, Ill., for respondent. 

Dorothea A. Baker, Administrative Law Judge. 

Decision by Donald A. Campbell, Judicial Officer.

On January 7, 1975, the complainant filed an appeal to the Judicial Officer 

from the initial decision filed herein on November 21, 1974, by the 

Administrative Law Judge, Dorothea A. Baker. Final administrative authority to 

decide cases under the Commodity Exchange Act has been delegated to the Judicial 

Officer (37 F.R. 28475; 38 F.R. 10795). n1 

n1. The office of Judicial Officer is a career position established 

pursuant to the Act of April 4, 1940 (7 U.S.C. 450c-450g), and 

Reorganization Plan No. 2 of 1953 (5 U.S.C. 1970 ed., Appendix, p. 550). 

The Department's first Judicial Officer held the office from 1942 to 1972. 

The present Judicial Officer was appointed in January 1971, having been 

involved with the Department's regulatory programs since 1949 (including 3 

years' trial litigation; 10 years' appellate litigation relating to appeals 

from the decisions of the prior Judicial Officer; and 8 years as 

administrator of the Packers and Stockyards Act regulatory program). 

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