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Commodity Futures Trading Commission 

CEA CASES 

NAME: DEAN WITTER & CO., INCORPORATED 

CITATION: 30 Agric. Dec. 1034 

DOCKET NUMBER: 178 

DATE: AUGUST 25, 1971 

DOCUMENT TYPE: DECISION AND ORDER 

(No. 14,095) 

In re DEAN WITTER & CO., INCORPORATED. CEA Docket No. 178. Decided August 25, 

1971. 

Segregation of funds -- Records -- Cease and desist -- Stipulation

Respondent is ordered to cease and desist from violations of the act in 

failing to hold customers' funds in segregated account and failing to maintain 

accurate records of such funds. 

Earl L. Saunders for complainant. 

Respondent pro se. 

Decision by Thomas J. Flavin, Judicial Officer

PRELIMINARY STATEMENT

This is an administrative proceeding under the Commodity Exchange Act (7 

U.S.C. 1 et seq.), instituted by a complaint and notice of hearing issued on 

August 20, 1971. The respondent is charged with violating sections 4d(2) and 4g 

of the Act (7 U.S.C. 6d(2) and 6g) and sections 1.20, 1.21, 1.22, 1.23, 1.32 and 

1.35 of the regulations thereunder (17 CFR 1.20, 1.21, 1.22, 1.23, 1.32 and 

1.35). 

No hearing has been held in this proceeding. The respondent has filed a 

stipulation under section 0.4(b) of the rules of practice (17 CFR 0.4(b)) in 

which it admits the facts hereinafter set forth in paragraph one of the Findings 

of Fact, (2) admits, for the purposes of this proceeding and for such purposes 

only, the facts hereinafter set forth in paragraphs two through four of the 

Findings of Fact, (3) waives the report of the Hearing Examiner, and (4) 

consents to the entry of the order contained herein. 

FINDINGS OF FACT

1. Respondent, Dean Witter & Co., Incorporated, a Delaware Corporation with 

offices at 45 Montgomery Street, San Francisco, California 94104, is now, and 

was at all times material herein, a registered futures commission merchant under 

the Commodity Exchange Act and so engaged in business. 

2. (a) At the times hereinafter stated, respondent Dean Witter & Co., 

Incorporated, in the regular course of its business as futures commission 

merchant, carried accounts of customers who traded in commodity futures on 

contract markets subject to the provisions of the Commodity Exchange Act and the 

regulations thereunder. Such accounts, the trading therein, and the handling 

and disposition of funds in connection therewith, were subject to the provisions 

of the said act and regulations. At all such times, the respondent corporation 

had to its credit with banks or other depositories, money and securities in 

varying amounts, held in segregated accounts and identified as customers' funds, 
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representing deposits of margin by and trading profits accruing to such 

customers. 

(b) During the period between June 5 and June 11, 1970, both inclusive, the 

respondent corporation was continuously undersegregated in amounts ranging from 

$ 137,014 on June 10, 1970, to $ 260,134 on June 11, 1970, that is, throughout 

the period mentioned the total amount of customers' funds held in segregation as 

above described, was from $ 137,014 to $ 260,134 less than the amount necessary 

to pay all credits and equities due to such customers. 

(c) Under the regulations issued pursuant to the Commodity Exchange Act the 

respondent corporation was obligated at all times material herein to prepare and 

maintain a daily computation and record setting forth the amount of money, 

securities and property of its customers required to be held, and held, in 

segregated accounts in accordance with the requirements of section 4d(2) of the 

Commodity Exchange Act (7 U.S.C. 6d(2)). On numerous days during the period 

between August 13 and December 31, 1970, both inclusive, the daily computation 

and record that was prepared and kept by the respondent corporation to meet the 

requirements of the regulations contained errors which resulted in gross 

misstatements of the amount of customers' money, securities and property held in 

segregation. 

3. Examination of the records of respondent Dean Witter & Co., Incorporated, 

by the Commodity Exchange Authority as of November 30, 1968, and examination of 

the records of Dean Witter & Co., the respondent corporation's predecessor 

partnership, as of March 31, 1966 and February 27, 1967, disclosed that the 

corporation and its predecessor partnership had not satisfactorily complied with 

the requirements of the Commodity Exchange Act and the regulations thereunder 

relating to the handling of customers' funds and to the preparation and 

maintenance of records in connection thereto. These matters were called to the 

attention of the corporation and to its predecessor partnership in writing by T. 

Reed McMinn, Director of the Commodity Exchange Authority's Eastern Region, on 

July 18, 1966, May 2, 1967 and April 24, 1969. 

4. The respondent corporation, at all times material herein, had available in 

its general accounts funds more than adequate to cover any under-segregation in 

regulated accounts and to meet all obligations to customers. Upon discovery of 

the under-segregation, described in paragraph 2(b) above, the respondent 

corporation promptly transferred funds into segregated accounts to comply with 

the requirements of the Commodity Exchange Act and the regulations thereunder. 

CONCLUSIONS

By reason of the facts set forth in the Findings of Fact, it is concluded 

that, as charged in the complaint, the respondent violated sections 4d(2) and 4g 

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

1.22, 1.23, 1.32 and 1.35 of the regulations thereunder (17 CFR 1.20, 1.21, 

1.22, 1.23, 1.32, 1.35). The complainant states that the administrative 

officials of the Commodity Exchange Authority have carefully considered the 

stipulation submitted by the respondent. The administrative officials believe 

that the prompt entry of the proposed order would constitute a satisfactory 

disposition of this case, serve the public interest and effectuate the purposes 

of the Act. The complainant recommends, therefore, that the stipulation be 

accepted and the proposed order be issued. It is concluded that the 

complainant's recommendation should be adopted. 

ORDER

Effective upon the date of service of this order upon the respondent, it 

shall cease and desist from: 

(1) failing to treat and deal with customers' funds as belonging to such 

customers as required by section 4d of the Commodity Exchange Act (7 U.S.C. 6d) 

and the regulations thereunder; 
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(2) failing to hold customers' funds in segregated account as required by 

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

thereunder; and 

(3) failing to prepare and maintain (a) an accurate record as of the close of 

the market on each business day of the amount of money, securities and property 

which must be in segregated account in order to comply with the requirements of 

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

thereunder, and (b) such other books and records relating to dealing in 

commodity futures in such form and manner and for such period as may be required 

by the Secretary of Agriculture. 

A copy of this Decision and Order shall be served on each of the parties and 

on each contract market. 

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