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Commodity Futures Trading Commission 

CEA CASES 

NAME: FRED STROHMEIER, JR. 

CITATION: 18 Agric. Dec. 100 

DOCKET NUMBER: 88 

DATE: FEBRUARY 11, 1959 

DOCUMENT TYPE: DECISION AND ORDER 

(No. 5786) 

In re FRED STROHMEIER, JR. CEA Docket No. 88. Decided February 11, 1959. 

Violation of Reporting Requirements -- Denial of Trading Privileges

It is concluded that respondent wilfully violated the reporting requirements 

of the act and the regulations thereunder, and all contract markets are directed 

to refuse all trading privileges to respondent for a 30-day period. 

Mr. Benj. M. Holstein, for Commodity Exchange Authority. Mr. Jack W. Bain,

Referee. 

Decision by Thomas J. Flavin, Judicial Officer

PRELIMINARY STATEMENT

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

instituted by a complaint issued under section 6(b) of the act October 31, 1958, 

by the Acting Secretary of Agriculture. Respondent is charged with knowingly 

and wilfully violating the reporting requirements of the act and the regulations 

issued thereunder. A copy of the complaint and a copy of the rules of practice 

were served upon respondent November 5, 1958. 

At the time of service of the complaint, respondent was notified, in effect, 

that an answer thereto should be filed within 20 days 

after such service and that, in accordance with section 0.9 of the rules of 

practice (17 CFR 0.9), failure to plead specifically to the allegations 

contained in the complaint would constitute an admission of the facts alleged 

therein and a waiver of oral hearing. On November 24, 1958, respondent filed a 

letter in which he failed to deny the allegations of the complaint. To insure 

that respondent would not be prejudiced due to a lack of understanding with 

respect to the result of his failure to deny such allegations, the Commodity 

Exchange Authority filed a statement setting forth such result. Notwithstanding 

such notice and statement, respondent has failed to plead specifically to the 

allegations of the complaint. The matter was referred to Jack W. Bain, Hearing 

Examiner, Office of Hearing Examiners, United States Department of Agriculture, 

for the preparation of a report without further investigation or hearing 

pursuant to section 0.9(c) of the rules of practice. The hearing examiner filed 

a report January 8, 1959, recommending that respondent be denied all trading 

privileges on all contract markets for a period of 30 days. No exceptions were 

filed to the hearing examiner's report. 

FINDINGS OF FACT

1. Respondent, Fred Strohmeier, Jr., is and was at all times material herein 

a dealer in eggs with an office and principal place of business at 

Jeffersontown, Kentucky. 
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2. The Chicago Mercantile Exchange, Chicago, Illinois, was at all times 

material herein a duly designated contract market under the act. 

3. During 1956 and 1958, the respondent traded in egg futures through various 

futures commission merchants in accounts controlled by him under the names Fred 

Strohmeier, Strohmeier Egg Company, E. B. Strohmeier, and Eleanor Strohmeier. 

4. On August 9 and 10, and 16 through 28, 1956, the respondent had a net 

short position in egg futures on the Chicago Mercantile Exchange which ranged 

from 25 carlots to 38 carlots in a single future. On each day during the period 

August 19 through 22, 1958, respondent had a net short position in egg futures 

on the Chicago Mercantile Exchange which ranged from 59 carlots to 89 carlots in 

a single future. By reason of the fact that such quantities were equal to or in 

excess of 25 carlots, the respondent was in reporting status and was required to 

report to the Commodity Exchange Authority with respect to all transactions 

executed and all open contract positions held for his account in all 

egg futures on all boards of trade (exchanges) during the said periods, and with 

respect to all such transactions by reason of which the respondent's position 

was reduced below reporting levels. 

5. On eight business days during the periods specified in Finding of Fact 4, 

while respondent was in reporting status as therein described, and on three 

business days within the said periods, when the respondent's positions were 

reduced below 25 carlots, transactions in egg futures on the Chicago Mercantile 

Exchange were executed for his account, but the respondent has failed to report 

to the Commodity Exchange Authority with respect to such transactions. 

6. On four occasions in 1956 officials of the Commodity Exchange Authority 

informed the respondent by mail of the reporting requirements with respect to 

egg futures under the act and the regulations issued thereunder and requested 

the submission of reports which were then due from the respondent, as described 

in Findings of Fact 4 and 5. The respondent was also informed in writing by the 

Administrator of the Commodity Exchange Authority on November 14, 1956, and 

again on August 26, 1958, of respondent's delinquencies in submitting reports, 

and notified that such delinquencies were a continuing violation of the law and 

could result in the institution of formal proceedings directed toward the denial 

of trading privileges on contract markets. 

CONCLUSIONS

Section 4i of the Commodity Exchange Act (7 U.S.C. 6i) provides as follows: 

"It shall be unlawful for any person to make any contract for the purchase or 

sale of any commodity for future delivery on or subject to the rules of any 

contract market unless such person shall report or cause to be reported to the 

properly designated officer in accordance with the rules and regulations of the 

Secretary of Agriculture * * * (2) whenever such person shall directly or 

indirectly have or obtain a long or short position in any commodity or in any 

future of such commodity, equal to or in excess of such amount as shall be fixed 

from time to time by the Secretary of Agriculture * * *." 

The quantity of egg futures fixed by the Secretary for reporting purposes 

pursuant to section 4i is 25 carlots (17 CFR 6.21). 

Respondent failed and refused to file required reports on eleven different 

occasions in violation of section 4i of the act and sections 

6.10, 6.11 and 6.12 of the regulations issued thereunder (17 CFR 6.10, 6.11 and 

6.12). The fact that respondent received ample notification of the reporting 

requirements, the possible consequences of failure to comply therewith and of 

his delinquency prior to the institution of this proceeding justify the 

conclusion that the violations herein were deliberate and wilful. Accordingly, 
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all contract markets should be directed to refuse all trading privileges to 

respondent for a period of 30 days as recommended by complainant, such refusal 

to apply to all trading done and positions held by respondent directly or 

indirectly. See, e.g., In re Joseph R. Awad, 17 Agric. Dec. 601 (17 A.D. 601) 

(1958). 

ORDER

Effective on the thirtieth day after the date of this order, all contract 

markets shall refuse all trading privileges to respondent for a period of thirty 

days, such refusal to apply to all trading done and positions held by respondent 

directly or indirectly. 

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

each contract market. 

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