Wallace v. Cutten

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Wallace v. Cutten (1936) was about how the Grain Futures Act could be used to punish traders. The key question was whether Section 6(b) of the Act could be used to punish past violations or only to stop ongoing violations.

Background: The Secretary of Agriculture charged Arthur W. Cutten on April 11, 1934, saying he didn’t report his net futures position and had helped hide it. After a hearing, Cutten was barred from trading for two years. The Seventh Circuit later set aside that ruling, and the government took the case to the Supreme Court.

Ruling: The Supreme Court said Section 6(b) can only be used to suspend or stop ongoing violations, not to punish violations that had already ended by the time of the hearing. The government had argued for retroactive use because investigations were ongoing, but the Court rejected that view and applied 6(b) strictly.

Consequences: The Court did not address other possible remedies under the Act, and the Seventh Circuit’s prior decision was affirmed.