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Commodity Futures Trading Commission 

CEA CASES 

NAME: MCCARTHY AND SCOVILLE, JOHN G. MCCARTHY, AND WALTER A. SCOVILLE 

DOCKET NUMBER: STIPULATION 14 

DATE: MAY 26, 1952 

DOCUMENT TYPE: STIPULATION OF COMPLIANCE 

UNITED STATES OF AMERICA 

BEFORE THE SECRETARY OF AGRICULTURE 

In re McCarthy and Scoville, John G. McCarthy, and Walter A. Scoville 141 W. 

Jackson Blvd. Chicago 4, Illinois 

Stipulation of Compliance under the Commodity Exchange Act No. 14 

WHEREAS, the Secretary of Agriculture has reason to believe that the abovenamed persons have violated section 4c(A) of the Commodity Exchange Act, and 

WHEREAS, no complaint has been filed with respect to such violations and the 

above-named persons desire to enter into a stipulation pursuant to the 

provisions of section 0.4(a) of the rules of practice under the Commodity 

Exchange Act. 

NOW, THEREFORE, McCarthy and Scoville, John G. McCarthy, and Walter A. 

Scoville admit the following facts are true: 

(1) McCarthy and Scoville during the period pertinent to this stipulation and 

up to and including May 15, 1952, was a partnership consisting of John G. 

McCarthy and Walter A. Scoville located at 141 W. Jackson Blvd., Chicago, 

Illinois. The partnership enjoyed membership privileges on the Board of Trade 

of the City of Chicago and both John G. McCarthy and Walter A. Scoville are 

members of the said Board of Trade. The partnership was registered as a futures 

commission merchant under the provisions of the Commodity 

Exchange Act and both John G. McCarthy and Walter A. Scoville are registered as 

floor brokers under the provisions of the said act. 

(2) On December 14, 1951, McCarthy and Scoville had on its books the account 

of a customer, E. F. Draw and Company, which account on that date had positions 

in soybean futures contracts on the Chicago Board of Trade as follows: 

January 1962 futures - short 400,000 bushels 

March 1962 futures - short 515,000 bushels 

May 1952 futures - short 535,000 bushels 

(3) On or about December 14, 1951, the customer, E. F. Drew and Company, 

telephoned to John G. McCarthy and requested him to purchase and sell 400,000 

bushels of January 1952 soybean futures contracts, 250,000 bushels of March 1952 

soybean futures contracts, and 250,000 bushels of May 1952 soybean futures 

contracts. The customer requested the opinion of John G. McCarthy as to whether 

such buying and selling orders to be executed at the same price would be proper. 

Mr. McCarthy stated that in his opinion the execution of such buying and selling 

orders would be proper provided they were executed in the trading pits of the 

Board of Trade. 
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(4)Pursuant to the customer's directions, said John G. McCarthy caused the 

purchases and sales of 400,000 bushels of January 1952 soybean futures 

contracts, 250,000 bushels of March 1952 soybean futures contracts, and 260,000 

of May 1952 soybean futures contracts to be executed on the Chicago Board of 

Trade through floor brokers. It was understood by E. F. Drew and Company, John 

G. McCarthy and the brokers to whom McCarthy gave these orders, that the 

purchases and sales were to be made at the same price. 

(5) Following the execution of the purchases and sales above stated, said 

John G. McCarthy made up and sent to his customer, E. P. Drew and Company, a 

purchase and sales statement reflecting the purchase of 400,000 January 1952 

soybean futures contracts, 250,000 bushels of March 1952 soybean futures 

contracts, and 250,000 bushels of May 1952 soybean futures contracts as against 

the existing open position of E. F. Drew and Company which would cause the 

records to indicate that certain short contracts held open at the close of 

business on December 13 were covered by purchases on December 14 and new 

contracts were sold short on December 14. 

(6) John G. McCarthy admits having received a circular letter sent by the 

Commodity Exchange Authority to all floor brokers and futures commission 

merchants under date of April 26, 1948, and the decision in CE-A Docket No. 38, 

entitled "In re Jean Goldwurm et al" which circular letter and decision 

concerned "fictitious" and "wash" trades. 

McCarthy and Scoville, John G. McCarthy and Walter A. Scoville state that at 

the time of the execution of the above-mentioned trades they believed them to be 

legitimate trades and not in violation of the Commodity Exchange Act, and 

further state, that after examination of the decision and circular letter 

referred to in paragraph (6) above, they admit said transactions set forth in 

paragraphs (5) to (6) are in violation of section 4c(A) of the Commodity 

Exchange Act as interpreted by said decision and circular letter referred to 

above. 

In addition to admitting the facts set forth above. McCarthy and Scoville, 

John G. McCarthy and Walter A. Scoville agree to discontinue all acts and 

practices which are in violation of the Commodity Exchange Act, and specifically 

agree that this stipulation shall be admissible in any proceedings brought 

against said McCarthy and Scoville, John G. McCarthy and Walter A. Scoville in 

connection with any violations of the Commodity Exchange Act and regulations 

thereunder. 

In view of said decision and circular letter, McCarthy and Scoville, John G. 

McCarthy and Walter A. Scoville further agree to cancel the above-described 

transactions of December 14 and to withdraw and cancel the confirmations and 

purchase and sales statement issued to the customer, E. F. Drew and Company, in 

connection therewith. 

Done at Chicago, Illinois, this 26th day of May 1952. 

/s/ McCarthy & Scoville 

McCarthy and Scoville 

By /s/ John G. McCarthy 

/s/ John G. McCarthy 

John G. McCarthy 

/s/ Walter A. Scoville 

Walter A. Scoville 

Witnessed by /s/ Albert W. Kibby 

/s/ A. R. Grosstephan 
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