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Commodity Futures Trading Commission 

CEA CASES 

NAME: SECRETARY OF AGRICULTURE V. GUY D. MARIANETTE 

DOCKET NUMBER: 14 

DATE: JANUARY 10, 1940 

DOCUMENT TYPE: DECISION AND ORDER 

UNITED STATES OF AMERICA 

BEFORE THE SECRETARY OF AGRICULTURE 

C.E.A. DOCKET NO. 14 

Secretary of Agriculture, Complainant, v. Guy D. Marianette, Respondent. 

Proceedings, Findings of Fact, Conclusions, and Order. 

PROCEEDINGS 

On July 15, 1939, complaint was issued by the Acting Secretary of 

Agriculture, pursuant to the Commodity Exchange Act (7 U.S.C., 1934 ed., and 

Supp. IV, Secs. 1-17a), alleging that the respondent, Guy D. Marianette, of 

Billings, Montana, doing business as Midwest Grains Securities, had been 

registered as a futures commission merchant since July 16, 1937, and had acted 

as such since January 4, 1937, but had failed to keep records required by the 

act; had, as correspondent of a member of a contract market, bucketed commodity 

futures 

orders, cheated and defrauded commodity customers, and falsely-reported to 

customers; had conducted a place of business for commodity futures orders 

without executing his orders through a member of a contract market; and had 

confirmed contracts not made through a member of a contract market. The 

respondent was directed to show cause, if any, why his registration should not 

be revoked and his trading privileges on contract markets denied, at a hearing 

to be held in Washington, D. C., on July 26, 1939. 

The complaint was served by registered mail on the respondent on July 25, 

1939, with a letter from the assistant solicitor advising him that the hearing 

was postponed to August 4, 1939, and that he might request a hearing elsewhere 

than in Washington if he desired. By letters dated July 25 and 26, 1939, the 

respondent stated that although his records may not have been kept accurately, 

they now were kept properly, and asked for a hearing in Billings. Jack W. Bain, 

the referee designated by the Secretary, wrote the respondent that the hearing 

would be held in Billings on a date to be fixed later. Under date of August 8, 

1939, the respondent wrote requesting that the hearing be held in Helena, 

Montana, that no publicity be given it, and that he be given advance notice of 

the date. On August 17, 1939, the reforce wrote the respondent that the hearing 

would be held in Helena. On October 20, 1939, the respondent was notified by 

telegram that it would be held November 2, and a letter followed advising him of 

the place. 

The hearing was held before the referce on November 2, 1939, in Room 324, 

Federal Office Building, Helena, Montana. Charles S. Brothers, Esquire, of 

Missoula, Montana, Office of the Solicitor, Department of Agriculture, appeared 

for the Government. The respondent was not represented by counsel, but appeared 

in person. Two witnesses testified: Clarence D. Cook, of Seattle, Washington, 
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accountant and auditor for the Commodity Exchange Administration, called by the 

Government; and Guy D. Marianette, the respondent, for himself. 

According to Mr. Cook, on his first visit to Midwest Grains Securities, in 

October 1938, he found no apparent efforts on the part of the respondent to 

comply with the requirements of the Commodity Exchange Act. He explained these 

requirements to Mr. Marianette. On his next visit, in February 1939, he found 

practically the same condition. In May 1939, he made his third call, and found 

very little improvement. The report of his examination of the respondent's 

books and records as of April 30, 1939, introduced in evidence, shows that the 

records were kept very carelessly. Pages were missing from the commodity 

lodger. A new ledger had been prepared for 1939. Some customers' orders, as 

late as December 1938, were not shown by the records to have been executed 

through Winthrop, Mitchell & Company, others were shown to have been executed at 

prices different from those entered in the records for customers, and 

some trades shown executed by Winthrop, Mitchell & Company did not appear on 

customers' records. The respondent kept no daily record of amounts in 

segregation, nor a record of customers' positions at the end of the month. 

Mr. Marianette testified that George Kincaid, a former partner, had kept the 

commodity books, and had not recorded his (Kincaid's) and his family's trades. 

About Juno 1937, Kincaid withdrew, after which time Marianette was sole 

proprietor. Then Joe Murphy, until December 1938, kept the records, in the same 

way as had Kincaid, not recording his (Murphy's) and his family's trades. The 

respondent does not know much about the books kept by those two, but has kept 

adequate records since February 1939. Kincaid and Murphy would offset their own 

trades against opposite trades of customers, but the respondent did not know 

that was wrong until told so by Cook. He received no profits from shortages or 

trades bucketed by Kincaid and Murphy. 

On December 4, 1939, a copy of the referee's report, proposed findings of 

fact and conclusions, and recommended order was served upon the respondent, and 

a period of twenty days was given for filing exceptions and requesting oral 

argument before the Secretary. The referee recommended that the respondent's 

registration as futures commission merchant be revoked and that his trading 

privileges on contract markets 

be denied. The respondent did not request oral argument within the twenty days, 

but filed a brief in which he alleged that his records had been kept properly 

since February 1939, that he did not know what was done before 1939, and that he 

should not be condemned for acts of his predecessors. The evidence adduced at 

the hearing, however, showed that, while there was some improvement in 1939, 

there was not full compliance with the requirements of the act, that the 

respondent was sole owner of the business after June 1937, and that Joe Murphy 

kept the records until 1939. In keeping the respondent's records, Murphy was 

his agent, and the act expressly makes him responsible for violations by his 

agents. 

FINDINGS OF FACT 

1. The respondent, Guy D. Marianette, was registered with the Secretary of 

Agriculture as a futures commission merchant under the Commodity Exchange Act 

from July 16, 1937, until December 31, 1939. 

2. Since about June 1937, the respondent, doing business as Midwest Grains 

Securities, has engaged as a futures commission merchant in Billings, Montana, 

soliciting and accepting orders for the purchase and sale of wheat for future 

delivery on and subject to the rules of the Board of Trade of the City of 

Chicago, a contract market designated by the Secretary of Agriculture pursuant 

to the act. 
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3. During the time mentioned in the preceding paragraph, the respondent 

failed to keep: (a) a record of the amount of money segregated as belonging to 

his commodity customers at the end of each business day; (b) a record showing 

the position of each commodity customer at the end of each month; and (c) other 

records required to bo kept by the act and the rules and regulations thereunder. 

4. During that time, the respondent was a correspondent of Winthrop, Mitchell 

& Company within the meaning of the act, and, in connection with orders for 

wheat futures contracts on a contract market, which contracts could be used for 

hedging wheat transactions in interstate commerce, did falsely report to the 

customers who had given the orders, in some instances reporting executions not 

made, and, in others, reporting a price different from that at which the order 

was executed. 

5. Among orders falsely reported as executed, as mentioned in the preceding 

paragraph, were: (a) an order from Douglas Markegard, Billings, Montana, on 

December 29, 1938, for the sale of 4,000 bushels of Chicago May wheat; (b) an 

order from Gustave Onkens, Silesia, Montana, on January 4, 1939, for the 

purchase of 2,000 bushels of Chicago May wheat; and (c) other orders from those 

and other persons on other dates. 

6. Among orders in connection with which false prices were reported, as 

mentioned in paragraph 4, were: (a) an order from Wade Benton, Powell, Wyoming, 

on August 29, 1938, for the purchase of 2,000 bushels of Chicago December wheat, 

was executed at 65 1/2 cents per bushel, but the price reported to the customer 

was 66 1/4 cents; (b) an order from F. H. Becker, Baker, Montana, on September 

14, 1938, for the sale of 1,000 bushels of Chicago May wheat, was executed at 68 

3/8 cents per bushel, but the price reported to the customer was 67 3/4 cents; 

and (c) other orders from these and other persons on various dates, in each of 

which orders the price reported to the customer was less than the actual price 

in the case of sales, and more than the actual price in the case of purchases. 

7. The registration of the respondent as a futures commission merchant has 

not heretofore been suspended or revoked, but, under the provisions of the act, 

it expired on December 31, 1939. 

CONCLUSIONS 

The record discloses beyond doubt that the required records were not kept, 

that various orders were bucketed, and that true prices of actual executions 

were not always reported to the customers, discrepancies being invariably to the 

detriment of the customers. It is concluded that such violations of the act 

should result in denial of his trading privileges on contract 

markets, but, as his registration has expired, it need not be suspended or 

revoked. 

ORDER 

IT IS ORDERED that all contract markets, until further notice of the 

Secretary of Agriculture, refuse all trading privileges thereon to the 

respondent, Guy D. Marianette. 

IT IS FURTHER ORDERED that a copy hereof be sent by registered mail to Guy D. 

Marianette and to each contract market, and that this order shall be effective 

five days after the date hereof. 

(SEAL) 

Done at Washington, D. C. this 10th day of January, 1940. Witness my hand 

and the seal of the Department of Agriculture. 

(Signed) Grover B. Hill 

Assistant Secretary of Agriculture 
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CEA DOCKET NO. 14 

NO COPY OF COMPLAINT AVAILABLE 

LOAD-DATE: June 11, 2008 
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