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Commodity Futures Trading Commission 

CEA CASES 

NAME: RAYMOND G. BROWN, SR. 

CITATION: 5 Agric. Dec. 745 

DOCKET NUMBER: 40 

DATE: OCTOBER 16, 1946 

DOCUMENT TYPE: DECISION AND ORDER 

(A. D. 1336) 

 

In re RAYMOND G. BROWN, SR., et al. CEA Doc. No. 40. Decided October 16, 1946. 

Suspension of Trading Privileges at all Contract Markets -- Failure to File 

Reports

Order suspending respondents' trading privileges for 90 days at all contract 

markets for failure to file reports concerning their egg futures trading. 

 

Mr. Benj. M. Holstein for Production and Marketing Administration. Mr. L. 

Pearce Bowlus, of Mount Airy, Maryland, for respondents. Mr. John J. Curry,

Referee. 

 

Decision by Thomas J. Flavin, Judicial Officer.

PRELIMINARY STATEMENT

This is a disciplinary proceeding under the Commodity Exchange Act (7 U.S.C., 

Chapter 1), instituted by a complaint issued by the Secretary of Agriculture on 

June 10, 1946. The respondents, Raymond G. Brown, Sr., Raymond G. Brown, Jr., 

Preston Brown, Harry C. Clower, Jr., and R. Bond Baker, of Mt. Airy, Maryland, 

were charged with violating the reporting requirements of the act in connection 

with egg futures holdings on the Chicago Mercantile Exchange in 1945 and 1946, 

and a hearing was set for July 23, 1946, in Washington, D. C. Through their 

attorney, L. Pearce Bowlus, of Mt. Airy, respondents filed an answer on June 25, 

1946. They admitted the allegations of the complaint, stated that their 

violations were due to unfamiliarity with the reporting requirements and to 

assurances of their brokers that they were in compliance, and waived oral 

hearing. On July 8, John J. Curry, Office of the Solicitor, was assigned to act 

as referee by an Associate Solicitor. On July 24, the Production and Marketing 

Administration, the complainant, through its attorney, Benjamin M. Holstein, 

Office of the Solicitor, filed a recommendation that respondents' trading 

privileges on contract markets be suspended until January 1, 1947, pointing out 

that 

 

 

the reports which they admitted filing showed that they were familiar with the 

reporting requirements. 

Without further investigation or hearing, as is authorized by section 0.9(c) 

of the rules of practice (17 CFR, Cum. and 1945 Supps., Part 0), the referee 

issued his report on August 28, 1946, proposing substantially the findings of 

fact set out below and the suspension recommended by complainant. Respondents 

filed exceptions on September 30, claiming that the proposed order might result 

in financial loss to them and was too harsh. They requested oral argument, 

which was set for October 16, 1946, before me in Washington. When respondents 
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withdrew their request on October 9, the setting was cancelled, and the record 

was submitted to this office, where this decision has been prepared. 

FINDINGS OF FACT

1. Respondents are Raymond G. Brown, Sr., Raymond G. Brown, Jr., Preston 

Brown, Harry C. Clower, Jr., and R. Bond Baker, whose address is Mt. Airy, 

Maryland. 

2. From April 2 through May 9 and from June 20 through July 9, 1945, 

Respondent Raymond G. Brown, Sr., was long 25 or more carlots, the number 

varying from 25 to 34 on different days, in the October 1945 egg future on the 

Chicago Mercantile Exchange, a contract market, but did not report his egg 

futures holdings to the Commodity Exchange Authority, except that he filed one 

incorrect report on May 15, 1945. These holdings were carried through three 

different futures commission merchants registered under the act, J. S. Bache and 

Company (and its successor, Bache and Company), Fahnestock and Company, and 

Orvis Brothers and Company. On some of the days involved, the account with 

Fahnestock alone was over 25 carlots long in the October future. 

3. From March 17 through August 21, 1945, Respondent Raymond G. Brown, Jr., 

was long 25 or more carlots, the number varying from 30 to 61 on different days, 

in the October 1945 egg future; from October 24 through November 3, 1945, he was 

long 26 and 28 carlots in the November 1945 egg future; and from January 25 

through February 19, 1946, he was long 25 or more carlots, the figure varying 

from 25 to 81 on different days, in the October 1946 egg future, all on the 

Chicago Mercantile Exchange. Except for two reports, filed April 15 and May 15, 

1945, he did not report his egg futures holdings to the Commodity Exchange 

Authority. These holdings were carried through four registered futures 

commission merchants, the three mentioned in Finding 2 and Becker, Stone and 

Company. On many of the days involved he was long more than 25 carlots in one 

future with Fahnestock alone, and similarly for Becker, Stone alone. 

 

4. From December 3 through December 11 Respondent Preston Brown was long 26 

carlots in the December 1945 egg future on the Chicago Mercantile Exchange 

through Fahnestock and Company and Becker, Stone and Company, and from February 

4 through February 15, 1946, he was long 25 and 27 carlots in the October 1946 

egg future on such Exchange through Becker, Stone and Company, but he filed no 

reports with the Commodity Exchange Authority. 

5. Respondent Harry C. Clower, Jr., was long 25 carlots on February 15, 30 

carlots on February 19, and 32 carlots on February 28, 1946, in the October 1946 

egg future on such Exchange through Orvis Brothers and Company, but filed no 

reports with the Commodity Exchange Authority. 

6. On October 29, 30 and 31, 1945, Respondent R. Bond Baker was long 26, 28 

and 27 carlots, respectively, in the Chicago Mercantile Exchange November 1945 

egg future, but filed no reports with the Commodity Exchange Authority. These 

holdings were carried with three different commission merchants. 

7. The respondents were aware of the reporting requirements relating to egg 

futures transactions and positions as evidenced by correspondence between 

certain of the respondents and officials engaged in the enforcement of the 

Commodity Exchange Act. 

8. Respondents are all related, either by blood or marriage. Concerning 

their egg futures trading, some of them gave powers of attorney to others, some 

were authorized to trade in and withdraw funds from accounts of others, some 

guaranteed the accounts of others, there were frequent transfers of funds 

between their accounts, checks payable to some were endorsed by others, and some 

transactions by one were distributed, after execution, to accounts of others. 

CONCLUSIONS

Section 4i of the act (7 U.S.C. 6i) requires a person to file reports in 

accordance with the rules and regulations when he has a long or short position 

in any future of any commodity equalling or exceeding an amount fixed by the 
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Secretary of Agriculture. In 17 CFR 5.10, 5.11, and 5.21, regulations under the 

act, the Secretary has fixed 25 carlots as this amount for eggs and has 

prescribed the method of reporting. The findings show that respondents violated 

these provisions, authorizing suspension of their trading privileges on contract 

markets. 

Finding 7 is copied word for word from Paragraph 10 of the complaint, which 

respondents specifically admitted in their answer; so their claims of ignorance 

and advice of their brokers are not well taken. Even if proved, such claims 

would not excuse the violations, but would only lessen the sanction to be 

imposed, for when respondents 

 

 

choose to trade on commodity markets, they must do so in accordance with all 

valid regulations applicable to such trading. That a sanction here might cause 

them financial loss does not change nor stay the law which authorizes the 

sanction. Indeed, any sanction may be considered as tending to involve some 

inconvenience to the person against whom it is invoked. 

We are at somewhat of a loss as to just what sanction has been recommended. 

Considering the dates on which they were filed, we might construe the 

complainant's suggestion as a suspension of about 150 days, and the proposal of 

the referee as one of about 120 days. But as we like to give 30 days from the 

date of suspension orders under the act for respondents to arrange their affairs 

and for complainant to notify contract markets and futures commission merchants, 

the recommended suspension until January 1, 1947, if now ordered, would be for a 

period of less than 50 days. On facts somewhat similar to those here, a 

suspension of 90 days was recommended and ordered recently in In re A. Feldstein 

and Company, 5 Agric. Dec. 337 (5 A.D. 337). In an effort to apply similar 

sanctions under similar circumstances, we prefer the period of suspension here 

to be what we ordered there. 

SANCTIONS

Beginning on the 30th day after this date, all contract markets shall refuse 

respondents, and each of them, all trading privileges thereon for a period of 90 

days. Copies of this decision shall be served on the parties or their counsel 

of record, and on each contract market. 

 

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