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Commodity Futures Trading Commission 

CEA CASES 

NAME: PLAINS COTTON COOPERATIVE ASSOCIATION AND DAN W. DAVIS 

CITATION: 1977 CFTC LEXIS 84; 1977 WL 13534 

DOCKET NUMBER: 75-11; 222; 

DATE: JULY 15, 1977 

DOCUMENT TYPE: OPINION AND ORDER 

NOTE: FORMERLY CEA DOCKET # 222 

UNITED STATES OF AMERICA 

Before the 

COMMODITY FUTURES TRADING COMMISSION 

In the Matter of PLAINS COTTON COOPERATIVE ASSOCIATION AND DAN W. DAVIS 

CFTC Docket No. 75-11 

OPINION AND ORDER IMPOSING REMEDIAL SANCTIONS 

OPINION AND ORDER 

In this proceeding under the Commodity Exchange Act, as amended, Plains 

Cotton Cooperative Association and Dan W. Davis, hereinafter jointly referred to 

as "Respondents", were charged in a United States Department of Agriculture 

Complaint and Notice of Hearing, dated February 5, 1974, n1 with attempting to 

manipulate and in fact manipulating the prices of the May 1972 and July 1972 

cotton futures contracts and the price of spot cotton during the period from 

March 15, 1972, to July 7, 1972, in wilful violation of Sections 6(b), 6(c) and 

9(b) of the Commodity Exchange Act, 7 U.S.C. 9, 13b and 13(b). 

n1 Since the institution of this proceeding, the Commodity Futures 

Trading Commission has come into being and has taken jurisdiction of this 

matter from its predecessor agency, the Commodity Exchange Authority, under 

authority of Sections 411 and 412 of Pub. L. No. 93-463 (Oct. 23, 1974). 

This matter formerly was docketed as CEA Docket No. 222. 

For the purpose of this proceeding, and any subsequent enforcement proceeding 

brought before the Commission pursuant to the Commodity Exchange Act and without 

admitting or denying the allegations in the Complaint, Respondents have 

submitted an Offer of Settlement. The Offer of Settlement provides, among other 

things, that the Commission may make findings based upon the facts alleged in 

the Complaint and shall enter an Order 

imposing remedial sanctions as set forth below, although these findings do not 

constitute an admission by Respondents of any allegation in the complaint or of 

any violation of the Commodity Exchange Act. The Commission has determined to 

accept the Offer of Settlement. 

On the basis of the Offer of Settlement and of the allegations in the 

Complaint, it is found that: 

(A) Respondents acknowledge receipt of the Complaint; 

(B) Respondents admit to the jurisdiction of the Commodity Futures Trading 

Commission with respect to the matters set forth in the Complaint; 
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(C) The allegations in the complaint relate to the purchase and sale of 

December 1971, March 1972, May 1972, and July 1972 cotton futures contracts on 

and subject to the rules of the New York Cotton Exchange; 

(D) During the period from May 6, 1971, to July 7, 1972, Respondents 

maintained a large long futures position involving one or more of the futures 

contracts described in paragraph (c); 

(E) During the period from November 23, 1971, to July 21, 1972, Respondents 

accepted and held transferable notices of delivery and subsequently received 

delivery of large amounts of spot cotton in satisfaction of their long open 

futures positions in each of the futures contracts 

referred to above as those futures contracts successively matured; n2 

n2 Detailed information concerning these deliveries is set out in the 

following table: 

Future Amount in Percent of total

contract lots deliveries 

December 1971 718 81.7

March 1972 366 98.7

May 1972 599 89.7

July 1972 400 59.7

Total 2,083 80.5

(F) Most of the spot cotton received by Respondents on the December 1971, 

March 1972, and May 1972 futures was handled by them in such a way as to make 

that cotton unavailable to other traders for redelivery against futures 

contracts. Respondents accomplished this by decertificating the cotton while in 

store prior to final disposition and by selling the cotton on either a f.a.s. 

vessel or landed mill basis; n3 

n3 Of the 72,276 bales of certificated cotton received on delivery in 

the December 1971 future, Respondents so handled 67,466 bales; of the 

36,420 bales of certificated cotton received on delivery in the March 1972 

future, Respondents so handled 35,820 bales; of the 59,963 bales of 

certificated cotton received on delivery in the May 1972 future, 

Respondents so handled 59,078 bales. 

(G) In pursuing the course of action described above, Respondents acted for 

the purpose and with the intent of causing, and did cause prices of the May 1972 

and July 1972 cotton futures contracts and the price of spot cotton to be 

abnormally and artificially high during the period March 15, 1972, to July 7, 

1972; 

(H) Then Respondents attempted to manipulate and did manipulate the prices of 

the May 1972 cotton futures contract, the July 1972 cotton futures contract, and 

spot cotton during the period from March 15, 1972, to July 7, 1972; in wilful 

violation of Sections 6(b), 6(c), and 9(b) of the Commodity Exchange Act, 7 

U.S.C. 9, 13b and 13(b). 

The Commission wishes to emphasize that attempted manipulation and 

manipulation under Sections 6(b) and 6(c) of the Act are among the most serious 

activities proscribed by the Act. Manipulation not only erodes public 

confidence in the markets by preying upon unsuspecting buyers and sellers of 

futures, but also undermines the economic functions of the the markets by 

disrupting the free forces of supply and demand. When a matter involving 

manipulative activity is proven after a hearing, the remedial sanctions imposed 

will normally be the most severe available under the Act. The facts and 

circumstances of this case have led the Commission to accept Respondents' Offer 

of Settlement. The imposition of these sanctions in settlement of the matter 
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herein, however, should not be regarded as precedent with respect to the 

appropriate sanctions to be imposed in future manipulation cases. 

Accordingly, IT IS ORDERED that: 

(1) Effective upon the thirtieth (30th) day after the date of the 

Commission's Order herein, Respondents, Plains Cotton Cooperative Association 

and Dan W. Davis, jointly and 

individually, shall be prohibited from trading, directly or indirectly, on or 

subject to the rules of any contract market for a period of one year, and all 

contract markets shall refuse trading privileges to the Respondents during this 

one year period. Such prohibition and refusal shall apply to all trading done 

and positions held directly by the Respondents, either for its or his own 

account or as agent or representative of any other person or firm, and also to 

all trading done and positions held indirectly by or in any way subject to its 

or his direction or control; 

(2) Effective upon the date of service of the Commission's Order herein, 

Respondents, Plains Cotton Cooperative Association and Dan W. Davis, jointly and 

individually, shall cease and desist from manipulating or attempting to 

manipulate the price of any commodity in interstate commerce or for future 

delivery on or subject to the rules of any contract market; 

(3) Copies of this Order shall be served upon each of the parties and upon 

all contract markets. 

By the Commission (Chairman BAGLEY and Commissioners SEEVERS and MARTIN). 

Commissioner DUNN not participating and Vice-Chairman RAINBOLT absent. 

[SEE SIGNATURE IN ORIGINAL] 

William T. Bagley 

Chairman 

Commodity Futures Trading Commission 

Dated: July 15, 1977 

LOAD-DATE: June 16, 2008 
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