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Commodity Futures Trading Commission 

CEA CASES 

NAME: KROLL, DALON & CO., INC., AND STANLEY KROLL 

DOCKET NUMBER: 173 

DATE: MAY 14, 1970 

DOCUMENT TYPE: COMPLAINT 

UNITED STATES DEPARTMENT OF AGRICULTURE 

BEFORE THE SECRETARY OF AGRICULTURE 

In re: Kroll, Dalon & Co., Inc., and Stanley Kroll, Respondents 

CEA Docket No. 173 

Complaint and Notice of Hearing Under the Commodity Exchange Act 

There is reason to believe that the respondents have violated the Commodity 

Exchange Act (7 U.S.C. 1964 ed., Chapter 1, as amended, Supp. IV, 1969) and the 

regulations made pursuant thereto, and this complaint and notice of hearing is 

issued stating the charges in that respect as follows: 

I 

Respondent Kroll, Dalon & Co., Inc., is now, and was at all times material 

herein, a corporation organized and existing under the laws of the State of New 

York, with offices at 25 Broad Street, New York, New York. At all times 

material herein up to on or about October 15, 1969, the said corporation engaged 

as futures commission merchant within the meaning of the term "futures 

commission merchant" as used in the Commodity Exchange Act. Throughout the year 

1969, the said corporation was registered as futures commission merchant under 

the Commodity Exchange Act. In accordance with the provisions of section 4f of 

the said Act (7 U.S.C. 6f, Supp. IV, 1969) and section 1.16 of the regulations 

thereunder (17 C.F.R. 1.16), such registration expired on December 31, 1969, and 

the said corporation is no longer registered under the Commodity Exchange Act. 

II 

Respondent Stanley Kroll, an individual whose business address is the same as 

that of the corporate respondent, is now, and was at all times material herein, 

president of the corporate respondent. At all such times, the operations of the 

corporate respondent were under the direction and control of respondent Stanley 

Kroll. 

III 

(a) At the times hereinafter stated, the respondent corporation, in the 

regular course of its business as futures commission merchant, carried accounts 

of customers who traded in commodity futures on contract markets subject to the 

provisions of the Commodity Exchange Act and regulations. Such accounts, the 

trading therein, and the handling and disposition of funds in connection 

therewith, were subject to the provisions of the said Act and regulations. At 

all such times, the corporate respondent had to its credit with banks or other 

depositories sums of money in varying amounts, held in segregated accounts and 

identified as customers' funds, representing deposits of margin by and trading 

profits accruing to such customers. 

(b) On 21 business days between July 14 and August 26, 1969, both inclusive, 

the respondent corporation was undersegregated in amounts ranging from $ 282.62 

on August 12 to $ 20,505.67 on August 15 -- that is, the total amount of 
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customers' funds held in segregation as above described, was insufficient, by 

the aforesaid sums, to pay all credits and equities due to such customers. 

IV 

As of August 31, 1969, the respondent corporation, while engaged as a 

registered futures commission merchant under the Commodity Exchange Act, failed 

to meet the minimum financial requirements prescribed by section 1.17 of the 

regulations (34 F.R. 599) issued by the Secretary of Agriculture under the said 

Act. According to the report of the respondent corporation's financial 

condition (Form 1-FR) which it filed with the Commodity Exchange Authority as of 

August 31, 1969, the respondent corporation lacked approximately $ 265,000 of 

having enough working capital to meet such minimum financial requirements. 

V 

By reason of the facts alleged in this complaint, the respondents violated 

sections 4d and 4f of the Commodity Exchange Act (7 U.S.C. 6d and 6f, Supp. IV, 

1969) and sections 1.17 (34 F.R. 599), 1.20 and 1.21 of the regulations (17 CFR 

1.20, 1.21). 

WHEREFORE, it is hereby ordered that this Complaint and notice of hearing be 

served upon the respondents and this proceeding shall be governed by sections 

0.1, 0.2, 0.4(b), 0.5 through 0.22, and 0.28 of the rules of practice under the 

Commodity Exchange Act (17 CFR 0.1, 0.2, 0.4(b), 0.5 through 0.22, 0.28). 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 four 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 filing of an 

answer in which all of the material allegations of fact contained in the 

complaint are admitted likewise shall constitute a waiver of hearing unless a 

hearing is requested. The respondents are hereby notified that unless hearing 

is waived, a hearing will be held at 10:00 a.m., local time, on June 30, 1970, 

in New York, New York, 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 the respondents shall cease and desist from 

violating the Commodity Exchange Act and the regulations thereunder in the 

manner described herein. 

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. 

May 14, 1970 

[SEE SIGNATURE IN ORIGINAL] 

Richard E. Lyng 

Assistant Secretary 

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