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Commodity Futures Trading Commission 

CEA CASES 

NAME: WARD MERCANTILE, INC., AND PHILIP J. FULLERTON 

DOCKET NUMBER: 179 

DATE: AUGUST 19, 1971 

DOCUMENT TYPE: COMPLAINT 

UNITED STATES DEPARTMENT OF AGRICULTURE 

BEFORE THE SECRETARY OF AGRICULTURE 

In re: Ward Mercantile, Inc., and Philip J. Fullerton, Respondents 

CEA Docket No. 179 

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. 1 et seq.) 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 Ward Mercantile, 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 6 Harrison Street, New York, New York 10013. The said 

corporation is now, and was at all such times, a registered futures commission 

merchant under the Commodity Exchange Act, engaged in trading in commodities for 

future delivery for the accounts of customers and holding for such customers 

sums of money, representing deposits of margin by and trading profits accruing 

to such customers. At all such times, the said corporation was subject to the 

minimum financial requirements specified in section 1.17 of the regulations 

under the Commodity Exchange Act (34 F.R. 599). 

II 

Respondent Philip, J. Fullerton, an individual, is now, and was at all times 

material herein, secretary-treasurer of the respondent corporation, and 

responsible for the management, direction and control of its activities. 

III 

During the period from August 31, 1970 through October 19, 1970, respondent 

Ward Mercantile, Inc., engaged as a registered futures commission merchant under 

the Commodity Exchange Act while failing to meet the minimum financial 

requirements prescribed by section 1.17 of the regulations issued by the 

Secretary of Agriculture under the Act. As of August 31, 1970, the respondent 

corporation lacked approximately $ 33,560 of having enough working capital to 

meet such minimum financial requirements. This insufficiency was not corrected 

until October 20, 1970. 

IV 

Having reason to believe that the respondent corporation was not meeting the 

minimum financial requirements prescribed in section 1.17 of the regulations 

under the Commodity Exchange Act, T. Reed McMinn, Director of the Commodity 

Exchange Authority's Eastern Region, on January 20, 1970, warned the corporation 

in writing as follows: "It is your firm's responsibility at all times to meet 

the financial requirements . . ." prescribed in section 1.17. 
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To correct the working capital insufficiency at the time, respondent Fullerton 

on or about February 13, 1970, loaned the corporate respondent $ 100,000 and 

subordinated the loan to the claims of the other general creditors. 

V 

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

violated section 4f of the Commodity Exchange Act and section 1.17 of the 

regulations thereunder. 

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 three 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 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 October 27, 1971, 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 appropriate order should not be 

issued in accordance with the Commodity Exchange Act, (1) suspending or revoking 

the registration of the respondent corporation as futures commission merchant, 

(2) 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 respondents for such period of time as may be determined and 

(3) directing that the respondents shall cease and desist from violating the Act 

and regulations 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. 

August 19, 1971 

[SEE SIGNATURE IN ORIGINAL] 

Richard E. Lyng 

Assistant Secretary 

 

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