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Commodity Futures Trading Commission 

CEA CASES 

NAME: ROBERT HALTMIER 

CITATION: Comm. Fut. L. Rep. (CCH) P20,078; [1975-1977 TRANSFER BINDER] 

DOCKET NUMBER: 75-2; 229 

DATE: SEPTEMBER 3, 1975 

DOCUMENT TYPE: DECISION AND ORDER 

NOTE: FORMERLY DOCKET # 229 

[P 20,078] In re Robert Haltmier.

Commodity Futures Trading Commission. CFTC Docket No. 75-2. September 3, 

1975. Decision and order in full text. (For final CFTC opinion, see P 20,160). 

Antifraud -- Account Executive -- Unauthorized Trading -- Profit Irrelevant - - An account executive who executed transactions for a customer's account 

without the customer's knowledge or authority has violated Sec. 4b of the 

Commodity Exchange Act. The account was not a discretionary account and the 

respondent admitted that the transactions were not "expressly" authorized. 

Respondent justified the transactions by claiming they were necessary to 

preserve the customer's capital in a declining market. The extent of gain or 

loss is immaterial, however. Even if a greater gain would have accrued than if 

the instructions had been followed, the actions of the respondent represent a 

clear violation of his fiduciary obligations under the Commodity Exchange Act. 

See P 12,555, "Liabilities -- Prohibitions" division. 

Preliminary Statement

LIEBERT, Administrative Law Judge: This is an administrative proceeding under 

the Commodity Exchange Act (7 U. S. C. §§ 1 et seq., hereinafter referred to as 

the "Act"), which was instituted by a complaint and notice of hearing filed on 

June 10, 1974, by the Assistant Secretary of Agriculture. The complaint alleges 

that from April 18, 1972, through October 10, 1972, the Respondent, Robert 

Haltmier, an account executive employed by a registered futures commission 

merchant, executed 208 transactions for the regulated commodity futures trading 

account of a customer without his knowledge or authorization. Such act is 

alleged to have been wilful and in violation of section 4b of the Act (7 U. S. 

C. § 6b). 

After extensions of time for filing an answer Respondent filed a letter 

responsive to the complaint on August 23, 1974. While not denying the fact of 

the transactions, Respondent stated by way of answer that the reasons for his 

actions in handling the account as he did were (1) an increase in margin 

requirements by the Chicago Board of Trade for soybean futures contracts; (2) 

adverse movement in the price of the soybean futures contracts; (3) the 

necessity to take action to preserve what he believed to be the customer's 

objective. He generally denied wrongdoing. 

Oral hearing on the matter was held in New York City on January 16, 1975, 

before Administrative Law Judge John G. Liebert. The Respondent represented 

himself and Complainant was represented by Herbert R. Bader, Esq., Office of the 

General Counsel, United States Department of Agriculture. Following the 

conclusion of the hearing the parties were afforded an opportunity to file 

proposed findings of fact and briefs. 

Findings of Fact
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1. The Respondent, Robert Haltmier, an individual whose address is 97-25 

118th Street, Richmond Hill, New York 11419, during the period March 1, 1971, 

through October 10, 1972, was employed as an account executive by the firm of 

Conti-Commodity Services, 2 Broadway, New York, New York, a registered futures 

commission 

merchant under the Act. Respondent's compensation was strictly on a percentage 

basis, that is, he was paid by Conti-Commodity Services a percentage of the 

commission charged by the firm on each customer transaction. 

2. Commencing sometime in January, 1972, Mr. Albert F. Millet opened a 

personal account with Conti-Commodity Services for trading in commodity futures. 

Because of dissatisfaction with the account executive initially assigned to 

handle his account, Mr. Millet caused the account to be liquidated and on or 

about March 16, 1972, Conti-Commodity Services assigned Respondent as the new 

account executive for Millet's account. The account was in the approximate 

amount of $ 5,000 on April 18, 1972, which was the date of initial purchases by 

Respondent for the account. 

3. There is no disagreement that Mr. Millet's instructions to Respondent were 

to purchase as many soybean futures contracts as he could with the money 

available for margin and to hold them for a period of at least 6 months for 

purposes of long term tax advantage on anticipated profits. Evidence discloses 

that the margin at this time was $ 1,000 per contract. Mr. Millet instructed 

Respondent that in the event it was necessary to obtain additional margin he 

could call on Mrs. Elizabeth Eastment, who had his power of attorney, for an 

amount up to $ 500 to supplement his margin account. He further instructed 

Respondent that he should make additional purchases with the additional paper 

profits if the market went up as anticipated; however, if the market went down 

so that further funds were needed he instructed that one or all of the contracts 

should be closed out. Shortly thereafter Mr. Millet went abroad and made no 

further communication with Respondent until October, 1972. 

4. The evidence discloses and Respondent admitted that during the period 

April 18 through October 10, 1972, after the initial purchase of 5 soybean 

contracts, Respondent made some 208 additional transactions in Millet's account 

involving some 690 contracts. These transactions included soybeans, soybean 

oil, wheat, cotton, potatoes and meal. Respondent admitted that these 208 

transactions were not expressly authorized by Millet. He justified the 

transactions as deemed by him necessary to preserve Millet's capital in a 

declining market for soybeans, and further, that an increase in margin 

requirement sometime in June changed the quantity of contracts that Millet had 

projected and he took actions in the form of additional trades to compensate. 

Generally, his contention adds up to a defense that he believed he had 

discretion to make these additional trades in Millet's best interest. 

5. The futures transactions, referred to herein, relate to the purchase and 

sale of futures contracts on or subject to the rules of the Chicago Board of 

Trade. Such transactions could have been used for (a) hedging transactions in 

interstate commerce, (b) determining the price basis of transactions in 

interstate commerce and (c) delivering commodities sold, shipped or received in 

interstate commerce for the fulfillment of futures contracts. 

6. The sole evidence introduced in support of Respondent's contention for the 

exercise of discretion in handling the account is his own testimony concerning 

Millet's conversations with him about trading. This testimony on several points 

is confused and contradictory. On the other hand, Millet firmly denies that he 

gave any authorization to Respondent at any time to make any trades in 

commodities other than soybeans, and those only within the trading program as 

stated in Finding 3. The evidence discloses that in actual practice Respondent 

made the trades, or stated a belief that a certain trade would be profitable, 

and wrote a report to Millet of what he had done, or intended to do, and mailed 

this to Mrs. Eastman's address. Millet was abroad at the time and received none 

of these advices. Millet did not communicate during the period with Respondent, 
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either by way of inquiry or response to Respondent's letters and reports. 

Millet did not learn of any of these additional transactions until sometime in 

September 1972, just prior to his return to New York. 

7. On the basis of the evidence we place more credence on the testimony of 

Millet. Additionally, Respondent knew, or should have known, that it is 

improper for brokers, or traders, or account managers to make trades in accounts 

under their control without specific authority. The only deviation from this 

practice is in a situation where a "discretionary account" is authorized. An 

official of Conti-Commodity Services testified that the company had an absolute 

rule that no "discretionary account" was permitted, or would be authorized, 

where the amount of the funds in 

the account was less than $ 10,000, and that all "discretionary accounts" had 

first to be accepted by the company and approved in writing. Millet's account 

failed to satisfy either requirement. Moreover, unimpeachable evidence adduced 

discloses that the margin requirements for soybeans did not go up in June, as 

stated by Respondent, but did in fact go down. Also, the evidence discloses 

that Respondent made no call on Mrs. Eastment for additional margin, as 

arranged, when it was concluded by him to be necessary or desirable, nor did he 

make such a call on Millet. 

8. On the basis of the foregoing, and after consideration of all of the 

testimony and evidence presented, we find that Respondent made the trades in 

Millet's account as alleged without authorization. Additionally, we find that, 

by virtue of his own admissions, Respondent willfully made these trades knowing 

them to be unauthorized. 

9. No evidence was adduced on the matter of the extent of gain or loss to 

Millet by virtue of Respondent's unauthorized trading in the account. 

Regardless, however, of the actual fact, we do not find it to be material or 

relevant to the issue. Even should there have been a greater gain to Millet 

than might have accrued if instructions had been followed, the fact remains that 

Respondent's actions were a clear violation of his fiduciary obligations under 

the Act. One ancillary and obvious fact is worthy of note and it is that 

Respondent's unauthorized trades greatly increased his commissions from what he 

would have received if he had followed his instructions; however, there was no 

showing that Respondent's mishandling of the account resulted in any other 

personal financial gain to himself. 

Conclusions

On October 23, 1974, Congress amended the Commodity Exchange Act by enactment 

of the Commodity Futures Trading Commission Act of 1974 (Pub. Law 93-463, 

October 23, 1974, 88 Stat. 1389 -- ). The amendments were made effective on 

April 21, 1975. Among the amendments were those which provide: 

"Sec. 411. All operations of the Commodity Exchange Commission and of the 

Secretary of Agriculture under the Commodity Exchange Act, including all pending 

administrative proceedings, shall be transferred to the Commodity Futures 

Trading Commission as of the effective date of this Act and continue to 

completion. All rules, regulations, and orders heretofore issued by the 

Commodity Exchange Commission and by the Secretary of Agriculture under the 

Commodity Exchange Act to the extent not inconsistent with the provisions of 

this Act shall continue in full force and effect unless and until terminated, 

modified, or suspended by the Commodity Futures Trading Commission. 

Sec. 412. Pending proceedings under existing law shall not be abated by 

reason of any provision of this Act but shall be disposed of pursuant to the 

applicable provisions of the Commodity Exchange Act, as amended, in effect prior 

to the effective date of this Act." 

This case was heard prior to April 21, 1975, and jurisdiction for purposes of 

this Decision is retained. 
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The amendments to the Act did not change the pertinent language supporting 

the charge in section 4b of the Act (7 U. S. C. 6b) which in pertinent part 

reads: 

"Sec. 4b. It shall be unlawful (1) for any member of a contract market, or 

for any correspondent, agent, or employee of any member, in or in connection 

with any order to make, or the making of any contract of sale of any commodity 

in interstate commerce, made, or to be made, on or subject to the rules of any 

contract market, for or on behalf of any other person, or (2) for any person, in 

or in connection with any order to make, or the making of, any contract of sale 

of any commodity for future delivery, made, or to be made, on or subject to the 

rules of any contract market, for or on behalf of any other person if such 

contract for future delivery is or may be used for (a) hedging any transaction 

in interstate commerce in such commodity or the products or byproducts thereof, 

or (b) determining the price basis of any transaction in interstate commerce in 

such commodity, or (c) delivering any such commodity sold, shipped, or received 

in interstate commerce for the fulfillment thereof -- 

(A) to cheat or defraud or attempt to cheat or defraud such other person; 

(B) willfully to make or cause to be made to such other person any false 

report or statement thereof, or willfully to enter or cause to be entered for 

such person any false record thereof; 

(C) willfully to deceive or attempt to deceive such other person by any means 

whatsoever in regard to any such order or contract or the disposition or 

execution of any such order or contract, or in regard to any act of agency 

performed with respect to such order or contract for such person; or * * *." 

The agency has consistently held that unauthorized trading in a customer's 

account with a registered futures commission merchant by an employee of such 

merchant having control of the account constitutes cheating or defrauding such 

customer in violation of section 4b of the Act. In re Douglas Steen, 21 Agric. 

Dec. 1076 (21 A.D. 1076)(1962); In re George Rex Andrews, 32 Agric. Dec. 553 (32 

A.D. 553) (1973); In re William R. Thompson, Jr., 27 Agric. Dec. 325 (27 A.D. 

325)(1968); In re Roger Harris, 29 Agric. Dec. 1330 (29 A.D. 1330) (1970); In re 

The Siegel Trading Co., Inc., et al., 29 Agric. Dec. 189 (29 A.D. 189) (1970); 

In re Edward Weitman, 30 Agric. Dec. 600 (30 A.D. 600) (1971); In re Elliott 

Alkow, 31 Agric. Dec. 1353 (31 A.D. 1353) (1972). 

The prohibitions in section 4b of the Act are sufficiently broad enough to 

encompass Respondent's activities at issue in this proceeding. One is mindful 

of the fact that the pertinent section of the Act is intended as remedial 

legislation. It imposes a high degree of trust on those engaged in trading 

activity with customer's funds. Respondent breached this trust by disregarding 

Millett's instructions. We conclude, therefore, that Respondent violated 

section 4b of the Act as charged, and that such violations were wilful and 

flagrant. Moreover, the facts in evidence compel the inference that Respondent 

was motivated by personal gain, or, at least, was the beneficiary of his 

unauthorized actions. 

Respondent is not registered as a floor broker or as a futures commission 

merchant, therefore, it is not possible to suspend or revoke any license as a 

result of his violations of the Act. However, in order to have an effective 

sanction the CEA has recommended that Respondent be denied all trading 

privileges for a period of 5 years and be required to cease and desist from the 

instant kinds of violations. These sanctions are consistent with the 

administrative policy of the CEA following determinations of wilful and flagrant 

violations of the Act. In the context of the recent amendments to the Act 

supra, we deem such sanctions to be presently appropriate. 

The foregoing findings and conclusions have been made after full 

consideration of the entire record and all evidence received. All motions, 

objections, proposed findings and arguments presented by the parties 

inconsistent with this decision are denied or found to be without persuasive 

merit. 
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Order

1. Upon the effective date of this Order, the Respondent, Robert Haltmier, 

shall cease and desist from placing, or causing to be placed, in any customer's 

account any commodity futures transaction without the prior knowledge, consent 

or authorization of such customer, or otherwise to cheat or defraud, or attempt 

to cheat or defraud, any person in connection with any order to make, or the 

making of, any contract of sale of any commodity for future delivery on or 

subject to the rules of any contract market for, or on behalf of, any person. 

2. The Respondent Robert Haltmier, is prohibited from trading on or subject 

to the rules of any contract market for a period of 5 years, and all contract 

markets shall refuse all trading privileges to him during said period. Such 

prohibition and refusal shall apply to all trading done and all positions held 

directly, or indirectly, whether for his account, or for the account of any 

other person. This prohibition of trading and denial of trading privileges to 

the Respondent shall become effective on the twentieth day after the date this 

Decision and Order becomes final. 

3. Pursuant to the Rules of Practice governing proceedings under the Act, 

this Decision and Order shall become final without further proceedings 35 days 

after service thereof, unless appealed to the Commission by a party to this 

proceeding within 30 days after service, as provided in the Rules of Practice. 

4. A copy of this Decision and Order shall be served upon the Respondent and 

on each contract market. 

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