Page 1 

Commodity Futures Trading Commission 

CEA CASES 

NAME: SECRETARY OF AGRICULTURE V. RAY E. STUART 

CITATION: 1 Agric. Dec. 359 

DOCKET NUMBER: 31 

DATE: MAY 23, 1942 

DOCUMENT TYPE: DECISION AND ORDER 

(A. D. 127) 

UNITED STATES OF AMERICA 

BEFORE THE SECRETARY OF AGRICULTURE 

CE-A Docket No. 31 

 

SECRETARY OF AGRICULTURE, COMPLAINANT V. RAY E. STUART, RESPONDENT. 

Proceedings, Findings of Fact, Conclusions and Order. 

PROCEEDINGS

On April 17, 1942, a complaint was issued by the Assistant Secretary of 

Agriculture pursuant to the Commodity Exchange Act (7 U. S. C. 1940 ed. 1), 

against Ray E. Stuart, of Freeport, Illinois, the respondent. 

The complaint alleged that Ray E. Stuart, during the years 1940, 1941 and 

1942, while engaged in business as a futures commission merchant and registered 

as such with the Secretary of Agriculture under the provisions of the Commodity 

Exchange Act and acting as a correspondent or agent of a clearing member of a 

contract market, did willfully make and cause to be made misleading and false 

reports and statements, concerning contracts for the future delivery of 

commodities, to customers; willfully attempted to and did deceive customers in 

regard to such contracts and acts of agency performed with respect to such 

contracts; willfully defrauded customers of funds which were deposited in order 

to margin and guarantee their trades and which resulted from their trades in 

commodities for future delivery; bucketed the orders of customers for the 

purchase or sale of commodities for future delivery on or subject to the rules 

of contract markets; failed to keep accurate records with respect to such trades 

and gave false information to representatives of the Department of Agriculture 

with respect to trades in commodities for future delivery on or subject to the 

rules of contract markets. 

A copy of the complaint was served on the respondent by registered mail on 

April 23, 1942, and a hearing was set for May 6, 1942, in Chicago. 

On April 23, 1942, Ray E. Stuart, the respondent, executed a document 

entitled "Admission of Facts, Waiver of Hearing, and Consent to Order", in which 

he acknowledged receipt of a copy of the complaint in this proceeding; admitted 

the allegations contained therein; waived a hearing on the complaint and 

consented to the entry, without further notice to him, of an order by the 

Secretary of Agriculture directing all contract markets to deny him trading 

privileges for such period of time as the Secretary of Agriculture may 

determine, and revoking his registration as a futures commission merchant. 

 

FINDINGS OF FACT

1. Ray E. Stuart, the respondent, is an individual who during the years 1940, 

1941, and 1942, has been registered with the Secretary of Agriculture as a 

futures commission merchant under the provisions of the Commodity Exchange Act 
Page 2 

and has engaged in business as a futures commission merchant under the name and 

style of R. E. Stuart & Company, at Freeport, Illinois. 

2. During the years 1940, 1941, and 1942, the respondent received orders from 

various customers and accepted funds from these customers to margin transactions 

in contracts for the future delivery of grains, on and subject to the rules of 

the Board of Trade of the City of Chicago, a contract market designated as such 

by the Secretary of Agriculture. 

3. The transactions in grain futures contracts executed for the account of 

the respondent's customers on the Board of Trade of the City of Chicago during 

1940, 1941 and 1942 were made through firms which during the periods referred to 

were clearing members of the Chicago Board of Trade, and the respondent during 

this time was a correspondent or agent of these firms. 

4. During the period from November 20, 1940, to February 1942, the respondent 

entered orders for the purchase and sale of commodities for future delivery on 

and subject to the rules of the Board of Trade of the City of Chicago for his 

own account in the accounts of customers without the knowledge or consent of the 

customers, thereby using the customers' funds to margin and guarantee the trades 

of the respondent. These trades were made in the accounts of Lorena Medeke, 

Edna Althof, Mrs. Raymond Young, and Heiko Greenfield, and as a result of these 

trades, the funds on deposit with the respondent for these parties were 

completely dissipated. 

5. The respondent, while a correspondent of a member firm of a contract 

market, in connection with orders to make and the making of futures contracts 

for commodities named in the Commodity Exchange Act on contract markets, which 

contracts may be used for hedging or determining the price basis of transactions 

in interstate commerce in the commodities involved, on April 22, 1941, and 

various dates thereafter, including April 26, September 15, September 22, 

October 8 and 14, November 22, 28, and 29, December 4, 9, and 13, 1941, and 

February 26, 1942, bucketed such orders and confirmed the execution thereof to 

various customers including Mrs. Raymond Young, Lorena Medeke, Edna Althof, and 

Heiko Greenfield when, in fact, the orders were not executed on a contract 

market but were held by the respondent for his own account. 

6. The respondent from April 22, 1941, to February 26, 1942, conducted an 

office and place of business at Freeport, Illinois, for the 

 

 

purpose of soliciting or accepting orders for the purchase or sale of 

commodities for future delivery and conducting deals in commodities for future 

delivery that could be used for hedging or determining the price basis for such 

transactions in interstate commerce and executed or consummated such orders, 

contracts, or dealings otherwise than by or through a member of a contract 

market. 

7. The respondent, during the times hereinbefore mentioned, delivered for 

transmission through the mail or in interstate commerce by other means of 

communication, confirmations of the execution of and reports of the price of 

contracts of sale of commodities for future delivery, on or subject to the rules 

of the Board of Trade of the City of Chicago, when such contracts were not made 

on or through a member of, a Board of Trade which had been designated by the 

Secretary of Agriculture as a contract market. 

CONCLUSIONS

Based upon the foregoing facts it is concluded that the respondent willfully 

made and caused to be made misleading and false reports and statements 

concerning orders to make and the making of contracts of sale of commodities for 

future delivery made or to be made on or subject to the rules of a contract 

market; attempted to and did deceive customers in regard to such contracts and 

acts of agency performed with respect thereto; defrauded customers of funds 

deposited to margin and guarantee their trades in commodities for future 

delivery and of funds resulting from such trades; bucketed orders for the 
Page 3 

purchase and sale of commodities for future delivery on and subject to the rules 

of contract markets; all in violation of Section 4 (b) of the Commodity Exchange 

Act. The respondent, in addition thereto, conducted an office and place of 

business for the purpose of soliciting or accepting orders for the purchase or 

sale of commodities for future delivery that could be used for hedging or 

determining the price basis of transactions in such commodity in interstate 

commerce and executed or consummated such orders, contracts, or dealings 

otherwise than by or through a member of a contract market, in violation of 

section 4 (h) (1) of the Commodity Exchange Act; transmitted through the mails 

confirmation of the execution of and reports of the price of contracts of sale 

of commodities for future delivery on or subject to the rules of a contract 

market, when such contracts were not made on or through a member of a Board of 

Trade which had been designated by the Secretary of Agriculture as a contract 

market, in violation of Section 4 of the Commodity Exchange Act. For these 

violations the respondent should be denied trading privileges on contract 

markets and his registration as a futures commission merchant under the 

provisions of the Commodity Exchange Act should be revoked. 

 

ORDER

IT IS ORDERED that all contract markets refuse Ray E. Stuart all trading 

privileges thereon for a period of five years beginning on the effective date of 

this order. 

IT IS FURTHER ORDERED that the registration of Ray E. Stuart as a futures 

commission merchant be, and the same hereby is, revoked. 

IT IS FURTHER ORDERED that a copy hereof be sent by registered mail to the 

respondent and to each contract market and that this order shall be effective 

ten days after its date. 

Done at Washington, D. C., this 23rd day of May, 1942. 

Witnese may hand and the seal of the Department of Agriculture. 

[SEAL] 

(S) THOMAS J. FLAVIN

Assistant to the Secretary of Agriculture

Acting Pursuant to Authority Delegated by the Secretary of Agriculture under 

the Act of April 4, 1940 (54 Stat. 81; 7 F. R. 2656). 

 

LOAD-DATE: March 12, 2008 
Page 4