Trading for Others in Commodity Futures

Excerpts from the Introduction: Trading in commodity futures for others is carried on by means of controlled accounts. For the purpose of this study, a controlled account is defined as an account with a futures commission merchant, for which an individual or interest other than the owner of all or a major part of the funds employed, has the right to make purchases or sales of commodity futures. The most common instrument used to create a controlled account is a power of attorney, executed by the customer of a commission merchant and authorizing some other person to give orders for the customer. During the past 2 years the Commodity Exchange Administration has received numerous complaints relating to controlled accounts. Misrepresentation, fraud, violations of the rules and regulations of commodity exchanges, and violations of the Commodity Exchange Act have been among the charges made. The increasing number of complaints of this nature led the Commodity Exchange Administration to make a general investigation of the use of controlled accounts in commodity trading. The information in this report concerning the profitability of trading is limited, for the most part, to the year 1937. A study based on a longer period might give more conclusive evidence, but the rising prices of the first few months of 1937 followed by sharp declines later in the year permit an analysis of trading under widely varying conditions. In a few cases profit and loss figures covering other years are available. They indicate that, in general, the results were similar to those which obtained in 1937. To present the information gathered in the investigation it has been necessary to refer to specific instances. In such cases letters have been used to designate individuals, but a different letter has been used to designate the same person in the different sections of the report