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Commodity Futures Trading Commission 

CEA CASES 

NAME: DANIEL A. DE LATTRE 

DOCKET NUMBER: 122 

DATE: JUNE 21, 1965 

DOCUMENT TYPE: RECOMMENDED DECISION 

UNITED STATES DEPARTMENT OF AGRICULTURE 

BEFORE THE SECRETARY OF AGRICULTURE 

In re Daniel A. de Lattre, Respondent 

CEA Docket No. 122 

Recommended Decision 

Preliminary Statement 

This is a proceeding under the Commodity Exchange Act (7 U.S.C. Chapter 1), 

hereinafter called the Act. It was instituted by a complaint filed October 13, 

1964, by an Assistant Secretary of Agriculture. The respondent, Daniel A. de 

Lattre, of Chicago, Illinois, a registered futures commission merchant and floor 

broker, and member of the Chicago Open Board of Trade and the Chicago Mercantile 

Exchange, was charged with failing to segregate funds received from a customer 

for trading in futures, and the resulting futures contracts, and failing to keep 

records of the trades and to report them to the customer. Respondent filed an 

answer October 15, 1964, stating that the money received was a loan, to be used 

partly for paying off a note, and did not constitute customer's funds and 

contracts required to be segregated and reported. 

An oral hearing was held in Chicago on November 18, 1964, before Jack W. 

Bain, Office of Hearing Examiners, United States Department of Agriculture. 

Earl L. Saunders, Office of the General Counsel of the 

Department, appeared as counsel for complainant, and Harry H. Fortes, of 

Chicago, as counsel for respondent. Three witnesses testified, and 12 exhibits 

were received in evidence. After the hearing, the parties filed suggested 

findings and briefs. 

Proposed Findings of Fact 

1. Respondent Daniel A. de Lattre is an individual whose business address is 

343 South Dearborn Street, Chicago, Illinois. He is, and was at all times 

material herein, a registered futures commission merchant and floor broker under 

the Act and a non-clearing member of the Chicago Open Board of Trade and the 

Chicago Mercantile Exchange, both of Chicago and both duly designated contract 

markets under the Act. 

2. From about 1950 through 1960, Mr. Rene Pervilhac, of New York City, 

occasionally traded in egg, wheat, and soybean futures on the Chicago Open Board 

of Trade and the Chicago Mercantile Exchange through respondent as futures 

commission merchant. In such trading, Pervilhac relied almost entirely on the 

judgment and advice of respondent, and permitted respondent in respondent's 

discretion to make trades for Pervilhac. Respondent in handling those trades 

operated as a futures commission merchant on a disclosed basis pursuant to 

section 1.31a of the regulations under the Act (17 CFR 1.31a), so that each 

trade and the margin put up for it by Pervilhac were carried in Pervilhac's name 
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at the clearing firm through which the trade was cleared, and the clearing firm 

made the confirmation of the trade and kept the required records. 

3. Respondent and Pervilhac were born in the same town in France, knew many 

of the same people there, and became good friends after meeting in Chicago. 

Early in 1961 Pervilhac was having domestic troubles. He borrowed $ 2,208 from 

the First National City Bank of New York, repayable $ 92 monthly. He planned to 

take his children to Europe for an indefinite time. He did not want to continue 

a futures account in his own name. He went to Chicago and discussed the 

situation with respondent. They considered closing out Pervilhac's account and 

opening one for him in respondent's wife's name. Among the results of their 

discussions were the following: Pervilhac closed out his commodity account, 

receiving from the clearing firm a $ 1,000 check and $ 150 in cash; gave 

respondent $ 5,000 to use at respondent's discretion to make money for 

Pervilhac, principally if not entirely in futures trading, and to pay off the $ 

2,208 loan; and Pervilhac turned over two life insurance policies to respondent 

(in respondent's wife's name) which respondent promised to use to educate 

Pervilhac's children in case of Pervilhac's death. 

4. Respondent deposited in his personal bank account the $ 5,000 he received 

from Pervilhac, and gave his check for $ 5,000 to Miller and Lamb, a Chicago 

Open Board of Trade clearing firm, to margin, guarantee, and secure his trades 

in regulated commodity futures through that firm. From time to time from May 

14, 1961 through March 13, 1963, respondent made regulated commodity futures 

trades in Pervilhac's behalf on the Chicago Open Board of Trade and placed such 

trades in respondent's personal account at Miller and Lamb. During the same 

period respondent 

also placed in such account trades he made in his own behalf. The financial 

results of all such trades, both those made in behalf of Pervilhac and those in 

behalf of respondent, appeared in the latter's personal account at Miller and 

Lamb. From May 2, 1961 through March 13, 1963, respondent maintained no record 

showing the amount of money held by him for Pervilhac or the transactions made 

in Pervilhac's behalf, and sent him no statements or accountings. Respondent 

paid off the New York loan on schedule. 

Proposed Conclusions 

Complainant asserts in its brief that receipt and use by respondent of $ 

5,000 for trading in futures was simply a continuation of the past relationship 

of customer and broker, and recommends suspension of registration and denial of 

trading privileges for 15 days. 

Respondent, on the other hand, says that receipt of the money under the 

circumstances did not continue or create a customer-broker relationship subject 

to the Act, but something entirely different. He argues that receiving money 

from a friend in trouble, to use in any way thought advisable to make him money, 

made respondent trustee for a friend rather than broker for a customer. 

It seems obvious, as has been found above, that it was contemplated by both 

parties to the transaction that the money was to be used principally, if not 

entirely, for futures trading, the main difference from the prior situation 

being that Pervilhac would not give the order and his name would not be used. 

It is not too clear in the 

record, but the conclusion may well be drawn that even the loan payments would 

be made not from the original $ 5,000, but from profits made in its full use for 

trading in futures. While different from the usual trading by a broker who 

executes specific orders given by a customer, here involved was money received 

by a registered futures commission merchant to finance trading in futures. The 
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Act contains requirements as to such money, and respondent's contention that the 

matter was something not subject to the Act can not be sustained. 

As stated in Findings 2 and 3, respondent, a futures commission merchant, 

received money from one who had been his customer for ten years, at least part 

of which was to be used in commodity futures trading, although not in the 

customer's name as had been the case before. Section 4d(2) of the Act (7 U.S.C. 

6d(2)) requires that such funds and property be kept separate and segregated 

from the commission merchant's personal funds. Respondent's failure to do so 

(Finding 4) was in violation of this provision. His failure to keep records of 

transactions and to report them was in violation of sections 1.32-1.36 of the 

regulations under the Act (17 CFR 1.32-1.36). Sections 4g, 6(b), and 9 of the 

Act (7 U.S.C. 6g, 9, and 13) authorize suspension or revocation of registration 

and denial of trading privileges on contract markets for these violations. 

While it is held that respondent was subject to the segregation, recording, 

and reporting requirements of the Act, the situation after receipt of the $ 

5,000 was considerably different from before. It was not a mere continuation of 

the usual trading for a customer, as should be apparent from the outline of it 

in Finding 3. It was so unusual in its origin and purpose that there is some 

ground for respondent's argument that it was so different that it did not 

involve a customer's funds covered by the Act. While respondent's intentional 

action was willful within the meaning of Section 9 of the Administrative 

Procedure Act (Goodman v. Benson, 286 F. 2d 896, C.A. 7, 1961), apparently he 

really did not think the Act applied to the matter, and probably still does not 

think so. Lest someone construe these violations as condoned by the Department, 

some sanction should be ordered, but because of the peculiar circumstances here 

involved, it should not be severe. 

It is concluded that a suspension of registration of three days would be 

sufficient herein and should be ordered. 

Proposed Order 

Effective on the 20th day after the date of this order, the registrations of 

Daniel A. de Lattre as a futures commission merchant and as a floor broker are 

suspended for three days. 

Copies hereof shall be served upon the parties and upon each contract market. 

Note: The foregoing is a recommended decision, not a final order. The final 

order will be issued by the Judicial Officer after the parties have had 

opportunity to file exceptions, etc., as provided by the rules of practice. 

[SEE SIGNATURE IN ORIGINAL] 

Jack W. Bain 

Referee 

June 21, 1965 

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