Page 1 

Commodity Futures Trading Commission 

CEA CASES 

NAME: PLAINS COTTON COOPERATIVE ASSOCIATION AND DAN W. DAVIS 

DOCKET NUMBER: 222; 75-11 

DATE: FEBRUARY 5, 1974 

DOCUMENT TYPE: COMPLAINT 

NOTE: LATER BECAME CFTC DOCKET # 75-11 

UNITED STATES DEPARTMENT OF AGRICULTURE 

BEFORE THE SECRETARY OF AGRICULTURE 

In re: Plains Cotton Cooperative Association and Dan W. Davis Respondents 

CEA Docket No. 222 

Complaint and Notice of Hearing Under the Commodity Exchange Act 

There is reason to believe that the respondents have violated the Commodity 

Exchange Act as amended (7 U.S.C. Chapter I), and this complaint and notice of 

hearing is issued stating the charges in that respect as follows. 

I 

a. Plains Cotton Cooperative Association (Plains), a non profit cooperative 

marketing association, with its principal office and place of business at 3301-

11 East 50th Street, Lubbock, Texas, is now and was at all times material herein 

engaged in the marketing or selling of agricultural products of its members. It 

is now and was at all times material herein a member of the New York Cotton 

Exchange. 

b. Dan W. Davis, an individual whose business address is the same as that of 

Plains, is now and was at all times material herein Executive Vice President, 

General Manager, and the chief operating officer of Plains. 

II 

The New York Cotton Exchange is now and was at all times material herein a 

duly designated contract market under the Commodity Exchange Act. 

III 

The allegations of this complaint relate to the purchase and sale of December 

1971, March 1972, May 1972, and July 1972 cotton futures contracts on and 

subject to the rules of the New York Cotton Exchange. The first day that all of 

these futures were open for trading was August 10, 1970. 

a. Trading in the December 1971 future began on October 2, 1970. The first 

day on which notice of intent to deliver spot cotton in satisfaction of December 

1971 futures contracts (first notice day) was November 23, 1971. The last day 

on which trading in the December 1971 future was conducted (last trading day) 

was December 9, 1971. The last day on which spot cotton could be delivered in 

satisfaction of December 1971 futures contracts (last day to deliver) was 

December 23, 1971. 

b. Trading in the March 1972 future began on February 25, 1971. First notice 

day for the March 1972 future was February 23, 1972. Last trading day for the 

March 1972 future was March 8, 1972. The last day to deliver on the March 1972 

future was March 22, 1972. 
Page 2 

c. Trading in the May 1972 future began on December 10, 1970. First notice 

day for the May 1972 future was April 24, 1972. Last trading day for the May 

1972 future was May 8, 1972. The last day to deliver on the May 1972 future was 

May 22, 1972. 

d. Trading in the July 1972 future began on January 27, 1971. First notice 

day for the July 1972 future was June 26, 1972. Last trading day for the July 

1972 future was July 7, 1972. The last day to deliver on the July 1972 future 

was July 21, 1972. 

IV 

During the period from May 6, 1971 to July 7, 1972, respondents maintained a 

large, long futures position involving one or more of the futures contracts 

described in paragraph III above. Detailed information concerning this position 

is set out in Annex A which is attached to and made a part of this complaint. 

V 

During the period from November 23, 1971 to July 21, 1972, respondents 

accepted and held (stopped) transferable notices of delivery and subsequently 

received delivery of large amounts of spot cotton in satisfaction of their long 

open futures position in each of the futures contracts referred to in paragraph 

III above as those futures contracts successively matured. Detailed information 

concerning these deliveries is set out in the following table. 

See original document-page 3 

Amount in Percent of total Percent of Plains' 

Future contract lots deliveries open long position * 

December 1971 718 81.7 79.2

March 1972 366 98.7 72.8

May 1972 599 89.7 73.1

July 1972 400 59.7 81.3

Total 2,083 80.5 76.5

* As of the opening of trading on first notice day plus contracts bought 

during delivery period. 

VI 

Most of the spot cotton received by respondents on the December, March and 

May futures, as set out in paragraph V above, was handled by respondents in such 

a way as to make it unavailable to other traders for redelivery against futures 

contracts. This was done by decertificating the cotton while in store prior to 

final disposition or by selling the cotton on a basis of FAS Vessel or landed 

mill. 

a. Of the 72,276 bales of certificated cotton received on delivery in the 

December 1971 future, Plains so handled 67,466 bales. The remaining 4,810 bales 

were redelivered by Plains on the December future. 

b. Of the 36,420 bales of certificated cotton received on delivery in the 

March 1972 future, Plains so handled 35,820 bales. The remaining 600 bales were 

sold f.o.b. warehouse. 

c. Of the 59,963 bales of certificated cotton received on delivery in the May 

1972 future, Plains so handled 59,078 bales. The remaining 885 bales were sold 

f.o.b. warehouse. 

VII 

In pursuing the course of action described in paragraphs IV, V and VI above, 

the respondents acted for the purpose and with the intent of causing, and did 

cause, prices of the May 1972 and July 1972 cotton futures and prices of spot 

cotton to be abnormally and artificially high during the period March 15, 1972 

to July 7, 1972. 
Page 3 

VIII 

By reason of the facts alleged in this complaint, the respondents attempted 

to manipulate and did manipulate the price of the May 1972 and July 1972 cotton 

futures and the price of spot cotton during the period from March 15, 1972 to 

July 7, 1972, in wilful violation of sections 6(b), 6(c) and 9(b) of the 

Commodity Exchange Act (7 U.S.C. 9, 13b and 13(b)). 

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

served on the respondents. 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 a time and place to be specified later, before an Administrative Law 

Judge 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 appropriate 

order should not be issued in accordance with the Commodity Exchange Act, (1) 

prohibiting the respondents from trading on or subject to the rules of any 

contract market, and directing that all contract markets refuse all trading 

privileges to the respondents for such period of time as may be determined and 

(2) directing that the respondents shall cease and desist from violating the 

Commodity Exchange Act in the manner alleged herein. 

Done at Washington, D. C. 

February 5, 1974 

[SEE SIGNATURE IN ORIGINAL] 

CLAYTON TEUTTER 

Assistant Secretary 

Number of Contracts and Percent of The Open Interest Held by PCCA Prior 

to the Open of Trading on First Notice Day and Last Trading Day of the 

December 1971, March, May and July 1972 Cotton Futures>100> >101> 

First Notice Day Last Trading Day First Notice Day Last Trading Day

December Future December Future March Future March Future 

Future Nov 23, 1971 Dec 9, 1971 Febr 23, 1972 March 8, 1972 

Percent Percent Percent Percent 

of Open of Open of Open of Open 

Amount Interest Amount Interest Amount Interest Amount Interest

Dec 1971 874 43 2 295 95 2 -- -- -- -- March 1972 181 5 1 242 7 7 401 56 6 249 85 6

May 1972 61 3 9 468 24 0 550 21 2 692 27 1

July 1972 0 -- 151 11 4 476 17.0 565 18 3 

Total 1,116 13.5 1.156 21.0 1,427 23 4 1,506 25.3

First Notice Day Last Trading Day First Notice Day Last Trading Day

May Future May Future July Future July Future 

Future Apr 24, 1972 May 8, 1972 June 26, 1972 July 7, 1972 

Percent Percent Percent Percent 

of Open of Open of Open of Open 

Amount Interest Amount Interest Amount Interest Amount Interest
Page 4 

 First Notice Day Last Trading Day First Notice Day Last Trading Day

December Future December Future March Future March Future 

Future Nov 23, 1971 Dec 9, 1971 Febr 23, 1972 March 8, 1972 

 Percent Percent Percent Percent 

 of Open of Open of Open of Open 

Amount Interest Amount Interest Amount Interest Amount Interest

Dec 1971 -- -- -- -- -- -- -- --

March 1972 -- -- -- -- -- -- -- -- May 1972 820 64 4 530 90 0 -- -- -- --

July 1972 488 16 5 370 11 9 440 23.1 250 29.4

 Total 1,308 30.9 900 24.4 640 23.1 250 29.4

 

LOAD-DATE: August 6, 2008 
Page 5