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Commodity Futures Trading Commission 

CEA CASES 

NAME: SERVICE GRAIN COMPANY, AND NORVELL D. SEELE 

DOCKET NUMBER: 102 

DATE: AUGUST 4, 1961 

DOCUMENT TYPE: COMPLAINT 

UNITED STATES DEPARTMENT OF AGRICULTURE 

BEFORE THE SECRETARY OF AGRICULTURE 

In re: Service Grain Company, and Norvell D. Seele, Respondents 

CEA Docket No. 102 

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

Act 

There is reason to believe that the respondents, Service Grain Company and 

Norvell D. Seele, have violated the Commodity Exchange Act (7 U.S.C. 1958 ed., 

Chapter 1) 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 Service Grain Company is a Missouri corporation with its principal 

office and place of business at 5100 Oakland Avenue, St. Louis 10, Missouri. 

The said corporation is now and was at all times material to this complaint a 

registered futures commission merchant under the Commodity Exchange Act. 

At all such times up to April 10, 1961, respondent Service Grain Company enjoyed 

membership privileges on the Chicago Board of Trade, a duly designated contract 

market. 

II 

Respondent Norvell D. Seele, an individual who resides at No. 7 Bellerive 

Acres, St. Louis 21, Missouri, is now and was at all times material to this 

complaint the president and manager of respondent Service Grain Company, the 

owner of 95 percent of its capital stock, and a member of the Chicago Board of 

Trade. 

III 

The acts and transactions hereinafter described were ordered and directed by 

or carried out under the supervision and control of respondent Norvell D. Seele 

in his capacity as president, manager, and principal shareholder of the 

respondent corporation. 

IV 

At the times hereinafter stated, respondent Service Grain Company, in the 

normal course of its business, carried accounts for customers who traded in 

commodity futures subject 
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to the provisions of the Commodity Exchange Act and regulations. In connection 

therewith, the said respondent had to its credit with a bank or other depository 

sums of money in varying amounts, held in segregated account and identified as 

customers' funds, representing deposits of margin by and trading profits 

accruing to such customers. During the same periods, respondent Service Grain 

Company traded in commodity futures on the Chicago Board of Trade for its own or 

house account. 

V 

Beginning on or about January 18, 1961, and continuing until April 7, 1961, 

respondent Service Grain Company executed purchases and sales of commodity 

futures on the Chicago Board of Trade for its own use and benefit and placed 

certain of such trades in its customers' accounts carried with clearing members, 

by reason of which the open contract positions and financial results of such 

trades were commingled with the open contract positions and financial results of 

the transactions of the customers of the respondent corporation, contrary to the 

provisions of section 4d(2) of the Commodity Exchange Act (7 U.S.C. § 6d(2)) and 

sections 1.20, 1.21, and 1.22 of the regulations (17 CFR 1.20, 1.21, 1.22). 

VI 

During the period set forth in paragraph V, with respect to the transactions 

for the house account of respondent Service Grain Company therein described, the 

said respondent failed to prepare and keep a record showing all such 

transactions, including the date, price, quantity, market, commodity, and 

future, as required by section 4g of the Commodity Exchange Act (7 U.S.C. § 6g) 

and section 1.35 of the regulations (17 CFR 1.35). 

VII 

As a result of losses incurred by respondent Service Grain Company in 

connection with the trades and contracts executed for its own account and the 

commingling of such trades and contracts with those of its customers as 

described in paragraph V, respondent Service Grain Company was under-segregated 

in the amount of approximately $ 59,000 at all times between April 10 and April 

30, 1961, in the amount of approximately $ 40,000 on May 1, and in the amount of 

approximately $ 15,000 on May 2, 1961, that is, the total amount of customers' 

funds held in segregation was insufficient, by the aforesaid sums, to pay all 

credits 

and equities due to such customers, contrary to the provisions of section 4d(2) 

of the Commodity Exchange Act (7 U.S.C. § 6d(2)) and sections 1.20, 1.21, and 

1.22 of the regulations (17 CFR 1.20, 1.21, 1.22). 

VIII 

At all times during the period from January 18, 1961, through March 24, 1961, 

the computation and record of funds required to be held in segregation, which 

respondent Service Grain Company was obligated to make as of the close of the 

market on each business day, as provided by section 1.32 of the regulations (17 

CFR 1.32), was incomplete and inaccurate to an extent which made it impossible 

to determine whether the funds so held were in fact sufficient to pay all 

credits and equities due to customers. On each business day from March 25 

through May 2, 1961, respondent Service Grain Company failed to make any daily 

computation or permanent record of funds required to be held in segregation. 

IX 

In June 1959, it was brought to the attention of respondent Norvell D. Seele 

by a representative of the Commodity Exchange Authority that respondent Service 

Grain 
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Company had at that time commingled trades for its own or house account with 

trades of its customers; that the said corporation had become under-segregated 

on thirteen different business days during a period of three months; and that 

its segregation record was incorrect due to erroneous computation of the amount 

required to be segregated. Respondent Norvell D. Seele was informed that these 

matters constituted violations of the Commodity Exchange Act and regulations, 

whereupon the said respondent assured the representative of the Commodity 

Exchange Authority that necessary corrective measures would be taken and that 

such violations would not be repeated. 

X 

By reason of the acts and omissions described in paragraphs V, VII, and VIII, 

respondents Service Grain Company and Norvell D. Seele failed to treat and deal 

with customers' funds as belonging to such customers, failed to account 

separately for such funds, commingled such funds with funds of respondent 

Service Grain Company, used such funds to margin and guarantee the trades and 

secure and extend the credit of persons other than those for whom such funds 

were held, and failed to prepare and maintain the records required under the 

Commodity Exchange Act and regulations as a basis for such segregation and 

accounting, in knowing and wilful violation of section 4d(2) of the Commodity 

Exchange Act (7 U.S.C. § 6d(2)), and sections 1.20, 1.21, 1.22, and 1.32 of the 

regulations (17 CFR 1.20, 1.21, 1.22, 1.32). 

By reason of the acts and omissions described in paragraph VI, respondents 

Service Grain Company and Norvell D. Seele failed and refused to keep books and 

records pertaining to futures transactions in the form and manner required by 

the Secretary of Agriculture, in knowing and wilful violation of section 4g of 

the Commodity Exchange Act (7 U.S.C. 6g) and section 1.35 of the regulations (17 

CFR 1.35). 

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

served upon each of the said respondents. 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, Washington 25, D. C., an answer 

in quadruplicate, 

wholly 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 not answered will be deemed admitted for the 

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

admission of all the material 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 and request a hearing, a 

hearing will be held at 10:00 a.m., local time, on the 12th day of September, 

1961, in St. Louis, Missouri, 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 suspending or revoking the registration of respondent Service 

Grain Company as a futures commission merchant and directing all contract 

markets to refuse all trading privileges to each of the respondents 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. 

August 4, 1961 

/s/ Orville L. Freeman 
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Orville L. Freeman 

Secretary 

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