Full text of Commodity Exchange Act

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[P

u b lic — N

o. 6 7 5 — 7 4 t h C o n g r e s s ]
[H. It. 6772]
AN ACT

To amend the Grain Futures Act to prevent and remove obstructions and bur­
dens upon interstate commerce in grains and other commodities by regulating
transactions therein on commodity futures exchanges, to lim it or abolish
short selling, to curb manipulation, and for other purposes.

Be it enacted by the Senate and House of Representatives of the
United States of Amcrica in Congress assembled, That section 1
of the Grain Futures Act (U. S. C., 1934 ed., title 7, sec. 1) is
amended to read as follows: “That this Act may be cited as the ‘Com­
modity Exchange Act.5”
S e c . 2. The Grain Futures Act (U. S. C., 1934 ed., title 7 , secs.
1 to 17, inclusive) is amended by striking out the word “grain” wher­
ever it appears in such Act and inserting in lieu thereof “commodity”,
“anv commodity”, or “commodities”, as the case may require, and by
striking out the phrase “cash grain” wherever such phrase appears
and inserting in lieu thereof “any cash commodity”.
S e c . 3. Section 2 of the Grain Futures Act (U. S. C., 1934 ed.,
title 7, secs. 2,3 and 4) is amended by—
(a) striking out the third sentence of paragraph (a) and inserting
in lieu thereof the following: “The word ‘commodity5 shall mean
wheat, cotton, rice, corn, oats, barley, rye, flaxseed, grain sorghums,
mill feeds, butter, eggs and Solanum tuberosum (Irish potatoes).” ;
and
(b) adding at the end of paragraph (a) the following sentences:
“The words ‘cooperative association of producers5 shall mean any
cooperative association, corporate or otherwise, not less than 75 per
centum in good faith owned or controlled, directly or indirectly, by
producers of agricultural products and otherwise complying with an
Act of Congress of February 18,1922 (U. S. C., 1934 ed., title 7, secs.
291 and 292), as now or hereafter amended, including any organiza­
tion acting for a group of such associations and owned or controlled
by such associations, provided that business done for or with the
United States of America, or any agency thereof, shall not be con­
sidered either member or nonmember business in determining the
compliance of any such association with said Act of Congress of
February 18, 1922, The words ‘member of a contract market’ shall
mean and include individuals, associations, partnerships, corpora­
tions. and trusts owning or holding membership in, or admitted to
membership representation on, a contract market or given members’
trading privileges thereon. The words ‘futures commission mer­
chant’ shall mean and include individuals, associations, partnerships,
corporations, and trusts engaged in soliciting or in accepting orders
for the purchase or sale of any commodity for future delivery on
or subject to the rules of any contract market and that, in or in
connection with such solicitation or acceptance of orders, accepts
any money, securities, or property (or extends credit in lieu thereof)




(182)

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to margin, guarantee, or secure any trades or contracts that result or
may result therefrom. The words ‘floor broker’ shall mean any per­
son who, in or surrounding any ‘pit5, ‘ring’, ‘post’, or other place
provided by a contract market for the meeting of persons similarly
engaged, shall engage in executing for others any order for the pur­
chase or sale of any commodity for future delivery on or subject to
the rules of any contract market, and who for such services receives
or accepts any commission or other compensation. The words ‘the
commission’ shall mean the Commodity Exchange Commission, con­
sisting of the Secretary of Agriculture, the Secretary of Commerce,
and the Attorney General.”
S ec . 4. Section 4 of the Grain Futures Act (XJ. S. C., 1934 ed.,
title 7, sec. 6) is amended by—
(a) striking out the word “except” at the end of the first para­
graph;
(b) striking out all of paragraph (a) ; and
(c) striking out the parentheses and letter “b” and the word
“Where” at the beginning of paragraph (b) and inserting in lieu
thereof the words “except, in any of the foregoing cases, where”.
S e c . 5. The Grain Futures Act is amended by adding after section
4 (U. S. C., 1984 ed., title 7, sec. 6) the following new sections:
“Sec. 4a. (1) Excessive speculation in any commodity under con­
tracts of sale of such commodity for future delivery made on or sub­
ject to the rules of contract markets causing sudden or unreasonable
fluctuations or unwarranted changes in the price of such commodity,
is an undue and unnecessary burden on interstate commerce in such
commodity. For the purpose of diminishing, eliminating, or prevent­
ing such burden, the commission shall, from time to time, after due
notice and opportunity for hearing, by order, proclaim and fix such
limits on the amount of trading under contracts of sale of such com­
modity for future delivery on or subject to the rules of any contract
market which may be done by any person as the commission finds is
necessary to diminish, eliminate, or prevent such burden. Nothing
in this section shall be construed to prohibit the commission from
fixing different trading limits for different commodities, markets,
futures, or delivery months, or different trading limits for buying and
selling operations, or different limits for the purposes of subpara­
graphs (A ) and (B) of this section, or from exempting transactions
commonly known to the trade as ‘spreads’ or ‘straddles’ or from fixing
trading limits applying to such transactions different from trading
limits fixed for other transactions.
“ (2) The commission shall, in such order, fix a reasonable time
(not to exceed ten days) after the order’s promulgation; after which,
and until such order is suspended, modified, or revoked, it shall be
unlawful for any person—
“ (A ) directly or indirectly to buy or sell, or agree to buy or
sell, under contracts of sale of such commodity for future delivery
on or subject to the rules of the contract market or markets to
which the order applies, any amount of such commodity during
any one business day in excess of any trading limit fixed for one
business day by the commission in such order for or with respect
to such commodity; or
33331*— 58-------13




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“ (B) directly or indirectly to buy or sell, or agree to buy or
sell, under contracts of sale of such commodity, for future delivery
on or subject to the rules of any contract market, any amount of
such commodity that shall result in giving such person a net long
or net short position at any one time m or with respect to any such
commodity in excess of any trading limit fixed by the commis­
sion for net long or net short position in such order for or with
respect to such commodity.
“ (3) No order issued under paragraph (1) of this section shall
apply to transactions which are shown to be bona fide hedging trans­
actions. For the purposes of this paragraph, bona fide hedging
transactions shall mean sales of any commodity for future delivery
on or subject to the rules of any board of trade to the extent that such
sales are offset in quantity by the ownership or purchase of the same
cash commodity or, conversely, purchases of any commodity for
future delivery on or subject to the rules of any board of trade to the
extent that such purchases are offset by sales of the same cash com­
modity. There shall be included in the amount of any commodity
which may be hedged by any person—
“ (A)'the amount of such commodity such person is raising, or
in good faith intends or expects to raise, within the next twelve
months, on land (in the United States or its Territories) which
such person owns or leases;
“ (B) an amount of such commodity the sale of which for future
delivery would be a reasonable hedge against the products or
byproducts of such commodity owned or purchased by such person,
or the purchase of which for future delivery would be a reasonable
hedcre against the sale of any product or byproduct of such com­
modity by such person.
“ (4) This section shall apply to a person that is registered as a
futures commission merchant or as floor broker under authority of
this Act only to the extent that transactions made by such person are
made on behalf of or for the account or benefit of such person. This
section shall not apply to transactions made by, or on behalf of, or
at the direction of, the United States, or a duly authorized agency
thereof.
“ S e c . 4b. It shall be unlawful for any member of a contract mar­
ket, or for any correspondent, agent, or employee of any member, in
or in connection with any order to make, or the making of (1) any
contract of sale of any commodity in interstate commerce, or (2) any
contract of sale of any commodity for future delivery made, or to be
made, on or subject to the rules of any contract market for or on
behalf of any person if such contract for future delivery is or may be
used for (a) hedging any transaction in interstate commerce in such
commodity or the products or byproducts thereof, or (b) determin­
ing the price basis of any transaction in interstate commerce in such
commodity, or (c) delivering any such commodity sold, shipped, or
received in interstate commerce for the fulfillment thereof—
“ (A ) to cheat or defraud or attempt to cheat or defraud such
person;
“ (B) willfully to make or cause to be made to such person any
false report or statement thereof, or willfully to enter or cause to be
entered for such person any false record thereof;




185
“ (C) willfully to deceive or attempt to deceive such person by
any means whatsoever in regard to any such order or contract or
the disposition or execution of any such order or contract, or in
regard to any act of agency performed with respect to such order
or contract for such person; or
“ (T>) to b u ck e t such o rd e r, o r to fill such o rd e r b y offset a ga inst
the o rd e r o r o rd e rs o f a n y o th e r p erson, o r w i l l f u l l y a n d k n o w in g ly
and w ith o u t the p r io r consent o f such p erson to becom e the b u y e r
in respect to a n y s e llin g o rd e r o f such p erson , o r becom e th e seller
in respect to a n y b u y in g o rd e r o f such p e rso n .
“Nothing in this section or in any other section of this Act shall be
construed to prevent a futures commission merchant or floor broker
who shall have in hand, simultaneously, buying and selling orders at
the market for different principals for a like quantity of cotton for
future delivery in the same month, from executing such buying and
selling orders at the market price: Provided, That any such execu­
tion shall take place on the floor of the exchance where such orders
are to be executed at public outcry across the ring and shall be duly
reported, recorded, and cleared in the same manner as other orders
executed on such exchange.
“ S e c . 4 c . I t s h a ll be u n la w fu l f o r a n y p e rso n to offe r to e n te r in to ,
enter in to , o r c o n firm the execu tion o f, a n y tra n sa ctio n in v o lv in g
a n y c o m m o d ity, w h ic h is o r m a y be used f o r (1) h e d g in g a n y tra n s ­
a ction in in te rs ta te com m erce in such c o m m o d ity o r the p ro d u c ts
o r b yp ro d u c ts th e re o f, o r (2) d e te rm in in g the p ric e basis o f a n y
such tra n s a c tio n in in te rsta te com m erce in such com m o dity* o r (3)
d e liv e rin g a n y such c o m m o d ity sold, sh ip p e d , o r re c e ive d in in te r­
state com m erce f o r the fu lfillm e n t th e re o f—
“ (A) if such transaction is, is of the character of. or is com­
monly known to the trade as, a cwash sale’, ‘cross trade’, or ‘accom­
modation trade’, or is a fictitious sale:
“ (B) if such transaction is, is of the character of, or is com­
monly known to the trade as, a ‘privilege’, ‘indemnity’, ‘bid’,
‘offer’, ‘put’, ‘call’, ‘advance guaranty’, or ‘decline guaranty7, or
“ (C) if such transaction is used to cause any price to be reported,
registered, or recorded which is not a true and bona fide price.
“Nothing in this section shall be construed to prevent the exchange
of futures in connection with cash commodity transactions or of
futures for cash commodities, or of transfer trades or office trades
if made in accordance with feoard of trade rules applying to such
transactions and such rules shall not have been disapproved by the
Secretary of Agriculture. Nothing in this section or section 4b
shall be construed to impair any State law applicable to any trans­
action enumerated or described in such sections.
“ S e c . 4d. It shall be unlawful for
>n to engage as futures
accepting orders for
commission merchant in soliciting
the purchase or sale of any commodity for future delivery, or involv­
ing any contracts of sale of any commodity for future delivery, on
or subject to the rules of any contract market unless—^
“ (1) such person shall have registered, under this Act, with the
Secretary of Agriculture as such futures commission merchant
and sucfi registration shall not have expired nor been suspended
nor revoked; and




186
“ (2) such person shall, whether a member or nonmember of a
contract market, treat and deal with all money, securities, and
property received by such person to margin, guarantee, or secure
the trades or contracts of any customer of such person, or accru­
ing to such customer as the result of such trades or contracts, as
belonging to such customer. Such money, securities, and property
shall be separately accounted for and shall not be commingled
with the funds of such commission merchant or be used to margin
or guarantee the trades or contracts, or to secure or extend the
credit, of any customer or person other than the one for whom
the same are held: Provided, however, That such money, securi­
ties, and property of the customers of such futures commission
merchant may, ior convenience, be commingled and deposited
in the same account or accounts with any bank or trust company
or with the clearing house organization of such contract market,
and that such share thereof as in the normal course of business
shall be necessary to margin, guarantee, secure, transfer, adjust,
or settle the contracts or trades of such customers, or resulting
market positions with the clearing-house organization of such
contract market or with any member of such contract market,
may be withdrawn and applied to such purposes, including the
payment of commissions, brokerage, interest, taxes, storage, and
other charges lawfully accruing in connection with such con­
tracts and trades: Provided further, That such money may be
invested in obligations of the United States, in general obliga­
tions of any State or of any political subdivision thereof, in
obligations fully guaranteed as to principal and interest by the
United States, and in ‘investment securities5 as defined in and
under authority of section 5136 of the Revised Statutes, as
amended, and, subject to approval by the Secretary of Agricul­
ture, may be loaned on the security of negotiable warehouse
receipts conveying or securing title to readily marketable commod­
ities to the extent of the current loan value of such receipts, such
investments and loans to be made in accordance with such rules
and regulations and subject to such conditions as the Secretary of
Agriculture may prescribe.
“ S e c . ^ o . I t sh a ll be u n la w fu l f o r a n y p e rso n to act as flo o r
b ro k e r in e xe c u tin g a n y o rd e rs f o r th e p u rch ase o r sale o f a n y
c o m m o d ity f o r fu tu re d e liv e ry , o r i n v o lv in g a n y contra cts o f sale
o f a n y c o m m o d ity f o r fu tu re d e liv e ry , on o r subject to the ru le s o f
a n y c o n tra ct m a rk e t unless such p e rso n sh a ll h a ve re g iste re d , u n d e r
th is A c t , writh the S e c re ta ry o f A g r ic u lt u r e as such flo o r b ro k e r
a n d such re g is tra tio n s h a ll n o t h a ve e x p ire d n o r been suspended
n o r re vo k e d .
^ “ S e c . 4f. (1) Any person desiring to register as futures commis­
sion merchant or as floor broker hereunder shall be registered upon
application to the Secretary of Agriculture, which application shall
be made in form and manner to be prescribed by the Secretary of
Agriculture, giving such information and facts as the Secretary of
Agriculture may deem necessary concerning the business in which the
applicant is or will be engaged, including, in the case of applications
of futures commission merchants, the names and addresses of the
managers of all branch offices and of all correspondents and agents




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engaged in soliciting or accepting on behalf of such applicant any
orders for the purchase or sale of any commodity for future delivery
on or subject to the rules of any board of trade, and including also
the names of its officers and partners, if a partnership, and of its
officers, directors, and stockholders, as the Secretary of Agriculture
may direct, if a corporation. Such person, when registered here­
under, shall likewise continue to report and furnish to the Secretary
of Agriculture the above-mentioned information and such other infor­
mation p e rta in in g to his business as the Secretary of Agriculture may
require. All registrations shall expire on the 31st day of December
of the year for which issued, and shall be renewed upon application
therefor unless the registration has been suspended (and the period
of such suspension has not expired) or revoked after notice and
hearing as prescribed in section 4g of this Act.
“ (2) Any person registered as futures commission merchant
hereunder shall post in a conspicuous place in each of the offices
maintained by such person in the United States in which orders for
the purchase or sale of any commodity for future delivery are solic­
ited or accepted, the original or duplicate copy (issued by the Secre­
tary of Agriculture) of such person’s registration certificate as such
futures commission merchant.
^ “ S e c . 4g. I f any person registered hereunder as futures commis­
sion merchant or floor broker shall violate any of the provisions of
this Act, or any of the rules or regulations of the Secretary of
Agriculture thereunder, or shall fail or refuse to make any report
required by the Secretary of Agriculture regarding the transactions
of such person, or the transactions of the customers thereof, in com­
modities for future delivery on any board of trade in the United
States or elsewhere, or shall fail or refuse to keep the books and
records pertaining to such transactions in the form and manner
required by the Secretary of Agriculture, or shall fail or refuse to
keep such books and records open to inspection by any representative
of the United States Department of Agriculture or the United States
Department of Justice, the registration of such person may be sus­
pended or revoked after notice and hearing in accordance with the
procedure and subject to the judicial review provided in paragraph
(b) of section 6 of this Act.
“ S e c . 4h. It shall be unlawful for any person—
“ (1) to conduct any office or place of business anywhere in the
United States or its territories for the purpose of soliciting or
accepting any orders for the purchase or sale of any commodity
for future delivery, or for making or offering to make any con­
tracts for the purchase or sale of any commodity for future
delivery, or for conducting any dealings in commodities for
future delivery, that are or may be used for
(A) hedging any transaction in interstate commerce in such
commodity or the products or byproducts thereof, or
(B) determining the price basis of any such transaction in
interstate commerce, or
(C) delivering any such commodity sold, shipped, or received
in interstate commerce for the fulfillment thereof,
if such orders, contracts, or dealings are executed or consummated
otherwise than by or through a member of a contract market; or




188
“ (2) falsely to represent such person to be a member of a
contract market, or the representative or agent of such member,
or to be a futures commission merchant registered under this
Act, or the agent of such registered futures commission merchant,
in soliciting or handling any order or contract for the purchase
or sale of any commodity in interstate commerce or for future
delivery, or falsely to represent in connection with the handling
of any such order or contract that the same is to be or has been
executed on, or by or through any member of, any contract market.
“ S ec . 4i. It shall be unlawful for any person to make any contract
for the purchase or sale of any commodity for future delivery on
or subject to the rules of any contract market unless such person
shall report or cause to be reported to the properly designated officer
in accordance with the rules and regulations of the Secretary of
Agriculture (1) whenever such person shall directly or indirectly
make such contracts with respect to any commodity, or any future of
such commodity, during any one day in an amount equal to or in
excess of such amount as shall be fixed from time to time by the
Secretar}7 of Agriculture; and (2) whenever such person shall
directly or indirectly have or obtain a long or short position in any
commodity or in any future of such commodity, equal to or in excess
of such amount as shall be fixed from time to time by the Secretary
of Agriculture. Such person shall also keep books and records of
transactions coming within the provisions of (1) and (2) hereof,
which books and records shall show complete details concerning all
such transactions, including the names and addresses of all persons
having any interest therein, and shall be open at all times to inspec­
tion by any representative of the United States Department of
Agriculture or tne United States Department of Justice.”
^ S ec . G. Section 5 of the Grain Futures Act (U. S. C., 1934 ed.,
title 7, sec. 7) is amended by—
(a) striking out the word “purpose.” at the end of paragraph (a)
and inserting in lieu thereof the following: “purpose: Provided,
That any board of trade not so located shall be designated as a
‘contract market’ if such board of trade provides for the delivery
of commodities on such contracts at a delivery point or points and
upon terms and conditions approved by the Secretary of Agri­
culture.” : and
(b) strikinfi^out the word “or” after the word “prices” in para­
graph (d) and inserting in lieu thereof the word “and”.
S ec . 7. The Grain Futures Act is amended b y adding after section
5 (U. 8. C , 1934 ed., title 7, sec. 7) the following new sections:
“ S ec . 5a. Each contract market shall—
“ (1) promptly furnish the Secretary of Agriculture copies of
all bylaws, rules, regulations, and resolutions made or issued by
it or by the governing board thereof or any committee, and of all
changes and proposed changes therein;
“ (2) allow inspection at all times by any authorized represent­
ative of the United States Department of Agriculture or United
States Department of Justice of the books, records, and all minutes
and journals of proceedings of such contract market, its governing
board and all committees, and of all subsidiaries and affiliates of
such contract market, 'which books, records3 minutes, and journals




189
of proceedings shall be kept for a period of three years from the
date thereof, or for a longer period if the Secretary of Agriculture
shall so direct;
“ (3) require the operators of warehouses in which or out of
which any commodity is deliverable on any contract for future
delivery made on or subject to the rules of such contract market, to
make such reports* keep such records, and permit such warehouse
visitation as the Secretary of Agriculture may prescribe. Such
books and records shall 6e required to be kept for a period of
three years from the date thereof, or for a longer period if the
Secretary of Agriculture shall so direct, and such books, records,
and warehouses shall be open at all times to inspection by any
representative of the United States Department of Agriculture or
United States Department of Justice;
“ (4) when so directed by order of the Secretary of Agricul­
ture, provide for a period, after trading in contracts of sale of
any commodity for future delivery in a delivery month has ceased,
during which contracts of sale of such commodity for future
delivery in such month may be satisfied by the delivery of the
actual cash commodity. Whenever, after due notice and oppor­
tunity for hearing, the Secretary of Agriculture finds that pro­
vision for such a period of delivery for any one or more commodi­
ties or markets would prevent or tend to prevent ‘squeezes’ and
market congestion endangering price stability, he shall, by order,
require such period of delivery (which shall be not less than
three nor more than ten business days) applicable to such com­
modities and markets as he finds will prevent or tend to prevent
such ‘squeezes’ and market congestion: Provided, however, That
such order shall not apply to then existing contracts;
“ (5) require the party making delivery of any commodity on
any contract of sale of sruch commodity for future delivery to
furnish the party obligated under the contract to accept delivery,
written notice of the date of delivery at least one business day
prior to such date of delivery* Whenever, after due notice and
opportunity for hearing, the Secretary of Agriculture finds that
the giving of longer notice of delivery is necessary to prevent
or diminish unfair practices in trading in any one or more com­
modities or markets, he shall by order require such longer notice
of delivery (which shall be not more than ten business days)
applicable to such commodities and markets as he finds will
revent or diminish such unfair practices: Provided, however,
'hat such order shall not apply to then existing contracts^
a (6) require that all contracts of sale of any commodity for
future delivery on such contract market shall provide for the
delivery thereunder of commodities of grades conforming to
United States standards, if such standards shall have been offi­
cially promulgated; and
“ (7) require that receipts issued under the United States Ware­
house Act (U. S. C., 1934 ed., title 7, secs. 241-273) shall be
accepted in satisfaction of any futures contract, made on or sub­
ject to the rules of such contract market, without discrimination
and notwithstanding that the warehouseman issuing such receipts
is not also licensed as a- warehouseman under the laws of any

P




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State or enjoys other or different privileges than under State law:
Provided however, That such receipts shall be for the kind,
quality, and quantity of commodity specified in such contract and
that the warehouse in which the commodity is stored meets such
reasonable requirements as may be imposed by such contract
market on other warehouses as to location, accessibility, and suit­
ability for warehousing and delivery purposes.
“ S ec/ 5b. The failure or refusal of any board of trade to comply
with any of the provisions of this Act, or any of the rules and
regulations of the Secretary of Agriculture thereunder, shall be
cause for suspending for a period not to exceed six months or revok­
ing the designation of such board of trade as a Contract market’
in accordance with the procedure and subject to the judicial review
provided in paragraph (a) of section 6 of this Act.”
S ec. 8* Section 6 of the Grain Futures Act (TJ. S. C., 1934 ed., title
7, secs. 8,9.10. and 15) is amended by—
(a) striking out the first sentence of paragraph (b) and inserting
in lieu thereof the following: “If the Secretary of Agriculture has
reason to believe that any person (other than a contract market)
is violating or has violated any of the provisions of this Act, or
any of the rules and regulations made pursuant to its requirements,
or has manipulated or is attempting to manipulate the market price
of any commodity, in interstate commerce, or for future delivery
on or subject to the rules of any board of trade, he may serve
upon such person a complaint stating his charges in that respect,
to which complaint shall be attached or contained therein a notice
of hearing, specifying a day and place not less than three days after
the service thereof, requiring such person to show cause why an
order should not be made directing that all contract markets until
further notice of the Secretary of Agriculture refuse all trading
privileges to such person, and to show cause why the registration
of such person, if registered as futures commission merchant or as
floor broker hereunder, should not be suspended or revoked.” ;
(b) striking out the words “said commission” after the words
“before the” in the second sentence of paragraph (b) and inserting
in lieu thereof “ Secretary of Agriculture” ;
(c) striking out the word “ who” in the second sentence of para­
graph (b) and inserting in lieu thereof “which referee” ;
(d) striking out the words “as chairman of the said commission”
in the second sentence of paragraph (b) after the words “to the
Secretary of Agriculture” ;
(e) striking out the words and numerals “of section 12” after the
word “penalties,” in the third sentence of paragraph (b) ;
(f) inserting, after the word “amended” in the third sentence of
paragraph (b) the following: “and supplemented (U. S. C., 1934 ed.,
title 49, secs. 12, 4G, 47, and 48)
(g) striking out the word “or” after the word “commission,” in
the third sente nce of paragraph (b) and inserting in lieu thereof
the word “and” ;
(h) striking out the fourth sentence of paragraph (b) and insert­
ing in lieu thereof the following: “Upon evidence received, the Secre­
tary of Agriculture may require all contract markets to refuse such
person aU trading privileges thereon for such period as may be




191
specified in the order, and, if such person is registered as futures
commission merchant or as floor broker hereunder, may suspend, for
a period not to exceed six months, or revoke, the registration of
such person.” ;
(i)
striking out the word “commission’’ wherever it appears in
the sixth, seventh, and eighth sentences of paragraph (b) and insert­
ing in lieu thereof the words “Secretary of Agriculture” ;
(j ) striking out the words “its chairman or to any member thereof”
after the word “to” in the seventh sentence of paragraph (b) and
inserting in lieu thereof the word “him” ; and
(k) striking out the word “Code” at the end of paragraph (b) and
inserting the following: “Code, as amended”.
S e c . 9. The Grain Futures Act is amended by adding after section
6 (U. S. C., 1934 ed., title 7, secs. 8, 9, 10, and 15) the following new
sections:
“ S e c . 6a. (1) No board of trade wliich has been designated as a
‘contract market’ shall exclude from membership in, and all privileges
on. such board of trade, any association or corporation engaged in
cash commodity business having adequate financial responsibility
which is organized under the cooperative laws of any State, or which
has been recognized as a cooperative association of producers by the
United States Government or by any agency thereof, if such asso­
ciation or corporation complies and agrees to comply with such
terms and conditions as are or may be imposed lawfully upon other
members of such board, and as are or may be imposed lawfully upon
a cooperative association of producers engaged in cash commodity
business, unless such board of trade is authorized by the commission
to exclude such association or coi'poration from membership and
privileges after hearing held upon at least three days’ notice subse­
quent to the filing of complaint by the board of trade: Provided,
however, That if any such association or corporation shall fail to
meet its obligations with any established clearing house or clearing
agency of any contract market, such association or corporation shall
be ipso facto debarred from further trading on such contract market,
except such trading as may be necessary to close open trades and to
discharge existing contracts in accordance with the rules of such
contract market applicable in such cases. Such commission may pre­
scribe that such association or corporation shall have and retain mem­
bership and privileges, with or without imposing conditions, or
it may permit such board of trade immediately to bar such association
or corporation from membership and privileges. Any order of said
commission entered hereunder shall be reviewable by the circuit court
of appeals for the circuit in which such association or corporation,
or such board of trade, has its principal place of business, on written
petition either of such association or corporation, or of such board
of trade, under the procedure provided in paragraph (a) of section 6
of this Act, but such order shall not be stayed by the court pending
review.
“ (2) No rule of any board of trade designated as a contract mar­
ket shall forbid or be construed to forbid the payment of compensa­
tion on a commodity-unit basis, or otherwise, by anj federated coop­
erative association to its regional member-associations for services
rendered or to be rendered in connection with any organization




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work, educational activity, or procurement of patronage, provided
no part of any such compensation is returned to patrons (whether
members or nonmembers) of such cooperative association, or of its
regional or local member-associations, otherwise than as a dividend
on capital stock or as a patronage dividend out of the net earn­
ings or surplus of such federated cooperative association.
“ S e c . Cb. I f any board of trade, or any director, officer, agent,
or employee of any board of trade is violating or has violated any
of the provisions of this Act or any of the rules or regulations of
the Secretary of Agriculture thereunder, or any order issued by the
commission pursuant to any provision of this Act, the commission*
in lieu of revoking the designation of such board of trade as a ‘con­
tract market’ may, upon notice and hearing and subject to appeal as
in other cases provided for in paragraph (a) of section 6 of this
Act, make and enter an order directing that such board of trade,
director, officer, agent, or employee shall cease and desist from such
violation or violations, and if such board of trade, director, officer,
agent, or employee, thereafter and after the lapse of the period
allowed for appeal of such order or after the affirmance of such
order, shall fail or refuse to obey or comply with such order, such
board of trade, director, officer, agent, or employee shall be guilty
of a misdemeanor and, upon conviction thereof, shall be fined not
less than $500 nor more than $10,000 or imprisoned for not less than
six months nor more than one year, or both. Each day during
which such failure or refusal to obey such order continues shall be
deemed a separate offense.”
S e c . 10. The Grain Futures Act is amended by adding after sec­
tion 8 (U. S . C., 1934 ed., title 7, sec. 12) the following new section:
“ S e c . 8a. The Secretary of Agriculture is authorized—
“ (1) to register futures commission merchants and floor brokers
upon application in accordance with rules and regulations and in
form and manner to be prescribed by the Secretary of Agriculture;
and
“ (2) to refuse to register any person if such person has violated
any of the provisions of this Act or any of the rules or regulations
promulgated by the Secretary of Agriculture hereunder for which
the registration of such person has been suspended (and the period
of such suspension shall not have expired) or has been revoked; and
“ (3) to suspend or revoke the registration of any futures commis­
sion merchant who shall knowingly accept any order for the purchase
or sale of any commodity for future delivery on or subject to the
rules of any contract market from any person if such person has
been denied trading privileges on any contract market by order
of the Secretary of Agriculture under the provisions of paragraph
(b) of section 6 of this Act and the period of denial specified in such
order shall not have expired; and
“ (4) to fix and estabUsh from time to time fees and charges for
registrations and renewals thereof and for copies of registration
certificates, not to exceed $10 for each such registration, renewal,
or copy; and
“ (5) to make and promulgate such rules and regulations as, in
the judgment of the Secretary of Agriculture, are reasonably neces­
sary to effectuate any of the provisions or to accomplish any of the
purposes of this A ct; and




193
“ (6) to communicate to the proper committee or officer of any
contract market and to publish, notwithstanding the provisions of
section 8 of this Act, the full facts concerning any transaction or
market operation, including the names of parties thereto, which in
the judgment of the Secrtary1 of Agriculture disrupts or tends to
disrupt any market or is otherwise harmful or against the best
interests of producers and consumers.”
S e c . 11. Section 9 of the Grain Futures Act (U. S. C., 1934 ed.,
title 7, sec. 13) is amended by:
(a)
striking out the word “section” and the numeral “4” and
inserting in lieu thereof the following: “section 4, section 4a, section
4b, section 4c, section 4d, section 4e, section 4h, or section 4i” ;
(b)
inserting after the comma following the word “Act” the
following: “or who shall manipulate or attempt to manipulate the
price of any commodity in interstate commerce, or for future delivery
on or subject to the rules of any board of trade, or who shall corner
or attempt to corner any such commodity,” ;
(c) striking out the words “said section” after the words “men­
tioned in” and inserting in lieu thereof the words “section 4 of this
Act” ; and
(d) inserting after the word “deliver” the words “ or cause to be
delivered”*
Sec. 12. I f any provision of this Act which is amendatory of any
section of the Gram Futures Act, or the application thereof to any
person or circumstances is held invalid, the provisions of the section
of the Grain Futures Act which is amended by such provision of this
Act shall apply to such person or circumstances. No proceeding shall
be abated by reason of any amendment to the Grain Futures Act
made by this Act but shall be disposed of pursuant to this Act.
Sec. 13. All provisions of this Act authorizing the registration of
futures commission merchants and floor brokers, the fixing of fees
and charges therefor, the promulgation of rules, regulations, and
orders, and the holding of hearings precedent to the promulgation of
rules, regulations, and orders shall be effective immediately. All
other provisions of this Act shall take effect ninety days after the
enactment of this Act.
Approved, June 15, 1936.
1 So In original.