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Commodity Futures Trading Commission 

CEA CASES 

NAME: INDIANA FARM BUREAU COOPERATIVE ASSOCIATION INC. AND LOUIS M. JOHNSTON 

DOCKET NUMBER: 234; 75-14 

DATE: DECEMBER 11, 1974 

DOCUMENT TYPE: COMPLAINT 

NOTE: LATER BECAME CFTC DOCKET # 75-14 

UNITED STATES DEPARTMENT OF AGRICULTURE 

BEFORE THE SECRETARY OF AGRICULTURE 

In re: Indiana Farm Bureau Cooperative Association, Inc., and Louis M. Johnston, 

Respondents 

CEA Docket No. 234 

Complaint and Notice of Hearing Under Section 6(b) and 6(c) of the Commodity 

Exchange Act 

There is reason to believe that the respondents Indiana Farm Bureau 

Cooperative Association, Inc., and Louis M. Johnston attempted to manipulate and 

did manipulate the market price of a commodity for future delivery on or subject 

to the rules of a contract market, in wilful violation of the Commodity Exchange 

Act (7 U.S.C. 1 et seq.). In accordance with the provisions of section 6(b) and 

6(c) of the said Act (7 U.S.C. 9 and 13b), this Complaint and Notice of Hearing 

is issued stating the charges in that respect as follows: 

I 

Respondent, Indiana Farm Bureau Cooperative Association, Inc., hereinafter 

referred to as Indiana Farm Bureau, is an Indiana Corporation whose address is 

47 S. Pennsylvania Street, Indianapolis, Indiana 46204, and 

is now and was at all times material herein a member firm of the Board of Trade 

of the City of Chicago. 

II 

Respondent, Louis M. Johnston, is now and was at all times material herein, 

the manager of the Indiana Grain Division of Indiana Farm Bureau, and a member 

of the Board of Trade of the City of Chicago. 

III 

The Board of Trade of the City of Chicago, hereinafter referred to as the 

Board of Trade, is now and was at all times material to this complaint, a board 

of trade duly designated as a contract market under the Commodity Exchange Act. 

IV 

At all times material herein, Indiana Farm Bureau maintained three commodity 

futures accounts with Illinois Cooperative Futures Company, a registered futures 

commission merchant, as follows: 

Account No. Name of Account 

1160 Gold Proof Elevator 

Div. Indiana Farm Bureau 

P. O. Box 773 

Louisville, Kentucky 40201 
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Account No. Name of Account 

1190 Indiana Grain Coop 

Div. Indiana Farm Bureau 

47 S. Pennsylvania St. 

Indianapolis, Indiana 

See original document-page 2 

Account No. Name of Account 

1191 Indiana Farm Bureau 

47 S. Pennsylvania St. 

Indianapolis, Indiana 46204 

Feed Division 

Louis M. Johnston, at all times material herein, directed and controlled the 

futures trading in the Gold Proof Elevator (1160) and Indiana Grain Coop (1190) 

commodity futures accounts and gave advice as to the futures trading in the Feed 

Division account (1191). 

V 

The futures transactions and positions referred to in this complaint relate 

to the July 1973 corn future on the Board of Trade. The last day of trading in 

the July 1973 corn future on the Board of Trade was July 20, 1973. 

VI 

CEA Form 203 Corn Reports filed by Indiana Farm Bureau show that the futures 

transactions and positions of the respondent corporation referred to in this 

complaint were hedging transactions or positions and did not constitute 

speculative transactions or positions. 

VII 

The Board of Trade corn futures contract specifies delivery of 5,000 bushels 

of yellow corn conforming to the following USDA grades at the following price 

differentials: 

No. 1 yellow corn -- at 1/2 cent per bushel over contract price. 

No. 2 yellow corn at contract price 

No. 3 yellow corn (maximum 

15 1/2 percent moisture) -- at 1 1/2 cents per bushel under contract price. 

The only delivery point acceptable under the rules of the Board of Trade then 

in existence was Chicago, Illinois. The lower than average quality of the 

1972/1973 corn crop, the scarcity of transportation during the summer of 1973, 

and the unwillingness of elevators regular for delivery in Chicago to accept 

corn for delivery or to accept corn for delivery only under special conditions 

at additional costs during July 1973, limited the supply of corn available for 

delivery on the July 1973 corn futures on the Board of Trade to the stocks of 

deliverable grades of corn in deliverable position in Chicago, Illinois. As of 

July 20, 1973, the stocks of deliverable grades of corn in deliverable position 

which were available for delivery at a price not exceeding the economic value of 

corn in Chicago or were otherwise uncommitted amounted to approximately 511,000 

bushels. 

VIII 

On July 19, 1973, the Board of Directors of the Board of Trade voted to 

remove the 10 cent maximum daily limit on price fluctuation for the final day of 

trading in the July 1973 corn future. This limit was not removed for any other 

corn futures. 

IX 
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On July 20, 1973, prior to the beginning of trading on the Board of Trade, 

Indiana Farm Bureau owned or controlled a net long futures position in the July 

1973 corn future of 4,705,000 bushels, representing 27.5 percent of the total 

open interest. This net futures position consisted of a long position in the 

Indiana Grain Coop account of 4,895,000 bushels and a short position in the Gold 

Proof Elevator account of 190,000 bushels. By 11:02 a.m. on July 20, 1973, the 

short position in the Gold Proof Elevator account had been completely 

liquidated. From the beginning of trading until 11:24 a.m. on July 20, 1973, 

three spread transactions (Order Numbers 70489, 70490, 70491) were executed for 

the Indiana Grain Coop account whereby Indiana Farm Bureau sold 1,500,000 

bushels of July 1973 corn futures and purchased a like number of bushels of 

September corn futures. As of approximately 11:24 a.m. on July 20, 1973, before 

the July corn futures price rose to $ 3.00 per bushel, Indiana Farm Bureau held 

a long July corn futures position of 3,395,000, representing about 62 percent of 

the total open interest in such future. This long position was six times larger 

than the stocks of corn available for delivery in Chicago. 

X 

At all times on July 20, 1973, there was an insufficient supply of 

deliverable grades of corn in deliverable position to permit holders of short 

contracts in the July 1973 corn future to satisfy such short contracts without 

purchasing July corn futures from Indiana Farm Bureau. Such facts were known to 

the respondents. 

XI 

On July 20, 1973, the price of the July 1973 corn future on the Board of 

Trade opened at a price range of $ 2.80 to $ 2.93 per bushel, an increase of 20 

1/2 to 33 1/2 per bushel over the prior day's closing price and 33 1/8 to 46 1/8 

cents per bushel over the September future. The July 1973 corn future traded 

within the opening range until about 11:12 a.m. on July 20, 1973, and the price 

of $ 3.00 per bushel was not reached until about 11:26 a.m. 

After 11:30 a.m., with less than a half hour of trading time remaining in the 

July 1973 corn future, the July corn future price moved sharply and erratically, 

closing at a price range of $ 3.70 to $ 3.90 per bushel. This closing price 

range was $ 1.23 1/8 to $ 1.43 1/8 per bushel over the September corn future and 

$ 1.10 1/2 to $ 1.30 1/2 per bushel higher than the prior day's closing price. 

XII 

As of 11:24 a.m. on July 20, 1973, Indiana Farm Bureau had two orders on the 

trading floor which had not been filled. These orders were (1) a spread order 

(Order Number 70492) entered at 9:15 a.m. on July 20, 1973, to purchase 750,000 

bushels of the September corn future and to sell 750,000 of the July corn future 

at 55 1/2 cents per bushel over the September future, and (2) a price order 

(Order Number 70589) entered at 9:49 a.m. on July 20, 1973, to sell 150,000 

bushels of July corn futures at $ 3.00 per bushel. The above price order was 

filled between 11:27 a.m. and 11:30 a.m. Spread order number 70492 was filled 

between 11:36 a.m. and 11:40 a.m. Between 11:38 a.m. and 11:40 a.m. on July 20, 

1973, Mr. Johnston entered the following additional scaled up price orders for 

the Indiana Grain Coop account: 

See original document-page 7 

Order No. Instructions on Order (in Thousands of Bushels) 

70783 Sell 100 July corn at $ 3.70 per bushel 

70784 " 100 " " " 3.80 " " 

70786 " 100 " " " 3.90 " " 

70787 " 100 " " " 3.85 " " 

No Number " 100 " " " 3.75 " " 
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With the exception of 5,000 bushels of Order No. 70786, these five scaled up 

price orders were filled before trading expired at 12:00 noon on July 20, 1973. 

XIII 

After trading in the July, 1973, corn future expired at 12:00 noon on July 

20, 1973, Indiana Farm Bureau had a long position of 2,010,000 bushels. 

Consequently they received delivery of that quantity of corn: 20,000 bushels on 

July 23, 1,050,000 on July 24, 470,000 bushels on July 27, 275,000 on July 30, 

and 195,000 on July 31. 

XIV 

The respondents, Indiana Farm Bureau and Louis M. Johnston, engaged in the 

acts and practices described in the paragraphs set forth herein-above for the 

purpose and with the intent of causing prices in the July 1973 corn future which 

were arbitrary and artificial, and demanded 

and received such prices in connection with the trading in such future. By 

reason thereof, the respondents attempted to manipulate and did, in fact, 

manipulate the price of a commodity for future delivery on or subject to the 

rules of a contract market, in wilful violation of section 6(b) and 6(c) of the 

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

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 and 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 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 purposes 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 the material allegations of fact contained in this complaint are 

admitted likewise 

shall constitute a waiver of hearing unless a hearing is requested. The 

respondents are hereby notified that unless the hearing is waived, a hearing 

will be held in Indianapolis, Indiana, at a place therein and date to be 

specified later, before an Administrative Law Judge 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 appropriate order should not be issued in 

accordance with the Commodity Exchange Act (1) prohibiting the respondents from 

trading on or subject to the rules of any contract market, and directing that 

all contract markets refuse all trading privileges to the said respondents for 

such period of time as may be determined, and (2) directing that the respondents 

shall cease and desist from violating the Commodity Exchange Act in the manner 

alleged 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. 

[SEE SIGNATURE IN ORIGINAL] 

RICHARD L. FELTNER 

Assistant Secretary 
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