[Federal Register Volume 63, Number 154 (Tuesday, August 11, 1998)]
[Notices]
[Pages 42891-42892]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-21476]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-40306]
Alternative Dispute Resolution Policy Statement
AGENCY: Securities and Exchange Commission.
ACTION: Final statement of policy.
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SUMMARY: Consistent with the Administrative Dispute Resolution Act of
1996, the recommendations of the National Performance Review, and
Executive Order 12988, the Securities and Exchange Commission has
adopted this Final Statement of Policy on the use of alternative
dispute resolution (ADR) techniques to resolve appropriate disputes in
a fair, timely, and cost efficient manner.
EFFECTIVE DATE: August 11, 1998.
FOR FURTHER INFORMATION CONTACT: D. Leah Meltzer, Senior ADR
Specialist, Office of General Counsel, Securities and Exchange
Commission, 450 Fifth Street, NW, Mail Stop 6-6, Washington, DC 20549,
telephone (202) 942-0048; e-mail [email protected].
SUPPLEMENTARY INFORMATION:
Background
On January 29, 1993, in response to the Administrative Dispute
Resolution Act of 1990, the Commission published a notice in the
Federal Register inviting interested persons to submit comments on the
utility of application of ADR procedures in Commission programs and
activities to assist the Commission in its effort to develop
appropriate policies. All nine comments received related to the
Commission's enforcement program and were considered in developing the
Commission's final Statement of Policy.
Statement of Policy on Alternative Dispute Resolution
ADR is the resolution of disputes through informal, voluntary,
consensual techniques such as mediation, early neutral evaluation,
minitrials, the practice of ombuds, arbitration and other methods. The
Commission is committed to the use of ADR as a management tool to
resolve disputes at an early stage, in an expeditious, cost effective,
and mutually acceptable manner. The Commission adopts this policy to
express its full support for the appropriate use of ADR. This policy is
intended to apply to the resolution of disputes in contract
administration, disputes in litigation (except as noted below), and
internal disputes, such as those between employees and management. It
is not intended to apply to inspections and law enforcement
investigations. In addition, a number of factors make litigation
challenging enforcement of the federal securities laws generally
unsuitable for ADR techniques (i.e., the need to ensure that the law
enforcement function is not compromised, the need to ensure uniform
treatment, and the need for judicial resolution or precedent). This
policy is also not intended to apply to situations where the Commission
seeks a temporary retraining order.
Core Principles Governing the Commission's Use of ADR
Any use of ADR by the Commission will be governed by certain core
principles. Foremost, any Commission ADR program must further the
agency's mission of administering the federal securities laws and
protecting investors. While the Commission will consider ADR in any
dispute in which a negotiated solution is a potentially acceptable
outcome, the Commission believes that not every dispute is suitable for
settlement through ADR. Further, while ADR processes are an important
option in the Commission's ability to resolve disputes, we believe the
processes are supplementary to, not a displacement of, traditional
adjudicative methods of resolving disputes. Therefore, the Commission
will engage in ADR only after determining that ADR is appropriate in a
particular instance. Moreover, the Commission recognizes that its ADR
policies and programs must be flexible enough to respond to the
diversity of disputes that the Commission handles, the evolving court-
based ADR programs, and on-going statutory changes and programmatic
concerns. To that end, the Commission believes that its ADR policy
should be dynamic and continually developing.
Affirmative Steps To Promote the Use of ADR
In furtherance of its commitment to ADR, the Commission has taken
and will continue to take several affirmative steps to promote the use
of ADR. The Administrative Dispute Resolution Act requires that each
agency appoint an agency Dispute Resolution Specialist. The Commission
has appointed the General Counsel as the agency Dispute Resolution
Specialist. The senior ADR specialist serves as the Deputy Dispute
Resolution Specialist. The Dispute Resolution Specialist is authorized
to develop dispute resolution policy and procedures; consult with the
staff on individual disputes regarding the appropriate use of ADR;
develop conflict management and prevention programs; monitor
implementation and evaluate dispute resolution program execution and
results; determine appropriate ADR-related training within the
Commission to educate employees and disputants about ADR and conflict
management options and processes; provide for access to neutral third
parties; and assure that incentives are developed which reward the
appropriate use of ADR.
Training
The Commission has begun and will continue to provide ADR training
to managers, supervisors and other individuals identified as benefiting
from the training, so that they will understand the appropriate use of
ADR,
[[Page 42892]]
its potential benefits, and how to obtain assistance. The Commission
will, as appropriate, also provide certain employees, including
litigation and contract attorneys, with training in ADR advocacy
techniques.
Confidentiality of ADR Processes
The Commission recognizes that the successful use of ADR procedures
is dependent on reasonable assurances of confidentiality to protect the
process. This principle is recognized and implemented by provisions of
the ADR Act. Accordingly, in connection with the ADR policy adopted
herein, the Commission adopts a policy of confidentiality consistent
with provisions of the ADR Act. In addition, the Commission, except as
it pertains to the Office of the Inspector General, agrees not to issue
process against any participant in an ADR proceeding, including any
neutral utilized by these ADR procedures, or to obtain information or
documents received by the participants in connection with such
proceedings. The Commission also directs that members of the staff, who
may receive information or documents in connection with any matter
submitted to ADR, not disclose such information and documents under any
circumstances inconsistent with the confidentiality provisions set
forth in Section 574 of the 1996 ADR Act. Section 574 provides that,
except in certain limited situations, neither a neutral nor the parties
to a dispute may voluntarily disclose or through compulsory process be
required to disclose any oral or written communication prepared for the
purpose of a dispute resolution proceeding. To the extent disclosure is
permitted pursuant to an exception in Section 574, members of the staff
may not disclose or use such information or documents for any purpose
other than in connection with one's official duties or
responsibilities. Violation of this policy may result in disciplinary
action. This policy of confidentiality does not prevent the discovery
or admissibility of otherwise discoverable evidence in any
administrative or judicial forum merely because the evidence is
presented in a proceeding utilizing ADR procedures.
Implementation
It is the responsibility of all Commission employees to implement
this policy and to practice and promote cost-effective dispute
resolution in Commission programs and other areas of Commission
operation. All management and employees of the Commission are hereby
directed to take the necessary steps to implement this policy and to
cooperate to the fullest extent with the Dispute Resolution Specialist
and his/her designee to promote effective and appropriate use of ADR at
the Commission in furtherance of this policy. The determination to use
ADR in any particular instance rests with the head of the Division or
Office involved.
This policy statement is intended only to improve the internal
management of the Commission in resolving disputes. It shall not be
construed as creating any right or benefit, substantive or procedural,
enforceable at law or in equity, by any person against the Commission
or its employees. This policy statement shall not be construed to
create any right to judicial review involving the compliance or
noncompliance of the Commission or its employees with this statement.
Nothing in this policy statement shall be construed to obligate the
Commission to offer funds to settle any case, to accept a particular
settlement or resolution of a dispute, to alter its standards for
accepting settlements, to submit to binding arbitration, or to alter
any existing delegation of settlement or litigating authority.
Dated: August 5, 1998.
By the Commission.
Jonathan G. Katz,
Secretary.
[FR Doc. 98-21476 Filed 8-10-98; 8:45 am]
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