Page 1 

Commodity Futures Trading Commission 

CEA CASES 

NAME: SECRETARY OF AGRICULTURE V. H. W. ARMSTRONG & COMPANY, JOSEPH BUCHHALTER, 

CATHERINE L. DURANT, WILLIAM C. DURANT, ALEXANDER EISEMANN, ALEXANDER EISEMANN & 

COMPANY, AND CLEMENT B. JOHNSON 

DOCKET NUMBER: 12 

DATE: MARCH 10, 1939 

DOCUMENT TYPE: COMPLAINT 

UNITED STATES OF AMERICA 

BEFORE THE SECRETARY OF AGRICULTURE 

C.E.A. DOCKET NO. 12 

Secretary of Agriculture, Complainant, v. H. W. Armstrong & Company, Joseph 

Buchhalter, Catherine L. Durant, William C. Durant, Alexander Eisemann, 

Alexander Eisemann & Company, and Clement B. Johnson, Respondents. 

Complaint and Notice of Hearing Under the Commodity Exchange Act. 

There being reason to believe that the respondents hereinafter named have 

violated and are violating the Commodity Exchange Act (7 U.S.C., 1934 ed., and 

Supp. IV, Secs. 1-17a) and the rules and regulations promulgated pursuant 

thereto, this complaint is issued alleging the following: 

1. 

H. W. Armstrong & Company is a corporation whose business address is 230 Park 

Avenue, New York, New York. Prior to about November, 1938, it was a partnership 

composed of respondents Clement B. Johnson and Catherine L. Durant. 

Joseph Buchhalter is an individual whose business address is 42 Broadway, New 

York, New York. 

Catherine L. Durant, wife of respondent William C. Durant, is an individual 

whose business address is 230 Park Avenue, New York, New York. 

William C. Durant, husband of respondent Catherine L. Durant, is an 

individual whose business address is 230 Park Avenue, New York, New York. 

Alexander Eisemann is an individual whose business address is 42 Broadway, 

New York, New York. 

Alexander Eisemann & Company is a partnership, of which respondent Alexander 

Eisemann is a partner, and its business address is 42 Broadway, New York, New 

York. 

Clement B. Johnson is an individual whose business address is 230 Park 

Avenue, New York, New York. 

2. 

H. W. Armstrong & Company and Alexander Eisemann & Company registered with 

the Secretary of Agriculture as futures commission merchants for the period 

ending December 31, 1939. 

Alexander Eisemann is a member of the Chicago Board of Trade, a contract 

market. His membership is registered for Alexander Eisemann & Company. 

Clement B. Johnson is a member of the Chicago Board of Trade, a contract 

market. His membership is registered for H. W. Armstrong & Company. 
Page 2 

3. 

Respondents, and each of them, members of a contract market or 

correspondents, agents, or employees of members, in connection with orders to 

make and the making of futures contracts for commodities named in the Commodity 

Exchange Act, on contract markets, which contracts may be used for hedging, or 

determining the price basis of, transactions in interstate commerce in the 

commodities involved, during 1937 and thereafter, attempted to and did cheat and 

defraud the persons for whom such contracts were made, willfully made and caused 

to be made misleading and false reports and statements concerning such contracts 

to such persons, and willfully attempted to and did deceive such persons in 

regard to such contracts and acts of agency performed with respect to such 

contracts, by the manner in which they promoted and operated a scheme sometimes 

called the Buchhalter Plan, which is described in general in the following 

paragraph. 

4. 

A power of attorney is taken from the customer whereunder respondents make 

the futures contracts for him. He is led to believe that respondents are 

experts in futures trading, that the plan is infallible, that he is put into a 

balanced position which makes losses very unlikely if not impossible, and that a 

regular weekly or monthly income will result from his "investment", the 

size of which income will depend entirely upon the amount "invested". Under the 

usual application of the plan, the customer, at the beginning, is put into a 

spread position, such as one job lot contract long in the May wheat future and 

one short in the July. When the price moves one cent per bushel, that contract 

wherein a profit is shown is closed out, resulting in a realized profit. At the 

same time a new contract is made in the same amount and future on the same side 

of the market, leaving the position the same as if the prior contract had not 

been offset. That contract wherein a loss is shown is not closed out, leaving 

the loss open and unrealized, and another similar contract is made at the now 

price. Commissions of $ 4.75 are charged for each job lot purchase and sale, or 

"round turn", as compared with the usual commission of 43.50. Statements are 

rendered to the customer showing the realized profits, but not clearly showing 

the unrealized loss, in the account. Sometimes a chock is sent for the profits 

realized on closed trades while the account as a whole shows a less. 

5. 

Those familiar with trading in futures could properly figure their chances 

for profit or loss under the plan, but others are deceived into believing that 

the special knowledge and experience of respondents will, under the plan, load 

then to certain profits and no losses. The closing out of trades showing a 

profit, and simultaneously reestablishing the position just liquidated, merely 

enable 

respondents to extract an additional $ 4.75 commission charge and to send a 

statement showing a realized profit while the whole account shows a loss. These 

repeated commission items rapidly deplete the amounts originally "invested". 

Many customers receiving these statements are led to believe that they are 

making money, as their larger losses on the other side of the market are not 

called to their attention. 

6. 

Very few, if any, of the accounts handled by respondents under their plan 

have proved profitable to customers. Of 48 accounts examined as of June 30, 

1938, all but six showed profits in closed trades, but every one showed 

unrealized losses on open trades exceeding such profits. The total net profits 

on closed trades amounted to $ 18,253, while the losses in open trades 
Page 3 

aggragated $ 45,218.75. Commissions charged on closed trades accounted for $ 

11,816 of the net loss of $ 26,965.75. 

Therefore, each of the respondents is hereby notified to be and appear before 

Jack W. Bain, who is hereby designated referee to conduct the hearing herein, at 

10 o'clock a.m., on March 29, 1939, in Room 800 at 15 William Street, New York, 

New York, or at such other times and places as may be determined by the referee, 

and then and there show cause, if any there be, why an order should not be made 

revoking the registrations of respondents who have 

registered as futures commission merchants, and directing that all contract 

markets until further notice of the Secretary of Agriculture refuse all trading 

privileges to each of the respondents, respectively. 

IT IS ORDERED that this complaint and notice of hearing be served on each of 

the named respondents, by delivery of a true copy hereof to each of them, by an 

employee of the Department of Agriculture or by registered mail, at least three 

days prior to the date herein set for hearing. 

Done at Washington, D. C., this 10th day of March, 1939. Witness my hand and 

the seal of the Department of Agriculture. 

(SEAL) 

(Signed) Harry L. Brown 

Acting Secretary of Agriculture. 

LOAD-DATE: June 11, 2008 
Page 4