Proposed Rule

RULE 504. PROCEDURES GOVERNING APPLICANTS AND REGISTRANTS DISQUALIFIED FROM REGISTRATION UNDER SECTION 8a(2), 8a(3) OR 8a(4) OF THE ACT.

(d) Interim Order. After the receipt of a registrant's written response to the Notice of Intent and any reply thereto from the Vice-President of Compliance, the Membership Committee or a designated Subcommittee shall determine based on the record before it whether the registrant is disqualified from registration under Section 8a(2) of the Act.

(1) If the Membership Committee or a designated Subcommittee determines that the registrant is disqualified under Section 8a(2) of the Act, the Membership Committee or a designated Subcommittee, within 30 days after receipt of the registrant's written response, if any, and any reply thereto, shall issue an interim order suspending the registration of the registrant. The interim order shall inform the registrant that the registration of the registrant shall be suspended, effective five days after the interim order is served upon the registrant, and such suspension shall remain in effect until a Final Order has been issued. In no event shall the registrant be suspended for a period to exceed six months.

(2) If the Membership Committee or a designated Subcommittee determines that the registrant is not disqualified from registration under Section 8a(2) of the Act, the Membership Committee or a designated Subcommittee shall, within 30 days after receipt of the registrant's written response and any reply thereto, either issue a Withdrawal of Notice of Intent or, if the Membership Committee or a designated Subcommittee determines that the disqualification constitutes a Section 8a(3) disqualification, it may grant the Vice-President leave to file an Amended Notice of Intent within thirty days. In either event, the Membership Committee or a designated Subcommittee shall make a finding that the registrant is not disqualified under Section 8a(2) of the Act.

(3) If the Membership Committee or a designated Subcommittee determines that there is not enough evidence in the written record to decide whether the registrant should be disqualified from registration under Section 8a(2) of the Act, the Membership Committee or a designated Subcommittee may, within 30 days after receipt of the registrant's written response and any reply thereto, either decline to make a finding or issue an order for an oral hearing. The Membership Committee or a designated Subcommittee shall rely upon any evidence produced at an oral hearing and any written submissions to make the determination required in paragraphs (d)(1) or (d)(2) of this Rule.

RULE 509. SETTLEMENTS

(b) Content of Offer. Each Offer of Settlement made by a respondent shall:

(5) in a case where a respondent is offering to be registered subject to conditions, contain representations by the firm or the individual, if the individual is sponsoring a FB or FT applicant or registrant, that will be sponsoring the respondent that the sponsor will abide by any conditions imposed on the applicant's or registrant's registration and that the sponsor is eligible to sponsor a registrant whose registration is subject to conditions. A firm or individual is eligible to sponsor a registrant whose registration is subject to conditions if the sponsor is not:
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(E) subject to a finding within the last five years, in an action by the Commission or NFA, that the firm or any of its current principals have engaged in fraud or have failed to supervise its APs; and

(F) subject to a pending adjudicatory proceeding brought by or before NFA, against any of the firm's current principals, alleging fraud or failure to supervise; and