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§9.13 Effective date of disciplinary actions.

(a) Any disciplinary action taken by an exchange shall not become effective until at least ten (10) days after written notice prescribed by § 9.11(a) is delivered to the Commission. However, the exchange may cause the disciplinary action to become effective prior to that time if:

(1) In accordance with § 8.25, the exchange reasonably believes that immediate action is necessary to protect the best interests of the marketplace;

(2) In accordance with § 8.17(b), the actions of a person who is within an exchange's jurisdiction impede the progess of disciplinary hearing;

(3) In accordance with § 8.27, a person has failed to timely submit accurate records required for clearing or verifying each day's transactions or other similar activities; or

(4) The person against whom the action is taken has consented to the sanction to be imposed.

(b) If the exchange determines in accordance with paragraph (a)(1) of this section that the disciplinary action shall become effective prior to the expiration of ten (10) days after written notice thereof, it shall by telegram or other means of written telecommunication immediately notify the Commission and the person against whom the action is taken, stating the reasons for that determination.

Subpart C-Initial Procedure With Respect to Applications for Review

§9.21 Application.

(a) Any person who is the subject of disciplinary action by an exchange or any person who is adversely affected by any other action of an exchange may, at any time within ten (10) days after notice of the disciplinary action has been provided to the person in accordance with § 9.11(a) or within ten (10) days of that adverse action, file a written notice of appeal with the Commission stating an intention to apply to the Commission for review of such action and within thirty (30) days after the notice of disciplinary or other adverse action has been mailed, file with the Commission a written ap

plication for review of the exchange action.

(b) Each application submitted to the Commission pursuant to this section shall include:

(1) The name and residence address of the applicant;

(2) The name of the exchange;

(3) If known, the specific rule or rules of the exchange which resulted in the applicant's being the subject of disciplinary or other adverse action;

(4) A concise statement of all facts relevant to the consideration of the application, including, if known, the date and place of each alleged act or omission forming the basis of the exchange's action;

(5) The date on which the disciplinary or other adverse action was imposed by the exchange or the date on which the final exchange decision was rendered;

(6) A full description of the disciplinary or other adverse action imposed and the relief sought; and

(7) A statement of the reasons why it is claimed that the disciplinary action or other adverse action is not in accordance with the rules of the exchange or the policies of the Act, and the specific facts which support those

reasons.

(c) Each application shall be signed personally by an individual applicant or by a duly authorized officer or agent of an applicant that is not a natural person. The applicant must attest that he knows the facts set forth in the application to be true, or believes the facts set forth to be true, in which event the information upon which he formed that belief shall be set forth with particularity. The application must also include a certification showing that a true copy of the application has been served on the exchange involved concurrently with its filing with the Commission.

§ 9.22 Stay pending review.

(a) A party who is the subject of a disciplinary action taken pursuant to § 9.13(a)(1) may petition the Commission to stay the effectiveness of the disciplinary action pending completion of the exchange hearing conducted under § 8.26. A party who has filed a notice of appeal in accordance with § 9.21(a) may petition the Commission to stay the disciplinary or other adverse action, pending consideration by the Commission of the application for review and, if granted, the appeal underlying the application. A petition filed under this section shall state the reasons that the stay is requested and the facts relied upon, and if the facts are subject to dispute, the petition shall be supported by affidavits or other sworn statements or copies thereof. The petition must also include a certification showing that a true copy of the petition has been served on the exchange involved concurrent with the filing of the petition with the Commission. Based upon the petition, the Commission, in its discretion, may order a stay of the disciplinary or other adverse action.

(b) An exchange may serve and file a written response to any petition for a stay within ten (10) days after service of the petition. However, if a petition for a stay involves a disciplinary action taken pursuant to § 9.13(a)(1) or other disciplinary or other adverse action which is to become effective before the ten-day period for filing a response expires, the petition may be acted upon by the Commission at any time, without waiting for a response thereto. An exchange may, however, request reconsideration, vacation or modification of a stay granted.

§9.23 Answer.

Within twenty (20) days after receipt of an application, served in accordance with § 9.21(c), the exchange may, at its election, file an answer with the Commission, setting forth facts which support the disciplinary action or other adverse action taken by the exchange, and a statement expressing why, notwithstanding the claims made in the application, the disciplinary action or other adverse action by the exchange is in accordance with the rules of the exchange and the policies of the Act. If an answer is filed, it shall be accompanied by certification showing that a true copy of the answer has been served upon the applicant. If no answer is filed by the exchange in the case of an application to review disciplinary action of the exchange, the notice of

the disciplinary action filed with the Commission under § 9.11 shall be deemed the exchange's answer to the application.

Subpart D-Commission Review of Disciplinary Action or Other Adverse Action Initiated by Application

§ 9.30 Determination to review exchange action.

The determination to review any exchange disciplinary or other adverse action is a matter committed to the Commission's discretion. In determining whether to grant or deny review of any exchange disciplinary or other adverse action, the Commission may consider such factors as:

(a) Whether the issues presented involve an important policy under the Act;

(b) The extent to which a review proceeding would interfere with the efficient disposition of other Commission business;

(c) The precedential value of a Commission decision on the issues presented;

(d) Whether there is substantial divergence among the exchanges in their treatment of similar matters;

(e) Whether it appears from the application or other information available to the Commission that the exchange action may not have been taken in accordance with any of the standards contained in § 9.37(b); or

(f) Any other factors which the Commission deems relevant.

§ 9.31 Institution of review.

(a) If the Commission determines to deny the application for review of the disciplinary action or other adverse action, it shall promptly give notice to that effect to the exchange and to the applicant.

(b) If the Commission determines to grant the application for review, the Commission shall issue an order to institute a review of the disciplinary action or other adverse action.

§ 9.32 Docketing of the proceeding.

If the Commission institutes review pursuant to the provisions of § 9.31,

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(a) Unless otherwise ordered by the Commission, the applicant shall file an opening brief within twenty (20) days after receipt of the order instituting review under § 9.32. The brief shall not exceed forty (40) pages, without leave of the Commission.

(b) An answering brief shall be filed by the exchange within twenty (20) days after service of the opening brief and shall not exceed forty (40) pages, without leave of the Commission.

(c) No further briefs shall be permitted.

(d) An original and five (5) copies of all briefs submitted under this section shall be filed with the Hearing Clerk.

(e) The briefs shall follow the form prescribed in § 10.82(c) (1) and (2) of the rules of practice.

§ 9.36 Oral argument.

On its own motion or at the request of either party, the Commission may, in its discretion, hear oral argument by the parties any time before the decision of the Commission is filed with the Hearing Clerk. Any such oral argument shall be recorded and transcribed in written form.

§ 9.37 Decision by the Commission.

or

(a) Upon review, the Commission may affirm, modify, set aside remand for further proceedings, in whole or in part, the decision of the exchange. The Commission's decision shall be based upon the record before it including the record of the disciplinary proceeding or other adverse action, any additional evidence provided in accordance with § 9.34(b) and any oral argument made in accordance with § 9.36. The Commission's decision shall be contained in its opinion and order. In the event the Commission is equally divided as to its decision, the decision of the exchange shall be affirmed without a Commission opinion.

(b) The standards for Commission review of the disciplinary action or other adverse action shall be:

(1) Whether the exchange disciplinary action or other adverse action was taken in accordance with the rules of the exchange;

(2) Whether fundamental fairness was observed in the conduct of the disciplinary proceeding or the proceeding resulting in other adverse action;

(3) Whether there is substantial evidence in the record to support a finding that there has been a violation of the rules of the exchange or that the exchange was otherwise justified in taking the disciplinary or other adverse action;

(4) Whether the disciplinary or other adverse action taken by the exchange was reasonable in light of all circumstances; and

(5) Whether the disciplinary action or other adverse action otherwise accords with the policies of the Act.

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matters.

(a) Denial, suspension, or revocation of registration as a futures commission merchant, or associated person, floor broker, commodity pool operator or commodity trading advisor pursuant to sections 4n(7), 6(b), 8a(2), and 8a(3) of the Act, 7 U.S.C. 6n(7), 9, 12a(2), 12a(3), or denial, suspension, or revocation of designation as a contract market pursuant to sections 6 and 6(a) of the Act, 7 U.S.C. 8;

(b) The issuance of cease and desist orders pursuant to sections 6b and 6(c) of the Act, 7 U.S.C. 13a and 13b;

(c) Denial of trading privileges pursuant to section 6(b) of the Act, 7 U.S.C. 9;

(d) The assessment of civil penalties pursuant to sections 6(b) and 6b of the Act, 7 U.S.C. 9 and 13a; and

(e) Any other proceedings where the Commission declares them to be applicable.

These rules do not apply to:

(f) Investigations conducted pursuant to sections 8 and 16(a) of the Act, 7 U.S.C. 12 and 20(a), except as specifically made applicable by the Rules Relating to Investigations set forth in Part 11 of this chapter;

(g) Reparation proceedings under section 14 of the Act, 7 U.S.C. 18, except as specifically made applicable by the Rules Relating to Reparation Proceedings set forth in Part 12 of this chapter;

(h) Public rulemaking, except as specifically made applicable by the Rules Relating to Public Rulemaking Procedures sets forth in Part 13 of this title.

The rules shall be construed to secure the just, speedy and inexpensive determination of every proceeding with full protection for the rights of all parties therein.

§ 10.2 Definitions.

For purposes of this part: (a) "Act" means the Commodity Exchange Act, as amended, 7 U.S.C. 1, et

seq.;

(b) "Adjudicatory proceeding" means a judicial-type proceeding leading to the formulation of a final order;

(c) "Administrative Law Judge" means an administrative law judge appointed pursuant to the provisions of 5 U.S.C. 3105 (provisions of the rules in this part which refer to Administrative Law Judges may be applicable to

other Presiding Officers as well, as set forth in § 10.8);

(d) "Administrative Procedure Act" means those provisions of the Administrative Procedure Act, as codified, which are contained in 5 U.S.C. 551 through 559;

(e) "Commission" means the Commodity Futures Trading Commission;

(f) "Complaint" means any document initiating an adjudicatory proceeding, whether designated a complaint or an order for proceeding or otherwise;

(g) "Division of Enforcement" means that office in the Commission that prosecutes a complaint issued by the Commission;

(h) "Hearing" means that part of a proceeding which involves the submission of evidence, either by oral presentation or written submission;

(i) "Hearing Clerk" means that member of the Commission's staff designated as such in the Commission's Office of Hearings and Appeals;

(j) "Order" means the whole or any part of a final procedural or substantive disposition of a matter by the Commission or by the Presiding Officer in a matter other than rulemaking;

(k). "Party" includes a person or agency named or admitted as a party to a proceeding;

(1) "Person" includes an individual, partnership, corporation, association, exchange or other entity or organization;

(m) "Pleading" means the complaint, the answer to the complaint, any supplement or amendment thereto, and any reply that may be permitted to any answer, supplement or amendment;

(n) "Presiding Officer" means a member of the Commission, and Administrative Law Judge, or a hearing officer designated by the Commission to conduct a hearing on a specific matter, or the Commission itself, if it is to preside at or accept the introduction of evidence in a particular proceeding (provisions of the rules in this part which refer to Administrative Law Judges may be applicable to other Presiding Officers as well, as set forth in § 10.8);

(o) "Respondent" means a party to an adjudicatory proceeding against

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