Proposed Amendments and Proposed New Rule
Proposed amendments to NFA's Compliance Rules and proposed new Compliance Rule 3-18 (additions are underscored and deletions are stricken through):
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Part 3 – Compliance Procedures
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RULE 3-5. RIGHT TO COUNSEL.
The Respondent may be represented by an attorney-at-law or other person at any stage of the investigation or disciplinary proceeding
except as provided in Rule 3-15(b)(iii), but the Business Conduct Committee, the Hearing Committee or any designated Panel may bar from the proceeding any representative for dilatory, disruptive or contumacious conduct.
RULE 3-6. ANSWER.
(a)The Respondent must file a written Answer to the Complaint with NFA within
10 business 30 days from the date of the Complaint or such further time as the Business Conduct Committee specifies in the Complaint.
(b)Failure to file a timely Answer shall be deemed an admission of the facts and legal conclusions contained in the Complaint, and a waiver of the hearing. The Answer shall respond to each allegation in the Complaint by admitting, denying or averring that the Respondent lacks sufficient knowledge or information to admit or deny the allegation. An averment of insufficient knowledge or information may be made only after a diligent effort has been made to ascertain the relevant facts, and shall be deemed to be a denial of the pertinent allegation. The failure to respond to any allegation shall be deemed an admission of that allegation.
(c)For good cause shown, the Business Conduct Committee
, the Hearing Committee, or a designated Hearing Panel may waive the effects of failure to file a timely or complete Answer.
(d)On motion of the Respondent for good cause shown, the Chairman of the Business Conduct Committee, or another member of the Business Conduct Committee designated by the Chairman,
or may grant an extension of time in which to comply with this Rule.
REQUEST FOR HEARING APPOINTMENT OF HEARING PANEL.
(a)The Respondent must file a written Request for Hearing within 10 business days of the date of the Complaint, unless the Complaint states otherwise. The requirement that a hearing be requested in writing may be satisfied by the Respondent completing and filing with NFA the Request for Hearing form, which shall be provided to each Respondent with the Complaint.
(b)The Respondent shall be afforded a hearing on the charges and possible sanctions
, if the Respondent requests a hearing as provided herein. The hearing shall be before the Hearing Committee as a whole or before a designated Hearing Panel of the Hearing Committee ("Hearing Panel"). Should the hearing be conducted by the Committee as a whole, the Committee and its Chairman shall have the same powers as provided under these Rules as the Hearing Panel and its Chairman. A Hearing Panel shall consist of no fewer than three members of the Hearing Committee. , each of whom The Chairman and the remaining members of the Hearing Panel shall be appointed by the Chairman of the Hearing Committee or his designee. The hearing shall be held at such location as the Chairman of the Hearing Panel shall determine. The hearing shall be held as soon as practicable after the request is received.
(c)Failure to request a hearing as provided in (a) above, unless good cause is shown, shall be deemed a waiver of hearing. If the Respondent waives his right to a hearing, the Compliance Department may proceed to submit testimonial or documentary evidence to the Hearing Panel without further notice to the Respondent. If the Respondent waives his right to a hearing, he has waived his right to object to the Compliance Department's evidence, cross-examine witnesses and present evidence on his own behalf.
RULE 3-8. PRE-HEARING PROCEDURES
If the Respondent requests a hearing —
(a)The Respondent shall be given reasonable advance notice of the hearing date; and
(b) (a) The Respondent shall be entitled to a reasonable pre-hearing examination of all evidence in the Compliance Department's possession or under its control that is to be relied upon by the Compliance Department or that is relevant to the Complaint. Such pre-hearing examination —
(i)must be requested by the Respondent in writing;
(ii)can be conducted either by the Respondent examining all such evidence at the offices of NFA, or by the Respondent requesting that all such evidence be copied and sent to him with any transportation and copying costs borne by the Respondent making the request;
(iii)will be available up until 30 days prior to the scheduled hearing date, except for good cause shown; and
(iv) (iii) is subject to the Compliance Department's right to withhold any privileged material (including, but not limited to, the investigation report), pursuant to all common law and statutory privileges it has available to it.
(c)At least 15 days prior to the date assigned for oral hearing, each party who will participate in that hearing, including the Compliance Department, shall file with NFA and serve on every other party who will participate in the hearing:
(i)the name, address and phone number of each witness they intend to call as part of their direct case; and
(ii)copies of all documents they intend to introduce into evidence as part of their direct case.
The Hearing Panel may preclude any party to the hearing from presenting witnesses or evidence that has not been previously disclosed, except for good cause shown.
The Compliance Department or any Respondent who has requested a hearing may petition the Hearing Panel to schedule a pre-hearing conference, which request shall specify the issues which the party wishes to raise in the pre-hearing conference. The request may be granted at the discretion of the Hearing Panel. Either the Hearing Panel or the Chairman may also schedule a pre-hearing conference on its own motion. Within 30 days after the Chairman of the Hearing Panel is appointed, the Chairman shall schedule and hold a pre-hearing conference with the parties. Any The order scheduling a the pre-hearing conference shall specify the issues which may be raised to be covered in the pre-hearing conference, including setting discovery and motion deadlines and scheduling the hearing. Such conferences may be conducted by telephone. The Hearing Panel in its sole discretion shall decide which issues may be the subject of a pre-hearing conference conducted by the Chairman acting alone.
(e)All motions, including motions for continuance, shall be filed with NFA and served on all parties not in default no later than 15 days prior to the day of the hearing, except for good cause shown. The Hearing Panel in its sole discretion shall decide which motions may be decided by the Chairman acting alone.
(c)The Chairman of the Hearing Panel shall schedule pre-hearing conferences and hearing sessions and shall decide all pre-hearing motions concerning discovery, motion deadlines, location of the hearing, continuances, and requests for telephonic or video testimony. All other motions shall be decided by the Hearing Panel.
(d)A motion for continuance shall be supported by an affidavit that provides a detailed description of the circumstances that form the basis for the continuance request.
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RULE 3-11. SETTLEMENT.
(i)A subject of an investigation in which the investigation report has been completed, or a Respondent in a disciplinary proceeding, shall submit any proposed settlement of the matter to the Business Conduct Committee or its designated Panel ("BCC Panel") at any time up until
10 business days before the date of a scheduled hearing a Chairman of the Hearing Panel has been appointed. A BCC Panel shall consist of no fewer than three members of the Business Conduct Committee, each of whom shall be appointed by the Chairman of the Business Conduct Committee. After that date, any proposed settlement offer shall be submitted to the Hearing Panel. Settlement offers may also be submitted to the Appeals Committee if the matter is before it on appeal or review. The Business Conduct Committee, BCC Panel, Hearing Panel, or Appeals Committee may accept or reject the settlement offer as it deems appropriate. The Compliance Director shall be afforded an opportunity to express the Compliance Department's views with respect to the settlement.
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RULE 3-18. SANCTIONS FOR CONTUMACIOUS CONDUCT.
If a party, attorney for a party, or other representative of a party violates an order of the Business Conduct Committee, Hearing Panel, Chairman of the Business Conduct Committee or Hearing Panel, or Appeals Committee or engages in dilatory, disruptive, or contumacious conduct during a proceeding, the Business Conduct Committee, Hearing Panel, or Appeals Committee may impose those sanctions that are just under the circumstances. In particular, the Business Conduct Committee, Hearing Panel, or Appeals Committee may —
(a)Find that matters covered by the order or any other designated facts shall be taken as established against the noncomplying party;
(b)Refuse to allow the noncomplying party to support or oppose designated claims or defenses or prohibit the noncomplying party from introducing designated witnesses or documents into evidence;
(c)Strike portions of the noncomplying party's Complaint or Answer;
(d)Stay further proceedings until the noncomplying party complies with the order:
(e)Dismiss the Complaint if the Compliance Department is the noncomplying party or find the relevant facts and legal conclusions in the Complaint to be admitted if a Respondent is the noncomplying; or
(f)Bar an attorney or other representative from the proceeding if the attorney or representative has engaged in dilatory, disruptive, or contumacious conduct.