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Commodity Futures Trading Commission 

CEA CASES 

NAME: HARRY KAY (ALSO KNOWN AS AARON D. SCHLECTER), AND HARRY KAY & ASSOCIATES, 

INC. 

DOCKET NUMBER: 117 

DATE: FEBRUARY 26, 1964 

DOCUMENT TYPE: COMPLAINT 

UNITED STATES DEPARTMENT OF AGRICULTURE 

BEFORE THE SECRETARY OF AGRICULTURE 

In re: Harry Kay (also known as Aaron D. Schlecter), and Harry Kay & Associates, 

Inc., Respondents 

CEA Docket No. 117 

Complaint and Notice of Hearing under Section 6(b) of the Commodity Exchange 

Act 

There is reason to believe that the respondents named herein have violated 

the Commodity Exchange Act (7 U.S.C. § 1 et seq.), hereinafter called the act, 

and the regulations made pursuant thereto (17 CFR, Part 1), hereinafter called 

the regulations, and in accordance with the provisions of section 6(b) of the 

act (7 U.S.C. § 9), this complaint and notice of hearing is issued stating the 

charges in that respect as follows: 

I 

The respondent Harry Kay (also known as Aaron D. Schlecter) is an individual 

whose last known address is 3051 Arabian Road, Las Vegas, Nevada. At all times 

during the periods referred to in this complaint, the said respondent was a 

member of the Board of Trade of the City of Chicago. 

II 

The respondent Harry Kay & Associates, Inc., a Nevada corporation, was, at 

all times during the periods referred to in this complaint, a registered futures 

commission merchant under the act. At all such times, the respondent Harry Kay 

(also known as Aaron D. Schlecter) was in complete control of the said 

corporation, initiated and carried out the 

acts, dealings and transactions of the corporation, and used the corporation as 

an instrument to conduct his own business. 

III 

The Board of Trade of the City of Chicago (hereinafter called the Chicago 

Board of Trade), the Chicago Mercantile Exchange and the New York Mercantile 

Exchange were, at all times during the periods referred to in this complaint, 

duly designated contract markets under the act. 

IV 

The respondents, during the period from November 16, 1962, through May 9, 

1963, converted to their own use funds amounting to approximately $ 60,000, 

which consisted of funds received by them in their capacity of futures 

commission merchant from their customers in connection with orders to make 

transactions in commodities for future delivery, and funds accrued to such 

customers in connection with dealings in commodity futures. 
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V 

As a result of the conversion of funds as described in paragraph IV above, 

the respondents were undersegregated in the amount of approximately $ 60,000 on 

May 9, 1963, that is, the total amount of customers' funds held in segregation 

was insufficient by the aforesaid sum to pay off all credits and equities due to 

such customers. 

VI 

The respondents, during the period from November 16, 1962, through May 8, 

1963, accepted 71 orders from 23 different customers for the execution of 

transactions in commodity futures on the Chicago Board of Trade, the Chicago 

Mercantile Exchange and the New York Mercantile Exchange, and in connection 

therewith falsely reported to these customers that transactions in commodity 

futures had been executed on the said markets for such customers' accounts, 

whereas, in truth and in fact, no such transactions had been executed. 

VII 

The respondents, during the period from February 18 through May 7, 1963, made 

purchases and sales of commodity futures on the Chicago Board of Trade and the 

Chicago Mercantile Exchange for the respondents' own use and benefit, and placed 

81 of such trades in their customers' accounts carried by clearing members, 

commingling the open contract positions and financial results of such trades 

with the open contract positions and financial results of the transactions of 

the respondents' customers. 

VIII 

The respondents, during the period from November 16, 1962, through May 9, 

1963, did not make a daily computation nor maintain a permanent record of the 

amount of customers' money required to be held in segregated account, nor 

prepare nor maintain full, complete and systematic records of all commodity 

futures transactions made through them on or subject to the rules of contract 

markets. 

IX 

The futures transactions described in this complaint were capable of being 

used for hedging transactions in interstate commerce, or determining the price 

basis of transactions in interstate commerce, or for delivering commodities 

sold, shipped or received in interstate commerce. 

X 

By reason of the acts and omissions described in this complaint; (1) the 

respondents cheated and defrauded their customers, wilfully deceived such 

customers, wilfully made false reports to such customers, and bucketed orders 

received from such customers, in violation of section 4b of the act (7 U.S.C. § 

6b); (2) the respondents knowingly confirmed to their customers fictitious 

trades, in violation of section 4c of the act (7 U.S.C. § 6c); (3) the 

respondents knowingly failed to treat and deal with customers' funds as 

belonging to such customers, failed to segregate and to account separately for 

such funds, used such funds to margin and guarantee the trades and secure and 

extend the credit of the respondents, commingled customers' funds with funds 

belonging to the respondents, and failed to keep records with respect to 

customers' funds, in violation of sections 4d(2) and 4g of the act (7 U.S.C. §§ 

6d(2), 6g), and sections 1.20, 1.21, 1.22 and 1.32 of the regulations (17 CFR 

1.20, 1.21, 1.22, 1.32); and (4) the respondents failed and refused to keep 

books and records pertaining to futures transactions in the form and manner 

required by the Secretary of Agriculture, in violation of section 4g of the act 

(7 U.S.C. § 6g) and section 1.35 of the regulations (17 CFR 1.35). 
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WHEREFORE, it is hereby ordered that this complaint and notice of hearing be 

served upon the said respondents. The respondents will have twenty (20) days 

after the receipt of this complaint in which to file with the Hearing Clerk, 

United States Department of Agriculture, Washington, D. C. 20250, an answer with 

an original and five copies, fully and completely stating the nature of the 

defense and admitting or denying, specifically and in detail, each allegation of 

this complaint. Allegations not answered will be deemed admitted for the 

purpose of this proceeding. Failure to file an answer will constitute an 

admission of all the allegations of this complaint and a waiver of hearing. The 

respondents are hereby notified that unless hearing is waived, either expressly 

or by failure to file an answer, or by filing an answer in which all of the 

material allegations of fact contained in the complaint are admitted and a 

hearing is not requested, a hearing will be held at 10:00 a.m., local time, on 

the 15th day of April 1964, in Las Vegas, Nevada, at a place therein to be 

specified later, before a referee designated to conduct such hearing. At such 

hearing the respondents will have the right to appear and show cause, if any 

there be, why an order should not be made directing that all contract markets 

refuse all trading privileges to the respondents for such period of time as may 

be determined. 

It is ordered that this complaint and notice of hearing be served on the 

respondents at least twenty (20) days prior to the date set for hearing. 

Done at Washington, D. C. 

February 26, 1964 

/s/ George L. Mehren 

Assistant Secretary 

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