U.S. JMMODITY FUTURES TRADING '- ..JMMISSION 

Three Lafayette Centre 

Office of Proceedings 

Richard Hallberg, 

Complainant, 

v. 

R.J. O'Brien Associates, LLC, 

Respondent. 

1155 21st Street, NW, Washington, DC 20581 

www.cftc.gov 

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CFTC Docket No. 11-R015 

_______________________ ) 

William Sauve, 

Complainant, 

v. 

R.J. O'Brien Associates, LLC, 

Respondent. 

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_______________________ ) 

James VanZee, 

Complainant, 

V. 

R.J. O'Brien Associates, LLC, 

Respondent. 

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CFTC Docket No. 11-R019 

CFTC Docket No. 11-R020 

INITIAL DECISION 

Introduction 

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The dispute in these consolidated matters arises from a trio of similar orders placed by 

Richard Hallberg, an experienced futures speculator who had discretionary authority to trade for 

the accounts of his friends James VanZee and William Sauve. Since May 2007, Hallberg 
typically had placed trades for his and his friends' accounts during the day through his 

introducing broker, Growth Futures, without any major problems. 

However, on July 13, 2010, Hallberg deviated from his normal practice. Late on that 

date during the evening trading session, Hallberg contacted the after-hours trading desk of the 

futures commission merchant, R.J. O'Brien & Associates. Hallberg called with the intention to 

liquidate long E-mini ( 1,000 ounce) Silver futures positions in each account. Respondent 

produced a recording of this conversation. Throughout the approximately five minute 

conversation Hallberg never used the term "E-mini" or "mini" when discussing, placing and 

confirming his orders. Rather, Hallberg told the R.J. O'Brien order clerk that he wanted to "get 

out of our silver longs," or "sell Silver," or "sell Septembers." When the order clerk repeated the 

terms of each order, before placing each order, he clearly stated that he was treating Hallberg's 

orders as for the "COMEX Silver" futures contract: that is, the older and more heavily traded 

normal (5,000 ounce) contract. At the end of the conversation, when the order clerk and 

Hallberg reviewed the fill for each trade, the order clerk again clearly stated that he had placed 

orders for "COMEX Silver" contracts. Hallberg did not correct the order clerk, who had also 

had informed Hallberg that he could not view the status of complainants' accounts. 

These trades left the three accounts with long E-mini Silver positions and short COMEX 

Silver positions. After the mistake was discovered later that day, the long mini Silver positions 

and the sh01i normal Silver positions were liquidated. The losses on the normal Silver trades 

substantially outweighed the profits on the mini Silver trades. 

Hallberg, Sauve and VanZee assert that R.J O'Brien should be liable for their losses, 

because, before filling the orders, the R.J. O'Brien order clerk either should have known that 

Hallberg was trading E-mini contracts or should have explicitly asked Hallberg whether he 

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wanted to trade E-mini Silver or normal COMEX Silver. In contrast, R.I. O'Brien denies any 

liability. R.J. O'Brien assetis that its order clerk acted in good faith and reasonably interpreted 

Hallbergs' instructions to "sell Silver" contracts as instructions to sell normal COMEX silver 

contracts. R.J. O'Brien further asserts that complainants are responsible for their losses because 

it was Hallberg's responsibility to accurately articulate instructions to sell E-mini Silver 

contracts. As explained below, after carefully reviewing the patties' submissions, 1 I have 

concluded that complainants have failed to establish any violations by R.I. O'Brien, and thus are 

not entitled to awards. 

Factual Findings 

Richard Hallberg, a resident of Seattle, Washington, disclosed on his account application 

an annual income of $50,000 to $100,000 and net worth of $500,000 to $1,000,000, and noted 

that he had extensive investment experience in futures, and stocks and bonds. He also had 

worked as a commodity broker in the early 1970's. William Sauve, a resident of Enumclaw, 

Washington, and James VanZee, a resident of Seattle, Washington, are friends of Hallberg. 

At the relevant time, R.I. O'Brien Associates, LLC ("RJO"), a futures commission 

merchant located in Chicago, Illinois, cleared complainants' accounts. Growth Futures, an 

introducing broker located in Goodinville, Washington, introduced complaints' accounts to R.I. 

O'Brien. William James Symonds is registered as a principal and associated person with Growth 

Futures. 

1 The parties principal submissions include : R.J. O'Brien 's three answers and a CD recording of the conversation 

between Hallberg and the R.J. O 'Brien order clerk on July 13 , 2010 (filed July 28, and August 22, 2011); 

Hallberg's complaint, with account statements attached (filed February 4, 2011), complaint addendum (filed March 

14, 2011), and second complaint addendum (filed May, 10, 2011); Sauve's complaint with account statements 

attached (filed March 14, 2011), and second addendum (filed May, 2, 2011); and VanZee's complaint (filed March 

22, 20 II), complaint addendum (filed May 2, 20 II), and second complaint addendum (filed July 16, 20 II). 

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In July 2007, Hallberg, Suave and Van Zee opened their commodity futures trading 

accounts with R.I. O'Brien. Suave and VanZee gave Hallberg a power of attorney to trade their 

accounts. Hallberg typically placed his orders through Symonds, and experienced very few 

problems trading until the day of the disputed orders. During July 2010, Hallberg traded a 

variety of futures contracts: Corn, Canadian Dollar, Coffee, U.S. Dollar Index, E-mini Euro, Emini S&P 500 Index, and E-mini NYMEX Silver. 

Long before Hallberg had begun trading futures in the 1970s, the COMEX in New York 

City had been established as the preeminent exchange in the Americas for precious metals 

futures. When Hallberg began trading, the COMEX was an independent exchange. As Hallberg 

probably knows, since the 1970's, many futures exchanges consolidated. First, in 1994, the 

COMEX became a division of the New York Mercantile Exchange (NYMEX). Next, in 2008, 

NYMEX became a division of the Chicago Mercantile Exchange (CME) Group. 

The COMEX lists the two types of Silver futures contract: the normal "COMEX Silver" 

futures contract, and the "E-rnini Silver" contract. The COMEX Silver future contract controls 

5,000 troy ounces, and theE-mini Silver future contract controls 1,000 troy ounces. _Normal 

futures contracts are the traditional contracts that long pre-date the mini and e-mini futures 

contracts. Historically, trading volume in the COMEX Silver has far exceeded trading volume in 

the E-mini Silver. Thus, in a hold-over from the days before the E-mini contracts were 

introduced and as a reflection of the COMEX Silver's volume dominance over theE-mini Silver, 

traders and commentators may colloquially refer to the COMEX Silver futures contract, but 

never the E-mini Silver futures contract, simply as "the Silver" futures contract. 

During the evening trading session on July 13, 2010, Hallberg deviated from his normal 

practice of placing trades through Symonds, and contacted the order entry desk at R.I. O'Brien, 

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with the intention to place orders to liquidate long E-mini Silver positions in the three accounts. 

As can be seen from the transcript of this conversation below: Hallberg told the order clerk that 

he wanted to "get out of our silver longs," or "sell Silver," or "sell Septembers," but never stated 

that he wanted to sell "mini" or "E-mini" Silver contracts; the R.J. O'Brien order clerk, before 

placing each of the three orders and at the end of the conversation when recapping each trade, 

clearly stated that he had placed orders for "September COMEX Silver" futures; and the R.J. 

O'Brien order clerk clearly confirmed that could not view the complainants' accounts, and as a 

result could not independently ascertain that the accounts had open mini Silver positions: 

RJO: 

Hallberg: 

RJO: 

Hallberg: 

RJO: 

Hallberg: 

RJO: 

Hallberg: 

RJO: 

Hallberg: 

RJO: 

Hallberg: 

RJO: 

Hallberg: 

O'Brien. John. 

Yeah, I've got three accounts and I want to get out of our silver longs and the first 

one will be Dick [i.e., Hallberg] at and that's a 10170803. 

70803 : 

And just get out two silvers at the market. 

You want to sell? 

I want to, yeah, I want to sell two silvers at the market. 

And what month? 

Gosh whatever [indiscernible] month that is. I don't . .. I, I, I didn't know you 

can't look at my account. Can you? 

No. 

So, just go ahead, and sell September. 

Okay. 

Two Septembers. 

Okay. We're going to sell two September Comex Silver at the market? 

Right. 

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RJO: Okay. That's filled on ticket 1730. It will take September Silver at 1789 and a 

half. 

Hallberg: Okay. And then we got another account 70709. That should be Bill Sauve. 

RJO: Okay. And the first one was Richard, right? 

Hallberg: Yeah, right. 

RJO: Sauve, and then the 70709? 

Hallberg: [Indiscernible.] 

RJO: Bill? 

Hallberg: Bill Sauve. 

RJO: Okay. 

Hallberg: And he's got three, just do three Septembers and we'll have to figure it out later 

on. 

RJO: Okay. 

Hallberg: He's got them different months. 

RJO: Okay. So we're going to sell three September Comex Silver at the market? 

Hallberg: . Right. 

RJO: Okay. 

Hallberg: And then we've got one more, Jim [i.e., VanZee]. 70805. 

RJO: 70805. 

Hallberg: And he's got two silvers. 

RJO: So we're going to sell two September. 

Hallberg: At the market. 

RJO: Okay. So two September Comex Silver at the market. Okay. That's filled. Let 

me get you your prices on everything here. 

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Hallberg: 

RJO: 

Hallberg: 

RJO: 

Hallberg: 

RJO: 

Hallberg: 

RJO: 

Hallberg: 

RJO: 

Hallberg: 

RJO: 

Hallberg: 

RJO: 

Hallberg: 

RJO: 

Hallberg: 

RJO: 

Hallberg: 

RJO: 

Hallberg: 

RJO: 

Hallberg: 

Yeah, let me write those prices down. 

You have the prices for the first two lot, right? 

Well, I don't because I didn't write them down. 

Okay. 

Hold on, let me get, I've got to get organized, I'm sorry 

That's okay. Take your time. 

Your phone is ringing off the hook? 

No, it's not. Summer is quiet. Europe is quiet there in the summer. 

Gosh oh mighty, talk about disorganized. Okay. Here we go. Dick. 

The first one, let's see it was account 10170803. 

Yeah. 

Sold two September Comex Silver at 1789 and a half. 

Okay. 

The second one was a sale, it was account 10170709, 

Now Bill. 

Sold three September Comex Silver, you sold two at 1789 half, and one at 1789. 

Okay. And Jim? 

And the last sale, the last sale of two, let's see here, it was account 10170805. 

Yeah, is that Jim Van Zee 

Let's see, 70805 that's Jim. Yeah. 

Okay. 

And I sold one at 1790. 

No kidding? 

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RJO: 

Hallberg: 

RJO: 

Hallberg: 

RJO: 

Hallberg: 

RJO: 

Hallberg: 

RJO: 

Hallberg: 

RJO: 

And sold one at 1789 half. 

Huh, so it's coming back? 

Yeah. 

There you go, see. [The market] got spooked down. Okay. That will teach me. 

I've done this before. 

No problem. 

It doesn't pay me. I should go to bed. 

And get a good night's sleep. 

Okay. 

All right then. 

Thanks. 

Take care. 

[Underlining added for emphasis. CD recording, exhibit to R.J. O'Brien's answers.] 

Conclusions 

Complainants have the burden to show by a preponderance of the evidence that R.J. 

O'Brien failed to execute Hallberg's orders in a diligent manner. Here, while R.J. O'Brien had a 

duty to follow Hallberg's instructions and to execute his orders diligently, Hallberg had the 

responsibility to give clear and accurate instructions. 

On July 13, 2010, Hallberg contacted the R.J. O'Brien order entry desk with the intention 

to place orders to liquidate long E-mini Silver positions in the three accounts. This was a 

deviation from his normal practice of placing orders with his introducing broker, who 

presumably was familiar with Hallberg's trading. In addition, the R.J. O'Brien order clerk also 

clearly confirmed that could not view the complainants' accounts. Thus, Hallberg was on notice 

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that the order clerk could not independently ascertain that the accounts had open E-mini Silver 

positions. This underscored how important it was for Hallberg to correctly and accurately 

describe the specific E-mini Silver contract, in order to reduce the possibility of error. 

Unfortunately, Hallberg did not tell the order clerk that he wanted to sell "mini" or "Emini" Silver contracts, and otherwise did not mention the term "mini" or "E-mini." Rather, 

Hallberg told the desk clerk that he wanted to "get out of our silver longs," or "sell Silver," or 

"sell Septembers." Hallberg also did not correct the order desk clerk when the clerk, before each 

of the three trades, carefully repeated back to Hallberg that he would be placing an order to sell 

normal "COMEX Silver" contracts. Hallberg again did not correct the order desk clerk at the 

end of the conversation when the clerk recapped the COMEX Silver trades. 

Complainants have not produced any evidence of an industry custom or practice where 

an ambiguous order to "sell Silver" should reasonably be construed presumptively as an order to 

sell the newer and more lightly traded 1,000 ounce E-mini Silver future. Here, the R.J. O'Brien 

order desk clerk made a reasonable, good faith and efficient interpretation that Hallberg's 

instructions to "sell Silver" were actually orders to sell the more heavily traded, normal 5,000 

ounce COMEX Silver futures, and before placing each order the clerk used the proper 

terminology which clearly informed Hallberg of this interpretation. The order clerk thus gave 

Hallberg a fair and reasonable oppotiunity to correct each order before it was filled. The order 

clerk also gave Hallberg a fair and reasonable opportunity to correct the enors promptly when 

the order clerk recapped the COMEX silver trades at the end of the conversation. However, 

Hallberg missed these multiple opportunities to tell the order clerk that he had meant to sell the 

smaller E-mini Silver contracts. 

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Nothing in the record shows that Hallberg ever informed the R.J. O'Brien order desk 

clerk that he expected him to be familiar with Hallberg's E-mini Silver trading strategy or to 

provide special assistance beyond executing his orders, and nothing in the record shows that R.J. 

O'Brien otherwise should have been aware of these expectations. Thus, Hallberg was merely 

imputing his own expectations to respondents, and could not reasonably shift to respondents his 

responsibility to use correct and accurate terminology when placing orders. See Grist v. 

Shear son Lehman Brothers, Inc., Comm. Fut. L. Rep. ~ 24,962 (CFTC 1990); and Avis v. 

Shem·son Hayden Stone, Inc., Comm. Fut. L. Rep.~ 21,379 at page 25,831 n.8 (CFTC 1982). In 

these circumstances, complainants' claim that R.J. O'Brien failed to diligently execute and report 

Hallberg's orders must fail. 

ORDER 

Complainants have failed to establish any violations by respondent. Accordingly, the 

complaints in these consolidated matters are dismissed. 

Dated Fe?/1, VAJ{ d . 

Philip cGuire , Judgment Officer 

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