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Commodity Futures Trading Commission 

CEA CASES 

NAME: ASA V. WILDER 

DOCKET NUMBER: 154 

DATE: APRIL 28, 1969 

DOCUMENT TYPE: RECOMMENDED DECISION 

UNITED STATES DEPARTMENT OF AGRICULTURE 

BEFORE THE SECRETARY OF AGRICULTURE 

In re: Asa V. Wilder, Respondent 

CEA Docket No. 154 

Recommended Decision 

Preliminary Statement 

This is an administrative proceeding under the Commodity Exchange Act (7 

U.S.C. 1 et seq.), hereinafter referred to as the act, instituted by a complaint 

and notice of hearing issued under section 6(b) of the act (7 U.S.C. 9) on April 

8, 1968, by the Assistant Secretary of Agriculture. The respondent is an 

individual, who at the time of the matters involved herein was the manager of 

the commodity operations of the San Francisco, California, office of Harris, 

Upham & Co., a stock and commodity brokerage firm. 

The principal allegations of the complaint are as follows: The respondent, 

while employed as the manager of the commodity operations of the San Francisco 

office of Harris, Upham & Co., personally handled the stock and commodity 

futures trading accounts of one Mrs. Bertha Hecht, a customer of that firm, and 

in so doing gained her confidence to the extent that the trading in such 

accounts was conducted on the respondent's advice or at his discretion. 

Acting for the purpose and with the intent of concealing from Mrs. Bertha Hecht 

the extent of the losses sustained by her in trading in commodity futures, the 

respondent: (1) in 14 instances during the period February 20, 1963 through July 

25, 1963, selectively closed out certain offsetting long and short futures 

transactions for her account in a manner which reflected larger profits or 

smaller losses than would have resulted had the oldest trades been closed out 

and thereby for a period of time concealed from Mrs. Bertha Hecht the actual 

amount of her losses; and (2) on or about March 29, 1963, prepared and delivered 

a "SUMMARY OF OPERATIONS" statement to Mrs. Bertha Hecht purportedly showing the 

status of her trading accounts as of such date but did not show in such 

statement and concealed from Mrs. Hecht the fact that as of March 29, 1963, she 

had unrealized losses in her commodity futures trading account of over $ 34,000. 

The complaint charges that, by reason of such facts, "the respondent, in 

connection with the disposition or execution of commodity futures contracts, and 

in regard to acts of agency performed with respect to such contracts, deceived 

the person on behalf of whom such contracts were made, in wilful violation of 

section 4b of the Commodity Exchange Act (7 U.S.C. 6b); and applied and closed 

out offsetting long and short positions in wilful violation of section 1.46 of 

the regulations issued under the said act (17 CFR 1.46)." 

The respondent filed an answer to the complaint. In his answer the 

respondent does not deny that the trading in the accounts of Mrs. Bertha Hecht 

was conducted on the respondent's advice or at his his discretion, nor that he 
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selectively closed out the futures transactions in question as described in the 

complaint. Nor does the respondent deny that he prepared and delivered to Mrs. 

Bertha Hecht on or about March 29, 1963, the "SUMMARY OF OPERATIONS" statement 

described in the complaint. By way of explanation, however, the respondent 

states in his answer that: "any close-outs of commodity futures contracts other 

than the oldest positions were made at the verbal request of Mrs. Hecht to show 

the profits whenever possible and to ride-out her paper losses to the last. 

Whenever confronted with a paper loss she would comment substantially as 

follows: there is plenty of time before the contract expires, there is no need 

to take the loss now." With respect to the "SUMMARY OF OPERATIONS" statement of 

March 29, 1963, the respondent states in his answer that this statement "was 

picked from a number of reports made to Mrs. Hecht, all of which were prepared 

on the same basis showing only the credit balance in her commodity account 

without showing either unrealized gains or unrealized losses." 

The oral hearing was held in Washington, D. C. on September 17, 1968. John 

J. Curry, Office of Hearing Examiners, United States Department of Agriculture, 

was assigned as referee and presided at the 

hearing. Earl L. Saunders, Office of the General Counsel of the Department, 

appeared for the complainant. The respondent did not appear in person at the 

hearing and there was no appearance on his behalf. No evidence was adduced on 

behalf of the respondent by deposition or otherwise. Charles E. Robinson, 

Director of the Compliance Division of the Commodity Exchange Authority, 

testified for the complainant and 26 exhibits were received in evidence on 

behalf of the complainant. The referee granted the complainant's motion that 

official notice be taken in this proceeding of the transcript of the trial in 

the case of Hecht v. Harris, Upham & Co., N. D. Calif., 283 F. Supp. 417 (1968) 

n1, and certain excerpts from the testimony appearing in that transcript were 

received in evidence in this proceeding. 

n1 Bertha Hecht, Plaintiff, v. Harris, Upham & Co., a partnership, 

Harris, Upham & Co., Inc., a corporation, Arthur R. Mejia, Asa V. Wilder, 

George Upham Harris, Henry Upham Harris, Jr., Frank L. Patty, et al., 

Defendants. The transcript of the trial in this case is cited herein as 

"(Court Transcript )". 

At the outset of the hearing, a petition to intervene was filed on behalf of 

Mrs. Bertha Hecht. This petition was granted by the referee and Mrs. Bertha 

Hecht was represented at the hearing by Donald F. X. Finn, Attorney at Law, 63 

Wall Street, New York City. 

Six exhibits were received in evidence on behalf of the intervenor. During the 

course of the hearing, counsel for the intervenor made an oral motion that 

Harris, Upham & Co., Inc. n2 be made a party respondent in this proceeding (Tr. 

67, 72). The referee denied the motion (Tr. 72-74, 113). After the close of 

the hearing, counsel the intervenor filed a written motion that Harris, Upham & 

Co., Inc. be made a party respondent in this proceeding. Complainant filed a 

reply to the intervenor's motion. A brief was filed by the complainant after 

the close of the hearing. 

n2 At the time of the matters involved herein, Harris, Upham & Co. was a 

partnership. On or about September 1, 1965, a new corporation, Harris, 

Upham & Co., Inc., took over the business formerly conducted by the 

partnership of Harris, Upham & Co. (Court Transcript 171-172). 

Proposed Findings of Fact 

1. The respondent, Asa V. Wilder, is an individual, who at all times material 

herein, was the manager of the commodity operations of the San Francisco, 
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California, office of Harris, Upham & Co., a brokerage firm dealing in 

securities and commodities. The said firm was at all times material herein a 

registered futures commision merchant under the act and entitled to membership 

privileges on the Board of Trade of the City of Chicago and various other 

contract markets (Tr. 17; Complaint, par. 1). 

2. Mrs. Bertha Hecht, a resident of San Mateo, California, is now 78 years of 

age and a retired widow, her husband having died on January 12, 1955. During 

the relevant period of this case, she maintained stock and commodity futures 

trading accounts at Harris, Upham & Co. At that time she was inexperienced in 

futures trading and had little or no knowledge in that field. After the death 

of her husband, there was a progressive deterioration of Mrs. Hecht's mental and 

physical well-being and she was treated on a number of occasions for various 

nervous or mental disorders (Tr. 17-18, 50-52, 98-101; Comp. Ex. 19, 20, 23; 

Court Transcript 300-382, 748-811, 1798, 1806-1808, 1810-1811, 1853, 1887, 2451, 

2470-2472, 2702-2705, 2735, 2912-2913). 

3. The Board of Trade of the City of Chicago is now and was at all times 

material herein a duly designated contract market under the act. The 

transactions in soybean, wheat and rye futures hereinafter described were made 

on or subject to the rules of the Board of Trade of the City of Chicago and were 

speculative. Such transactions were capable of being used for hedging 

transactions in interstate commerce in such commodities or the products or byproducts thereof, or for determining the price basis of transactions in inter 

state commerce in such commodities or the products or by-products thereof, or 

for delivering such commodities sold, shipped, or received in interstate 

commerce (Tr. 33, 101-102). 

4. At all times material herein, the respondent personally handled the stock 

and commodity futures trading accounts of Mrs. Bertha Hecht at Harris, Upham & 

Co., and in so doing gained her confidence to the extent that the trading in 

such accounts was conducted on the respondent's advice or at his discretion (Tr. 

18, 92-93). 

5. In 14 instances during the period February 20, 1963 through July 25, 1963, 

in closing out offsetting transactions in soybean, wheat and rye futures for the 

account of Mrs. Bertha Hecht, the respondent selectively closed out certain 

transactions in a manner which reflected larger profits or smaller losses than 

would have resulted if the transactions had not been closed out selectively (Tr. 

34). In the usual course of business and in conformity with section 1.46 of the 

regulations under the act (17 CFR 1.46), Harris, Upham & Co. prepared and 

delivered to Mrs. Bertha Hecht, in connection with the close out of each such 

transaction, a purchase and sale statement showing the financial results of such 

close out (Tr. 27-28, 46). With respect to such purchase and sale statements, 

the following table shows the date of each such statement, the transaction that 

was offset thereon against the previously held position, the financial results 

that would have been shown on such statement if the offsetting transaction had 

been applied to the oldest portion of the previously held position (Comp. Ex. 1-

14; Tr. 19-34; Answer, par. 1): 

See original document-page 7 

Profit or Loss Profit or Loss 

Offsetting Shown on If Oldest Trades Had

Date Transaction P & S Statement Been Closed Out 

1963 Profit Loss Profit Loss 

February 20 Sale 20,000 bushels $ 1,327.25 $ 2,477.25

March 1963 soybeans 

 March 13 Purchase 20,000 $ 660.25 2,546.00

bushels July 1963 soybeans March 14 Purchase 20,000 354.00 $ 4.00 
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Profit or Loss Profit or Loss 

Offsetting Shown on If Oldest Trades Had

Date Transaction P & S Statement Been Closed Out 

1963 Profit Loss Profit Loss 

bushels July 1963 soybeans 

 March 15 Purchase 20,000 274.00 501.00

bushels May 1963 

wheat March 22 Sale 10,000 bushels 106.00 637.75

July 1963 wheat March 28 Sale 10,000 bushels 68.50 681.50

July 1963 wheat 

 March 28 Sale 20,000 bushels 370.50 6,442.00

May 1963 soybeans March 28 Sale 10,000 bushels 89.50 2,098.00

August 1963 soybeans April 18 Sale 20,000 bushels 104.00 2,346.00

May 1963 soybeans 

 May 8 Sale 20,000 bushels 129.00 3,446.00

August 1963 soybeans May 15 Purchase 10,000 168.50 544.00

bushels May 1963 rye May 21 Purchase 20,000 133.00 567.00

bushels July 1963 soybeans 

May 28 Purchase 20,000 204.00 196.00

bushels July 1963 soybeans 

 

July 25 Sale 50,000 bushels 1,010.00 5,340.00

August 1963 soybeans 

6. On or about March 29, 1963, the respondent prepared and delivered a 

"SUMMARY OF OPERATIONS" statement to Mrs. Bertha Hecht purportedly showing the 

status of her trading accounts as of such date, but the respondent did not show 

in such statement and concealed from Mrs. Hecht the fact that as of March 29, 

1963, she had unrealized losses in her commodity futures trading account of $ 

34,306.25 (Comp. Ex. 15, 16, 21, 24; Tr. 34-44, 56-57; Court Transcript 76-82, 

1279-1281, 1325-1326). 

7. The respondent selectively closed out the transactions, described in 

Finding of Fact 5, and prepared and delivered to Mrs. Bertha Hecht the "SUMMARY 

OF OPERATIONS" statement, described in Finding of Fact 6, for the purpose and 

with the intent of concealing from her the extent of the losses sustained by her 

in trading in commodity futures, and thereby did conceal from Mrs. Bertha Hecht 

the extent of such losses (Tr. 46-47, 94-95, 97-98). 

Proposed Conclusions 

I 

During the relevant period of this case, section 4b of the act (7 U.S.C. 6b) 

declares it to be unlawful "for any member of a contract market, or for any 
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correspondent, agent, or employee of any member, in or in connection with any 

order to make, or the making of . . . any contract of sale of any commodity for 

future delivery made, or to be made . . . for or on behalf of any person . . 

.(C) wilfully 

to deceive or attempt to deceive such person by any means whatsoever in regard 

to any such order or contract or the disposition or execution of any such order 

or contract, or in regard to any act of agency performed with respect to such 

order or contract for such person." 

During the relevant period of this case, section 1.46 of the regulations (17 

CFR 1.46), insofar as pertinent, read as follows: 

Application and closing out of offsetting long and short positions. (a) 

Application of purchases and sales. Any futures commission merchant who, on or 

subject to the rules of a contract market: 

(1) shall purchase any commodity for future delivery for the account of any 

customer (other than the "Customers' Account" of another futures commission 

merchant) when the account of such customer at the time of such purchase has a 

short position in the same future of the same commodity on the same market, or 

(2) shall sell any commodity for future delivery for the account of any 

customer (other than the "Customers' Account" of another futures commission 

merchant) when the account of such customer at the time of such sale has a long 

position in the same future of the same commodity on the same market, shall on 

the same day apply such purchase or sale against such previously held short or 

long position, as the case may be, and shall promptly furnish such customer a 

purchase and sale statement, or account sale, showing the financial result of 

the transactions involved. 

(b) Customer's instructions. In all instances wherein the short or long 

position in such customer's account immediately prior to such offsetting 

purchase or sale is greater than the quantity purchased or sold, the futures 

commission merchant shall apply such offsetting purchase or sale to such portion 

of the previously held short or long position as may be specified by the 

customer. In the absence of 

 

specific instructions from the customer, the futures commission merchant shall 

apply such offsetting purchase or sale to the oldest portion of the previously 

held short or long position, as the case may be. n3 

n3 Section 4b of the act was amended on February 19, 1968, and section 

1.46 of the regulations was amended on April 18, 1966, but the amendments 

are not relevant here. The matters involved occurred and were prohibited 

prior to the amendments and after the amendments. 

The evidence in this case proves beyond question that Mrs. Bertha Hecht's 

comprehension of futures trading was virtually nil, that she relied completely 

on the respondent to decide what futures transactions were made for her account, 

and that her knowledge of the financial results of the futures trading in her 

account was limited to the information shown on the purchase and sale statements 

rendered to her by Harris, Upham & Co. (Tr. 46-47, 52-55, 94-95, 97-98; Comp. 

Ex. 22, 23, 25, 26; Court Transcript 173-175, 394-398, 1179-1184, 1142, 1129, 

1436-1438, 1808, 1809, 2451, 2470-2472, 2702-2705, 2735, 2783). Indeed, the 

respondent has admitted that every futures transaction that was made for Mrs. 

Hecht's account was made on his recommendation or at his discretion (Comp. Ex. 

22; Court Transcript 1436-1438). In his answer to the complaint, the respondent 

does not deny the fact that the trading in Mrs. Hecht's accounts was conducted 

on his advice or at his discretion. He claims, however, that he selectively 

closed out the transactions in question "at the verbal request of Mrs. Hecht to 
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show profits whenever possible and to ride out her paper losses to the last" and 

that "[whenever] confronted 

 

with a paper loss she [Mrs. Hecht] would comment substantially as follows: there 

is plenty of time before the contract expires, there is no need to take the loss 

now" (Answer, par. 1). With respect to the merit of such a claim, it is simply 

not credible that a person such as Mrs. Hecht, who lacked any knowledge in the 

field of futures trading and who relied completely on another person to decide 

what transactions were made for her account, would have decided the manner in 

which her transactions were offset. There was no advantage to Mrs. Hecht in 

having her transactions offset selectively and no credible motivation can be 

advanced for offsetting her transactions in this manner except that the 

respondent wanted to conceal from Mrs. Hecht the extent of her losses. In this 

connection, Charles E. Robinson, Director of the Compliance Division of the 

Commodity Exchange Authority, testified (Tr. 44-45): 

In my opinion there is no advantage to Mrs. Hecht to have her trades 

selectively closed out. The investigation disclosed that she was on a calendar 

year tax basis. Now the only time, in my experience, that there has been an 

advantage from selective closing out of trades has been in connection with tax 

purposes, but the investigation disclosed no possible tax advantage to Mrs. 

Hecht in the selective closing out of trades, so that in my opinion there was no 

advantage. 

Continuing, Mr. Robinson testified that in his opinion the only possible 

reason for selectively closing out the transactions in question was "to conceal 

from her [Mrs. Hecht] for a period of time the extent of her losses, to put off 

the day of reckoning, and to keep her happy for a 

 

while longer" (Tr. 47). Mr. Robinson made clear in his testimony the 

respondent's motivation for keeping Mrs. Hecht "happy". His testimony, in this 

respect, is as follows (Tr. 47-48): 

According to information furnished the Commodity Exchange Authority by 

Harris, Upham & Co., Mr. Wilder, when he was employed in May of 1957, was 

employed at a salary of $ 1250 a month. The letter goes on -- I am reading from 

a letter of December 5, 1967 from Harris, Upham & Co. to the Commodity Exchange 

-- it says "Administration". "Commissions received by the firm from 

transactions that Mr. Wilder accomplished for his customers in securities and 

commodities were substantially in excess of his salary. Therefore, in fairness 

to Mr. Wilder, in March 1961 the salary was increased to $ 1500 a month and he 

was paid a bonus of $ 5,000 in June of that year." Then the letter goes on to 

state: "In March 1963 his salary was reduced to $ 1250 a month. This was 

because he had been less active. He had become 65 and the volume of his 

business had declined through 1962 and 1963." Now in this letter they state that 

his salary was reduced in March 1963 because he had become less active. These 

selective close-outs occurred during the period from February 20th through July 

25, 1963, and this "Summary of Operations," Complainant's Exhibit 16, was 

rendered as of March 29, 1963, so it seems quite apparent to me that he could 

very well have had a motive here that his salary is being cut because of having 

less business and he wanted to keep Mrs. Hecht happy as long as he could because 

he might lose her account. 

In his answer, the respondent stated that he selectively closed out the 

transactions in question in accordance with Mrs. Bertha Hecht's instruction "to 

show profits whenever possible". However, the respondent did not act in 

accordance with such an instruction. As shown in Finding of Fact 5, the 

offsetting sale of February 20, 1963, was 

 
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selectively applied so as to decrease the apparent size of a loss, not to show a 

profit instead of a loss. Further, as shown in Finding of Fact 5, the 

offsetting purchase of March 14, 1963, was selectively applied so as to increase 

the apparent size of a profit, not to show a profit instead of a loss. 

The facts and circumstances in this record compel the conclusion that as 

charged in the complaint, the respondent deceived Mrs. Bertha Hecht in wilful 

violation of section 4b of the act (7 U.S.C. 6b), and applied and closed out 

offsetting long and short positions in wilful violation of section 1.46 of the 

regulations (17 CFR 1.46). The respondent's offenses were deliberate, serious 

and flagrant and cannot be too strongly condemned. They were contrary to the 

principles of honesty and fair dealing and violated basic provisions of the act. 

Section 4b of the act is a basic part of the measures designed for the 

protection of customers of futures commission merchants. Considering all of the 

facts and circumstances of this case, including the recommendation of the agency 

charged with administering the provisions of the Commodity Exchange Act, it is 

concluded that in order to effectuate the purposes of the act, the respondent 

should be denied all trading Privileges on all contract markets for a period of 

three years. 

II 

As previously stated at page 4 hereof, official notice was taken of the 

transcript of the trial in the case of Bertha Hecht v. Harris, Upham & Co., et 

al., N.D. Calif., 283 F. Supp. 417 (1963). In that case 

 

plaintiff Bertha Hecht, a widow of 77 years of age, instituted an action against 

Harris, Upham & Co., Harris, Upham & Co., Inc., Asa V. Wilder and others to 

recover $ 1,109,000 damages arising from the defendants' fraudulent handling of 

her securities and commodities accounts and their breach of fiduciary duties. 

After a 27 day trial without a jury a Memorandum of Decision in favor of Bertha 

Hecht was rendered and a judgment entered thereon in the amount of $ 504,391.02 

against Harris, Upham & Co., Harris, Upham & Co., Inc. and Asa V. Wilder. 

In the course of the administrative hearing counsel for the Intervenor Bertha 

Hecht made a motion to amend the complaint to include Harris, Upham & Co., et 

al., as parties respondent. In such motion and elsewhere counsel averred the 

record shows: (1) that Harris, Upham & Co. violated the Commodity Exchange Act 

by cheating and deceiving Mrs. Hecht and by failing to institute and maintain an 

adequate system of supervision of its San Francisco and New York offices; (2) 

that all P&S instructions, close-out instructions, and requests to determine the 

buying power in the account were wired by Mr. Wilder over Harris, Upham & Co.'s 

private wire system from San Francisco to various individuals in New York; (3) 

that close-outs were actually effectuated in New York by someone other than Mr. 

Wilder; (4) that the New York office of Harris, Upham & Co. had the primary and 

ultimate responsibility for maintaining an adequate system of supervision and 

 

internal control in order to protect customers against fraud and to ensure 

against violation of Commodity Exchange Act rules and regulations; (5) that even 

in the absence of actual knowledge, Harris, Upham & Co. is responsible to 

exercise reasonable supervision, and it is not at all clear nor is there any 

real proof that Harris, Upham & Co. has taken any corrective action which will 

ensure the exercise of reasonable supervision in the future; and (6) that 

officials of Harris, Upham & Co. in New York had or should have had actual 

knowledge of the selective close-out scheme and of the churning and unsuitable 

transactions in Mrs. Hecht's account. 

In reply to the motion, counsel for the Complainant stated for the record 

that the Commodity Exchange Authority has taken corrective action to avoid a reoccurrence of the activities involved in this administrative proceeding; that 

the evidence does not reveal that any official of Harris, Upham & Co., other 

than Asa V. Wilder, had knowledge of these activities; and that in view of these 
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circumstances and the lapse of time since the activities took place, it is the 

view of the Commodity Exchange Authority that it is not necessary to include 

Harris, Upham & Co. as a party respondent in this administrative proceeding in 

order to effectuate the purposes of the Commodity Exchange Act (Tr. pp. 68, 69). 

The Referee denied the motion to join Harris, Upham & Co., et al., as 

respondents, stating that he had no authority under the Rules of practice to 

amend the complaint which had been issued by an Assistant Secretary of 

Agriculture, but added that counsel in due course could file such a motion with 

the proper authority. Subsequently, counsel on September 30, 1968 filed a 

written motion with the Referee again requesting joinder of the aforesaid 

parties as respondents, and on December 16, 1968, the Referee certified the 

Motion to the Secretary for decision, as provided by the rules of practice 

governing proceedings under the act. On February 11, 1969, the Commodity 

Exchange Authority informed Counsel for Intervenor by letter that, "We submitted 

your motion on behalf of Mrs. Bertha Hecht to the Assistant Secretary with the 

recommendation that it be denied. In so doing, we restated our position as set 

forth at the oral hearing and in our answer to the Motion. On January 14, 1969, 

the Assistant Secretary concurred in our recommendation and denied the motion." 

All contentions of the parties presented for the record have been considered 

and whether or not specifically mentioned herein, any suggestions, requests, 

etc., inconsistent with this decision are denied. 

Proposed Order 

Effective 30 days after the receipt of this Order, the said Asa V. Wilder is 

prohibited from trading on or subject to the rules of any contract market for a 

period of three (3) years, and all contract 

 

markets shall refuse all trading privileges to him for the said period of three 

years, such prohibition and refusal to apply to all trading done and positions 

held by the said Asa V. Wilder directly or indirectly whether for his own 

account or for the account of other persons. 

A copy of this decision and order shall be served upon the parties and upon 

each contract market. 

[SEE SIGNATURE IN ORIGINAL] 

John Curry 

Referee 

April 28, 1969 

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