[Federal Register Volume 64, Number 110 (Wednesday, June 9, 1999)]
[Rules and Regulations]
[Pages 30902-30904]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-14370]


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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

[[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