Search NFA Rulebook

Compliance Rules

Part 3 - Compliance Procedures


[Effective date of amendments: December 8, 1987; October 29, 1991; September 30, 1992; March 15, 1994; February 2, 1995; March 12, 1999; November 30, 2001 and July 1, 2019.]

A Member or Associate may be summarily suspended from membership, or association with a Member, may be required to restrict its operations (e.g., restrictions on accepting new accounts), or may otherwise be directed to take remedial action, (e.g., may be ordered to immediately infuse additional capital or to maintain its adjusted net capital at a level in excess of its current capital requirement), where the President, with the concurrence of the NFA Board of Directors or Executive Committee, has reason to believe that the summary action is necessary to protect commodity interest markets, customers, counterparties, or other Members or Associates. No member of either the Board of Directors or the Executive Committee shall participate in a summary action if the member, or any person with whom the member is connected, has a financial, personal or other direct interest in the matter under consideration or is disqualified under Bylaw 516 or Bylaw 708(c). Notice of such summary action shall be given promptly to the Commission.

(b) Procedure.

The following procedures shall be observed in actions under this Rule:

    (i) The subject of the action (the "Respondent") shall, whenever practicable, be served with a notice before the action is taken. If prior notice is not practicable, the Respondent shall be served with a notice at the earliest opportunity. This notice shall (A) state the action taken or to be taken; (B) briefly state the reasons for the action; (C) state the time and date when the action became or becomes effective and its duration; and (D) state that any person aggrieved by the action may petition the Commission for a stay of the effective date of the action pending a hearing pursuant to Commission Regulations, Part 171, within 10 days of service. Service may be made by personal delivery (effective upon receipt), by telefax (effective upon transmission), or by mail (effective upon deposit). When service is effected by mail, the time within which the person served may respond shall be increased by five days.

    (ii) The Respondent shall be given an opportunity for a hearing promptly after the summary action is taken. Any such hearing shall be conducted before a Hearing Panel under the procedures of Rule 3-9.

    (iii) The Respondent shall have the right to be represented by an attorney-at-law or other person in all proceedings after the summary action is taken, but the Hearing Panel may bar from the proceeding any representative for dilatory, disruptive, or contumacious conduct.

    (iv) Promptly after the hearing, the Hearing Panel shall issue a written and dated decision affirming, modifying or reversing the action taken, based upon the evidence contained in the record of the proceeding. A copy of the decision shall be furnished promptly to the Respondent, the Appeals Committee and the Commission. The decision shall contain:

      (A) A description of the action taken and the reasons for the action;

      (B) A brief summary of the evidence received at the hearing;

      (C) Findings and conclusions;

      (D) A determination as to whether the summary action that was taken should be affirmed, modified or reversed; a declaration of any action to be taken against the Respondent as the result of that determination; the effective date and duration of that action; and a determination of the appropriate relief based on the findings and conclusions;

      (E) A statement that any person aggrieved by the action may have a right to appeal the action pursuant to Commission Regulations, Part 171, within 30 days of service; and

      (F) A statement that any person aggrieved by the action may petition to the Commission for a stay pursuant to Commission Regulations, Part 171, within 10 days of service.

(c) Appeal.

The Respondent shall have no right to appeal a final action taken under this Rule to the Appeals Committee.

(d) Review.

The Appeals Committee may on its own motion review a decision of the Hearing Panel issued under paragraph (b)(iv) above, by giving written notice to the Respondent of its decision to review within 15 days of the date of the decision. The review shall be conducted in accordance with paragraphs (d), (e), (f) and (g) of Rule 3-13.