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Commodity Futures Trading Commission 

CEA CASES 

NAME: TIDEWATER GRAIN COMPANY AND R. J. BARNES 

CITATION: 15 Agric. Dec. 205 

DOCKET NUMBER: 71 

DATE: MARCH 21, 1956 

DOCUMENT TYPE: DECISION AND ORDER 

AGRICULTURE DECISIONS

BEFORE THE SECRETARY OF AGRICULTURE

UNITED STATES DEPARTMENT OF AGRICULTURE

(No. 4563) 

In re TIDEWATER GRAIN COMPANY AND R. J. BARNES, CEA Docket No. 71. Decided 

March 21, 1956. 

Suspension of Registration -- Denial of Trading Privileges -- Stipulation by 

Respondents -- Jurisdiction of Secretary -- Furnishing Information to Determine 

Proper Handling of Customers' Funds -- Consent Order

Where it is alleged that respondents refused to furnish information of 

profit-sharing agreements of their customers with another corporation under 

common ownership and management with the respondent corporation in order that a 

determination might be made as to the proper handling of the funds of such 

customers, and respondents entered a stipulation admitting jurisdiction of the 

Secretary, waving oral hearing, and consenting to the entry of an order, held,

respondent company's registration is suspended for five days and trading 

privileges are denied respondents for the same period but such prohibitions 

shall not become effective unless, within a year, the respondents shall have 

been found to have violated the statute or regulations by reason of acts other 

than those constituting the basis for the charges brought in this proceeding. 

Mr. Benj. M. Holstein for Commodity Exchange Authority. Respondents pro se. Mr 

Jack W. Bain, Referee. 

Decision by Thomas J. Flavin, Judicial Officer

PRELIMINARY STATEMENT

This is a quasi-judicial proceeding under the Commodity Exchange Act (7 

U.S.C. 1952 ed., Chapter 1) instituted by a complaint and notice of hearing 

issued under section 6(b) of the act (7 U.S.C. 1952 ed., § 9) by the Assistant 

Secretary of Agriculture on January 27, 1956. 

The respondents are a corporation registered as a futures commission merchant 

under the act and an individual who is its president and principal shareholder. 

The complaint charges that the respondents wilfully violated the act by refusing 

to furnish information to the Commodity Exchange Authority with respect to 

profit-sharing agreements between two of the corporate respondent's customers 

and Commodities Management 

Corporation, a Pennsylvania corporation of which the individual respondent, R. 

J. Barnes, is also the president and principal shareholder. 
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No hearing has been held. On March 12, 1956, prior to the date set for 

filing the answer, respondents submitted a joint statement in which they admit 

the facts alleged in the complaint and contained herein under "Findings of 

Fact", waive hearing on the charges, and consent to the entry of the order 

hereinafter set forth. The statement also contains a stipulation that Tidewater 

Grain Company and R. J. Barnes will make available for examination by the 

Commodity Exchange Authority, upon request, all profit-sharing agreements or 

arrangements between the two customers in question and Commodities Management 

Corporation, and that the said respondents will, in like manner, furnish to the 

Commodity Exchange Authority upon request similar information and details 

concerning any interest, direct or indirect, which the said Tidewater Grain 

Company or R. J. Barnes may now or hereafter have in any customer's account. 

FINDINGS OF FACT

1. Tidewater Grain Company is a Delaware corporation in the grain 

merchandizing and brokerage business, with an office and place of business at 

301 Bourse Building, Philadelphia, Pennsylvania. The said corporation is now 

and has been at all times material herein a registered futures commission 

merchant under the Commodity Exchange Act, trading in commodity futures on 

contract markets for the accounts of customers. Respondent R. J. Barnes, an 

individual, is now and has been at all such times the president and principal 

shareholder of said Tidewater Grain Company, and also the president and a 

principal shareholder of Commodities Management Corporation, a Pennsylvania 

Corporation engaged in the business of managing and directing commodity futures 

trading for others, with an office and place of business at 301 Bourse Building, 

Philadelphia, Pennsylvania. 

2. At all times material herein, respondent Tidewater Grain Company was 

carrying among its regulated commodity accounts the "managed accounts" of 

Francis G. McGrath and Donald M. Steele, customers of said Tidewater Grain 

Company, and at all such times funds belonging to the said accounts have been 

comingled and deposited together with the funds of other customers of said 

Tidewater Grain Company. Each of such 

accounts was at all such times and is now the subject of an agreement between 

its owner and Commodities Management Corporation, under which Commodities 

Management Corporation manages the accounts, controls and directs the trading 

and shares in the resulting profits or losses. 

3. In October and November, 1955, and in January 1956, the Commodity Exchange 

Authority requested information from the respondents herein as to the details of 

the profit-sharing agreements between Commodities Management Corporation and the 

said Francis G. McGrath and Donald M. Steele, in order that a determination 

might be made with respect to the proper handling of the funds in such accounts 

under the applicable provisions of the Commodity Exchange Act and the rules and 

regulations thereunder, but respondents Tidewater Grain Company and R. J. Barnes 

refused to furnish such information. 

CONCLUSIONS

Section 0.4(b) of the rules of practice under the Commodity Exchange Act (17 

CFR 0.4(b)) provides as follows: 

(b) Consent order. At any time after the issuance of the complaint and prior 

to the hearing in any proceeding, the Secretary, in his discretion, may allow 

the respondent to consent to an order. In so consenting, the respondent must 

submit, for filing in the record, a stipulation or statement in which he admits 

at least those facts necessary to the Secretary's jurisdiction and agrees that 

an order may be entered against him. Upon a record composed of the complaint 

and the stipulation or agreement consenting to the order, the Secretary may 

enter the order consented to by the respondent, which shall have the same force 

and effect as an order made after oral hearings. 
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The facts admitted by the respondents are set forth in the Findings of Fact 

and are identical with those alleged in the complaint. Such facts are 

sufficient to subject the respondents and each of them to the jurisdiction of 

the Secretary of Agriculture. 

The complainant has filed a recommendation which recites that it has 

carefully considered the stipulation and the terms of the order to which the 

respondents propose to consent. This recommendation states that in view of the 

respondents' agreement to furnish the information in question and similar 

information in future instances, an operative sanction is not required, 

and that the prompt entry, without further proceedings, of the order to which 

the respondents have consented would provide an adequate sanction, constitute a 

satisfactory disposition of the case, serve the public interest, and effectuate 

the purposes of the Commodity Exchange Act. For these reasons, the complainant 

recommends that the stipulation and waiver be accepted and that the order to 

which the respondents have consented be issued. It is so concluded. 

ORDER

The registration of respondent Tidewater Grain Company as a futures 

commission merchant under the Commodity Exchange Act is suspended for a period 

of five (5) days, and all contract markets shall refuse all trading privileges 

to Tidewater Grain Company and R. J. Barnes for the same period, such refusal to 

apply to all trading done and positions held by the said Tidewater Grain Company 

and R. J. Barnes, or either of them, directly, or indirectly, provided, however, 

that such suspension of registration and refusal of trading privileges shall not 

become effective unless, within one year from the date of issuance of this 

order, the respondents or either of them should, after complaint and hearing in 

accordance with established procedure, be found to have violated the Commodity 

Exchange Act or regulations by reason of acts other than those constituting the 

basis for the charges brought in this proceeding, in which event a supplemental 

order in this proceeding may be issued against the said respondents or either of 

them without further notice, making effective forthwith the aforesaid suspension 

of registration and refusal of trading privileges. 

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