[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] ======================================================================= ----------------------------------------------------------------------- COMMODITY FUTURES TRADING COMMISSION 17 CFR Part 10 Rules of Practice; Final Rules; Correction AGENCY: Commodity Futures Trading Commission. ACTION: Final Rules; technical corrections. ----------------------------------------------------------------------- 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 [[Page 30904]] 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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