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Commodity Futures Trading Commission 

CEA CASES 

NAME: JULIAN M. MARKS, STUART A. NEWMAN, MARSHALL K. SMITH, IRWIN M. EISEN, AND 

JAMES S. SCHONBERG 

CITATION: 20 Agric. Dec. 457 

DOCKET NUMBER: 98 

DATE: MAY 1, 1961 

DOCUMENT TYPE: DECISION AND ORDER 

(No. 7149) 

In re JULIAN M. MARKS, STUART A. NEWMAN, MARSHALL K. SMITH, IRWIN M. EISEN, AND 

JAMES S. SCHONBERG. CEA Docket No. 98. Decided May 1, 1961. 

Noncompetitive Transactions -- Denial of Trading Privileges -- Consent Order

Respondent Stuart A. Newman consented to an order requiring all contract 

markets to refuse all trading privileges to this respondent for 30 days. 

Mr. Benj. M. Holstein, for Commodity Exchange Authority. Mr. Sherwin J. Stone,

of Chicago, Illinois, for respondent Stuart A. Newman. 

Decision by Thomas J. Flavin, Judicial Officer 

PRELIMINARY STATEMENT

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

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

section 6(b) of the act (7 U.S.C. § 9) on January 13, 1961, by the Assistant 

Secretary of Agriculture. 

The complaint names five respondents and charges them with violating various 

provisions of the Commodity Exchange Act and the regulations on May 19, 1960, 

growing out of numerous transactions in wheat futures on the Chicago Board of 

Trade, on that date. Stuart A. Newman, one of the respondents, is a member of 

the Chicago Board of Trade and was a registered floor broker at the time of the 

transactions in question. He is charged with entering into accommodation 

trades, executing transactions noncompetitively, bucketing orders, taking the 

opposite side of customers' trades without prior consent, deceiving his 

principal, causing false records to be entered and false reports to be made 

concerning the execution of orders, and failing to keep full and complete 

records of futures transactions, in willful violation of sections 4b, 4c, and 4g 

of the act, and sections 1.35 and 1.38 of the regulations (7 U.S.C. §§ 6b, 6c, 

6g; 17 CFR 1.35, 1.38). 

No hearing has been held with respect to any of the respondents. On March 

16, 1961, a consent order was issued against respondent James S. Schonberg. On 

April 21, 1961, respondent Stuart A. Newman withdrew his previous answer and 

submitted a stipulation under section 0.4(b) of the rules of practice (17 CFR 

0.4(b)), in which he admits the facts hereinafter set forth, waives hearing on 

the charges, and consents to entry of the order contained herein. 

FINDINGS OF FACT

1. Respondent Stuart A. Newman was at all times material herein a registered 

floor broker under the Commodity Exchange Act and is now and was at all such 

times a member of the Chicago Board of Trade, a duly designated contract market 

under the Commodity Exchange Act. 
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2. The contracts resulting from the execution of the orders for the purchase 

or sale of wheat futures on the Chicago Board of Trade, hereinafter described, 

were capable of being used for hedging transactions in interstate commerce in 

wheat or 

the products or by-products thereof, or for determining the price basis of 

transactions in interstate commerce in wheat, or for delivering wheat sold, 

shipped, or received in interstate commerce. 

3. On May 19, 1960, respondent Stuart A. Newman, as a result of direct and 

noncompetitive negotiations with respondent Julian M. Marks, purchased for his 

own account from the said Julian M. Marks 15,000 bushels of May 1960 wheat 

futures at $ 2.01 -1/2 per bushel and 10,000 bushels of such future at $ 2.01 -

1/8 per bushel, and simultaneously sold for his own account the same quantities 

of the same future at the same prices to the said Julian M. Marks. 

4. On May 19, 1960, respondent Stuart A. Newman, as a result of direct and 

noncompetitive negotiations with respondent Julian M. Marks, purchased for his 

own account from the said Juian M. Marks 20,000 bushels of May 1960 wheat 

futures at $ 1.96-1/2 per bushel and 5,000 bushels of such future at $ 1.97 per 

bushel, and simultaneously sold 25,000 bushels of such future for his own 

account to the said Julian M. Marks at $ 1.97 per bushel. 

5. On May 19, 1960, respondent Stuart A. Newman, having received and accepted 

from respondent Julian M. Marks orders to sell a total of 40,000 bushels of May 

1960 wheat futures for the account of Paine, Webber, Jackson & Curtis, a 

registered futures commission merchant, thereupon sold 35,000 bushels of such 

future for the account of the said firm in execution of such orders but did not 

record such sales on his trading card. Respondent Stuart A. Newman did not 

execute the remaining 5,000 bushels of the said selling orders but took the 

purchase side thereof into his own account by making entries on his trading card 

purporting to show that he had bought 5,000 bushels of such future at $ 1.93 per 

bushel from the clearing firm from whom respondent Julian M. Marks had received 

the said orders. 

6. On May 19, 1960, respondent Stuart A. Newman received and accepted from 

respondent Julian M. Marks an order to buy 5,000 bushels of May 1960 wheat 

futures for the account of the aforesaid Paine, Webber, Jackson & Curtis. 

Respondent Newman did not execute the said order but took the sale side thereof 

into his own account at $ 2.01 per bushel, and subsequently, 

upon complaint by the customer of the said clearing firm, respondent Newman and 

respondent Marks adjusted the price of the purported transaction to $ 1.98 per 

bushel. 

CONCLUSIONS

The requirement that orders be executed openly and competitively is inherent 

in the provisions of the Commodity Exchange Act and is set forth specifically in 

section 1.38 of the regulations (17 CFR 1.38). This regulation requires that 

all futures transactions "be executed openly and competitively as to price by 

open outcry or posting of bids and offers or by other equally open and 

competitive methods, . . . ." In the transactions described in Findings of Fact 

3 and 4, respondent Newman bought from and simultaneously sold to respondent 

Marks by means of direct and noncompetitive negotiations with Marks. Newman, 

therefore, willfully violated the requirement imposed by section 1.38 of the 

regulations. 

In each of these transactions, the purchase by Newman from Marks and the 

simultaneous sale by Newman to Marks involved the same quantity of the same 

future. In the transactions described in Finding 3, each purchase by Newman and 

its corresponding sale by him were at the same prices. In transactions 
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described in Finding 4, the price was the same with respect to 5,000 bushels, 

but with respect to the remaining 20,000 bushels Newman's sale to Marks was at 

one-half cent more than his purchase from Marks. In each of these transactions, 

Newman was "accommodating" Marks, that is, helping Marks to execute his orders. 

In some of the transactions, the accommodation was gratis. In the transaction 

last described, Newman was compensated in the amount of $ 100 by being given a 

profit of one-half cent per bushel on 20,000 bushels. This in no wise affects 

the character of the transaction. Section 4c(A) of the act (7 U.S.C. § 6c(A)), 

prohibits accommodation trades, and Newman willfully violated this prohibition 

in all of these transactions. 

Respondent Newman failed to record on his trading card the 35,000 bushel sale 

of May wheat futures which he had made for the account of Paine, Webber, Jackson 

& Curtis, in fulfillment of its orders to sell 40,000 bushels. He failed to 

execute the balance of the orders, but instead recorded a nonexistent 

transaction in which he showed himself as the purchaser of 5,000 

bushels sold for the account of this firm at $ 1.93 per bushel (Finding of Fact 

5). He also received an order to buy 5,000 bushels for Paine Webber, which he 

did not execute but merely took the sale side into his own account at $ 2.01 per 

bushel, later adjusted to $ 1.98 when the customer compained (Finding of Fact 

6). By reason of these acts, respondent Newman deceived Paine, Webber, Jackson 

& Curtis, caused false reports to be made and false records to be entered 

concerning the orders and transactions of such firm, bucketed its orders, took 

the opposite side of customers' orders without their prior consent, and failed 

to keep full and complete records of futures transactions. 

Section 4b of the act (7 U.S.C. § 6b) makes it unlawful for any member of a 

contract market willfully to deceive or attempt to deceive any person with 

respect to the disposition or execution of such person's orders, or willfully to 

cause false reports to be made or false records to be entered with respect to 

such orders, or to bucket such orders, or willfully and knowingly to take the 

opposite side of such orders without such person's prior consent. Section 4g of 

the act (7 U.S.C. § 6g)' requires a registered floor broker to keep records of 

customers' transactions in the form and manner specified by the Secretary. 

Section 1.35 of the regulations (17 CFR 1.35) sets forth certain details with 

respect to the keeping of records by members of contract markets and others. It 

provides, in pertinent part, that "each member of a contract market shall keep 

full, complete, and systematic records of all commodity futures transactions . . 

. made by or through him, on or subject to the rules of a board of trade." We 

conclude that respondent Newman violated all of these requirements by virtue of 

the transactions described in Findings 5 and 6, and that such violations were 

knowing and willful. 

The complainant states that it has carefully considered the proposed 

stipulation and order, and it believes that the proposed sanction would be 

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

which respondent Newman has consented woud constitute a satisfactory disposition 

of this case as against the said respondent, serve the public interest, and 

effectuate the purposes of the act. The complainant, therefore, recommends that 

the stipulation and waiver submitted by respondent Newman be accepted and that 

the proposed order be issued. It is so concluded. 

ORDER

Effective June 5, 1961, all contract markets shall refuse all trading 

privileges to Stuart A. Newman for a period of thirty (30) days, such refusal to 

apply to all trading done and positions held by the said Stuart A. Newman, 

directly or indirectly. 

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

and upon each contract market. 
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