Page 1 

Commodity Futures Trading Commission 

CEA CASES 

NAME: JACOB STERN AND JACOB STERN AND COMPANY, INC. 

CITATION: 14 Agric. Dec. 807 

DOCKET NUMBER: 69 

DATE: OCTOBER 20, 1955 

DOCUMENT TYPE: DECISION AND ORDER 

(No. 4397) 

In re JACOB STERN AND JACOB STERN AND COMPANY, INC. CEA Docket No. 69. Decided 

October 20, 1955. 

Denial of Trading Privileges -- Stipulation by Respondents -- Jurisdiction of 

Secretary -- Consent Order

Upon respondents' admission of jurisdictional facts, waiver of oral hearing, 

consent to entry of the order herein, and stipulation, trading privileges on all 

contract markets are denied to them for a period of six months, 

with an exception which would permit respondent Jacob Stern to execute bona fide 

orders received by him in his capacity as a floor broker. 

Mr. Benj. M. Holstein for Commodity Exchange Authority. Mr. Louis A. Tepper of 

Moldauer & Tepper, of New York, New York, for respondents. 

Decision by Thomas J. Flavin, Judicial Officer

PRELIMINARY STATEMENT

This is a quasi-judicial proceeding under the Commodity Exchange Act (7 

U.S.C. 1952 ed., Chapter 1) instituted by a complaint and notice of hearing 

issued under section 6(b) of the Act (7 U.S.C. 1952 ed., § 9) by the Acting 

Secretary of Agriculture on June 24, 1955. 

The respondents are an individual and a New York corporation of which he is 

the president and principal owner, and which he manages and directs. 

The complaint charges that the respondents attempted to manipulate and did in 

fact manipulate the price of potatoes in interstate commerce and for future 

delivery on the New York Mercantile Exchange, a contract market. These charges 

are based upon allegations that during and prior to February 1955, the 

respondents sold large quantities of March 1955 potato futures on the exchange 

and thereby acquired and maintained a substantial short position in such future; 

that during the same period they purchased and withheld from sale large 

quantities of February 1955 potato futures and acquired and maintained a 

dominant long position in that future; that during the latter part of February 

1955, their holdings represented from 30 to 40 percent of all open contracts in 

the March future and from 50 to 80 percent of all open contracts in the February 

future; that they sold deliverable potatoes to holders of short February 

contracts only at fixed and arbitrary prices, and subsequently reacquired such 

potatoes by repurchase or by delivery to them in satisfaction of their long 

February position; that they stood for delivery on such position and demanded 

and received delivery during February of more than 92 percent of all deliveries 

made on the exchange and held 149 carlots of potatoes at the end of the month, 

which quantity represented approximately the entire available supply of cash 

potatoes in New York which met requirements for delivery on the New York 
Page 2 

Mercantile Exchange; that they employed these cash supplies to threaten delivery 

on their short March futures position in order to cause lower prices in that 

future; and that on March 1, 1955, they delivered the entire 149 carlots against 

their 

short March position. The complaint also alleges that the respondents entered 

into these transactions for the purpose and with the intent of depressing the 

price of March 1955 potato futures, and that their acts caused an increase in 

the price of February 1955 potato futures, a decrease in the price of March 1955 

potato futures and in the price of cash potatoes, and a widening of the spread 

between the prices of these two futures. 

No hearing has been held. On September 21, 1955, prior to the date set for 

filing the answer, the respondents submitted a joint stipulation under section 

0.4(b) of the rules of practice (17 CFR 0.4(b)), in which they admit the facts 

contained herein under "Findings of Fact," and consent to the entry of the order 

hereinafter set forth. The stipulation also contains a recital that it is 

submitted solely for the purpose of disposing of this administrative proceeding 

and with no other intent. 

FINDINGS OF FACT

1. Respondent Jacob Stem and Company, Inc., is a corporation organized under 

the laws of the State of New York with offices and a place of business at 190 

Duane Street, New York, New York. The said corporation is now and was at all 

times specified herein a clearing member of the New York Mercantile Exchange. 

2. Respondent Jacob Stern is now and was at all times specified herein the 

president of the corporate respondent, the manager and director of its business, 

and the owner of 70 percent of its capital stock, with the remaining 30 percent 

of such capital stock being held by other members of the family of the said 

Jacob Stern. The said Jacob Stern is now and was at all times specified herein 

a member of the New York Mercantile Exchange and a registered floor broker under 

the Commodity Exchange Act. 

3. The New York Mercantile Exchange is now and was at all times specified 

herein a board of trade duly designated as a contract market under the Commodity 

Exchange Act. 

4. During January, February, and March, 1955, respondent Jacob Stern and 

Company, Inc., acting through respondent Jacob Stern, bought and sold potato 

futures on the New York Mercantile Exchange and entered the resulting 

transactions in the Jacob Stern and Company, Inc., account on the books of the 

said firm. 

CONCLUSIONS

Section 0.4(b) of the rules of practice under the Commodity Exchange Act (17 

CFR 0.4(b)) provides as follows: 

"(b) Consent order. At any time after the issuance of the complaint and 

prior to the hearing in any proceeding, the Secretary, in his discretion, may 

allow the respondent to consent to an order. In so consenting, the respondent 

must submit, for filing in the record, a stipulation or statement in which he 

admits at least those facts necessary to the Secretary's jurisdiction and agrees 

that an order may be entered against him. Upon a record composed of the 

complaint and the stipulation or agreement consenting to the order, the 

Secretary may enter the order consented to by the respondent, which shall have 

the same force and effect as an order made after oral hearings." 

The facts admitted by the respondents and set forth in the Findings of Fact 

are sufficient to subject them and each of them to the jurisdiction of the 

Secretary of Agriculture. 
Page 3 

The complainant has filed a recommendation which recites that it has 

carefully considered the stipulation and the terms of the order to which the 

respondents propose to consent. The complainant states that, in its opinion, 

the proposed sanction would be adequate and the prompt entry of such an order 

without further proceedings would constitute a satisfactory disposition of this 

case, serve the public interest, and effectuate the purposes of the Commodity 

Exchange Act, and it therefore recommends that the waiver be accepted and that 

the order to which the respondents have consented be issued. 

It is concluded that such an order should be issued. 

ORDER

Effective December 1, 1955, all contract markets shall refuse all trading 

privileges to Jacob Stern and Jacob Stern and Company, Inc., for a period of six 

months, such refusal to apply to all trading done and positions held directly by 

said Jacob Stern and Jacob Stern and Company, Inc., or either of them, and also 

to all trading done and positions held indirectly through persons or firms owned 

or controlled by them, or either of them, or otherwise. Provided, that such 

refusal shall not be construed to prohibit the execution of bona fide orders 

received by the said Jacob Stern in his capacity as a floor broker, in which 

orders 

the said Jacob Stern has no interest other than the usual broker-customer 

relationship. 

A copy of this decision and order shall be served upon each of the parties by 

registered mail or in person and upon each contract market. 

LOAD-DATE: June 8, 2008 
Page 4