Page 1 

Commodity Futures Trading Commission 

CEA CASES 

NAME: PENNSYLVANIA CO-OPERATIVE POTATO GROWERS, INC., AND OWEN L. BARKLEY 

DOCKET NUMBER: 103 

DATE: SEPTEMBER 13, 1961 

DOCUMENT TYPE: COMPLAINT 

UNITED STATES DEPARTMENT OF AGRICULTURE 

BEFORE THE SECRETARY OF AGRICULTURE 

In re: Pennsylvania Co-operative Potato Growers, Inc., and Owen L. Barkley, 

Respondents 

CEA Docket No. 103 

Complaint and Notice of Hearing Under Section 6(b) of the Commodity Exchange 

Act 

There is reason to believe that the respondents, Pennsylvania Co-operative 

Potato Growers, Inc., and Owen L. Barkley, have violated the Commodity Exchange 

Act (7 U.S.C. 1958 ed., Chapter 1) and the regulations made pursuant thereto (17 

CFR, Part I), and in accordance with the provisions of section 6(b) of the said 

act (7 U.S.C. § 9), this complaint and notice of hearing is issued stating the 

charges in that respect as follows: 

I 

Respondent Pennsylvania Co-operative Potato Growers, Inc., is a Pennsylvania 

corporation with its principal office and place of business at 5235 North Front 

Street, Harrisburg, Pennsylvania. The said corporation is now and was at all 

times material to this complaint registered as a futures commission merchant 

under the 

Commodity Exchange Act. At all such times up to about May 7, 1961, the said 

corporation had membership privileges on the New York Mercantile Exchange. 

II 

The New York Mercantile Exchange, the Chicago Mercantile Exchange, and the 

Chicago Board of Trade are now and were at all times material to this complaint 

duly designated contract markets under the Commodity Exchange Act. 

III 

Respondent Owen L. Barkley, an individual whose address is 5235 North Front 

Street, Harrisburg, Pennsylvania, is now and was at all times material to this 

complaint the general manager of respondent Pennsylvania Co-operative Potato 

Growers, Inc. At all times material to this complaint respondent Owen L. 

Barkley was a member of the New York Mercantile Exchange. The acts and 

transactions hereinafter described were initiated and carried out by or under 

the direction of respondent Owen L. Barkley in his capacity as general manager 

of the respondent corporation and such acts and transactions were at all times 

subject to his control and management. 

IV 

At the times hereinafter stated, respondent Pennsylvania Co-operative Potato 

Growers, Inc., in the regular course of its business, carried accounts of 
Page 2 

customers who traded in commodity futures on contract markets subject to the 

provisions of the Commodity Exchange Act and regulations. In connection 

therewith, the said respondent had to its credit with a bank or other depository 

sums of money in varying amounts, held in segregated accounts, representing 

deposits of margin by and trading profits accruing to such customers. During 

the same periods, respondent Owen L. Barkley traded in commodity futures for his 

personal use and benefit or for the house account of the respondent corporation, 

as hereinafter more particularly described. 

V 

Between October 14 and November 14, 1960, both inclusive, respondent Owen L. 

Barkley caused the making of purchases and sales of egg futures on the Chicago 

Mercantile Exchange for his own use and benefit and placed such trades in the 

customers' omnibus account of the respondent corporation carried with E. F. 

Hutton & Company, another registered futures commission 

merchant, by reason of which the open contract positions and financial results 

of such trades were commingled with the open contract positions and financial 

results of the transactions of the customers of the respondent corporation. In 

connection with the aforesaid purchases and sales for the use and benefit of 

respondent Owen L. Barkley, the respondents failed to prepare and keep, or cause 

the preparation and keeping of a record showing the account for which the said 

transactions were executed, and the date, price, quantity, market, commodity, 

and future. 

VI 

During the period between November 2 and November 23, 1960, the segregation 

record of the respondent corporation showed an excess of funds in segregation 

ranging from approximately $ 129 to approximately $ 7,000, that is, such 

segregation record indicated that the total amount of customers' funds in 

segregation exceeded, by the aforesaid sums, the amount of money necessary to 

pay all credits and equities due to such customers. In truth and in fact, as 

the result of losses incurred by respondent Owen L. Barkley in connection with 

the transactions in egg futures executed for his own use and benefit and the 

commingling of such transactions with those of the 

respondent corporation's customers, as described in paragraph V, the said 

corporation was undersegregated on fifteen business days between November 2 and 

November 23, 1960, in amounts ranging from approximately $ 2,174 to 

approximately $ 13,684, that is, the total amount of segregated funds was 

insufficient, by the aforesaid sums, to pay all credits and equities due to such 

customers. 

VII 

During the period from February 1 through April 24, 1961, respondent Owen L. 

Barkley caused the making of transactions in commodity futures on the New York 

Mercantile Exchange and the Chicago Board of Trade for the account of the 

respondent corporation and placed such transactions in the customers' omnibus 

account of the said corporation with the aforesaid E. F. Hutton & Company, by 

reason of which the open contract positions and financial results of such 

transactions were commingled with the open contract positions and financial 

results of the transactions of the customers of the respondent corporation. In 

connection with the aforesaid transactions for the account of the respondent 

corporation, the respondents failed to prepare and keep, or cause the 

preparation and keeping, of a record showing 
Page 3 

the account for which the said transactions were executed, and the date, price, 

quantity, market, commodity, and future. 

VIII 

From February 27, 1961, through March 28, 1961, the segregation record of the 

respondent corporation showed an excess of funds in segregation ranging from 

approximately $ 296 to approximately $ 5,400, whereas, in truth and in fact, by 

reason of losses incurred in connection with the transactions described in 

paragraph VII and the commingling thereof with those of the respondent 

corporation's customers, the said corporation was undersegregated on sixteen 

business days within the said period in amounts ranging from approximately $ 32 

up to approximately $ 16,000. 

IX 

Between March 1 and March 6, 1961, both inclusive, respondent Owen L. Barkley 

caused the making of purchases of potato futures on the New York Mercantile 

Exchange for the account of the respondent corporation, and placed such 

purchases in the customers' omnibus account of the respondent corporation with 

the aforesaid E. F. Hutton & Company, by reason of which the open contract 

positions and financial results of such purchases were commingled with the open 

contract positions and financial results of the transactions 

of the customers of the respondent corporation. The contracts resulting from 

the above-described purchases showed a loss, and respondent Owen L. Barkley 

informed representatives of the estate of one Hugh McPherson, deceased president 

of Maple Lawn Farms, Inc., which corporation had a commodity futures trading 

account with respondent Pennsylvania Co-operative Potato Growers, Inc., that the 

said purchases had been ordered by the said Hugh McPherson, whereupon the 

representatives of the said estate ordered the aforesaid contracts to be sold 

and such sale resulted in a net loss of approximately $ 15,000, which loss 

respondent Owen L. Barkley charged to the Maple Lawn Farms, Inc., account. 

Respondent Owen L. Barkley destroyed certain records pertaining to the said 

account, altered other records of respondent Pennsylvania Co-operative Potato 

Growers, Inc., and made entries in the Maple Lawn Farms, Inc., account which 

purported to show that the said purchases had been made for the said account. 

In truth and in fact, the said purchases had not been ordered by the said Hugh 

McPherson for the Maple Lawn Farms, Inc., account but had been initiated and 

carried out by respondent Owen L. Barkley, acting in his capacity as general 

manager of respondent Pennsylvania Co-operative Potato Growers, Inc. 

The contracts resulting from such purchases and sales were capable of being 

used for hedging a transaction in interstate commerce in potatoes or the 

products or by-products thereof, or for determining the price basis of a 

transaction in interstate commerce in potatoes, or for delivering potatoes sold, 

shipped, or received in interstate commerce. 

X 

(A) By reason of the acts and omissions described in paragraphs IV-IX, 

inclusive, respondents Pennsylvania Co-operative Potato Growers, Inc., and Owen 

L. Barkley failed to treat and deal with customers' funds as belonging to such 

customers, failed to segregate and account separately for such funds, commingled 

such funds with funds of the respondent corporation, used such funds to margin 

and guarantee the trades and secure and extend the credit of persons other than 

those for whom the same were held, and failed to prepare and maintain a true and 

accurate computation and record as a basis for such segregation and accounting, 

in knowing and wilful violation of section 4d(2) of the Commodity Exchange Act 

(7 U.S.C. 6d(2)) and sections 1.20, 1.21, 1.22, and 1.32 of the regulations (17 

CFR 1.20, 1.21, 1.22, 1.32). 
Page 4 

(B) By reason of the acts and omissions described in paragraphs V, VII, and 

IX, respondents Pennsylvania Co-operative Potato Growers, Inc., and Owen L. 

Barkley failed to keep the books and records pertaining to futures transactions 

in the form and manner required by the Secretary of Agriculture, in knowing and 

wilful violation of section 4g of the Commodity Exchange Act (7 U.S.C. § 6g), 

and section 1.35 of the regulations (17 CFR 1.35). 

(C) By reason of the acts and omissions described in paragraph IX, 

respondents Pennsylvania Co-operative Potato Growers, Inc., and Owen L. Barkley, 

in connection with an order to make and the making of futures contracts on 

behalf of a customer, cheated or defrauded or attempted to cheat or defraud such 

customer, made a false report to such customer, entered a false record for such 

customer with respect to such transaction, and deceived or attempted to deceive 

such customer with respect to the execution of such contract, in knowing and 

wilful violation of section 4b of the Commodity Exchange Act (7 U.S.C. § 6b). 

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

served upon each of the said respondents. The respondents will have twenty (20) 

days after the receipt of this notice of hearing in which to file with the 

Hearing Clerk, United States Department of Agriculture, Washington 25, D. C., an 

answer with an original and six copies, wholly and completely stating the nature 

of the defense and admitting or denying, specifically and in detail, each 

material and relevant allegation of this complaint. Allegations not answered 

will be deemed admitted for the purpose of this proceeding. Failure to file an 

answer will constitute an admission of all the material allegations of this 

complaint and a waiver of hearing. The respondents are hereby notified that 

unless hearing is waived, either expressly or by failure to file an answer and 

request a hearing, a hearing will be held at 10:00 a.m., local time, on the 31st 

day of October 1961, in Harrisburg, Pennsylvania, 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 suspending or revoking the 

registration of respondent Pennsylvania Co-operative Potato Growers, Inc., as a 

futures 

 

commission merchant and directing all contract markets to refuse all trading 

privileges to each respondent for such period of time as may be determined. 

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. 

September 13, 1961. 

/s/ John P. Duncan, Jr. 

John P. Duncan, Jr. 

Assistant Secretary 

LOAD-DATE: June 12, 2008 
Page 5