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Commodity Futures Trading Commission 

CEA CASES 

NAME: UNITED COMMODITY TRADERS OF IOWA, INC., D/B/A JADA CORPORATION, AND JAMES 

B. PEPPER 

DOCKET NUMBER: 157 

DATE: NOVEMBER 15, 1968 

DOCUMENT TYPE: COMPLAINT 

UNITED STATES DEPARTMENT OF AGRICULTURE 

BEFORE THE SECRETARY OF AGRICULTURE 

In re: United Commodity Traders of Iowa, Inc., also d/b/a Jada Corporation, and 

James B. Pepper, Respondents 

CEA Docket No. 157 

Complaint and Notice of Hearing Under the Commodity Exchange Act 

There is reason to believe that the respondents named above have violated the 

Commodity Exchange Act, as amended (7 U.S.C. 1 et seq.; Public Law 90-258), and 

the regulations made pursuant thereto (17 CFR, Part 1), and, therefore, this 

complaint and notice of hearing is issued alleging the following: 

I 

Respondent United Commodity Traders of Iowa, Inc., also d/b/a Jada 

Corporation, is an Iowa corporation with offices at 201 Badgerow Building, Sioux 

City, Iowa. The said respondent is now, and was at all times material herein, a 

registered futures commission merchant under the Commodity Exchange Act, and so 

engaged in business. 

II 

Respondent James B. Pepper, an individual whose business address is the same 

as that of the respondent corporation, is now, and was at all times material 

herein, a vice president of the respondent corporation and was responsible for 

the corporate acts and transactions hereinafter described. 

III 

a. At the times hereinafter stated, the respondent corporation, 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 sums of money in varying amounts, held in 

segregated accounts and identified as customers' funds, representing deposits of 

margin by and trading profits accruing to such customers. 

b. During the period between July 1, 1968, and August 8, 1968, both 

inclusive, the respondent corporation was continuously under-segregated in 

amounts ranging from $ 1,423.85 on July 1, 1968, to $ 2,759.85 on August 5, 

1968, that is, throughout the period specified above, the total amount of 

customers' funds held in segregation as above described, was from $ 1,423.85 to 

$ 2,759.85 less than the amount necessary to pay all credits and equities due to 

such customers. 
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c. Under the regulations issued pursuant to the Commodity Exchange Act the 

respondent corporation was obligated during the period specified above 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 the daily computation and 

record that was prepared and kept 

by the respondent corporation to meet the requirements of the regulations during 

the period specified above, the respondent corporation showed that it had excess 

funds in segregation, whereas, in truth and in fact, the said corporation was 

under-segregated as stated above. 

IV 

Prior to the acts and omissions described in paragraph III above, examination 

of the records of the respondent corporation by the Commodity Exchange Authority 

as of May 31, 1968, revealed that the firm was in an under-segregated condition 

on various dates in May 1968. On July 9, 1968, the Director of the Authority's 

Accounting and Licensing Division wrote a letter to respondent James B. Pepper 

in his capacity as vice president of the respondent corporation, calling 

attention to the under-segregated condition of the firm revealed by the 

Authority's examination of its records as of May 31, 1968, informing him of the 

requirements of the Commodity Exchange Act relating to the treatment and 

handling of customers' funds, and affording the firm an opportunity to bring 

itself into compliance. 

V 

By reason of the facts alleged in this complaint, the respondents 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). 

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

served upon the respondents and this proceeding shall be governed by sections 

0.1, 0.2, 0.4(b), 0.5 through 0.22, and 0.28 of 

the rules of practice under the Commodity Exchange Act (17 CFR 0.1, 0.2, 0.4(b), 

0.5 through 0.22, 0.28). The respondents will have twenty (20) days after the 

receipt of this complaint in which to file with the Hearing Clerk, United States 

Department of Agriculture, Washington, D.C. 20250, an answer with an original 

and four copies, fully and completely stating the nature of the defense and 

admitting or denying, specifically and in detail, each allegation of this 

complaint. Allegations not answered will be deemed admitted for the purposes of 

this proceeding. Failure to file an answer will constitute an admission of all 

the allegations of this complaint and a waiver of hearing. The filing of an 

answer in which all of the material allegations of fact contained in the 

complaint are admitted likewise shall constitute a waiver of hearing unless a 

hearing is requested. The respondents are hereby notified that unless hearing 

is waived, a hearing will be held at 10:00 a.m., local time, on December 18, 

1968, in Sioux City, Iowa, 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 directing that the respondents shall cease and desist from 

violating the Commodity Exchange Act and the regulations thereunder in the 

manner described herein. 

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. 
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November 15, [ILLEGIBLE TEXT] 

[SEE SIGNATURE IN ORIGINAL] 

Ted J. Davis 

Assistant Secretary 

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