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Commodity Futures Trading Commission 

CEA CASES 

NAME: SECRETARY OF AGRICULTURE V. P. S. MCMUNN 

DOCKET NUMBER: 20 

DATE: NOVEMBER 27, 1940 

DOCUMENT TYPE: DECISION AND ORDER 

UNITED STATES OF AMERICA 

BEFORE THE SECRETARY OF AGRICULTURE 

CE-A Docket No. 20 

Secretary of Agriculture, Complainant, v. P. S. McMunn, Respondent. 

Proceedings, Findings of Fact, Conclusions, and Order. 

PROCEEDINGS 

On September 12, 1940, complaint was issued by the Secretary of Agriculture, 

pursuant to the provisions of the Commodity Exchange Act (7 U.S.C. and Supp. V. 

§§ 1-17a), against P. S. McMunn. It was alleged that McMunn, the respondent, 

was registered as a futures commission merchant for the year 1940 and, acting as 

such, failed to segregate his commodity customers' funds, but used these funds 

for himself and others, leaving a shortage therein in May 1940; and that, as a 

member of the Chicago Open Board of Trade, a contract market, from August 1, 

1936, to May 19, 1940, he deceived and falsely reported to his commodity 

customers. The respondent was directed to show why 

his registration should not be revoked and his trading privileges on contract 

markets denied, at a hearing in Washington, D. C., on September 20, 1940. 

The complaint was served on the respondent by registered mail on September 

16, 1940, with a letter in which it was stated that the hearing was postponed to 

September 30 and that, if he preferred a hearing at a place other than 

Washington, he should file a request therefor. In an undated letter, received 

in the Hearing Clerk's office on September 24, 1940, the respondent waived a 

hearing and consented to the entry of an order revoking his registration, but 

did not admit the allegations in the complaint. He said that his insolvency was 

brought about by a drastic market decline, and that his customers suffered no 

loss. 

As the facts alleged had not been admitted, a hearing was held in Washington 

on September 30, 1940, before Jack W. Bain, a referee designated by the Under 

Secretary. Charles W. Bucy, Office of the Solicitor, Department of Agriculture, 

appeared for the Government. There was no appearance for the respondent. The 

only witness called was Douglas B. Bagnell, in charge of the Division of 

Investigations, Commodity Exchange Administration, who produced the report of an 

examination of the respondent's records made by a Government accountant. This 

report, admitted in evidence, and Mr. Bagnell's testimony, showed the facts 

alleged in the complaint 

and hereinafter set forth in the findings of fact. At the close of the hearing, 

the referee announced that 20 days would be allowed for filing suggested 

findings of fact. The time elapsed, and none was filed. 
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The referee's report, containing proposed findings and conclusions and a 

recommended order, was served by registered mail upon the respondent on November 

2, 1940. It was also served upon the Commodity Exchange Administration and 

Government counsel. The time allowed for filing exceptions, briefs, and request 

for oral argument before the Secretary has expired, and nothing was filed. 

FINDINGS OF FACT 

1. P. S. McMunn, the respondent, formerly doing business under the firm name 

of P. S. McMunn & Company, at Chicago, Illinois, registered with the Secretary 

of Agriculture as a futures commission merchant for the year 1940, and his 

registration has not heretofore been suspended or revoked. 

2. From January 1 to May 20, 1940, the respondent engaged as a futures 

commission merchant and accepted orders for the purchase and sale of wheat and 

other commodities named in the Commodity Exchange Act for future delivery on the 

Chicago Open Board of Trade, a contract 

market, without separately accounting for funds received from and accruing to 

customers in connection with such orders. He used such customers' funds for 

himself and to extend the credit of other customers. These acts resulted in a 

shortage of $ 7,441.51 in customers' funds on May 18, 1940. 

3. The respondent, while a member of the Chicago Open Board of Trade, a 

contract market, willfully deceived and falsely reported to his customers in 

connection with their futures contracts on the Chicago Open Board of Trade in 

commodities named in the Commodity Exchange Act, in that he reported to them 

that he was holding greater balances for them than he was actually holding. He 

did not report various items of currency withdrawn from and, in some instances, 

returned to their accounts. As an example of such practices, between September 

4, 1936, and September 2, 1939, inclusive, twelve items of $ 10 each and one of 

$ 20 were withdrawn from the account of James E. McCall, a customer, and one 

item of $ 30 and one of $ 10 were credited to the account, none of which was 

reported to the customer, with the result that a balance of $ 199.05 was 

reported to the customer on September 2, 1939, whereas the actual balance was $ 

99.05. Other customers were similarly treated. 

4. The Chicago Open Board of Trade suspended the respondent as a member 

thereof on May 20, 1940. That exchange arranged for the 

liquidation of the business of the respondent, then insolvent, and put up more 

than $ 7,000 from its own funds to make up the deficiency in customers' funds, 

thus preventing loss to customers. 

CONCLUSIONS 

The evidence shows that the respondent failed to segregate his commodity 

customers' funds and falsely reported to his customers, in violation of the 

requirements of the Commodity Exchange Act. It is concluded that, because of 

these violations, his registration should be revoked and his trading privileges 

on contract markets denied. 

ORDER 

IT IS ORDERED that the registration of P. S. McMunn as a futures commission 

merchant for the year 1940 be, and it is hereby, revoked. 

IT IS FURTHER ORDERED that all contract markets refuse P. S. McMunn all 

trading privileges thereon until further notice by the Secretary of Agriculture. 

IT IS FURTHER ORDERED that a copy hereof be sent by registered mail to the 

respondent and to each contract market, and that this order shall become 

effective 10 days after its date. 
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(SEAL) 

Done at Washington, D. C., this 27th day of November, 1940. Witness my hand 

and the seal of the Department of Agriculture. 

/s/ Paul H. Appleby 

Under Secretary of Agriculture 

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