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Commodity Futures Trading Commission 

CEA CASES 

NAME: WALSTON & CO., INC., PAT G. NOEL, AND CARLTON M. SMITH 

CITATION: 25 Agric. Dec. 15 

DOCKET NUMBER: 130 

DATE: JANUARY 24, 1966 

DOCUMENT TYPE: DECISION AND ORDER 

(No. 10,311) 

In re WALSTON & Co., INC., PAT G. NOEL, AND CARLTON M. SMITH. CEA Docket No. 

130. Decided January 24, 1966. 

Stipulation as to Pat G. Noel -- Denial of trading privileges -- Dismissal of 

remaining party

Respondent Pat G. Noel consented to the issuance of an order denying trading 

privileges to him on the contract markets for 30 days for his actions in 

connection with deceiving customers by selectively closing out offsetting long 

and short positions of such customers. As this respondent admitted that he is 

the individual responsible for these actions the complaint against Carlton M. 

Smith is dismissed. 

Mr. Earl L. Saunders for Commodity Exchange Authority. Mr. Thomas Brennan, of 

Houston, Tex., for respondent Pat G. Noel. 

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 and notice of hearing issued under 

section 6 (b) of the Act (7 U.S.C. 9) by the Assistant Secretary of Agriculture. 

The complaint names as respondents Walston & Co., Inc., a Delaware corporation, 

and two individuals, Pat G. Noel and Carlton M. Smith, who at the time of the 

matters involved herein were employed by the corporate respondent as account 

executives in its Houston, Texas, office. The complaint charges the respondents 

with deceiving certain customers of the corporate respondent in wilful violation 

of section 4b of the Commodity Exchange Act (7 U.S.C. 6b), and with applying and 

closing out offsetting long and short positions of such customers in wilful 

violation of section 1.46 of the regulations issued under the act (17 CFR 1.46). 

No hearing has been held with respect to any of the respondents. On October 

7, 1965, a consent order was issued against respondent Walston & Co., Inc., 

concluding the proceeding as against that respondent. On January 19, 1966, 

respondent Pat G. Noel submitted a stipulation under section 0.4(b) of the rules 

of practice (17 CFR 0.4(b)), in which he admits the facts hereinafter set forth, 

waives hearing on the charges, and consents to the entry of an order directing 

all contract markets to refuse all trading privileges to him for a period of 30 

days, such refusal to apply 

to all trading done and all positions held by him, directly or indirectly. 

FINDINGS OF FACT

1. Respondent Walston & Co., Inc., is now and was at all times material 

herein a corporation organized and existing under the laws of the State of 
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Delaware, with its principal office and place of business at 74 Wall Street, New 

York, New York and branch offices at Houston, Texas, and various other cities 

throughout the United States. The said corporation is now and was at all such 

times a clearing member of the Chicago Board of Trade and various other contract 

markets, and a registered futures commission merchant under the Commodity 

Exchange Act, trading in commodity futures on such contract markets for the 

accounts of its customers. 

2. Respondent Pat G. Noel, an individual whose address is 202 Renoir Drive, 

Houston, Texas, was at all times material herein and until April 23, 1965, 

employed by the corporate respondent as an account executive in its Houston, 

Texas, office. 

3. Respondent Carlton M. Smith, an individual whose address is 7900 

Westheimer Street, Houston, Texas, was at all times material herein and until 

July 15, 1964, employed by the corporate respondent as an account executive in 

its Houston, Texas, office. 

4. The contracts referred to herein were contracts for the purchase or sale 

of soybean futures on the Chicago Board of Trade, a duly designated contract 

market under the Commodity Exchange Act. Such contracts could have been used 

for hedging transactions in interstate commerce in soybeans or the products or 

byproducts thereof, or for determining the price basis of transactions in 

interstate commerce in such commodity, or for delivery of such commodity sold, 

shipped or received in interstate commerce. 

5. During the period from on or about September 16, 1963, through on or about 

May 5, 1964, respondent Walston & Co., Inc., selectively closed out certain 

offsetting long and short soybean futures contracts for the accounts of certain 

customers (Accounts number 76-01-865, 76-01-756, 76-02-131 and 76-02-079) with 

the effect of causing larger profits or smaller losses than actually existed to 

be reported to such customers, and thereby for a period of time concealing from 

each of such customers the actual amount of his losses. Respondent Walston & 

Co., Inc., selectively closed out 

such offsetting long and short soybean futures contracts by reason of the 

instruction of the respondent Pat G. Noel, acting in his capacity as account 

executive of respondent Walston & Co., Inc., in its Houston, Texas, office. 

CONCLUSIONS

The facts admitted by respondent Pat G. Noel in his stipulation have been 

adopted as the findings herein. By reason of these findings, it is concluded 

that respondent Noel wilfully violated section 4b of the Commodity Exchange Act 

(7 U.S.C. 6b), and section 1.46 of the regulations (17 CFR 1.46), as charged in 

the complaint. 

The complainant has filed a recommendation which recites that it has 

carefully considered the stipulation and the terms of the order to which 

respondent Noel proposes to consent. It is the opinion of the complainant that 

the proposed sanction would be adequate, and that the prompt entry of such an 

order would constitute a satisfactory disposition of the case as against 

respondent Noel. The complainant recommends, therefore, that the stipulation 

and waiver be accepted and that the proposed order be issued. The complainant 

points out that, as stated in Finding of Fact numbered 5, respondent Noel admits 

that the selective closing out of the offsetting long and short soybean futures 

contracts in question occurred by reason of his instruction to respondent 

Walston & Co., Inc. The complaint alleges that these acts were ordered or 

carried out by respondents Noel and Smith. In view of the admission of 

respondent Noel that he is the individual responsible for these acts, the 

complainant recommends that the complaint be dismissed as against respondent 

Carlton M. Smith. It is concluded that the recommendations of the complainant 

should be adopted. 

ORDER
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Effective February 21, 1966, all contract markets shall refuse all trading 

privileges to respondent Pat G. Noel for a period of thirty (30) days, such 

refusal to apply to all trading done and all positions held by him, directly or 

indirectly. 

The proceeding is dismissed as against respondent Carlton M. Smith. 

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

and upon each contract market. 

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