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Rules of Practice
and
Rules on Fair Fund and
Disgorgement Plans
U.S. Securities and Exchange Commission
January 2006
Corrected March 2006
COMMISSION RULES OF PRACTICE
TABLE OF CONTENTS
GENERAL RULES
Rule 100.
Scope of the Rules of Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Rule 101.
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Rule 102.
Appearance and Practice Before the Commission . . . . . . . . . . . . . 3
Rule 103.
Construction of Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Rule 104.
Business Hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Rule 110.
Presiding Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Rule 111.
Hearing Officer: Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Rule 112.
Hearing Officer: Disqualification and Withdrawal . . . . . . . . . . 11
Rule 120.
Ex Parte Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Rule 121.
Separation of Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Rule 140.
Commission Orders and Decisions: Signature and
Availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Rule 141.
Orders and Decisions: Service of Orders Instituting
Proceedings and Other Orders and Decisions . . . . . . . . . . . . . . . 13
Rule 150.
Service of Papers by Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Rule 151.
Filing of Papers with the Commission: Procedure . . . . . . . . . . . . 16
Rule 152.
Filing of Papers: Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Rule 153.
Filing of Papers: Signature Requirement and Effect . . . . . . . . . . 19
Rule 154.
Motions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
i
Rule 155.
Default; Motion to Set Aside Default . . . . . . . . . . . . . . . . . . . . . . 20
Rule 160.
Time Computation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Rule 161.
Extensions of Time, Postponements and Adjournments . . . . . . . 21
Rule 180.
Sanctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Rule 190.
Confidential Treatment of Information in Certain Filings . . . . . 25
Rule 191.
Adjudications Not Required to Be Determined on the Record
After Notice and Opportunity for Hearing . . . . . . . . . . . . . . . . . 26
Rule 192.
Rulemaking: Issuance, Amendment and Repeal of Rules of
General Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Rule 193.
Applications by Barred Individuals for Consent to Associate . . 27
INITIATION OF PROCEEDINGS AND PREHEARING RULES
Rule 200.
Initiation of Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Rule 201.
Consolidation and Severance of Proceedings . . . . . . . . . . . . . . . . 32
Rule 202.
Specification of Procedures by Parties in Certain
Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Rule 210.
Parties, Limited Participants and Amici Curiae . . . . . . . . . . . . . 34
Rule 220.
Answer to Allegations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Rule 221.
Prehearing Conference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Rule 222.
Prehearing Submissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Rule 230.
Enforcement and Disciplinary Proceedings: Availability of
Documents for Inspection and Copying . . . . . . . . . . . . . . . . . . . . 41
Rule 231.
Enforcement and Disciplinary Proceedings: Production of
Witness Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ii
Rule 232.
Subpoenas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Rule 233.
Depositions Upon Oral Examination . . . . . . . . . . . . . . . . . . . . . . . 47
Rule 234.
Depositions Upon Written Questions . . . . . . . . . . . . . . . . . . . . . . 48
Rule 235.
Introducing Prior Sworn Statements of Witnesses into
the Record . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Rule 240.
Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Rule 250.
Motion for Summary Disposition . . . . . . . . . . . . . . . . . . . . . . . . . 51
RULES REGARDING HEARINGS
Rule 300.
Hearings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Rule 301.
Hearings to Be Public . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Rule 302.
Record of Hearings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Rule 310.
Failure to Appear at Hearings: Default . . . . . . . . . . . . . . . . . . . . 53
Rule 320.
Evidence: Admissibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Rule 321.
Evidence: Objections and Offers of Proof . . . . . . . . . . . . . . . . . . 54
Rule 322.
Evidence: Confidential Information, Protective Orders . . . . . . 54
Rule 323.
Evidence: Official Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Rule 324.
Evidence: Stipulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Rule 325.
Evidence: Presentation Under Oath or Affirmation . . . . . . . . . . 55
Rule 326.
Evidence: Presentation, Rebuttal and Cross-examination . . . . . 56
Rule 340.
Proposed Findings, Conclusions and Supporting Briefs . . . . . . . 56
iii
Rule 350.
Record in Proceedings Before Hearing Officer; Retention of
Documents; Copies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Rule 351.
Transmittal of Documents to Secretary; Record Index;
Certification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Rule 360.
Initial Decision of Hearing Officer . . . . . . . . . . . . . . . . . . . . . . . . 59
APPEAL TO THE COMMISSION AND COMMISSION REVIEW
Rule 400.
Interlocutory Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Rule 401.
Consideration of Stays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Rule 410.
Appeal of Initial Decisions by Hearing Officers . . . . . . . . . . . . . . 64
Rule 411.
Commission Consideration of Initial Decisions by Hearing
Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Rule 420.
Appeal of Determinations by Self-Regulatory Organizations . . 67
Rule 421.
Commission Consideration of Determinations by
Self-Regulatory Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Rule 430.
Appeal of Actions Made Pursuant to Delegated Authority . . . . . 69
Rule 431.
Commission Consideration of Actions Made Pursuant to
Delegated Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Rule 440.
Appeal of Determinations by the Public Company Accounting
Oversight Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Rule 441.
Commission Consideration of Board Determinations . . . . . . . . . 72
Rule 450.
Briefs Filed with the Commission . . . . . . . . . . . . . . . . . . . . . . . . . 72
Rule 451.
Oral Argument Before the Commission . . . . . . . . . . . . . . . . . . . . 74
Rule 452.
Additional Evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Rule 460.
Record Before the Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
iv
Rule 470.
Reconsideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Rule 490.
Receipt of Petitions for Judicial Review Pursuant to
28 U.S.C. 2112(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
RULES RELATING TO TEMPORARY ORDERS AND SUSPENSIONS
Rule 500.
Expedited Consideration of Proceedings . . . . . . . . . . . . . . . . . . . 77
Rule 510.
Temporary Cease-and-Desist Orders: Application Process . . . . 78
Rule 511.
Temporary Cease-and-Desist Orders: Notice; Procedures for
Hearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Rule 512.
Temporary Cease-and-Desist Orders: Issuance After
Notice and Opportunity for Hearing . . . . . . . . . . . . . . . . . . . . . . . 80
Rule 513.
Temporary Cease-and-Desist Orders: Issuance Without Prior
Notice and Opportunity for Hearing . . . . . . . . . . . . . . . . . . . . . . . 81
Rule 514.
Temporary Cease-and-Desist Orders: Judicial Review;
Duration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Rule 520.
Suspension of Registration of Brokers, Dealers, or Other
Exchange Act-Registered Entities: Application . . . . . . . . . . . . . 82
Rule 521.
Suspension of Registration of Brokers, Dealers, or Other
Exchange Act-Registered Entities: Notice and Opportunity
for Hearing on Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Rule 522.
Suspension of Registration of Brokers, Dealers, or Other
Exchange Act-Registered Entities: Issuance and
Review of Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Rule 524.
Suspension of Registrations: Duration . . . . . . . . . . . . . . . . . . . . . 85
Rule 530.
Initial Decision on Permanent Order: Timing for Submitting
Proposed Findings and Preparation of Decision . . . . . . . . . . . . . 86
v
Rule 531.
Initial Decision on Permanent Order: Effect on Temporary
Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Rule 540.
Appeal and Commission Review of Initial Decision Making a
Temporary Order Permanent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Rule 550.
Summary Suspensions Pursuant to Exchange Act Section
12(k)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
RULES REGARDING DISGORGEMENT AND PENALTY PAYMENTS
Rule 600.
Interest on Sums Disgorged . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Rule 601.
Prompt Payment of Disgorgement, Interest and Penalties . . . . . 88
Rule 630.
Inability to Pay Disgorgement, Interest or Penalties . . . . . . . . . . 89
FORM D-A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
*
Rule 900.
*
*
Informal Procedures and Supplementary Information
Concerning Adjudicatory Proceedings . . . . . . . . . . . . . . . . . . . . 101
FAIR FUND AND DISGORGEMENT PLANS
Rule 1100. Creation of Fair Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Rule 1101. Submission of Plan of Distribution; Contents of Plan . . . . . . . . 104
Rule 1102. Provisions for Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Rule 1103. Notice of Proposed Plan and Opportunity for Comment
by Non-parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Rule 1104. Order Approving, Modifying, or Disapproving
Proposed Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Rule 1105. Administration of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Rule 1106. Right to Challenge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
vi
GENERAL RULES
Rule 100.
(a)
Scope of the Rules of Practice.
Unless provided otherwise, these Rules of Practice govern
proceedings before the Commission under the statutes that it administers.
(b)
These rules do not apply to:
(1)
investigations, except where made specifically applicable by the
Rules Relating to Investigations, part 203 of this rule; or
(2)
actions taken by the duty officer pursuant to delegated authority
under 17 CFR 200.43.
(c)
The Commission, upon its determination that to do so would serve the
interests of justice and not result in prejudice to the parties to the proceeding, may
by order direct, in a particular proceeding, that an alternative procedure shall apply
or that compliance with an otherwise applicable rule is unnecessary.
Rule 101.
(a)
Definitions.
For purposes of these Rules of Practice, unless explicitly stated to the
contrary:
(1)
Commission means the United States Securities and Exchange
Commission, or a panel of Commissioners constituting a quorum of the
Commission, or a single Commissioner acting as duty officer pursuant to 17
CFR 200.43;
(2)
counsel means any attorney representing a party or any other
person representing a party pursuant to Rule 102(b);
(3)
disciplinary proceeding means an action pursuant to Rule
102(e);
(4)
enforcement proceeding means an action, initiated by an order
instituting proceedings, held for the purpose of determining whether or not a
person is about to violate, has violated, has caused a violation of, or has
aided or abetted a violation of any statute or rule administered by the
Commission, or whether to impose a sanction as defined in Section 551(10)
of the Administrative Procedure Act, 5 U.S.C. 551(10);
1
(5)
hearing officer means an administrative law judge, a panel of
Commissioners constituting less than a quorum of the Commission, an
individual Commissioner, or any other person duly authorized to preside at a
hearing;
(6)
interested division means a division or an office assigned
primary responsibility by the Commission to participate in a particular
proceeding;
(7)
order instituting proceedings means an order issued by the
Commission commencing a proceeding or an order issued by the
Commission to hold a hearing;
(8)
party means the interested division, any person named as a
respondent in an order instituting proceedings, any applicant named in the
caption of any order, persons entitled to notice in a stop order proceeding as
set forth in Rule 200(a)(2) or any person seeking Commission review of a
decision;
(9)
proceeding means any agency process initiated:
(i)
by an order instituting proceedings; or
(ii)
by the filing, pursuant to Rule 410, of a petition for
review of an initial decision by a hearing officer; or
(iii)
by the filing, pursuant to Rule 420, of an application for
review of a self-regulatory organization determination; or
(iv)
by the filing, pursuant to Rule 430, of a notice of
intention to file a petition for review of a determination made
pursuant to delegated authority; or
(v)
by the filing, pursuant to Rule 440, of an application for
review of a determination by the Public Company Accounting
Oversight Board; or
(vi)
by the filing, pursuant to 17 CFR 240.11Aa3-1(f),
of an application for review of an action or failure to act in connection
with the implementation or operation of any effective transaction
reporting plan; or
2
(vii)
by the filing, pursuant to 17 CFR 240.11Aa3-2(e),
of an application for review of an action taken or failure to act in
connection with the implementation or operation of any effective
national market system plan; or
(viii) by the filing, pursuant to Section 11A(b)(5) of the
Securities Exchange Act of 1934, of an application for review of a
determination of a registered securities information processor;
(10)
Secretary means the Secretary of the Commission;
(11)
temporary sanction means a temporary cease-and-desist order
or a temporary suspension of the registration of a broker, dealer, municipal
securities dealer, government securities broker, government securities
dealer, or transfer agent pending final determination whether the registration
shall be revoked; and
(12)
Board means the Public Company Accounting Oversight
Board.
(b)
[Reserved]
Rule 102.
Appearance and Practice Before the Commission.
A person shall not be represented before the Commission or a hearing
officer except as stated in paragraphs (a) and (b) of this rule or as otherwise
permitted by the Commission or a hearing officer.
(a)
Representing Oneself. In any proceeding, an individual may appear
on his or her own behalf.
(b)
Representing Others. In any proceeding, a person may be represented
by an attorney at law admitted to practice before the Supreme Court of the United
States or the highest court of any State (as defined in Section 3(a)(16) of the
Exchange Act, 15 U.S.C. 78c(a)(16)); a member of a partnership may represent the
partnership; a bona fide officer of a corporation, trust or association may represent
the corporation, trust or association; and an officer or employee of a state
commission or of a department or political subdivision of a state may represent the
state commission or the department or political subdivision of the state.
3
(c)
Former Commission Employees. Former employees of the
Commission must comply with the restrictions on practice contained in the
Commission's Conduct Regulation, Subpart M, 17 CFR 200.735.
(d)
Designation of Address for Service; Notice of Appearance; Power of
Attorney; Withdrawal.
(1)
Representing Oneself. When an individual first makes any
filing or otherwise appears on his or her own behalf before the Commission
or a hearing officer in a proceeding as defined in Rule 101(a), he or she shall
file with the Commission, or otherwise state on the record, and keep current,
an address at which any notice or other written communication required to
be served upon him or her or furnished to him or her may be sent and a
telephone number where he or she may be reached during business hours.
(2)
Representing Others. When a person first makes any filing or
otherwise appears in a representative capacity before the Commission or a
hearing officer in a proceeding as defined in Rule 101(a), that person shall
file with the Commission, and keep current, a written notice stating the name
of the proceeding; the representative's name, business address and telephone
number; and the name and address of the person or persons represented.
(3)
Power of Attorney. Any individual appearing or practicing
before the Commission in a representative capacity may be required to file a
power of attorney with the Commission showing his or her authority to act
in such capacity.
(4)
Withdrawal. Any person seeking to withdraw his or her
appearance in a representative capacity shall file a notice of withdrawal with
the Commission or the hearing officer. The notice shall state the name,
address, and telephone number of the withdrawing representative; the name,
address, and telephone number of the person for whom the appearance was
made; and the effective date of the withdrawal. If the person seeking to
withdraw knows the name, address, and telephone number of the new
representative, or knows that the person for whom the appearance was made
intends to represent him- or herself, that information shall be included in the
notice. The notice must be served on the parties in accordance with Rule
4
150. The notice shall be filed at least five days before the proposed effective
date of the withdrawal.
(e)
Suspension and Disbarment.
(1)
Generally. The Commission may censure a person or deny,
temporarily or permanently, the privilege of appearing or practicing before it
in any way to any person who is found by the Commission after notice and
opportunity for hearing in the matter:
(i)
not to possess the requisite qualifications to represent
others; or
(ii)
to be lacking in character or integrity or to have engaged
in unethical or improper professional conduct; or
(iii)
to have willfully violated, or willfully aided and abetted
the violation of any provision of the Federal securities laws or the
rules and regulations thereunder.
(iv)
with respect to persons licensed to practice as
accountants, “improper professional conduct” under Rule 102(e)(1)(ii)
means:
(A)
intentional or knowing conduct, including
reckless conduct, that results in a violation of applicable
professional standards; or
(B)
conduct:
either of the following two types of negligent
(1)
a single instance of highly unreasonable
conduct that results in a violation of applicable
professional standards in circumstances in which an
accountant knows, or should know, that heightened
scrutiny is warranted.
(2)
repeated instances of unreasonable conduct,
each resulting in a violation of applicable professional
standards, that indicate a lack of competence to practice
before the Commission .
5
(2)
Certain Professionals and Convicted Persons. Any attorney
who has been suspended or disbarred by a court of the United States or of
any State; or any person whose license to practice as an accountant,
engineer, or other professional or expert has been revoked or suspended in
any State; or any person who has been convicted of a felony or a
misdemeanor involving moral turpitude shall be forthwith suspended from
appearing or practicing before the Commission. A disbarment, suspension,
revocation or conviction within the meaning of this rule shall be deemed to
have occurred when the disbarring, suspending, revoking or convicting
agency or tribunal enters its judgment or order, including a judgment or
order on a plea of nolo contendere, regardless of whether an appeal of such
judgment or order is pending or could be taken.
(3)
Temporary Suspensions. An order of temporary suspension
shall become effective upon service on the respondent. No order of
temporary suspension shall be entered by the Commission pursuant to
paragraph (e)(3)(i) of this rule more than 90 days after the date on which the
final judgment or order entered in a judicial or administrative proceeding
described in paragraph (e)(3)(i)(A) or (e)(3)(i)(B) has become effective,
whether upon completion of review or appeal procedures or because further
review or appeal procedures are no longer available.
(i)
The Commission, with due regard to the public interest
and without preliminary hearing, may, by order, temporarily suspend
from appearing or practicing before it any attorney, accountant,
engineer, or other professional or expert who has been by name:
(A)
permanently enjoined by any court of competent
jurisdiction, by reason of his or her misconduct in an action
brought by the Commission, from violating or aiding and
abetting the violation of any provision of the Federal securities
laws or of the rules and regulations thereunder; or
(B)
found by any court of competent jurisdiction in an
action brought by the Commission to which he or she is a party
or found by the Commission in any administrative proceeding
to which he or she is a party to have violated (unless the
6
violation was found not to have been willful) or aided and
abetted the violation of any provision of the Federal securities
laws or of the rules and regulations thereunder.
(ii)
Any person temporarily suspended from appearing and
practicing before the Commission in accordance with paragraph
(e)(3)(i) of this rule may, within 30 days after service upon him or her
of the order of temporary suspension, petition the Commission to lift
the temporary suspension. If no petition has been received by the
Commission within 30 days after service of the order, the suspension
shall become permanent.
(iii)
Within 30 days after the filing of a petition in accordance
with paragraph (e)(3)(ii) of this rule, the Commission shall either lift
the temporary suspension, or set the matter down for hearing at a time
and place designated by the Commission, or both, and, after
opportunity for hearing, may censure the petitioner or disqualify the
petitioner from appearing or practicing before the Commission for a
period of time or permanently. In every case in which the temporary
suspension has not been lifted, every hearing held and other action
taken pursuant to this paragraph (e)(3) shall be expedited in
accordance with Rule 500. If the hearing is held before a hearing
officer, the time limits set forth in Rule 540 will govern review of the
hearing officer's initial decision.
(iv)
In any hearing held on a petition filed in accordance with
paragraph (e)(3)(ii) of this rule, the staff of the Commission shall
show either that the petitioner has been enjoined as described in
paragraph (e)(3)(i)(A) of this rule or that the petitioner has been found
to have committed or aided and abetted violations as described in
paragraph (e)(3)(i)(B) of this rule and that showing, without more,
may be the basis for censure or disqualification. Once that showing
has been made, the burden shall be upon the petitioner to show cause
why he or she should not be censured or temporarily or permanently
disqualified from appearing and practicing before the Commission. In
any such hearing, the petitioner may not contest any finding made
7
against him or her or fact admitted by him or her in the judicial or
administrative proceeding upon which the proceeding under this
paragraph (e)(3) is predicated. A person who has consented to the
entry of a permanent injunction as described in paragraph (e)(3)(i)(A)
of this rule without admitting the facts set forth in the complaint shall
be presumed for all purposes under this paragraph (e)(3) to have been
enjoined by reason of the misconduct alleged in the complaint.
(4)
Filing of Prior Orders. Any person appearing or practicing
before the Commission who has been the subject of an order, judgment,
decree, or finding as set forth in paragraph (e)(3) of this rule shall promptly
file with the Secretary a copy thereof (together with any related opinion or
statement of the agency or tribunal involved). Failure to file any such paper,
order, judgment, decree or finding shall not impair the operation of any other
provision of this rule.
(5)
Reinstatement.
(i)
An application for reinstatement of a person permanently
suspended or disqualified under paragraph (e)(1) or (e)(3) of this rule
may be made at any time, and the applicant may, in the Commission's
discretion, be afforded a hearing; however, the suspension or
disqualification shall continue unless and until the applicant has been
reinstated by the Commission for good cause shown.
(ii)
Any person suspended under paragraph (e)(2) of this rule
shall be reinstated by the Commission, upon appropriate application,
if all the grounds for application of the provisions of that paragraph
are subsequently removed by a reversal of the conviction or
termination of the suspension, disbarment, or revocation. An
application for reinstatement on any other grounds by any person
suspended under paragraph (e)(2) of this rule may be filed at any time
and the applicant shall be accorded an opportunity for a hearing in the
matter; however, such suspension shall continue unless and until the
applicant has been reinstated by order of the Commission for good
cause shown.
8
(6)
Other Proceedings Not Precluded. A proceeding brought under
paragraph (e)(1), (e)(2) or (e)(3) of this rule shall not preclude another
proceeding brought under these same paragraphs.
(7)
Public Hearings. All hearings held under this paragraph (e)
shall be public unless otherwise ordered by the Commission on its own
motion or after considering the motion of a party.
(f)
Practice Defined. For the purposes of these Rules of Practice,
practicing before the Commission shall include, but shall not be limited to:
(1)
transacting any business with the Commission; and
(2)
the preparation of any statement, opinion or other paper by any
attorney, accountant, engineer or other professional or expert, filed with the
Commission in any registration statement, notification, application, report or
other document with the consent of such attorney, accountant, engineer or
other professional or expert.
Rule 103.
(a)
Construction of Rules.
The Rules of Practice shall be construed and administered to secure
the just, speedy, and inexpensive determination of every proceeding.
(b)
In any particular proceeding, to the extent that there is a conflict
between these rules and a procedural requirement contained in any statute, or any
rule or form adopted thereunder, the latter shall control.
(c)
For purposes of these rules:
(1)
any term in the singular includes the plural, and any term in the
plural includes the singular, if such use would be appropriate;
(2)
any use of a masculine, feminine, or neuter gender encompasses
such other genders as would be appropriate; and
(3)
unless the context requires otherwise, counsel for a party may
take any action required or permitted to be taken by such party.
Rule 104.
Business Hours.
The Headquarters office of the Commission, at 100 F Street, N.E.,
Washington, DC 20549, is open each day, except Saturdays, Sundays, and Federal
legal holidays, from 9 a.m. to 5:30 p.m., Eastern Standard Time or Eastern
9
Daylight Saving Time, whichever is currently in effect in Washington, DC Federal
legal holidays consist of New Year's Day; Birthday of Martin Luther King, Jr.;
Presidents Day; Memorial Day; Independence Day; Labor Day; Columbus Day;
Veterans Day; Thanksgiving Day; Christmas Day; and any other day appointed as
a holiday in Washington, DC by the President or the Congress of the United States.
Rule 110.
Presiding Officer.
All proceedings shall be presided over by the Commission or, if the
Commission so orders, by a hearing officer. When the Commission designates that
the hearing officer shall be an administrative law judge, the Chief Administrative
Law Judge shall select, pursuant to 17 CFR 200.30-10, the administrative law
judge to preside.
Rule 111.
Hearing Officer: Authority.
The hearing officer shall have the authority to do all things necessary and
appropriate to discharge his or her duties. No provision of these Rules of Practice
shall be construed to limit the powers of the hearing officer provided by the
Administrative Procedure Act, 5 U.S.C. 556, 557. The powers of the hearing
officer include, but are not limited to, the following:
(a)
administering oaths and affirmations;
(b)
issuing subpoenas authorized by law and revoking, quashing, or
modifying any such subpoena;
(c)
receiving relevant evidence and ruling upon the admission of evidence
and offers of proof;
(d)
regulating the course of a proceeding and the conduct of the parties
and their counsel;
(e)
holding prehearing and other conferences as set forth in Rule 221 and
requiring the attendance at any such conference of at least one representative of
each party who has authority to negotiate concerning the resolution of issues in
controversy;
(f)
recusing himself or herself upon motion made by a party or upon his
or her own motion;
10
(g)
ordering, in his or her discretion, in a proceeding involving more than
one respondent, that the interested division indicate, on the record, at least one day
prior to the presentation of any evidence, each respondent against whom that
evidence will be offered;
(h)
subject to any limitations set forth elsewhere in these Rules of
Practice, considering and ruling upon all procedural and other motions, including a
motion to correct a manifest error of fact in the initial decision. A motion to
correct is properly filed under this Rule only if the basis for the motion is a patent
misstatement of fact in the initial decision. Any motion to correct must be filed
within ten days of the initial decision. A brief in opposition may be filed within
five days of a motion to correct. The hearing officer shall have 20 days from the
date of filing any brief in opposition filed to rule on a motion to correct;
(i)
preparing an initial decision as provided in Rule 360;
(j)
upon notice to all parties, reopening any hearing prior to the filing of
an initial decision therein, or, if no initial decision is to be filed, prior to the time
fixed for the filing of final briefs with the Commission; and
(k)
informing the parties as to the availability of one or more alternative
means of dispute resolution, and encouraging the use of such methods.
Rule 112.
(a)
Hearing Officer: Disqualification and Withdrawal.
Notice of Disqualification. At any time a hearing officer believes
himself or herself to be disqualified from considering a matter, the hearing officer
shall issue a notice stating that he or she is withdrawing from the matter and setting
forth the reasons therefor.
(b)
Motion for Withdrawal. Any party who has a reasonable, good faith
basis to believe that a hearing officer has a personal bias, or is otherwise
disqualified from hearing a case, may make a motion to the hearing officer that the
hearing officer withdraw. The motion shall be accompanied by an affidavit setting
forth in detail the facts alleged to constitute grounds for disqualification. If the
hearing officer finds himself or herself not disqualified, he or she shall so rule and
shall continue to preside over the proceeding.
11
Rule 120.
(a)
Ex Parte Communications.
Except to the extent required for the disposition of ex parte matters as
authorized by law, the person presiding over an evidentiary hearing may not:
(1) consult a person or party on a fact in issue, unless on notice and
opportunity for all parties to participate; or
(2) be responsible to or subject to the supervision or direction of an
employee or agent engaged in the performance of investigative or
prosecuting functions for the Commission.
(b)
The Commission's code of behavior regarding ex parte
communications between persons outside the Commission and decisional
employees, 17 CFR 200.110 - 200.114, governs other prohibited communications
during a proceeding conducted under the Rules of Practice.
Rule 121.
Separation of Functions.
Any Commission officer, employee or agent engaged in the performance of
investigative or prosecutorial functions for the Commission in a proceeding as
defined in Rule 101(a) may not, in that proceeding or one that is factually related,
participate or advise in the decision, or in Commission review of the decision
pursuant to Section 557 of the Administrative Procedure Act, 5 U.S.C. 557, except
as a witness or counsel in the proceeding.
Rule 140.
(a)
Commission Orders and Decisions: Signature and Availability.
Signature Required. All orders and decisions of the Commission shall
be signed by the Secretary or any other person duly authorized by the Commission.
(b)
Availability for Inspection. Each order and decision shall be available
for inspection by the public from the date of entry, unless the order or decision is
nonpublic. A nonpublic order or decision shall be available for inspection by any
person entitled to inspect it from the date of entry.
(c)
Date of Entry of Orders. The date of entry of a Commission order
shall be the date the order is signed. Such date shall be reflected in the caption of
the order, or if there is no caption, in the order itself.
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Rule 141.
Orders and Decisions: Service of Orders Instituting Proceedings
and Other Orders and Decisions.
(a)
Service of an Order Instituting Proceedings.
(1)
By Whom Made. The Secretary, or another duly authorized
officer of the Commission, shall serve a copy of an order instituting
proceedings on each person named in the order as a party. The Secretary
may direct an interested division to assist in making service.
(2)
How Made.
(i)
To Individuals. Notice of a proceeding shall be made to
an individual by delivering a copy of the order instituting proceedings
to the individual or to an agent authorized by appointment or by law
to receive such notice. Delivery means -- handing a copy of the order
to the individual; or leaving a copy at the individual's office with a
clerk or other person in charge thereof; or leaving a copy at the
individual's dwelling house or usual place of abode with some person
of suitable age and discretion then residing therein; or sending a copy
of the order addressed to the individual by U.S. Postal Service
certified, registered or Express Mail and obtaining a confirmation of
receipt; or giving confirmed telegraphic notice.
(ii)
To Corporations or Entities. Notice of a proceeding
shall be made to a person other than a natural person by delivering a
copy of the order instituting proceedings to an officer, managing or
general agent, or any other agent authorized by appointment or law to
receive such notice, by any method specified in paragraph (a)(2)(i) of
this rule, or, in the case of an issuer of a class of securities registered
with the Commission, by sending a copy of the order addressed to the
most recent address shown on the entity’s most recent filing with the
Commission by U.S. Postal Service certified, registered, or Express
Mail and obtaining a confirmation of attempted delivery.
(iii)
Upon Persons Registered with the Commission. In
addition to any other method of service specified in paragraph (a)(2)
of this rule, notice may be made to a person currently registered with
the Commission as a broker, dealer, municipal securities dealer,
13
government securities broker, government securities dealer,
investment adviser, investment company or transfer agent by sending
a copy of the order addressed to the most recent business address
shown on the person's registration form by U.S. Postal Service
certified, registered or Express Mail and obtaining a confirmation of
attempted delivery.
(iv)
Upon Persons in a Foreign Country. Notice of a
proceeding to a person in a foreign country may be made by any
method specified in paragraph (a)(2) of this rule, or by any other
method reasonably calculated to give notice, provided that the method
of service used is not prohibited by the law of the foreign country.
(v)
In Stop Order Proceedings. Notwithstanding any other
provision of paragraph (a)(2) of this rule, in proceedings pursuant to
Sections 8 or 10 of the Securities Act of 1933, 15 U.S.C. 77h or 77j,
or Sections 305 or 307 of the Trust Indenture Act of 1939, 15 U.S.C.
77eee or 77ggg, notice of the institution of proceedings shall be made
by personal service or confirmed telegraphic notice, or a waiver obtain
pursuant to paragraph (a)(4) of this rule.
(vi)
To Persons Registered with Self-Regulatory
Organizations. Notice of a proceeding shall be made to a person
registered with a self-regulatory organization by any method specified
in paragraph (a)(2)(i) of this rule, or by sending a copy of the order
addressed to the most recent address for the person shown in the
Central Registration Depository by U.S. Postal Service certified,
registered, or Express Mail and obtaining a confirmation of attempted
delivery.
(3)
Record of Service. The Secretary shall maintain a record of
service on parties (in hard copy or computerized format), identifying the
party given notice, the method of service, the date of service, the address to
which service was made, and the person who made service. If service is
made in person, the certificate of service shall state, if available, the name of
the individual to whom the order was given. If service is made by U.S.
Postal Service certified or Express Mail, the Secretary shall maintain the
14
confirmation of receipt or of attempted delivery. If service is made to an
agent authorized by appointment to receive service, the certificate of service
shall be accompanied by evidence of the appointment.
(4)
Waiver of Service. In lieu of service as set forth in paragraph
(a)(2) of this rule, the party may be provided a copy of the order instituting
proceedings by first class mail or other reliable means if a waiver of service
is obtained from the party and placed in the record.
(b)
Service of Orders or Decisions Other than an Order Instituting
Proceedings. Written orders or decisions issued by the Commission or by a
hearing officer shall be served promptly on each party pursuant to any method of
service authorized under paragraph (a) of this rule or Rule 150(c)(1) - (3). Such
orders or decisions may also be served by facsimile transmission if the party to be
served has agreed to accept such service in a writing, signed by the party, and has
provided the Commission with information concerning the facsimile machine
telephone number and hours of facsimile machine operation. Service of orders or
decisions by the Commission, including those entered pursuant to delegated
authority, shall be made by the Secretary or, as authorized by the Secretary, by a
member of an interested division. Service of orders or decisions issued by a
hearing officer shall be made by the Secretary or the hearing officer.
Rule 150.
(a)
Service of Papers by Parties.
When Required. In every proceeding as defined in Rule 101(a), each
paper, including each notice of appearance, written motion, brief, or other written
communication, shall be served upon each party in the proceeding in accordance
with the provisions of this rule; provided, however, that absent an order to the
contrary, no service shall be required for motions which may be heard ex parte.
(b)
Upon a Person Represented by Counsel. Whenever service is
required to be made upon a person represented by counsel who has filed a notice of
appearance pursuant to Rule 102, service shall be made pursuant to paragraph (c)
of this rule upon counsel, unless service upon the person represented is ordered by
the Commission or the hearing officer.
(c)
How Made. Service shall be made by delivering a copy of the filing.
Delivery means:
15
(1)
personal service – handing a copy to the person required to be
served; or leaving a copy at the person's office with a clerk or other person in
charge thereof, or, if there is no one in charge, leaving it in a conspicuous
place therein; or, if the office is closed or the person to be served has no
office, leaving it at the person’s dwelling house or usual place of abode with
some person of suitable age and discretion then residing therein;
(2)
mailing the papers through the U.S. Postal Service by first
class, registered, or certified mail or Express Mail delivery addressed to the
person;
(3)
sending the papers through a commercial courier service or
express delivery service; or
(4)
transmitting the papers by facsimile transmission where the
following conditions are met:
(i)
the persons so serving each other have provided the
Commission and the parties with notice of the facsimile machine
telephone number to be used and the hours of facsimile machine
operation;
(ii)
the transmission is made at such a time that it is received
during the Commission's business hours as defined in Rule 104; and
(iii)
the sender of the transmission previously has not been
served in accordance with Rule 150 with a written notice from the
recipient of the transmission declining service by facsimile
transmission.
(d)
When Service Is Complete. Personal service, service by U.S. Postal
Service Express Mail or service by a commercial courier or express delivery
service is complete upon delivery. Service by mail is complete upon mailing.
Service by facsimile is complete upon confirmation of transmission by delivery of
a manually signed receipt.
Rule 151.
(a)
Filing of Papers with the Commission: Procedure.
When to File. All papers required to be served by a party upon any
person shall be filed contemporaneously with the Commission. Papers required to
be filed with the Commission must be received within the time limit, if any, for
16
such filing. Filing with the Commission may be made by facsimile transmission if
the party also contemporaneously transmits to the Commission a non-facsimile
original with a manual signature. However, any person filing with the Commission
by facsimile transmission will be responsible for assuring that the Commission
receives a complete and legible filing within the time limit set for such filing.
(b)
Where to File. Filing of papers with the Commission shall be made
by filing them with the Secretary. When a proceeding is assigned to a hearing
officer, a person making a filing with the Secretary shall promptly provide to the
hearing officer a copy of any such filing, provided, however, that the hearing
officer may direct or permit filings to be made with him or her, in which event the
hearing officer shall note thereon the filing date and promptly provide the
Secretary with either the original or a copy of any such filings.
(c)
To Whom to Direct the Filing. Unless otherwise provided, where the
Commission has assigned a case to a hearing officer, all motions, objections,
applications or other filings made during a proceeding prior to the filing of an
initial decision therein, or, if no initial decision is to be filed, prior to the time fixed
for the filing of briefs with the Commission, shall be directed to and decided by the
hearing officer.
(d)
Certificate of Service. Papers filed with the Commission or a hearing
officer shall be accompanied by a certificate stating the name of the person or
persons served, the date of service, the method of service and the mailing address
or facsimile telephone number to which service was made, if not made in person.
If the method of service to any party is different from the method of service to any
other party or the method for filing with the Commission, the certificate shall state
why a different means of service was used.
Rule 152.
(a)
Filing of Papers: Form.
Specifications. Papers filed in connection with any proceeding as
defined in Rule 101(a) shall:
(1)
be on one grade of unglazed white paper measuring 8½ x 11
inches, except that, to the extent that the reduction of larger documents
would render them illegible, such documents may be filed on larger paper;
17
(2)
be typewritten or printed in 12-point or larger typeface or
otherwise reproduced by a process that produces permanent and plainly
legible copies;
(3)
include at the head of the paper, or on a title page, the name of
the Commission, the title of the proceeding, the names of the parties, the
subject of the particular paper or pleading, and the file number assigned to
the proceeding;
(4)
be paginated with left hand margins at least 1 inch wide, and
other margins of at least 1 inch;
(5)
be double-spaced, with single-spaced footnotes and single-
spaced indented quotations; and
(6)
be stapled, clipped or otherwise fastened in the upper left
corner.
(b)
Signature Required. All papers must be dated and signed as provided
in Rule 153.
(c)
Suitability for Recordkeeping. Documents which, in the opinion of
the Commission, are not suitable for computer scanning or microfilming may be
rejected.
(d)
Number of Copies. An original and three copies of all papers shall be
filed, unless filing is made by facsimile in accordance with Rule 151. If filing is
made by facsimile, the filer shall also transmit to the Office of the Secretary one
non-facsimile original with a manual signature, contemporaneously with the
facsimile transmission. The non-facsimile original must be accompanied by a
statement of the date on which, and the facsimile number to which, the party made
transmission of the facsimile filing.
(e)
Form of Briefs. All briefs containing more than 10 pages shall
include a table of contents, an alphabetized table of cases, a table of statutes, and a
table of other authorities cited, with references to the pages of the brief wherein
they are cited.
(f)
Scandalous or Impertinent Matter. Any scandalous or impertinent
matter contained in any brief or pleading or in connection with any oral
presentation in a proceeding may be stricken on order of the Commission or the
hearing officer.
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Rule 153.
(a)
Filing of Papers: Signature Requirement and Effect.
General Requirements. Following the issuance of an order instituting
proceedings, every filing of a party represented by counsel shall be signed by at
least one counsel of record in his or her name and shall state that counsel's business
address and telephone number. A party who acts as his or her own counsel shall
sign his or her individual name and state his or her address and telephone number
on every filing.
(b)
Effect of Signature.
(1)
The signature of a counsel or party shall constitute a
certification that:
(i)
the person signing the filing has read the filing;
(ii)
to the best of his or her knowledge, information, and
belief, formed after reasonable inquiry, the filing is well grounded in
fact and is warranted by existing law or a good faith argument for the
extension, modification, or reversal of existing law; and
(iii)
the filing is not made for any improper purpose, such as
to harass or to cause unnecessary delay or needless increase in the cost
of adjudication.
(2)
If a filing is not signed, the hearing officer or the Commission
shall strike the filing, unless it is signed promptly after the omission is called
to the attention of the person making the filing.
Rule 154.
(a)
Motions.
Generally. Unless made during a hearing or conference, a motion
shall be in writing, shall state with particularity the grounds therefor, shall set forth
the relief or order sought, and shall be accompanied by a written brief of the points
and authorities relied upon. All written motions shall be served in accordance with
Rule 150, be filed in accordance with Rule 151, meet the requirements of Rule
152, and be signed in accordance with Rule 153. The Commission or the hearing
officer may order that an oral motion be submitted in writing. Unless otherwise
ordered by the Commission or the hearing officer, if a motion is properly made to
the Commission concerning a proceeding to which a hearing officer is assigned,
the proceeding before the hearing officer shall continue pending the determination
19
of the motion by the Commission. No oral argument shall be heard on any motion
unless the Commission or the hearing officer otherwise directs.
(b)
Opposing and Reply Briefs. Except as provided in Rule 401, briefs in
opposition to a motion shall be filed within five days after service of the motion.
Reply briefs shall be filed within three days after service of the opposition.
(c)
Length Limitation. No motion (together with the brief in support of
the motion), brief in opposition to the motion, or reply brief shall exceed 7,000
words, exclusive of any table of contents or table of authorities. The word limit
shall not apply to any addendum that consists solely of copies of applicable cases,
pertinent legislative provisions or rules, or relevant exhibits. Requests for leave to
file motions and briefs in excess of 7,000 words are disfavored. A motion or brief,
together with any accompanying brief, that does not exceed 15 pages in length,
exclusive of pages containing the table of contents, table of authorities, and any
addendum that consists solely of copies of applicable cases, pertinent legislative
provisions, or rules and exhibits, but inclusive of pleadings incorporated by
reference, is presumptively considered to contain no more than 7,000 words. Any
motion or brief that exceeds these page limits must include a certificate by the
attorney, or an unrepresented party, stating that the document complies with the
length limitation set forth in this paragraph and stating the number of words in the
document. The person preparing the certificate may rely on the word count of a
word-processing program to prepare the document.
Rule 155.
(a)
Default; Motion to Set Aside Default.
A party to a proceeding may be deemed to be in default and the
Commission or the hearing officer may determine the proceeding against that party
upon consideration of the record, including the order instituting proceedings, the
allegations of which may be deemed to be true, if that party fails:
(1)
to appear, in person or through a representative, at a hearing or
conference of which that party has been notified;
(2)
to answer, to respond to a dispositive motion within the time
provided, or otherwise to defend the proceeding; or
(3)
to cure a deficient filing within the time specified by the
Commission or the hearing officer pursuant to Rule 180(b).
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(b)
A motion to set aside a default shall be made within a reasonable time,
state the reasons for the failure to appear or defend, and specify the nature of the
proposed defense in the proceeding. In order to prevent injustice and on such
conditions as may be appropriate, the hearing officer, at any time prior to the filing
of the initial decision, or the Commission, at any time, may for good cause shown
set aside a default.
Rule 160.
(a)
Time Computation.
Computation. In computing any period of time prescribed in or
allowed by these Rules of Practice or by order of the Commission, the day of the
act, event, or default from which the designated period of time begins to run shall
not be included. The last day of the period so computed shall be included unless it
is a Saturday, Sunday, or Federal legal holiday (as defined in Rule 104), in which
event the period runs until the end of the next day that is not a Saturday, Sunday, or
Federal legal holiday. Intermediate Saturdays, Sundays, and Federal legal holidays
shall be excluded from the computation when the period of time prescribed or
allowed is seven days or less, not including any additional time allowed for service
by mail in paragraph (b) of this rule. If on the day a filing is to be made, weather
or other conditions have caused the Secretary's office or other designated filing
location to close, the filing deadline shall be extended to the end of the next day
that is neither a Saturday, a Sunday, nor a Federal legal holiday.
(b)
Additional Time for Service by Mail. If service is made by mail, three
days shall be added to the prescribed period for response unless an order of the
Commission or the hearing officer specifies a date certain for filing. In the event
that an order of the Commission or the hearing officer specifies a date certain for
filing, no time shall be added for service by mail.
Rule 161.
(a)
Extensions of Time, Postponements and Adjournments.
Availability. Except as otherwise provided by law, the Commission,
at any time, or the hearing officer, at any time prior to the filing of his or her initial
decision or, if no initial decision is to be filed, at any time prior to the closing of
the record, may, for good cause shown, extend or shorten any time limits
21
prescribed by these Rules of Practice for the filing of any papers and may,
consistent with paragraphs (b) and (c) of this rule, postpone or adjourn any hearing.
(b)
Considerations in Determining Whether to Extend Time Limits or
Grant Postponements, Adjournments and Extensions.
(1)
In considering all motions or requests pursuant to paragraph (a)
or (b) of this rule, the Commission or the hearing officer should adhere to a
policy of strongly disfavoring such requests, except in circumstances where
the requesting party makes a strong showing that the denial of the request or
motion would substantially prejudice their case. In determining whether to
grant any requests, the Commission or hearing officer shall consider, in
addition to any other relevant factors:
(i)
the length of the proceeding to date;
(ii)
the number of postponements, adjournments or
extensions already granted;
(iii)
the stage of the proceedings at the time of the request;
(iv)
the impact of the request on the hearing officer’s ability
to complete the proceeding in the time specified by the Commission;
and
(v)
(2)
any other such matters as justice may require.
To the extent that the Commission has chosen a timeline under
which the hearing would occur beyond the statutory 60-day deadline, this
policy of strongly disfavoring requests for postponement will not apply to a
request by a respondent to postpone commencement of a cease -and-desist
proceeding hearing beyond the statutory 60-day period.
(c)
(1)
Time Limit. Postponements, adjournments or extensions of
time for filing papers shall not exceed 21 days unless the Commission or the
hearing officer states on the record or sets forth in a written order the reasons
why a longer period of time is necessary.
(2)
Stay Pending Commission Consideration of Offers of
Settlement.
(i)
If the Commission staff and one or more respondents in
the proceeding file a joint motion notifying the hearing officer that
hey have agreed in principle to a settlement on all major terms, then
22
the hearing officer shall stay the proceeding as to the settling
respondent(s), or in the discretion of the hearing officer as to all
respondents, pending completion of Commission consideration of the
settlement offer. Any such stay will be contingent upon:
(A)
the settling respondent(s) submitting to the
Commission staff, within 15 business days of the stay, a signed
offer of settlement in conformance with Rule 240; and
(B)
within 20 business days of receipt of the signed
offer, the staff submitting the settlement offer and
accompanying recommendation to the Commission for
consideration.
(ii)
If the parties fail to meet either of these deadlines or if
the Commission rejects the offer of settlement, the hearing officer
must be promptly notified and, upon notification of the hearing
officer, the stay shall lapse and the proceeding will continue. In the
circumstance where:
(A)
a hearing officer has granted a stay because the
parties have “agreed in principle to a settlement;”
(B)
the agreement in principle does not materialize into
a signed settlement offer within 15 business days of the stay;
and
(C)
the stay lapses, the hearing officer will not be
required to grant another stay related to the settlement process
until both parties have notified the hearing officer in writing
that a signed settlement offer has been prepared, received by the
Commission’s staff, and will be submitted to the Commission.
(iii)
The granting of any stay pursuant to this paragraph (c)
shall not affect any deadline set pursuant to Rule 360.
Rule 180.
(a)
Sanctions.
Contemptuous Conduct.
(1)
Subject to Exclusion or Suspension. Contemptuous conduct by
any person before the Commission or a hearing officer during any
23
proceeding, including any conference, shall be grounds for the Commission
or the hearing officer to:
(i)
exclude that person from such hearing or conference, or
any portion thereof; and/or
(ii)
summarily suspend that person from representing others
in the proceeding in which such conduct occurred for the duration, or
any portion, of the proceeding.
(2)
Review Procedure. A person excluded from a hearing or
conference, or a counsel summarily suspended from practice for the duration
or any portion of a proceeding, may seek review of the exclusion or
suspension by filing with the Commission, within three days of the
exclusion or suspension order, a motion to vacate the order. The
Commission shall consider such motion on an expedited basis as provided in
Rule 500.
(3)
Adjournment. Upon motion by a party represented by counsel
subject to an order of exclusion or suspension, an adjournment shall be
granted to allow the retention of new counsel. In determining the length of
an adjournment, the Commission or hearing officer shall consider, in
addition to the factors set forth in Rule 161, the availability of co-counsel for
the party or of other members of a suspended counsel's firm.
(b)
Deficient Filings; Leave to Cure Deficiencies. The Commission or
the hearing officer may reject, in whole or in part, any filing that fails to comply
with any requirements of these Rules of Practice or of any order issued in the
proceeding in which the filing was made. Any such filings shall not be part of the
record. The Commission or the hearing officer may direct a party to cure any
deficiencies and to resubmit the filing within a fixed time period.
(c)
Failure to Make Required Filing or to Cure Deficient Filing. The
Commission or the hearing officer may enter a default pursuant to Rule 155,
dismiss the case, decide the particular matter at issue against that person, or
prohibit the introduction of evidence or exclude testimony concerning that matter if
a person fails:
24
(1)
to make a filing required under these Rules of Practice; or
(2)
to cure a deficient filing within the time specified by the
Commission or the hearing officer pursuant to paragraph (b) of this rule.
Rule 190.
(a)
Confidential Treatment of Information in Certain Filings.
Application. An application for confidential treatment pursuant to the
provisions of Clause 30 of Schedule A of the Securities Act of 1933, 15 U.S.C.
77aa(30), and Rule 406 thereunder, 17 CFR 230.406; Section 24(b)(2) of the
Securities Exchange Act of 1934, 15 U.S.C. 78x(b)(2), and Rule 24b-2 thereunder,
17 CFR 240.24b-2; Section 22(b) of the Public Utility Holding Company Act of
1935, 15 U.S.C. 79v(b), and Rule 104 thereunder, 17 CFR 250.104; Section 45(a)
of the Investment Company Act of 1940, 15 U.S.C. 80a-44(a), and Rule 45a-1
thereunder, 17 CFR 270.45a-1; or Section 210(a) of the Investment Advisers Act
of 1940, 15 U.S.C. 80b-10(a), shall be filed with the Secretary. The application
shall be accompanied by a sealed copy of the materials as to which confidential
treatment is sought.
(b)
Procedure For Supplying Additional Information. The applicant may
be required to furnish in writing additional information with respect to the grounds
for objection to public disclosure. Failure to supply the information so requested
within 14 days from the date of receipt by the applicant of a notice of the
information required shall be deemed a waiver of the objection to public disclosure
of that portion of the information to which the additional information relates,
unless the Commission or the hearing officer shall otherwise order for good cause
shown at or before the expiration of such 14-day period.
(c)
Confidentiality of Materials Pending Final Decision. Pending the
determination of the application for confidential treatment, transcripts, non-final
orders including an initial decision, if any, and other materials in connection with
the application shall be placed under seal; shall be for the confidential use only of
the hearing officer, the Commission, the applicant, and any other parties and
counsel; and shall be made available to the public only in accordance with orders
of the Commission.
(d)
Public Availability of Orders. Any final order of the Commission
denying or sustaining an application for confidential treatment shall be made
25
public. Any prior findings or opinions relating to an application for confidential
treatment under this rule shall be made public at such time as the material as to
which confidentiality was requested is made public.
Rule 191.
Adjudications Not Required to Be Determined on the Record
After Notice and Opportunity for Hearing.
(a)
Scope of the Rule. This rule applies to every case of adjudication, as
defined in 5 U.S.C. 551, pursuant to any statute which the Commission
administers, where adjudication is not required to be determined on the record after
notice and opportunity for hearing and which the Commission has not chosen to
determine on the record after notice and opportunity for hearing.
(b)
Procedure. In every case of adjudication under paragraph (a) of this
rule, the Commission shall (1) give prompt notice of any adverse action or final
disposition to any person who has requested the Commission to make (or not to
make) any such adjudication, and (2) furnish to any such person a written
statement of reasons therefor. Additional procedures may be specified in rules
relating to specific types of such adjudications. Where any such rule provides for
the publication of a Commission order, notice of the action or disposition shall be
deemed to be given by such publication.
(c)
Contents of the Record. If the Commission provides notice and
opportunity for the submission of written comments by parties to the adjudication
or, as the case may be, by other interested persons, written comments received on
or before the closing date for comments, unless accorded confidential treatment
pursuant to statute or rule of the Commission, become a part of the record of the
adjudication. The Commission, in its discretion, may accept and include in the
record written comments filed with the Commission after the closing date.
Rule 192.
Rulemaking: Issuance, Amendment and Repeal of Rules of
General Application.
(a)
By Petition. Any person desiring the issuance, amendment or repeal
of a rule of general application may file a petition therefor with the Secretary.
Such petition shall include a statement setting forth the text or the substance of any
proposed rule or amendment desired or specifying the rule the repeal of which is
26
desired, and stating the nature of his or her interest and his or her reasons for
seeking the issuance, amendment or repeal of the rule. The Secretary shall
acknowledge, in writing, receipt of the petition and refer it to the appropriate
division or office for consideration and recommendation. Such recommendations
shall be transmitted with the petition to the Commission for such action as the
Commission deems appropriate. The Secretary shall notify the petitioner of the
action taken by the Commission.
(b)
Notice of Proposed Issuance, Amendment or Repeal of Rules. Except
where the Commission finds that notice and public procedure are impracticable,
unnecessary, or contrary to the public interest, whenever the Commission proposes
to issue, amend, or repeal any rule or regulation of general application other than
an interpretive rule; general statement of policy; or rule of agency organization,
procedure, or practice; or any matter relating to agency management or personnel
or to public property, loans, grants, benefits, or contracts, there shall first be
published in the Federal Register a notice of the proposed action. Such notice
shall include:
(1)
a statement of the time, place, and nature of the rulemaking
proceeding, with particular reference to the manner in which interested
persons shall be afforded the opportunity to participate in such proceeding;
(2)
reference to the authority under which the rule is proposed; and
(3)
the terms or substance of the proposed rule or a description of
the subjects and issues involved.
Rule 193.
Applications by Barred Individuals for Consent to Associate.
P RELIMINARY N OTE
This rule governs applications to the Commission by certain persons, barred
by Commission order from association with brokers, dealers, municipal securities
dealers, government securities brokers, government securities dealers, investment
advisers, investment companies or transfer agents, for consent to become so
associated. Applications made pursuant to this rule must show that the proposed
association would be consistent with the public interest. In addition to the
information specifically required by the rule, applications should be supplemented,
where appropriate, by written statements of individuals (other than the applicant)
27
who are competent to attest to the applicant's character, employment performance,
and other relevant information. Intentional misstatements or omissions of fact may
constitute criminal violations of 18 U.S.C. 1001, et seq. and other provisions of
law.
The nature of the supervision that an applicant will receive or exercise as an
associated person with a registered entity is an important matter bearing upon the
public interest. In meeting the burden of showing that the proposed association is
consistent with the public interest, the application and supporting documentation
must demonstrate that the proposed supervision, procedures, or terms and
conditions of employment are reasonably designed to prevent a recurrence of the
conduct that led to imposition of the bar. As an associated person, the applicant
will be limited to association in a specified capacity with a particular registered
entity and may also be subject to specific terms and conditions.
Normally, the applicant's burden of demonstrating that the proposed
association is consistent with the public interest will be difficult to meet where the
applicant is to be supervised by, or is to supervise, another barred individual. In
addition, where an applicant wishes to become the sole proprietor of a registered
entity and thus is seeking Commission consent notwithstanding an absence of
supervision, the applicant's burden will be difficult to meet.
In addition to the factors set forth in paragraph (d) of this rule, the
Commission will consider the nature of the findings that resulted in the bar when
making its determination as to whether the proposed association is consistent with
the public interest. In this regard, attention is directed to Rule 5(e) of the
Commission's Rules on Informal and Other Procedures, 17 CFR 202.5(e). Among
other things, Rule 5(e) sets forth the Commission's policy "not to permit a . . .
respondent [in an administrative proceeding] to consent to . . . [an] order that
imposes a sanction while denying the allegations in the . . . order for proceedings."
Consistent with the rationale underlying that policy, and in order to avoid the
appearance that an application made pursuant to this rule was granted on the basis
of such denial, the Commission will not consider any application that attempts to
reargue or collaterally attack the findings that resulted in the Commission's bar
order.
28
(a)
Scope of Rule. Applications for Commission consent to associate, or
to change the terms and conditions of association, with a registered broker, dealer,
municipal securities dealer, government securities broker, government securities
dealer, investment adviser, investment company or transfer agent may be made
pursuant to this rule where a Commission order bars the individual from
association with a registered entity and:
(1)
such barred individual seeks to become associated with an
entity that is not a member of a self-regulatory organization; or
(2)
the order contains a proviso that application may be made to the
Commission after a specified period of time.
(b)
Form of Application. Each application shall be supported by an
affidavit, manually signed by the applicant, that addresses the factors set forth in
paragraph (d) of this rule. One original and three copies of the application shall be
filed pursuant to Rules 151, 152 and 153. Each application shall include as
exhibits:
(1)
a copy of the Commission order imposing the bar;
(2)
an undertaking by the applicant to notify immediately the
Commission in writing if any information submitted in support of the
application becomes materially false or misleading while the application is
pending;
(3)
the following forms, as appropriate:
(i)
a copy of a completed Form U-4, where the applicant's
proposed association is with a broker-dealer or municipal securities
dealer;
(ii)
a copy of a completed Form MSD-4, where the
applicant's proposed association is with a bank municipal securities
dealer;
(iii)
the information required by Form ADV, 17 CFR 279.1,
with respect to the applicant, where the applicant's proposed
association is with an investment adviser;
(iv)
the information required by Form TA-1, 17 CFR
249b.100, with respect to the applicant, where the applicant's
proposed association is with a transfer agent; and
29
(4)
a written statement by the proposed employer that describes:
(i)
the terms and conditions of employment and supervision
to be exercised over such applicant and, where applicable, by such
applicant;
(ii)
the qualifications, experience, and disciplinary records of
the proposed supervisor(s) of the applicant;
(iii)
the compliance and disciplinary history, during the two
years preceding the filing of the application, of the office in which the
applicant will be employed; and
(iv)
the names of any other associated persons in the same
office who have previously been barred by the Commission, and
whether they are to be supervised by the applicant.
(c)
Required Showing. The applicant shall make a showing satisfactory
to the Commission that the proposed association would be consistent with the
public interest.
(d)
Factors to be Addressed. The affidavit required by paragraph (b) of
this rule shall address each of the following:
(1)
the time period since the imposition of the bar;
(2)
any restitution or similar action taken by the applicant to
recompense any person injured by the misconduct that resulted in the bar;
(3)
the applicant's compliance with the order imposing the bar;
(4)
the applicant's employment during the period subsequent to
imposition of the bar;
(5)
the capacity or position in which the applicant proposes to be
associated;
(6)
the manner and extent of supervision to be exercised over such
applicant and, where applicable, by such applicant;
(7)
any relevant courses, seminars, examinations or other actions
completed by the applicant subsequent to imposition of the bar to prepare for
his or her return to the securities business; and
(8)
(e)
any other information material to the application.
Notification to Applicant and Written Statement. In the event an
adverse recommendation is proposed by the staff with respect to an application
30
made pursuant to this rule, the applicant shall be so advised and provided with a
written statement of the reasons for such recommendation. The applicant shall
then have 30 days to submit a written statement in response.
(f)
Concurrent Applications. The Commission will not consider any
application submitted pursuant to this rule if any other application for consent to
associate concerning the same applicant is pending before any self-regulatory
organization.
INITIATION OF PROCEEDINGS AND PREHEARING RULES
Rule 200.
(a)
Initiation of Proceedings.
Order Instituting Proceedings: Notice and Opportunity For Hearing.
(1)
Generally. Whenever an order instituting proceedings is issued
by the Commission, appropriate notice thereof shall be given to each party to
the proceeding by the Secretary or another duly designated officer of the
Commission. Each party shall be given notice of any hearing within a time
reasonable in light of the circumstances, in advance of the hearing; provided,
however, no prior notice need be given to a respondent if the Commission
has authorized the Division of Enforcement to seek a temporary sanction ex
parte.
(2)
Stop Order Proceedings: Additional Persons Entitled to Notice.
Any notice of a proceeding relating to the issuance of a stop order
suspending the effectiveness of a registration statement pursuant to Section
8(d) of the Securities Act of 1933, 15 U.S.C. 77h(d), shall be sent to or
served on the issuer; or, in the case of a foreign government or political
subdivision thereof, sent to or served on the underwriter; or, in the case of a
foreign or territorial person, sent to or served on its duly authorized
representative in the United States named in the registration statement,
properly directed in the case of telegraphic notice to the address given in
such statement. In addition, if such proceeding is commenced within 90
days after the registration statement has become effective, notice of the
proceeding shall be given to the agent for service named on the facing sheet
of the registration statement and to each other person designated on the
31
facing sheet of the registration statement as a person to whom copies of
communications to such agent are to be sent.
(b)
Content of Order. The order instituting proceedings shall:
(1)
state the nature of any hearing;
(2)
state the legal authority and jurisdiction under which the
hearing is to be held;
(3)
contain a short and plain statement of the matters of fact and
law to be considered and determined, unless the order directs an answer
pursuant to Rule 220 in which case the order shall set forth the factual and
legal basis alleged therefor in such detail as will permit a specific response
thereto; and
(4)
(c)
state the nature of any relief or action sought or taken.
Time and Place of Hearing. The time and place for any hearing shall
be fixed with due regard for the public interest and the convenience and necessity
of the parties, other participants, or their representatives.
(d)
Amendment to Order Instituting Proceedings.
(1)
By the Commission. Upon motion by a party, the Commission
may, at any time, amend an order instituting proceedings to include new
matters of fact or law.
(2)
By the Hearing Officer. Upon motion by a party, the hearing
officer may, at any time prior to the filing of an initial decision or, if no
initial decision is to be filed, prior to the time fixed for the filing of final
briefs with the Commission, amend an order instituting proceedings to
include new matters of fact or law that are within the scope of the original
order instituting proceedings.
(e)
Publication of Notice of Public Hearings. Unless otherwise ordered
by the Commission, notice of any public hearing shall be given general circulation
by release to the public, by publication in the SEC News Digest and, where
directed, by publication in the Federal Register.
Rule 201.
(a)
Consolidation and Severance of Proceedings.
Consolidation. By order of the Commission or a hearing officer,
proceedings involving a common question of law or fact may be consolidated for
32
hearing of any or all the matters at issue in such proceedings. The Commission or
the hearing officer may make such orders concerning the conduct of such
proceedings as it deems appropriate to avoid unnecessary cost or delay.
Consolidation shall not prejudice any rights under these Rules of Practice and shall
not affect the right of any party to raise issues that could have been raised if
consolidation had not occurred. For purposes of this rule, no distinction is made
between joinder and consolidation of proceedings.
(b)
Severance. By order of the Commission, any proceeding may be
severed with respect to one or more parties. Any motion to sever must be made
solely to the Commission and must include a representation that a settlement offer
is pending before the Commission or otherwise show good cause.
Rule 202.
(a)
Specification of Procedures by Parties in Certain Proceedings.
Motion to Specify Procedures. In any proceeding other than an
enforcement or disciplinary proceeding, a proceeding to review a determination by
a self-regulatory organization pursuant to Rules 420 and 421, or a proceeding to
review a determination of the Board pursuant to Rules 440 and 441, a party may, at
any time up to 20 days prior to the start of a hearing, make a motion to specify the
procedures necessary or appropriate for the proceeding with particular reference to:
(1)
whether there should be an initial decision by a hearing officer;
(2)
whether any interested division of the Commission may assist
in the preparation of the Commission’s decision; and
(3)
whether there should be a 30-day waiting period between the
issuance of the Commission’s order and the date it is to become effective.
(b)
Objections; Effect of Failure to Object. Any other party may object to
the procedures so specified, and such party may specify such additional procedures
as it considers necessary or appropriate. In the absence of such objection or such
specification of additional procedures, such other party may be deemed to have
waived objection to the specified procedures.
(c)
Approval Required. Any proposal pursuant to paragraph (a) of this
rule, even if not objected to by any party, shall be subject to the written approval of
the hearing officer.
33
(d)
Procedure upon Agreement to Waive an Initial Decision. If an initial
decision is waived pursuant to paragraph (a) of this rule, the hearing officer shall
notify the Secretary and, unless the Commission directs otherwise within 14 days,
no initial decision shall be issued.
Rule 210.
(a)
Parties, Limited Participants and Amici Curiae.
Parties in an Enforcement or Disciplinary Proceeding, a Proceeding
to Review a Self-Regulatory Organization Determination, or a Proceeding to
Review a Board Determination.
(1)
Generally. No person shall be granted leave to become a party
or a non-party participant on a limited basis in an enforcement or
disciplinary proceeding, a proceeding to review a determination by a selfregulatory organization pursuant to Rules 420 and 421, or a proceeding to
review a determination by the Board pursuant to Rules 440 and 441, except
as authorized by paragraph (c) of this rule.
(2)
Disgorgement Proceedings. In an enforcement proceeding, a
person may state his or her views with respect to a proposed plan of
disgorgement or file a proof of claim pursuant to Rule 1103.
(b)
Intervention as a Party.
(1)
Generally. In any proceeding, other than an enforcement
proceeding, a disciplinary proceeding, a proceeding to review a selfregulatory determination, or a proceeding to review a Board determination,
any person may seek leave to intervene as a party by filing a motion setting
forth the person's interest in the proceeding. No person, however, shall be
admitted as a party to a proceeding by intervention unless it is determined
that leave to participate pursuant to paragraph (c) of this rule would be
inadequate for the protection of the person's interests.
(i)
in a proceeding under the Public Utility Holding
Company Act of 1935, any representative of interested consumers or
security holders, or any other person whose participation in the
proceeding may be in the public interest or for the protection of
investors or consumers, may be admitted as a party upon the filing of
a written motion setting forth the person's interest in the proceeding.
34
(ii)
in a proceeding under the Investment Company Act of
1940, any representative of interested security holders, or any other
person whose participation in the proceeding may be in the public
interest or for the protection of investors, may be admitted as a party
upon the filing of a written motion setting forth the person's interest in
the proceeding.
(2)
Intervention as of Right.
(i)
in proceedings under the Public Utility Holding
Company Act of 1935, any interested representative, agency, authority
or instrumentality of the United States or any interested State, State
commission, municipality or other political subdivision of a state shall
be admitted as a party to any proceeding upon the filing of a written
motion requesting leave to be admitted.
(ii)
in proceedings under the Investment Company Act of
1940, any interested State or State agency shall be admitted as a party
to any proceeding upon the filing of a written motion requesting leave
to be admitted.
(c)
Leave to Participate on a Limited Basis. In any proceeding, other
than an enforcement proceeding, a disciplinary proceeding, a proceeding to review
a self-regulatory determination, or a proceeding to review a Board determination,
any person may seek leave to participate on a limited basis as a non-party
participant as to any matter affecting the person's interests:
(1)
Procedure. Motions for leave to participate shall be in writing,
shall set forth the nature and extent of the movant's interest in the
proceeding, and, except where good cause for late filing is shown, shall be
filed not later than 20 days prior to the date fixed for the commencement of
the hearing. Leave to participate pursuant to this paragraph (c) may include
such rights of a party as the hearing officer may deem appropriate. Persons
granted leave to participate shall be served in accordance with Rule 150;
provided, however, that a party to the proceeding may move that the extent
of notice of filings or other papers to be provided to persons granted leave to
participate be limited, or may move that the persons granted leave to
participate bear the cost of being provided copies of any or all filings or
35
other papers. Persons granted leave to participate shall be bound, except as
may be otherwise determined by the hearing officer, by any stipulation
between the parties to the proceeding with respect to procedure, including
submission of evidence, substitution of exhibits, corrections of the record,
the time within which briefs or exceptions may be filed or proposed findings
and conclusions may be submitted, the filing of initial decisions, the
procedure to be followed in the preparation of decisions and the effective
date of the Commission's order in the case. Where the filing of briefs or
exceptions or the submission of proposed findings and conclusions are
waived by the parties to the proceedings, a person granted leave to
participate pursuant to this paragraph (c) shall not be permitted to file a brief
or exceptions or submit proposed findings and conclusions except by leave
of the Commission or of the hearing officer.
(2)
Certain Persons Entitled to Leave to Participate. The hearing
officer is directed to grant leave to participate under this paragraph (c) to any
person to whom it is proposed to issue any security in exchange for one or
more bona fide outstanding securities, claims or property interests, or partly
in such exchange and partly for cash, where the Commission is authorized to
approve the terms and conditions of such issuance and exchange after a
hearing upon the fairness of such terms and conditions.
(3)
Leave to Participate in Certain Commission Proceedings by a
Representative of the United States Department of Justice, a United States
Attorney's Office, or a Criminal Prosecutorial Authority of any State or any
Other Political Subdivision of a State. The Commission or the hearing
officer may grant leave to participate on a limited basis to an authorized
representative of the United States Department of Justice, an authorized
representative of a United States Attorney, or an authorized representative of
any criminal prosecutorial authority of any State or any other political
subdivision of a State for the purpose of requesting a stay during the
pendency of a criminal investigation or prosecution arising out of the same
or similar facts that are at issue in the pending Commission enforcement or
disciplinary proceeding. Upon a showing that such a stay is in the public
interest or for the protection of investors, the motion for stay shall be
36
favored. A stay granted under this paragraph (c)(3) may be granted for such
a period and upon such conditions as the Commission or the hearing officer
deems appropriate.
(d)
Amicus Participation.
(1)
Availability. An amicus brief may be filed only if:
(i)
a motion for leave to file the brief has been granted;
(ii)
the brief is accompanied by written consent of all parties;
(iii)
the brief is filed at the request of the Commission or the
hearing officer; or
(iv)
the brief is presented by the United States or an officer or
agency thereof, or by a State, Territory or Commonwealth.
(2)
Procedure. An amicus brief may be filed conditionally with the
motion for leave. The motion for leave shall identify the interest of the
movant and shall state the reasons why a brief of an amicus curiae is
desirable. Except as all parties otherwise consent, any amicus curiae shall
file its brief within the time allowed the party whose position the amicus will
support, unless the Commission or hearing officer, for cause shown, grants
leave for a later filing. In the event that a later filing is allowed, the order
granting leave to file shall specify when an opposing party may reply to the
brief. A motion of an amicus curiae to participate in oral argument will be
granted only for extraordinary reasons.
(e)
Permission to State Views. Any person may make a motion seeking
leave to file a memorandum or make an oral statement of his or her views. Any
such communication may be included in the record; provided, however, that unless
offered and admitted as evidence of the truth of the statements therein made, any
assertions of fact submitted pursuant to the provisions of this paragraph (e) will be
considered only to the extent that the statements therein made are otherwise
supported by the record.
(f)
Modification of Participation Provisions. The Commission or the
hearing officer may, by order, modify the provisions of this rule which would
otherwise be applicable, and may impose such terms and conditions on the
participation of any person in any proceeding as it may deem necessary or
appropriate in the public interest.
37
Rule 220.
(a)
Answer to Allegations.
When Required. In its order instituting proceedings, the Commission
may require any party to file an answer to each of the allegations contained therein.
Even if not so ordered, any party in any proceeding may elect to file an answer.
Any other person granted leave by the Commission or the hearing officer to
participate on a limited basis in such proceedings pursuant to Rule 210(c) may be
required to file an answer.
(b)
When to File. Except where a different period is provided by rule or
by order, a party required to file an answer as provided in paragraph (a) of this rule
shall do so within 20 days after service upon the party of the order instituting
proceedings. Persons granted leave to participate on a limited basis in the
proceeding pursuant to Rule 210(c) may file an answer within a reasonable time, as
determined by the Commission or the hearing officer. If the order instituting
proceedings is amended, the Commission or the hearing officer may require that an
amended answer be filed and, if such an answer is required, shall specify a date for
the filing thereof.
(c)
Contents; Effect of Failure to Deny. Unless otherwise directed by the
hearing officer or the Commission, an answer shall specifically admit, deny, or
state that the party does not have, and is unable to obtain, sufficient information to
admit or deny each allegation in the order instituting proceedings. When a party
intends in good faith to deny only a part of an allegation, the party shall specify so
much of it as is true and shall deny only the remainder. A statement of a lack of
information shall have the effect of a denial. A defense of res judicata, statute of
limitations or any other matter constituting an affirmative defense shall be asserted
in the answer. Any allegation not denied shall be deemed admitted.
(d)
Motion for More Definite Statement. A party may file with an answer
a motion for a more definite statement of specified matters of fact or law to be
considered or determined. Such motion shall state the respects in which, and the
reasons why, each such matter of fact or law should be required to be made more
definite. If the motion is granted, the order granting such motion shall set the
periods for filing such a statement and any answer thereto.
38
(e)
Amendments. A party may amend its answer at any time by written
consent of each adverse party or with leave of the Commission or the hearing
officer. Leave shall be freely granted when justice so requires.
(f)
Failure to File Answer: Default. If a party respondent fails to file an
answer required by this rule within the time provided, such person may be deemed
in default pursuant to Rule 155(a). A party may make a motion to set aside a
default pursuant to Rule 155(b).
Rule 221.
(a)
Prehearing Conference.
Purposes of Conference. The purposes of a prehearing conference
include, but are not limited to:
(1)
expediting the disposition of the proceeding;
(2)
establishing early and continuing control of the proceeding by
the hearing officer; and
(3)
improving the quality of the hearing through more thorough
preparation.
(b)
Procedure. On his or her own motion or at the request of a party, the
hearing officer may, in his or her discretion, direct counsel or any party to meet for
an initial, final or other prehearing conference. Such conferences may be held with
or without the hearing officer present as the hearing officer deems appropriate.
Where such a conference is held outside the presence of the hearing officer, the
hearing officer shall be advised promptly by the parties of any agreements reached.
Such conferences also may be held with one or more persons participating by
telephone or other remote means.
(c)
Subjects to be Discussed. At a prehearing conference consideration
may be given and action taken with respect to any and all of the following:
(1)
simplification and clarification of the issues;
(2)
exchange of witness and exhibit lists and copies of exhibits;
(3)
stipulations, admissions of fact, and stipulations concerning the
contents, authenticity, or admissibility into evidence of documents;
(4)
matters of which official notice may be taken;
(5)
the schedule for exchanging prehearing motions or briefs, if
any;
39
(6)
the method of service for papers other than Commission orders;
(7)
summary disposition of any or all issues;
(8)
settlement of any or all issues;
(9)
determination of hearing dates;
(10)
amendments to the order instituting proceedings or answers
thereto;
(11)
production of documents as set forth in Rule 230, and
prehearing production of documents in response to subpoenas duces tecum
as set forth in Rule 232;
(12)
specification of procedures as set forth in Rule 202; and
(13)
such other matters as may aid in the orderly and expeditious
disposition of the proceeding.
(d)
Required Prehearing Conference. Except where the emergency
nature of a proceeding would make a prehearing conference clearly inappropriate,
at least one prehearing conference should be held.
(e)
Prehearing Orders. At or following the conclusion of any conference
held pursuant to this rule, the hearing officer shall enter a ruling or order which
recites the agreements reached and any procedural determinations made by the
hearing officer.
(f)
Failure to Appear: Default. Any person who is named in an order
instituting proceedings as a person against whom findings may be made or
sanctions imposed and who fails to appear, in person or through a representative, at
a prehearing conference of which he or she has been duly notified may be deemed
in default pursuant to Rule 155(a). A party may make a motion to set aside a
default pursuant to Rule 155(b).
Rule 222.
(a)
Prehearing Submissions.
Submissions Generally. The hearing officer, on his or her own
motion, or at the request of a party or other participant, may order any party,
including the interested division, to furnish such information as deemed
appropriate, including any or all of the following:
(1)
an outline or narrative summary of its case or defense;
(2)
the legal theories upon which it will rely;
40
(3)
copies and a list of documents that it intends to introduce at the
hearing; and
(4)
a list of witnesses who will testify on its behalf, including the
witnesses' names, occupations, addresses and a brief summary of their
expected testimony.
(b)
Expert Witnesses. Each party who intends to call an expert witness
shall submit, in addition to the information required by paragraph (a)(4) of this
rule, a statement of the expert's qualifications, a listing of other proceedings in
which the expert has given expert testimony, and a list of publications authored or
co-authored by the expert.
Rule 230.
Enforcement and Disciplinary Proceedings: Availability of
Documents for Inspection and Copying.
For purposes of this rule, the term documents shall include writings,
drawings, graphs, charts, photographs, recordings and other data compilations,
including data stored by computer, from which information can be obtained.
(a)
Documents to be Available for Inspection and Copying.
(1)
Unless otherwise provided by this rule, or by order of the
Commission or the hearing officer, the Division of Enforcement shall make
available for inspection and copying by any party documents obtained by the
Division prior to the institution of proceedings, in connection with the
investigation leading to the Division's recommendation to institute
proceedings. Such documents shall include:
(i)
each subpoena issued;
(ii)
every other written request to persons not employed by
the Commission to provide documents or to be interviewed;
(iii)
the documents turned over in response to any such
subpoenas or other written requests;
(iv)
all transcripts and transcript exhibits;
(v)
any other documents obtained from persons not
employed by the Commission; and
41
(vi)
any final examination or inspection reports prepared by
the Office of Compliance Inspections and Examinations, the Division
of Market Regulation, or the Division of Investment Management, if
the Division of Enforcement intends either to introduce any such
report into evidence or to use any such report to refresh the
recollection of any witness.
(2)
Nothing in this paragraph (a) shall limit the right of the
Division to make available any other document, or shall limit the right of a
respondent to seek access to or production pursuant to subpoena of any other
document, or shall limit the authority of the hearing officer to order the
production of any document pursuant to subpoena.
(b)
Documents that May Be Withheld.
(1)
The Division of Enforcement may withhold a document if:
(i)
the document is privileged;
(ii)
the document is an internal memorandum, note or writing
prepared by a Commission employee, other than an examination or
inspection report as specified in paragraph (a)(1)(vi) of this rule, or is
otherwise attorney work product and will not be offered in evidence;
(iii)
the document would disclose the identity of a
confidential source; or
(iv)
the hearing officer grants leave to withhold a document
or category of documents as not relevant to the subject matter of the
proceeding or otherwise, for good cause shown.
(2)
Nothing in this paragraph (b) authorizes the Division of
Enforcement in connection with an enforcement or disciplinary proceeding
to withhold, contrary to the doctrine of Brady v. Maryland, 373 U.S. 83, 87
(1963), documents that contain material exculpatory evidence.
(c)
Withheld Document List. The hearing officer may require the Division
of Enforcement to submit for review a list of documents or categories of
documents withheld pursuant to paragraphs (b)(1)(i) through (b)(1)(iv) of this rule
or to submit any document withheld, and may determine whether any such
document should be made available for inspection and copying. When similar
documents are withheld pursuant to paragraphs (b)(1)(i) through (b)(1)(iv) of this
42
rule, those documents may be identified by category instead of by individual
document. The hearing officer retains discretion to determine when an
identification by category is insufficient.
(d)
Timing of Inspection and Copying. Unless otherwise ordered by the
Commission or the hearing officer, the Division of Enforcement shall commence
making documents available to a respondent for inspection and copying pursuant
to this rule no later than seven days after service of the order instituting
proceedings. In a proceeding in which a temporary cease-and-desist order is
sought pursuant to Rule 510 or a temporary suspension of registration is sought
pursuant to Rule 520, documents shall be made available no later than the day after
service of the decision as to whether to issue a temporary cease-and-desist order or
temporary suspension order.
(e)
Place of Inspection and Copying. Documents subject to inspection
and copying pursuant to this rule shall be made available to the respondent for
inspection and copying at the Commission office where they are ordinarily
maintained, or at such other place as the parties, in writing, may agree. A
respondent shall not be given custody of the documents or leave to remove the
documents from the Commission's offices pursuant to the requirements of this rule
other than by written agreement of the Division of Enforcement. Such agreement
shall specify the documents subject to the agreement, the date they shall be
returned and such other terms or conditions as are appropriate to provide for the
safekeeping of the documents.
(f)
Copying Costs and Procedures. The respondent may obtain a
photocopy of any documents made available for inspection. The respondent shall
be responsible for the cost of photocopying. Unless otherwise ordered, charges for
copies made by the Division of Enforcement at the request of the respondent will
be at the rate charged pursuant to the fee schedule at 17 CFR 200.80e for copies.
The respondent shall be given access to the documents at the Commission's offices
or such other place as the parties may agree during normal business hours for
copying of documents at the respondent's expense.
(g)
Issuance of Investigatory Subpoenas After Institution of Proceedings.
The Division of Enforcement shall promptly inform the hearing officer and each
party if investigatory subpoenas are issued under the same investigation file
43
number or pursuant to the same order directing private investigation ("formal
order") under which the investigation leading to the institution of proceedings was
conducted. The hearing officer shall order such steps as necessary and appropriate
to assure that the issuance of investigatory subpoenas after the institution of
proceedings is not for the purpose of obtaining evidence relevant to the
proceedings and that any relevant documents that may be obtained through the use
of investigatory subpoenas in a continuing investigation are made available to each
respondent for inspection and copying on a timely basis.
(h)
Failure to Make Documents Available – Harmless Error. In the event
that a document required to be made available to a respondent pursuant to this rule
is not made available by the Division of Enforcement, no rehearing or redecision of
a proceeding already heard or decided shall be required, unless the respondent shall
establish that the failure to make the document available was not harmless error.
Rule 231.
Enforcement and Disciplinary Proceedings: Production of
Witness Statements.
(a)
Availability. Any respondent in an enforcement or disciplinary
proceeding may move that the Division of Enforcement produce for inspection and
copying any statement of any person called or to be called as a witness by the
Division of Enforcement that pertains, or is expected to pertain, to his or her direct
testimony and that would be required to be produced pursuant to the Jencks Act, 18
U.S.C. 3500. For purposes of this rule, statement shall have the meaning set forth
in 18 U.S.C. 3500(e). Such production shall be made at a time and place fixed by
the hearing officer and shall be made available to any party, provided, however,
that the production shall be made under conditions intended to preserve the items
to be inspected or copied.
(b)
Failure to Produce - Harmless Error. In the event that a statement
required to be made available for inspection and copying by a respondent is not
turned over by the Division of Enforcement, no rehearing or redecision of a
proceeding already heard or decided shall be required unless the respondent
establishes that the failure to turn over the statement was not harmless error.
44
Rule 232.
(a)
Subpoenas.
Availability; Procedure. In connection with any hearing ordered by
the Commission, a party may request the issuance of subpoenas requiring the
attendance and testimony of witnesses at the designated time and place of hearing,
and subpoenas requiring the production of documentary or other tangible evidence
returnable at any designated time or place. Unless made on the record at a hearing,
requests for issuance of a subpoena shall be made in writing and served on each
party pursuant to Rule 150. A person whose request for a subpoena has been
denied or modified may not request that any other person issue the subpoena.
(1)
Unavailability of Hearing Officer. In the event that the hearing
officer assigned to a proceeding is unavailable, the party seeking issuance of
the subpoena may seek its issuance from the first available of the following
persons: the Chief Administrative Law Judge, the law judge most senior in
service as a law judge, the duty officer, any other member of the
Commission, or any other person designated by the Commission to issue
subpoenas. Requests for issuance of a subpoena made to the Commission,
or any member thereof, must be submitted to the Secretary, not to an
individual Commissioner.
(2)
Signing May be Delegated. A hearing officer may authorize
issuance of a subpoena, and may delegate the manual signing of the
subpoena to any other person authorized to issue subpoenas.
(b)
Standards for Issuance. Where it appears to the person asked to issue
the subpoena that the subpoena sought may be unreasonable, oppressive, excessive
in scope, or unduly burdensome, he or she may, in his or her discretion, as a
condition precedent to the issuance of the subpoena, require the person seeking the
subpoena to show the general relevance and reasonable scope of the testimony or
other evidence sought. If after consideration of all the circumstances, the person
requested to issue the subpoena determines that the subpoena or any of its terms is
unreasonable, oppressive, excessive in scope, or unduly burdensome, he or she
may refuse to issue the subpoena, or issue it only upon such conditions as fairness
requires. In making the foregoing determination, the person issuing the subpoena
may inquire of the other participants whether they will stipulate to the facts sought
to be proved.
45
(c)
Service. Service shall be made pursuant to the provisions of Rule
150(b) - (d). The provisions of this paragraph (c) shall apply to the issuance of
subpoenas for purposes of investigations, as required by 17 CFR 203.8, as well as
hearings.
(d)
Tender of Fees Required. When a subpoena compelling the
attendance of a person at a hearing or deposition is issued at the instance of anyone
other than an officer or agency of the United States, service is valid only if the
subpoena is accompanied by a tender to the subpoenaed person of the fees for one
day's attendance and mileage specified by paragraph (f) of this rule.
(e)
Application to Quash or Modify.
(1)
Procedure. Any person to whom a subpoena is directed, or
who is an owner, creator or the subject of the documents that are to be
produced pursuant to a subpoena, or any party may, prior to the time
specified therein for compliance, but in no event more than 15 days after the
date of service of such subpoena, request that the subpoena be quashed or
modified. Such request shall be made by application filed with the Secretary
and served on all parties pursuant to Rule 150. The party on whose behalf
the subpoena was issued may, within five days of service of the application,
file an opposition to the application. If a hearing officer has been assigned
to the proceeding, the application to quash shall be directed to that hearing
officer for consideration, even if the subpoena was issued by another person.
(2)
Standards Governing Application to Quash or Modify. If
compliance with the subpoena would be unreasonable, oppressive or unduly
burdensome, the hearing officer or the Commission shall quash or modify
the subpoena, or may order return of the subpoena only upon specified
conditions. These conditions may include but are not limited to a
requirement that the party on whose behalf the subpoena was issued shall
make reasonable compensation to the person to whom the subpoena was
addressed for the cost of copying or transporting evidence to the place for
return of the subpoena.
(f)
Witness Fees and Mileage. Witnesses summoned before the
Commission shall be paid the same fees and mileage that are paid to witnesses in
the courts of the United States, and witnesses whose depositions are taken and the
46
persons taking the same shall severally be entitled to the same fees as are paid for
like services in the courts of the United States. Witness fees and mileage shall be
paid by the party at whose instance the witnesses appear.
Rule 233.
(a)
Depositions Upon Oral Examination.
Procedure. Any party desiring to take the testimony of a witness by
deposition shall make a written motion setting forth the reasons why such
deposition should be taken including the specific reasons why the party believes
the witness will be unable to attend or testify at the hearing; the name and address
of the prospective witness; the matters concerning which the prospective witness is
expected to be questioned; and the proposed time and place for the taking of the
deposition.
(b)
Required Finding When Ordering a Deposition. In the discretion of
the Commission or the hearing officer, an order for a deposition may be issued
upon a finding that the prospective witness will likely give testimony material to
the proceeding; that it is likely the prospective witness, who is then within the
United States, will be unable to attend or testify at the hearing because of age,
sickness, infirmity, imprisonment, other disability, or absence from the United
States, unless it appears that the absence of the witness was procured by the party
requesting the deposition; and that the taking of a deposition will serve the interests
of justice.
(c)
Contents of Order. An order for deposition shall designate by name a
deposition officer. The designated officer may be the hearing officer or any other
person authorized to administer oaths by the laws of the United States or of the
place where the deposition is to be held. An order for deposition also shall state:
(1)
the name of the witness whose deposition is to be taken;
(2)
the scope of the testimony to be taken;
(3)
the time and place of the deposition;
(4)
the manner of recording, preserving and filing the deposition;
(5)
the number of copies, if any, of the deposition and exhibits to
and
be filed upon completion of the deposition.
47
(d)
Procedure at Depositions. A witness whose testimony is taken by
deposition shall be sworn or shall affirm before any questions are put to him or her.
Examination and cross-examination of deponents may proceed as permitted at a
hearing. The witness being deposed may have counsel present during the
deposition.
(e)
Objections to Questions or Evidence. Objections to questions or
evidence shall be in short form, stating the grounds of objection relied upon.
Objections to questions or evidence shall be noted by the deposition officer upon
the deposition, but a deposition officer other than the hearing officer shall not have
the power to decide on the competency, materiality or relevance of evidence.
Failure to object to questions or evidence before the deposition officer shall not be
deemed a waiver unless the ground of the objection is one that might have been
obviated or removed if presented at that time.
(f)
Filing of Depositions. The questions propounded and all answers or
objections shall be recorded or transcribed verbatim, and a transcript prepared by
the deposition officer, or under his or her direction. The transcript shall be
subscribed by the witness and certified by the deposition officer. The original
deposition and exhibits shall be filed with the Secretary. A copy of the deposition
shall be available to the deponent and each party for purchase at prescribed rates.
(g)
Payment. The cost of the transcript shall be paid by the party
requesting the deposition.
Rule 234.
(a)
Depositions Upon Written Questions.
Availability. Depositions may be taken and submitted on written
questions upon motion of any party. The motion shall include the information
specified in Rule 233(a). A decision on the motion shall be governed by the
provisions of Rule 233(b).
(b)
Procedure. Written questions shall be filed with the motion. Within
10 days after service of the motion and written questions, any party may file
objections to such written questions and any party may file cross-questions. When
a deposition is taken pursuant to this rule no persons other than the witness,
counsel to the witness, the deposition officer, and, if the deposition officer does not
act as reporter, a reporter, shall be present at the examination of the witness. No
48
party shall be present or represented unless otherwise permitted by order. The
deposition officer shall propound the questions and cross-questions to the witness
in the order submitted.
(c)
Additional Requirements. The order for deposition, filing of the
deposition, form of the deposition and use of the deposition in the record shall be
governed by paragraphs (c) through (g) of Rule 233, except that no crossexamination shall be made.
Rule 235.
Introducing Prior Sworn Statements of Witnesses into the
Record.
(a)
At a hearing, any person wishing to introduce a prior, sworn statement
of a witness, not a party, otherwise admissible in the proceeding, may make a
motion setting forth the reasons therefor. If only part of a statement is offered in
evidence, the hearing officer may require that all relevant portions of the statement
be introduced. If all of a statement is offered in evidence, the hearing officer may
require that portions not relevant to the proceeding be excluded. A motion to
introduce a prior sworn statement may be granted if:
(1)
the witness is dead;
(2)
the witness is out of the United States, unless it appears that the
absence of the witness was procured by the party offering the prior sworn
statement;
(3)
the witness is unable to attend or testify because of age,
sickness, infirmity, imprisonment or other disability;
(4)
the party offering the prior sworn statement has been unable to
procure the attendance of the witness by subpoena; or,
(5)
in the discretion of the Commission or the hearing officer, it
would be desirable, in the interests of justice, to allow the prior sworn
statement to be used. In making this determination, due regard shall be
given to the presumption that witnesses will testify orally in an open hearing.
If the parties have stipulated to accept a prior sworn statement in lieu of live
testimony, consideration shall also be given to the convenience of the parties
in avoiding unnecessary expense.
(b)
[Reserved]
49
Rule 240.
(a)
Settlement.
Availability. Any person who is notified that a proceeding may or
will be instituted against him or her, or any party to a proceeding already instituted,
may, at any time, propose in writing an offer of settlement.
(b)
Procedure. An offer of settlement shall state that it is made pursuant
to this rule; shall recite or incorporate as a part of the offer the provisions of
paragraphs (c)(4) and (5) of this rule; shall be signed by the person making the
offer, not by counsel; and shall be submitted to the interested division.
(c)
Consideration of Offers of Settlement.
(1)
Offers of settlement shall be considered by the interested
division when time, the nature of the proceedings, and the public interest
permit.
(2)
Where a hearing officer is assigned to a proceeding, the
interested division and the party submitting the offer may request that the
hearing officer express his or her views regarding the appropriateness of the
offer of settlement. A request for the hearing officer to express his or her
views on an offer of settlement or otherwise to participate in a settlement
conference constitutes a waiver by the persons making the request of any
right to claim bias or prejudgment by the hearing officer based on the views
expressed.
(3)
The interested division shall present the offer of settlement to
the Commission with its recommendation, except that, if the division's
recommendation is unfavorable, the offer shall not be presented to the
Commission unless the person making the offer so requests.
(4)
By submitting an offer of settlement, the person making the
offer waives, subject to acceptance of the offer:
(i)
all hearings pursuant to the statutory provisions under
which the proceeding is to be or has been instituted;
(ii)
the filing of proposed findings of fact and conclusions of
(iii)
proceedings before, and an initial decision by, a hearing
law;
officer;
(iv)
all post-hearing procedures; and
50
(v)
(5)
judicial review by any court.
By submitting an offer of settlement the person further waives:
(i)
such provisions of the Rules of Practice or other
requirements of law as may be construed to prevent any member of
the Commission's staff from participating in the preparation of, or
advising the Commission as to, any order, opinion, finding of fact, or
conclusion of law to be entered pursuant to the offer; and
(ii)
any right to claim bias or prejudgment by the
Commission based on the consideration of or discussions concerning
settlement of all or any part of the proceeding.
(6)
If the Commission rejects the offer of settlement, the person
making the offer shall be notified of the Commission's action and the offer
of settlement shall be deemed withdrawn. The rejected offer shall not
constitute a part of the record in any proceeding against the person making
the offer, provided, however, that rejection of an offer of settlement does not
affect the continued validity of waivers pursuant to paragraph (c)(5) of this
rule with respect to any discussions concerning the rejected offer of
settlement.
(7)
Final acceptance of any offer of settlement will occur only upon
the issuance of findings and an order by the Commission.
Rule 250.
(a)
Motion for Summary Disposition.
After a respondent's answer has been filed and, in an enforcement or a
disciplinary proceeding, documents have been made available to that respondent
for inspection and copying pursuant to Rule 230, the respondent, or the interested
division may make a motion for summary disposition of any or all allegations of
the order instituting proceedings with respect to that respondent. If the interested
division has not completed presentation of its case in chief, a motion for summary
disposition shall be made only with leave of the hearing officer. The facts of the
pleadings of the party against whom the motion is made shall be taken as true,
except as modified by stipulations or admissions made by that party, by
uncontested affidavits, or by facts officially noted pursuant to Rule 323.
51
(b)
The hearing officer shall promptly grant or deny the motion for
summary disposition or shall defer decision on the motion. The hearing officer
may grant the motion for summary disposition if there is no genuine issue with
regard to any material fact and the party making the motion is entitled to a
summary disposition as a matter of law. If it appears that a party, for good cause
shown, cannot present by affidavit prior to hearing facts essential to justify
opposition to the motion, the hearing officer shall deny or defer the motion. A
hearing officer's decision to deny leave to file a motion for summary disposition is
not subject to interlocutory appeal.
(c)
The motion for summary disposition, together with any supporting
memorandum of points and authorities (exclusive of any declarations, affidavits, or
attachments), shall not exceed 9,800 words. Requests for leave to file motions and
accompanying documents in excess of 9,800 words are disfavored. A motion that
does not, together with any accompanying memorandum of points and authorities,
exceed 35 pages in length, inclusive of pleadings incorporated by reference (but
excluding any declarations, affidavits, or attachments) is presumptively considered
to contain no more than 9,800 words. Any motion that exceeds these page limits
must include a certificate by the attorney, or an unrepresented party, stating that the
brief complies with the length limitation set forth in this paragraph and stating the
number of words in the motion. The person preparing the certificate may rely on
the word count of a word-processing program to prepare the document.
RULES REGARDING HEARINGS
Rule 300.
Hearings.
Hearings for the purpose of taking evidence shall be held only upon order of
the Commission. All hearings shall be conducted in a fair, impartial, expeditious
and orderly manner.
Rule 301.
Hearings to Be Public.
All hearings, except hearings on applications for confidential treatment filed
pursuant to Rule 190, hearings held to consider a motion for a protective order
pursuant to Rule 322, and hearings on ex parte application for a temporary cease52
and-desist order, shall be public unless otherwise ordered by the Commission on its
own motion or the motion of a party. No hearing shall be nonpublic where all
respondents request that the hearing be made public.
Rule 302.
(a)
Record of Hearings.
Recordation. Unless ordered otherwise by the hearing officer or the
Commission, all hearings shall be recorded and a written transcript thereof shall be
prepared.
(b)
Availability of a Transcript. Transcripts of public hearings shall be
available for purchase at prescribed rates. Transcripts of nonpublic proceedings,
and transcripts subject to a protective order pursuant to Rule 322, shall be available
for purchase only by parties, provided, however, that any person compelled to
submit data or evidence in a hearing may purchase a copy of his or her own
testimony.
(c)
Transcript Correction. Prior to the filing of post-hearing briefs or
proposed findings and conclusions, or within such earlier time as directed by the
Commission or the hearing officer, a party or witness may make a motion to
correct the transcript. Proposed corrections of the transcript may be submitted to
the hearing officer by stipulation pursuant to Rule 324, or by motion. Upon notice
to all parties to the proceeding, the hearing officer may, by order, specify
corrections to the transcript.
Rule 310.
Failure to Appear at Hearings: Default.
Any person named in an order instituting proceedings as a person against
whom findings may be made or sanctions imposed who fails to appear at a hearing
of which he or she has been duly notified may be deemed to be in default pursuant
to Rule 155(a). A party may make a motion to set aside a default pursuant to Rule
155(b).
Rule 320.
Evidence: Admissibility.
The Commission or the hearing officer may receive relevant evidence and
shall exclude all evidence that is irrelevant, immaterial or unduly repetitious.
53
Rule 321.
(a)
Evidence: Objections and Offers of Proof.
Objections. Objections to the admission or exclusion of evidence
must be made on the record and shall be in short form, stating the grounds relied
upon. Exceptions to any ruling thereon by the hearing officer need not be noted at
the time of the ruling. Such exceptions will be deemed waived on appeal to the
Commission, however, unless raised:
(1)
pursuant to interlocutory review in accordance with Rule 400;
(2)
in a proposed finding or conclusion filed pursuant to Rule 340;
(3)
in a petition for Commission review of an initial decision filed
or
in accordance with Rule 410.
(b)
Offers of Proof. Whenever evidence is excluded from the record, the
party offering such evidence may make an offer of proof, which shall be included
in the record. Excluded material shall be retained pursuant to Rule 350(b).
Rule 322.
(a)
Evidence: Confidential Information, Protective Orders.
Procedure. In any proceeding as defined in Rule 101(a), a party; any
person who is the owner, subject or creator of a document subject to subpoena or
which may be introduced as evidence; or any witness who testifies at a hearing
may file a motion requesting a protective order to limit from disclosure to other
parties or to the public documents or testimony that contain confidential
information. The motion should include a general summary or extract of the
documents without revealing confidential details. If the movant seeks a protective
order against disclosure to other parties as well as the public, copies of the
documents shall not be served on other parties. Unless the documents are
unavailable, the movant shall file for in camera inspection a sealed copy of the
documents as to which the order is sought.
(b)
Basis for Issuance. Documents and testimony introduced in a public
hearing are presumed to be public. A motion for a protective order shall be granted
only upon a finding that the harm resulting from disclosure would outweigh the
benefits of disclosure.
(c)
Requests for Additional Information Supporting Confidentiality. A
movant under paragraph (a) of this rule may be required to furnish in writing
54
additional information with respect to the grounds for confidentiality. Failure to
supply the information so requested within five days from the date of receipt by the
movant of a notice of the information required shall be deemed a waiver of the
objection to public disclosure of that portion of the documents to which the
additional information relates, unless the Commission or the hearing officer shall
otherwise order for good cause shown at or before the expiration of such five-day
period.
(d)
Confidentiality of Documents Pending Decision. Pending a
determination of a motion under this rule, the documents as to which confidential
treatment is sought and any other documents that would reveal the confidential
information in those documents shall be maintained under seal and shall be
disclosed only in accordance with orders of the Commission or the hearing officer.
Any order issued in connection with a motion under this rule shall be public unless
the order would disclose information as to which a protective order has been
granted, in which case that portion of the order that would reveal the protected
information shall be nonpublic.
Rule 323.
Evidence: Official Notice.
Official notice may be taken of any material fact which might be judicially
noticed by a district court of the United States, any matter in the public official
records of the Commission, or any matter which is peculiarly within the knowledge
of the Commission as an expert body. If official notice is requested or taken of a
material fact not appearing in the evidence in the record, the parties, upon timely
request, shall be afforded an opportunity to establish the contrary.
Rule 324.
Evidence: Stipulations.
The parties may, by stipulation, at any stage of the proceeding agree upon
any pertinent facts in the proceeding. A stipulation may be received in evidence
and, when received, shall be binding on the parties to the stipulation.
Rule 325.
Evidence: Presentation Under Oath or Affirmation.
A witness at a hearing for the purpose of taking evidence shall testify under
oath or affirmation.
55
Rule 326.
Evidence: Presentation, Rebuttal and Cross-examination.
In any proceeding in which a hearing is required to be conducted on the
record after opportunity for hearing in accord with 5 U.S.C. 556(a), a party is
entitled to present its case or defense by oral or documentary evidence, to submit
rebuttal evidence, and to conduct such cross-examination as, in the discretion of
the Commission or the hearing officer, may be required for a full and true
disclosure of the facts. The scope and form of evidence, rebuttal evidence, if any,
and cross-examination, if any, in any other proceeding shall be determined by the
Commission or the hearing officer in each proceeding.
Rule 340.
(a)
Proposed Findings, Conclusions and Supporting Briefs.
Opportunity to File. Before an initial decision is issued, each party
shall have an opportunity, reasonable in light of all the circumstances, to file in
writing proposed findings and conclusions together with, or as a part of, its brief.
(b)
Procedure. Proposed findings of fact must be supported by citations
to specific portions of the record. If successive filings are directed, the proposed
findings and conclusions of the party assigned to file first shall be set forth in
serially numbered paragraphs, and any counter statement of proposed findings and
conclusions must, in addition to any other matter, indicate those paragraphs of the
proposals already filed as to which there is no dispute. A reply brief may be filed
by the party assigned to file first, or, where simultaneous filings are directed, reply
briefs may be filed by each party, within the period prescribed therefor by the
hearing officer. No further briefs may be filed except with leave of the hearing
officer.
(c)
Time for Filing. In any proceeding in which an initial decision is to
be issued:
(1)
At the end of each hearing, the hearing officer shall, by order,
after consultation with the parties, prescribe the period within which
proposed findings and conclusions and supporting briefs are to be filed. The
party or parties directed to file first shall make its or their initial filing within
30 days of the end of the hearing unless the hearing officer, for good cause
shown, permits a different period and sets forth in the order the reasons why
the different period is necessary.
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(2)
The total period within which all such proposed findings and
conclusions and supporting briefs and any counter statements of proposed
findings and conclusions and reply briefs are to be filed shall be no longer
than 90 days after the close of the hearing unless the hearing officer, for
good cause shown, permits a different period and sets forth in an order the
reasons why the different period is necessary.
Rule 350.
Record in Proceedings Before Hearing Officer; Retention of
Documents; Copies.
(a)
Contents of the Record. The record shall consist of:
(1)
the order instituting proceedings, each notice of hearing and any
amendments;
(2)
each application, motion, submission or other paper, and any
amendments, motions, objections, and exceptions to or regarding them;
(3)
each stipulation, transcript of testimony and document or other
item admitted into evidence;
(4)
each written communication accepted by the hearing officer
pursuant to Rule 210;
(5)
with respect to a request to disqualify a hearing officer or to
allow the hearing officer's withdrawal under Rule 112, each affidavit or
transcript of testimony taken and the decision made in connection with the
request;
(6)
all motions, briefs and other papers filed on interlocutory
appeal;
(7)
all proposed findings and conclusions;
(8)
each written order issued by the hearing officer or Commission;
(9)
any other document or item accepted into the record by the
and
hearing officer.
(b)
Retention of Documents Not Admitted. Any document offered into
evidence but excluded shall not be considered a part of the record. The Secretary
shall retain any such document until the later of the date upon which a Commission
57
order ending the proceeding becomes final, or the conclusion of any judicial
review of the Commission's order.
(c)
Substitution of Copies. A true copy of a document may be substituted
for any document in the record or any document retained pursuant to paragraph (b)
of this rule.
Rule 351.
Transmittal of Documents to Secretary; Record Index;
Certification.
(a)
Transmittal from Hearing Officer to Secretary of Partial Record
Index. The hearing officer may, at any time, transmit to the Secretary motions,
exhibits or any other original documents filed with or accepted into evidence by
the hearing officer, together with a list of such documents.
(b)
Preparation, Certification of Record Index. Promptly after the close
of the hearing, the hearing officer shall transmit to the Secretary an index of the
originals of any motions, exhibits or any other documents filed with or accepted
into evidence by the hearing officer that have not been previously transmitted to
the Secretary, and the Secretary shall prepare a record index. Prior to issuance of
an initial decision, or if no initial decision is to be prepared, within 30 days of the
close of the hearing, the Secretary shall transmit the record index to the hearing
officer and serve a copy of the record index on each party. Any person may file
proposed corrections to the record index with the hearing officer within 15 days of
service of the record index. The hearing officer shall, by order, direct whether any
corrections to the record index shall be made. The Secretary shall make such
corrections, if any, and issue a revised record index. If an initial decision is to be
issued, the initial decision shall include a certification that the record consists of
the items set forth in the record index or revised record index issued by the
Secretary.
(c)
Final Transmittal of Record Items to the Secretary. After the close of
the hearing, the hearing officer shall transmit to the Secretary originals of any
motions, exhibits or any other documents filed with, or accepted into evidence by,
the hearing officer, or any other portions of the record that have not already been
transmitted to the Secretary. Prior to service of the initial decision by the
Secretary, or if no initial decision is to be issued, within 60 days of the close of the
58
hearing, the Secretary shall inform the hearing officer if any portions of the record
are not in the Secretary's custody.
Rule 360.
Initial Decision of Hearing Officer.
(a)(1) When Required. Unless the Commission directs otherwise, the
hearing officer shall prepare an initial decision in any proceeding in which the
Commission directs a hearing officer to preside at a hearing, provided, however,
that an initial decision may be waived by the parties with the consent of the hearing
officer pursuant to Rule 202.
(2)
Time Period for Filing Initial Decision. In the order instituting
proceedings, the Commission will specify a time period in which the hearing
officer's initial decision must be filed with the Secretary. In the Commission's
discretion, after consideration of the nature, complexity, and urgency of the subject
matter, and with due regard for the public interest and the protection of investors,
this time period will be either 120, 210 or 300 days from the date of service of the
order. Under the 300-day timeline, the hearing officer shall issue an order
providing that there shall be approximately 4 months from the order instituting the
proceeding to the hearing, approximately 2 months for the parties to obtain the
transcript and submit briefs, and approximately 4 months after briefing for the
hearing officer to issue an initial decision. Under the 210-day timeline, the
hearing officer shall issue an order providing that there shall be approximately
2-1/2 months from the order instituting the proceeding to the hearing,
approximately 2 months for the parties to review the transcript and submit briefs,
and approximately 2-1/2 months after briefing for the hearing officer to issue an
initial decision. Under the 120-day timeline, the hearing officer shall issue an
order providing that there shall be approximately 1 month from the order
instituting the proceeding to the hearing, approximately 2 months for the parties to
review the transcript and submit briefs, and approximately 1 month after briefing
for the hearing officer to issue an initial decision. These deadlines confer no
substantive rights on respondents. If a stay is granted pursuant to Rule 210(c)(3),
the time period specified in the order instituting proceedings in which the hearing
officer's initial decision must be filed with the Secretary, as well as any other time
59
limits established in orders issued by the hearing officer in the proceeding, shall be
automatically tolled during the period while the stay is in effect.
(3)
Motion for Extension. In the event that the hearing officer presiding
over the proceeding determines that it will not be possible to issue the initial
decision within the specified period of time, the hearing officer should consult with
the Chief Administrative Law Judge. Following such consultation, the Chief
Administrative Law Judge may determine, in his or her discretion, to submit a
motion to the Commission requesting an extension of the time period for filing the
initial decision. This motion must be filed no later than 30 days prior to the
expiration of the time specified in the order for issuance of an initial decision. The
motion will be served upon all parties in the proceeding, who may file with the
Commission statements in support of or in opposition to the motion. If the
Commission determines that additional time is necessary or appropriate in the
public interest, the Commission shall issue an order extending the time period for
filing the initial decision.
(b)
Content. An initial decision shall include: findings and conclusions,
and the reasons or basis therefor, as to all the material issues of fact, law or
discretion presented on the record and the appropriate order, sanction, relief, or
denial thereof. The initial decision shall also state the time period, not to exceed
21 days after service of the decision, except for good cause shown, within which a
petition for review of the initial decision may be filed. The reasons for any
extension of time shall be stated in the initial decision. The initial decision shall
also include a statement that, as provided in paragraph (d) of this rule:
(1)
The Commission will enter an order of finality as to each party
unless a party or an aggrieved person entitled to review timely files a
petition for review of the initial decision or a motion to correct a manifest
error of fact in the initial decision with the hearing officer, or the
Commission determines on its own initiative to review the initial decision;
and
(2)
If a party or an aggrieved person entitled to review timely files a
petition for review or a motion to correct a manifest error of fact in the initial
decision with the hearing officer, or if the Commission takes action to
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review as to a party or an aggrieved person entitled to review, the initial
decision shall not become final as to that party or person.
(c)
Filing, Service and Publication. The hearing officer shall file the
initial decision with the Secretary. The Secretary shall promptly serve the initial
decision upon the parties and shall promptly publish notice of the filing thereof in
the SEC News Digest. Thereafter, the Secretary shall publish the initial decision in
the SEC Docket; provided, however, that in nonpublic proceedings no notice shall
be published unless the Commission otherwise directs.
(d)
Finality.
(1)
If a party or an aggrieved person entitled to review timely files a
petition for review or a motion to correct a manifest error of fact in the
initial decision, or if the Commission on its own initiative orders review of a
decision with respect to a party or a person aggrieved who would be entitled
to review, the initial decision shall not become final as to that party or
person.
(2)
If a party or aggrieved person entitled to review fails to file
timely a petition for review or a motion to correct a manifest error of fact in
the initial decision, and if the Commission does not order review of a
decision on its own initiative, the Commission will issue an order that the
decision has become final as to that party. The decision becomes final upon
issuance of the order. The order of finality shall state the date on which
sanctions, if any, take effect. Notice of the order shall be published in the
SEC Docket and on the SEC Web site.
APPEAL TO THE COMMISSION AND COMMISSION REVIEW
Rule 400.
(a)
Interlocutory Review.
Availability. The Commission may, at any time, on its own motion,
direct that any matter be submitted to it for review. Petitions by parties for
interlocutory review are disfavored, and the Commission ordinarily will grant a
petition to review a hearing officer ruling prior to its consideration of an initial
decision only in extraordinary circumstances. The Commission may decline to
consider a ruling certified by a hearing officer pursuant to paragraph (c) of this rule
61
or the petition of a party who has been denied certification if it determines that
interlocutory review is not warranted or appropriate under the circumstances. This
section is the exclusive remedy for review of a hearing officer's ruling prior to
Commission consideration of the entire proceeding and is the sole mechanism for
appeal of actions delegated pursuant to 17 CFR 200.30-9 and 200.30-10.
(b)
Expedited Consideration. Interlocutory review of a hearing officer's
ruling shall be expedited in every way, consistent with the Commission's other
responsibilities.
(c)
Certification Process. A ruling submitted to the Commission for
interlocutory review must be certified in writing by the hearing officer and shall
specify the material relevant to the ruling involved. The hearing officer shall not
certify a ruling unless:
(1)
his or her ruling would compel testimony of Commission
members, officers or employees or the production of documentary evidence
in their custody; or
(2)
upon application by a party, within five days of the hearing
officer's ruling, the hearing officer is of the opinion that:
(i)
the ruling involves a controlling question of law as to
which there is substantial ground for difference of opinion; and
(ii)
an immediate review of the order may materially advance
the completion of the proceeding.
(d)
Proceedings Not Stayed. The filing of an application for review or the
grant of review shall not stay proceedings before the hearing officer unless he or
she, or the Commission, shall so order. The Commission will not consider the
motion for a stay unless the motion shall have first been made to the hearing
officer.
Rule 401.
(a)
Consideration of Stays.
Procedure. A request for a stay shall be made by written motion, filed
pursuant to Rule 154, and served on all parties pursuant to Rule 150. The motion
shall state the reasons for the relief requested and the facts relied upon, and, if the
facts are subject to dispute, the motion shall be supported by affidavits or other
sworn statements or copies thereof. Portions of the record relevant to the relief
62
sought, if available to the movant, shall be filed with the motion. The Commission
may issue a stay based on such motion or on its own motion.
(b)
Scope of Relief. The Commission may grant a stay in whole or in
part, and may condition relief under this rule upon such terms, or upon the
implementation of such procedures, as it deems appropriate.
(c)
Stay of a Commission Order. A motion for a stay of a Commission
order may be made by any person aggrieved thereby who would be entitled to
review in a federal court of appeals. A motion seeking to stay the effectiveness of
a Commission order pending judicial review may be made to the Commission at
any time during which the Commission retains jurisdiction over the proceeding.
(d)
Stay of an Action by a Self-Regulatory Organization.
(1)
Availability. A motion for a stay of an action by a self-
regulatory organization for which the Commission is the appropriate
regulatory agency, for which action review may be sought pursuant to Rule
420, may be made by any person aggrieved thereby at the time an
application for review is filed in accordance with Rule 420 or thereafter.
(2)
Summary Entry. A stay may be entered summarily, without
notice and opportunity for hearing.
(3)
Expedited Consideration. Where the action complained of has
already taken effect and the motion for stay is filed within 10 days of the
effectiveness of the action, or where the action complained of, will, by its
terms, take effect within five days of the filing of the motion for stay, the
consideration of and decision on the motion for a stay shall be expedited in
every way, consistent with the Commission's other responsibilities. Where
consideration will be expedited, persons opposing the motion for a stay may
file a statement in opposition within two days of service of the motion unless
the Commission, by written order, shall specify a different period.
(e)
Lifting of Stay of Action by the Public Company Accounting Oversight
Board.
(1)
Availability. Any person aggrieved by a stay of action by the
Board entered in accordance with 15 U.S.C. 7215(e) for which review has
been sought pursuant to Rule 440 or which the Commission has taken up on
its motion pursuant to Rule 441 may make a motion to lift the stay. The
63
Commission may, at any time, on its own motion determine whether to lift
the automatic stay.
(2)
Summary Action. The Commission may lift a stay summarily,
without notice and opportunity for hearing.
(3)
Expedited Consideration. The Commission may expedite
consideration of a motion to lift a stay of Board action, consistent with the
Commission's other responsibilities. Where consideration is expedited,
persons opposing the lifting of the stay may file a statement in opposition
within two days of service of the motion requesting lifting of the stay unless
the Commission, by written order, shall specify a different period.
Rule 410.
(a)
Appeal of Initial Decisions by Hearing Officers.
Petition for Review; When Available. In any proceeding in which an
initial decision is made by a hearing officer, any party, and any other person who
would have been entitled to judicial review of the decision entered therein if the
Commission itself had made the decision, may file a petition for review of the
decision with the Commission.
(b)
Procedure. The petition for review of an initial decision shall be filed
with the Commission within such time after service of the initial decision as
prescribed by the hearing officer pursuant to Rule 360(b) unless a party has filed a
motion to correct an initial decision with the hearing officer. If such correction has
been sought, a party shall have 21 days from the date of the hearing officer's order
resolving the motion to correct to file a petition for review. The petition shall set
forth the specific findings and conclusions of the initial decision as to which
exception is taken, together with supporting reasons for each exception.
Supporting reasons may be stated in summary form. Any exception to an initial
decision not stated in the petition for review, or in a previously filed proposed
finding made pursuant to Rule 340 may, at the discretion of the Commission, be
deemed to have been waived by the petitioner. In the event a petition for review is
filed, any other party to the proceeding may file a cross-petition for review within
the original time allowed for seeking review or within ten days from the date that
the petition for review was filed, whichever is later.
(c)
Financial Disclosure Statement Requirement. Any person who files a
petition for review of an initial decision that asserts that person's inability to pay
64
either disgorgement, interest or a penalty shall file with the opening brief a sworn
financial disclosure statement containing the information specified in Rule 630(b).
(d)
[Reserved]
(e)
Prerequisite to Judicial Review. Pursuant to Section 704 of the
Administrative Procedure Act, 5 U.S.C. 704, a petition to the Commission for
review of an initial decision is a prerequisite to the seeking of judicial review of a
final order entered pursuant to such decision.
Rule 411.
Commission Consideration of Initial Decisions by Hearing
Officers.
(a)
Scope of Review. The Commission may affirm, reverse, modify, set
aside or remand for further proceedings, in whole or in part, an initial decision by a
hearing officer and may make any findings or conclusions that in its judgment are
proper and on the basis of the record.
(b)
Standards for Granting Review Pursuant to a Petition for Review.
(1)
Mandatory Review. After a petition for review has been filed,
the Commission shall review any initial decision that:
(i)
denies any request for action pursuant to Section 8(a) or
Section 8(c) of the Securities Act of 1933, 15 U.S.C. 77h(a), (c), or
the first sentence of Section 12(d) of the Exchange Act, 15
U.S.C. 78l(d);
(ii)
suspends trading in a security pursuant to Section 12(k)
of the Exchange Act, 15 U.S.C. 78l(k); or
(iii)
is in a case of adjudication (as defined in 5 U.S.C. 551)
not required to be determined on the record after notice and
opportunity for hearing (except to the extent there is involved a matter
described in 5 U.S.C. 554(a)(1) through (6)).
(2)
Discretionary Review. The Commission may decline to review
any other decision. In determining whether to grant review, the Commission
shall consider whether the petition for review makes a reasonable showing
that:
(i)
a prejudicial error was committed in the conduct of the
proceeding; or
65
(ii)
the decision embodies:
(A)
a finding or conclusion of material fact that is
clearly erroneous; or
(B)
a conclusion of law that is erroneous; or
(C)
an exercise of discretion or decision of law or
policy that is important and that the Commission should review.
(c)
Commission Review Other Than Pursuant to a Petition for Review.
The Commission may, on its own initiative, order review of any initial decision, or
any portion of any initial decision, within 21 days after the end of the period
established for filing a petition for review pursuant to Rule 410(b). A party who
does not intend to file a petition for review, and who desires the Commission's
determination whether to order review on its own initiative to be made in a shorter
time, may make a motion for an expedited decision, accompanied by a written
statement that the party waives its right to file a petition for review. The vote of
one member of the Commission, conveyed to the Secretary, shall be sufficient to
bring a matter before the Commission for review.
(d)
Limitations on Matters Reviewed. Review by the Commission of an
initial decision shall be limited to the issues specified in the petition for review or
the issues, if any, specified in the briefing schedule order issued pursuant to Rule
450(a). On notice to all parties, however, the Commission may, at any time prior
to issuance of its decision, raise and determine any other matters that it deems
material, with opportunity for oral or written argument thereon by the parties.
(e)
Summary Affirmance.
(1)
At any time within 21 days after the filing of a petition for
review pursuant to Rule 410(b), any party may file a motion in accordance
with Rule 154 asking that the Commission summarily affirm an initial
decision. Any party may file an opposition and reply to such motion in
accordance with Rule 154. Pending determination of the motion for
summary affirmance, the Commission, in its discretion, may delay issuance
of a briefing schedule order pursuant to Rule 450.
(2)
Upon consideration of the motion and any opposition or upon
its own initiative, the Commission may summarily affirm an initial decision.
The Commission may grant summary affirmance if it finds that no issue
66
raised in the initial decision warrants consideration by the Commission of
further oral or written argument. The Commission will decline to grant
summary affirmance upon a reasonable showing that a prejudicial error was
committed in the conduct of the proceeding or that the decision embodies an
exercise of discretion or decision of law or policy that is important and that
the Commission should review.
(f)
Failure to Obtain a Majority. In the event a majority of participating
Commissioners do not agree to a disposition on the merits, the initial decision shall
be of no effect, and an order will be issued in accordance with this result.
Rule 420.
(a)
Appeal of Determinations by Self-Regulatory Organizations.
Application for Review; When Available. An application for review
by the Commission may be filed by any person who is aggrieved by a
determination of a self-regulatory organization with respect to any
(i)
final disciplinary sanction;
(ii)
denial or conditioning of membership or participation;
(iii)
prohibition or limitation in respect to access to services offered
by that self-regulatory organization or a member thereof; or
(iv)
bar from association as to which a notice is required to be filed
with the Commission pursuant to Section 19(d)(1) of the Exchange Act, 15
U.S.C. 78s(d)(1).
(b)
Procedure. As required by section 19(d)(1) of the Securities Exchange
Act of 1934, 15 U.S.C. 78s(d)(1), an applicant must file an application for review
with the Commission within 30 days after the notice of the determination is filed
with the Commission and received by the aggrieved person applying for review.
The Commission will not extend this 30-day period, absent a showing of
extraordinary circumstances. This rule is the exclusive remedy for seeking an
extension of the 30-day period.
(c)
Application. The application shall be filed with the Commission
pursuant to Rule 151. The applicant shall serve the application on the
self-regulatory organization. The application shall identify the determination
complained of and set forth in summary form a brief statement of the alleged errors
in the determination and supporting reasons therefor. The application shall state an
67
address where the applicant can be served. The application should not exceed two
pages in length. If the applicant will be represented by a representative, the
application shall be accompanied by the notice of appearance required by Rule
102(d).
(d)
Determination Not Stayed. Filing an application for review with the
Commission pursuant to paragraph (b) of this rule shall not operate as a stay of the
complained of determination made by the self-regulatory organization unless the
Commission otherwise orders either pursuant to a motion filed in accordance with
Rule 401 or on its own motion.
(e)
Certification of the Record; Service of the Index. Fourteen days after
receipt of an application for review or a Commission order for review, the selfregulatory organization shall certify and file with the Commission one copy of the
record upon which the action complained of was taken, and shall file with the
Commission three copies of an index to such record, and shall serve upon each
party one copy of the index.
Rule 421.
Commission Consideration of Determinations by Self-Regulatory
Organizations.
(a)
Commission Review Other than Pursuant to a Petition for Review.
The Commission may, on its own initiative, order review of any determination by a
self-regulatory organization that could be subject to an application for review
pursuant to Rule 420(a) within 40 days after notice thereof was filed with the
Commission pursuant to Section 19(d)(1) of the Exchange Act, 15 U.S.C.
78s(d)(1).
(b)
Supplemental Briefing. The Commission may at any time prior to
issuance of its decision raise or consider any matter that it deems material, whether
or not raised by the parties. Notice to the parties and an opportunity for
supplemental briefing with respect to issues not briefed by the parties shall be
given where the Commission believes that such briefing would significantly aid the
decisional process.
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Rule 430.
(a)
Appeal of Actions Made Pursuant to Delegated Authority.
Scope of Rule. Any person aggrieved by an action made by authority
delegated in 17 CFR 200.30-1 through 200.30-8 or 17 CFR 200.30-11 through
200.30-18 may seek review of the action pursuant to paragraph (b) of this rule.
(b)
Procedure.
(1)
Notice of Intention to Petition for Review. A party to an action
made pursuant to delegated authority, or a person aggrieved by such action,
may seek Commission review of the action by filing a written notice of
intention to petition for review within five days after actual notice of the
action to that party or aggrieved person, or 15 days after publication of the
notice of action in the Federal Register, or five days after service of notice of
the action on that party or aggrieved person pursuant to Rule 141(b),
whichever is the earliest.
(2)
Petition for Review. Within five days after the filing of a notice
of intention to petition for review pursuant to paragraph (b)(1) of this rule,
the person seeking review shall file a petition for review containing a clear
and concise statement of the issues to be reviewed and the reasons why
review is appropriate. The petition shall include exceptions to any findings
of fact or conclusions of law made, together with supporting reasons for
such exceptions based on appropriate citations to such record as may exist.
These reasons may be stated in summary form.
(c)
Prerequisite to Judicial Review. Pursuant to Section 704 of the
Administrative Procedure Act, 5 U.S.C. 704, a petition to the Commission for
review of an action made by authority delegated in 17 CFR 200.30-1 through
200.30-18 is a prerequisite to the seeking of judicial review of a final order entered
pursuant to such an action.
Rule 431.
Commission Consideration of Actions Made Pursuant to
Delegated Authority.
(a)
Scope of Review. The Commission may affirm, reverse, modify, set
aside or remand for further proceedings, in whole or in part, any action made
pursuant to authority delegated in 17 CFR 200.30-1 through 200.30-18.
69
(b)
Standards for Granting Review Pursuant to a Petition for Review.
(1)
Mandatory Review. After a petition for review has been filed,
the Commission shall review any action that it would be required to review
pursuant to Rule 411(b)(1) if the action was made as the initial decision of a
hearing officer.
(2)
Discretionary Review. The Commission may decline to review
any other action. In determining whether to grant review, the Commission
shall consider the factors set forth in Rule 411(b)(2).
(c)
Commission Review Other Than Pursuant to a Petition for Review.
The Commission may, on its own initiative, order review of any action made
pursuant to delegated authority at any time, provided, however, that where there
are one or more parties to the matter, such review shall not be ordered more than
ten days after the action. The vote of one member of the Commission, conveyed to
the Secretary, shall be sufficient to bring a matter before the Commission for
review.
(d)
Required Items in an Order for Review. In an order granting a
petition for review or directing review on the Commission's own initiative, the
Commission shall set forth the time within which any party or other person may
file a statement in support of or in opposition to the action made by delegated
authority and shall state whether a stay shall be granted, if none is in effect, or shall
be continued, if in effect pursuant to paragraph (e) of this rule.
(e)
Automatic Stay of Delegated Action. An action made pursuant to
delegated authority shall have immediate effect and be deemed the action of the
Commission. Upon filing with the Commission of a notice of intention to petition
for review, or upon notice to the Secretary of the vote of a Commissioner that a
matter be reviewed, an action made pursuant to delegated authority shall be stayed
until the Commission orders otherwise, provided, however, there shall be no
automatic stay of an action:
(1)
to grant a stay of action by the Commission or a self-regulatory
organization as authorized by 17 CFR 200.30-14(g)(5) - (6); or
(2)
to commence a subpoena enforcement proceeding as authorized
by 17 CFR 200.30-4(a)(10).
70
(f)
Effectiveness of Stay or of Commission Decision to Modify or Reverse
a Delegated Action. As against any person who shall have acted in reliance upon
any action at a delegated level, any stay or any modification or reversal by the
Commission of such action shall be effective only from the time such person
receives actual notice of such stay, modification or reversal.
Rule 440.
Appeal of Determinations by the Public Company Accounting
Oversight Board.
(a)
Application for Review; When Available. Any person who is
aggrieved by a determination of the Board with respect to a
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