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Commodity Futures Trading Commission 

CEA CASES 

NAME: MILROSE BROKERAGE CO., INC., AND MILTON E. ROSENBERG 

CITATION: 26 Agric. Dec. 225 

DOCKET NUMBER: 145 

DATE: MARCH 3, 1967 

DOCUMENT TYPE: DECISION AND ORDER 

(No. 11,072) 

In re MILROSE BROKERAGE CO., INC., and MILTON E. ROSENBERG. CEA Docket No. 145. 

Decided March 3, 1967. 

Segregation of funds -- Reports -- Records -- Suspension of registration -- 

Denial of trading privileges -- Stipulation

Respondents consented to the issuance of an order suspending the registration 

of the corporate respondent as a futures commission merchant for 90 days and 

directing all contract markets to deny trading privileges to both respondents 

for a like period for activities involving the improper handling of customers' 

funds, failure to segregate and keep records with respect to such funds, and 

failure to send monthly statements to customers. 

Mr. Earl L. Saunders for Commodity Exchange Authority. 

Respondents 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 filed on January 24, 1967, by the 

Assistant Secretary of Agriculture. The respondents are a Pennsylvania 

corporation registered as a futures commission merchant, and an individual who 

is the president and manager of the corporation and its principal stockholder. 

The complaint charges the respondents with improper handling of customers' 

funds, failure to segregate and keep records with respect to such funds, and 

failure to send monthly statements or accountings to customers, in wilful 

violation of the act and the regulations thereunder. 

No hearing has been held. On February 28, 1967, the respondents submitted a 

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

which they withdraw their answer previously filed, admit the facts as alleged in 

the complaint, waive hearing, and consent to the entry of the order hereinafter 

set forth. 

FINDINGS OF FACT

1. Respondent Milrose Brokerage Co., Inc., a Pennsylvania corporation with 

offices at 2033 Penn Avenue, Pittsburgh, Pennsylvania, is now, and was at all 

times material herein, registered 

as a futures commission merchant under the Commodity Exchange Act. 

2. Respondent Milton E. Rosenberg, an individual whose address is 552 North 

Neville Street, Pittsburgh, Pennsylvania, is now, and was at all times material 

herein, the president of the respondent corporation and its principal 
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stockholder. At all such times, respondent Milton E. Rosenberg conducted, 

managed and controlled the affairs of the corporation as his own business. The 

operations of the corporation, hereinafter described, were ordered and directed 

or carried out by respondent Milton E. Rosenberg. 

3. At the times hereinafter stated, the respondent corporation, in the 

regular course of its business as futures commission merchant, carried accounts 

for customers who traded in commodity futures. Such accounts, the trading 

therein, and the handling and disposition of funds in connection therewith, were 

subject to the provisions of the Commodity Exchange Act and the rules and 

regulations issued thereunder. At all such times, the respondent corporation 

had to its credit with a bank or other depository, sums of money in varying 

amounts, held in segregated account and identified as customers' funds, 

representing deposits of margin by and trading profits accruing to such 

customers. 

4. On 51 business days during the period from June 22, 1966, through 

September 6, 1966, the respondent corporation was undersegregated in amounts 

ranging from $ 265.50 on June 22 to $ 4,515.50 on June 29 -- that is, on the 51 

days mentioned the total amount of customers' funds held in segregation by the 

respondent corporation, as described in Finding of Fact 3 hereof, was from $ 

265.50 to $ 4,515.50 less than the amount necessary to pay all credits and 

equities due to such customers. 

5. On 13 business days during the period from June 22, 1966, through July 11, 

1966, and on 11 business days during the period from July 26, 1966, through 

August 9, 1966, the respondent corporation purchased and sold commodity futures 

for the use and benefit of certain customers and margined, guaranteed, or 

secured such purchases and sales with funds belonging to other customers of the 

respondent corporation. The funds so used ranged from $ 254.25 on July 8, 1966, 

to $ 2,406.25 on June 29, 1966. 

6. On 46 business days during the period from July 1, 1966, through September 

6, 1966, the respondent corporation failed to prepare and maintain a daily 

segregation record setting forth 

the amount of money, securities and property of customers required to be kept in 

segregation, and during the months of June, July and August 1966, no monthly 

statements or accountings were sent to its customers. 

7. In June 1966 and prior to the acts and omissions described above, an 

examination of the books and records of the respondent corporation by the 

Commodity Exchange Authority disclosed that during the period from October 4, 

1965, through March 6, 1966, the respondent corporation had not prepared a daily 

record of customers' funds required to be held in segregation, and that during 

the period from March 7, 1966, through June 6, 1966, the respondent corporation 

had become under-segregated on all but seven days. Representatives of the 

Commodity Exchange Authority informed respondent Milton E. Rosenberg that these 

matters constituted violations of the Commodity Exchange Act and regulations, 

and the said respondent promised the representatives of the Commodity Exchange 

Authority that necessary corrective measures would be taken and that such 

violations would not be repeated. 

CONCLUSIONS

The respondents have admitted the facts as alleged in the complaint, and 

these have been adopted as the Findings of Fact in this proceeding. These 

findings demonstrate that the corporate respondent, under the supervision and 

direction, or by means of the acts of the individual respondent, failed to treat 

and deal with customers' funds as belonging to such customers, failed to 

segregate and account separately for such funds, used funds held for customers 

to margin and guarantee the trades and secure and extend the credit of customers 

other than those for whom such funds were held, failed to prepare and maintain 

the records required under the Commodity Exchange Act and the regulations issued 
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thereunder as a basis for such segregation and accounting, and failed to send 

customers required statements. By reason thereof, the respondents wilfully 

violated sections 4d and 4g of the Commodity Exchange Act (7 U.S.C. 6d, 6g) and 

sections 1.20, 1.21, 1.32 and 1.33 of the regulations (17 CFR 1.20, 1.21, 1.22, 

1.32, 1.33). 

Complainant states that the administrative officials of the Commodity 

Exchange Authority have carefully considered the proposed stipulation and order, 

and that they believe the proposed 

sanctions are adequate and that the prompt entry, without further proceedings, 

of the order to which the respondents have consented will constitute a 

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

the purposes of the Commodity Exchange Act. Complainant recommends, therefore, 

that the stipulation and waiver submitted by the respondents be accepted and 

that the proposed order be issued. It is so concluded. 

ORDER

Effective on the thirtieth day after the date of entry of this order, (1) the 

registration of Milrose Brokerage Co., Inc. as a futures commission merchant is 

suspended for a period of 90 days, and (2) all contract markets shall refuse all 

trading privileges to Milrose Brokerage Co., Inc. and Milton E. Rosenberg for a 

period of 90 days, such refusal to apply to all trading done and all positions 

held by the said Milrose Brokerage Co., Inc. and Milton E. Rosenberg, or either 

of them, directly or indirectly. 

A copy of this decision and order shall be served on each of the parties and 

on each contract market. 

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