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Commodity Futures Trading Commission 

CEA CASES 

NAME: RAWLIN L. STOVALL AND STOVALL & STOVALL INC. 

CITATION: Comm. Fut. L. Rep. (CCH) P20,941; [1977-1980 TRANSFER BINDER] 

DOCKET NUMBER: 75-7; 206 

DATE: DECEMBER 6, 1979 

DOCUMENT TYPE: DECISION AND ORDER 

NOTE: FORMERLY CEA DOCKET # 206 

[P20,941] In re Stovall, et al.

Commodity Futures Trading Commission. CFTC Docket No. 75-7. December 6, 

1979. Commission opinion in full text. 

Futures Commission Merchants -- Unauthorized Trading in Commodities Futures 

Contracts. -- Upon consideration of the record, the CFTC has determined that the 

instant operation did not involve the sale of cash commodities for deferred 

delivery, but in fact, involved the contracts for sale of commodities for future 

delivery, commonly known as commodity futures contracts, which are lawfully 

effected only on or subject to the rules of a board of trade designated as a 

contract market. Commodity futures contracts are entered into primarily for the 

purpose of assuming or shifting the risk of change in value of commodities, 

rather than for transferring ownership of the actual commodities. The 

activities of the merchant here were directed to the general public, and not to 

those specific individuals interested in acquiring or disposing commodities. 

The facts show that the majority of clients were not interested in the delivery 

aspect of the contracts. The CFTC agreed with the findings of the ALJ that the 

transactions resembled futures contracts in the standardization of their terms, 

the purposes for which they were traded, and the methods by which they were 

traded. 

See P 5001, "Commodity Futures Trading Commission" division. 

Futures Contracts -- Trading Off Contract Markets -- Legality of 

Transactions. -- Futures contracts must be traded on or subject to the rules of 

a designated contract market to be legal. The definition of a futures contract 

is not dependent upon the trading of that contract on a board of trade, but its 

legality is determined by its compliance with contract market rules. The floor 

broker here who contended that his operation was concerned strictly with cash 

commodity contracts further contended that only contracts which are traded 

according to contract market rules are futures contracts. This construction of 

the Commodity Exchange Act was rejected by the Commission. 

See P 12,001, "Liabilities -- Prohibitions" division. 

The respondents, Rawlin L. Stovall ("Stovall") and Stovall and Stovall, Inc. 

("Stovall, Inc."), have appealed to the Commission from the May 6, 1977 initial 

decision and order of the Administrative Law Judge which would revoke the 

registrations of both respondents, enter a cease and desist order against 

Stovall, and suspend Stovall's trading privileges for a period of two years. 

I. 

On January 22, 1973, the administrative complaint in this action was filed 

before the Secretary of Agriculture, pursuant to Sections 
Page 2 

6(b), 6(c) and 8a(3) of the Commodity Exchange Act, as amended ("the Act"), 7 

U.S.C. §§ 9, 13b and 12a (1970). At that time respondent Stovall was registered 

as a floor broker and was a member of the Chicago Board of Trade and the Chicago 

Open Board of Trade (now the MidAmerica Commodity Exchange, Inc.). He also was 

the president and principal shareholder of Stovall, Inc., a registered futures 

commission merchant. 

The complaint charged that during the period May 3, 1972 to December 6, 1972, 

Stovall, doing business as R.L. Stovall, Sole Proprietor, Principal in Cash 

Commodities ("Stovall Commodities" or "Stovall"), willfully violated Section 4 

of the Act, 7 U.S.C. § 6, by 

[engaging] in a course of business in which [Stovall] solicited and accepted 

orders which he represented to be for contracts for the purchase and sale of 

cash commodities. Such orders were actually for contracts for the purchase and 

sale of commodities for future delivery. 

The complaint also charged that: 1) Stovall had violated Section 4d of the 

Act, 7 U.S.C. § 6d, by acting as a futures commission merchant without being 

registered: 2) Stovall had violated Sections 4b(D) and 4c(a)(A) of the Act, 7 

U.S.C. §§ 6b and 6c, and Section 1.38(a) of the regulations of the Commodity 

Exchange Authority ("CEA"), by bucketing customer orders and by taking the 

opposite side of each order "with no intention of bona fide execution"; and 3) 

Stovall had violated Section 1.35(a) of the CEA's regulations on December 20, 

1972, by refusing to permit United States Department of Agriculture employees to 

inspect his books and records. The complaint proposed suspension or revocation 

of the respondents registrations, n1 the revocation of Stovall's trading 

privileges, and the entry of a cease and desist order against Stovall. 

n1 The complaint did not allege that Stovall, Inc. was an active 

participant in any of the transactions which were the subject of the 

charges against Stovall, doing business as Stovall Commodities. Rather, 

the proposed suspension or revocation of Stovall, Inc.'s registration was 

based upon Rawlin Stovall's position as president and owner of Stovall, 

Inc. See pp. 25-26 infra.

On February 7, 1973, respondents filed an answer to the complaint denying 

that they had violated the Act in transacting business as Stovall Commodities. 

Relying on Section 2(a)(1) of the Act, 7 U.S.C. § 2, respondents argued that the 

Stovall operation involved only the execution of "cash commodity contracts for 

deferred delivery outside a Regulated Exchange" and that consequently, the CEA 

had no jurisdiction over the operation. n2 

n2 The respondents also contended that: 1) the CEA is estopped from 

prosecuting this action because, prior to engaging in business, Stovall had 

discussed his prospective operation with several employees of the CEA and 

had been advised that the Stovall operation would not require registration 

with the Department of Agriculture; 2) the CEA had failed to comply with 

Section 0.3(c) of its regulations which required that 

in any case, except one of willfulness or one in which the public 

health, interest or safety otherwise requires, prior to the institution of 

a proceeding for the suspension or revocation of a registration of 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. . . . 

and 3) the complaint failed to set forth the specific sections of the 

Act respondents had allegedly violated and failed to state a cause of 

action against Stovall, Inc. 

On January 13, 14 and 15, 1975, an Administrative Law Judge conducted a 

hearing on the merits of the proceeding. On September 2, 1975, staff attorneys 

with the Commission's Division of Enforcement entered appearances. n3 
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Thereafter, the Division and the respondents filed post-hearing papers and, on 

April 19, 1977, oral argument was conducted before the Administrative Law Judge. 

On May 6, 1977, the Administrative Law Judge filed a fifty-five page initial 

decision in which he set forth his conclusion that respondents had violated the 

Act as charged, and entered, the sanctions which we described at p. 1, supra.

n3 On October 23, 1974, Congress enacted the Commodity Futures Trading 

Commission Act of 1974, Pub. L. 93-463, 88 Stat. 1389. That legislation 

extensively amended the Commodity Exchange Act, 7 U.S.C. §§ 1-17b (1970), 

and created the Commission as an independent regulatory agency, which, on 

April 21, 1975, took over responsibility for administering and enforcing 

the provisions of the Commodity Exchange Act from the Commodity Exchange 

Authority. Sections 411 and 412 of the Commodity Futures Trading 

Commission Act of 1974, 88 Stat. 1414, provide: 

Sec. 411. All operations of the Commodity Exchange Commission and of 

the Secretary of Agriculture under the Commodity Exchange Act, including 

all pending administrative proceedings, shall be transferred to the 

Commodity Futures Trading Commission as of the effective date of this Act 

and continue to completion. All rules, regulations, and orders heretofore 

issued by the Commodity Exchange Commission and by the Secretary of 

Agriculture under the Commodity Exchange Act to the extent not inconsistent 

with the provisions of this Act shall continue in full force and effect 

unless and until terminated, modified, or suspended by the Commodity 

Futures Trading Commission. 

Sec. 412. Pending proceedings under existing law shall not be abated by 

reason of any provision of this Act but shall be disposed of pursuant to 

the applicable provisions of the Commodity Exchange Act, as amended, in 

effect prior to the effective date of this Act. 

We use the terms "Division" or "Division of Enforcement" to refer to the 

prosecutorial staff of the Commodity Exchange Authority and of the 

Commission's Division of Enforcement. 

Upon consideration of the record as a whole and the arguments of the parties 

on appeal, we have determined that Stovall's operation did not involve the sale 

of cash commodities "for 

deferred delivery" and that the contracts executed between Stovall and his 

customers were contracts of sale of commodities for future delivery, commonly 

known as commodity futures contracts, n4 which are lawfully effected only on or 

subject to the rules of a board of trade designated as a "contract market" 

pursuant to Section 5 of the Act, 7 U.S.C. § 7. Consequently, we have concluded 

that respondent Stovall violated Section 4 of the Act as charged. In reaching 

our decision, we rely upon, and adopt as our own, the Administrative Law Judge's 

findings of fact. We have, however, determined to set forth our conclusions of 

law based on those facts. 

n4 See 7 U.S.C. § 5. 

II. 

Section 4 of the Act provides, in pertinent part, that: 

It shall be unlawful for any person to deliver for transmission through the 

mails or in interstate commerce by telegraph, telephone, wireless, or other 

means of communication any offer to make or execute, or any confirmation of the 

execution of, or any quotation or report of the price of, any contract of sale 

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

trade in the United States, or for any person to make or execute such contract 

of sale, . . . except, in any of the foregoing cases, where such contract is 
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made by or through a member of a board of trade which has been designated . . . 

as a "contract market", . . . (emphasis added). 

However, under Section 2(a)(1) of the Act the term "future delivery" does not 

include 

any sale of any cash commodity for deferred shipment or delivery. 

Thus, the threshold issue here is whether the Stovall transactions were 

contracts of sale of commodities for future delivery. Commodity futures 

transactions involve standardized contracts for the purchase or sale of 

commodities n5 which provide for future, as opposed to immediate, delivery, and 

which are directly or indirectly offered to the general public and generally 

secured by earnest money, or "margin." They are entered into primarily for the 

purpose of assuming or shifting the risk of change in value of commodities, 

rather than for transferring ownership of the actual commodities. Thus, while a 

party to a commodity futures contract may eventually perform on the contract, 

that is, make or take delivery, at the maturation of the contract, thereby using 

the futures market to make or take delivery of actual commodities in exchange 

for money, he need have no expectation that performance will occur. Indeed, 

most parties to commodity futures contracts extinguish their legal obligations 

to make or take delivery by offsetting their contracts with equal and opposite 

transactions prior to the date on which delivery is called for, accepting a 

profit or loss for any differences in price between the initial and offsetting 

transactions. Cf. Board of Trade of the City of Chicago v. Christie Grain & 

Stock Co., 198 U.S. 236, 247-248 (1905). As we shall discuss, all of these 

classic elements are present here and, therefore, the Stovall transactions 

constituted contracts for the sale of commodities for future delivery under 

Section 4 of the Act which were required to be executed on designated contract 

markets. 

n5 See 7 U.S.C. § 2 (1970) for the definition of "commodity" contained 

in the Commodity Exchange Act at the time this proceeding was instituted. 

In deciding this issue we have considered whether the Stovall transactions 

fell within the Section 2(a)(1) "cash commodity" exclusion from the term "future 

delivery" and thus were outside the purview of the provisions of Section 4 of 

the Act. The "cash commodity for deferred shipment or delivery" exclusion, 

which originated in the Future Trading Act of 1921, and was incorporated into 

the Grain Futures Act of 1922, the predecessor of the Commodity Exchange Act 

(see pp. 14-18 infra), was enacted to make clear that the 1921 Act was not 

intended to "interfere with the cash grain." Hearings on Futures Trading Before 

the House Committee on Agriculture, 66th Cong., 2d Sess. 213 (1921). George T. 

McDermott, a representative of the Kansas Grain Dealer's Association and the 

person who first proposed to the House Agriculture Committee that it include 

this exclusion in the bill, explained at the hearings that "the words 'cash 

grain for deferred shipment do have a technical meaning." McDermott explained 

that "they ought to add those words in there; . . . so that we would not tax the 

farmer in selling his wheat to the mill" (id. at 214). Similarly, Senator 

Capper, proponent of the Senate bill, explained that the words "cash grain," as 

used in the exclusion, refer to "the actual grain." Hearings on H.R. 5676 Before 

the Senate Committee on Agriculture and Forestry, 67th Cong., 1st Sess. 463 

(1921). And, as will be discussed more fully below, the "cash commodity" 

exclusion was intended to cover only contracts for sale which are entered into 

with the expectation that delivery of the actual commodity will eventually occur 

through performance on the contracts. The seller would necessarily have the 

ability to deliver and the buyer would have the ability to accept delivery in 

fulfillment of the contract. 

Although the desire to acquire or dispose of a physical commodity is the 

underlying motivation for entering such a contract, delivery may be deferred for 

purposes of convenience or necessity See pp. 15-18 infra.
Page 5 

Thus, a major difference between an excluded cash commodity-deferred delivery 

contract and contracts of sale of a commodity for future delivery is that the 

former entails not only the legal obligation to perform, but also the generally 

fulfilled expectation that the contract will lead to the exchange of commodities 

for money. In contrast, parties to a futures contract do not usually expect 

delivery and it rarely occurs. 

Given this starting point, it is clear that the Stovall operation did involve 

contracts of sale of commodities for future delivery, not the contracts Congress 

had in mind when it carved the cash commodity exclusion out of the requirements 

of the Act, among them Section 4. Stovalls activities had all the earmarks of 

the undesignated futures operation Congress has specifically sought to prohibit 

since 1921. First, as the Administrative Law Judge found, the Stovall operation 

was directed at and overwhelmingly used by the general public, and not by those 

persons with specific interests in acquiring or disposing of commodities. Few, 

if any, n6 of the transactions entered into were motivated by a desire to 

acquire or dispose of actual commodities. But, the Stovall operation was 

consistently used and promoted as a means of speculating on changes in the price 

of cash commodities which might occur in the future. For example, the 

promotional material used to solicit prospective clients touted the "limited 

risk," and "big profit opportunities" in cash commodities [CX 8, 51]. n7 

Similarly, in one of the documents signed by every client upon opening an 

account with Stovall Commodities, the client was required to certify that he had 

been "informed of the speculative nature of cash commodities" [CX 5]. 

n6 Stovall points to the fact that some of the contracts he made with a 

customer named Donald Rutherford eventually resulted in delivery. However, 

we have determined that the Rutherford deliveries were not significant 

because futures contracts are occasionally settled by delivery. Moreover, 

Rutherford's deliveries represented only a small percentage of his own 

total contracts with Stovall, and their quantitative significance is even 

less when compared with the total volume of transactions for all of 

Stovall's customers for whom we have records. 

The Administrative Law Judge observed that Rutherford did not testify 

that he and Stovall mutually agreed to non-delivery or rescission of those 

contracts which were not settled by delivery. Rather, the transactions 

were simply offset by the execution of opposite orders. The Administrative 

Law Judge's reasoning is an additional factor in our conclusion that the 

Rutherford transactions were not significant. 

n7 We have cited to exhibits introduced by the Division and respondents 

as "CX" and "RX" respectively. We refer to the hearing transcript as "TR 

," and the Initial Decision as "Init. Dec. ." 

Daniel Vaccaro, the Stovall client whose inquiry to the CEA led to the 

investigation of Stovall's operation, told CEA personnel that 

he wasn't concerned with the cash commodity and never wanted to take delivery 

or make delivery. All he was interested in was speculating in cash commodities 

[TR 19]. 

Edward Piala, then Deputy Director of the CEA, and Henry Matecki, a CEA 

auditor, testified that the twenty-five or thirty Stovall clients interviewed by 

the CEA had stated that they were not interested in acquiring or disposing of 

cash commodities and, in fact, were unaware of what commodities, and in what 

amount, were ostensibly purchased and sold for their accounts until they 

received statements from Stovall. 

Vernon Henrichs, a Stovall salesman/client, testified that Stovall had 

informed him, and his clients, that they could acquire actual commodities 

through transactions with Stovall but that "this was not the normal operation" 

[TR 103]. Douglas Newkirk, Stovall's other salesman/client, also testified that 

he had no personal or business use for the actual commodities which were the 

subject of his personal transactions with Stovall. Henrichs and Newkirk also 

testified that neither they nor their clients ever actually selected the 
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commodities ostensibly bought and sold. n8 Rather, after making an initial cash 

deposit, a client had no contact with either his salesman or his trading agent, 

and exercised no control over his account. n9 

n8 Hackbarth, Stovall's "trading agent," testified that he received only 

one actual order, which was a "block order" from a group of clients in 

Michigan. 

n9 As the Administrative Law Judge described the operation. 

To initiate a trade in Stovall's program, either Stovall or Hackbarth 

would call the other and propose a trade of a specific commodity at a 

specific price with a specified delivery month. The party receiving the 

proposition had the option of accepting or declining it. Based on data 

supplied by Stovall, the International S.C.O.P.E.S. computer was already 

programmed by Hackbarth, pursuant to Stovall's instructions, to show 

specific delivery periods and specific delivery points, the latter being 

determined by the commodity involved. Also based on data from Stovall the 

computer was programmed to show delivery periods according to whether the 

initiating party proposed a sale or purchase of a commodity. It was only 

necessary during the telephone conversations for the initiating party to 

refer to a specific month such as July and the computer was programmed to 

show a specific delivery period [Init. Dec. 35-36]. 

Second, the terms of Stovall's contracts were standardized in the same way as 

are the terms 

of commodity futures contracts. n10 Hackbarth testified that delivery dates 

were not negotiated. Rather, delivery periods were 

n10 Indeed, the pre-programmed contract sizes in fifteen of the twentyfour commodities traded by Stovall were identical to those in the 

corresponding commodity futures contracts traded on designated contract 

markets [DE 54, 55]. The remaining nine commodities were not regulated 

under the Act during the relevant time period, and were neither a part of 

the complaint nor relevant to this action. 

built in as part of the program and . . . when a given month was specified . 

. . [the computer] would kick out these specific dates [TR 476]. 

According to Hackbarth, computer-programmed and predetermined delivery dates 

were automatically keyed to whether Stovall was the "purchaser" or "seller" of 

the commodities and the programmed delivery points were keyed to the commodities 

being traded. n11 Similarly, contract sizes and handling fees in the 

commodities traded by Stovall Commodities were pre-programmed. 

n11 The Computer was programmed so that Stovall always bought Grade # 1 

and sold Grade # 3 of any commodity. 

Finally, with the qualified exception of Rutherford, n12 not a single party 

to a Stovall contract fulfilled his legal obligations under the contract by 

delivering the commodities ostensibly bought or sold through Stovall's 

operation. Rather, each contract was "offset" when Stovall and the customer 

subsequently entered into a contract which was exactly opposite the earlier 

contract, exchanging a cash differential for the difference in price between the 

initial and off-setting transactions. n13 In view of the other circumstances, 

this lack of delivery is the clearest indication that the contracts were not 

"cash commodity contracts for deferred shipment or delivery," as respondents 

contend. 

n12 See n. 6, supra.
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n13 For example, CX 10 entitled "Transactions reported to customers by 

R.L. Stovall, doing business under the name of R.L. Stovall, Principal in 

Cash Commodities", shows that on May 4, 1972, Vernon L. Henrichs contracted 

to buy and Stovall to sell 36,000 pounds of # 3 frozen pork bellies to be 

delivered between July 1 and August 6, 1972. This commodity was never 

delivered. Rather, on May 5, 1972. Henrichs contracted to sell and 

Stovall to buy an identical quantity of of # 3 pork bellies to be delivered 

during the same period. The matching and opposite obligations, coupled 

with the payment of the cash differential between the contract prices, 

"offset" each other, cancelling both contracts. In a similar manner, 

Stovall and Henrichs entered and cancelled soybean oil contracts on May 12 

and 15, 1972 respectively, and soybean contracts on May 17 and 18. 

Thus, here it is clear that Stovall's transactions have all of the classic 

elements of a contract of sale of a commodity for future delivery. We do not 

mean that all commodity futures contracts must have all of these elements, nor 

are the elements we have described here an exhaustive catalogue of factors to 

which we will look in every case to determine whether an instrument is a cash 

contract for deferred shipment or delivery or is a commodity futures contract. 

Rather, we will look at each operation in context and will not hesitate to look 

behind whatever label the parties may give to the instrument. Tcherepnin v. Knight, 389 U.S. 332, 336 (1967), citing Securities and Exchange Commission v. 

W. J. Howey Co., 328 U.S. 293, 298 (1946). Cf. In the Matter of Precious Metals 

Associates, Inc., CCH COMM. FUT. L. REP. P 20,882, p. 23, 597 (August 14, 1979), 

appeal pending, No. 79-1449 (1st Cir. August 29, 1979). n14 

n14 We shall not address the issues whether Stovall also violated 

Sections 4d, 4b(D) and 4c(a)(A) of the Act and Sections 1.35(a) and 1.38(a) 

of the regulations. In our view, respondent Stovall's deliberate violation 

of Section 4 of the Act override and, to a large extent, subsume the other 

violations alleged and, standing alone, supports the sanctions we have 

determined to impose. 

We turn next to respondents' argument that even if the disputed instruments 

were commodity futures contracts, the Commission has no jurisdiction over them 

because they were not transacted on or through the facilities of a designated 

contract market. The Administrative Law Judge rejected respondents' contention 

on the ground that 

the requirement that a futures contract be executed on a designated contract 

market is what makes the contract legal, and not what makes it a futures 

contract. To permit execution other than on a contract market would invite 

bucket shops and other fraudulent and non-regulated activities to the detriment 

of the public and in contravention of the history of commodity regulation, which 

was designed to insure honest dealings and protection of the public [Init. Dec. 

39] (emphasis added). 

The administrative Law Judge was absolutely correct on this point and his 

conclusion is supported by the legislative history of the earliest statutes 

regulating commodity futures trading. 

The Future Trading Act of 1921 was enacted to curb the increasingly 

disruptive activities of grain speculators on exchanges and of off-exchange 

bucket shop operations. Rather than prohibiting all trading in contracts for 

future delivery, as populist and farming factions wished, Congress recognized 

the legitimacy and commercial necessity of commodity futures exchanges, n15 and 

permitted exchange 

trading in contracts for future delivery to continue, but only in a controlled 

environment. The Future Trading Act of 1921 imposed a "prohibitive tax" n16 

applicable generally to all contracts for future delivery not exempted by that 

Act. n17 By its terms, the Act exempted from the tax contracts traded by or 

through members of boards of trade designated by the Secretary of Agriculture as 
Page 8 

"contract markets," that designation being contingent, among other things, upon 

a board of trade providing for the prevention of manipulative activity in the 

trading of commodities through its facilities. Thus, with certain exceptions, 

all contracts for the sale of commodities for future delivery were intended to 

be taxed prohibitively under this legislation unless they were traded on an 

exchange designated by the government as a contract market. The Future Trading 

Act of 1921 also expressly exempted from the tax sales for future delivery made 

by owners and growers of grain who merchandised the physical commodity. n18 

Thus, Congress endeavored to force all futures transactions, as opposed to cashdeferred future delivery transactions, onto regulated contract markets, which, 

as a result of government oversight, were to be free from manipulations and 

other market disturbances. This is clear when the legislative history of the 

1921 Act is examined. n19 

n15 See, e.g., Hearings on Futures Trading Before the House Committee on 

Agriculture, supra, at 1043; Hearings on H.R. 5676 before the Senate 

Committee on Agriculture and Forestry, supra, at 452; Hearings on Futures 

Trading Before the House Committee on Agriculture, 67th Cong., 1st Sess. 7-

9 (1921); 61 Cong. Rec. 4761 (1921) (remarks of Senator Capper, the sponsor 

of the Senate bill which became the 1921 Act.). 

n16 Hearings on Futures Trading Before the House Committee on 

Agriculture, supra, at 10. 

n17 Section 4 of the Future Trading Act of 1921, 42 Stat. 187-188. 

n18 Specifically, Section 4 of the 1921 Act exempted from the tax the 

offer and sale of contracts for future delivery: 

(a) Where the seller is at the time of the making of such contract the 

owner of the actual physical property covered thereby, or is the grower 

thereof, or in case either party to the contract is the owner or renter of 

land on which the same is to be grown, or is an association of such owner, 

or growers of grain, or of such owners or renters of land; or 

(b) Where such contracts are made by or through a member of a board of 

trade which has been designated by the Secretary of Agriculture as a 

"contract market". . . . 42 Stat. 187. 

Sections 4(b) and 5(d) of the 1921 Act, 42 Stat. 187-188. See 61 Cong. 

Rec. 4762 (1921) (remarks of Senator Capper); 61 Cong. Rec. 1314 (1921) 

(remarks of Rep. Tincher); 61 Cong. Rec. 1371 (1921) (remarks of Rep. 

Jones). 

n19 E.g., 61 Cong. Rec. 4761-4763 (1921) (remarks of Senator Capper); 61 

Cong. Rec. 1379 (1921) (remarks of Rep. Bland); 61 Cong. Rec. 1313-1314 

(1921) (remarks of Rep. Tincher, the sponsor of the House bill which became 

the 1921 Act); 61 Cong. Rec. 1376 (1921) (remarks of Rep. Gensman). 

The House of Representatives passed and sent to the Senate, H.R. 5676, the 

bill that ultimately became the Future Trading Act of 1921. Section 4 of H.R. 

5676 taxed all contracts for the sale of grain for future delivery, other than 

those exempted by Sections 4(a) and 4(b), "made at, on, or in an exchange, board 

of trade, or similar institution or place of business." n20 The quoted language 

was added by the House to insure and emphasize the exemption from tax liability 

contained in Section 4(a) for any owner or grower who might actually wish to 

sell grain for deferred shipment. n21 However, the Senate deleted this limiting 

language and, in substitution, emphasized the tax exemption for growers and 

owners by adding to Section 2 of the bill the exclusion for "any sale of cash 

grain for deferred shipment or delivery" from the term "future delivery." n22 

The Senate Agriculture Committee explained that this change was necessary 

because the House, by proposing to limit imposition of the tax to contracts 

"made at, on, or in an exchange, board of trade or similar institution or place 

of business," may have inadvertently exempted from the tax the operations of 

private exchanges or bucket shops, which Congress intended to prohibit 

completely through imposition of the tax. The Senate Committee's Report stated: 
Page 9 

"It is obvious also that if . . . [the limiting House language] [remains] in the 

bill operations on private exchanges or bucket shops would be possible." S. Rep. 

No. 212, 67th Cong., 1st Sess. 1 (1921). Senator Capper, the sponsor of S. 212, 

the Senate companion bill to H.R. 5676, and a member of the Senate Agriculture 

Committee, explained: 

With those words [the limiting House language] in it there is nothing to 

prevent a private individual or a private corporation from buying or selling 

futures to the public without a tax. As the business is now conducted, futures 

are sold simply on seven or eight boards of trade; but if the law taxed future 

trades on exchanges, I think there would be a tendency for these private 

institutions to go into the business for they would not be taxed. Hearings on 

H.R. 5676 Before the Senate Committee on Agriculture and Forestry, supra at 462. 

n20 This language was originally set forth in the United States Cotton 

Futures Act of 1914 and was added without change by the House to Section 4 

of H.R. 5676. The definition of "board of trade" contained in section 2 of 

the Commodity Exchange Act was first set forth in Section 2 of the 1921 

Act. 

n21 S. Rep. No. 212, 67th Cong., 1st Sess. 1 (1921). The limiting 

language was added to the House bill at the insistence of the Department of 

Agriculture to make clear that the tax was to be imposed upon contracts for 

future delivery as distinguished from transactions in which owners and 

growers would be involved as part of their cash commodity businesses. 

Hearings on H.R. 5676 Before the Senate Committee on Agriculture and 

Forestry, supra, at 8-11, 461-463; Hearings on H.R. 168, 231, 2238, 2331, 

2363 and 5228 Before the House Committee on Agriculture, supra, at 326, 

344-345. 

n22 42 Stat. 187. This provision was re-enacted without change as part 

of the Grain Futures Act of 1922, 42 Stat. 998, and, as amended to refer to 

"any cash commodity," was enacted as part of the Commodity Exchange Act in 

1936, 49 Stat. 1491. See Section 2(a)(1) of the Act. 

 

Ultimately, the Senate version prevailed and, as enacted, the Future Trading 

Act of 1921 contained both the exemption from the tax for owners and growers of 

grain and, for emphasis, the exclusion from the term "future delivery" for cashdeferred delivery transactions. However, the 1921 Act was shortlived for it was 

almost immediately declared unconstitutional as an impermissible attempt at 

regulation through the taxing power. Hill v. Wallace, 259 U.S. 44 (1922). 

In invalidating the 1921 Act in Hill v. Wallace, supra, the Supreme Court 

suggested that it would be possible to regulate contracts for future delivery 

under the commerce clause of the Constitution, 259 U.S. at 69. Thus, barely four 

months after the Supreme Court's decision, Congress enacted the Grain Futures 

Act of 1922, which regulated commodity futures trading under the commerce 

clause. That Act was clearly intended to accomplish the same legislative 

purpose as the 1921 Act with no material change in its regulatory provisions. 

Indeed, in its Report accompanying the new legislation the House Committee on 

Agriculture described the differences between the 1921 and 1922 Act and, in 

describing the changes in Section 4, stated "[these] regulations are practically 

as they were in the old bill, except for slight changes." n23 The Report went on 

to state that "[otherwise], we think there are no material changes in the 

regulatory provisions of this bill and the law, which this same committee and 

the present Congress considered so fully and passed." H. Rep. No. 1095, 67th 

Cong., 2d Sess. 3 (1922). n24 

n23 The 1921 version of Section 4 provided for a tax of 20 cents "a 

bushel on every bushel involved therein, upon each contract of sale of 

grain for future delivery" subject to the exceptions discussed above. The 

1922 version of Section 4 made it unlawful, with identical exceptions, to 

use the means of interstate commerce to offer, execute or confirm 
Page 10 

a contract of sale of grain for future delivery on or subject to the 

rules of any board of trade in the United States, or for any person to make 

or execute such contract of sale, which is or may be used for (a) hedging 

or (b) determining the price basis of any such transaction in interstate 

commerce, or (c) delivering grain sold, shipped, or received interstate 

commerce for the fulfillment thereof. 

 42 Stat. 187-188. 

n24 See also 62 Cong. Rec. 9417 (1922) (Remarks of Rep. Timberlake); 62 

Cong. Rec. 9519-9420 (1922) (Remarks of Rep. Ellis); 62 Cong. Rec. 9428 

(1922) (Remarks of Rep. Voigt); 62 Cong. Rec. 9446 (1922) (Remarks of Rep. 

Hays). The constitutionality of the Grain Futures Act of 1922, including 

its regulatory scheme based on the commerce clause, was sustained in 

Chicago Board of Trade v. Olsen, 262 U.S. 1 (1923) 

Thus, Section 4 of the 1922 Act was patterned after Section 4 of the 1921 Act 

except that it directly prohibited any offer to make, execute or confirm, 

through interstate facilities, any contract for the sale of grain for future 

delivery, subject to two exemptions -- contracts traded by or through a member 

of a designated contract market and contracts for deferred shipment or delivery 

by owners and growers. n25 And, like the 1921 Act, the Grain Futures Act of 

1922 also contained the definitional exclusion for owners and growers. Thus, 

Congress intended to permit only: 1) those futures transactions which were 

executed through the facilities of designated contract markets, markets 

regulated by the federal government, which were required, in turn, to regulate 

the activities of their members; and 2) cash commodity transactions for deferred 

shipment or delivery. 

n25 42 Stat. 999-1000. 

Respondents would have us construe the words "on or subject to the rules of 

any board of trade in the United States," contained in Section 4, to limit the 

prohibitive effect of that section to transactions actually consummated on 

boards of trade, and argue that the Stovall operation was not a board of trade. 

Such an interpretation would leave untouched any private exchange or bucket shop 

operation which is arguably not a "board of trade," regardless of whether the 

transactions consummated thereon involve contracts for the sale of commodities 

for future delivery. Given the historical background of the legislation, that 

interpretation would undercut the central purpose of the 1922 legislation, n26 

which is to permit only contracts for the sale of commodities for future 

delivery executed on designated -- and regulated -- exchanges, and to exclude 

from regulation cash commodity-deferred delivery transactions. Accordingly, we 

read Section 4 of the Act to require that all contracts for the sale of 

commodities for future delivery be executed by or through a contract market 

member, and on a contract market designated by this Commission. n27 We 

unequivocably reject respondents' argument to the contrary. n28 

n26 See Organized Migrants in Community Action, Inc. v. Brennan, 520 

F.2d 1161, 1166-1167 (D.C. Cir. 1975). 

n27 This view was articulated by the Senate Agriculture Committee of the 

ninety-third Congress, which enacted the Commodity Futures Trading 

Commission Act of 1974. In discussing the Commodity Exchange Act as it 

existed prior to the 1974 amendments, the Committee stated that: 

The Commodity Exchange Act requires that all futures transactions in 

regulated commodities be executed on a commodity exchange designated by the 

Secretary of Agriculture as a "contract market." 

S. Rep. No. 93-1131, 93d Cong., 2d Sess. 16 (1974). Cf. Goodman v. 

Benson, 286 F.2d 896.898 (7th Cir. 1961). 

n28 Thus, we need not reach respondents' argument that the Stovall 

operation was not a board of trade, and, hence, that the transactions to 

which Stovall was a party were beyond the scope of Section 4 and the 
Page 11 

jurisdiction of this Commission. Indeed, his operation may well fall 

within the broad statutory definition of "board of trade" found in Section 

2(a)(1). However, in our view, the prohibition found in Section 4 of the 

Act was intended by Congress to apply regardless of the locus of the 

transaction. Clearly, that was the intent of Congress in 1921, and, since 

no substantive change, except the shift from the taxing clause to the 

commerce clause, was intended in 1922, or has been made since that time, we 

do not attach significance to the words upon which Stovall relies. See 

also Section 4h of the Act, enacted in 1936, which does not require that 

any means or instumentality of interstate commerce be employed in the 

transaction, so long as the transaction may be used for hedging, 

determining price basis or delivery in interstate commerce. 

Similarly, we reject respondents argument that Section 4 might be read 

literally to require only that commodity futures contracts be executed by 

or through a member of a contract market, but not necessarily through the 

facilities of a contract market. Stovall, a member of two contract markets 

during the time period in issue here, would have us determine that he 

therefore was free to engage with impunity in activities that have been 

proscribed since 1922. However, the analysis we have undertaken of the 

legislative history and statutory purpose of Section 4 of the Act and the 

history of futures trading in general also leads us to conclude that 

Congress could not have intended such a narrow application of Section 4. 

See e.g. S. Rep. No. 212, 67th Cong., 1st Sess. 1 (1921), Hearings on H. R. 

5676 Before the Senate Committee on Agriculture and Forestry, supra, at 10-

11, 461-63; Hearings On Futures Trading Before the House Committee on 

Agriculture, supra, at 326, 344-345; 62 Cong. Rec. 9417 (1922) (Remarks of 

Rep. Timberlake); 62 Cong. Rec. 9519-9520 (1922) (Remarks of Rep. Ellis); 

62 Cong. Rec. 9420 (1922) (Remarks of Rep. Voigt); 62 Cong. Rec. 9446 

(1922) (Remarks of Rep. Hays). See also note 27, supra. 

III. 

Respondents also attack the initial decision on a number of other grounds, 

all of which we have considered and most of which we have found to be frivolous. 

We shall address in depth only those few arguments which, in our view, merit 

discussion. n29 Respondents observe that the agreements signed by Stovall 

clients [CX5] contained a clause that 

CLIENT agrees that any and all purchases and/or sales with STOVALL 

contemplate actual delivery and/or receipt of the (actual) commodities . . . 

[CX5 at 1]. 

Respondents urge that in determining the intent or understanding of the 

parties to the transactions, the Commission is bound by the language of the 

customer agreement and thus, that we may not hold that, contrary to the terms of 

the agreement, the parties did not intend to enter cash contracts for deferred 

shipment of commodities [Doc. 95 at 11-14]. n30 

n29 We have considered respondents' arguments that: 1) Congress' failure 

to define "commodity futures" precludes the Commission from interpreting 

the term and 2) the sample of Stovall's customers, upon which the 

Administrative Law Judge's decision was based, was only a small percentage 

of the customers and therefore did not reliably represent the total 

universe of customers. As to Stovall's argument regarding our authority to 

interpret the Commodity Exchange Act. we shall say little more than that 

we have not only the right, but the duty to do so. As to Stovall's 

contention with regard to the sample of customers, we observe that the 

record clearly indicates that it was Stovall himself who prevented CEA 

investigators from obtaining the names of all of his customers by refusing 

to produce his books and records. We infer, from Stovall's refusal to 

produce his records either initially or in defense of his action that those 

records would have disclosed information against Stovall's interest -- 

namely, that the sample of customers was entirely representative of the 
Page 12 

whole group. Alabama Power Co. v. Federal Power Commission, 511 F.2d 383 

(D.C. Cir. 1974). 

n30 Respondents are apparently referring to the "parol evidence rule" 

applied in most states, which holds that extrinsic evidence is not 

admissible to add to detract from, or vary unambiguous terms in a written 

agreement. 

Respondents are wrong. First, it is well settled that the word "contemplate" 

is subject to various interpretations. Moreover, extrinsic evidence is always 

admissible to explain an ambiguous term in a contract, Lucie v. Kleen-Leen, 

Inc., 449 F.2d 220, 221 (7th Cir. 1974); Marbury-Patillo Construction Company, 

Inc. v. Bayside Warehouse Co., 490 F.2d 155 (5th Cir. 1974); American Casualty 

Company of Reading, Pennsylvania v. Reidy, 386 F.2d 795 (7th Cir. 1967); Dancy

v. William J. Howard, Inc., 297 F.2d 686 (7th Cir. 1961); Personal Finance Co.

v. Meredith, 39 Ill. App 3d 695, 350 NE 2d 781, 789 (1976), and is likewise 

always admissible to determine the intentions of contracting parties. n31 More 

importantly, however, were we unable to look beyond the terms of an instrument 

drafted in clear and unambiguous language to determine the true intent of 

parties to a contract, it might be impossible for us to distinguish between 

commodity futures contracts and those falling within the exclusionary 

language of Section 2(a)(1). n32 Indeed, the language in futures contracts 

presently traded on markets designated by the Commission does, on its face, 

appear to fall within the Section 2(a)(1) exclusion. Surely, Congress would not 

have charged us with the responsibility of discriminating between two classes of 

transactions, yet left us without the ability to do so. 

n31 In Lucie v. Kleen-Leen, Inc., supra, 499 F.2d at 221, the court held 

that 

We cannot accede to the defendant's assertion that no extrinsic evidence 

reflecting on the parties' intentions should be considered. It is wellestablished that the test of admissibility of extrinsic evidence to explain 

the meaning of a written instrument is not whether the instrument appears 

to be plain and unambiguous, but whether the offered evidence is relevant 

to prove a meaning to which the language of the instrument is reasonably 

susceptible. A rule that limits the determination of the meaning of a 

written contract to its four-corners, merely because the court deems it 

clear and unambiguous, is a rule that ignores the intentions of the parties 

or presumes a degree of verbal precision and crystallization presently 

unattainable by our language. 

n32 Nearly a century ago, in 1882, addressing the issue whether, in a 

contract to buy rye for deferred delivery, the parties intended to deliver 

the rye, a circuit court observed: 

In seeking to ascertain the intentions of parties to such transactions 

as the one under consideration, it is evident that it will not do to place 

any great stress upon the mere terms of their contract, or upon their own 

declarations, whether under oath or not. Parties to such contracts will 

always seek to give them the form and semblance of legality, and all our 

experience admonishes us to receive with extreme caution, if not absolute 

distrust, what parties charged with transactions apparently illegal say 

respecting the innocency of their own intentions. 

The Court also noted that 

We must look at the actions of interested or accused parties, rather 

than their mere words, to ascertain their real intentions. We must 

consider what they have done, rather than what they have said, when called 

to account for their actions. We can best learn what interpretation the 

parties themselves have put upon their own contract, by considering what 
Page 13 

they have done under and in pursuance of it, with a view to its settlement 

of fulfilment (emphasis supplied). 

Melchert v. American Union Telegraph Co., 11 F. 193, 196-7 (C.C.D. Iowa 

1882). 

Next, citing the Administrative Procedure Act and Section 0.3(c) of the CEA's 

regulations, Stovall argues that this action should not have been instituted 

without first calling to Stovall's attention the violations charged and 

providing Stovall "an opportunity to demonstrate or achieve compliance with all 

lawful requirements." However, that opportunity need not be afforded if the 

conduct complained of is willful. See 5 U.S.C. § 558(c)(2). In Goodman v. 

Benson, supra, 286 F.2d at 900, the court held that 

if a person 1) intentionally does an act which is prohibited-irrespective of 

evil motive . . . or 2) acts with careless disregard of statutory requirements, 

the violation is willful. 

See also Haltmier v. Commodity Futures Trading Commission, 554 F.2d 556 (2nd 

Cir. 1977); Cargill, Incorporated v. Hardin, 452 F.2d 1154 (8th Cir. 1971), 

cert. denied 406 U.S. 932 (1972); and Great Western Food Distributors v. Brannan, 201 F.2d 476 (7th Cir.), cert. denied, 345 U.S. 997 (1953). In all of 

those cases, the courts adopted the principle that "willfulness" means the 

knowing doing of the act charged. There is no question that Stovall's operation 

was undertaken knowingly. Consequently, we find Stovall's violations were 

willful such that these sections of the Administrative Procedure Act and the CEA 

regulations did not require that Stovall be provided an opportunity to conform 

his conduct with the law prior to the institution of this action. 

Stovall also contends that the government is estopped from prosecuting this 

action because CEA employees endorsed Stovall's operation by informing Stovall 

that he need not register. However, the record shows that when Stovall came to 

the offices of the CEA in April 1971, he asked if the CEA "had jurisdiction over 

the cash grain operation per se," and did not explain the mechanics of the "cash 

grain" operation he intended to pursue. Thus, it is not surprising that Stovall 

was simply informed that, generally, cash grain transactions need not be 

conducted on an exchange. In our view the calculated ambiguity of Stovall's 

inquiry undercuts absolutely his argument that actual approval was given to 

Stovall's operation. n33 We also observe that when CEA officials became aware, 

through information provided by a third party, of the details of the operation, 

they began the investigation which led to this action. n34 

n33 Even assuming, arguendo, that CEA employees had given Stovall an 

erroneous impression, such a mistake would not bind the Commission but 

would be relevant only in determining the sanctions to be entered upon a 

finding of a violation based on activities which were erroneously approved 

by CEA staff. Nelson v. Secretary of Agriculture, 133 F.2d 453, 455 (7th 

Cir. 1943); Nichols & Co. v. Secretary of Agriculture, 131 F.2d 651, 658-

659 (1st Cir. 1942); Goodman v. Benson, supra, 286 F.2d at 900; In re 

Arthur N. Economou and Arthur Economou & Co., 32 Agric. Dec. 14 (32 A.D. 

14) (1973), rev'd on other grounds sub nom. Economou v. U.S. Dept. of 

Agriculture, 494 F.2d 519 (2d Cir. 1974). 

n34 During the course of the proceeding, Stovall also made a number of 

allegations, both on and off the record, of misconduct by specific 

Commission staff members. We have considered those made on the record in 

the context of this proceeding and have found them to be without merit. 

The Commission's General Counsel determined that those allegations made off 

the record should be considered under the Commission's regulations with 

regard to unethical conduct, 17 §§ 140.735-1 -- 140.735-16 (1979), and 28 

U.S.C. § 535, and appropriate disposition was made. The record of 

investigation and determination of the Office of the General Counsel, while 

separate and distinct from the record here, will certainly be made 

available to any reviewing court, should it find it necessary to consider 

the matter. 
Page 14 

IV. 

Section 8a(3) of the Act provides, in pertinent part, that the Commission is 

authorized "to suspend or revoke the registration of any person registered under 

this Act if cause exists under sub-paragraph (2)(B) . . . which would warrant a 

refusal of registration of such person,. . . ." Section 8a(2)(B) provides that 

registration might be refused 

(B) if it is found, after opportunity for hearing, that the applicant is 

unfit to engage in the business for which the application for registration is 

made, (i) because such applicant, or, if the applicant is . . . a corporation, 

any officer or holder of more than 10 per centum of the stock, at any time 

engaged in any practice of the character prohibited by this Act . . . or (ii) 

for other good cause shown;. . . . 

As set forth above, we have found that Rawlin Stovall violated Section 4 of 

the Act. Stovall is the president and principal shareholder of Stovall and 

Stovall Inc. Accordingly, with regard to both respondents, pursuant to Sections 

8a(2)(B) and 8a(3) of the Act, 7 U.S.C. § 12a, and with regard to Stovall, 

pursuant to Section 6(b) of the Act, 7 U.S.C. § 9, n35 we have determined to 

revoke the registrations of both Stovall and Stovall, Inc. and Rawlin Stovall. 

n36 We have also determined to order that Rawlin Stovall cease and desist from 

violating Section 4 of the Act. 

n35 Section 6(b) of the Act provides, in pertinent part: 

If the Commission has reason to believe that any person . . . is 

violating or has violated any of the provisions of this Act or of the 

rules, regulations, or orders of the Commission thereunder, . . . the 

Commission may [after hearing] . . . suspend, for a period not to exceed 

six months, or revoke, the registration of such person, . . . 

n36 Neither respondent is currently registered with the Commission. The 

registration of both lapsed in 1973 without timely applications for renewal 

being made. Thus, the provisions of the Administrative Procedure Act, 5 

U.S.C. § 559, did not operate to extend respondents' registrations to the 

present. However, we shall order that respondents' registrations existing 

at the time this proceeding was instituted be revoked in order to preserve 

any collateral implications of revocation. See e.g., Sections 4n(6) and 

8a(2)(A) of the Act, 7 U.S.C. §§ 6(n)(6) and 12a(2)(A). 

We also wish to point out that we have not considered the evidence of 

Stovall's perjury conviction in our determination to revoke Stovall's and 

Stovall Inc.'s registrations. Stovall was convicted on January 14, 1974, 

after the institution of this action [CX 12]. 5 U.S.C. § 558(c)(1) (1976) 

clearly requires that a respondent in an administrative proceeding have 

notice of each charge which he will be required to answer. Of course, if 

events occur after the filing of a complaint which might form additional 

bases for the sanctions sought, a complaint may be amended to add the 

additional counts, or Section 10.24(d) of the Rules of Practice may be 

invoked. However, in the first instance, the respondents is offered an 

opportunity to answer formally the supplemental allegations and to prepare 

a defense. In the second instance, the respondent, by addressing and 

defending the supplemental allegations on the merits, may be said to have 

waived his right to challenge the informal supplementing of the complaint. 

Clearly, neither of the recognized methods of supplementing the complaint 

was invoked here. Moreover, respondents did not have an opportunity to 

address fully the ramifications of the perjury conviction, which were not 

addressed by the Division until its brief to the Administrative Law Judge. 

Stovall strenuously opposes the Administrative Law Judge's imposition of a 

two-year revocation of trading privileges, arguing that the penalty is too 

harsh. However, in our view, the sanction imposed by the Administrative Law 
Page 15 

Judge was not harsh enough. The statutory requirement that all commodity 

futures trading be conducted on designated contract markets is the centerpiece 

of the pervasive regulatory scheme embodied in the Act. Therefore, we view 

Stovall's willful violation of that requirement, through a deliberate scheme, a 

most serious offense, deserving of serious remedial sanctions. Recognizing our 

statutory responsibilities to insure that futures trading be conducted as 

Congress has required, we shall not permit Stovall to avail himself of the rules 

of the marketplace which he has flouted by his actions and have determined to 

bar him from trading on or subject to rules of any contract market for a period 

of five years. n37 

n37 In conjunction with pleas of guilty and nolo contendre in the 

criminal proceedings against him. United States v. Rawlin L. Stovall and 

American Cash Commodities of Missouri, Inc., a Corporation, No. 73 CR 679 

(N.D. Ill. 1973), the Honorable Abraham Marovitz placed Stovall on 

probation for a five-year period, which ended on February 28, 1979. The 

terms of that probation prohibited Stovall from 

[trading] in any manner whatsoever for or on behalf of any person, 

business, partnership, or corporation, or for or on behalf of the account 

of any person, business, partnership, or corporation. 

Stovall notes that in conjunction with his probation, Judge Marovitz 

rejected a request from the government that he be prohibited from commodity 

futures trading for his own account. Judge Marovitz stated that while he 

would prohibit Stovall from trading for others, he would not deprive 

Stovall of his livelihood by prohibiting Stovall from trading for himself 

However, our responsibilities in enforcing Section 4 of the Commodity 

Exchange Act differ from the concerns of Judge Marovitz in connection with 

Stovall's conviction for perjury. In our view, Stovall's deliberate 

violation of Section 4 of the Act more than justifies a five-year 

suspension of trading privileges. 

We note in passing that since Stovall is not registered with the 

Commission, he may not engage in trading activities for others on contract 

markets. 

The Commission, having reviewed the record as a whole and considered all of 

respondents' arguments, has determined by the weight of the evidence that 

respondent Rawlin L. Stovall has willfully violated Section 4 of the Commodity 

Exchange Act, as amended, as charged in the complaint for the reasons set forth 

in the Opinion of the Commission, filed herewith. 

Accordingly, IT IS ORDERED that the registration of respondent Rawlin L. 

Stovall as a floor broker is REVOKED. IT IS FURTHER ORDERED that the 

registration of respondent Stovall and Stovall, Inc. as a futures commission 

merchant is REVOKED. IT IS FURTHER ORDERED that respondent Rawlin L. Stovall is 

prohibited from trading on or subject to any contract market, and all contract 

markets are directed to refuse him trading privileges, for a period of five 

years from the date of this order. IT IS FURTHER ORDERED that respondent Rawlin 

L. Stovall shall cease and desist from further violations of Section 4 of the 

Act. Respondents' motion for oral argument before the Commission is denied. 

This order shall become effective upon service of a copy hereof upon 

respondents. 

By the Commission (Chairman STONE, Commissioners DUNN, MARTIN and GARTNER). 

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