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Commodity Futures Trading Commission 

CEA CASES 

NAME: SECRETARY OF AGRICULTURE V. RAY E. STUART 

DOCKET NUMBER: 31 

DATE: APRIL 17, 1942 

DOCUMENT TYPE: COMPLAINT 

UNITED STATES DEPARTMENT OF AGRICULTURE 

AGRICULTURAL MARKETING ADMINISTRATION 

COMMODITY EXCHANGE BRANCH 

WASHINGTON, D. C. 

UNITED STATES OF AMERICA 

BEFORE THE SECRETARY OF AGRICULTURE 

CE-A Docket No. 31 

Secretary of Agriculture Complainant v. Ray E. Stuart, Respondent 

Complaint and Notice of Hearing 

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

Exchange Act (7 U.S.C. 1940 ed. 1) and the rules and regulations promulgated 

pursuant thereto, this complaint is issued alleging the following: 

1. 

Ray E. Stuart is an individual trading and doing business as R. E. Stuart & 

Company, at Freeport, Illinois. 

2. 

The respondent, during the years 1940, 1941, and 1942, has been registered 

with the Secretary of Agriculture as a futures commission merchant under the 

provisions of the Commodity Exchange Act and has engaged in business as a 

futures commission merchant under the name and style of R. E. Stuart & Company, 

at Freeport, Illinois. 

3. 

During the years 1940, 1941, and 1942, the respondent received orders from 

various customers and accepted funds from these customers to margin transactions 

in contracts for the future delivery of grains, on and subject to the rules of 

the Board of Trade of the City of Chicago, a contract market designated as such 

by the Secretary of Agriculture. 

4. 

The transactions in grain futures contracts executed for the account of the 

respondent's customers on the Board of Trade of the City of Chicago were made 

through the firm of Winthrop, Mitchell & Company, Chicago, Illinois, in 1940 and 

1941, and through Shearson, Hammill & Company, Chicago, Illinois, in 1942. Both 

of these firms during the periods referred to were clearing members of the 

Chicago Board of Trade, and the respondent during this time was a correspondent 

or agent of these firms. 

5. 

During the period from November 20, 1940, to February 1942, the respondent 

entered orders for the purchase and sale of commodities for future delivery on 
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and subject to the rules of the Board of Trade of the City of Chicago in the 

accounts of customers without the knowledge or consent of the customers, thereby 

using the customers' funds to margin and guarantee the trades of the respondent. 

These trades were made in the accounts of Lorena 

Medeke, Edna Althof, Mrs. Raymond Young, and Heiko Greenfield, and as a result 

of these trades, the funds on deposit with the respondent for these parties were 

completely dissipated. 

6. 

The respondent, while a correspondent of a member firm of a contract market, 

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

commodities named in the Commodity Exchange Act on contract markets, which 

contracts may be used for hedging or determining the price basis of transactions 

in interstate commerce in the commodities involved, on April 22, 1941, and 

various dates thereafter, including April 26, September 15, September 22, 

October 8 and 14, November 22, 28, and 29, December 4, 9, and 13, 1941, and 

February 26, 1942, bucketed such orders and confirmed the execution thereof to 

various customers including Mrs. Raymond Young, Lorena Medeke, Edna Althof, and 

Heiko Greenfield when, in fact, the orders were not executed on a contract 

market but were held by the respondent for his own account, all in violation of 

Section 4b, Subsection (D) of the Commodity Exchange Act. 

7. 

The respondent from April 22, 1941, to February 26, 1942, conducted an office 

and place of business at Freeport, Illinois, for the purpose of soliciting or 

accepting orders for the purchase or sale of commodities for future delivery and 

conducting deals in commodities for future delivery that could be used for 

hedging or determining the price basis for such transactions in interstate 

commerce and 

executed or consummated such orders, contracts, or dealings otherwise than by or 

through a member of a contract market, in violation of Section 4h, Subsection 

(1), of the Commodity Exchange Act. 

8. 

The respondent, during the times hereinbefore mentioned, delivered for 

transmission through the mail or in interstate commerce by other means of 

communication, confirmations of the execution of and reports of the price of 

contracts of sale of commodities for future delivery, on or subject to the rules 

of the Board of Trade of the City of Chicago, when such contracts were not made 

on or through a member of, a Board of Trade which had been designated by the 

Secretary of Agriculture as a contract market, all in violation of Section 4 of 

the Commodity Exchange Act. 

9. 

The respondent by reason of the facts alleged in paragraphs 4 to 8, 

inclusive, did willfully make and cause to be made misleading and false reports 

and statements concerning contracts for the future delivery of commodities to 

customers; willfully attempted to and did deceive such customers in regard to 

such contracts and acts of agencies performed with respect to such contracts; 

willfully defrauded such customers of funds deposited to margin and guarantee 

their trades in commodities for future delivery, failed to keep accurate records 

with respect to such trades and gave false information 

to representatives of the Department of Agriculture with respect to such trades, 

all in violation of the provisions of the Commodity Exchange Act. 
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THEREFORE, the respondent is hereby afforded an opportunity to answer the 

foregoing allegations in accordance with the rules of practice and is notified 

to be and appear before a referee to be appointed by the Secretary of 

Agriculture at a hearing to be held at 10:00 a.m., on May 6, 1942, at Room 1200, 

Board of Trade Building, 141 W. Jackson Boulevard, Chicago, Illinois, or at such 

other times and places as may be determined by the referee, and then and there 

show cause, if any there be, why an order should not be made revoking the 

registration of the respondent as a futures commission merchant and directing 

that all contract markets, until further notice by the Secretary of Agriculture, 

refuse all trading privileges to the respondent. 

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

named respondent, by delivery of a true copy hereof to him by an employee of the 

Department of Agriculture or by registered mail, at least three days prior to 

the date herein set for hearing. 

(SEAL) 

Done at Washington, D. C., this 17th day of April 1942. Witness my hand and 

the seal of the Department of Agriculture. 

/s/ Grover B. Hill 

Assistant Secretary of Agriculture 

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