[Federal Register Volume 59, Number 140 (Friday, July 22, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-17880]


[[Page Unknown]]

[Federal Register: July 22, 1994]


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COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 3

 

Ethics Training for Registrants

AGENCY: Commodity Futures Trading Commission.

ACTION: Proposed rules.

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SUMMARY: The Commodity Futures Trading Commission (Commission) is 
proposing amendments to its rule governing ethics training for 
registrants to provide additional guidance relative to ethics training 
providers. The proposed amendments would: allow a person to provide 
ethics training if he certifies to a registered futures association 
that he is not subject to statutory disqualification from registration 
under the Commodity Exchange Act (Act), barred from service on self-
regulatory organization (SRO) governing boards or committees, or 
subject to a pending proceeding or investigation with respect to 
possible violations of the Act or rules or orders promulgated 
thereunder; prohibit certain representations with respect to a person's 
status as an ethics training provider; prohibit an ethics training 
provider from using that fact to qualify as an expert witness in an 
adjudicatory proceeding before the Commission or from proffering 
evidence of that fact to qualify as an expert witness in any 
adjudicatory proceeding to which the Commission is a party; allow wider 
use of ethics training presentation by interactive means and videotape; 
and require ethics training providers to furnish records of attendees 
to a registered futures association upon request.

DATES: Comments must be received by September 20, 1994.

ADDRESSES: Comments should be sent to the Office of the Secretariat, 
Commodity Futures Trading Commission, 2033 K Street NW., Washington, DC 
20581 and should refer to ``Ethics Training for Registrants.''

FOR FURTHER INFORMATION CONTACT: Lawrence B. Patent, Associate Chief 
Counsel, Division of Trading and Markets, at the above address. 
Telephone (202) 254-8955.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 210 of the Futures Trading Practices Act of 1992 added a 
new paragraph (b) to Section 4p of the Act mandating ethics training 
for registrants.1 The Commission adopted Rule 3.34 to implement 
this Congressional mandate.2 The Commission subsequently issued a 
notice to give further guidance with respect to information to be 
supplied in applications by persons seeking to provide ethics training 
to registrants.3
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    \1\This provision of the Act is codified at 7 U.S.C. 6p(b) 
(Supp. IV 1992) and states that:
    The Commission shall issue regulations to require new 
registrants, within 6 months after receiving such registration, to 
attend a training session, and all other registrants to attend 
periodic training sessions, to ensure that registrants understand 
their responsibilities to the public under this Act, including 
responsibilities to observe just and equitable principles of trade, 
any rule or regulation of the Commission, any rule of any 
appropriate contract market, registered futures association, or 
other self-regulatory organization, or any other applicable Federal 
or state law, rule or regulation.
    \2\58 FR 19575, 19584-19587, 19593-19594 (April 15, 1993).
    \3\58 FR 47890 (September 13, 1993).
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    The Commission has reviewed several applications from persons 
seeking to provide ethics training to registrants and several other 
applications are currently pending with the Commission. In light of 
this experience, the Commission is now proposing amendments to Rule 
3.34 regarding ethics training providers in an effort to enhance the 
operation of this program. Those provisions of the rule that relate to 
what must be covered in ethics training and specific requirements 
concerning attendance at such training by registrants would remain 
unchanged.

II. Proposed Amendments

A. Certification by Ethics Training Provider

    Presently, there are three categories of persons that may provide 
ethics training to registrants under the Act: (1) an SRO, such as an 
exchange which may have a program for its member floor brokers (FBs) 
and floor traders (FTs); (2) an entity accredited to conduct continuing 
education programs by a state professional licensing authority in the 
fields of law, finance, accounting or economics; or (3) any other 
person ``if its program is approved by the Commission for this 
purpose.''4 The proposals set forth herein would maintain SROs and 
state-accredited continuing education programs as ethics providers. The 
Commission is also proposing, however, to permit any other person to 
provide ethics training if the person files a notice with a registered 
futures association certifying that the person, any principals thereof 
(as defined in Commission Rule 3.1(a))5 and any individuals, on 
behalf of such person, who conduct in-person ethics training or who 
prepare ethics training videotape or electronic presentations, are not 
subject to: (1) statutory disqualification from registration under 
Sections 8a (2) or (3) or the Act;6 (2) a bar from service on SRO 
governing boards or committees based on disciplinary histories, 
pursuant to Commission Rule 1.637or any SRO rule adopted 
thereunder;8 (3) a pending adjudicatory proceeding under Sections 
6(c), 6(d), 6c, 6d, 8a or 9 of the Act or Commission Rules 3.55, 3.56 
or 3.60;9 or (4) a pending investigation by the Commission's 
Division of Enforcement of which the subject has been notified.10
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    \4\Rule 3.34(b)(3).
    \5\17 CFR 3.1(a) (1993).
    \6\7 U.S.C. 12a(2) and (3) (1988 and Supp. IV 1992). The Act 
specifies several grounds for disqualification including, among 
others, prior revocation of registration, felony convictions, and 
injunctions related to futures or securities activities.
    \7\17 CFR 1.63 (1993), as amended by 58 FR 37644 (July 13, 
1993).
    \8\Thus, if Mr. Jones sets up Jones, Inc. to offer ethics 
training and hires Ms. Smith to conduct the lectures, the 
certification must include Jones, Inc., Mr. Jones and Ms. Smith. 
Such certification must also cover any additional instructors who 
would be hired if necessary to handle the number of registrants 
enrolling in the ethics training program.
    \9\A pending proceeding is a basis to bar a person whose 
registration has expired within the preceding sixty days from 
obtaining a temporary license upon mailing a new registration 
application to NFA (see 17 CFR 3.11(c)(1)(i)(B), 3.11(c)(1)(ii)(B), 
3.12(d)(1)(iv), and 3.12(i)(1)(iv) (1993)), to bar a person from 
serving as a sponsor or special supervisor of a conditioned or 
restricted registrant (see 17 CFR 3.60(b)(2)(i)(A) (1993)), and to 
prevent withdrawal from registration (see 17 CFR 3.33(f)(1)(1993)).
    \1\0The Commission also notes that this has been used as a basis 
to prevent withdrawal from registration (see 17 CFR 3.33(f)(3) 
(1993)).
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    The Commission believes that it is appropriate for an ethics 
training provider to make such a certification.11 The 
Congressional mandate for ethics training is intended ``to ensure that 
registrants understand their responsibilities to the public under [the] 
Act, including responsibilities to observe just and equitable 
principles of trade, any rule or regulation of the Commission, any 
rules of any appropriate contract market, registered futures 
association, or other self-regulatory organization or any other 
applicable Federal or State law, rule or regulation.''12 The 
Commission believes that it would be anomalous, inconsistent with the 
Congressional mandate and contrary to the public interest for a person 
to teach others about their responsibilities under those laws and rules 
if such person has a disciplinary history that would disqualify him 
from registration under the Act or service on SRO governing broads or 
committees, or is involved in an adjudicatory proceeding or the subject 
of an investigation pertaining to violations of such laws and rules. 
The Commission is also proposing that the certification requirement be 
a continuous one so that if circumstances change and the certification 
becomes inaccurate, the person must so inform the registered futures 
association, which shall then refuse to include such person on, or 
remove such person from, the list of ethics training providers.13
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    \1\1The items discussed above would apply to a certification 
from any ethics training provider. If the ethics training provider 
will offer training via videotape or electronic presentation, the 
provider's certification would also be required to include a 
statement with respect to verification of the registrant's 
attendance. This is discussed below under Heading C, Videotape or 
Electronic Presentation.
    \1\2Section 4p(b) of the Act.
    \1\3However, if a firm is subject to a pending adjudicatory 
proceeding or investigation as described above, the Commission 
believes that it could submit a certification to a registered 
futures association with an explanation describing the circumstances 
of the proceeding or investigation, particularly with respect to the 
scope and nature of the proceeding or investigation in relation to 
the size of the firm. For example, an investigation limited to a 
single branch office of a firm that does not involve fraud or 
failure to supervise might be treated differently than a proceeding 
involving such allegations against the top management of a firm. The 
Commission would expect the registered futures association to 
consult the Commission as to any particular certification submitted 
or in cases where a firm on the list becomes subject to a proceeding 
or investigation.
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    The purpose of this amendment is to permit National Futures 
Association (NFA), currently the only registered futures association, 
to maintain the list of eligible ethics training providers for purposes 
of Commission Rule 3.34 and to clarify that the specific content of an 
ethics training program is not being approved by the Commission or by 
NFA, as discussed more fully below. The Commission would delegate 
authority to NFA to establish guidance as to the required experience of 
ethics training providers and permit NFA to receive and evaluate 
complaints concerning such providers and make other appropriate review 
of providers' operations, subject to Commission oversight. NFA would 
also be delegated authority to develop appropriate procedures to verify 
certifications filed by a potential ethics training provider, for 
having such certifications updated periodically and for refusing to 
include persons on the list of ethics training providers.14 NFA 
would submit its procedures to the Commission for review pursuant to 
Section 17(j) of the Act,15 which governs approval of registered 
futures association rules.
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    \1\4Misrepresentations contained in such certification would 
also constitute federal criminal violations. See 18 U.S.C. 1001 
(1988).
    \1\57 U.S.C. 21(j)(1988).
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B. Permissible Representations

    When the Commission has granted applications to provide ethics 
training, it has stated in letters to the applicants, among other 
things, that it has not approved the specific content of the ethics 
training program proposed and expresses no opinion as to the program's 
quality or accuracy. Indeed, it would be impossible for the Commission 
to do so since it has normally been presented with only an outline of 
the training course from those who filed applications.16 The 
Commission therefore believes that it is appropriate to clarify the 
effect of the blanket reference in Rule 3.34 to an SRO or state-
accredited continuing education entity as ethics training providers, as 
well as the effect of a registered futures association's listing of 
other persons providing such training.
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    \1\6See Item B4 in the September 1993 notice, 58 FR 47890, 
47891.
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    Accordingly, the Commission is proposing to provide in new 
paragraph (b)(5)(i) that no SRO, state-accredited continuing education 
entity or other person included on a list of ethics training providers 
``may represent or imply in any manner whatsoever that such person has 
been sponsored, recommended or approved, or that such person's 
abilities or qualifications, the content, quality or accuracy of his 
training program, or the positions taken in the course of resolving any 
actual or hypothetical situations presenting ethical issues, have in 
any respect been passed upon or endorsed, by the Commission or a 
registered futures association.'' Proposed new paragraph (b)(5)(i) 
would further provide that any promotional or instructional material 
used in connection with ethics training ``must prominently state that 
the Commission and any registered futures association have not reviewed 
or approved the specific content of the training program and do not 
recommend the provider of such training.''17
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    \1\7Proposed paragraph (b)(5)(i) would also contain a proviso 
that it ``shall not be construed to prohibit a statement that a 
person is included on a list of ethics training providers maintained 
by a registered futures association if such statement is true in 
fact and if the effect of such a listing is not misrepresented.'' 
The effect of this statement is intended to be that such person is 
not precluded from providing ethics training by reason of 
``unfitness'' as defined by the Act and the Commission's rules on 
statutory disqualification.
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    The Commission believes that these clarifications with respect to 
representations that may be made as to the effect of providing ethics 
training, whether pursuant to self-executing provisions of the rule or 
to inclusion on a list maintained by a registered futures association, 
are appropriate, particularly in light of existing limitations upon the 
representations that may be made by registered commodity trading 
advisors (CTAs), commodity pool operators (CPOs) or associated persons 
(APs) of CTAs and CPOs as to the effect of registration under the Act, 
which encompasses a greater level of review than pertains to ethics 
providers.18
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    \1\8See Section 4o(2) of the Act, 7 U.S.C. 6o(2) (1988).
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    The Commission similarly believes that it is appropriate to limit 
the use an ethics training provider may make of that fact in certain 
adjudicatory proceedings. An ethics training provider should not be 
able to use that fact to qualify as an expert witness or to present 
expert testimony in an adjudicatory proceeding before the Commission 
under Sections 6(c), 6(d), 8a or 14 of the Act19 or Commission 
Rules 3.55, 3.56 or 3.60.20 Nor should an ethics training provider 
proffer evidence of that fact in order to demonstrate experience, 
competence or knowledge that would qualify the provider as an expert 
witness in any adjudicatory proceeding to which the Commission is a 
party, for example, a civil injunctive action brought by the Commission 
under Section 6c of the Act (7 U.S.C. 13c (Supp. IV 1992)). The 
Commission is therefore proposing new paragraphs (b)(5)(ii) and 
(b)(5)(iii) to so provide. The Commission believes that because the 
rule amendments proposed herein provide for a person to be included on 
a list of ethics providers based on a self-certification process, it 
would be inappropriate for any person included on such a list to use 
that fact to demonstrate credentials as an expert witness. The 
Commission would not consider evidence of a person's status as an 
ethics provider in any administrative proceeding before it, and would 
object to any such proffer in any adjudicatory proceeding to which it 
is a party.
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    \1\97 U.S.C. 9, 13b, 12a or 18 (1988 & Supp. IV 1992).
    \2\017 CFR 3.55, 3.56 or 3.60 (1993).
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C. Videotape or Electronic Presentation

    When the Commission adopted Rule 3.34, it provided in paragraph 
(b)(3) that a program of ethics training could include a videotape or 
electronic presentation. The Commission stated that such training would 
be acceptable if the provider could substantiate the registrant's 
completion of the program. The Commission further stated that such 
substantiation contemplates, for example, an interactive computerized 
training program that requires and records the registrant's 
participation and return of such computer disk to the ethics training 
provider for verification of such participation and the provider's 
issuance of a certificate to that effect to the registrant.21
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    \2\158 FR 19575, 19586-19587.
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    The Commission had originally proposed allowing the use of 
videotape or electronic presentation in recognition of the fact that it 
could be difficult for registrants located substantial distances from 
major metropolitan areas to attend in-person training sessions without 
incurring significant expense or business disruption.22 One 
contract market commenter on the Commission's proposal stated that all 
registrants should have the opportunity to use an interactive computer 
program. Since all of the contract markets are located in major 
metropolitan areas, the Commission responded by expressing its belief 
that FTs and FBs will generally attend in-person training sessions 
sponsored by a contract market. The Commission also indicated, however, 
that it ``may consider in its review of proposed ethics training 
courses whether a particular proposal that includes an interactive 
computer program would be appropriate for those whom attendance at an 
in-person session would not be unduly burdensome.''23
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    \2\258 FR 6748, 6756 (February 2, 1993).
    \2\358 FR 19575, 19587.
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    Most of the persons authorized to provide ethics training to date 
currently do so by means of in-person presentation. Originally, a firm 
authorized to provide such training by means of videotape or electronic 
presentation was required to represent that videotape or electronic 
training would be limited to registrants who live in locations outside 
those metropolitan areas where in-person training will be given and for 
those registrants that can provide a valid excuse for their inability 
to attend sessions in those cities. The firm was further required to 
represent that it would review all excuses given by registrants for 
being unable to attend an in-person program in their metropolitan areas 
and would assure that each such registrant is unable to attend due to 
illness, vacation, business trips or other commitments that genuinely 
precluded his presence.
    Subsequently, the Commission's staff received several inquiries, 
both from existing ethics training providers and potential new 
providers, concerning the offering of interactive training in lieu of 
in-person training where locational or other factors rendering in-
person training less feasible did not exist. The Commission has 
reviewed this issue and believes that the previously required 
representations may be difficult to interpret and may prevent the most 
economic means of compliance for firms with multiple, dispersed 
branches. Given the numbers of registrants, it may also be more 
efficient and cost-effective to permit greater use of videotaped and 
interactive training, without sacrificing the usefulness of such 
training, subject to the verification procedures described below. 
Accordingly, the Commission is now of the view that any registrant may 
meet his ethics training requirement through in-person or through 
videotaped or electronic presentations.
    The Commission also wishes to make clear, however, that if 
videotaped or electronic training is offered, the provider must be able 
to verify that the video has been viewed or the training completed by 
the registrant before the provider issues a certificate of attendance 
to the registrant. Accordingly, if a provider will conduct training via 
videotape or electronic presentation, either exclusively or in addition 
to in-person training, the Commission is proposing that the provider's 
certification referred to above be supplemented to include a 
representation that the provider will maintain documentation reasonably 
designed to verify that registrants have properly completed ethics 
training for the minimum time required (one, two or four hours).
    The Commission envisages that an appropriate verification regime 
for a provider would include procedures such as the following. The 
provider would maintain a list of the computer-based ethics program 
purchasers and match each completed program with a record of purchase. 
Registrants would be required to enter identifying information, such as 
name, firm's name, business address, telephone number, date of birth, 
NFA and/or Social Security number, on the control diskette and return a 
signed statement with the completed computer diskette certifying that 
he did in fact complete the ethics training course in the manner set 
out in the instructions.
    With respect to the fulfillment of the minimum time requirements 
and verification of the registrants' participation in the program, the 
ethics training provider could use a computer-based test to assure that 
the registrant has attained a minimum level of understanding of the 
materials covered, drawing upon matters covered in video and written 
materials, as well as the computer program, to the extent applicable. 
Registrants would be required to pass each section of the test prior to 
answering questions in later sections of the test to assure that each 
section of the program is completed. While those who fail the test 
would be required to retake it until it is successfully completed, only 
the time spent on the first test could be credited toward the ethics 
training time required by Rule 3.34. Registrants answering quickly 
would be given additional questions to answer, and the program would 
cease recording elapsed time for those slow to answer questions. Thus, 
registrants would be monitored both as to time spent and material 
covered.24
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    \2\4If an ethics training provider develops a computer-based 
ethics training program for use by a particular registered firm and 
its APs that in addition to the required subject matter also 
includes material tailored to that firm, such as the firm's specific 
professional conduct policies, the ethics training provider could 
verify completion by the APs by relying on the registered firm's 
representation as to its APs' attendance if the firm can verify the 
identity of participants through the firm's in-house computer 
communication system or through monitoring by the firm's supervisory 
or managerial staff. The ethics training provider should require 
registered firms using a tailored ethics training program to furnish 
periodic reports of specified identifying information for each AP 
accessing the training program.
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    If a provider wished to follow a different verification regime, he 
could do so if such steps had been submitted to and not found 
objectionable by a registered futures association.
    The Commission contemplates that an ethics training provider would 
be able to document that a registrant had undertaken various steps 
required for the provider to verify completion. The provider would be 
required under revised paragraph (b)(4) of Rule 3.34 to keep 
documentation to support its determination that ethics training has 
been properly completed by a registrant and to support its issuance of 
a certificate of attendance.25
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    \2\5The Commission is also proposing under revised paragraph 
(b)(4) of Rule 3.34 that records of trainer evaluations be 
maintained.
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D. Recordkeeping

    Rule 3.34(b)(4) governs recordkeeping by an ethics training 
provider. The Commission is proposing to add a provision to the current 
recordkeeping requirements that would require providers of ethics 
training to furnish records of attendees at such training to a 
registered futures association in such format as the registered futures 
association may request. When the Commission adopted Rule 3.34, it 
required that providers of ethics training maintain records of 
attendees at such training in accordance with Commission Rule 1.31, 
i.e., for a five-year period.26 The Commission also stated that it 
would monitor the effectiveness of the requirement for maintaining a 
record of ethics training attendance and may reconsider the issue at a 
later date if appropriate.27 The Commission understands that NFA 
is willing to compile information on ethics training attendance for 
inclusion in the registration database and believes that ethics 
training providers should cooperate with NFA requests for the 
information which providers are already required to maintain. This will 
allow for a central repository of such information which should benefit 
all registrants and facilitate oversight of compliance with the ethics 
training requirement. To facilitate NFA's incorporation of this data in 
the registration database, ethics training providers should include 
appropriate identifiers of registrants, such as NFA ID number, and 
follow other format conventions requested by NFA.
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    \2\617 CFR 1.31 (1993).
    \2\758 FR 19575, 19587.
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III. Related Matters

A. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA), 5 U.S.C. 601-611 (1988), 
requires that agencies, in proposing rules, consider the impact of 
those rules on small businesses. The proposed rule amendments discussed 
herein will affect ethics training providers, which include SROs, 
entities accredited to conduct continuing education programs by a state 
professional licensing authority in the fields of law, finance, 
accounting or economics, and any other person who complies with the 
requirements to be included on a list of ethics training providers. The 
SROs offering ethics training to their members are the contract markets 
and the Commission has previously determined that contract markets are 
not small entities under the RFA.28 As to the impact of these 
proposals on other providers of ethics training or persons seeking to 
become providers of ethics training, the Commission believes that such 
impact will be minimal. The procedure for becoming an ethics training 
provider would be simplified. The permissible representations by ethics 
training providers which the Commission is proposing to codify are 
consistent with the statements set forth in Commission letters issued 
to date to ethics training providers. Finally, since ethics training 
providers are already required to maintain records of attendees, 
furnishing such information to NFA upon request should not cause an 
undue burden.
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    \2\847 FR 18618-18619 (April 30, 1982).
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    Therefore, the Acting Chairman, on behalf of the Commission, hereby 
certifies, pursuant to 5 U.S.C. 605(b), that the rules proposed herein 
will not have a significant economic impact on a substantial number of 
small entities. The Commission nonetheless invites comments from any 
person or entity which believes that these proposed rule amendments 
would have a significant impact on its operations.

B. Paperwork Reduction Act

    The Paperwork Reduction Act of 1980 (PRA), 44 U.S.C. 3501 et seq., 
imposes certain requirements on federal agencies (including the 
Commission) in connection with their conducting or sponsoring any 
collection of information as defined by the PRA. In compliance with the 
PRA, the Commission has submitted this proposed rule and its associated 
information collection requirements to the Office of Management and 
Budget. While the amendments proposed herein have no burden, Rule 3.34 
is a part of a group of rules which has the following burden: 

Rules 3.16, 3.32 and 3.34 (3038-0023, approved                          
 June 2, 1993):                                                         
  Average Burden Hours Per Response...............  1.13                
  Number of Respondents...........................  60,980              
  Frequency of Response...........................  On occasion and     
                                                     triennially.       
                                                                        

    Persons wishing to comment on the information which would be 
required by these rules as amended should contact Gary Waxman, Office 
of Management and Budget, room 3228, NEOB, Washington, D.C. 20503, 
(202) 395-7340. Copies of the information collection submission to OMB 
are available from Joe F. Mink, CFTC Clearance Officer, 2033 K St. 
N.W., Washington, D.C. 20581, (202) 254-9735.

List of Subjects in 17 CFR Part 3

    Ethics training, Registration.

    Accordingly, the Commission, pursuant to the authority contained in 
the Commodity Exchange Act and, in particular, Sections 1a, 4d, 4e, 4g, 
4m, 4p, 8a and 17 thereof (7 U.S.C. 1a, 6d, 6e, 6g, 6m, 6p, 12a and 21 
(1988 & Supp. IV. 1992)), hereby proposes to amend Part 3 of Chapter I 
of Title 17 of the Code of Federal Regulations as follows:

PART 3--REGISTRATION

    1. The authority citation for Part 3 continues to read as follows:

    Authority: 7 U.S.C. 1a, 2, 4, 4a, 6, 6b, 6d, 6e, 6f, 6g, 6h, 6i, 
6k, 6m, 6o, 6p, 8, 9, 9a, 12, 12a, 13b, 13c, 16a, 18, 19, 21 and 23; 
5 U.S.C. 552, 552b.

    2. Section 3.34 is proposed to be amended by revising paragraphs 
(b)(3) and (b)(4) and by adding paragraph (b)(5) to read as follows:


Sec. 3.34  Mandatory ethics training for registrants.

* * * * *
    (b) * * * 
    (3) The training required by this section must be provided by or 
pursuant to a program of training (including videotape or electronic 
presentation) sponsored by:
    (i) A self-regulatory organization;
    (ii) An entity accredited to conduct continuing education programs 
by a state professional licensing authority in the fields of law, 
finance, accounting or economics; or,
    (iii) A person included on a list maintained by a registered 
futures association who has filed a notice with the registered futures 
association certifying that:
    (A) The person, any principals thereof (as defined in Sec. 3.1(a)) 
and any individuals, on behalf of such person, who conduct in-person 
ethics training or who prepare an ethics training videotape or 
electronic presentation are not subject to:
    (1) Statutory disqualification from registration under Sections 
8a(2) or (3) of the Act;
    (2) A bar from service on self-regulatory organization governing 
boards or committees based on disciplinary histories pursuant to 
Sec. 1.63 of this chapter or any self-regulatory organization rule 
adopted thereunder;
    (3) A pending adjudicatory proceeding under Sections 6(c), 6(d), 
6c, 6d, 8a or 9 of the Act, or Secs. 3.55, 3.56 or 3.60; or
    (4) A pending investigation by the Commission's Division of 
Enforcement of which the subject has been notified; and
    (B) If the person will conduct training via videotape or electronic 
presentation, either exclusively or in addition to in-person training, 
he will maintain documentation reasonably designed to verify the 
attendance of registrants at such videotape or electronic presentation 
for the minimum time required.
    (iv) The certification requirement under paragraph (b)(3)(iii) of 
this section is continuous and if circumstances change so that such 
certification becomes inaccurate, the person must so inform the 
registered futures association, which shall then refuse to include such 
person on or remove such person from the list referred to in paragraph 
(b)(3)(iii) of this section.
    (4) Any person providing ethics training under this section must 
maintain records of materials used in such training, attendees at such 
training, documentation to verify completion by a registrant of 
training through videotape or electronic presentation and trainer 
evaluations in accordance with Sec. 1.31 of this chapter. All such 
books and records shall be open to inspection by any representative of 
the Commission or the U.S. Department of Justice and persons providing 
ethics training shall be subject to audit by any representative of the 
Commission. Records of attendees at such training shall be provided 
upon request to a registered futures association in such format as 
specified by the registered futures association.
    (5) No person referred to in paragraph (b)(3) of this section may:
    (i) Represent or imply in any manner whatsoever that such person 
has been sponsored, recommended or approved, or that such person's 
abilities or qualifications, the content, quality or accuracy of his 
training program, or the positions taken in the course of resolving any 
actual or hypothetical situations presenting ethical issues, have in 
any respect been passed upon or endorsed, by the Commission, a 
registered futures association, or any representative thereof. Any 
promotional or instructional material used in connection with the 
training required by this section must prominently state that the 
Commission and any registered futures association have not reviewed or 
approved the specific content of the training program and do not 
recommend the provider of such training: Provided, however, that this 
paragraph shall not be construed to prohibit a statement that a person 
is included on a list of ethics training providers maintained by a 
registered futures association if such statement is true in fact and if 
the effect of such a listing is not misrepresented;
    (ii) Use in any manner whatsoever the fact that he is offering 
training required by this section to qualify as an expert witness or to 
present expert testimony in an adjudicatory proceeding before the 
Commission or one of its Administrative Law Judges under Sections 6(c), 
6(d), 8a or 14 of the Act, or Secs. 3.55, 3.56 or 3.60; or
    (iii) Proffer evidence that he is offering training required by 
this section to demonstrate experience, competence or knowledge that 
would qualify him as an expert witness in any adjudicatory proceeding 
to which the Commission is a party.
* * * * *
    Issued in Washington, DC on July 19, 1994, by the Commission.
Jean A. Webb,
Secretary of the Commission.
[FR Doc. 94-17880 Filed 7-21-94; 8:45 am]
BILLING CODE 6351-01-P