[Federal Register: June 9, 1999 (Volume 64, Number 110)]
[Rules and Regulations]
[Page 30902-30904]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09jn99-11]
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COMMODITY FUTURES TRADING COMMISSION
17 CFR Part 10
Rules of Practice; Final Rules; Correction
AGENCY: Commodity Futures Trading Commission.
ACTION: Final Rules; technical corrections.
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SUMMARY: On October 19, 1998, the Commodity Futures Trading Commission
(``Commission'') published in the Federal Register (63 FR 55784) final
regulations amending its Rules of Practice (``Rules''), 17 CFR Part 10
(1998), which governs most adjudicatory proceedings brought under the
Commodity Exchange Act, as amended (``Act''), other than reparations
proceedings. Included in the amended Rules was a new Appendix A, which
sets out Commission policy relating to the acceptance of settlements
from defendants or respondents in Commission enforcement proceedings,
specifically, that the Commission will not enter into a settlement if
the defendant or respondent wishes to continue to deny the allegations
in the complaint. The Commission has determined to make certain
technical changes to Appendix A to clarify two points: the Commission
will not enter into a settlement if the defendant or respondent wishes
to continue to deny the findings of fact and conclusions of law
contained in an order settling the matter; and Commission settlement
agreements do not affect a defendant's or respondent's subsequent
testimonial obligations in any proceeding. In addition, the Commission
has made several technical corrections or publication errors in the
final Rules.
EFFECTIVE DATE: The effective date is June 9, 1999.
FOR FURTHER INFORMATION CONTACT: Stephen Mihans, Office of Chief
Counsel, Division of Enforcement, at (202) 418-5399, Commodity Futures
Trading Commission, Three Lafayette Centre, 1155 21st Street, N.W.,
Washington, D.C. 20581.
SUPPLEMENTARY INFORMATION: On October 19, 1998, the Commission
published its final amended Rules of Practice. This was the first major
revision of the Rules in over 20 years. Appendix A was added to the
Rules to set out the Commission's policy relating to the acceptance of
settlements in Commission enforcement proceedings, specifically, that
the Commission will not enter into a settlement if the defendant or
respondent wishes to continue to deny the allegations in the complaint.
The proposed changes to Appendix A are intended to clarify two points
related to this policy. First, in its current form, Appendix A requires
an agreement from defendants and respondents as a condition of
settlement that they will not deny the allegations in a complaint, but
does not address directly a respondent's or defendant's ability to deny
the findings of fact or conclusions of law in settlement order entered
by the Commission or a court. The proposed changed make clear that
settling defendants and respondents cannot continue to deny either the
allegations in the complaint or the
[[Page 30903]]
findings of fact or conclusions of law in a settlement order that is
entered by the Commission or a court.
Second, the proposed changes to Appendix A clarify that Commission
settlement agreements do not affect defendants' or respondents'
testimonial obligations in proceedings to which the Commission is a
party or in any other proceeding. In its current form, Appendix A
effectively requires an agreement by a settling respondent or defendant
not to give testimony in a Commission proceeding that would tend to
deny any allegation in the complaint or create an impression that the
complaint lacks a factual basis. This restriction has the potential to
conflict with the legal obligation of a respondent or defendant to
testify truthfully. Accordingly, the Commission is making technical
changes to Appendix A to clarify that a Commission settlement agreement
does not affect a settling respondent's or defendant's subsequent
testimonial obligations in any proceeding in which the Commission is a
party or in any other proceeding. This change will not affect the
Commission's ability to protect against respondents or defendants
making later statements that are inconsistent with statements upon
which the Commission relies in entering into a settlement. In such
circumstances, the Commission can condition the settlement upon the
truthfulness of such statements and can vitiate the settlement in the
event that the respondent or defendant subsequently provides testimony
that is inconsistent with the statements. Moreover, the Commission will
continue to prohibit settling respondents and defendants from taking
legal positions in proceedings to which the Commission is a party that
would tend to deny the allegations in the complaint or the findings of
fact and conclusions of law in the settlement order or would tend to
create the impression that the complaint or order is without a factual
basis.
Because Appendix A constitutes a statement of agency policy, the
Commission finds that there is no need to provide the public with an
opportunity to submit comments before implementing the above changes. 5
U.S.C. 553(b)(A). For the same reason the Commission has determined to
make the changes to Appendix A effective immediately upon publication.
5 U.S.C. 553(b)(2). All of the remaining changes to the Rules correct
publication errors. Accordingly, the Commission also finds good cause
to make these corrections effective immediately upon publication in the
Federal Register. 5 U.S.C. 553(b)(B), 553(d)(3).
In consideration of the foregoing, the Commission corrects Chapter
I of Title 17 of the Code of Federal Regulations as follows:
List of Subjects in 17 CFR Part 10
Administrative practice and procedure, Commodity futures.
PART 10--RULES OF PRACTICE
1. The authority citation for Part 10 continues to read as follows:
Authority: Pub. L. 93-463, sec. 101(a)(11), 88 Stat. 1391; 7
U.S.C. 4a(j), unless otherwise noted.
2. Section 10.1 is amended by revising paragraph (d) to read as
follows:
Sec. 10.1 Scope and applicability of rules of practice.
* * * * *
(d) The assessment of civil penalties pursuant to sections 6(c) and
6b of the Act, 7 U.S.C. 9 and 15 and 13a;
* * * * *
3. Section 10.68 is amended by revising the second sentence in
paragraph (a)(2) to read as follows:
Sec. 10.68 Subpoenas.
(a) * * *
(2 Application for subpoena duces tecum. * * * All requests for the
issuance of a subpoena duces tecum shall be submitted in duplicate and
in writing and shall be served upon all other parties to the
proceeding, unless the request is made on the record at the hearing or
the requesting party can demonstrate why, in the interest of fairness
or justice, the requirement of a written submission or service on one
or more of the other parties is not appropriate. * * *
* * * * *
4. Section 10.92 is amended by revising paragraph (b)(1) to read as
follows:
Sec. 10.92 Shortened procedure.
* * * * *
(b) Filing of Statements--(1) Opening statement. Within 20 days
after receipt of notice that the shortened procedure will be used, the
Division of Enforcement shall serve upon all other parties and file
with the Proceedings Clerk, in triplicate, an opening statement, in
support of the complaint;
* * * * *
5. Section 10.101 is amended by revising paragraph (a)(5)(iii) to
read as follows:
Sec. 10.101 Interlocutory appeals.
* * * * *
(a) Scope of review. * * *
(5) * * *
(iii) Subsequent reversal of the ruling would cause unnecessary
delay or expense to the parties.
* * * * *
6. Section 10.102 is amended by revising the fifth sentence in
paragraph (e)(1) to read as follows:
Sec. 10.102 Review of initial decisions.
* * * * *
(e) Appendix to briefs--(1) Designation of contents of appendix. *
* * In designating parts of the record for inclusion in the appendix,
the principal parts of the record relied upon should be designated, but
the parties shall have regard to the fact that the entire record is
always available to the Commission for reference and examinations and
shall not engage in unnecessary designation. * * *
* * * * *
7. Section 10.106 is amended by revising the last sentence in
paragraph (b)(3) to read as follows:
Sec. 10.106 Reconsideration; stay pending judicial review.
* * * * *
(b) Stay pending judicial appeal * * *
(3) Civil monetary penalties and restitution. * * * In the event
the Commission denies the applicant's motion for a stay, the
Proceedings Clerk shall return the surety bond to the applicant.
* * * * *
8. Appendix A to Part 10 is revised to read as follows:
Appendix A to Part 10--Commission Policy Relating to the Acceptance
of Settlements in Administrative and Civil Proceedings
It is the policy of the Commission not to accept any offer of
settlement submitted by any respondent or defendant in an
administrative or civil proceeding, if the settling respondent or
defendant wishes to continue to deny the allegations of the
complaint or the findings of fact or conclusions of law to be made
in the settlement order entered by the Commission or a court. In
accepting a settlement and entering an order finding violations of
the Act and/or regulations promulgated under the Act, the Commission
makes uncontested findings of fact and conclusions of law.
Similarly, in settling a civil proceeding with a defendant the
Commission invites the federal court to make conclusions of law and,
in some instances, findings of fact. The Commission does not believe
it would be appropriate for it to be making or inviting a court to
make such uncontested findings of violations if the party against
whom the findings and conclusions are to be entered is continuing to
deny the alleged misconduct.
The refusal of a settling respondent or defendant to admit the
allegations in a
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Commission-instituted complaint or the findings of fact or
conclusions of law in the settlement order entered by the Commission
or a court shall be treated as a denial, unless the party states
that he or she neither admits nor denies the allegations or the
findings and conclusions. In that event, the proposed offer of
settlement, consent or consent order must include a provision
stating that, by neither admitting nor denying the allegations,
findings or conclusions, the settling respondent or defendant agrees
that neither he or she nor any of his or her agents or employees
under his authority or control shall take any action or make any
public statement denying, directly or indirectly, any allegation in
the complaint or findings or conclusions in the order, or creating,
or tending to create, the impression that the complaint or the order
is without a factual basis; provided, however, that nothing in this
provision shall affect the settling respondent's or defendant's--
i. Testimonial obligation, or
ii. Right to take legal positions in other proceedings to which
the Commission is not a party.
Issued in Washington, DC on June 1, 1999, by the Commission.
Jean A. Webb,
Secretary of the Commission.
[FR Doc. 99-14370 Filed 6-8-99; 8:45 am]
BILLING CODE 6351-01-M
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