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Commodity Futures Trading Commission 

CEA CASES 

NAME: GREAT WESTERN DISTRIBUTORS, INC., NATHANIEL E. HESS, CHARLES S. BORDEN, 

THOMAS F. HAYNES AND HARTLEY L. HARRIS 

DOCKET NUMBER: 48 

DATE: JULY 12, 1948 

DOCUMENT TYPE: COMPLAINT 

UNITED STATES DEPARTMENT OF AGRICULTURE 

BEFORE THE SECRETARY OF AGRICULTURE 

In re Great Western Distributors, Inc. Nathaniel E. Hess. Charles S. Borden, 

Thomas F. Haynes and Hartley L. Harris, Respondents 

CE-A Docket No. 48 

Complaint and Notice of Rearing under Section 6(b) of the Commodity Exchange 

Act 

The Secretary of Agriculture has reason to believe that the respondents, 

Great Western Distributors, Inc., Nathaniel E. Hess, Charles S. Borden, Thomas 

F. Haynes and Hartley L. Harris, have violated the provisions of the Commodity 

Exchange Act (7 U.S.C. Chapter 1) and the rules and regulations made pursuant to 

its requirements, and have attempted to manipulate the market price of a 

commodity in interstate commerce or for future delivery on or subject to the 

rules of a board of trade. In accordance with the provisions of Section 6(b) of 

the Commodity Exchange Act. (7 U.S.C. 9), this complaint is issued alleging as 

follows: 

1. 

Great Western Distributors, Inc. is a corporation organized in 1933 under the 

laws of the State of New York, with its principal place of business located at 

99 Hudson Street, New York 13, New York, and a branch office located at 110 

North Franklin Street, Chicago, Illinois. The said corporation was at all times 

material to this complaint and is now registered as a futures commission 

merchant 

under the provisions of the Commodity Exchange Act. The said corporation had 

membership trading privileges on the Chicago Mercantile Exchange at all times 

mentioned in this complaint, and has such privileges at the present time. 

2. 

The Chicago Mercantile Exchange was, prior to the time of the transactions 

described in this complaint, duly designated as a con- tract market under the 

provisions of the Commodity Exchange Act and has been a contract market 

continuously since that time. 

3. 

Nathaniel E. Hess, an individual residing at Sands Point, Long Island, New 

York, was at all times material to this complaint and is now a registered floor 

broker under the provisions of the Commodity Exchange Act, a member of the 

Chicago Mercantile Exchange, and Vice-President of respondent Great Western 

Distributors, Inc. The membership of the said Nathaniel E. Hess in the Chicago 

Mercantile Exchange is registered for the use of respondent Great Western 

Distributors, Inc. 
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4. 

Charles S. Borden, an individual residing in La Grange, Illinois was at all 

times material to this complaint and is now a registered floor broker under the 

provisions of the Commodity Exchange Act, a member of the Chicago Mercantile 

Exchange, and manager of the aforesaid 

Chicago branch office of respondent Great Western Distributors Inc. The 

membership of the said Charles S. Borden in the Chicago Mercantile Exchange is 

registered for the use of respondent Great Western Distributors, Inc. 

5. 

Thomas F. Haynes, an individual residing in Ralston, New Jersey, was at all 

times material to this complaint and is now secretary of respondent Great 

Western Distributors, Inc. 

6. 

Hartley L. Harris, an individual residing at 35 West 76th Street, New York, 

New York, was at all times material to this complain and is now a registered 

floor broker under the provisions of the Commodity Exchange Act, and an employee 

of the corporate respondent Great Western Distributors, Inc. The said Hartley 

L. Harris is presently a member of the Chicago Mercantile Exchange. 

7. 

At all times material to this complaint, respondents Nathaniel E. Hess, 

Charles S. Borden, Hartley L. Harris and Thomas F. Haynes, as officers and 

employees of the corporate respondent Great Western Distributors, Inc., 

exercised management and control over the business of the said corporate 

respondent, and the transactions hereinafter described were carried out under 

the direction and supervision and 

by means of the acts of the said individual respondents in their capacity as 

officers and employees, respectively, of the said corporate respondent. 

8. 

During the months of November and December 1947, respondent Great Western 

Distributors, Inc. purchased large quantities of December 1947 egg futures 

contracts for long account and sold large quantities of January 1948 egg futures 

contracts for short account on the Chicago Mercantile Exchange. During such 

period, the said respondent kept its purchases of December 1947 egg futures open 

and maintained this long position at a steadily increasing percentage of the 

total open December contracts, with the result that, in December 1947, the said 

respondent attained a dominant and controlling long position in the December 

1947 egg futures market. During the same period, the said respondent maintained 

a substantial short position in January 1948 egg futures contracts. 

9. 

During the month of December 1947, respondent Great western Distributors, 

Inc. continued to maintain and strengthen its long position in December 1947 egg 

futures contracts on the Chicago Mercantile Exchange, with the result that the 

total amount of its contracts approaching maturity was, at all times between 

December 10, 1947 and December 22, 1947, both inclusive, from two to three times 

as large as total stocks of eggs in Chicago available for delivery on December 

1947 futures contracts. 

10. 
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During the month of December 1947, while continuing to maintain and 

strengthen its long position in December 1947 egg futures, respondent Great 

Western Distributors, Inc. stood for delivery on the long contracts which it 

held, as a result of which, and because of the dominant and controlling position 

of the said respondent in the December 1947 egg futures market, substantially 

all the eggs delivered on the Chicago Mercantile Exchange in December 1947 in 

satisfaction of futures contracts were required to be and were delivered to the 

said respondent. 

11. 

During the month of December 1947, while maintaining and strengthening its 

long position in December 1947 egg futures contracts and requiring and accepting 

delivery in satisfaction of such contracts as described above, respondent Great 

Western Distributors, Inc. purchased and held large quantities of each eggs 

(eggs in store and in position for immediate delivery), and maintained its case 

egg position at a steadily increasing ratio of the total quantity of deliverable 

eggs in stock in Chicago. The result of the aforesaid deliveries and purchases 

was that on December 23, 1947, at the close of trading in December 1947 egg 

futures, who said respondent owned and held over fifty per cent of the total 

stocks of 71,000 cases of eggs in Chicago, and on 

December 31, 1947 the said respondent owned and held substantially all the eggs 

in Chicago deliverable in satisfaction of futures contracts and a major portion 

of the eggs in store in Indiana, Illinois, Michigan, Ohio and Wisconsin. 

12. 

During the month of December 1947, respondent Great Western Distributors, 

Inc., after having attained a dominant and controlling position in the December 

1947 egg futures market and after having strengthened its cash egg position by 

means of the purchases and acceptance of deliveries described above continued to 

require delivery on its long December 1947 futures contracts with knowledge of 

the fact that there were insufficient- eggs in store in Chicago which could be 

delivered in satisfaction of such contracts, and with knowledge of the fact that 

a substantial proportion of the available supply of eggs in Chicago was in its 

own possession. 

13. 

During the month of December 1947, respondent Great Western Distributors, 

Inc. offered to sell the eggs owned and held by it as described above, but only 

at prices which were at a premium in relation to prevailing prices of December 

1947 egg futures, so as to render it unprofitable for holders of short contracts 

to fulfill such contracts by the purchase of cash eggs for delivery, and thereby 

compelling such holders to cover their commitments by purchases in the futures 

market at prices fixed by the said respondent. 

14. 

Respondent Great Western Distributors, Inc. conducted the operations 

described in paragraphs 8 to 13, inclusive, for the purpose and with the intent 

of widening the spread between the price of December 1947 and January 1948 egg 

futures contracts on the Chicago Mercantile Exchange, and for the purpose of 

increasing or preventing a decrease in the price of eggs deliverable in 

satisfaction of futures contracts on such Exchange In furtherance of such 

purpose and intent, the said respondent required and accepted the deliveries and 

made the purchases described above, obtained control of the supply of 

deliverable eggs in Chicago and the surrounding area, and placed itself in a 

position where it could and did demand such prices as it saw fit from those who 

had sold December 1947 egg futures contracts and were obligated to deliver eggs 

in fulfillment thereof or, in the alternative, to cover such sales by purchases 

in the futures market. The short position of the said respondent in January 
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1948 egg futures contracts was used to dispose of the cash eggs acquired by 

means of the deliveries and purchases described above. 

15. 

By reason of the acts described in paragraphs 8 to 14, inclusive, respondent 

Great Western Distributors, Inc. attempted to manipulate the price of a 

commodity in interstate commerce and for future delivery on or subject to the 

rules of a board of trade, in violation of sections 6(b) and 9 of the Commodity 

Exchange Act. (7 U.S.C. 9, 13). 

16. 

By reason of the acts described in paragraphs 8 to 14, inclusive, respondent 

Great Western Distributors, Inc. attempted to corner a commodity in interstate 

commerce and for future delivery on or subject to the rules of a board of trade, 

in violation of section 9 of the Commodity Exchange Act (7 U.S.C 13). 

17. 

By reason of the acts described in paragraphs 3 to 14, inclusive, respondent 

Great Western Distributors, Inc. cornered a commodity in interstate commerce and 

for future delivery on or subject to the rules of a board of trade, in violation 

of section 9 of the Commodity Exchange Act (7 U.S.C. 13). 

Therefore, the said respondents, Great Western Distributors, Inc., Nathaniel 

E. Hess, Charles S. Borden, Thomas F. Haynes and Hartley L. Harris, are hereby 

notified to be and appear at a hearing to be held at 10 o'clock A. M., central 

day-light saving time, on the 19th. day of August, 1948, in Room 1200, Board of 

Trade Building, 145 West Jackson Boulevard, Chicago, Illinois, before a referee 

designated to conduct such hearing and then and there show cause, if any there 

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

the said Great Western Distributors, Inc. as a futures commission merchant, 

revoking or suspending the registration of respondents Nathaniel E. Hess, 

Charles S. Borden, and Hartley L. Harris as floor brokers under the Commodity 

Exchange Act, and directing that all contract markets refuse all trading 

privileges to the respondents until further notice by the Secretary of 

Agriculture. 

The respondents will have twenty days after the receipt of this notice of 

hearing in which to file with the Hearing Clerk, United States Department of 

Agriculture, in triplicate, an answer fully and completely stating the nature of 

the defense and admitting or denying specifically and in detail each material 

and relevant allegation of this complaint. Allegations that are not answered 

will be deemed admitted for the purpose of this proceeding. 

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

respondents by delivery of a true copy thereof to each of them by an employee of 

the Department of Agriculture, or by registered mail, at least twenty days prior 

to the date set for hearing. 

Done at Washington, D. C., this 12th day of July 1948. 

/s/ I. W. Duggan 

Acting Secretary of Agriculture 

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