Page 1 

Commodity Futures Trading Commission 

CEA CASES 

NAME: WALSTON & CO., INC., PAT G. NOEL, AND CARLTON M. SMITH 

DOCKET NUMBER: 130 

DATE: SEPTEMBER 13, 1965 

DOCUMENT TYPE: COMPLAINT 

UNITED STATES DEPARTMENT OF AGRICULTURE 

BEFORE THE SECRETARY OF AGRICULTURE 

In re: Walston & Co., Inc., Pat G. Noel, and Carlton M. Smith, Respondents 

CEA Docket No. 130 

Complaint and Notice of Hearing Under Section 6(b) of the Commodity Exchange 

Act 

There is reason to believe that the respondents, Walston & Co., Inc., Pat G. 

Noel, and Carlton M. Smith, have violated the Commodity Exchange Act (7 U.S.C. 1 

et seq.), and the regulations made pursuant thereto (17 CFR, Part 1), and in 

accordance with the provisions of section 6(b) of the said act (7 U.S.C. 9), 

this complaint and notice of hearing is issued stating the charges in that 

respect as follows: 

I 

Respondent Walston & Co., Inc., is now and was at all times material herein a 

corporation organized and existing under the laws of the State of Delaware, with 

its principal office and place of business at 74 Wall Street, New York, New 

York, and branch offices at Houston, Texas, and various other cities throughout 

the United States. The said corporation is now and was at all such times a 

clearing member of the Chicago Board of Trade and various other contract 

markets, and a registered futures commission merchant under the Commodity 

Exchange Act, trading in commodity futures on such contract markets for the 

accounts of its customers. 

II 

Respondent Pat G. Noel, an individual whose address is 202 Renoir Drive, 

Houston, Texas, was at all times material herein employed by the corporate 

respondent as an account executive in its Houston, Texas, office. 

III 

Respondent Carlton M. Smith, an individual whose address is 7900 West Heimer 

Street, Houston, Texas, was at all times material herein employed by the 

corporate respondent as an account executive in its Houston, Texas, office. 

IV 

The contracts referred to in this complaint were contracts for the purchase 

or sale of soybean futures on the Chicago Board of Trade, a duly designated 

contract market under the Commodity Exchange Act. Such contracts could have 

been used for hedging transactions in interstate commerce in soybeans or the 

products or byproducts thereof, or for determining the price basis of 

transactions in interstate commerce in such commodity, or for delivering such 

commodity sold, shipped, or received in interstate commerce. 

V 
Page 2 

The acts and transactions on the part of the corporate respondent hereinafter 

described were ordered or carried out by respondents Pat G. Noel and Carlton M. 

Smith acting in their capacities as account executives of the corporate 

respondent. 

VI 

During the period from on or about September 16, 1963, through on or about 

May 5, 1964, respondent Walston & Co., Inc., in closing out certain offsetting 

long and short soybean futures contracts for the accounts of certain customers 

of its Houston, Texas,office (Account Nos. 76-01-865, 76-01-756, 76-02-131 and 

76-02-079), engaged in the practice of selectively closing out such contracts so 

that larger profits or smaller losses than actually existed were reported to 

such customers, thereby for a period of time concealing from each of such 

customers the actual amount of his losses. 

VII 

By reason of the facts set forth in this complaint, the respondents, in 

connection with the disposition or execution of contracts of sale of a commodity 

for future delivery on or subject to the rules of a contract market, and in 

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

persons on behalf of whom such contracts were made, in wilfull 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 wilfull violation of section 1.46 of 

the regulations (17 CFR 1.46). 

WHEREFORE, it is hereby ordered that this complaint and notice of hearing be 

served upon the said respondents. The respondents will have twenty (20) days 

after the receipt of this complaint in which to file with the Hearing Clerk, 

United States Department of Agriculture, Washington, D. C. 20250, an answer with 

an original and five copies, fully and completely stating the nature of the 

defense and admitting or denying, specifically and in detail, each allegation of 

this complaint. Allegations not answered will be deemed admitted for the 

purpose of this proceeding. Failure to file an answer will constitute an 

admission of all the allegations of this complaint and a waiver of hearing. The 

respondents are hereby notified that unless hearing is waived, either expressly 

or by failure to file an answer, or by filing an answer in which all of the 

material allegations of fact contained in the complaint are admitted and a 

hearing is not requested, a hearing will be held at 10:00 a.m., local time, on 

the 17th day of November 1965, in Houston, Texas, at a place therein to be 

specified later, before a referee designated to conduct such hearing. At such 

hearing the respondents will have the right to appear and show cause, if any 

there be, why an order should not be made revoking or suspending the 

registration of respondent Walston & Co., Inc., as futures commission merchant, 

and directing that all contract markets refuse all trading privileges to each 

respondent for such period of time as may be determined. 

It is ordered that this complaint and notice of hearing be served on the 

respondents at least twenty (20) days prior to the date set for hearing. 

Done at Washington, D. C., on 

September 13, 1965. 

[SEE SIGNATURE IN ORIGINAL] 

Assistant Secretary 

LOAD-DATE: June 12, 2008 
Page 3