-------------------- BEGINNING OF PAGE #1 ---------------------

SECURITIES AND EXCHANGE COMMISSION

17 CFR PARTS 200, 201, 202, 203, 209, 228, 229, 230, 232, 240,
250, 260, 270 and 275

[Release No. 34-35833; File No. S7-40-92]

RIN 3235-AF91

Rules of Practice

AGENCY: Securities and Exchange Commission.

ACTION: Final rules. 

SUMMARY:  The Securities and Exchange Commission today announces
the adoption of comprehensive revisions to its Rules of Practice
("Rules"), the procedural rules that govern Commission
administrative proceedings.  Enforcement proceedings initiated by
the Commission and review of disciplinary proceedings brought by
self-regulatory organizations are among the most frequently
occurring and significant proceedings governed by the Rules. 
Adoption of the Rules and the other actions taken today implement
recommendations made by the Commission's Task Force on
Administrative Proceedings in its final Report, entitled Fair and
Efficient Administrative Proceedings.

     The Rules contain procedures implementing authority granted
to the Commission by the Securities Enforcement Remedies and
Penny Stock Reform Act of 1990 to issue administrative temporary
cease-and-desist and disgorgement orders.  The Rules also
implement revised procedures for the conduct of hearings,
including simplified service of orders instituting proceeding,
expanded use of prehearing conferences, codification of policies
on the availability of certain investigation files to respondents
in enforcement and disciplinary proceedings, issuance of
subpoenas returnable prior to hearing and the consideration by
administrative law judges of dispositive motions prior to
hearing.  In addition, the Rules contain revised procedures
governing appeals to the Commission including various procedural
requirements governing Commission review of self-regulatory
determinations that were previously contained in part in Rules
19d-2 and 19d-3 under the Securities Exchange Act of 1934.

     The revised Rules better facilitate full, fair and efficient
proceedings by setting forth applicable procedural requirements
more completely and in an easier to use format; by streamlining
procedures that had become burdened with archaic requirements;
and by the addition of provisions that address changes in
statutory requirements, judicial and administrative case law
developments, Commission policies, and litigation practices since
the Rules were last revised.  

     The Commission also announces the issuance of a statement of
Informal Procedures and Supplementary Information Concerning
Adjudicatory Proceedings.  This statement establishes guidelines
for the completion of key phases of contested adjudications;
requires periodic case status reports that will formally apprise
the Commission if an adjudicatory matter is pending for longer
than specified periods of time, so that the Commission can
determine whether additional steps are necessary to reach a fair
and timely resolution of the matter; and provides for increased
and more timely disclosure concerning the Commission's
adjudicatory docket through the periodic publication in the SEC
 
-------------------- BEGINNING OF PAGE #2 ---------------------

Docket of summary statistical information concerning changes in
the Commission's case load.  

EFFECTIVE DATE: These rules are effective [insert date 30 days
after publication in the Federal Register]. 

TRANSITION PROVISION:  Any administrative proceeding that has
been docketed by the Commission -- i.e., in which an
administrative proceedings file number has been assigned by the
Secretary -- prior to the date of this Federal Register
publication, [insert date of publication], shall be completed
pursuant to the former Rules of Practice.  Any proceeding
docketed by the Commission after the date of this Federal
Register publication but prior to the effective date shall be
conducted under the former Rules of Practice unless, within 30
days of the effective date, each respondent in the proceeding
submits a request in writing to the Secretary that the
proceedings be conducted under the Rules of Practice adopted
today.

FOR FURTHER INFORMATION CONTACT: Andrew Z. Glickman or Daniel O.
Hirsch, Office of the General Counsel at (202) 942-0870; U.S.
Securities and Exchange Commission; 450 Fifth Street, N.W.; Stop
6-6; Washington, D.C. 20549. 

I.   BACKGROUND
     Today's adoption of comprehensive revisions to the Rules of
Practice ("Rules") of the Securities and Exchange Commission
("Commission") and issuance of a statement of informal procedures
with respect to Commission adjudications culminate an extensive
review of the Commission's adjudication procedures and process. 
In July 1990, then-Commissioner Mary L. Schapiro was appointed
chairman of the Task Force on Administrative Proceedings ("Task
Force" or "Schapiro Task Force").  The mission of the Task Force
was to review the rules and procedures relating to Commission
administrative proceedings, to identify sources of delay in those
proceedings and to recommend steps to make the adjudicatory
process more efficient and effective.-[1]-  Following passage of
the Securities Enforcement Remedies and Penny Stock Reform Act
("Remedies Act"),-[2]- the Task Force greatly expanded its work
to include preparing procedures to implement the authority
granted to the Commission by the Remedies Act.  The Task Force
ultimately determined that it would be necessary and appropriate
to revise completely the entire Rules of Practice. 
     In January 1991 and December 1991, the Schapiro Task Force
presented to the Chairman interim findings and recommendations
concerning the need to reduce the pending case backlog. 
Implementation of these recommendations included, among other
things, a reorganization of the Adjudications Group within the
Office of the General Counsel, significant increases in staff
resources assigned to adjudicatory proceedings, and more frequent
Commission meetings to consider proposed adjudicatory opinions.  
     In August 1992, the Secretary published approximately 400
orders issued by the Commission and administrative law judges
between 1964 and 1992.-[3]-  The previously unpublished orders,
which were assembled and organized by the Task Force, concerned

-------- FOOTNOTES --------                    

-[1]-  SEC Creates Task Force on Administrative Proceedings, News
Release 90-39 (July 19, 1990).  

-[2]-     Pub. L. No. 101-429, 104 Stat. 931 (1990).

-[3]-     52 SEC Docket 3, 3-792 (Aug. 18, 1992). 
 
-------------------- BEGINNING OF PAGE #3 ---------------------

interpretations of the Rules of Practice or other procedural
issues.  The orders provide litigants with additional information
about applicable procedure and thereby reduce the likelihood that
previously decided issues will need to be relitigated.  Also, as
recommended by the Task Force, the Commission began regular
publication in the SEC Docket of initial decisions of the
administrative law judges as well as significant procedural
orders.
     In March 1993, the Schapiro Task Force issued its final
report, Fair and Efficient Administrative Proceedings ("the Task
Force Report").-[4]-  The Task Force concluded that the
fundamental structure of the Commission's administrative process
is sound.  The Task Force found, however, that there was
unnecessary delay in deciding litigated adjudicatory
proceedings.-[5]-  The Task Force recommended a comprehensive
revision of the Rules of Practice and included proposed new Rules
in its Report.  In addition, the Task Force made various other
recommendations designed to improve the efficiency and fairness
of the Commission's administrative proceedings.-[6]-  These
included steps that were intended to make structural changes that
would reduce the likelihood of a recurrence of the conditions
that led to unnecessary delay and a backlog of pending cases.
     In November 1993, the Commission published in the Federal
Register a release proposing to adopt the Task Force's proposals
pertaining to the Rules and asking interested persons for
comment.-[7]- 

II.  DISCUSSION OF THE REVISED RULES 
     The Commission received seven comment letters from various
interested persons.-[8]-  Although not numerous, the comment
letters as a group contained very extensive commentary on the
proposed Rules.  Commenters generally greeted the Commission's
proposals favorably.  All commenters praised the Commission's
initiating a review of its Rules with the goal of further
promoting fair and efficient administrative proceedings.  All
commenters submitted proposals to make various modifications to
the Rules including many suggestions in response to the specific
requests for comment contained in the proposing release.  A
number of comments also addressed matters not directly within the
                    
-------- FOOTNOTES --------

-[4]-  Task  Force on Administrative Proceedings,  Securities and
Exchange   Commission,   Fair   and    Efficient   Administrative
Proceedings: Report of  the Task  Force (Feb. 1993)  [hereinafter
Task Force Report].

-[5]-     Id.  at  13.    See  also  id.  at  19-22  (summary  of
statistical  data concerning  proceedings  adjudicated from  1982
through 1992).

-[6]-     Id. 12-19.

-[7]-    Proposed Rules  of  Practice, Exchange  Act  Release No.
33163, 58  FR 61732 (Nov.  22, 1993).   Most of the  rules in the
Rules of Practice deal with agency procedure and practice and are
exempt from the Administrative Procedure Act's notice and comment
requirement  for rulemaking,  5  U.S.C.   553(b)(3).   Consistent
with the recommendation of the Task  Force, though, all the Rules
were published for comment.  See Task Force Report, supra note 4,
at 12.

-[8]-   The comment  letters may be  inspected and copied  at the
Commission's  Public  Reference  Room, 450  Fifth  Street,  N.W.,
Washington, D.C. 20549, File No. S7-40-92.  
 
-------------------- BEGINNING OF PAGE #4 ---------------------

scope of the Rules.  These included internal Commission
management issues, such as the organizational structure of the
Commission's divisions and offices, or enforcement policy issues,
such as the frequency with which the Commission will initiate
administrative proceedings.  Significant changes to the Rules are
discussed below.

     A.   New Organizational Structure of the Rules 
     The former Rules, which had not been comprehensively revised
since 1960, contained requirements which were out-of-date or
inconsistent with current practices and, in a few cases,
inconsistent with other rules.  In revising the Rules, emphasis
was placed on maintaining consistency with applicable statutory
language while improving intelligibility, ensuring that the Rules
accurately reflected current Commission practice, and providing
internal consistency in the use of terms between individual
rules. 
     The Commission has adopted a new organizational structure
and numbering system for the Rules of Practice based on model
administrative rules prepared by the Administrative Conference of
the United States ("ACUS").  As originally proposed, the
Commission's Rules had been arranged in roughly the order in
which an administrative proceeding progresses and numbered
consecutively.  The new format groups rules together in six broad
categories based on which phase or type of proceeding they
govern.  The first four groups -- general rules; institution of
proceedings and prehearing rules; hearing rules; and rules
regarding appeals to the Commission and Commission review -- are
predicated upon the four classifications suggested by ACUS.  The
two additional groups are related to specific Commission
proceedings and administrative remedies and sanctions -- rules
regarding temporary orders, suspension of a registration and
summary suspensions of trading; and rules governing disgorgement
and penalty payments.  
     Within each group, related rules are placed together.  Rules
which, as proposed, covered multiple topics have been divided
into shorter rules each limited to fewer topics.  The new
structure increases the use of rule headings and subheadings to
guide a user to the appropriate rule.  To the extent possible,
related provisions cross-reference each other.  Each of the six
major groups of rules is numbered in a separate series, from 100
through 600.  In addition to improving the ease of use of the
rules, the new numbering system will provide the Commission with
greater flexibility when future amendments and additions to the
Rules occur.  

     B.   Comments Accompanying the Rules
     The Commission has prepared explanatory comments for the
Rules of Practice; these comments appear with the Rules in this
"Supplementary Information" section.  The complete text of the
Rules without comments appears below in Section VII.  Each
explanatory remark is identified as either a "comment" or a
"revision comment."  "Comments" are statements explaining the
basis for a rule, describing the rule's rationale, referencing
related rules, or providing information concerning pertinent
Commission practice.  Comments are not a part of the rules, and
are not included in the Code of Federal Regulations.  The
Commission believes, however, that information in the comment
section will assist persons consulting the Rules in a more
thorough understanding of the Rules.  Printed copies of the
revised Rules of Practice including the comments will be
available from the Commission's Publications Branch, U.S.
Securities and Exchange Commission; 450 Fifth Street, N.W.; Stop
C-11; Washington, D.C. 20549.  A copy of this publication will be
 
-------------------- BEGINNING OF PAGE #5 ---------------------

provided to each respondent by the Secretary at the commencement
of proceedings. 
     "Revision comments" are statements explaining changes from
the proposed Rules to the adopted Rules.  In addition, revision
comments include, where appropriate, a brief discussion of
responses to the requests for comment in the proposing release.

     C.   Summary of Major Changes to the Rules from the Former
     Rules
     This section contains a capsule summary of major changes
from the former Rules.-[9]-
          1.   Temporary cease-and-desist orders.  The Rules
include procedures for the issuance of a temporary cease-and-
desist order ("TCDO").-[10]-  Rules 510, 511 and 512 contain the
application procedures, notice requirements, hearing procedures
and issuance requirements for TCDO's.  Rule 513 contains
additional requirements for ex parte issuance of a TCDO.  Rule
514 sets forth the availability of judicial review and the
duration of a TCDO.  Rule 530 governs special procedures relating
to issuance of an initial decision whether to enter a permanent
order if a temporary order is pending.  Rules 531 and 540 govern
Commission review of that initial decision, and duration of the
temporary order pending that review.
     The Division of Enforcement may file an application for a
TCDO simultaneously with or after the commencement of proceedings
seeking a permanent cease-and-desist order with respect to a
registered entity or associated person.-[11]-  The application
must be accompanied by a declaration of facts signed by a person
with knowledge of the facts contained therein; a memorandum of
points and authorities; a proposed order imposing the temporary
relief sought; and, unless relief is sought ex parte, a proposed
notice of hearing and order to show cause whether the temporary
relief should be imposed.  If a proceeding for a permanent cease-
and-desist order has not already been commenced, the Division
must also file a proposed order instituting proceedings to
determine whether a permanent cease-and-desist order should be
imposed. 
     Unless the conditions warranting issuance of an ex parte
order are met, a respondent shall be served with the application
and additional papers and a hearing on the application shall be
scheduled.
     If a respondent has been served with a temporary cease-and-
desist order entered without a prior Commission hearing, the
respondent may apply to the Commission to have the order set
aside, limited, or suspended, and if the application is made
within 10 days after the date on which the order was served, may
request a hearing on such application.  The Commission shall hold
a hearing and render a decision on such an application at the
                    
-------- FOOTNOTES --------

-[9]-      The  text of  the  Rules,  with explanatory  comments,
begins on  page ___.  The  text of the  Rules without explanatory
comments begins on page ___. 

-[10]-    Rules 510-514, 530, 531 and 540.

-[11]-  Prior to filing an  application for temporary relief, the
staff would,  in all  cases, have to  obtain authority to  seek a
temporary order from the Commission.   As with any other decision
to  initiate  enforcement  action  prior  to the  institution  of
proceedings,  Commission deliberations  and discussions  with the
staff concerning the decision whether to authorize an application
for  temporary  relief would  be  nonpublic, privileged,  and not
ordinarily reviewable by a court.
 
-------------------- BEGINNING OF PAGE #6 ---------------------

earliest possible time.  The hearing shall begin within two days
of the filing of the application unless the applicant consents to
a longer period or the Commission, by order, for good cause
shown, sets a later date.  If the Commission does not render its
decision within 10 days of the application or such longer time as
consented to by the applicant, the temporary order shall be
suspended until a decision is rendered.  
     A temporary cease-and-desist order may be appealed to a
federal district court within 10 days of service of an order
entered with prior notice, or within 10 days after the
Commission's issuance of its decision upon a respondent's
application to set aside, limit or suspend an ex parte order.  
     After issuance of a temporary cease-and-desist order, the
proceeding to determine whether to enter a permanent order shall
go forward with a hearing before a hearing officer and the
issuance of an initial decision.  The Rules establish procedures
with respect to expedited consideration of any appeal of the
initial decision.  The Rules also set forth limitations on the
duration and scope of the temporary cease-and-desist order
pending issuance of the Commission's opinion on review of the
initial decision.
          2.   Suspension of Registered Entity.  Rules 520, 521,
522 and 524 include extensive revisions to the provisions of
former Rule 19 relating to the suspension of a registered broker
or dealer pending a final determination whether the registration
shall be revoked.  Consistent with amendments to the Securities
Exchange Act, the new rules apply to a municipal securities
dealer, government securities broker, government securities
dealer, or transfer agent as well as a broker or dealer.  Where
possible, the new procedures for suspensions pending a final
determination whether to revoke a registration parallel the
procedures relating to temporary cease-and-desist orders.  
          3.   Disgorgement.  The 600 series of the revised Rules
contains new provisions governing payment of disgorgement,
interest and penalties.  Rule 600 requires prejudgment interest
to be assessed on any sum required to be paid pursuant to an
order of disgorgement.  The rate of interest is set at the IRS
underpayment rate and compounded quarterly unless the Commission
specifies a lower rate with respect to funds placed in an
approved escrow.  Under Rule 601 unless otherwise provided, funds
due pursuant to an order by the Commission requiring the payment
of disgorgement, interest or penalties must be paid no later than
21 days after service of the order.  After disgorgement has been
paid, a proposed plan of disgorgement will be submitted pursuant
to Rule 610.  
     Rule 611 lists the required elements of such disgorgement
plan.  A plan may provide for distribution of funds to investors
or to a court registry or court-appointed receiver for injured
investors.  Where return of disgorged funds to investors is not
justified, funds may be paid to the U.S. Treasury.  Rule 612
requires that notice of a proposed plan be published in the SEC
News Digest and the SEC Docket and other publications as
required.  A plan may be approved, approved with modifications,
republished for additional comments or disapproved pursuant to
Rule 613.  Rule 614 contains provisions governing the
administration of an approved plan.  
     Rule 620 addresses conditions under which a non-party will
be granted leave to intervene or to participate in a proceeding
for the purpose of challenging a disgorgement order or plan of
disgorgement.  The Rule provides that no person shall be granted
leave to intervene or to participate for such a purpose based
solely upon that person's eligibility or potential eligibility to
participate in a disgorgement fund or based upon any private
 
-------------------- BEGINNING OF PAGE #7 ---------------------

right of action such person may have against any person who is
also a respondent in an enforcement proceeding.  
     Persons claiming an inability to pay disgorgement, interest
or a penalty must do so in accordance with Rule 630.  A
respondent who asserts inability to pay may be required to file a
sworn financial statement and to keep the statement current. 
Failure to file a required statement may be deemed a waiver of
the claim of inability to pay.
          4.   Expanded Role for Prehearing Conferences.  The
Rules significantly expand the role of prehearing conferences and
encourage more active prehearing case management by
administrative law judges.  Under the proposed rule, no initial
prehearing conference was required.  In accordance with
suggestions by commenters, revised Rule 221 requires that except
where the emergency nature of a proceeding would make a
prehearing conference clearly inappropriate, both an initial and
a final prehearing conference shall be held.  The initial
conference is to be held within 14 days of service of an answer,
or if no answer is required, within 14 days of the issuance of an
order instituting proceedings.  The final conference is to be
held as close to the beginning of the hearing as is reasonable.  
     The Rules make an initial prehearing conference mandatory in
most cases because such a conference can eliminate unnecessary
delay and improve the quality of adjudicative decisionmaking by
sharpening the preparation of cases and presentation of issues. 
The increased role for prehearing conferences will facilitate the
new procedures that provide for access to certain categories of
investigation file documents in enforcement and disciplinary
proceedings and for the prehearing production of documents
pursuant to subpoena.  
          5.   Prehearing Access to Certain Investigative
Documents.  Pursuant to new Rule 230, in an enforcement or
disciplinary proceeding, the Division of Enforcement will provide
any party with an opportunity for inspection and copying of
certain categories of documents obtained by the Division in
connection with the investigation leading to the Division's
recommendation to institute proceedings.  The rule codifies the
prevailing practice of the Division of Enforcement staff in the
Headquarters Office and various regional offices.  A respondent's
right to inspect and copy documents under this Rule is automatic;
the respondent does not need to make a formal request for access
through the hearing officer.
     Documents to which access must be provided include:  (1)
each subpoena issued; (2) every other written request to persons
not employed by the Commission to provide documents or to be
interviewed; (3) the documents turned over in response to any
such subpoenas or other written requests; (4) all transcripts and
transcript exhibits; (5) any other documents obtained from
persons not employed by the Commission; and (6) any final
examination or inspection reports prepared by the Division of
Market Regulation or the Division of Investment Management.  The
Division of Enforcement's obligation under this rule relates only
to documents obtained by the Division of Enforcement.  Documents
located only in the files of other divisions or offices are
beyond the scope of the rule.  
     The Division of Enforcement may withhold a document if:  (1)
the document is privileged; (2) the document is an internal
memorandum, note or writing prepared by a Commission employee,
other than certain examination or inspection reports prepared by
the Divisions of Market Regulation or Investment Management, or
is otherwise attorney work-product and will not be offered in
evidence; (3) the document would disclose the identity of a
confidential source; or (4) the hearing officer grants leave to
withhold a document or category of documents as not relevant to
 
-------------------- BEGINNING OF PAGE #8 ---------------------

the subject matter of the proceeding or otherwise, for good cause
shown. 
     Rule 230 is not the exclusive means by which a respondent
may obtain access to documents.  Production of documents prepared
by the staff may be required under the doctrine of Brady v.
Maryland, 373 U.S. 83 (1963), or pursuant to Jencks Act
requirements made applicable to the Commission pursuant to rule,
or may be sought by subpoena or through other procedures.  See,
e.g., the Freedom of Information Act, 5 U.S.C.   552. 
     The document access policy in Rule 230 has been revised
significantly from the proposed rule.  Under the proposed rule,
the staff was required to make a relevancy determination before a
document would be produced.  The Commission decided to change
this rule, based in part upon comments received that contended
that a relevancy determination by the staff was
problematic.-[12]-  
          6.   Prehearing Document Production Pursuant to
Subpoena.  Rule 232(a) allows for production of documents
pursuant to subpoena prior to the start of a hearing.  The Rule
states that a party may request "subpoenas requiring the
production of documentary or other tangible evidence returnable
at any designated time or place."  Under former Rule 14(b)(1),
such documents were only to be turned over at the hearing.  As
adopted, the rule will reduce delay and eliminate the need for
postponements by allowing for documents to be reviewed and
copied, and for proposed exhibits to be selected, all prior to a
final prehearing conference. 
          7.   Summary Disposition.  Under former Rule 11(e), a
motion that would dispose of a proceeding in whole or in part
could not be made, or considered by a hearing officer, prior to
the completion of the interested division's case or the
conclusion of the hearing.  See 17 CFR 201.11(e) (1994).  Rule
250 makes substantial changes to these procedures.  The Rule
provides for a motion for summary disposition by any party after
each party required to file an answer has done so and, in an
enforcement or disciplinary proceeding, after documents have been
made available to the respondent for inspection and copying.  If
the interested division has not completed presentation of its
case in chief at the hearing, a summary decision motion may be
made only with leave of the hearing officer.  The facts of the
pleadings of the party against whom the motion is made shall be
taken as true, except as modified by stipulations or admissions
made by that party, by uncontested affidavits, or by facts
officially noted.  In accordance with suggestions of a commenter,
the Rule now provides that if a party cannot, for good cause,
present facts essential to justify opposition to the motion by
affidavit prior to hearing, the hearing officer shall deny the
motion.  
     A motion for summary disposition is subject to a 35-page
limit.
          8.   Protective Orders.  The revised Rules contain
provisions allowing certain persons involved in an evidentiary
hearing to obtain a protective order for confidential
information.  Documents and testimony introduced in a public
                    
-------- FOOTNOTES --------

-[12]-  Specifically, it was suggested that the proposed standard
might deny respondents  access to documents that  "while possibly
not directly relevant to any of the Commission's allegations, may
bear  directly  on  the  lines   of  defense  the  respondent  is
developing."  ABA comment letter dated Feb. 28, 1994, at 59.   It
was  also  suggested  that  asking  the  staff  to  make  such  a
determination was  inappropriate because of the  staff's "outlook
and allegiance."  Id.
 
-------------------- BEGINNING OF PAGE #9 ---------------------

hearing are presumed to be public.  Rule 322 allows any party
intending to introduce material as evidence during a hearing, any
person who is the subject or creator of such material, or any
witness who testifies at a hearing to file a motion requesting a
protective order for such material or testimony.  A protective
order shall be granted only upon a finding that the harm
resulting from disclosure would outweigh the benefits of
disclosure.
     The former Rules of Practice contained a confidential
treatment provision that related solely to applications for
materials filed in connection with registration statements and
other statutorily required filings; it required that confidential
treatment be sought at the time of filing.  See 17 CFR 201.25
(1994).  Proposed Rule 33 would have responded to this situation
by allowing a party to seek confidential treatment under any
"applicable statute or rule," without limiting the scope of
materials sought to be protected or the timing of the
application.  
     The Commission has decided that a separate rule for
protective orders would be more efficient and easier for
adjudicatory litigants to use than a rule that encompassed not
only protective orders, but also requests for confidential
treatment under the federal securities laws-[13]- or the Freedom
of Information Act.-[14]-  
          9.   Service.  The rule for service of orders by the
Commission, Rule 141, and the rule for service of papers by
parties, Rule 150, contain a number of revisions.  Rule 141
contains new provisions specifically addressing service upon
persons in a foreign country and upon persons currently
registered with the Commission.  Rule 141 also contains a new
provision allowing a waiver of formal service to permit a party
to accept service by facsimile transmission.  For parties wishing
to use facsimile transmission to serve one another, Rule 150
allows delivery of papers by fax when two conditions are met: (i)
there must be a written agreement between the persons intending
to serve each other by fax specifying such terms as they deem
necessary with respect to telephone numbers, hours of facsimile
operation, provision of paper original or other matters; and (ii)
receipt of each document served by fax must be confirmed by a
manually signed receipt delivered by fax or other means agreed to
by the parties.  These conditions are intended to ensure that
service by fax will be both an efficient and an effective means
of service.
     D.   Technical Changes and Appendices
                    
-------- FOOTNOTES --------

-[13]-  See  Clause 30  of Schedule  A of the  Securities Act  of
1933,  15 U.S.C.    77aa(30),  and Rule  406  thereunder, 17  CFR
230.406; Section 24(b)(2) of the Securities Exchange Act of 1934,
15  U.S.C.     78x(b)(2),  and  Rule  24b-2  thereunder,  17  CFR
240.24b-2; Section 22(b)  of the  Public Utility Holding  Company
Act of  1935, 15 U.S.C.   79v(b), and Rule 104 thereunder, 17 CFR
250.104; Section 45(a) of the Investment  Company Act of 1940, 15
U.S.C.   80a-44(a), and Rule 45a-1  thereunder, 17 CFR 270.45a-1;
and Section 210(a)  of the  Investment Advisers Act  of 1940,  15
U.S.C.    80b-10(a).   See  also  Rule  of Practice  190,  17 CFR
201.190 (specifying  procedures by which  registrants may request
confidential  treatment  of   certain  information  contained  in
regulatory filings).

-[14]-   See 17  CFR 200.83  (providing for  procedures by  which
persons submitting information to the Commission can request that
the information not be disclosed pursuant  to a request under the
Freedom of Information Act, 5 U.S.C.   552).
 
-------------------- BEGINNING OF PAGE #10 ---------------------

     A number of technical changes have been made and appendices
created in order to implement the Rules.  First, former Rule 24
concerning incorporation by reference, which related to the
making of disclosure or regulatory filings has been moved from
the Rules of Practice to Regulation S-K section 10, paragraph (d)
(17 CFR 229.10(d); a comparable provision has been added to
Regulation S-B section 10, paragraph (f) (17 CFR 228.10(f)). 
Second, Commission procedures for summary suspensions pursuant to
Section 12(k) of the Exchange Act, 15 U.S.C.   78l(k), have been
moved from Part 202 of 17 CFR into new Rule 550.  Third, new
cross-reference tables showing the location of the former rules
in the revised rules and vice versa have been included in an
appendix to appear in the Code of Federal Regulations.  Finally,
all references to the Rules of Practice in the Commission's other
rules and forms have been updated.  

III. DISCUSSION OF THE STATEMENT OF INFORMAL PROCEDURES AND
     SUPPLEMENTAL INFORMATION CONCERNING ADJUDICATORY
PROCEEDINGS

     In 1990, at the time the Schapiro Task Force was created,
there was significant delay in the disposition of administrative
proceedings.  For example, in fiscal years 1991 and 1992, the
Commission issued a total of 10 opinions in Commission-initiated
administrative proceedings.  These 10 cases took an average of
four years from institution of proceedings to conclusion.-[15]-
     Interim recommendations made by the Task Force to eliminate
unnecessary delay and reduce the backlog were implemented in 1991
and 1992.  The Commission reorganized the Adjudications Group
within the Office of the General Counsel and appointed new senior
staff to supervise the adjudicatory work assigned to the Office
of the General Counsel.  On a Commission-wide basis, the total
number of staff assigned to adjudicatory matters was increased
over three fold.  For approximately one year attorneys throughout
the General Counsel's Office assisted the Adjudications Group in
preparing opinions for the Commission.  Further, the Commission
gave greater priority to adjudicatory matters, held oral
arguments on a more timely basis, and met to consider proposed
opinions more frequently.-[16]-  
     In fiscal year 1994, the number of new appeals to the
Commission declined and the number of cases resolved increased
compared with the prior year.  As a result, in fiscal year 1994
the pending appellate caseload declined for the first time in
over a decade.  In addition, the number of cases pending on
appeal for more than one year has declined significantly from the
level of four years ago.
     Despite these strides, the Commission's past experience
strongly suggests that additional steps should be taken,
especially given the increase in proceedings assigned to the
administrative law judges-[17]- and the likelihood that the
                    
-------- FOOTNOTES --------

-[15]-    See Task Force Report, supra note 4, at 20-22.

-[16]-    Also pursuant to  a recommendation  of the Task  Force,
the Office  of the  General Counsel  organized a  conference with
self-regulatory  organizations, held  in  June  1994, to  address
problems of mutual  concern.  Changes in  adjudicatory procedures
or practices by the  self-regulatory organizations resulting from
the  conference  may eliminate  or  simplify certain  issues that
would otherwise be appealed to the Commission.

-[17]-     There were 56 cases pending before  the administrative
law judges as of October 1, 1994,  up from 32 cases on October 1,
1993 and 25 cases on October 1, 1992.  
 
-------------------- BEGINNING OF PAGE #11 ---------------------

number and complexity of new appeals may increase again in coming
years.  Backlogs in the Commission's disposition of adjudicatory
proceedings have recurred periodically over at least the past 30
years.-[18]-  The Task Force examined prior efforts to address
delay in the administrative proceedings process, and considered
why earlier "solutions" gave way to new backlogs. 
     The Task Force considered various alternatives aimed at
eliminating systemic causes of the recurring backlog problems. 
In its Report, the Task Force recommended: (1) that the
Commission establish guidelines for the timely completion of
adjudicatory proceedings; (2) that the Commission be specifically
apprised of matters not completed within designated periods, so
that the Commission has a specific opportunity to determine what,
if any, steps to take to advance the fair and timely resolution
of those particular matters; and (3) that the Commission make
increased public disclosure of the status of the pending case
docket and changes in its case load.  
     The Statement of Informal Procedures and Supplementary
Information Concerning Adjudicatory Proceedings ("Statement of
Informal Procedures") adopts, with modifications, these three
recommendations.  Implementation of these recommendations will
increase accountability for the timely and efficient completion
of adjudicatory proceedings and consolidate on a more permanent
basis the improvements in the adjudications process made since
the creation of the Task Force. 

     A. Guidelines For the Timely Completion of Proceedings
     The Guidelines For the Timely Completion of Proceedings
provide that an administrative law judge's initial decision
should be filed within 10 months of issuance of the order for
proceedings and that a decision by the Commission on appeal of an
initial decision, review of a self-regulatory organization
determination or remand of a prior decision by a court of appeals
should be issued within 11 months of the filing of a petition for
review or application for review or the issuance of a mandate of
the court.-[19]-
     The primary purposes of the guidelines are to provide a
basis to gauge the Commission's and administrative law judges'
productivity in issuing opinions, and to permit the allocation of
appropriate Commission, management and staff resources for the
timely completion of proceedings.  Establishment of guidelines by
the Commission indicates the priority of adjudicatory matters for
the Commission, as well as for persons delegated authority or
assigned responsibility for adjudicatory matters.  Among other
benefits, the guidelines can lend important authority to the
deadlines set by the administrative law judges for hearing dates
and pre- and post-hearing submissions, and by the General Counsel
and the Secretary for oral argument dates and the filing of
briefs.  
     The Schapiro Task Force had recommended that "normative
guidelines" for the completion of adjudicatory proceedings be
included in the Rules of Practice themselves.  The existing Rules

-------- FOOTNOTES --------

-[18]-    See Task Force Report, supra note 4, at 33 n.46. 

-[19]-    The  guidelines  also  set  45  days for  a  Commission
decision on interlocutory matters, and up to 45 days to decide  a
motion for stay, depending  upon whether the action to  be stayed
has already taken effect.
 
-------------------- BEGINNING OF PAGE #12 ---------------------

of Practice use this approach in some instances,-[20]- and other
federal agencies and departments also have used similar
approaches.-[21]-  The Commission believes, however, that since
the guidelines are not themselves rules, it is preferable to
publish them in a supplemental statement, and thereby eliminate a
potential source of confusion or collateral litigation concerning
their status as non-binding criteria for monitoring the age of
pending cases rather than a legal standard.  This approach is
consistent with the publication in the Code of Federal Regulation
of other non-binding, informal procedures.-[22]-
     The guidelines do not create a requirement that each portion
of a proceeding or the entire proceeding be completed within the
periods described.  Proceedings at either the hearing stage or on
review by the Commission may require additional time because they
are unusually complex or because the record is exceptionally long
or for other reasons.  In addition, fairness to all parties
requires that the Commission's deliberative process not be
constrained by an inflexible schedule.  In some proceedings,
deliberation may be delayed by the need to consider more urgent
matters, to permit the preparation of dissenting opinions or for
other good cause.  The guidelines will be used by the Commission
as one of several criteria in monitoring and evaluating its
adjudicatory program.  
     As noted in the supplemental statement, the guidelines
adopted today will need to be examined periodically and may need
to be readjusted in light of changes in the Commission's case
load and the availability of Commission resources.
     One alternative approach, considered by the Task Force, was
to set fixed deadlines for the issuance of initial decisions and
Commission opinions, and to provide for a remedy, such as
dismissal, if cases were not completed within the deadline. 
Applying this approach to adjudicatory proceedings, including
enforcement actions and review of self-regulatory organization
determinations, places too great a premium on the benefits of
achieving resolution of a proceeding, without due consideration
to the resolution reached.  In light of its broad
responsibilities, the Commission should retain the flexibility to
delay the resolution of proceedings in order to address higher
priority matters, without abandoning the opportunity to
adjudicate issues properly before it, particularly those relating
to whether the protection of the public or investors requires
that a securities law violator be subject to remedial sanctions.

     B.  Reports to the Commission on Pending Cases
     Prior reviews of the administrative process concluded that
delegation of certain functions to the staff is desirable, as it
frees the Commission from having to deal with routine matters and

-------- FOOTNOTES --------                    

-[20]-    See, e.g., former  Rule 16(e), 17 CFR  201.16(e) (1994)
(period  prescribed   for  filing   of   proposed  findings   and
conclusions "normally should  be no more  than 30 days after  the
close of the hearing, and if the hearing officer directs that the
first filing be made at a date later than 30 days after the close
of the hearing, the  reasons for so doing shall be  stated in his
order").  

-[21]-    See,  e.g.,  37  CFR  10.139(c)   (ALJ  in  Patent  and
Trademark Office, Dept. of Commerce, shall normally issue initial
decisions in disciplinary cases  within six months of the  date a
complaint is filed).  

-[22]-    See, e.g., 17 CFR 202.
 
-------------------- BEGINNING OF PAGE #13 ---------------------

can expedite Commission action.-[23]-  Unmonitored delegation,
however, can also create a source of delay.  The Schapiro Task
Force observed that, once a case is assigned to an administrative
law judge or to the staff, "there is no procedure to return cases
to the Commission for a status conference if significant
milestones are not reached or no opinion is prepared within
specified periods."-[24]-  The Task Force recommended that if a
case does not proceed through each major phase on a timely basis,
it should automatically be returned to the Commission to
determine whether any additional steps should be taken to advance
the resolution of the case.  The Task Force stated that "[b]y
establishing this procedure, the Commission will require the
staff to identify non-routine matters, shortages in staff or
other impediments that are preventing the timely completion of
delegated decisionmaking."-[25]-  
     In response to this recommendation, one commenter advocated
that the Commission should "encourage more ALJ autonomy and
thereby avoid SEC involvement between the times when cases are
authorized and appealed."-[26]-  Accordingly, this commenter
suggested, unless absolutely necessary, interim Commission review
of cases assigned to an administrative law judge should not
occur, even on a case management basis such as for status
conferences.  The commenter suggested, as an alternative to
status conferences, that the administrative law judges have a
periodic requirement to report any case backlog to the Commission
and the public.  The Commission has modified the recommendation
of the Schapiro Task Force to address the concerns raised by this
commenter.  
     Under the informal procedures adopted today, a requirement
formally to apprise the Commission of proceedings beyond a
specified age is being integrated into a case status reporting
system overseen by the Secretary.  Use of written status reports
as a tool to improve docket control is a widely accepted
practice.  For example, federal court judges are required to
report periodically to the Office of United States Courts on the
status of certain matters pending beyond specified periods. 
Face-to-face status conferences between the Commission and an
administrative law judge, or discussion of the merits of a
proceeding, will not be a part of the more formal case status
reporting system.  
     Periodically, confidential status reports with respect to
all filed adjudicatory proceedings shall be made to the
Commission.  The Chief Administrative Law Judge shall report on
proceedings assigned to an administrative law judge.  The General
Counsel shall report on proceedings assigned to the Office of the
General Counsel, as well as any other pending proceedings.  These
status reports shall be made through the Secretary, with a
minimum frequency established by the Commission.  In connection
with these reports, the Chief Administrative Law Judge and the
General Counsel shall specifically apprise the Commission of any
proceeding that exceeds the guidelines established for the timely
completion of proceedings by more than 30 days.  The report shall
describe the procedural posture of any such proceeding, estimate
                    
-------- FOOTNOTES --------

-[23]-    Task Force Report, supra note 4, at 32-33.

-[24]-    Id. at 33.

-[25]-    Id. at 42.

-[26]-  ABA comment  letter to Commissioner Mary Schapiro  on the
Report of the Task Force on Administrative Proceedings dated Nov.
10, 1993, at 8.
 
-------------------- BEGINNING OF PAGE #14 ---------------------

a date for conclusion of the proceeding, and provide such other
information as is necessary to enable the Commission to determine
whether additional steps are necessary to reach a fair and timely
resolution of the matter.  
     In some cases, additional resources may be necessary to free
an administrative law judge or staff to address a matter of
unusually large size or exceptional complexity.-[27]-  In some
instances, consultation with the Commission by the General
Counsel may speed the completion of a particular case.  In
others, the length of the hearing, the number or respondents, the
complexity of a case or the urgency of other matters may justify
delay in reaching a decision at a delegated level, in which case
no action in response to the status report would be needed. 
Coupled with the guidelines for the timely completion of
proceedings, however, the use of a comprehensive and formalized
case status reporting system will provide greater assurance that
the resolution of a proceeding that has been delayed will be
treated as a priority matter.      As noted by the Schapiro Task
Force, an increasing number of status reports concerning cases
that are not completed within the guidelines may provide an
"early warning signal" that additional resources are necessary. 
Had a more detailed and more formal case status reporting
requirement been in effect in the mid-1980's, the Commission
might have been in a better position to address the developing
case backlog before it gained the magnitude it had reached by
1990 when the Task Force was created.  
     The Commission believes that the case status reporting
requirements announced today will fulfill the purpose of the
Schapiro Task Force recommendation discussed above by
establishing a mechanism that will automatically address cases
that are not timely resolved and by increasing accountability by
and to the Commission for management of the docket.  
     The Task Force recommended that the requirement to formally
apprise the Commission if a proceeding is not completed within
specified periods should be implemented through changes in the
Commission's formal delegations to the administrative law judges,
the Secretary, and the General Counsel. See 17 CFR 200.30-1 et.
seq.  The Commission believes that publication of these case
status reporting procedures in the Statement of Informal
Procedures will be equally effective in implementing this
recommendation. 

     C.  Increased Public Disclosure Concerning the Pending Case
Docket
     The Task Force recommended publishing more information
concerning the status of the Commission's adjudicatory
docket.-[28]-  Ongoing disclosure of information about the
adjudication program caseload increases awareness of the
importance of the program, facilitates oversight of the program,
and promotes public confidence in the efficiency and fairness of
the program.  Under the procedures adopted today, the Secretary
will publish each October and April in the SEC Docket summary
                    
-------- FOOTNOTES --------

-[27]-    For example, additional administrative law judges might
be necessary on a  temporary basis, see, e.g.,  5  U.S.C.   3344,
to allow  the judge assigned  responsibility for a  proceeding to
complete  that proceeding  without the  burden  of new  cases, or
additional law clerks,  paralegals or other staff might be needed
on temporary assignment.

-[28]-  See Recommendation 4, Task Force Report, supra note 4, at
43-44.
 
-------------------- BEGINNING OF PAGE #15 ---------------------

statistical information about the status of the pending
adjudicatory docket and changes in the Commission's caseload over
the prior six months.-[29]-  
     The Commission will also continue to follow the Task Force
recommendation that it adopt the practice of several federal
courts of appeals by publishing with each opinion the date the
appeal or review was commenced and the date of oral argument, if
any.  
     The Task Force suggested publication of information about
the Commission's caseload in the Annual Report.  Although a
useful adjunct to publication in the SEC Docket, publication in
the Annual Report alone is not sufficient.  The Docket is more
widely available (both on commercial database services and in
other places such as libraries) than the Annual Report.  In
addition, publication in the Docket allows more frequent and more
timely disclosure.

IV. RULES OF PRACTICE

                          GENERAL RULES

Rule 100. Scope of the Rules of Practice.
     (a)  Unless provided otherwise, these Rules of Practice
govern proceedings before the Commission under the statutes that
it administers.  
     (b)  These rules do not apply to:
          (1)  investigations, except where made specifically
     applicable by the Rules Relating to Investigations, part 203
     of this chapter; or 
          (2)  actions taken by the duty officer pursuant to
     delegated authority under 17 CFR 200.42.

COMMENT:  The Rules of Practice govern a wide range of Commission
processes, including Commission-initiated enforcement and
disciplinary proceedings, proceedings to review disciplinary
actions initiated by self-regulatory organizations and certain
other self-regulatory decisions, proceedings to review Commission
staff decisions made pursuant to delegated authority, and
proceedings in which an exemptive application is contested and a
hearing ordered.  Certain agency processes are specifically
excluded from the scope of the Rules.  First, Commission
investigations are not governed by the Rules unless a rule
explicitly provides otherwise.  See, e.g., Rule 240 (concerning
offers of settlement); see also 17 CFR 203.8 (service of
subpoenas in formal investigations is governed by Rule 232). 
Second, these Rules do not cover an appeal from a decision of the
                    
-------- FOOTNOTES --------

-[29]-    The report shall  include the  number of cases  pending
before the administrative  law judges and  the Commission at  the
beginning and end of the six-month period.  The report shall also
show increases  in  the caseload  arising  from new  cases  being
instituted, appealed or remanded to the Commission, and decreases
in the  caseload arising from  the disposition of  proceedings by
issuance of initial decisions, issuance of final decisions issued
on appeal of initial decisions, other  dispositions of appeals of
initial decisions,  final decisions on  review of self-regulatory
organization  determinations,  other  dispositions on  review  of
self-regulatory organization determinations,  and decisions  with
respect to stays or interlocutory motions.   For each category of
decision, the report shall also show the median age  of the cases
at  the time  of the  decision  and the  number of  cases decided
within the guidelines  for the timely completion  of adjudicatory
proceedings.  
 
-------------------- BEGINNING OF PAGE #16 ---------------------

duty officer.  Rules governing appeals of such decisions are
contained in 17 CFR 200.42(c).  
     Each rule indicates whether that rule applies generally to
all proceedings, or only to a particular category of proceedings,
such as ones in which an order instituting proceedings has been
entered.  A majority of the rules address procedures in those
matters where the Commission has ordered an evidentiary hearing
pursuant to an order instituting proceedings.  When an order
instituting proceedings has been entered, it may specify
particular procedures to be used in the proceeding to which it
applies.  
     The Administrative Procedure Act ("APA"), 5 U.S.C.   551 et.
seq., is the source of various provisions of the Rules.  In
addition, in any particular proceeding the APA may govern the
rules or the specific procedures that the Commission is required
to employ.  Which requirements of the Administrative Procedure
Act are applicable to a particular Commission proceeding depends
on the language of the statute authorizing the proceeding.  An
adjudication is subject to the requirements of 5 U.S.C.    554,
556 and 557 if the Commission is authorized by statute to make
its determination "on the record, after notice and opportunity
for an agency hearing."  Such adjudications are often referred to
as "on the record" or formal adjudications.  Other adjudications,
including those where the Commission is authorized by statute to
make its determination "after opportunity for hearing," are often
referred to as informal adjudications.  See Rules 191 and 326 and
associated comments.


Rule 101. Definitions.
     (a)  For purposes of these Rules of Practice, unless
explicitly stated to the contrary:
          (1)  Commission means the United States Securities and
     Exchange Commission, or a panel of Commissioners
     constituting a quorum of the Commission, or a single
     Commissioner acting as duty officer pursuant to 17 CFR
     200.42; 
          (2)  counsel means any attorney representing a party or
     any other person representing a party pursuant to Rule
     102(b);
          (3)  disciplinary proceeding means an action pursuant
     to Rule 102(e);
          (4)  enforcement proceeding means an action, initiated
     by an order instituting proceedings, held for the purpose of
     determining whether or not a person is about to violate, has
     violated, has caused a violation of, or has aided or abetted
     a violation of any statute or rule administered by the
     Commission, or whether to impose a sanction as defined in
     Section 551(10) of the Administrative Procedure Act, 5
     U.S.C. 551(10);
          (5)  hearing officer means an administrative law judge,
     a panel of Commissioners constituting less than a quorum of
     the Commission, an individual Commissioner, or any other
     person duly authorized to preside at a hearing;
          (6)  interested division means a division or an office
     assigned primary responsibility by the Commission to
     participate in a particular proceeding;
          (7)  order instituting proceedings means an order
     issued by the Commission commencing a proceeding or an order
     issued by the Commission to hold a hearing;
          (8)  party means the interested division, any person
     named as a respondent in an order instituting proceedings,
     any applicant named in the caption of any order, persons
     entitled to notice in a stop order proceeding as set forth
 
-------------------- BEGINNING OF PAGE #17 ---------------------

     in Rule 200(a)(2) or any person seeking Commission review of
     a decision;
          (9)  proceeding means any agency process initiated by
     an order instituting proceedings; or by the filing, pursuant
     to Rule 410, of a petition for review of an initial decision
     by a hearing officer; or by the filing, pursuant to Rule
     420, of an application for review of a self-regulatory
     organization determination; or by the filing, pursuant to
     Rule 430, of a notice of intention to file a petition for
     review of a determination made pursuant to delegated
     authority; 
          (10) Secretary means the Secretary of the Commission;
     and
          (11) temporary sanction means a temporary cease-and-
     desist order or a temporary suspension of the registration
     of a broker, dealer, municipal securities dealer, government
     securities broker, government securities dealer, or transfer
     agent pending final determination whether the registration
     shall be revoked.
     (b)  [Reserved]

Rule 102. Appearance and Practice Before the Commission.
     A person shall not be represented before the Commission or a
hearing officer except as stated in paragraphs (a) and (b) of
this rule or as otherwise permitted by the Commission or a
hearing officer.
     (a)  Representing Oneself.  In any proceeding, an individual
may appear on his or her own behalf. 
     (b)  Representing Others.  In any proceeding, a person may
be represented by an attorney at law admitted to practice before
the Supreme Court of the United States or the highest court of
any State (as defined in Section 3(a)(16) of the Exchange Act, 15
U.S.C. 78c(a)(16)); a member of a partnership may represent the
partnership; a bona fide officer of a corporation, trust or
association may represent the corporation, trust or association;
and an officer or employee of a state commission or of a
department or political subdivision of a state may represent the
state commission or the department or political subdivision of
the state. 
     (c)  Former Commission Employees.  Former employees of the
Commission must comply with the restrictions on practice
contained in the Commission's Conduct Regulation, Subpart M, 17
CFR 200.735.
     (d)  Designation of Address for Service; Notice of
Appearance; Power of Attorney; Withdrawal. 
          (1)  Representing Oneself.  When an individual first
     makes any filing or otherwise appears on his or her own
     behalf before the Commission or a hearing officer in a
     proceeding as defined in Rule 101(a), he or she shall file
     with the Commission, or otherwise state on the record, and
     keep current, an address at which any notice or other
     written communication required to be served upon him or her
     or furnished to him or her may be sent and a telephone
     number where he or she may be reached during business hours.
          (2)  Representing Others.  When a person first makes
     any filing or otherwise appears in a representative capacity
     before the Commission or a hearing officer in a proceeding
     as defined in Rule 101(a), that person shall file with the
     Commission, and keep current, a written notice stating the
     name of the proceeding; the representative's name, business
     address and telephone number; and the name and address of
     the person or persons represented.  
          (3)  Power of Attorney.  Any individual appearing or
     practicing before the Commission in a representative
 
-------------------- BEGINNING OF PAGE #18 ---------------------

     capacity may be required to file a power of attorney with
     the Commission showing his or her authority to act in such
     capacity.
          (4)  Withdrawal.  Withdrawal by any individual
     appearing in a representative capacity shall be permitted
     only by order of the Commission or the hearing officer.  A
     motion seeking leave to withdraw shall state with
     specificity the reasons for such withdrawal.
     (e)  Suspension and Disbarment. 
          (1)  Generally.  The Commission may censure a person or
     deny, temporarily or permanently, the privilege of appearing
     or practicing before it in any way to any person who is
     found by the Commission after notice and opportunity for
     hearing in the matter: 
               (i)  not to possess the requisite qualifications
          to represent others; or 
               (ii) to be lacking in character or integrity or to
          have engaged in unethical or improper professional
          conduct; or 
               (iii)     to have willfully violated, or willfully
          aided and abetted the violation of any provision of the
          Federal securities laws or the rules and regulations
          thereunder.
          (2)  Certain Professionals and Convicted Persons.  Any
     attorney who has been suspended or disbarred by a court of
     the United States or of any State; or any person whose
     license to practice as an accountant, engineer, or other
     professional or expert has been revoked or suspended in any
     State; or any person who has been convicted of a felony or a
     misdemeanor involving moral turpitude shall be forthwith
     suspended from appearing or practicing before the
     Commission.  A disbarment, suspension, revocation or
     conviction within the meaning of this rule shall be deemed
     to have occurred when the disbarring, suspending, revoking
     or convicting agency or tribunal enters its judgment or
     order, including a judgment or order on a plea of nolo
     contendere, regardless of whether an appeal of such judgment
     or order is pending or could be taken. 
          (3)  Temporary Suspensions.  An order of temporary
     suspension shall become effective upon service on the
     respondent.  No order of temporary suspension shall be
     entered by the Commission pursuant to paragraph (e)(3)(i) of
     this rule more than 90 days after the date on which the
     final judgment or order entered in a judicial or
     administrative proceeding described in paragraph
     (e)(3)(i)(A) or (e)(3)(i)(B) has become effective, whether
     upon completion of review or appeal procedures or because
     further review or appeal procedures are no longer available.
               (i)  The Commission, with due regard to the public
          interest and without preliminary hearing, may, by
          order, temporarily suspend from appearing or practicing
          before it any attorney, accountant, engineer, or other
          professional or expert who has been by name:
                    (A)  permanently enjoined by any court of
               competent jurisdiction, by reason of his or her
               misconduct in an action brought by the Commission,
               from violating or aiding and abetting the
               violation of any provision of the Federal
               securities laws or of the rules and regulations
               thereunder; or
                    (B)  found by any court of competent
               jurisdiction in an action brought by the
               Commission to which he or she is a party or found
               by the Commission in any administrative proceeding
 
-------------------- BEGINNING OF PAGE #19 ---------------------

               to which he or she is a party to have violated
               (unless the violation was found not to have been
               willful) or aided and abetted the violation of any
               provision of the Federal securities laws or of the
               rules and regulations thereunder.
               (ii) Any person temporarily suspended from
          appearing and practicing before the Commission in
          accordance with paragraph (e)(3)(i) of this rule may,
          within 30 days after service upon him or her of the
          order of temporary suspension, petition the Commission
          to lift the temporary suspension.  If no petition has
          been received by the Commission within 30 days after
          service of the order, the suspension shall become
          permanent. 
               (iii)     Within 30 days after the filing of a
          petition in accordance with paragraph (e)(3)(ii) of
          this rule, the Commission shall either lift the
          temporary suspension, or set the matter down for
          hearing at a time and place designated by the
          Commission, or both, and, after opportunity for
          hearing, may censure the petitioner or disqualify the
          petitioner from appearing or practicing before the
          Commission for a period of time or permanently.  In
          every case in which the temporary suspension has not
          been lifted, every hearing held and other action taken
          pursuant to this paragraph (e)(3) shall be expedited in
          accordance with Rule 500.  If the hearing is held
          before a hearing officer, the time limits set forth in
          Rule 531 will govern review of the hearing officer's
          initial decision. 
               (iv) In any hearing held on a petition filed in
          accordance with paragraph (e)(3)(ii) of this rule, the
          staff of the Commission shall show either that the
          petitioner has been enjoined as described in paragraph
          (e)(3)(i)(A) of this rule or that the petitioner has
          been found to have committed or aided and abetted
          violations as described in paragraph (e)(3)(i)(B) of
          this rule and that showing, without more, may be the
          basis for censure or disqualification.  Once that
          showing has been made, the burden shall be upon the
          petitioner to show cause why he or she should not be
          censured or temporarily or permanently disqualified
          from appearing and practicing before the Commission. 
          In any such hearing, the petitioner may not contest any
          finding made against him or her or fact admitted by him
          or her in the judicial or administrative proceeding
          upon which the proceeding under this paragraph (e)(3)
          is predicated.  A person who has consented to the entry
          of a permanent injunction as described in paragraph
          (e)(3)(i)(A) of this rule without admitting the facts
          set forth in the complaint shall be presumed for all
          purposes under this paragraph (e)(3) to have been
          enjoined by reason of the misconduct alleged in the
          complaint.
          (4)  Filing of Prior Orders.  Any person appearing or
     practicing before the Commission who has been the subject of
     an order, judgment, decree, or finding as set forth in
     paragraph (e)(3) of this rule shall promptly file with the
     Secretary a copy thereof (together with any related opinion
     or statement of the agency or tribunal involved).  Failure
     to file any such paper, order, judgment, decree or finding
     shall not impair the operation of any other provision of
     this rule.
 
-------------------- BEGINNING OF PAGE #20 ---------------------

          (5)  Reinstatement. 
               (i)  An application for reinstatement of a person
          permanently suspended or disqualified under paragraph
          (e)(1) or (e)(3) of this rule may be made at any time,
          and the applicant may, in the Commission's discretion,
          be afforded a hearing; however, the suspension or
          disqualification shall continue unless and until the
          applicant has been reinstated by the Commission for
          good cause shown.
               (ii) Any person suspended under paragraph (e)(2)
          of this rule shall be reinstated by the Commission,
          upon appropriate application, if all the grounds for
          application of the provisions of that paragraph are
          subsequently removed by a reversal of the conviction or
          termination of the suspension, disbarment, or
          revocation.  An application for reinstatement on any
          other grounds by any person suspended under paragraph
          (e)(2) of this rule may be filed at any time and the
          applicant shall be accorded an opportunity for a
          hearing in the matter; however, such suspension shall
          continue unless and until the applicant has been
          reinstated by order of the Commission for good cause
          shown.
          (6)  Other Proceedings Not Precluded.  A proceeding
     brought under paragraph (e)(1), (e)(2) or (e)(3) of this
     rule shall not preclude another proceeding brought under
     these same paragraphs.
          (7)  Public Hearings.  All hearings held under this
     paragraph (e) shall be public unless otherwise ordered by
     the Commission on its own motion or after considering the
     motion of a party. 
     (f)  Practice Defined.  For the purposes of these Rules of
Practice, practicing before the Commission shall include, but
shall not be limited to:
          (1)  transacting any business with the Commission; and
          (2)  the preparation of any statement, opinion or other
     paper by any attorney, accountant, engineer or other
     professional or expert, filed with the Commission in any
     registration statement, notification, application, report or
     other document with the consent of such attorney,
     accountant, engineer or other professional or expert.

REVISION COMMENT:  Rule 102, which governs appearance and
practice before the Commission, contains two changes from former
Rule 2.  First, as suggested by one commenter, the rule now
explicitly requires that individuals and other persons filing a
notice of appearance keep the information contained in the
notice, such as address and telephone number, up-to-date. 
Current information is necessary to permit the expeditious
service of orders as well as other efforts to contact a party.
     The same commenter suggested that the Commission consider
adopting a provision that would require an attorney to file a
written notice of withdrawal when the attorney seeks to withdraw
from a matter before the Commission.  New paragraph (d)(4)
accomplishes this by requiring that, a person appearing in a
representative capacity who wishes to withdraw from a proceeding,
must file a motion seeking leave to withdraw and obtain such
leave from the Commission or the hearing officer.  
     In addition, language has been added to paragraph (d)(1) and
(2) to clarify the longstanding policy of the Commission that a
person who makes a filing with the Commission thereby makes an
appearance before the Commission.  
 
-------------------- BEGINNING OF PAGE #21 ---------------------

Rule 103. Construction of Rules.
     (a)  The Rules of Practice shall be construed and
administered to secure the just, speedy, and inexpensive
determination of every proceeding. 
     (b)  In any particular proceeding, to the extent that there
is a conflict between these rules and a procedural requirement
contained in any statute, or any rule or form adopted thereunder,
the latter shall control.
     (c)  For purposes of these rules:
          (1)  any term in the singular includes the plural, and
     any term in the plural includes the singular, if such use
     would be appropriate;
          (2)  any use of a masculine, feminine, or neuter gender
     encompasses such other genders as would be appropriate; and
          (3)  unless the context requires otherwise, counsel for
     a party may take any action required or permitted to be
     taken by such party.  

COMMENT (a):  Paragraph (a) is based on Rule 1 of the Federal
Rules of Civil Procedure.  See Fed. R. Civ. P. 1. 


Rule 104. Business Hours.
     The Headquarters office of the Commission, at 450 Fifth
Street, N.W., Washington, D.C. 20549, is open each day, except
Saturdays, Sundays, and Federal legal holidays, from 9 a.m. to
5:30 p.m., Eastern Standard Time or Eastern Daylight Saving Time,
whichever is currently in effect in Washington, D.C.  Federal
legal holidays consist of New Year's Day; Birthday of Martin
Luther King, Jr.; Presidents Day; Memorial Day; Independence Day;
Labor Day; Columbus Day; Veterans Day; Thanksgiving Day;
Christmas Day; and any other day appointed as a holiday in
Washington, D.C. by the President or the Congress of the United
States. 


Rule 110. Presiding Officer.
     All proceedings shall be presided over by the Commission or,
if the Commission so orders, by a hearing officer.  When the
Commission designates that the hearing officer shall be an
administrative law judge, the Chief Administrative Law Judge
shall select, pursuant to 17 CFR 200.30-10, the administrative
law judge to preside.    

COMMENT: Ordinarily the assignment to a hearing officer is part
of the order instituting proceedings.  The Rules use the term
"hearing officer," defined in Rule 101(a), to refer to a person
who presides at a hearing.  While an administrative law judge
presides at most hearings at which the Commission itself does not
preside, other persons may preside.  See Securities Exchange Act
  4A, 15 U.S.C.   78d-1; Administrative Procedure Act   556(b), 5
U.S.C.   556(b).  

REVISION COMMENT:  Rule 110 has been revised to specify the
process by which administrative law judges are assigned by
referencing the authority the Commission has previously delegated
to the Chief Administrative Law Judge to assign matters to any of
the administrative law judges.  


Rule 111. Hearing Officer: Authority.  
     The hearing officer shall have the authority to do all
things necessary and appropriate to discharge his or her duties. 
No provision of these Rules of Practice shall be construed to
 
-------------------- BEGINNING OF PAGE #22 ---------------------

limit the powers of the hearing officer provided by the
Administrative Procedure Act, 5 U.S.C. 556, 557.  The powers of
the hearing officer include, but are not limited to, the
following:
     (a)  administering oaths and affirmations; 
     (b)  issuing subpoenas authorized by law and revoking,
quashing, or modifying any such subpoena;
     (c)  receiving relevant evidence and ruling upon the
admission of evidence and offers of proof;
     (d)  regulating the course of a proceeding and the conduct
of the parties and their counsel;
     (e)  holding prehearing and other conferences as set forth
in Rule 221 and requiring the attendance at any such conference
of at least one representative of each party who has authority to
negotiate concerning the resolution of issues in controversy; 
     (f)  recusing himself or herself upon motion made by a party
or upon his or her own motion;
     (g)  ordering, in his or her discretion, in a proceeding
involving more than one respondent, that the interested division
indicate, on the record, at least one day prior to the
presentation of any evidence, each respondent against whom that
evidence will be offered;
     (h)  subject to any limitations set forth elsewhere in these
rules, considering and ruling upon all procedural and other
motions; 
     (i)  preparing an initial decision as provided in Rule 360; 
     (j)  upon notice to all parties, reopening any hearing prior
to the filing of an initial decision therein, or, if no initial
decision is to be filed, prior to the time fixed for the filing
of final briefs with the Commission; and
     (k)  informing the parties as to the availability of one or
more alternative means of dispute resolution, and encouraging the
use of such methods.  

COMMENT:  This rule is based upon Section 556(c) of the
Administrative Procedure Act, 5 U.S.C.   556(c).  By its terms,
the list of powers is illustrative, not exhaustive.  The hearing
officer is permitted to take any action necessary and appropriate
to discharge his or her duties.

REVISION COMMENT:  One commenter suggested that the Commission
include in Rule 111 two powers recently added to Section 556(c)
of the Administrative Procedure Act by the Administrative Dispute
Resolution Act: the power to require attendance at a prehearing
conference by a representative of each party who has the
authority to negotiate concerning the resolution of issues in
controversy and the power to inform parties as to the
availability of alternate means of dispute resolution (ADR) and
to encourage the use of such methods.  
     The Commission has decided to modify this rule to address
these concerns.  


Rule 112. Hearing Officer: Disqualification and Withdrawal.
     (a)  Notice of Disqualification.  At any time a hearing
officer believes himself or herself to be disqualified from
considering a matter, the hearing officer shall issue a notice
stating that he or she is withdrawing from the matter and setting
forth the reasons therefor.  
     (b)  Motion for Withdrawal.  Any party who has a reasonable,
good faith basis to believe that a hearing officer has a personal
bias, or is otherwise disqualified from hearing a case, may make
a motion to the hearing officer that the hearing officer
withdraw.  The motion shall be accompanied by an affidavit
 
-------------------- BEGINNING OF PAGE #23 ---------------------

setting forth in detail the facts alleged to constitute grounds
for disqualification.  If the hearing officer finds himself or
herself not disqualified, he or she shall so rule and shall
continue to preside over the proceeding. 

COMMENT:  Section 556(b) of the Administrative Procedure Act, 5
U.S.C.   556(b), provides that a hearing officer may disqualify
himself or herself at any time.  The standard for making a motion
to disqualify requires that the movant have a reasonable good-
faith basis.  This standard is intended to emphasize that there
must be objective reasons to seek a disqualification, not just a
subjective, though sincerely held, belief.  A party seeking
disqualification must do so promptly upon learning of the
relevant information.  A party may not await the outcome of the
hearing officer's decision to determine if the alleged grounds
for disqualification affected the decision.  


Rule 120. Ex Parte Communications.
     (a)  Except to the extent required for the disposition of ex
parte matters as authorized by law, the person presiding over an
evidentiary hearing may not: 
          (1) consult a person or party on a fact in issue,
     unless on notice and opportunity for all parties to
     participate; or 
          (2) be responsible to or subject to the supervision or
     direction of an employee or agent engaged in the performance
     of investigative or prosecuting functions for the
     Commission.
     (b)  The Commission's code of behavior regarding ex parte
communications between persons outside the Commission and
decisional employees, 17 CFR 200.110 - 200.114, governs other
prohibited communications during a proceeding conducted under the
Rules of Practice.

COMMENT:  Paragraph (a) is based on Section 554(d)(1) of the
Administrative Procedure Act (APA), 5 U.S.C.   554(d)(1). 
Paragraph (b) references the Commission's rules applying to
communications between Commission members or decisional employees
and persons outside the agency, which incorporate the
requirements of Section 557(d)(1) of the APA, 5 U.S.C.  
557(d)(1).  See also 17 CFR 200.62 (ethical canon for Commission
members regarding ex parte communications); Securities Act
Release No. 5815 (Mar. 10, 1977), 11 SEC Docket 1933 (Mar. 22,
1977) (amending Commission's code of behavior governing ex parte
communications between persons outside the Commission and
decisional employees to conform to requirements of Section 4 of
the Government in the Sunshine Act, 5 U.S.C.   552b). 

REVISION COMMENT:  Although the Commission's administrative
proceedings were previously subject to the requirements of the
Administrative Procedure Act governing ex parte communications, 
5 U.S.C.    554(d)(1) and 557(d)(1), the prior rules did not
mention them.  Rule 120 makes no substantive changes to these
requirements  -- it simply restates the APA's directive with
regard to ex parte contacts.  The Rule was added so that these
requirements were more readily available to persons subject to
proceedings under the Rules of Practice.  See, Model Adjudication
Rule 120(A), Administrative Conference of the United States (Dec.
1993).


Rule 121. Separation of Functions.
 
-------------------- BEGINNING OF PAGE #24 ---------------------

     Any Commission officer, employee or agent engaged in the
performance of investigative or prosecutorial functions for the
Commission in a proceeding as defined in Rule 101(a) may not, in
that proceeding or one that is factually related, participate or
advise in the decision, or in Commission review of the decision
pursuant to Section 557 of the Administrative Procedure Act, 5
U.S.C. 557, except as a witness or counsel in the proceeding.

COMMENT:  Rule 121 is based on Section 554(d) of the
Administrative Procedure Act (APA), 5 U.S.C.   554(d), which
governs the separation of personnel involved in prosecutorial and
investigative functions in certain cases from decisionmaking in
those cases.  

REVISION COMMENT:  Although the Commission's administrative
proceedings were previously subject to the requirements of
Section 554(d) of the APA governing separation of functions, 5
U.S.C.   554(d), the prior rules did not mention them.  Rule 121
makes no substantive changes to these requirements -- it simply
restates the APA's position on separation of functions.  The Rule
was added so that these requirements were more readily available
to persons subject to proceedings under the Rules of Practice. 
See Model Adjudication Rule 121, Administrative Conference of the
United States (Dec. 1993).


Rule 140. Commission Orders and Decisions: Signature and
          Availability
     (a)  Signature Required.  All orders and decisions of the
Commission shall be signed by the Secretary or any other person
duly authorized by the Commission. 
     (b)  Availability for Inspection.  Each order and decision
shall be available for inspection by the public from the date of
entry, unless the order or decision is nonpublic.  A nonpublic
order or decision shall be available for inspection by any person
entitled to inspect it from the date of entry. 
     (c)  Date of Entry of Orders.  The date of entry of a
Commission order shall be the date the order is signed.  Such
date shall be reflected in the caption of the order, or if there
is no caption, in the order itself.  

REVISION COMMENT (b):  Changes to the text of the Commission's
rule regarding availability of orders are technical.  The Office
of the Secretary has for many years maintained a practice of
holding Commission orders for five days before release to the
public.  Under Rule 140(b), unless an order or decision is
nonpublic, it will be available to the public from the date of
entry. 

REVISION COMMENT (c):  This paragraph has been simplified.  No
substantive change is intended. 


Rule 141. Orders and Decisions: Service of Orders Instituting
          Proceeding And Other Orders and Decisions.
     (a)  Service of an Order Instituting Proceedings. 
          (1)  By Whom Made.  The Secretary, or another duly
     authorized officer of the Commission, shall serve a copy of
     an order instituting proceedings on each person named in the
     order as a party.  The Secretary may direct an interested
     division to assist in making service.  
          (2)  How made. 
               (i)  To Individuals.  Notice of a proceeding shall
          be made to an individual by delivering a copy of the
 
-------------------- BEGINNING OF PAGE #25 ---------------------

          order instituting proceedings to the individual or to
          an agent authorized by appointment or by law to receive
          such notice.  Delivery means -- handing a copy of the
          order to the individual; or leaving a copy at the
          individual's office with a clerk or other person in
          charge thereof; or leaving a copy at the individual's
          dwelling house or usual place of abode with some person
          of suitable age and discretion then residing therein;
          or sending a copy of the order addressed to the
          individual by U.S. Postal Service certified, registered
          or Express Mail and obtaining a confirmation of
          receipt; or giving confirmed telegraphic notice.  
               (ii)  To Corporations or Entities.  Notice of a
          proceeding shall be made to a person other than a
          natural person by delivering a copy of the order
          instituting proceedings to an officer, managing or
          general agent, or any other agent authorized by
          appointment or by law to receive such notice, by any
          method specified in paragraph (a)(2)(i) of this rule.  
               (iii)  Upon Persons Registered with the
          Commission.   In addition to any other method of
          service specified in paragraph (a)(2) of this rule,
          notice may be made to a person currently registered
          with the Commission as a broker, dealer, municipal
          securities dealer, government securities broker,
          government securities dealer, investment adviser,
          investment company or transfer agent by sending a copy
          of the order addressed to the most recent business
          address shown on the person's registration form by U.S.
          Postal Service certified, registered or Express Mail
          and obtaining a confirmation of attempted delivery.  
               (iv)  Upon Persons in a Foreign Country.  Notice
          of a proceeding to a person in a foreign country may be
          made by any method specified in paragraph (a)(2) of
          this rule, or by any other method reasonably calculated
          to give notice, provided that the method of service
          used is not prohibited by the law of the foreign
          country.  
               (v)  In Stop Order Proceedings.  Notwithstanding
          any other provision of paragraph (a)(2) of this rule,
          in proceedings pursuant to Sections 8 or 10 of the
          Securities Act of 1933, 15 U.S.C. 77h or 77j, or
          Sections 305 or 307 of the Trust Indenture Act of 1939,
          15 U.S.C. 77eee or 77ggg, notice of the institution of
          proceedings shall be made by personal service or
          confirmed telegraphic notice, or a waiver obtain
          pursuant to paragraph (a)(4) of this rule. 
          (3)  Certificate of Service.  The Secretary shall place
     in the record of the proceeding a certificate of service
     identifying the party given notice, the method of service,
     the date of service, the address to which service was made
     and the person who made service.  If service is made in
     person, the certificate shall state, if available, the name
     of the individual to whom the order was given.  If service
     is made by U.S. Postal Service certified, registered or
     Express Mail, the certificate shall be accompanied by a
     confirmation of receipt or of attempted delivery, as
     required.  If service is made to an agent authorized by
     appointment to receive service, the certificate shall be
     accompanied by evidence of the appointment. 
          (4)  Waiver of Service.  In lieu of service as set
     forth in paragraph (a)(2) of this rule, the party may be
     provided a copy of the order instituting proceedings by
     first class mail or other reliable means if a waiver of
 
-------------------- BEGINNING OF PAGE #26 ---------------------

     service is obtained from the party and placed in the record.


     (b)  Service of Orders or Decisions Other Than An Order
Instituting Proceedings.  Written orders or decisions issued by
the Commission or by a hearing officer shall be served promptly
on each party pursuant to any method of service authorized under
paragraph (a) of this rule or Rule 150(c).  Service of orders or
decisions by the Commission, including those entered pursuant to
delegated authority, shall be made by the Secretary or, as
authorized by the Secretary, by a member of an interested
division.  Service of orders or decisions issued by a hearing
officer shall be made by the Secretary or the hearing officer.  

COMMENT (a):  The Rule is derived, in part, from Rules 4 and 5(b)
of the Federal Rules of Civil Procedure.  The rule is also based,
in part, on Section 40(a) of the Investment Company Act, 15
U.S.C.   80a-39(a), and Section 211(c) of the Investment Advisers
Act, 15 U.S.C.   80b-11(c), which set forth acceptable methods
for service of orders instituting proceedings under those Acts,
and on Sections 8 and 10 of the Securities Act of 1933, 15 U.S.C.
   77h and 77j, and Sections 305 and 307 of the Trust Indenture
Act of 1939, 15 U.S.C.    77eee and 77ggg, which set forth
acceptable methods of service for orders instituting stop order
proceedings pursuant to those statutory sections.  
     The Commission commences proceedings to enforce the Federal
securities laws by issuing an "order instituting proceedings." 
The Commission is required to give each party appropriate notice
of an order instituting proceedings.  See Rule 200 (setting forth
requirements in connection with the issuance of such orders). 
While service of the order instituting proceedings satisfies
notice requirements, it is not the exclusive means of providing
notice sufficient to meet the requirements of due process.  In
some circumstances -- for example, where emergency or expedited
relief is sought -- actual notice of the institution of a
proceeding may be made by telephone.  See, e.g., Rule 511. 
Although formal service of the order is still required in such
circumstances, action on an application for emergency or
expedited relief may  precede service of the order.  
     Rule 141(a)(2) allows service by those means specifically
mentioned by statute.  Rule 141 also allows service to be made by
U.S. Postal Service Express Mail which, like certified or
registered mail, both traditionally relied upon under the former
rule, is a U.S. Post Office service that provides each letter a
unique identification number, is traceable, and allows for a
receipt upon delivery.  Under Rule 141, alternative methods of
service to persons located in the United States, such as service
by publication, are not permitted.  A party may, however, waive
service and receive notice by accepting a copy of an order
instituting proceedings by facsimile transmission, U.S. Mail,
private overnight courier, or other means.  Whatever method of
service is used, Rule 141 requires a certificate of service
establishing how notice was given, or a written waiver of
service.  
     The Rule establishes specific criteria for service of orders
upon persons registered with the Commission and upon persons in a
foreign country.  A person who is currently registered with the
Commission to engage in the securities business with the public
may reasonably be expected to receive mail sent to the address
shown on their registration form or to make appropriate
arrangements for such mail to be forwarded or delivered.  Rule
141 provides that a person currently registered with the
Commission as a broker, dealer, municipal securities dealer,
government securities broker, government securities dealer,
investment adviser, investment company or transfer agent may be
 
-------------------- BEGINNING OF PAGE #27 ---------------------

served by sending a copy of the order to the last business
address shown on their registration form by U.S. Postal Service
certified, registered or Express Mail and that confirmation of
attempted delivery to that address is sufficient for valid
service if no confirmation of receipt can be obtained.  
     A person in a foreign country may be served by any method of
service, reasonably calculated to give notice, that is not
prohibited by the law of the foreign country.  

COMMENT (b):  Service of an order instituting proceedings places
a party on notice that there will be subsequent filings or other
papers.  Unless a party defaults, a party's response to receipt
of an order instituting proceedings must include the filing of a
notice of appearance.  Cf. Rule 155 (governing defaults).  The
notice will provide an address of record where the party can be
served with subsequent orders.  Therefore, a return receipt or
other confirmation of delivery is not required for subsequent
orders.  
     Subject to statutory limitations governing particular types
of orders, orders other than an order instituting proceedings may
be served pursuant to any method provided for in Rule 141(a) or
in Rule 150(c), which governs service of papers filed by parties.

The Commission may serve an order on a party, as well as on the
party's counsel.  It is the Commission's practice to send orders
instituting proceedings and final orders to each party in
addition to serving counsel, if any.  Cf. Rule 150(b) (if a party
is represented by counsel, counsel shall be served with papers
filed by other parties with the Commission). 

REVISION COMMENT (a):  The rule has been revised to permit a
waiver of formal service and thereby allow the use of methods of
service, such as private courier service or facsimile
transmission in circumstances where such methods might otherwise
be inconsistent with statutory requirements.  
     The rule has been revised to include a provision
specifically addressing service by the Commission on a person in
a foreign country.  The Hague Convention on the Service Abroad of
Judicial and Extrajudicial Documents does not apply to the
service of Commission orders.  
     The rule has also been revised to include a specific
provision for service on persons registered with the Commission
as a broker, dealer, municipal securities dealer, government
securities broker, government securities dealer, investment
adviser, investment company or transfer agent.  


Rule 150. Service of Papers By Parties.
     (a)  When Required.  In every proceeding as defined in Rule
101(a), each paper, including each notice of appearance, written
motion, brief, or other written communication, shall be served
upon each party in the proceeding in accordance with the
provisions of this rule; provided, however, that absent an order
to the contrary, no service shall be required for motions which
may be heard ex parte. 
     (b)  Upon a Person Represented by Counsel.  Whenever service
is required to be made upon a person represented by counsel who
has filed a notice of appearance pursuant to Rule 102, service
shall be made pursuant to paragraph (c) of this rule upon
counsel, unless service upon the person represented is ordered by
the Commission or the hearing officer. 
     (c)  How Made.  Service shall be made by delivering a copy
of the filing.  Delivery means:
          (1)  personal service -- handing a copy to the person
          required to be served; or leaving a copy at the
 
-------------------- BEGINNING OF PAGE #28 ---------------------

          person's office with a clerk or other person in charge
          thereof; or leaving a copy at the person's dwelling
          house or usual place of abode with some person of
          suitable age and discretion then residing therein. 
          (2)  mailing the papers through the U.S. Postal Service
          by first class, certified, registered, or Express Mail
          delivery addressed to the person;  
          (3)  sending the papers through a commercial courier
          service or express delivery service addressed to the
          person; or 
          (4)  transmitting the papers by facsimile machine where
          the following conditions are met:
               (i)  the persons serving each other by facsimile
               transmission have agreed to do so in a writing,
               signed by each party, which specifies such terms
               as they deem necessary with respect to facsimile
               machine telephone numbers to be used, hours of
               facsimile machine operation, the provision of non-
               facsimile original or copy, and any other such
               matters; and
               (ii) receipt of each document served by facsimile
               is confirmed by a manually signed receipt
               delivered by facsimile machine or other means
               agreed to by the parties.  
     (d)  When Service is Complete.  Personal service, service by
U.S. Postal Service Express Mail or service by a commercial
courier or express delivery service is complete upon delivery. 
Service by mail is complete upon mailing.  Service by facsimile
is complete upon confirmation of transmission by delivery of a
manually signed receipt.  

COMMENT (a):  Each document a party files in connection with a
proceeding, as defined in Rule 101(a), must be served on all
other parties admitted to the proceeding.  In general, the party
serving a paper should use the same method of service on all
other parties and for filing with the Commission.  Where a party
uses different methods of service, the reason for doing so must
be stated.  Where a party is represented by counsel who has filed
a notice of appearance, service ordinarily shall be made on
counsel.  

REVISION COMMENT:  The rule now contains a provision, paragraph
(c)(4), allowing the use of facsimile transmission ("fax") for
the delivery of papers.  The Commission received a large number
of comments on this subject.  Commenters had a number of
suggestions for how to implement service by fax, including: that
service should not be deemed complete unless a manually signed
receipt acknowledges that the transmission was readable and was
received in full within the time permitted for filing; that the
hearing officer be given discretion to determine whether, and
under what circumstances, fax service should be allowed; that an
initial agreement to allow service by fax should include an
undertaking to serve documents leaving sufficient time before the
filing deadline and to notify the sender promptly of any fax
transmission errors; that simultaneous service of an original
copy should also be made through other means; and that a written
agreement of terms should be required when the parties agree to
the use of fax service.  Commenters disagreed whether the
Commission should limit the use of facsimile transmission to
cases in which all parties agree on the terms for service.  
     In federal court, filing by fax is permitted where
authorized by local rule subject to standards approved by the
Judicial Conference.  See Fed. R. Civ. P. 5(e); Fed. R. App. P. 
25(a). The Commission has decided to allow service by facsimile
 
-------------------- BEGINNING OF PAGE #29 ---------------------

transmission where two conditions have been met.  First, persons
serving each other by fax must agree to do so in writing.  The
written agreement shall contain such terms as are necessary with
respect to telephone numbers, hours of operation, and provision
of paper original and any other matters.  Second, receipt of a
document served by fax must be confirmed by a manually signed
receipt.  These conditions are intended to ensure that service by
fax will be both an efficient and an effective means of service.
     One commenter objected to the provision in the proposed rule
that would have allowed service directly upon a party where the
party was represented by counsel.  In response, Rule 150(b) has
been amended to clarify that service upon counsel by another
party is required unless service upon the person represented is
specifically ordered by the Commission or the hearing officer.  


Rule 151. Filing of Papers With the Commission: Procedure.
     (a)  When to File.  All papers required to be served by a
party upon any person shall be filed with the Commission at the
time of service or promptly thereafter.  Papers required to be
filed with the Commission must be received within the time limit,
if any, for such filing.  
     (b)  Where to File.  Filing of papers with the Commission
shall be made by filing them with the Secretary.  When a
proceeding is assigned to a hearing officer, a person making a
filing with the Secretary shall promptly provide to the hearing
officer a copy of any such filing, provided, however, that the
hearing officer may direct or permit filings to be made with him
or her, in which event the hearing officer shall note thereon the
filing date and promptly provide the Secretary with either the
original or a copy of any such filings. 
     (c)  To Whom to Direct the Filing.  Unless otherwise
provided, where the Commission has assigned a case to a hearing
officer, all motions, objections, applications or other filings
made during a proceeding prior to the filing of an initial
decision therein, or, if no initial decision is to be filed,
prior to the time fixed for the filing of briefs with the
Commission, shall be directed to and decided by the hearing
officer.   
     (d)  Certificate of Service.  Papers filed with the
Commission or a hearing officer shall be accompanied by a
certificate stating the name of the person or persons served, the
date of service, the method of service and the mailing address or
facsimile telephone number to which service was made, if not made
in person.  If the method of service to any party is different
from the method of service to any other party or the method for
filing with the Commission, the certificate shall state why a
different means of service was used. 

COMMENT:  Since hearing officers frequently preside at locations
away from the Commission's Headquarters in Washington, D.C.,
persons are permitted to make filings with the hearing officer,
who then can forward the filings to the Secretary.  Rule 351
contains additional procedures for the transmittal of the record
of a proceeding before a hearing officer (and the index of the
record) from the hearing officer to the Secretary. 
     Rule 151 requires that where the Commission has assigned a
hearing officer to preside at a proceeding, the person making a
motion direct his or her requests and arguments to the hearing
officer, not the Commission.  If a motion is directed to the
Commission in a case in which a hearing officer is assigned, the
Secretary must refer the motion to the hearing officer unless a
motion directly to the Commission is authorized.  In those
unusual circumstances where a motion is properly directed to the
 
-------------------- BEGINNING OF PAGE #30 ---------------------

Commission, the proceeding before the hearing officer should
continue, unless otherwise ordered.  

REVISION COMMENT (d):  The requirements for the certificate of
service have been modified to require that the certificate list
the name of the person served and the method of service used if
other than personal service is made.  Additionally, if the method
of service to any party is different from the method of service
to any other party or the method for filing with the Commission,
the certificate must state why a different method was used.


Rule 152. Filing of Papers: Form.
     (a)  Specifications.  Papers filed in connection with any
proceeding as defined in Rule 101(a) shall:
          (1)  be on one grade of unglazed white paper measuring
     8  x 11 inches, except that, to the extent that the
     reduction of larger documents would render them illegible,
     such documents may be filed on larger paper;  
          (2)  be typewritten or printed in either 10- or 12-
point typeface or otherwise reproduced by a process that produces
permanent and plainly legible copies; 
          (3)  include at the head of the paper, or on a title
     page, the name of the Commission, the title of the
     proceeding, the names of the parties, the subject of the
     particular paper or pleading, and the file number assigned
     to the proceeding;
          (4)  be paginated with left hand margins at least 1
     inch wide, and other margins of at least 1 inch; 
          (5)  be double-spaced, with single-spaced footnotes and
     single-spaced indented quotations; and
          (6)  be stapled, clipped or otherwise fastened in the
     upper left corner.
     (b)  Signature Required.  All papers must be dated and
signed as provided in Rule 153.
     (c)  Suitability for Recordkeeping.  Documents which, in the
opinion of the Commission, are not suitable for computer scanning
or microfilming may be rejected.  
     (d)  Number of Copies.  An original and three copies of all
papers shall be filed.  
     (e)  Form of Briefs.  All briefs containing more than 10
pages shall include a table of contents, an alphabetized table of
cases, a table of statutes, and a table of other authorities
cited, with references to the pages of the brief wherein they are
cited.
     (f)  Scandalous or Impertinent Matter.  Any scandalous or
impertinent matter contained in any brief or pleading or in
connection with any oral presentation in a proceeding may be
stricken on order of the Commission or the hearing officer. 


Rule 153. Filing of Papers: Signature Requirement and Effect. 
     (a)  General Requirements.  Following the issuance of an
order instituting proceedings, every filing of a party
represented by counsel shall be signed by at least one counsel of
record in his or her name and shall state that counsel's business
address and telephone number.  A party who acts as his or her own
counsel shall sign his or her individual name and state his or
her address and telephone number on every filing.
     (b)  Effect of Signature.  
          (1)  The signature of a counsel or party shall
     constitute a certification that: 
               (i)  the person signing the filing has read the
          filing;
 
-------------------- BEGINNING OF PAGE #31 ---------------------

               (ii) to the best of his or her knowledge,
          information, and belief, formed after reasonable
          inquiry, the filing is well grounded in fact and is
          warranted by existing law or a good faith argument for
          the extension, modification, or reversal of existing
          law; and 
               (iii)     the filing is not made for any improper
          purpose, such as to harass or to cause unnecessary
          delay or needless increase in the cost of adjudication.


          (2)  If a filing is not signed, the hearing officer or
     the Commission shall strike the filing, unless it is signed
     promptly after the omission is called to the attention of
     the person making the filing.

COMMENT:  Rule 153(b) is based upon Rule 11 of the Federal Rules
of Civil Procedure.  Persons signing a filing bear personal
responsibility for the contents of the filing.  If a filing is
contrary to the provisions of this rule, the person or persons
signing the filing may be subject to sanctions under Rule 180.  


Rule 154. Motions.
     (a)  Generally.  Unless made during a hearing or conference,
a motion shall be in writing, shall state with particularity the
grounds therefor, shall set forth the relief or order sought, and
shall be accompanied by a written brief of the points and
authorities relied upon.  All written motions shall be served in
accordance with Rule 150, be filed in accordance with Rule 151,
meet the requirements of Rule 152, and be signed in accordance
with Rule 153.  The Commission or the hearing officer may order
that an oral motion be submitted in writing.  Unless otherwise
ordered by the Commission or the hearing officer, if a motion is
properly made to the Commission concerning a proceeding to which
a hearing officer is assigned, the proceeding before the hearing
officer shall continue pending the determination of the motion by
the Commission.  No oral argument shall be heard on any motion
unless the Commission or the hearing officer otherwise directs.  
 
     (b)  Opposing and Reply Briefs.  Except as provided in Rule
401, briefs in opposition to a motion shall be filed within five
days after service of the motion.  Reply briefs shall be filed
within three days after service of the opposition.
     (c)  Length Limitation.  A brief in support of or opposition
to a motion shall not exceed 10 pages, exclusive of pages
containing any table of contents, table of authorities, and/or
addendum.  Requests for leave to file briefs in excess of 10
pages are disfavored.


Rule 155. Default; Motion to Set Aside Default.
     (a)  A party to a proceeding may be deemed to be in default
and the Commission or the hearing officer may determine the
proceeding against that party upon consideration of the record,
including the order instituting proceedings, the allegations of
which may be deemed to be true, if that party fails: 
          (1)  to appear, in person or through a representative,
     at a hearing or conference of which that party has been
     notified; 
          (2)  to answer, to respond to a dispositive motion
     within the time provided, or otherwise to defend the
     proceeding; or
 
-------------------- BEGINNING OF PAGE #32 ---------------------

          (3)  to cure a deficient filing within the time
     specified by the Commission or the hearing officer pursuant
     to Rule 180(b).
     (b)  A motion to set aside a default shall be made within a
reasonable time, state the reasons for the failure to appear or
defend, and specify the nature of the proposed defense in the
proceeding.  In order to prevent injustice and on such conditions
as may be appropriate, the hearing officer, at any time prior to
the filing of the initial decision, or the Commission, at any
time, may for good cause shown set aside a default. 

COMMENT:  Pursuant to Rule 155 the Commission or the hearing
officer may enter a default against any party who fails to appear
in person or, if appropriate, through a representative, at a
hearing or conference of which the party has notice.  Thus, for
example, failure to appear at a prehearing conference may be a
grounds for default.  In addition, for example, this rule permits
the entry of default against any party who fails to answer, to
respond to a dispositive motion, or otherwise to defend the
proceeding, or to file a required brief either before the hearing
officer or on appeal before the Commission.  This provision
retains the existing standards for setting aside a default
contained in former Rule of Practice 12(d), 17 CFR 201.12(d)
(1994).  

REVISION COMMENT:  Failure to file a notice of appearance has
been eliminated as a basis for a default.  Failure to file a
notice of appearance, like the failure to make any other required
filing, is subject to sanctions under Rule 180(c).  


Rule 160. Time Computation.
     (a)  Computation.  In computing any period of time
prescribed in or allowed by these Rules of Practice or by order
of the Commission, the day of the act, event, or default from
which the designated period of time begins to run shall not be
included.  The last day of the period so computed shall be
included unless it is a Saturday, Sunday, or Federal legal
holiday (as defined in Rule 104), in which event the period runs
until the end of the next day that is not a Saturday, Sunday, or
Federal legal holiday.  Intermediate Saturdays, Sundays, and
Federal legal holidays shall be excluded from the computation
when the period of time prescribed or allowed is seven days or
less, not including any additional time allowed for service by
mail in paragraph (b) of this rule.  If on the day a filing is to
be made, weather or other conditions have caused the Secretary's
office or other designated filing location to close, the filing
deadline shall be extended to the end of the next day that is
neither a Saturday, a Sunday, nor a Federal legal holiday.  
     (b)  Additional Time For Service by Mail.  If service is
made by mail, three days shall be added to the prescribed period
for response. 

REVISION COMMENT (b):  This paragraph has been simplified.  No
substantive change is intended.  One commenter requested that the
amount of time for service by mail be increased.  Rule 6(e) of
the Federal Rules of Civil Procedure, which allows only three
days to be added to a prescribed period when service is by mail,
establishes a widely used and familiar standard for the
computation of additional time when service is by mail.  No
change in the additional time period for service by mail was
deemed warranted.  
 
-------------------- BEGINNING OF PAGE #33 ---------------------

Rule 161. Extensions of Time, Postponements and Adjournments.
     (a)  Availability.  Except as otherwise provided by law, the
Commission, at any time, or the hearing officer, at any time
prior to the filing of his or her initial decision or, if no
initial decision is to be filed, at any time prior to the closing
of the record, may, for good cause shown, extend or shorten any
time limits prescribed by these Rules of Practice for the filing
of any papers and may, consistent with paragraph (b) of this
rule, postpone or adjourn any hearing.  
     (b)  Limitations on Postponements, Adjournments and
Extensions.  A hearing shall begin at the time and place ordered,
provided that, within the limits provided by statute, the
Commission or the hearing officer may for good cause shown
postpone the commencement of the hearing or adjourn a convened
hearing for a reasonable period of time or change the place of
hearing.   
          (1)  Additional Considerations.  In considering a
     motion for postponement of the start of a hearing,
     adjournment once a hearing has begun, or extensions of time
     for filing papers, the hearing officer or the Commission
     shall consider, in addition to any other factors:  
               (i)  the length of the proceeding to date;
               (ii) the number of postponements, adjournments or
          extensions already granted;
               (iii)     the stage of the proceedings at the time
          of the request; and
               (iv) any other such matters as justice may
          require. 
          (2)  Time Limit.  Postponements, adjournments or
     extensions of time for filing papers shall not exceed 21
     days unless the Commission or the hearing officer states on
     the record or sets forth in a written order the reasons why
     a longer period of time is necessary.  

COMMENT:  The rule requires the hearing officer to consider
explicitly the efficient and timely administration of justice
when determining whether to grant a postponement, adjournment or
extension of time for filing of papers.  The need for delay must
be balanced against the need to bring each case to a timely
conclusion, consistent with the public interest.  The factors
listed in the rule build on existing standards applied by the
administrative law judges.  


Rule 180. Sanctions.  
     (a)  Contemptuous Conduct.  
          (1)  Subject to Exclusion or Suspension.  Contemptuous
     conduct by any person before the Commission or a hearing
     officer during any proceeding, including any conference,
     shall be grounds for the Commission or the hearing officer
     to:
               (i)  exclude that person from such hearing or
          conference, or any portion thereof; and/or
               (ii) summarily suspend that person from
          representing others in the proceeding in which such
          conduct occurred for the duration, or any portion, of
          the proceeding.    
          (2)  Review Procedure.  A person excluded from a
     hearing or conference, or a counsel summarily suspended from
     practice for the duration or any portion of a proceeding,
     may seek review of the exclusion or suspension by filing
     with the Commission, within three days of the exclusion or
     suspension order, a motion to vacate the order.  The
 
-------------------- BEGINNING OF PAGE #34 ---------------------

     Commission shall consider such motion on an expedited basis
     as provided in Rule 500. 
          (3)  Adjournment.  Upon motion by a party represented
     by counsel subject to an order of exclusion or suspension,
     an adjournment shall be granted to allow the retention of
     new counsel.  In determining the length of an adjournment,
     the Commission or hearing officer shall consider, in
     addition to the factors set forth in Rule 161, the
     availability of co-counsel for the party or of other members
     of a suspended counsel's firm.
     (b)  Deficient Filings; Leave to Cure Deficiencies.  The
Commission or the hearing officer may reject, in whole or in
part, any filing that fails to comply with any requirements of
these Rules of Practice or of any order issued in the proceeding
in which the filing was made.  Any such filings shall not be part
of the record.  The Commission or the hearing officer may direct
a party to cure any deficiencies and to resubmit the filing
within a fixed time period. 
     (c)  Failure to Make Required Filing or to Cure Deficient
Filing.  The Commission or the hearing officer may enter a
default pursuant to Rule 155, dismiss the case, decide the
particular matter at issue against that person, or prohibit the
introduction of evidence or exclude testimony concerning that
matter if a person fails:
          (1)  to make a filing required under these Rules of
     Practice; or 
          (2)  to cure a deficient filing within the time
     specified by the Commission or the hearing officer pursuant
     to paragraph (b) of this rule.

COMMENT (a):  Paragraph (a) is based on former Rule 2(f), which
provided that contemptuous conduct was grounds for exclusion and
summary suspension for the duration of a hearing.  Contemptuous
conduct during the course of a proceeding that would warrant
sanctions has been rare.  Under Rule 180(a), any person found to
have engaged in contemptuous conduct can be excluded from all or
a portion of a particular hearing or conference.  
     In the event that a hearing officer or the Commission
excludes or suspends a party's counsel, the party may make a
motion for an adjournment to obtain new counsel.  See 5 U.S.C.
  555(b) (right in administrative proceedings to be accompanied
by retained counsel); cf. Feeney v. SEC, 564 F.2d 260, 262 (8th
Cir. 1977), cert. denied, 435 U.S. 969 (1978) (no right to
appointed counsel in administrative proceedings where respondent
assumed to be indigent (citing Boruski v. SEC, 340 F.2d 991, 992
(2d Cir.), cert. denied, 381 U.S. 943 (1965)).  Whether or not an
exclusion or summary suspension order is issued, conduct during a
hearing may be the basis for further disciplinary action, e.g.,
pursuant to Rule 102(e), or, as to a staff member, under the 
Commission's personnel regulations.

COMMENT (b):  A filing may be rejected if it fails to meet the
requirements of any rule or order.  See In the Matter of
Fischbach, Admin. Proc. File No. 3-7384 (June 18, 1991).  For
example, filings that are not served as required by Rule 150,
that fail to cite to the record as required by Rule 450, that are
longer than permitted by Rule 450, or that fail to comply with a
prehearing order pursuant to Rule 221, could be found to be
deficient. 
     The rule permits the hearing officer or the Commission to
fix a period of time during which a deficiency must be cured and
a new filing made.  The authority to reject a filing or to permit
an opportunity to cure a deficiency is discretionary.  Whether a
particular filing should be rejected or whether leave to cure a
 
-------------------- BEGINNING OF PAGE #35 ---------------------

deficient filing should be granted requires a case-by-case
determination.  Parties, including those appearing pro se, are
obligated to familiarize themselves with the Rules of Practice. 
The fact that a person may represent himself or herself or be
represented by counsel who has not previously practiced before
the Commission may be a factor in considering how to address a
deficient filing, but should not, standing alone, be
determinative.  Deficiencies that are technical, de minimis, or
non-prejudicial, however, may not warrant any action pursuant to
this rule.  

COMMENT (c):  This provision permits the entry of sanctions for
the failure to file a document required under the Commission's
Rules of Practice or for failure to cure a deficient filing
within the time ordered.  In response to such failures, the
Commission or the hearing officer may determine the particular
matter at issue against the person who has failed to perform or
may preclude that person from introducing evidence or testimony
on that matter.  It is intended that the provision will be
invoked for failures that do not warrant the entry of a default
under Rule 155.  

REVISION COMMENT (b):  The rule now states explicitly that a
rejected filing is not part of the record.  If a filing is
rejected, the entry of that filing on the docket may be stricken.



REVISION COMMENT (c):  The revised rule allows for a sanction
less severe than a default for a deficient filing.  


Rule 190. Confidential Treatment of Information in Certain
          Filings.  
     (a)  Application.  An application for confidential treatment
pursuant to the provisions of Clause 30 of Schedule A of the
Securities Act of 1933, 15 U.S.C. 77aa(30), and Rule 406
thereunder, 17 CFR 230.406; Section 24(b)(2) of the Securities
Exchange Act of 1934, 15 U.S.C. 78x(b)(2), and Rule 24b-2
thereunder, 17 CFR 240.24b-2; Section 22(b) of the Public Utility
Holding Company Act of 1935, 15 U.S.C. 79v(b), and Rule 104
thereunder, 17 CFR 250.104; Section 45(a) of the Investment
Company Act of 1940, 15 U.S.C. 80a-44(a), and Rule 45a-1
thereunder, 17 CFR 270.45a-1; or Section 210(a) of the Investment
Advisers Act of 1940, 15 U.S.C. 80b-10(a), shall be filed with
the Secretary.  The application shall be accompanied by a sealed
copy of the materials as to which confidential treatment is
sought. 
     (b)  Procedure For Supplying Additional Information.  The
applicant may be required to furnish in writing additional
information with respect to the grounds for objection to public
disclosure.  Failure to supply the information so requested
within 14 days from the date of receipt by the applicant of a
notice of the information required shall be deemed a waiver of
the objection to public disclosure of that portion of the
information to which the additional information relates, unless
the Commission or the hearing officer shall otherwise order for
good cause shown at or before the expiration of such 14-day
period.
     (c)  Confidentiality of Materials Pending Final Decision. 
Pending the determination of the application for confidential
treatment, transcripts, non-final orders including an initial
decision, if any, and other materials in connection with the
application shall be placed under seal; shall be for the
confidential use only of the hearing officer, the Commission, the
 
-------------------- BEGINNING OF PAGE #36 ---------------------

applicant, and any other parties and counsel; and shall be made
available to the public only in accordance with orders of the
Commission.  
     (d)  Public Availability of Orders.  Any final order of the
Commission denying or sustaining an application for confidential
treatment shall be made public.  Any prior findings or opinions
relating to an application for confidential treatment under this
rule shall be made public at such time as the material as to
which confidentiality was requested is made public.

COMMENT:  Pursuant to the statutory provisions and rules set
forth in paragraph (a), persons who file a registration
statement, report, application or other such materials may file
an application for confidential treatment of required information
included in such filings.  Securities Act Rule 406, 17 CFR
230.406, Exchange Act Rule 24b-2, 17 CFR 240.24b-2, and Pubic
Utility Holding Company Act Rule 104, 15 CFR 250.104, set forth
certain procedures governing application for confidential
treatment for materials filed under the Securities Act, Exchange
Act and Public Utility Holding Company Act respectively.  There
are no corresponding rules governing applications for
confidential treatment under the Investment Company Act or
Investment Advisers Act, although Investment Company Act Rule
45a-1, 17 CFR 270.45a-1, sets forth certain procedures governing
applications for confidential treatment of the names and
addresses of dealers of registered investment companies.
     Rule 190 is based in part on former Rule 25.  The Rule
governs applications for confidential treatment with respect to
information required to be filed with the Commission in
connection with a registration statement, report, application or
other such materials.  Rule 322 applies to requests for a
protective order for materials introduced at hearings conducted
pursuant to these Rules of Practice.  Thus, both rules address
material that would ordinarily be placed in a public file but is
treated as confidential pending the determination of the request
for confidentiality.  The Commission's Freedom of Information Act
regulations, 17 CFR 200.83, apply to requests for confidential
treatment of information, such as testimony in an enforcement
investigation, that is not ordinarily placed in a public file at
the time received by the Commission but which may be made public
pursuant to a request under the Freedom of Information Act
("FOIA").  Requests to keep materials confidential under FOIA are
not evaluated until the Commission receives a request for access
to the information.
     An application for confidential treatment may be heard by
the Commission or referred to a hearing officer.  Authority to
act on applications for confidential treatment has been delegated
to the staff, see, e.g., Delegation to the Director of the
Division of Corporation Finance, 17 CFR 200.30-1(a)(3).  In
practice, applications are determined by delegated authority. 
Review of delegated decisionmaking may be sought pursuant to Rule
430.  


Rule 191. Adjudications Not Required to Be Determined on the
          Record After Notice and Opportunity for Hearing. 
     (a)  Scope of the Rule.  This rule applies to every case of
adjudication, as defined in 5 U.S.C. 551, pursuant to any statute
which the Commission administers, where adjudication is not
required to be determined on the record after notice and
opportunity for hearing and which the Commission has not chosen
to determine on the record after notice and opportunity for
hearing. 
 
-------------------- BEGINNING OF PAGE #37 ---------------------

     (b)  Procedure.  In every case of adjudication under
paragraph (a) of this rule, the Commission shall (1) give prompt
notice of any adverse action or final disposition to any person
who has requested the Commission to make (or not to make) any
such adjudication, and (2) furnish to any such person a written
statement of reasons therefor.  Additional procedures may be
specified in rules relating to specific types of such
adjudications.  Where any such rule provides for the publication
of a Commission order, notice of the action or disposition shall
be deemed to be given by such publication. 
     (c)  Contents of the Record.  If the Commission provides
notice and opportunity for the submission of written comments by
parties to the adjudication or, as the case may be, by other
interested persons, written comments received on or before the
closing date for comments, unless accorded confidential treatment
pursuant to statute or rule of the Commission, become a part of
the record of the adjudication.  The Commission, in its
discretion, may accept and include in the record written comments
filed with the Commission after the closing date.  

COMMENT:  Section 23(c) of the Exchange Act, 15 U.S.C.   78w(c)
requires the Commission to prescribe the procedures applicable to
Exchange Act adjudications "not required to be determined on the
record after notice and opportunity for hearing."  Rule 191
contains these required procedures and also applies them to
adjudications arising under all statutes administered by the
Commission.
     The Administrative Procedure Act recognizes a distinction
between an "adjudication required by statute to be determined on
the record after opportunity for an agency hearing,"  See 5
U.S.C.   554(a), and other types of adjudications.  The former
are often referred to as "formal" or "on the record"
adjudications.  The latter, such as proceedings in which a
hearing is required to be conducted after "notice and opportunity
for hearing," but not specifically "on the record," are often
referred to as "informal" adjudications.  Various Administrative
Procedure Act requirements, particularly with respect to hearing
procedures, apply only to an "adjudication required by statute to
be determined on the record after opportunity for an agency
hearing. . . ." See, e.g., 5 U.S.C.    556(a), 557(a)
(requirements of those sections apply only to an adjudication "on
the record" as set forth in Section 554(a)); cf. 5 U.S.C.   555
(requirements not limited to proceedings "on the record" as set
forth in Section 554(a)).  
     Where an "on the record" hearing is not mandated by statute,
this rule establishes certain basic requirements for the
proceedings.  The Commission, as a matter of discretion, can
order a "formal" hearing or provide other alternative procedures
in addition to the minimum requirements of Rule 191.


Rule 192. Rulemaking: Issuance, Amendment and Repeal of Rules of
          General Application. 
     (a)  By Petition.  Any person desiring the issuance,
amendment or repeal of a rule of general application may file a
petition therefor with the Secretary.  Such petition shall
include a statement setting forth the text or the substance of
any proposed rule or amendment desired or specifying the rule the
repeal of which is desired, and stating the nature of his or her
interest and his or her reasons for seeking the issuance,
amendment or repeal of the rule.  The Secretary shall
acknowledge, in writing, receipt of the petition and refer it to
the appropriate division or office for consideration and
recommendation.  Such recommendations shall be transmitted with
 
-------------------- BEGINNING OF PAGE #38 ---------------------

the petition to the Commission for such action as the Commission
deems appropriate.  The Secretary shall notify the petitioner of
the action taken by the Commission.
     (b)  Notice of Proposed Issuance, Amendment or Repeal of
Rules.  Except where the Commission finds that notice and public
procedure are impracticable, unnecessary, or contrary to the
public interest, whenever the Commission proposes to issue,
amend, or repeal any rule or regulation of general application
other than an interpretive rule; general statement of policy; or
rule of agency organization, procedure, or practice; or any
matter relating to agency management or personnel or to public
property, loans, grants, benefits, or contracts, there shall
first be published in the Federal Register a notice of the
proposed action.  Such notice shall include:  
          (1)  a statement of the time, place, and nature of the
     rulemaking proceeding, with particular reference to the
     manner in which interested persons shall be afforded the
     opportunity to participate in such proceeding;
          (2)  reference to the authority under which the rule is
     proposed; and 
          (3)  the terms or substance of the proposed rule or a
     description of the subjects and issues involved.


Rule 193. Applications by Barred Individuals For Consent to
          Associate. 
                         PRELIMINARY NOTE
     This rule governs applications to the Commission by certain
persons, barred by Commission order from association with
brokers, dealers, municipal securities dealers, government
securities brokers, government securities dealers, investment
advisers, investment companies or transfer agents, for consent to
become so associated.  Applications made pursuant to this rule
must show that the proposed association would be consistent with
the public interest.  In addition to the information specifically
required by the rule, applications should be supplemented, where
appropriate, by written statements of individuals (other than the
applicant) who are competent to attest to the applicant's
character, employment performance, and other relevant
information.  Intentional misstatements or omissions of fact may
constitute criminal violations of 18 U.S.C. 1001 et seq. and
other provisions of law.
     The nature of the supervision that an applicant will receive
or exercise as an associated person with a registered entity is
an important matter bearing upon the public interest.  In meeting
the burden of showing that the proposed association is consistent
with the public interest, the application and supporting
documentation must demonstrate that the proposed supervision,
procedures, or terms and conditions of employment are reasonably
designed to prevent a recurrence of the conduct that led to
imposition of the bar.  As an associated person, the applicant
will be limited to association in a specified capacity with a
particular registered entity and may also be subject to specific
terms and conditions.
     Normally, the applicant's burden of demonstrating that the
proposed association is consistent with the public interest will
be difficult to meet where the applicant is to be supervised by,
or is to supervise, another barred individual.  In addition,
where an applicant wishes to become the sole proprietor of a
registered entity and thus is seeking Commission consent
notwithstanding an absence of supervision, the applicant's burden
will be difficult to meet.
     In addition to the factors set forth in paragraph (d) of
this rule, the Commission will consider the nature of the
 
-------------------- BEGINNING OF PAGE #39 ---------------------

findings that resulted in the bar when making its determination
as to whether the proposed association is consistent with the
public interest.  In this regard, attention is directed to Rule
5(e) of the Commission's Rules on Informal and Other Procedures,
17 CFR 202.5(e).  Among other things, Rule 5(e) sets forth the
Commission's policy "not to permit a . . . respondent [in an
administrative proceeding] to consent to . . . [an] order that
imposes a sanction while denying the allegations in the . . .
order for proceedings."  Consistent with the rationale underlying
that policy, and in order to avoid the appearance that an
application made pursuant to this rule was granted on the basis
of such denial, the Commission will not consider any application
that attempts to reargue or collaterally attack the findings that
resulted in the Commission's bar order.
     (a)  Scope of Rule.  Applications for Commission consent to
associate, or to change the terms and conditions of association,
with a registered broker, dealer, municipal securities dealer,
government securities broker, government securities dealer,
investment adviser, investment company or transfer agent may be
made pursuant to this rule where a Commission order bars the
individual from association with a registered entity and:
          (1)  such barred individual seeks to become associated
     with an entity that is not a member of a self-regulatory
     organization; or
          (2)  the order contains a proviso that application may
     be made to the Commission after a specified period of time.
     (b)  Form of Application.  Each application shall be
supported by an affidavit, manually signed by the applicant, that
addresses the factors set forth in paragraph (d) of this rule. 
One original and three copies of the application shall be filed
pursuant to Rules 151, 152 and 153.  Each application shall
include as exhibits: 
          (1)  a copy of the Commission order imposing the bar; 
          (2)  an undertaking by the applicant to notify
     immediately the Commission in writing if any information
     submitted in support of the application becomes materially
     false or misleading while the application is pending; 
          (3)  the following forms, as appropriate:
               (i)  a copy of a completed Form U-4, where the
          applicant's proposed association is with a broker-
          dealer or municipal securities dealer; 
               (ii) a copy of a completed Form MSD-4, where the
          applicant's proposed association is with a bank
          municipal securities dealer; 
               (iii)     the information required by Form ADV, 17
          CFR 279.1, with respect to the applicant, where the
          applicant's proposed association is with an investment
          adviser; 
               (iv) the information required by Form TA-1, 17 CFR
          249b.100, with respect to the applicant, where the
          applicant's proposed association is with a transfer
          agent; and
          (4)  a written statement by the proposed employer that
     describes: 
               (i)  the terms and conditions of employment and
          supervision to be exercised over such applicant and,
          where applicable, by such applicant; 
               (ii) the qualifications, experience, and
          disciplinary records of the proposed supervisor(s) of
          the applicant; 
               (iii)     the compliance and disciplinary history,
          during the two years preceding the filing of the
          application, of the office in which the applicant will
          be employed; and
 
-------------------- BEGINNING OF PAGE #40 ---------------------

               (iv) the names of any other associated persons in
          the same office who have previously been barred by the
          Commission, and whether they are to be supervised by
          the applicant.
     (c)  Required Showing.  The applicant shall make a showing
satisfactory to the Commission that the proposed association
would be consistent with the public interest.
     (d)  Factors to be Addressed.  The affidavit required by
paragraph (b) of this rule shall address each of the following:  
          (1)  the time period since the imposition of the bar; 
          (2)  any restitution or similar action taken by the
     applicant to recompense any person injured by the misconduct
     that resulted in the bar; 
          (3)  the applicant's compliance with the order imposing
     the bar; 
          (4)  the applicant's employment during the period
     subsequent to imposition of the bar; 
          (5)  the capacity or position in which the applicant
     proposes to be associated; 
          (6)  the manner and extent of supervision to be
     exercised over such applicant and, where applicable, by such
     applicant; 
          (7)  any relevant courses, seminars, examinations or
     other actions completed by the applicant subsequent to
     imposition of the bar to prepare for his or her return to
     the securities business; and 
          (8)  any other information material to the application.
     (e)  Notification to Applicant and Written Statement.  In
the event an adverse recommendation is proposed by the staff with
respect to an application made pursuant to this rule, the
applicant shall be so advised and provided with a written
statement of the reasons for such recommendation.  The applicant
shall then have 30 days to submit a written statement in
response.
     (f)  Concurrent Applications.  The Commission will not
consider any application submitted pursuant to this rule if any
other application for consent to associate concerning the same
applicant is pending before any self-regulatory organization.  

INITIATION OF PROCEEDINGS AND PREHEARING RULES

Rule 200. Initiation of Proceedings.
     (a)  Order Instituting Proceedings: Notice and Opportunity
For Hearing.  
          (1)  Generally.  Whenever an order instituting
     proceedings is issued by the Commission, appropriate notice
     thereof shall be given to each party to the proceeding by
     the Secretary or another duly designated officer of the
     Commission.  Each party shall be given notice of any hearing
     within a time reasonable in light of the circumstances, in
     advance of the hearing; provided, however, no prior notice
     need be given to a respondent if the Commission has
     authorized the Division of Enforcement to seek a temporary
     sanction ex parte.  
          (2)  Stop Order Proceedings: Additional Persons
     Entitled to Notice.  Any notice of a proceeding relating to
     the issuance of a stop order suspending the effectiveness of
     a registration statement pursuant to Section 8(d) of the
     Securities Act of 1933, 15 U.S.C. 77h(d), shall be sent to
     or served on the issuer; or, in the case of a foreign
     government or political subdivision thereof, sent to or
     served on the underwriter; or, in the case of a foreign or
     territorial person, sent to or served on its duly authorized
     representative in the United States named in the
 
-------------------- BEGINNING OF PAGE #41 ---------------------

     registration statement, properly directed in the case of
     telegraphic notice to the address given in such statement. 
     In addition, if such proceeding is commenced within 90 days
     after the registration statement has become effective,
     notice of the proceeding shall be given to the agent for
     service named on the facing sheet of the registration
     statement and to each other person designated on the facing
     sheet of the registration statement as a person to whom
     copies of communications to such agent are to be sent. 
     (b)  Content of Order.  The order instituting proceedings
shall: 
          (1)  state the nature of any hearing; 
          (2)  state the legal authority and jurisdiction under
     which the hearing is to be held; 
          (3)  contain a short and plain statement of the matters
     of fact and law to be considered and determined, unless the
     order directs an answer pursuant to Rule 220 in which case
     the order shall set forth the factual and legal basis
     alleged therefor in such detail as will permit a specific
     response thereto; and 
          (4)  state the nature of any relief or action sought or
     taken. 
     (c)  Time and Place of Hearing.  The time and place for any
hearing shall be fixed with due regard for the public interest
and the convenience and necessity of the parties, other
participants, or their representatives.  
     (d)  Amendment to Order Instituting Proceedings.
          (1)  By the Commission.  Upon motion by a party, the
     Commission may, at any time, amend an order instituting
     proceedings to include new matters of fact or law.  
          (2)  By the Hearing Officer.  Upon motion by a party,
     the hearing officer may, at any time prior to the filing of
     an initial decision or, if no initial decision is to be
     filed, prior to the time fixed for the filing of final
     briefs with the Commission, amend an order instituting
     proceedings to include new matters of fact or law that are
     within the scope of the original order instituting
     proceedings.  
     (e)  Publication of Notice of Public Hearings.  Unless
otherwise ordered by the Commission, notice of any public hearing
shall be given general circulation by release to the public, by
publication in the SEC News Digest and, where directed, by
publication in the Federal Register. 

COMMENT (a):  Paragraph (a) requires that appropriate notice of
an order instituting proceedings be given.  Ordinarily, notice is
accomplished through service of the order pursuant to the
procedures set forth in Rule 141.  Where emergency or expedited
action is sought, however, notice of a hearing may be given prior
to formal service of the order instituting proceedings.  See
Rules 511(a) and 521(a).  Notice may be delayed if the Commission
determines to hear a matter ex parte.  See Rule 513. 

COMMENT (c):  The provisions of this paragraph are based on
Section 554(b) of the Administrative Procedure Act, 5 U.S.C.  
554(b).  It is the policy of the Commission that in a proceeding
under the Public Utility Holding Company Act, the Investment
Company Act (except Section 9(b)), Section 206A of the Investment
Advisers Act, Section 8 of the Securities Act, or Sections 305
and 307 of the Trust Indenture Act or any proceeding in which a
temporary sanction is sought, the hearing should normally be held
at the Commission's Headquarters.  
 
-------------------- BEGINNING OF PAGE #42 ---------------------

COMMENT (d):  The Commission has stated that amendment of orders
instituting proceeding should be freely granted, subject only to
the consideration that other parties should not be surprised, nor
their rights prejudiced.  Carl L. Shipley, 45 S.E.C. 589, 595
(1974).  Where amendments to an order instituting proceedings are
intended to correct an error, to conform the order to the
evidence or to take into account subsequent developments which
should be considered in disposing of the proceeding, and the
amendments are within the scope of the original order, either a
hearing officer or the Commission has authority to amend the
order.  See, e.g., Don A. Long, Admin. Proc. Rulings Release No.
233 (Mar. 31, 1980), 52 SEC Docket 497 (Aug. 18, 1992) (hearing
officer's grant of motion to conform pleading to evidence adduced
at hearing).  Since, however, the Commission has not delegated
its authority to authorize orders instituting proceedings,
hearing officers do not have authority to initiate new charges or
to expand the scope of matters set down for hearing beyond the
framework of the original order instituting proceedings.  See
Securities Act Release No. 5309 (Sept. 27, 1972).   

REVISION COMMENT (c):  Comment was requested as to the
Commission's practice with respect to holding hearings in
multiple cities, in locations outside Washington, or in locations
other than those where the Commission maintains Regional Offices.

Commenters supported the current practice.  The Commission has
determined not to change the substance of the rule.  The
statement of policy in former Rule 6(b) that certain specified
hearings would normally be held in Washington, D.C. has been
moved into a comment to Rule 200.  The policy statement contained
in the comment has been modified to reflect that the hearing
location should normally be at the Commission's Headquarters, and
that hearings as to whether a temporary sanction will be imposed
are covered by the policy.  


Rule 201. Consolidation of Proceedings.
     By order of the Commission or a hearing officer, proceedings
involving a common question of law or fact may be consolidated
for hearing of any or all the matters at issue in such
proceedings.  The Commission or the hearing officer may make such
orders concerning the conduct of such proceedings as it deems
appropriate to avoid unnecessary cost or delay.   Consolidation
shall not prejudice any rights under these Rules of Practice and
shall not affect the right of any party to raise issues that
could have been raised if consolidation had not occurred.  For
purposes of this rule, no distinction is made between joinder and
consolidation of proceedings.  

COMMENT:  Rule 201 is modeled after Model Adjudication Rule 201,
Administrative Conference of the United States (Dec. 1993).

REVISION COMMENT:  Former Rule 10 provided that proceedings could
be "joined" and "consolidated."  Rule 201 does not draw a
distinction between joinder and consolidation. 
     One commenter suggested that the Commission should refrain
from making decisions on whether to consolidate proceedings in
order to avoid the appearance that in deciding the consolidation
issue the Commission had reached an opinion as to the merits of a
case.  Just as judges make preliminary decisions regarding
joinder, consolidation, evidentiary motions and other matters
without losing either their objectivity or the appearance of
objectivity, so the Commission or a hearing officer must decide
matters preliminary to a final decision.  There is neither a loss
of objectivity nor an appearance of less objectivity from doing
 
-------------------- BEGINNING OF PAGE #43 ---------------------

so.  Although the Commission does not agree with the rationale
provided by the commenter, the rule as adopted permits the
decision on consolidation to be made by a hearing officer because
it may be more efficient to have a hearing officer issue a
decision on consolidation.  
     The commenter also suggested that consolidation should be
permitted only if consolidation tends to avoid unnecessary cost
or delay as under former Rule 10.  Rule 201 as revised includes a
standard substantially similar to that of former Rule 10.  


Rule 202. Specification of Procedures by Parties in Certain
          Proceedings
     (a)  Motion to Specify Procedures.  In any proceeding other
than an enforcement or disciplinary proceeding or a proceeding to
review a determination by a self-regulatory organization pursuant
to Rules 420 and 421, a party may, at any time up to 20 days
prior to the start of a hearing, make a motion to specify the
procedures necessary or appropriate for the proceeding, with
particular reference to: 
          (1)  whether there should be an initial decision by a
     hearing officer; 
          (2)  whether any interested division of the Commission
     may assist in the preparation of the Commission's decision;
     and 
          (3)  whether there should be a 30-day waiting period
     between the issuance of the Commission's order and the date
     it is to become effective.  
     (b)  Objections; Effect of Failure to Object.  Any other
party may object to the procedures so specified, and such party
may specify such additional procedures as it considers necessary
or appropriate.  In the absence of such objection or such
specification of additional procedures, such other party may be
deemed to have waived objection to the specified procedures. 
     (c)  Approval Required.  Any proposal pursuant to paragraph
(a) of this rule, even if not objected to by any party, shall be
subject to the written approval of the hearing officer.  
     (d)  Procedure Upon Agreement to Waive an Initial Decision. 
If an initial decision is waived pursuant to paragraph (a) of
this rule, the hearing officer shall notify the Secretary and,
unless the Commission directs otherwise within 14 days, no
initial decision shall be issued. 

COMMENT:  Allowing for the specification of procedures by the
parties under the supervision of a hearing officer has been
effective in promoting efficiency in certain proceedings
involving regulatory matters.  By contrast, in an enforcement or
disciplinary proceeding in which the government is seeking to
impose sanctions on particular persons, or on review of a
determination by a self-regulatory organization, it is not in the
public interest to subject basic procedures to negotiation by the
parties.  Accordingly, Rule 202 excludes enforcement,
disciplinary, and self-regulatory organization review proceedings
from its scope.  
     Consistent with the operation of Rule 221, the Rule requires
motions to specify procedures to be made at least 20 days prior
to a hearing.  As a result, any such motions may be timely
answered and resolved prior to the final prehearing conference. 



Rule 210. Parties, Limited Participants and Amici Curiae. 
 
-------------------- BEGINNING OF PAGE #44 ---------------------

     (a)  Parties in an Enforcement or Disciplinary Proceeding or
a Proceeding to Review a Self-Regulatory Organization
Determination.  
          (1)  Generally.  No person shall be granted leave to
     become a party or a non-party participant on a limited basis
     in an enforcement or disciplinary proceeding or a proceeding
     to review a determination by a self-regulatory organization
     pursuant to Rules 420 and 421. 
          (2)  Disgorgement Proceedings.  In an enforcement
     proceeding, a person may state his or her views with respect
     to a proposed plan of disgorgement or file a proof of claim
     pursuant to Rule 612. 
     (b)  Intervention as a Party.
          (1)  Generally.  In any proceeding, other than an
     enforcement proceeding, a disciplinary proceeding or a
     proceeding to review a self-regulatory organization
     determination, any person may seek leave to intervene as a
     party by filing a motion setting forth the person's interest
     in the proceeding.  No person, however, shall be admitted as
     a party to a proceeding by intervention unless it is
     determined that leave to participate pursuant to paragraph
     (c) of this rule would be inadequate for the protection of
     his or her interests.  
               (i)  In a proceeding under the Public Utility
          Holding Company Act of 1935, any representative of
          interested consumers or security holders, or any other
          person whose participation in the proceeding may be in
          the public interest or for the protection of investors
          or consumers, may be admitted as a party upon the
          filing of a written motion setting forth the person's
          interest in the proceeding.  
               (ii) In a proceeding under the Investment Company
          Act of 1940, any representative of interested security
          holders, or any other person whose participation in the
          proceeding may be in the public interest or for the
          protection of investors, may be admitted as a party
          upon the filing of a written motion setting forth the
          person's interest in the proceeding. 
          (2)  Intervention as of Right.
               (i)  In proceedings under the Public Utility
          Holding Company Act of 1935, any interested
          representative, agency, authority or instrumentality of
          the United States or any interested State, State
          commission, municipality or other political subdivision
          of a state shall be admitted as a party to any
          proceeding upon the filing of a written motion
          requesting leave to be admitted.  
               (ii) In proceedings under the Investment Company
          Act of 1940, any interested State or State agency shall
          be admitted as a party to any proceeding upon the
          filing of a written motion requesting leave to be
          admitted. 
     (c)  Leave to Participate On a Limited Basis.  In any
proceeding, other than an enforcement proceeding, a disciplinary
proceeding or a proceeding to review a self-regulatory
organization determination, any person may seek leave to
participate on a limited basis as a non-party participant as to
any matter affecting the person's interests.
          (1)  Procedure.  Motions for leave to participate shall
     be in writing, shall set forth the nature and extent of the
     movant's interest in the proceeding, and, except where good
     cause for late filing is shown, shall be filed not later
     than 20 days prior to the date fixed for the commencement of
     the hearing.  Leave to participate pursuant to this
 
-------------------- BEGINNING OF PAGE #45 ---------------------

     paragraph (c) may include such rights of a party as the
     hearing officer may deem appropriate.  Persons granted leave
     to participate shall be served in accordance with Rule 150;
     provided, however, that a party to the proceeding may move
     that the extent of notice of filings or other papers to be
     provided to persons granted leave to participate be limited,
     or may move that the persons granted leave to participate
     bear the cost of being provided copies of any or all filings
     or other papers.  Persons granted leave to participate shall
     be bound, except as may be otherwise determined by the
     hearing officer, by any stipulation between the parties to
     the proceeding with respect to procedure, including
     submission of evidence, substitution of exhibits,
     corrections of the record, the time within which briefs or
     exceptions may be filed or proposed findings and conclusions
     may be submitted, the filing of initial decisions, the
     procedure to be followed in the preparation of decisions and
     the effective date of the Commission's order in the case.
     Where the filing of briefs or exceptions or the submission
     of proposed findings and conclusions are waived by the
     parties to the proceedings, a person granted leave to
     participate pursuant to this paragraph (c) shall not be
     permitted to file a brief or exceptions or submit proposed
     findings and conclusions except by leave of the Commission
     or of the hearing officer.  
          (2)  Certain Persons Entitled to Leave to Participate. 
     The hearing officer is directed to grant leave to
     participate under this paragraph (c) to any person to whom
     it is proposed to issue any security in exchange for one or
     more bona fide outstanding securities, claims or property
     interests, or partly in such exchange and partly for cash,
     where the Commission is authorized to approve the terms and
     conditions of such issuance and exchange after a hearing
     upon the fairness of such terms and conditions. 
     (d)  Amicus Participation.  
          (1)  Availability.  An amicus brief may be filed only
     if:
               (i)  a motion for leave to file the brief has been
          granted; 
               (ii) the brief is accompanied by written consent
          of all parties; 
               (iii)     the brief is filed at the request of the
          Commission or the hearing officer; or
               (iv) the brief is presented by the United States
          or an officer or agency thereof, or by a State,
          Territory or Commonwealth.
          (2)  Procedure.  An amicus brief may be filed
     conditionally with the motion for leave.  The motion for
     leave shall identify the interest of the movant and shall
     state the reasons why a brief of an amicus curiae is
     desirable.  Except as all parties otherwise consent, any
     amicus curiae shall file its brief within the time allowed
     the party whose position the amicus will support, unless the
     Commission or hearing officer, for cause shown, grants leave
     for a later filing.  In the event that a later filing is
     allowed, the order granting leave to file shall specify when
     an opposing party may reply to the brief.  A motion of an
     amicus curiae to participate in oral argument will be
     granted only for extraordinary reasons.  
     (e)  Permission to State Views.  Any person may make a
motion seeking leave to file a memorandum or make an oral
statement of his or her views.  Any such communication may be
included in the record; provided, however, that unless offered
and admitted as evidence of the truth of the statements therein
 
-------------------- BEGINNING OF PAGE #46 ---------------------

made, any assertions of fact submitted pursuant to the provisions
of this paragraph (e) will be considered only to the extent that
the statements therein made are otherwise supported by the
record.  
     (f)  Modification of Participation Provisions.  The
Commission or the hearing officer may, by order, modify the
provisions of this rule which would otherwise be applicable, and
may impose such terms and conditions on the participation of any
person in any proceeding as it may deem necessary or appropriate
in the public interest.  

COMMENT (b):  Paragraph (b) reflects requirements of Section 19
of the Public Utility Holding Company Act of 1935, 15 U.S.C.  
79s, and Section 40(c) of the Investment Company Act of 1940, 15
U.S.C.   80a-39(c).  

COMMENT (c):  Through leave to participate on a limited basis,
this rule provides an interested person the opportunity to
express concerns relating to any matter affecting the person's
interests.  Unlike the consent to submission by an amicus,
written consent of all parties is not sufficient to obtain status
as a limited participant.  Approval from the hearing officer is
required.    
     By their terms, certain rules within the Rules of Practice
apply to the rights and responsibilities of "parties."  When non-
party participants are admitted, the order granting leave to
participate may specify the extent to which they are to have the
obligations or rights of a party under the Rules.  Depending on
the extent of the participant's interest and the facts of each
case, the degree of participation will vary.   See, e.g., In the
Matter of College Retirement Equities Fund, Admin. Proc. Rulings
Release No. 288 (Feb. 11, 1988), 52 SEC Docket 448 (Aug. 18,
1992) (order scheduling prehearing conference to discuss inter
alia procedures to limit duplicative cross-examination of
witnesses without diminishing the opportunity for full cross-
examination by participants).
     In an enforcement or disciplinary proceeding, or a
proceeding to review a self-regulatory organization
determination, the only persons who may be parties are those
specified by the Commission in the order instituting proceedings.

Status as a limited, non-party participant pursuant to paragraph
(c) is not allowed.  A person may seek to participate in such
proceedings as an amicus, pursuant to paragraph (d), or, if that
person has knowledge of specific facts relevant to the
proceeding, as a witness.  In addition, pursuant to Rule 612,
persons desiring to comment on a proposed plan of disgorgement
will have an opportunity to submit their written views to the
Commission and, as appropriate under the plan, to file a claim
against the disgorgement pool. 
     Paragraph (c)(2) reflects the requirements of Section
3(a)(10) of the Securities Act of 1933, 15 U.S.C.   77c(a)(10).  

COMMENT (d):  The provisions for amicus participation are based
on Rule 29 of the Federal Rules of Appellate Procedure.  Amicus
participation contemplates the limited action of filing a brief
setting forth the filer's views on particular legal or policy
issues in the proceeding.  

COMMENT (e):  This paragraph allows for the submission of a
statement of views with less formality than that required for an
amicus brief or for participation on an ongoing basis as a non-
party.  From time to time persons, particularly individual
security holders or members of the public, who do not otherwise
wish to participate in a proceeding on any extended basis will
 
-------------------- BEGINNING OF PAGE #47 ---------------------

seek to make written statements of their views in a letter or by
appearing at a hearing.  The factual assertions in such letters
or statements will be considered only to the extent that the
statements therein made are otherwise supported by the record.   

REVISION COMMENT (d):  One commenter suggested that the consent
of the Division of Enforcement should not be required for the
filing of an amicus brief on behalf of a respondent in an
enforcement proceeding.  The Commission or a hearing officer can
more fairly and more adequately assess the benefits of a proposed
amicus filing if the Division of Enforcement or any other party
with views on the proposal may set forth its objections on the
record.  Accordingly, the Commission decided not to make the
suggested rule change.  


Rule 220. Answer to Allegations. 
     (a)  When Required.  In its order instituting proceedings,
the Commission may require any party to file an answer to each of
the allegations contained therein.  Even if not so ordered, any
party in any proceeding may elect to file an answer.  Any other
person granted leave by the Commission or the hearing officer to
participate on a limited basis in such proceedings pursuant to
Rule 210(c) may be required to file an answer.  
     (b)  When to File.  Except where a different period is
provided by rule or by order, a party required to file an answer
as provided in paragraph (a) of this rule shall do so within 20
days after service upon the party of the order instituting
proceedings.  Persons granted leave to participate on a limited
basis in the proceeding pursuant to Rule 210(c) may file an
answer within a reasonable time, as determined by the Commission
or the hearing officer.  If the order instituting proceedings is
amended, the Commission or the hearing officer may require that
an amended answer be filed and, if such an answer is required,
shall specify a date for the filing thereof.  
     (c)  Contents; Effect of Failure to Deny.  Unless otherwise
directed by the hearing officer or the Commission, an answer
shall specifically admit, deny, or state that the party does not
have, and is unable to obtain, sufficient information to admit or
deny each allegation in the order instituting proceedings.  When
a party intends in good faith to deny only a part of an
allegation, the party shall specify so much of it as is true and
shall deny only the remainder.  A statement of a lack of
information shall have the effect of a denial.  A defense of res
judicata, statute of limitations or any other matter constituting
an affirmative defense shall be asserted in the answer.  Any
allegation not denied shall be deemed admitted.  
     (d)  Motion for More Definite Statement.  A party may file
with an answer a motion for a more definite statement of
specified matters of fact or law to be considered or determined. 
Such motion shall state the respects in which, and the reasons
why, each such matter of fact or law should be required to be
made more definite.  If the motion is granted, the order granting
such motion shall set the periods for filing such a statement and
any answer thereto. 
     (e)  Amendments.  A party may amend its answer at any time
by written consent of each adverse party or with leave of the
Commission or the hearing officer.  Leave shall be freely granted
when justice so requires.  
     (f)  Failure to File Answer: Default.  If a party respondent
fails to file an answer required by this rule within the time
provided, such person may be deemed in default pursuant to Rule
155(a).  A party may make a motion to set aside a default
pursuant to Rule 155(b).  
 
-------------------- BEGINNING OF PAGE #48 ---------------------


COMMENT (b):  The time allowed to file an answer, 20 days,
conforms to the time for answers under Rule 12 of the Federal
Rules of Civil Procedure. 

REVISION COMMENT (c):  The provision relating to the filing of
affirmative defenses is based on Rule 8(c) of the Federal Rules
of Civil Procedure.  The change is intended to improve efficiency
and fairness by clarifying issues at an early stage of the
proceeding that may affect the timing, duration or necessity for
a hearing.

REVISION COMMENT (e):  Proposed Rule 9(b) provided for amendment
of an answer only when ordered by the Commission or a hearing
officer.  As adopted, Rule 220(e) allows amendment of an answer
by consent of all parties or by leave of the Commission or
hearing officer.  Amendment of an answer may increase efficiency
and fairness by sharpening the issues in dispute.  Moreover, the
provisions for a summary disposition prior to hearing pursuant to
Rule 250 increase the importance of the answer.  The modification
to the rule is in accordance with Rule 15 of the Federal Rules of
Civil Procedure.  No provision is made, however, for allowing a
period for an amendment as of right, because a meaningful period
for exercise of such a right, such as the 20-day period provided
under the Federal Rules of Civil Procedure, is inconsistent with
the prompt start of the hearing.  See, e.g., Exchange Act  
21C(b), 15 U.S.C.   78u-3(b) (cease-and-desist proceedings to
begin no later than 60 days after institution, other than with
consent of respondent).  


Rule 221. Prehearing Conferences. 
     (a)  Purposes of Conferences.  The purposes of prehearing
conferences include, but are not limited to:
          (1)  expediting the disposition of the proceeding;
          (2)  establishing early and continuing control of the
     proceeding by the hearing officer; and
          (3)  improving the quality of the hearing through more
     thorough preparation.  
     (b)  Procedure.  On his or her own motion or at the request
of a party, the hearing officer may, in his or her discretion,
direct counsel or any party to meet for an initial, final or
other prehearing conference.  Such conferences may be held with
or without the hearing officer present as the hearing officer
deems appropriate.  Where such a conference is held outside the
presence of the hearing officer, the hearing officer shall be
advised promptly by the parties of any agreements reached.  Such
conferences also may be held with one or more persons
participating by telephone or other remote means.    
     (c)  Subjects to be Discussed.  At a prehearing conference
consideration may be given and action taken with respect to any
and all of the following:
          (1)  simplification and clarification of the issues;
          (2)  exchange of witness and exhibit lists and copies
     of exhibits;
          (3)  stipulations, admissions of fact, and stipulations
     concerning the contents, authenticity, or admissibility into
     evidence of documents;
          (4)  matters of which official notice may be taken;
          (5)  the schedule for exchanging prehearing motions or
     briefs, if any;
          (6)  the method of service for papers other than
     Commission orders;
          (7)  summary disposition of any or all issues;
 
-------------------- BEGINNING OF PAGE #49 ---------------------

          (8)  settlement of any or all issues; 
          (9)  determination of hearing dates;
          (10) amendments to the order instituting proceedings or
     answers thereto;
          (11) production of documents as set forth in Rule 230,
     and prehearing production of documents in response to
     subpoenas duces tecum as set forth in Rule 232;
          (12) specification of procedures as set forth in Rule
     202; and 
          (13) such other matters as may aid in the orderly and
     expeditious disposition of the proceeding. 
     (d)  Required Prehearing Conferences.  Except where the
emergency nature of a proceeding would make a prehearing
conference clearly inappropriate, both an initial and a final
prehearing conference should be held.  Unless ordered otherwise,
an initial prehearing conference shall be held within 14 days of
the service of an answer, or if no answer is required, within 14
days of service of the order instituting proceedings.  A final
conference shall be held as close to the start of the hearing as
reasonable under the circumstances.  
     (e)  Prehearing Orders.  At or following the conclusion of
any conference held pursuant to this rule, the hearing officer
shall enter a ruling or order which recites the agreements
reached and any procedural determinations made by the hearing
officer.  
     (f)  Failure to Appear: Default.  Any person who is named in
an order instituting proceedings as a person against whom
findings may be made or sanctions imposed and who fails to
appear, in person or through a representative, at a prehearing
conference of which he or she has been duly notified may be
deemed in default pursuant to Rule 155(a).  A party may make a
motion to set aside a default pursuant to Rule 155(b).    

COMMENT (a):  Rule 221 is modeled on Rule 16 of the Federal Rules
of Civil Procedure.  When properly managed, prehearing
conferences can eliminate unnecessary delay and improve the
quality of justice by sharpening the preparation of cases,
facilitating the prehearing exchange of documents, and promoting
settlements in appropriate cases.

COMMENT (d):  Unless ordered otherwise, the initial prehearing
conference will be held within 14 days after a respondent files
an answer.  Pursuant to Rule 230(d), the Division of Enforcement
is required to commence making documents available to a
respondent for inspection and copying in an enforcement or
disciplinary proceeding no later than 14 days after the
respondent files an answer.  Consequently, the initial prehearing
conference can be used to address any pending issues related to
the availability of documents for inspection and copying, and
thereafter the respondent should ordinarily have access to such
documents.  

REVISION COMMENT (c):  Paragraph (c)(6) was added to bring to the
attention of the participants that they may agree among
themselves to procedures for the service of papers by facsimile. 
See Rule 150(c)(4). 

REVISION COMMENT (d):  Under the proposed rule, no initial
prehearing conference was required.  In accordance with comments
received, the revised rule requires both an initial and a final
prehearing conference, except where the emergency nature of a
proceeding would make a prehearing conference clearly
inappropriate.  
 
-------------------- BEGINNING OF PAGE #50 ---------------------


Rule 222. Prehearing Submissions.  
     (a)  Submissions Generally.  The hearing officer, on his or
her own motion, or at the request of a party or other
participant, may order any party, including the interested
division, to furnish such information as deemed appropriate,
including any or all of the following: 
          (1)  an outline or narrative summary of its case or
     defense; 
          (2)  the legal theories upon which it will rely; 
          (3)  copies and a list of documents that it intends to
     introduce at the hearing; and 
          (4)  a list of witnesses who will testify on its
     behalf, including the witnesses' names, occupations,
     addresses and a brief summary of their expected testimony. 
     (b)  Expert Witnesses.  Each party who intends to call an
expert witness shall submit, in addition to the information
required by paragraph (a)(4) of this rule, a statement of the
expert's qualifications, a listing of other proceedings in which
the expert has given expert testimony, and a list of publications
authored or co-authored by the expert.  


Rule 230. Enforcement and Disciplinary Proceedings: Availability
          of Documents For Inspection and Copying 
     For purposes of this rule, the term documents shall include
writings, drawings, graphs, charts, photographs, recordings and
other data compilations, including data stored by computer, from
which information can be obtained. 
     (a)  Documents to be Available for Inspection and Copying.  
          (1)  Unless otherwise provided by this rule, or by
     order of the Commission or the hearing officer, the Division
     of Enforcement shall make available for inspection and
     copying by any party documents obtained by the Division
     prior to the institution of proceedings, in connection with
     the investigation leading to the Division's recommendation
     to institute proceedings.  Such documents shall include:
               (i)  each subpoena issued; 
               (ii) every other written request to persons not
          employed by the Commission to provide documents or to
          be interviewed; 
               (iii)     the documents turned over in response to
          any such subpoenas or other written requests;
               (iv) all transcripts and transcript exhibits; 
               (v)  any other documents obtained from persons not
          employed by the Commission; and
               (vi) any final examination or inspection reports
          prepared by the Division of Market Regulation or the
          Division of Investment Management.
     (2)  Nothing in this paragraph (a) shall limit the right of
the Division to make available any other document, or shall limit
the right of a respondent to seek access to or production
pursuant to subpoena of any other document, or shall limit the
authority of the hearing officer to order the production of any
document pursuant to subpoena. 
     (b)  Documents That May Be Withheld.  
     (1)  The Division of Enforcement may withhold a document if:
          (i)  the document is privileged; 
          (ii) the document is an internal memorandum, note or
     writing prepared by a Commission employee, other than an
     examination or inspection report as specified in paragraph
     (a)(f) of this rule, or is otherwise attorney work product
     and will not be offered in evidence; 
 
-------------------- BEGINNING OF PAGE #51 ---------------------

          (iii)     the document would disclose the identity of a
     confidential source; or
          (iv) the hearing officer grants leave to withhold a
     document or category of documents as not relevant to the
     subject matter of the proceeding or otherwise, for good
     cause shown.  
     (2)  Nothing in this paragraph (b) authorizes the Division
of Enforcement in connection with an enforcement or disciplinary
proceeding to withhold, contrary to the doctrine of Brady v.
Maryland, 373 U.S. 83, 87 (1963), documents that contain material
exculpatory evidence.  
     (c)  Withheld Document List.  The hearing officer may
require the Division of Enforcement to submit for review a list
of documents withheld pursuant to paragraphs (b)(1) - (b)(4) of
this rule or to submit any document withheld, and may determine
whether any such document should be made available for inspection
and copying.  
     (d)  Timing of Inspection and Copying.  Unless otherwise
ordered by the Commission or the hearing officer, the Division of
Enforcement shall commence making documents available to a
respondent for inspection and copying pursuant to this rule no
later than 14 days after the respondent files an answer.  In a
proceeding in which a temporary cease-and-desist order is sought
pursuant to Rule 510 or a temporary suspension of registration is
sought pursuant to Rule 520, documents shall be made available no
later than the day after service of the decision as to whether to
issue a temporary cease-and-desist order or temporary suspension
order.
     (e)  Place of Inspection and Copying.  Documents subject to
inspection and copying pursuant to this rule shall be made
available to the respondent for inspection and copying at the
Commission office where they are ordinarily maintained, or at
such other place as the parties, in writing, may agree.  A
respondent shall not be given custody of the documents or leave
to remove the documents from the Commission's offices pursuant to
the requirements of this rule other than by written agreement of 
the Division of Enforcement.  Such agreement shall specify the
documents subject to the agreement, the date they shall be
returned and such other terms or conditions as are appropriate to
provide for the safekeeping of the documents.
     (f)  Copying Costs and Procedures.  The respondent may
obtain a photocopy of any documents made available for
inspection.  The respondent shall be responsible for the cost of
photocopying.  Unless otherwise ordered, charges for copies made
by the Division of Enforcement at the request of the respondent
will be at the rate charged pursuant to the fee schedule at 17
CFR 200.80e for copies.  The respondent shall be given access to
the documents at the Commission's offices or such other place as
the parties may agree during normal business hours for copying of
documents at the respondent's expense.  
     (g)  Issuance of Investigatory Subpoenas After Institution
of Proceedings.  The Division of Enforcement shall promptly
inform the hearing officer and each party if investigatory
subpoenas are issued under the same investigation file number or
pursuant to the same order directing private investigation
("formal order") under which the investigation leading to the
institution of proceedings was conducted.  The hearing officer
shall order such steps as necessary and appropriate to assure
that the issuance of investigatory subpoenas after the
institution of proceedings is not for the purpose of obtaining
evidence relevant to the proceedings and that any relevant
documents that may be obtained through the use of investigatory
subpoenas in a continuing investigation are made available to
each respondent for inspection and copying on a timely basis.  
 
-------------------- BEGINNING OF PAGE #52 ---------------------

     (h)  Failure to Make Documents Available - Harmless Error. 
In the event that a document required to be made available to a
respondent pursuant to this rule is not made available by the
Division of Enforcement, no rehearing or redecision of a
proceeding already heard or decided shall be required, unless the
respondent shall establish that the failure to make the document
available was not harmless error. 

COMMENT (a):  A respondent's right to inspect and copy documents
under this rule is automatic; the respondent does not need to
make a formal request for access through the hearing officer. 
Generally, the rule requires that the Division of Enforcement
make available for inspection and copying documents obtained by
the Division from persons not employed by the Commission during
the course of its investigation prior to the institution of
proceedings.  Except for final inspection or examination reports
prepared by the Division of Market Regulation or the Division of
Investment Management, documents prepared by Commission staff are
treated as attorney work product, and do not have to be made
available pursuant to this rule.
     Rule 230 is not the exclusive means by which a respondent
may obtain access to or production of documents.  Production of
documents prepared by the staff may be required under the
doctrine of Brady v. Maryland, 373 U.S. 83 (1963), or pursuant to
Jencks Act requirements made applicable to the Commission
pursuant to Rule 231, or may be sought by subpoena pursuant to
Rule 232 or through other procedures.  See, e.g., Freedom of
Information Act, 5 U.S.C.   552. 
     The Rule states that the Division of Enforcement shall (1)
make available for inspection and copying (2) documents (3)
obtained by the Division (4) in connection with the investigation
leading to the institution of proceedings.  
     (1) The Division of Enforcement is required to make
documents available for inspection and copying.  It is not
required to produce a copy of the documents to each respondent. 
The definition of documents is based in part on Federal Rule of
Civil Procedure 34.
     (2) The definition of the term "documents" in paragraph (a)
is modeled on the definition of documents in Rule 34 of the
Federal Rules of Civil Procedure.  
     (3) The Division of Enforcement's obligation under this rule
relates to documents obtained by the Division of Enforcement. 
Documents located only in the files of other divisions or offices
are beyond the scope of the rule.  
     (4) The "investigation leading to the Division's
recommendation to institute proceedings" ordinarily is delineated
by the investigation number or numbers under which requests for
documents, testimony or other information were made.  When an
investigation is initiated by the Division of Enforcement it is
assigned a number, often referred to as the "case" or
"investigation" number.  Each request for documents, testimony or
other information from persons not employed by the Commission
specifies the investigation or preliminary investigation number
to which it relates.  In turn, each written recommendation by the
Division of Enforcement to institute proceedings identifies on
its cover page, by investigation number, the source investigation
or investigations to which it relates.  Accordingly, the identity
and content of the appropriate investigation file or files from
which documents must be made available can be based on objective
criteria.  

COMMENT (b):  Under paragraph (b), the Division can withhold
documents under four exceptions.  Exception (1) shields
information subject to a claim of privilege.  Exception (2)
 
-------------------- BEGINNING OF PAGE #53 ---------------------

protects as attorney work product internal documents prepared by
Commission employees, which will not be offered in evidence. 
Work product includes any notes, working papers, memoranda or
other similar materials, prepared by an attorney in anticipation
of litigation.  See Hickman v. Taylor, 329 U.S. 495 (1947); see
also Fed. R. Civ. P. 26(b)(3) and (b)(5).  Accountants,
paralegals and investigators who work on an investigation do so
at the direction of the director, an associate director, an
associate regional administrator or another supervisory attorney,
and their work product is therefore shielded by the rule.  An
examination or inspection report prepared by the Division of
Market Regulation or the Division of Investment Management is not
prepared in anticipation of litigation, and is therefore
explicitly excluded from the materials that may be withheld.  A
respondent's claim that work product should be turned over will
necessarily be evaluated on a case-by-case basis.  
     Exception (3) protects the identity of a confidential
source.  See 5 U.S.C.   552(b)(7)(C) and (D).  Exception (4)
protects any other document or category of documents that the
hearing officer determines may be withheld as not relevant to the
subject matter of the proceeding, or otherwise for good cause
shown.  This exception provides a mechanism to address a
situation where a single investigation involves a discrete
segment or segments that are related only indirectly, or not at
all, to the recommendations ultimately made to the Commission
with respect to the particular respondents in a specific
proceeding.  To require that documents not relevant to the
subject matter of the proceeding be made available, simply
because they were obtained as part of a broad investigation,
burdens the respondent as well as the Division of Enforcement
with unnecessary costs and delay.
     For example, a single investigation may encompass inquiry
into an issuer's allegedly false accounting disclosure and an
unrelated manipulation of the issuer's securities by a third
party.  If the recommendation to the Commission and resulting
administrative proceeding involve only the accounting
disclosures, the Division could seek leave to withhold trading
records, transcripts and other documents related to the
manipulation investigation.

COMMENT (c):  The hearing officer may, in his or her discretion,
override any exception claimed by the Division and order the
Division to produce withheld items.  

COMMENT (g):  In some circumstances, for example, where a
temporary cease-and-desist order is sought, or where a single
formal order is being used to investigate several distinct areas
of potential violations, proceedings may be instituted prior to
the end of all investigative activities.  To allow the hearing
officer to take appropriate steps to assure that investigative
subpoenas are not used for the purpose of gathering information
for use in the proceeding, paragraph (g) requires the Division of
Enforcement to notify the hearing officer and each party if the
Division is continuing to issue investigative subpoenas under the
same investigation file number or order directing private
investigation ("formal order") used in the investigation leading
to the institution of proceedings.  

REVISION COMMENT:  As stated in the proposing release, the intent
of the Rule is to codify existing staff practice with respect to
voluntarily making available documents for inspection or copying.

See Comments to proposed Rules 20 and 21, 58 FR 61750 - 51 (Nov.
22, 1993).  The staff practice reflected an informal policy of
the Division of Enforcement staff in the Headquarters Office and
 
-------------------- BEGINNING OF PAGE #54 ---------------------

certain Regional Offices to make available to respondents major
portions of the Division's investigation file.  The policy
evolved over many years and was implemented differently by
different offices.  Rule 230 seeks to respond to the criticism of
commenters without establishing document production requirements,
suggested by several commenters, that are not a part of existing
practice.  
     Proposed Rule 20 would have required the production of "all
documents, including transcripts of testimony, relevant to any
allegation in the order instituting proceedings" and excepted
from production various documents including those  "obtained
during the course of a pending nonpublic investigation, unless
the documents will be relied upon by the interested division
during the course of the hearing."  One commenter suggested that
the scope of required production was too narrow and ill defined,
thereby providing too much discretion to the Division of
Enforcement staff to determine whether a document was relevant. 
For example, it was suggested that a respondent should be
entitled to information relevant to the scope of requested relief
as well as allegations of liability.  Moreover, the commenter
explained, the exception for documents from pending
investigations could negate the requirement to produce if the
investigation that led to an enforcement proceeding is still
continuing with respect to other persons or activities.
     With exceptions for documents that are privileged, work
product, or would reveal a confidential source, the revised rule
requires that documents obtained from persons outside the
Commission as part of the investigation leading to institution of
proceedings be made available for inspection and copying.  In
addition, the Division of Enforcement may seek leave of the
hearing officer to withhold other documents.  The rule no longer
calls upon the Division of Enforcement staff to make relevancy
determinations.
     As proposed, Rule 20 would have allowed the Division to
withhold documents "obtained during the course of a pending
nonpublic investigation, unless the documents will be relied upon
by the interested division during the course of the hearing." 
This provision was intended to address the possibility,
particularly where a temporary cease-and-desist order was sought,
that the investigation that led to proceedings was continuing as
to other persons or events after the institution of proceedings. 
As revised, Rule 230 provides that the Division of Enforcement
shall promptly inform the hearing officer and each party if
investigatory subpoenas are issued under the same investigation
file number or pursuant to the same formal order under which the
investigation leading to the recommendation to institute
proceedings was conducted.  The hearing officer will then order
such steps as are necessary and appropriate with regard to
documents obtained in the ongoing investigation.
     In order to provide for the safekeeping of documents subject
to inspection, and to control costs associated with
implementation of the rule, the revised rule provides that
documents shall be made available for inspection and copying at
the Commission office where they are ordinarily maintained, or at
such other place as the parties may agree.  The Commission
considered alternatives raised by commenters.  None appear more
likely to result in prompt access to documents obtained by the
Division of Enforcement that are the basis of the Division's
allegations. 
 
-------------------- BEGINNING OF PAGE #55 ---------------------

Rule 231. Enforcement and Disciplinary Proceedings: Production of
          Witness Statements
     (a)  Availability.  Any respondent in an enforcement or
disciplinary proceeding may move that the Division of Enforcement
produce for inspection and copying any statement of any person
called or to be called as a witness by the division that
pertains, or is expected to pertain, to his or her direct
testimony and that would be required to be produced pursuant to
the Jencks Act, 18 U.S.C. 3500.  Such production shall be made at
a time and place fixed by the hearing officer and shall be made
available to any party, provided, however, that the production
shall be made under conditions intended to preserve the items to
be inspected or copied. 
     (b)  Failure to Produce - Harmless Error.  In the event that
a statement required to be made available for inspection and
copying by a respondent is not turned over by the Division of
Enforcement, no rehearing or redecision of a proceeding already
heard or decided shall be required unless the respondent
establishes that the failure to turn over the statement was not
harmless error. 

COMMENT:  Prior statements by witnesses memorialized in
transcripts during the investigation that led to a proceeding
fall within the scope of Rule 230 as well as Rule 231.  Where the
staff believes a witness statement falls outside the purview of
the rule, the hearing officer may require that the documents in
question be turned over for in camera inspection.  See, e.g., In
the Matter of Thomas J. Fittin, Jr., Exchange Act Release No.
29173, 48 SEC Docket 1474, 1483 (May 21, 1991); In the Matter of
Robert E. Iles, Sr., Admin. Proc. Rulings Release No. 367 (Apr.
19, 1990), 52 SEC Docket 750 (Aug. 18, 1992) (order relating to
Brady v. Maryland and Jencks Act issues). 
     The Jencks Act does not require production of a witness's
prior statement until the witness takes the stand.  In Commission
proceedings administrative law judges often required production
prior to the start of the hearing, and the Division of
Enforcement now provides such prehearing production voluntarily
in most circumstances.  Submission of a witness's prior
statement, however, may provide a motive for intimidation of that
witness or improper contact by a respondent with the witness. 
The rule provides, therefore, that the time for delivery of
witness statements is to be determined by the hearing officer, so
that a case-specific determination of such risks can be made if
necessary.  Upon a showing that there is substantial risk of
improper use of a witness's prior statement, the hearing officer
may take appropriate steps, for example, delaying production of a
prior statement, or prohibiting parties from communicating with
particular witnesses.


Rule 232. Subpoenas.
     (a)  Availability; Procedure.  In connection with any
hearing ordered by the Commission, a party may request the
issuance of subpoenas requiring the attendance and testimony of
witnesses at the designated time and place of hearing, and
subpoenas requiring the production of documentary or other
tangible evidence returnable at any designated time or place. 
Unless made on the record at a hearing, requests for issuance of
a subpoena shall be made in writing and served on each party
pursuant to Rule 150.  A person whose request for a subpoena has
been denied or modified may not request that any other person
issue the subpoena.  
          (1)  Unavailability of Hearing Officer.  In the event
     that the hearing officer assigned to a proceeding is
 
-------------------- BEGINNING OF PAGE #56 ---------------------

     unavailable, the party seeking issuance of the subpoena may
     seek its issuance from the first available of the following
     persons: the Chief Administrative Law Judge, the law judge
     most senior in service as a law judge, the duty officer, any
     other member of the Commission, or any other person
     designated by the Commission to issue subpoenas.  Requests
     for issuance of a subpoena made to the Commission, or any
     member thereof, must be submitted to the Secretary, not to
     an individual Commissioner.  
          (2)  Signing May be Delegated.  A hearing officer may
     authorize issuance of a subpoena, and may delegate the
     manual signing of the subpoena to any other person
     authorized to issue subpoenas.  
     (b)  Standards for Issuance.  Where it appears to the person
asked to issue the subpoena that the subpoena sought may be
unreasonable, oppressive, excessive in scope, or unduly
burdensome, he or she may, in his or her discretion, as a
condition precedent to the issuance of the subpoena, require the
person seeking the subpoena to show the general relevance and
reasonable scope of the testimony or other evidence sought.  If
after consideration of all the circumstances, the person
requested to issue the subpoena determines that the subpoena or
any of its terms is unreasonable, oppressive, excessive in scope,
or unduly burdensome, he or she may refuse to issue the subpoena,
or issue it only upon such conditions as fairness requires.  In
making the foregoing determination, the person issuing the
subpoena may inquire of the other participants whether they will
stipulate to the facts sought to be proved. 
     (c)  Service.  Service shall be made pursuant to the
provisions of Rule 150(b) - (d).  The provisions of this
paragraph (c) shall apply to the issuance of subpoenas for
purposes of investigations, as required by 17 CFR 203.8, as well
as hearings.  
     (d)  Tender of fees required.  When a subpoena compelling
the attendance of a person at a hearing or deposition is issued
at the instance of anyone other than an officer or agency of the
United States, service is valid only if the subpoena is
accompanied by a tender to the subpoenaed person of the fees for
one day's attendance and mileage specified by paragraph (f) of
this rule.   
     (e)  Application to Quash or Modify.  
          (1)  Procedure.  Any person to whom a subpoena is
     directed or who is an owner, creator or the subject of the
     documents that are to be produced pursuant to a subpoena
     may, prior to the time specified therein for compliance, but
     in no event more than 15 days after the date of service of
     such subpoena, request that the subpoena be quashed or
     modified.  Such request shall be made by application filed
     with the Secretary and served on all parties pursuant to
     Rule 150.  The party on whose behalf the subpoena was issued
     may, within five days of service of the application, file an
     opposition to the application.  If a hearing officer has
     been assigned to the proceeding, the application to quash
     shall be directed to that hearing officer for consideration,
     even if the subpoena was issued by another person.  
          (2)  Standards Governing Application to Quash or
     Modify.  If compliance with the subpoena would be
     unreasonable, oppressive or unduly burdensome, the hearing
     officer or the Commission shall quash or modify the
     subpoena, or may order return of the subpoena only upon
     specified conditions.  These conditions may include but are
     not limited to a requirement that the party on whose behalf
     the subpoena was issued shall make reasonable compensation
     to the person to whom the subpoena was addressed for the
 
-------------------- BEGINNING OF PAGE #57 ---------------------

     cost of copying or transporting evidence to the place for
     return of the subpoena.
     (f)  Witness Fees and Mileage.  Witnesses summoned before
the Commission shall be paid the same fees and mileage that are
paid to witnesses in the courts of the United States, and
witnesses whose depositions are taken and the persons taking the
same shall severally be entitled to the same fees as are paid for
like services in the courts of the United States.  Witness fees
and mileage shall be paid by the party at whose instance the
witnesses appear.  

COMMENT(a):  Rule 232 requires that, unless made on the record at
a hearing, subpoena requests must be in writing.  Ex parte, oral
communication with the hearing officer concerning the need for
issuance of a subpoena creates the opportunity for unintended and
potentially improper discussion of the merits of a case.  
COMMENT (b):  Rule 232(b) is based upon Section 555(d) of the
Administrative Procedure Act, 5 U.S.C. 555(d). 

REVISION COMMENT:  Under the former Rule 14 of the Rules of
Practice and the proposed rules, neither the fact that a subpoena
was sought nor the identity of the person subpoenaed was
disclosed.  Comment was requested as to whether the identity of
the persons subpoenaed should be disclosed to other parties, and
if so, when such disclosure should take place.  One commenter
suggested that the identity of persons subpoenaed should be
disclosed to all other parties and an application to quash should
be served on all parties.  The Commission believes that these
suggestions are consistent with other changes made to increase
the prehearing exchange of information.  Accordingly, Rule 232
has been revised to incorporate these suggestions.  
     Commenters also suggested that respondents be allowed to
issue subpoenas for the purpose of compelling prehearing
discovery depositions as is allowed in actions under the Federal
Rules of Civil Procedure.  See Fed. R. Civ. P. 30(a)(1). 
Discovery under the Federal Rules of Civil Procedure, including
deposition practice, is often a source of delay, extensive
collateral disputes and high litigation costs.  See Fair and
Efficient Administrative Proceedings: Report of the Task Force on
Administrative Proceedings (1993) at 47-48.  One commenter
suggested that the disadvantages of oral deposition practice
under the Federal Rules of Civil Procedure could be avoided by
permitting depositions only by order of the hearing officer; by
limiting each respondent to five depositions, unless additional
depositions were approved by the hearing officer; and by
requiring all depositions to be completed within 90 days of the
close of document discovery. 
     The Commission has weighed the arguments advanced in favor
of expanding the scope of prehearing discovery to permit oral
depositions as suggested and has concluded that a rule
authorizing discovery depositions is not warranted. 
     First, the Commission's experience in federal court
litigation strongly suggests that notwithstanding the proposed
restriction for the use of discovery depositions, there remains a
significant potential for extensive collateral litigation over
their use.  Under the commenter's proposal, for example, each
respondent could seek leave to take more than five depositions,
and might contest, through motions for interlocutory review and
arguments on appeal, any denial of additional depositions by the
hearing officer.  
     Second, the suggestion to limit depositions to the 90-day
period after the close of "document discovery" conflicts with the
statutory timetable for cease-and-desist proceedings, the fastest
growing category of enforcement proceedings.  When a cease-and-
 
-------------------- BEGINNING OF PAGE #58 ---------------------

desist order is sought, the Commission is required to set a
hearing date not earlier than 30 days nor later than 60 days
after service of the order instituting proceedings, unless an
earlier or a later date is set by the Commission with the consent
of a respondent.  See, e.g., Exchange Act 21C(b), 15 U.S.C.
  78u-3(b).  In a proceeding with multiple respondents, one
respondent's decision not to consent to a later hearing date, or
to consent to an extension less than that sought by other
respondents, would give rise to difficult and time-consuming
collateral issues over scheduling, and could necessitate multiple
hearings.  Even without such complications, a 90-day period for
depositions, in addition to a period for inspection and copying
of documents, would represent a significant departure from the
statute.  
     Third, the rationale for permitting oral depositions in
litigation under the Federal Rules of Civil Procedure does not
apply equally to a Commission administrative proceeding.  In the
typical civil action, where neither party can compel testimony
prior to the filing of the complaint, oral depositions play a
critical role in permitting evidence to be gathered prior to
trial.  Also, a plaintiff in the typical civil action is not
required before filing to vet a proposed lawsuit either with the
defendant or anyone else.  In this context, discovery, including
depositions, is a crucial adjunct to motions to dismiss, summary
judgment, and other procedural mechanisms designed to allow an
assessment by the judge whether the allegations of the complaint
are sufficient to warrant trial.  
     By contrast, in administrative proceedings brought by the
Commission, there is ordinarily a detailed pre-institution fact
finding investigation and a rigorous pre-institution review
process.  At the close of the investigation, a respondent is
usually told the general conclusions reached by the Division of
Enforcement and is afforded an opportunity to submit a written
"Wells" statement presenting arguments against commencement of an
action.  See Commission's decisions on advisory committee
recommendations regarding commencement of enforcement proceedings
and termination of staff investigations, Securities Act Release
No. 5310, 38 FR 5457 (Mar. 1, 1973).  No proceedings are
instituted unless a majority of the Commission votes to authorize

proceedings after reviewing both a report on the investigation's
findings from the Division of Enforcement and any Wells statement
that is submitted.  If proceedings are authorized, the documents
and transcripts obtained from persons not employed by the
Commission in the investigation are shared with the respondent. 
The benefits from and need for oral depositions are therefore
different and less important in the context of Commission
administrative proceedings than they may be in litigation between
private parties under the Federal Rules of Civil Procedure. 
     Finally, the revised Rules of Practice include two new
provisions that address in significant part a respondent's
interest in obtaining discovery prior to the start of the
hearing.  Rule 232 authorizes the issuance of subpoenas duces
tecum for the production of documents returnable at any
designated time or place.  Rule 230 mandates that the Division of
Enforcement generally make available documents and transcripts of
testimony obtained from persons other than employees of the
Commission in the investigation leading to the proceeding.  
     One commenter suggested that the opportunity to review
transcripts of investigative depositions was not sufficient.  The
commenter noted that knowledge gained during an investigation is
cumulative.  Division of Enforcement staff are unable to question
each witness as thoroughly during the course of an investigation,
particularly in the early stages, as can be done in a post-
investigation deposition.  Further, an investigator on the
 
-------------------- BEGINNING OF PAGE #59 ---------------------

Division of Enforcement staff will not necessarily ask the same
questions as would a respondent.  Moreover, even where
investigative testimony is complete, the transcript provided to
respondents is not a full substitute for the opportunity during
live testimony to observe a witness's demeanor as well as to hear
the content of a witness's answers.  
     These reasons establish support for an opportunity after the
investigation for both the respondent and the Division of
Enforcement to subpoena witnesses and question them under oath -
- an opportunity available at the hearing.  They do not establish
the need for prehearing depositions as well.  Permitting post-
investigation, prehearing depositions would afford a respondent
information that may be useful in advance of hearing.  However,
given the newly established right to subpoena documents prior to
hearing, the marginal benefits of prehearing depositions are not
justified by their likely cost in time, expense, collateral
disputes and scheduling complexities.  


Rule 233. Depositions Upon Oral Examination.
     (a)  Procedure.  Any party desiring to take the testimony of
a witness by deposition shall make a written motion setting forth
the reasons why such deposition should be taken including the
specific reasons why the party believes the witness will be
unable to attend or testify at the hearing; the name and address
of the prospective witness; the matters concerning which the
prospective witness is expected to be questioned; and the
proposed time and place for the taking of the deposition. 
     (b)  Required Finding When Ordering a Deposition.  In the
discretion of the Commission or the hearing officer, an order for
deposition may be issued upon a finding that the prospective
witness will likely give testimony material to the proceeding,
that it is likely the prospective witness will be unable to
attend or testify at the hearing because of age, sickness,
infirmity, imprisonment or other disability, and that the taking
of a deposition will serve the interests of justice.  
     (c)  Contents of Order. An order for deposition shall
designate by name a deposition officer.  The designated officer
may be the hearing officer or any other person authorized to
administer oaths by the laws of the United States or of the place
where the deposition is to be held.    An order for deposition
also shall state: 
          (1)  the name of the witness whose deposition is to be
     taken; 
          (2)  the scope of the testimony to be taken; 
          (3)  the time and place of the deposition; 
          (4)  the manner of recording, preserving and filing the
     deposition; and 
          (5)  the number of copies, if any, of the deposition
     and exhibits to be filed upon completion of the deposition. 
     (d)  Procedure at Depositions.  A witness whose testimony is
taken by deposition shall be sworn or shall affirm before any
questions are put to him or her.  Examination and cross-
examination of deponents may proceed as permitted at a hearing. 
The witness being deposed may have counsel present during the
deposition.  
     (e)  Objections to Questions or Evidence.  Objections to
questions or evidence shall be in short form, stating the grounds
of objection relied upon.  Objections to questions or evidence
shall be noted by the deposition officer upon the deposition, but
a deposition officer other than the hearing officer shall not
have the power to decide on the competency, materiality or
relevance of evidence.  Failure to object to questions or
evidence before the deposition officer shall not be deemed a
 
-------------------- BEGINNING OF PAGE #60 ---------------------

waiver unless the ground of the objection is one that might have
been obviated or removed if presented at that time.  
     (f)  Filing of Depositions.  The questions propounded and
all answers or objections shall be recorded or transcribed
verbatim, and a transcript prepared by the deposition officer, or
under his or her direction.  The transcript shall be subscribed
by the witness and certified by the deposition officer.  The
original deposition and exhibits shall be filed with the
Secretary.  A copy of the deposition shall be available to the
deponent and each party for purchase at prescribed rates.  
     (g)  Payment.  The cost of the transcript shall be paid by
the party requesting the deposition.

COMMENT:  Depositions under the Rules of Practice are used only
to preserve testimony of a witness who would be unlikely to be
able to attend the hearing.  They are not allowed for purposes of
discovery.  See In the Matter of Central and South West Corp.,
Admin. Proc. Rulings Release No. 184 (July 14, 1976), 52 SEC
Docket 375 (Aug. 18, 1992) (citing L.M. Rosenthal & Co., Inc.,
Admin. Proc. File No. 3-4330 (Jan. 30, 1974)); see also In the
Matter of Gail G. Griseuk, Admin. Proc. Rulings Release 440 (Aug.
31, 1994), 57 SEC Docket 1488 (Sept. 27, 1994) (formal discovery
procedures are not available in Commission administrative
proceedings).

COMMENT (c):  The criteria for serving as a deposition officer
are based on the criteria in Rule 28 of the Federal Rules of
Civil Procedure.  

REVISION COMMENT (b):  Under Proposed Rule 22, the criteria for
whether to allow a deposition to be taken were not consistent
with the criteria for allowing the deposition to be introduced. 
As revised, the criteria for permitting a deposition are
consistent with the criteria of Rule 235 for introducing a prior
sworn statement of a witness.  
     Depositions are no longer required to be filed under seal,
although a confidentiality order may be sought.  See Rule 322.  


Rule 234. Depositions Upon Written Questions.
     (a)  Availability.  Depositions may be taken and submitted
on written questions upon motion of any party.  The motion shall
include the information specified in Rule 233(a).  A decision on
the motion shall be governed by the provisions of Rule 233(b).   

     (b)  Procedure.  Written questions shall be filed with the
motion.  Within 10 days after service of the motion and written
questions, any party may file objections to such written
questions and any party may file cross-questions.  When a
deposition is taken pursuant to this rule no persons other than
the witness, counsel to the witness, the deposition officer, and,
if the deposition officer does not act as reporter, a reporter,
shall be present at the examination of the witness.  No party
shall be present or represented unless otherwise permitted by
order.  The deposition officer shall propound the questions and
cross-questions to the witness in the order submitted.  
     (c)  Additional Requirements.  The order for deposition,
filing of the deposition, form of the deposition and use of the
deposition in the record shall be governed by paragraphs (c)
through (g) of Rule 233, except that no cross-examination shall
be made. 
 
-------------------- BEGINNING OF PAGE #61 ---------------------

COMMENT:  The procedures for depositions upon written questions
are based in part on Rule 31 of the Federal Rules of Civil
Procedure.


Rule 235. Introducing Prior Sworn Statements of Witnesses into
          the Record.
     (a)  At a hearing, any person wishing to introduce a prior,
sworn statement of a witness, not a party, otherwise admissible
in the proceeding, may make a motion setting forth the reasons
therefor.  If only part of a statement is offered in evidence,
the hearing officer may require that all relevant portions of the
statement be introduced.  If all of a statement is offered in
evidence, the hearing officer may require that portions not
relevant to the proceeding be excluded.  A motion to introduce a
prior sworn statement may be granted if: 
          (1)  the witness is dead;
          (2)  the witness is out of the United States, unless it
     appears that the absence of the witness was procured by the
     party offering the prior sworn statement;
          (3)  the witness is unable to attend or testify because
     of age, sickness, infirmity, imprisonment or other
     disability;
          (4)  the party offering the prior sworn statement has
     been unable to procure the attendance of the witness by
     subpoena; or,
          (5)  in the discretion of the Commission or the hearing
     officer, it would be desirable, in the interests of justice,
     to allow the prior sworn statement to be used.  In making
     this determination, due regard shall be given to the
     presumption that witnesses will testify orally in an open
     hearing.  If the parties have stipulated to accept a prior
     sworn statement in lieu of live testimony, consideration
     shall also be given to the convenience of the parties in
     avoiding unnecessary expense. 

REVISION COMMENT:  Proposed Rule 22, which addressed the
introduction of a deposition as part of the record, did not state
whether it applied to any deposition, or only a deposition taken
pursuant to the Rules of Practice.  Rule 235 specifies the
circumstances under which prior sworn statements by a witness are
admissible.  One commenter suggested making the stipulation of
the parties to accept a deposition in lieu of live testimony a
factor in determining whether a deposition already taken should
be admitted in evidence.  The rule was revised accordingly. 


Rule 240. Settlement
     (a)  Availability.  Any person who is notified that a
proceeding may or will be instituted against him or her, or any
party to a proceeding already instituted, may, at any time,
propose in writing an offer of settlement.  
     (b)  Procedure.  An offer of settlement shall state that it
is made pursuant to this rule; shall recite or incorporate as a
part of the offer the provisions of paragraphs (c)(4) and (5) of
this rule; shall be signed by the person making the offer, not by
counsel; and shall be submitted to the interested division.  
     (c)  Consideration of Offers of Settlement.
          (1)  Offers of settlement shall be considered by the
     interested division when time, the nature of the
     proceedings, and the public interest permit.
          (2)  Where a hearing officer is assigned to a
     proceeding, the interested division and the party submitting
     the offer may request that the hearing officer express his
 
-------------------- BEGINNING OF PAGE #62 ---------------------

     or her views regarding the appropriateness of the offer of
     settlement.  A request for the hearing officer to express
     his or her views on an offer of settlement or otherwise to
     participate in a settlement conference constitutes a waiver
     by the persons making the request of any right to claim bias
     or prejudgment by the hearing officer based on the views
     expressed.  
          (3)  The interested division shall present the offer of
     settlement to the Commission with its recommendation, except
     that, if the division's recommendation is unfavorable, the
     offer shall not be presented to the Commission unless the
     person making the offer so requests.
          (4)  By submitting an offer of settlement, the person
     making the offer waives, subject to acceptance of the offer:
               (i)  all hearings pursuant to the statutory
          provisions under which the proceeding is to be or has
          been instituted;
               (ii) the filing of proposed findings of fact and
          conclusions of law;
               (iii)     proceedings before, and an initial
          decision by, a hearing officer;
               (iv) all post-hearing procedures; and
               (v)  judicial review by any court.
          (5)  By submitting an offer of settlement the person
     further waives:
               (i)  such provisions of the Rules of Practice or
          other requirements of law as may be construed to
          prevent any member of the Commission's staff from
          participating in the preparation of, or advising the
          Commission as to, any order, opinion, finding of fact,
          or conclusion of law to be entered pursuant to the
          offer; and
               (ii) any right to claim bias or prejudgment by the
          Commission based on the consideration of or discussions
          concerning settlement of all or any part of the
          proceeding.  
          (6)  If the Commission rejects the offer of settlement,
     the person making the offer shall be notified of the
     Commission's action and the offer of settlement shall be
     deemed withdrawn.  The rejected offer shall not constitute a
     part of the record in any proceeding against the person
     making the offer, provided, however, that rejection of an
     offer of settlement does not affect the continued validity
     of waivers pursuant to paragraph (c)(5) of this rule with
     respect to any discussions concerning the rejected offer of
     settlement.
          (7)  Final acceptance of any offer of settlement will
     occur only upon the issuance of findings and an order by the
     Commission.

COMMENT:  In proceedings required to be conducted "on the
record," Section 554(c) of the Administrative Procedure Act, 5
U.S.C.   554(c), requires that administrative agencies give
interested parties the opportunity for the submission and
consideration of offers of settlement "when time, the nature of
the proceeding, and the public interest permit."  Cf. Table I,
Subpart D, 17 CFR 201 (listing Commission proceedings required to
be conducted "on the record").  It is the Commission's practice
to provide such an opportunity in all proceedings, whether or not
the proceeding is required to be conducted "on the record."  
     Although the staff is authorized to participate in
settlement negotiations under various circumstances, the
Commission must approve every settlement.
 
-------------------- BEGINNING OF PAGE #63 ---------------------

     Rule 240 addresses offers of settlement made both prior to
and after the institution of proceedings.  The Rule requires each
offer of settlement to recite or incorporate as part of the offer
the provisions of paragraphs (c)(4) and (5).  Certain facts
necessary for the Commission to make a reasoned judgment as to
whether settlement offer is in the public interest are often
available only to the staff that negotiated the proposed
settlement.  Paragraph (c)(5)(i) requires waiver of any
provisions that may be construed to prohibit ex parte
communications regarding the settlement offer between the
Commission and staff involved in litigating the proceeding. 
Paragraph (c)(5)(ii) requires waiver of any right to claim bias
or prejudgment by the Commission arising from the Commission's
consideration or discussion concerning settlement of all or any
part of the proceeding.

REVISION COMMENT:  The Commission considered but declined to
accept one commenter's suggestion that the rule regarding
settlements should retain a provision of former Rule 8(a)(3)
that, where the Commission deemed it appropriate, the Commission
also may give the party making an offer an opportunity to make an
oral presentation.  The Commission considers hundreds of
settlement offers each year.  Given the volume of settlements, it
would require significant resources to rule on oral presentation
requests, to address collateral disputes if a request was denied,
and to hear presentations if requests were granted.  While the
Commission has authority to permit oral presentations at any
time, see Rule 451, based on its experience, the Commission does
not believe that oral presentations by a respondent in support of
a written offer of settlement would aid the Commission's
decisional process.  


Rule 250. Motion for Summary Disposition.
     (a)  After a respondent's answer has been filed and, in an
enforcement or a disciplinary proceeding, documents have been
made available to that respondent for inspection and copying
pursuant to Rule 230, the respondent, or the interested division
may make a motion for summary disposition of any or all
allegations of the order instituting proceedings with respect to
that respondent.  If the interested division has not completed
presentation of its case in chief, a motion for summary
disposition shall be made only with leave of the hearing officer.

The facts of the pleadings of the party against whom the motion
is made shall be taken as true, except as modified by
stipulations or admissions made by that party, by uncontested
affidavits, or by facts officially noted pursuant to Rule 323.  
     (b)  The hearing officer shall promptly grant or deny the
motion for summary disposition or shall defer decision on the
motion.  The hearing officer may grant the motion for summary
disposition if there is no genuine issue with regard to any
material fact and the party making the motion is entitled to a
summary disposition as a matter of law.  If it appears that a
party, for good cause shown, cannot present by affidavit prior to
hearing facts essential to justify opposition to the motion, the
hearing officer shall deny or defer the motion.  A hearing
officer's decision to deny leave to file a motion for summary
disposition is not subject to interlocutory appeal.   
     (c)  The motion for summary disposition, supporting
memorandum of points and authorities, and any declarations,
affidavits or attachments shall not exceed 35 pages in length.  

COMMENT:  The rule applies to enforcement proceedings and
disciplinary proceedings as well as any other proceeding in which
 
-------------------- BEGINNING OF PAGE #64 ---------------------

a hearing is scheduled.  Motions for disposition prior to hearing
may provide particular benefits in regulatory proceedings. 
Enforcement or disciplinary proceedings in which a motion for
disposition prior to hearing would be appropriate are likely to
be less common.  Typically, enforcement and disciplinary
proceedings that reach litigation involve genuine disagreement
between the parties as to material facts.  Where a genuine issue
as to material facts clearly exists as to an issue, it would be
inappropriate for a party to seek leave to file a motion for
summary disposition or for a hearing officer to grant the motion.

 While partial disposition may be appropriate in some cases, a
hearing will still often be necessary in order to determine a
respondent's state of mind and the need for remedial sanctions if
liability is found.  
     Summary disposition is a procedure that can resolve issues
prior to hearing, thereby reducing the costs of hearing and
expediting resolution of the proceeding.  The possibility that
such motions may simplify the proceeding should not be allowed to
delay the planned start of the hearing, however.  The hearing
officer is authorized to set schedules for the submission of
summary disposition motions in order to prevent the use of such
motions as a tactic for delay or as a means for needlessly
increasing the costs of prehearing preparation.  The hearing
officer may deny or defer a ruling on such a motion if it is not
filed timely in light of the prehearing schedule.  Nothing in
Rule 250 should be construed to create a right to prehearing
depositions or other discovery not otherwise provided for by
these rules in order to support or oppose such a motion.

REVISION COMMENT:  Most major agencies in the federal system have
made available some form of summary disposition procedure.  See
Puerto Rico Aqueduct & Sewer Authority v. EPA, 35 F.3d 600, 606
(1st Cir. 1994), cert. denied, 115 S. Ct. 1096 (1995) (listing
agencies that provide for summary disposition).  Rule 250
expressly permits a dispositive motion prior to hearing to be
made to and decided by the hearing officer, a reversal of
practice under former Rule 11(e) which required such decisions to
be made by the Commission.  
     One commenter recommended that the proposed rule allowing
for dispositive motions be modified to permit a procedure similar
or identical to a motion for summary judgment under Rule 56 of
the Federal Rules of Civil Procedure.  That commenter also
recommended that a summary judgment remedy be available to
respondents only, unless a staff motion for summary judgment
triggered a respondent's right to take discovery depositions to
secure evidence necessary to show the existence of a genuine
factual dispute.  
     The Commission gave detailed consideration to both
proposals.  Rule 250 balances the potential efficiency gained by
allowing the hearing officer to eliminate unnecessary hearings in
some cases against the costs of allowing additional motions,
prehearing procedures and the attendant delay in cases where a
hearing in which all evidence can be presented and witness
demeanor can be observed is warranted.  
     As noted in the Revision Comment to Rule 232, pretrial
procedures developed under the Federal Rules of Civil Procedure,
including summary judgment under Rule 56, must be viewed in
context.  The Federal Rules of Civil Procedure govern a judicial
system that deals most frequently with disputes between private
parties.  Unlike in Commission proceedings, in the typical
private party civil action there is no opportunity to conduct a
pre-filing investigation with the use of subpoenas; no formal
opportunity such as a Wells submission, see 17 CFR 202.5(c), for
the opposing party to present reasons against the initiation of
 
-------------------- BEGINNING OF PAGE #65 ---------------------

an action; and no panel of public officials, such as the
Commission, that must authorize the filing of a complaint.  In
addition, because of the priority of criminal caseloads, there is
a high premium on providing trial dates for civil matters.  Thus,
the rationales that justify prehearing summary disposition
procedures under the Federal Rules of Civil Procedure do not
apply equally to Commission administrative proceedings.  
     Also as noted in the Revision Comment to Rule 232, the
statutory schedule for cease-and-desist proceedings provides no
realistic opportunity for summary judgment procedures comparable
to those allowed under the Federal Rules of Civil Procedure.  It
is the Commission's view, therefore, that procedures to allow for
the disposition of a case prior to hearing have a potentially
useful role in the administrative process, but one that is more
limited than summary judgment under the Federal Rules of Civil
Procedure.  
     It was also suggested that the Commission should permit the
use of affidavits in support of a motion for summary disposition.

The text of the proposed rule did not set forth any limitation on
the filing of affidavits in connection with a dispositive motion.

The comment to the proposed rule, however, stated that affidavits
were not contemplated.  After further consideration, the
Commission has decided that affidavits or declarations should be
allowed, subject to limitations on their length.  
     Typically, Commission proceedings that reach litigation
involve basic disagreement as to material facts.  Based on past
experience, the circumstances when summary disposition prior to
hearing could be appropriately sought or granted will be
comparatively rare.  Consistent with the goal of various other
rules to facilitate the hearing officer's control over the
prehearing scheduling, the revised rule requires leave of the
hearing officer prior to filing a motion for summary disposition
at any time prior to completion of the interested division's case
in chief.  See Rules 221 and 222.  Such leave shall be granted
only for good cause shown, and if consideration of the motion
will not delay the scheduled start of the hearing.  
     The Commission will monitor closely the use of the
procedures for disposition prior to hearing to determine whether
they operate as intended to create more streamlined proceedings
and an elimination of needless hearings, or whether the
availability of such procedures operates as a source of delay,
expense or harassment.  


RULES REGARDING HEARINGS


Rule 300. Hearings.
     Hearings for the purpose of taking evidence shall be held
only upon order of the Commission.  All hearings shall be
conducted in a fair, impartial, expeditious and orderly manner.  


Rule 301. Hearings to Be Public.
     All hearings, except hearings on applications for
confidential treatment filed pursuant to Rule 190, hearings held
to consider a motion for a protective order pursuant to Rule 322,
and hearings on ex parte application for a temporary cease-and-
desist order, shall be public unless otherwise ordered by the
Commission on its own motion or the motion of a party.  No
hearing shall be nonpublic where all respondents request that the
hearing be made public.  
 
-------------------- BEGINNING OF PAGE #66 ---------------------

Rule 302. Record of Hearings.
     (a)  Recordation.  Unless ordered otherwise by the hearing
officer or the Commission, all hearings shall be recorded and a
written transcript thereof shall be prepared.  
     (b)  Availability of a Transcript.  Transcripts of public
hearings shall be available for purchase at prescribed rates. 
Transcripts of nonpublic proceedings, and transcripts subject to
a protective order pursuant to Rule 322, shall be available for
purchase only by parties, provided, however, that any person
compelled to submit data or evidence in a hearing may purchase a
copy of his or her own testimony.  
     (c)  Transcript Correction.  Prior to the filing of post-
hearing briefs or proposed findings and conclusions, or within
such earlier time as directed by the Commission or the hearing
officer, a party or witness may make a motion to correct the
transcript.  Proposed corrections of the transcript may be
submitted to the hearing officer by stipulation pursuant to Rule
324, or by motion.  Upon notice to all parties to the proceeding,
the hearing officer may, by order, specify corrections to the
transcript.  

COMMENT (b):  The Administrative Procedure Act (APA) provides
that any person compelled to submit data or evidence in a non-
investigatory proceeding may purchase a copy of his or her own
testimony.  See 5 U.S.C.   555(c).  In addition, Section 11 of
the Federal Advisory Committee Act (FACA) requires that an agency
make available copies of transcripts of agency proceedings as
defined in Section 551(12) of the APA, 5 U.S.C.   555(c).  See
FACA, 5 U.S.C. App. (1988), 86 Stat. 770.


Rule 310. Failure to Appear at Hearings:  Default  
     Any person named in an order instituting proceedings as a
person against whom findings may be made or sanctions imposed who
fails to appear at a hearing of which he or she has been duly
notified may be deemed to be in default pursuant to Rule 155(a). 
A party may make a motion to set aside a default pursuant to Rule
155(b).  


Rule 320. Evidence:  Admissibility.
     The Commission or the hearing officer may receive relevant
evidence and shall exclude all evidence that is irrelevant,
immaterial or unduly repetitious. 

COMMENT:  Rule 320 restates the Administrative Procedure Act
(APA) standard for the reception of evidence.  5 U.S.C.  
556(c)(3) and (d).  While Section 556 of the APA applies only to
proceedings which are "on the record" pursuant to 5 U.S.C.
  554(a), Rule 320 applies to all proceedings, as defined in Rule
101(a), before the Commission or a hearing officer.  


Rule 321. Evidence:  Objections and Offers of Proof.
     (a)  Objections.  Objections to the admission or exclusion
of evidence must be made on the record and shall be in short
form, stating the grounds relied upon.  Exceptions to any ruling
thereon by the hearing officer need not be noted at the time of
the ruling.  Such exceptions will be deemed waived on appeal to
the Commission, however, unless raised:
          (1)  pursuant to interlocutory review in accordance
     with Rule 400; 
          (2)  in a proposed finding or conclusion filed pursuant
     to Rule 340; or
 
-------------------- BEGINNING OF PAGE #67 ---------------------

          (3)  in a petition for Commission review of an initial
     decision filed in accordance with Rule 410.  
     (b)  Offers of Proof.  Whenever evidence is excluded from
the record, the party offering such evidence may make an offer of
proof, which shall be included in the record.  Excluded material
shall be retained pursuant to Rule 350(b).  


Rule 322. Evidence:  Confidential Information, Protective Orders.
     (a)  Procedure.  In any proceeding as defined in Rule
101(a), a party; any person who is the owner, subject or creator
of a document subject to subpoena or which may be introduced as
evidence; or any witness who testifies at a hearing may file a
motion requesting a protective order to limit from disclosure to
other parties or to the public documents or testimony that
contain confidential information.  The motion should include a
general summary or extract of the documents without revealing
confidential details.  If the movant seeks a protective order
against disclosure to other parties as well as the public, copies
of the documents shall not be served on other parties.  Unless
the documents are unavailable, the movant shall file for in
camera inspection a sealed copy of the documents as to which the
order is sought.  
     (b)  Basis for Issuance.  Documents and testimony introduced
in a public hearing are presumed to be public.  A motion for a
protective order shall be granted only upon a finding that the
harm resulting from disclosure would outweigh the benefits of
disclosure.  
     (c)  Requests for Additional Information Supporting
Confidentiality. A movant under paragraph (a) of this rule may be
required to furnish in writing additional information with
respect to the grounds for confidentiality.  Failure to supply
the information so requested within five days from the date of
receipt by the movant of a notice of the information required
shall be deemed a waiver of the objection to public disclosure of
that portion of the documents to which the additional information
relates, unless the Commission or the hearing officer shall
otherwise order for good cause shown at or before the expiration
of such five-day period.
     (d)  Confidentiality of Documents Pending Decision.  Pending
a determination of a motion under this rule, the documents as to
which confidential treatment is sought and any other documents
that would reveal the confidential information in those documents
shall be maintained under seal and shall be disclosed only in
accordance with orders of the Commission or the hearing officer. 
Any order issued in connection with a motion under this rule
shall be public unless the order would disclose information as to
which a protective order has been granted, in which case that
portion of the order that would reveal the protected information
shall be nonpublic.  

COMMENT:  A protective order under Rule 322 is available only in
proceedings as defined in Rule 101(a).  Rule 322 is distinct from
other Commission rules relating to the treatment of requests for
preserving the confidentiality of information.  See 17 CFR 200.83
(providing for procedures by which persons submitting information
generally to the Commission can request that the information not
be disclosed pursuant to a request under the Freedom of
Information Act, 5 U.S.C.   552).  See also Rule 190 (specifying
procedures by which registrants may request confidential
treatment of certain information contained in regulatory
filings). 
 
-------------------- BEGINNING OF PAGE #68 ---------------------

REVISION COMMENT:  The former Rules of Practice did not have a
provision that specifically allowed the entry of protective
orders for documents submitted as evidence in connection with a
hearing.  Former Rule 25 related solely to applications for
confidential treatment of materials filed in connection with
registration statements and other such filings and required that
confidential treatment be sought at the time of filing.  Proposed
Rule 33 allowed a party to seek confidential treatment under any
"applicable statute or rule," without limiting the scope of
materials sought to be protected or the timing of the
application.  The proposed rule was intended to allow for
issuance of a protective order in connection with a hearing. 
Rule 322 has been added to clarify the availability of protective
orders for documents filed or testimony given in an adjudicative
proceeding.  
     Comment was requested as to whether the filing of an
application for confidential treatment of evidentiary information
should be permitted ex parte.  The Commission has decided that
allowing such filings will not be necessary because Rule 322
allows a party to file a motion containing a general summary or
extract of the materials without revealing confidential details. 


Rule 323. Evidence:  Official Notice.
     Official notice may be taken of any material fact which
might be judicially noticed by a district court of the United
States, any matter in the public official records of the
Commission, or any matter which is peculiarly within the
knowledge of the Commission as an expert body.  If official
notice is requested or taken of a material fact not appearing in
the evidence in the record, the parties, upon timely request,
shall be afforded an opportunity to establish the contrary.  

COMMENT:  This provision is based on Section 556(e) of the
Administrative Procedure Act, 5 U.S.C.   556(e).  


Rule 324. Evidence:  Stipulations.
     The parties may, by stipulation, at any stage of the
proceeding agree upon any pertinent facts in the proceeding.  A
stipulation may be received in evidence and, when received, shall
be binding on the parties to the stipulation.  

REVISION COMMENT:  Stipulation as to facts not in dispute can aid
in the efficient conduct of a hearing and reduce costs for all
parties.  Rule 324 has been added to clarify that stipulations
may be entered into at any stage of the proceeding, including
prior to the start of the hearing.  Rule 324 is based, in part,
on Rule 324 of the Model Adjudication Rules, Administrative
Conference of the United States (Dec. 1993). 


Rule 325. Evidence:  Presentation Under Oath or Affirmation.  
     A witness at a hearing for the purpose of taking evidence
shall testify under oath or affirmation.  


Rule 326. Evidence:  Presentation, Rebuttal and Cross-
          examination.
     In any proceeding in which a hearing is required to be
conducted on the record after opportunity for hearing in accord
with 5 U.S.C. 556(a), a party is entitled to present its case or
defense by oral or documentary evidence, to submit rebuttal
evidence, and to conduct such cross-examination as, in the
 
-------------------- BEGINNING OF PAGE #69 ---------------------

discretion of the Commission or the hearing officer, may be
required for a full and true disclosure of the facts.  The scope
and form of evidence, rebuttal evidence, if any, and cross-
examination, if any, in any other proceeding shall be determined
by the Commission or the hearing officer in each proceeding.  

COMMENT:  The requirements of Section 556 of the Administrative
Procedure Act, including those regarding the right to present
evidence, submit rebuttal evidence and conduct cross-examination,
apply only to "formal" adjudications: those hearings required by
statute to be conducted "on the record" after opportunity for
hearing.  See 5 U.S.C.    554(a), 556(a).  In contrast,
"informal" adjudications are proceedings where the statutory
requirement for an "opportunity for hearing" does not
specifically require the hearing to be held "on the record."  The
Commission may, but is not required to, follow procedures
mandated for "formal" adjudications under Section 556 in
"informal" adjudications.  Thus, in cases of "informal"
adjudication, such as a proceeding as to whether a temporary
cease-and-desist order should be entered, the respondent's
opportunity to put on live witnesses at the hearing may be
limited.  See also Rule 191 (regarding adjudications not required
to be determined on the record after notice and opportunity for
hearing); Rules 510-513 (regarding temporary cease-and-desist
orders).  


Rule 340. Proposed Findings, Conclusions and Supporting Briefs.
     (a)  Opportunity to File.  Before an initial decision is
issued, each party shall have an opportunity, reasonable in light
of all the circumstances, to file in writing proposed findings
and conclusions together with, or as a part of, its brief.  
     (b)  Procedure.  Proposed findings of fact must be supported
by citations to specific portions of the record.  If successive
filings are directed, the proposed findings and conclusions of
the party assigned to file first shall be set forth in serially
numbered paragraphs, and any counter statement of proposed
findings and conclusions must, in addition to any other matter,
indicate those paragraphs of the proposals already filed as to
which there is no dispute.  A reply brief may be filed by the
party assigned to file first, or, where simultaneous filings are
directed, reply briefs may be filed by each party, within the
period prescribed therefor by the hearing officer.  No further
briefs may be filed except with leave of the hearing officer.  
     (c)  Time for Filing.  In any proceeding in which an initial
decision is to be issued:
          (1)  At the end of each hearing, the hearing officer
     shall, by order, after consultation with the parties,
     prescribe the period within which proposed findings and
     conclusions and supporting briefs are to be filed.  The
     party or parties directed to file first shall make its or
     their initial filing within 30 days of the end of the
     hearing unless the hearing officer, for good cause shown,
     permits a different period and sets forth in the order the
     reasons why the different period is necessary.  
          (2)  The total period within which all such proposed
     findings and conclusions and supporting briefs and any
     counter statements of proposed findings and conclusions and
     reply briefs are to be filed shall be no longer than 90 days
     after the close of the hearing unless the hearing officer,
     for good cause shown, permits a different period and sets
     forth in an order the reasons why the different period is
     necessary.    
 
-------------------- BEGINNING OF PAGE #70 ---------------------

COMMENT (a):  Rule 340 is based on Section 557(c) of the
Administrative Procedure Act, 5 U.S.C.   557(c).  By its terms,
Section 557(c) applies only to proceedings "on the record" after
opportunity to be heard.  See Comment to Rule 326.  Consistent
with longstanding Commission practice, however, Rule 340 mandates
an opportunity for submission of findings and conclusions in any
case in which an initial decision is to be prepared, whether or
not the proceeding is "on the record."  The limitation in Rule
340 that the opportunity to submit proposed findings and
conclusions be "reasonable in light of all the circumstances"
grants the hearing officer or the Commission discretion to
restrict the time allowed for filing findings and conclusions. 
For example, in emergency proceedings, an abbreviated period
might be appropriate.  Rule 340 does not apply to proceedings in
which the Commission itself presides at the taking of evidence
since no initial decision is issued in such circumstances.  In
such a case -- for example, where a temporary cease-and-desist
order is sought -- the Commission has complete discretion whether
to allow for post-hearing submissions.
     The rule requires that each proposed finding must be
supported by appropriate citations to the record.  Filings that
fail to meet this requirement may be subject to sanctions
pursuant to Rule 180.


Rule 350. Record in Proceedings Before Hearing Officer; Retention
          of Documents; Copies.
     (a)  Contents of the Record.  The record shall consist of:  
          (1)  the order instituting proceedings, each notice of
     hearing and any amendments;
          (2)  each application, motion, submission or other
     paper, and any amendments, motions, objections, and
     exceptions to or regarding them;
          (3)  each stipulation, transcript of testimony and
     document or other item admitted into evidence; 
          (4)  each written communication accepted by the hearing
     officer pursuant to Rule 210;
          (5)  with respect to a request to disqualify a hearing
     officer or to allow the hearing officer's withdrawal under
     Rule 112, each affidavit or transcript of testimony taken
     and the decision made in connection with the request;
          (6)  all motions, briefs and other papers filed on
     interlocutory appeal;
          (7)  all proposed findings and conclusions; 
          (8)  each written order issued by the hearing officer
     or Commission; and
          (9)  any other document or item accepted into the
     record by the hearing officer.  
     (b)  Retention of Documents Not Admitted.  Any document
offered in evidence but excluded, and any document marked for
identification but not offered as an exhibit, shall not be
considered a part of the record.  The Secretary shall retain any
such documents until the later of the date upon which a
Commission order ending the proceeding becomes final, or the
conclusion of any judicial review of the Commission's order.
     (c)  Substitution of Copies.  A true copy of a document may
be substituted for any document in the record or any document
retained pursuant to paragraph (b) of this rule. 


Rule 351. Transmittal of Documents to Secretary; Record Index;
          Certification
     (a)  Transmittal From Hearing Officer to Secretary of
Partial Record Index.  The hearing officer may, at any time,
 
-------------------- BEGINNING OF PAGE #71 ---------------------

transmit to the Secretary motions, exhibits or any other original
documents filed with or accepted into evidence by the hearing
officer, together with an index of such documents.  The hearing
officer, may, by order, require the interested division or other
persons to assist in promptly transporting such documents from
the hearing location to the Office of the Secretary.  
     (b)  Preparation, Certification of Record Index.  Promptly
after the close of the hearing, the hearing officer shall
transmit to the Secretary an index of the originals of any
motions, exhibits or any other documents filed with or accepted
into evidence by the hearing officer that have not been
previously transmitted to the Secretary, and the Secretary shall
prepare a record index.  Prior to issuance of an initial
decision, or if no initial decision is to be prepared, within 30
days of the close of the hearing, the Secretary shall transmit
the record index to the hearing officer and serve a copy of the
record index on each party.  Any person may file proposed
corrections to the record index with the hearing officer within
15 days of service of the record index.  The hearing officer
shall, by order, direct whether any corrections to the record
index shall be made.  The Secretary shall make such corrections,
if any, and issue a revised record index.  If an initial decision
is to be issued, the initial decision shall include a
certification that the record consists of the items set forth in
the record index or revised record index issued by the Secretary.
     (c)  Final Transmittal of Record Items to the Secretary. 
After the close of the hearing, the hearing officer shall
transmit to the Secretary originals of any motions, exhibits or
any other documents filed with, or accepted into evidence by, the
hearing officer, or any other portions of the record that have
not already been transmitted to the Secretary.  Prior to service
of the initial decision by the Secretary, or if no initial
decision is to be issued, within 60 days of the close of the
hearing, the Secretary shall inform the hearing officer if any
portions of the record are not in the Secretary's custody.  

COMMENT:  The Office of the Secretary is responsible for custody
and safekeeping of administrative proceedings records.  Hearings,
however, are often held away from the Commission's Headquarters
in Washington.  Exhibits introduced at such hearings or filings
made directly with the hearing officer (see Rule 151) may be
voluminous.  Rule 350 establishes procedures to facilitate and
safeguard the transfer to the Secretary of motions, exhibits or
other record items filed with the hearing officer.  Parties and
other persons are afforded a specific opportunity to object if
they believe that the certified record is incomplete.  


Rule 360. Initial Decision of Hearing Officer.
     (a)  When Required.  Unless the Commission directs
otherwise, the hearing officer shall prepare an initial decision
in any proceeding in which the Commission directs a hearing
officer to preside at a hearing, provided, however, that an
initial decision may be waived by the parties with the consent of
the hearing officer pursuant to Rule 202.  
     (b)  Content.  An initial decision shall include:  findings
and conclusions, and the reasons or basis therefor, as to all the
material issues of fact, law or discretion presented on the
record and the appropriate order, sanction, relief, or denial
thereof.  The initial decision shall also state the time period,
not to exceed 21 days after service of the decision, except for
good cause shown, within which a petition for review of the
initial decision may be filed.  The reasons for any extension of
time shall be stated in the initial decision.  The initial
 
-------------------- BEGINNING OF PAGE #72 ---------------------

decision shall also include a statement that, as provided in
paragraph (d) of this rule: 
          (1)  the initial decision shall become the final
     decision of the Commission as to each party unless a party
     files a petition for review of the initial decision or the
     Commission determines on its own initiative to review the
     initial decision as to a party; and 
          (2)  if a party timely files a petition for review or
     the Commission takes action to review as to a party, the
     initial decision shall not become final with respect to that
     party.  
     (c)  Filing, Service and Publication.  The hearing officer
shall file the initial decision with the Secretary.  The
Secretary shall promptly serve the initial decision upon the
parties and shall promptly publish notice of the filing thereof
in the SEC News Digest.  Thereafter, the Secretary shall publish
the initial decision in the SEC Docket; provided, however, that
in nonpublic proceedings no notice shall be published unless the
Commission otherwise directs. 
     (d)  When Final.  
          (1)  Unless a party or an aggrieved person entitled to
     review files a petition for review in accordance with the
     time limit specified in the initial decision, or unless the
     Commission on its own initiative orders review pursuant to
     Rule 411, an initial decision shall become the final
     decision of the Commission. 
          (2)  If a petition for review is timely filed by a
     party or an aggrieved person entitled to review, or if the
     Commission upon its own initiative has ordered review of a
     decision with respect to a party or a person aggrieved who
     would be entitled to review, the initial decision shall not
     become final as to that party or person.
     (e)  Order of Finality.  In the event that the initial
decision becomes the final decision of the Commission with
respect to a party, the Commission shall issue an order that the
decision has become final as to that party.  The order of
finality shall state the date on which sanctions, if any, take
effect.  Notice of the order shall be published in the SEC News
Digest and the SEC Docket. 

COMMENT (a):  Paragraph (a) is based on Section 557(b) of the
Administrative Procedure Act (APA), 5 U.S.C.   557(b).

COMMENT (b):  The first sentence of paragraph (b), is based on
Section 557(c)(3) of the APA, 5 U.S.C.   557(c)(3).

COMMENT (d):  Paragraph (d) is based on Sections 557(b) and 704
of the APA, 5 U.S.C.    557(b) and 704.  In certain limited
circumstances, a non-party may be aggrieved by a decision and
entitled to seek review.  See, e.g., Exchange Act   25(a)(1), 15
U.S.C.   78y(a)(1).

COMMENT (e):  The order of finality provides formal notice that
the initial decision will not be reviewed.  An initial decision
automatically becomes final, however, with the passage of time
even if the order of finality is not issued.  Formal notice to a
respondent that an initial decision has become final is not
required for the decision to take effect.  A respondent is able
to ascertain when the period for filing a petition for review
pursuant to Rule 410, or for initiation of review on the
Commission's initiative pursuant to Rule 411, has expired.  
When an initial decision becomes final, any collateral
consequences from entry of a final order take effect immediately.

Sanctions pursuant to the decision may not be immediately
 
-------------------- BEGINNING OF PAGE #73 ---------------------

effective, however.  Rule 601 specifies when amounts owing
pursuant to a disgorgement or penalty order become due.  In
addition, some period of time may be necessary or appropriate
after an initial decision becomes final before sanctions should
take effect, for example, to allow a respondent to provide for an
orderly termination of a business upon effectiveness of a
suspension or bar.  Ordinarily, the initial decision will specify
when sanctions will take effect if the initial decision becomes
final.  If the initial decision or applicable rule does not
specify when sanctions are to become final, the Commission will
enter an appropriate order.  The Secretary has delegated
authority to fix the date when sanctions become effective.  See
17 CFR 200.30-7.  


APPEAL TO THE COMMISSION AND COMMISSION REVIEW


Rule 400. Interlocutory Review.
     (a)  Availability.  The Commission will not review a hearing
officer's ruling prior to its consideration of the entire
proceeding in the absence of extraordinary circumstances.  The
Commission may decline to consider a ruling certified by a
hearing officer pursuant to paragraph (c) of this rule if it
determines that interlocutory review is not warranted or
appropriate under the circumstances.  The Commission may, at any
time, on its own motion, direct that any matter be submitted to
it for review.  
     (b)  Expedited Consideration.  Interlocutory review of a
hearing officer's ruling shall be expedited in every way,
consistent with the Commission's other responsibilities.  
     (c)  Certification Process.  A ruling submitted to the
Commission for interlocutory review must be certified in writing
by the hearing officer and shall specify the material relevant to
the ruling involved.  The hearing officer shall not certify a
ruling unless:
          (1)  his or her ruling would compel testimony of
     Commission members, officers or employees or the production
     of documentary evidence in their custody; or
          (2)  upon application by a party, within five days of
     the hearing officer's ruling, the hearing officer is of the
     opinion that:
               (i)  the ruling involves a controlling question of
          law as to which there is substantial ground for
          difference of opinion; and 
               (ii) an immediate review of the order may
          materially advance the completion of the proceeding. 
     (d)  Proceedings Not Stayed.  The filing of an application
for review or the grant of review shall not stay proceedings
before the hearing officer unless he or she, or the Commission,
shall so order.  The Commission will not consider the motion for
a stay unless the motion shall have first been made to the
hearing officer.  

COMMENT:  Rule 400 is based in part on rules governing
interlocutory review of the decisions of a United States district
court by a court of appeals.  See 28 U.S.C.   1292(b).  In
contrast to the practice in the federal judicial system, however,
the Commission may take up a matter on its own motion at any
time, even if a hearing officer does not certify it for
interlocutory review.  
     The requirement in paragraph (b) that interlocutory review
be "expedited in every way, consistent with the Commission's
other responsibilities," conforms to the standard for review in
 
-------------------- BEGINNING OF PAGE #74 ---------------------

Rules 102(e)(3) and 500.  Interlocutory matters should be
promptly resolved in order to allow for the timely completion of
the entire proceeding.

REVISION COMMENT:  The structure of this rule has been
significantly modified to break out each of the rule's
substantive provisions and thereby improve its readability. 
Other changes in the rule are technical and are intended only to
clarify its operation.
     One commenter recommended that a hearing officer's decision
with respect to a motion that he or she be disqualified be
subject to interlocutory review and that the rule contain an
express provision making immediately appealable any decision not
to quash a subpoena as requested by a third-party recipient.  The
Commission has decided not to incorporate these recommendations. 
Either is subject to interlocutory review if the hearing officer
determines that the decision meets the standards of paragraph
(c).  Moreover, the decision whether to subpoena a witness is
best made by the hearing officer who is most familiar with the
details of the proceeding.  


Rule 401. Issuance of Stays.  
     (a)  Procedure.  A request for a stay shall be made by
written motion, filed pursuant to Rule 154, and served on all
parties pursuant to Rule 150.  The motion shall state the reasons
for the relief requested and the facts relied upon, and, if the
facts are subject to dispute, the motion shall be supported by
affidavits or other sworn statements or copies thereof.  Portions
of the record relevant to the relief sought, if available to the
movant, shall be filed with the motion.  The Commission may issue
a stay based on such motion or on its own motion.  
     (b)  Scope of Relief.  The Commission may grant a stay in
whole or in part, and may condition relief under this rule upon
such terms, or upon the implementation of such procedures, as it
deems appropriate. 
     (c)  Stay of a Commission Order.  A motion for a stay of a
Commission order may be made by any person aggrieved thereby who
would be entitled to review in a federal court of appeals.  A
motion seeking to stay the effectiveness of a Commission order
pending judicial review may be made to the Commission at any time
during which the Commission retains jurisdiction over the
proceeding. 
     (d)  Stay of an Action by a Self-Regulatory Organization. 
          (1)  Availability.  A motion for a stay of an action by
     a self-regulatory organization for which the Commission is
     the appropriate regulatory agency, for which action review
     may be sought pursuant to Rule 420, may be made by any
     person aggrieved thereby.   
          (2)  Summary Entry.  A stay may be entered summarily,
     without notice and opportunity for hearing.  
          (3)  Expedited Consideration.  Where the action
     complained of has already taken effect and the motion for
     stay is filed within 10 days of the effectiveness of the
     action, or where the action complained of, will, by its
     terms, take effect within five days of the filing of the
     motion for stay, the consideration of and decision on the
     motion for a stay shall be expedited in every way,
     consistent with the Commission's other responsibilities. 
     Where consideration will be expedited, persons opposing the
     motion for a stay may file a statement in opposition within
     two days of service of the motion unless the Commission, by
     written order, shall specify a different period.  
 
-------------------- BEGINNING OF PAGE #75 ---------------------

COMMENT:  The Commission has stated that it "generally considers
four factors" when evaluating the appropriateness of a stay of
its own orders: 

     (1) whether there is a strong likelihood that a party
     will succeed on the merits in a proceeding challenging
     the particular Commission action (or, if the other
     factors strongly favor a stay, that there is a
     substantial case on the merits); (2) whether, without a
     stay, a party will suffer irreparable injury; (3)
     whether there will be substantial harm to any person if
     the stay were granted; and (4) whether the issuance of
     a stay would likely serve the public interest. 

Order Preliminarily Considering Whether to Issue Stay Sua Sponte
and Establishing Guidelines for Seeking Stay Applications,
Exchange Act Release No. 33870 (Apr. 7, 1994), 56 SEC Docket
1189, 1190-91 (Apr. 26, 1994).  The evaluation of the factors
enumerated by the Commission, according to the release, will vary
with the "equities and circumstances" of the case before the
Commission.  Id.  See also In re Hibbard, Brown & Co. et al.,
Admin. Proc. File No. 3-8418, SEC Press Release No. 94-72 (Aug.
2, 1994) at 4.  
     The General CouVISION COMMENT:  A commenter suggested that
the Commission
amend the rule to include substantive standards under which a
stay shall be granted or to identify the criteria the Commission
applies in considering a request for a stay.  As noted in the
comment to Rule 401, earlier this year the Commission reiterated
in a release the factors generally considered when evaluating the
appropriateness of a stay under Section 25(c)(2) of the Exchange
Act.  Order Prelimnt of an escrow, that would assure that funds
will
be available for payment at a later date if the disgorgement
order is upheld.

COMMENT (c):  Rule 401(c) requires that a motion for a stay of a
Commission order pending review by a court be made to the
Commission while the Commission retains jurisdiction over the
proceeding.  Other than a temporary cease-and-desist order, which
is subject to judicial review in the first instance in a United
States District Court, Commission orders are reviewable by a
court of appeals.  See, e.g., Exchange Act   25, 15 U.S.C.   78y
(governing judicial review of final orders of the Commission
generally), Exchange Act   21C(d)(2), 15 U.S.C.   78u-3(d)(2)
(governing judicial review of temporary cease-and-desist orders).

The Commission loses jurisdiction to grant a stay of an order
subject to review in a court of appeals only after the record is
filed in a court of appeals.  See, e.g., Exchange Act   
25(a)(3), (c)(2), 15 U.S.C.    78y(a)(3), (c)(2), and Fed. R.
App. P. 18. 

COMMENT (d):  This paragraph is based on Section 19(d) of the
Exchange Act, 15 U.S.C.   78s(d), and former Exchange Act Rule
19d-2, 17 C.F.R. 240.19d-2 (1994).  
     The provision for expedited consideration in paragraph
(d)(3) is based on the requirement of Section 19(d)(2) that the
Commission establish an expedited procedure for consideration and
determination of the question of a stay for "appropriate cases." 
The Commission has established a guideline for the timely
determination of such requests.  See 17 CFR 201.900 (Informal
Procedures and Supplementary Information Concerning Adjudicatory
Proceedings).  A self-regulatory organization controls the
effective date of the sanctions it imposes.  If it desires
additional time to address the issue of whether a stay should
 
-------------------- BEGINNING OF PAGE #76 ---------------------

issue, it may consider delaying the effective date of its order. 
If the determination complained of has not taken effect, the time
limits for the filing of opposing and reply briefs would be those
set forth in Rule 154.  

REVISION COMMENT:  A commenter suggested that the Commission
amend the rule to include substantive standards under which a
stay shall be granted or to identify the criteria the Commission
applies in considering a request for a stay.  As noted in the
comment to Rule 401, earlier this year the Commission reiterated
in a release the factors generally considered when evaluating the
appropriateness of a stay under Section 25(c)(2) of the Exchange
Act.  Order Preliminarily Considering Whether to Issue Stay Sua
Sponte and Establishing Guidelines for Seeking Stay Applications,
Exchange Act Release No. 33870 (Apr. 7, 1994).  The Commission
believes that the long-standing enunciation of its policy with
respect to such stays provides sufficient guidance.  
     A commenter suggested that the Commission reconsider its
rule allowing motions for stays of a self-regulatory organization
(SRO) determination, including a final SRO disciplinary action,
to be made "at any time."  The commenter proposed that a person
seek a stay within 10 days of the filing of an SRO disciplinary
decision pursuant to Section 19(d)(1) of the Exchange Act, 15
U.S.C. 78s(d)(1).  The Commission does not agree that respondents
should be required to request a stay within such a limited
period.  Requiring a stay to be sought within a fixed time would
place respondents who may have no reason to seek a stay
immediately at a disadvantage, as they may be entitled to a stay
or other relief as the result of changed circumstances at a later
time.  Cf. Rule 512(e).  
     Exchange Act Section 19(d)(2) requires that in "appropriate
cases" the Commission establish an expedited procedure for
consideration and determination of the question of a stay. 
Expedited consideration is appropriate when a sanction or other
action complained of has already taken effect or will take effect
prior to the time a decision could be made without expedited
consideration.  


Rule 410. Appeal of Initial Decisions by Hearing Officers.
     (a)  Petition for Review; When Available.  In any proceeding
in which an initial decision is made by a hearing officer, any
party, and any other person who would have been entitled to
judicial review of the decision entered therein if the Commission
itself had made the decision, may file a petition for review of
the decision with the Commission. 
     (b)  Procedure.  The petition for review of an initial
decision shall be filed with the Commission within such time
after service of the initial decision as prescribed by the
hearing officer pursuant to Rule 360(b).  The petition shall set
forth the specific findings and conclusions of the initial
decision as to which exception is taken, together with supporting
reasons for each exception.  Supporting reasons may be stated in
summary form.  Any exception to an initial decision not stated in
the petition for review, or in a previously filed proposed
finding made pursuant to Rule 340, may, at the discretion of the
Commission, be deemed to have been waived by the petitioner.  
     (c)  Financial Disclosure Statement Requirement.  Any person
who files a petition for review of an initial decision that
asserts that person's inability to pay either disgorgement,
interest or a penalty shall file with the opening brief a sworn
financial disclosure statement containing the information
specified in Rule 630(b). 
 
-------------------- BEGINNING OF PAGE #77 ---------------------

     (d)  Opposition to Review.  A party may seek leave to file a
brief in opposition to a petition for review within five days of
the filing of the petition.  The Commission will grant leave, or
order the filing of an opposition on its own motion, only if it
determines that briefing will significantly aid the decisional
process.  A brief in opposition shall identify those issues which
do not warrant consideration by the Commission and shall state
succinctly the reasons therefore.   
     (e)  Prerequisite to Judicial Review.  Pursuant to Section
704 of the Administrative Procedure Act, 5 U.S.C. 704, a petition
to the Commission for review of an initial decision is a
prerequisite to the seeking of judicial review of a final order
entered pursuant to such decision.    

COMMENT (a)-(b):  Pursuant to Section 557(c) of the
Administrative Procedure Act, 5 U.S.C   557(c), in adjudications
required to be conducted "on the record after opportunity for
agency hearing," a party is entitled to a reasonable opportunity
to file exceptions to the initial decision and supporting reasons
for the exceptions or proposed findings or conclusions.  The
Commission's practice, reflected in paragraph (a), is to provide
an opportunity to file exceptions in all proceedings where an
initial decision is to be made, not only those in "on-the-record"
or "formal" adjudication.  See Comments to Rules 100 and 191.
     Except in limited cases as specified in Rule 411(b)(1) when
the right of appeal is mandatory, the Commission, after
considering a petition for review, may determine not to hear an
appeal or to limit the issues on appeal.  Administrative
Procedure Act   557(b), 5 U.S.C   557(b) ("[o]n appeal from or
review of the initial decision, the agency has all the powers
which it would have in making the initial decision except as it
may limit the issues on notice or by rule").  Cf. Section 4A(b)
of the Exchange Act, 15 U.S.C.   78d-1(b) (providing a right to
appeal certain decisions to the Commission).  
     The standards for granting a petition for review are set
forth in Rule 411.  Under these standards, the Commission grants
a petition for review in virtually all cases.  The product of a
consensus over many years, this result represents a Commission
determination that there is a benefit to joint deliberation by
the Commission when exception is taken to an initial decision.  

COMMENT (c):  In order to make a determination with respect to
whether disgorgement, interest or a penalty is appropriate for a
respondent who raises inability to pay as an issue, the
Commission must have access to complete and current financial
information.  Although financial disclosure may have occurred
during the course of a hearing, by the time an initial decision
and petition for review are filed that information is not likely
to be current.  Accordingly, a current financial disclosure
statement is required if a petition for review raises exceptions
concerning inability to pay.

COMMENT (d):  The Commission has rarely found grounds for denial
of a petition for review under its long-standing standards for
determining whether to grant review, now set forth in Rule
411(b).  Therefore, routine opposition to a petition for review
serves little purpose.  Accordingly, leave from the Commission
must be sought prior to filing an opposition to a petition for
review.  Where the Commission believes briefing would
significantly assist its decisional process, it may grant leave
to file an opposition or order such a filing.  The Commission has
delegated authority to the General Counsel to determine whether
to grant requests for leave to file an opposition.  See 17 CFR
200.30-14.
 
-------------------- BEGINNING OF PAGE #78 ---------------------


REVISION COMMENTS:  Comment was requested as to (1) whether,
notwithstanding the potential benefits of preparing a petition
for review, the requirement for a petition should be eliminated
where an appeal is provided as of right by Section 4A(b) of the
Exchange Act; and (2) whether, in light of the Commission's
longstanding practice of granting virtually all petitions for
review, the requirement of filing a petition for review should be
eliminated.
     One commenter supported retaining the petition for review
and suggested that the petition for review is a more appropriate
mechanism for noticing an appeal because it helps clarify issues
and provides more information than the notice of appeal used
under the Federal Rules of Appellate Procedure.  
     The Commission grants virtually all petitions for review. 
Although Commission review in a particular case can be time
consuming, it establishes authoritative precedent applicable to
other cases and promotes accountability for, and confidence in,
the Commission's adjudicatory process.  Commission review of
those cases in which review is sought has tended to encourage
acceptance of hearing officers' decisions and to promote the
settlement of cases even prior to hearing in similar cases,
thereby reducing the overall adjudicatory workload. 
     The Commission has decided to retain the petition for review
process for all cases including those where a right to appeal is
statutorily required.  The petition for review is a summary
document and requires limited resources to prepare.  Requiring
the petition, however, enhances the efficiency of the appeals
process for both the Commission and parties by focusing attention
from an early point on those issues considered most significant
by the petitioner.  Thus, the petition for review offers
substantial benefits both to the Commission and to petitioners. 
 
     As proposed, the rule would have allowed the filing of an
opposition to review by any person opposing review.  As noted by
one commenter, given the Commission's practices with respect to
the grant of petitions for review, an opposition to review serves
little benefit to either the Commission or the parties, except in
those rare cases where there is a genuine issue as to the
necessity or appropriateness of review.  As revised, the rule
allows a party to seek leave to file a brief in opposition to a
petition for review.  The Commission believes this mechanism will
limit the unnecessary expenditure of time or resources in routine
oppositions to petitions for review while allowing, in
appropriate cases, for other parties to be heard in opposition. 
The Commission retains discretion to direct the filing of an
opposition on its motion in any case.
     Comment was requested as to whether, after the filing of a
petition for review, a 10- or 15-day period would be more
realistic for filing a brief in opposition to a petition for
review or a petition for summary affirmance.  As revised, the
Rule provides a 10-day period for a person to seek leave to file
an opposition.  If leave is granted, the Commission will specify
the time allowed for filing a brief.  Provisions related
specifically to the filing of a motion for summary affirmance
have been deleted.  


Rule 411. Commission Consideration of Initial Decisions by
          Hearing Officers.
     (a)  Scope of Review.  The Commission may affirm, reverse,
modify, set aside or remand for further proceedings, in whole or
in part, an initial decision by a hearing officer and may make
 
-------------------- BEGINNING OF PAGE #79 ---------------------

any findings or conclusions that in its judgment are proper and
on the basis of the record. 
     (b)  Standards for Granting Review Pursuant to a Petition
          for Review.
          (1)  Mandatory Review.  After a petition for review has
     been filed, the Commission shall review any initial decision
     that: 
               (i)  denies any request for action pursuant to
          Section 8(a) or Section 8(c) of the Securities Act of
          1933, 15 U.S.C. 77h(a), (c), or the first sentence of
          Section 12(d) of the Exchange Act, 15 U.S.C. 78l(d); 
               (ii) suspends trading in a security pursuant to
          Section 12(k) of the Exchange Act, 15 U.S.C. 78l(k); or
               (iii)     is in a case of adjudication (as defined
          in 5 U.S.C. 551) not required to be determined on the
          record after notice and opportunity for hearing (except
          to the extent there is involved a matter described in 5
          U.S.C. 554(a)(1) through (6)). 
          (2)  Discretionary Review.  The Commission may decline
     to review any other decision.  In determining whether to
     grant review, the Commission shall consider whether the
     petition for review makes a reasonable showing that:
               (i)  a prejudicial error was committed in the
          conduct of the proceeding; or
               (ii) the decision embodies:
                    (A)  a finding or conclusion of material fact
               that is clearly erroneous; or 
                    (B)  a conclusion of law that is erroneous;
               or 
                    (C)  an exercise of discretion or decision of
               law or policy that is important and that the
               Commission should review.  
     (c)  Commission Review Other Than Pursuant to a Petition for
Review.  The Commission may, on its own initiative, order review
of any initial decision, or a portion of any initial decision,
within 21 days after the end of the period established for filing
a petition for review pursuant to Rule 410(b) or any brief in
opposition to a petition for review permitted pursuant to Rule
410(d).  A party who does not intend to file a petition for
review, and who desires the Commission's determination whether to
order review on its own initiative to be made in a shorter time,
may make a motion for an expedited decision, accompanied by a
written statement that the party waives its right to file a
petition for review.  The vote of one member of the Commission,
conveyed to the Secretary, shall be sufficient to bring a matter
before the Commission for review.  
     (d)  Limitations on Matters Reviewed.  Review by the
Commission of an initial decision shall be limited to the issues
specified in the petition for review or the issues, if any,
specified in the briefing schedule order issued pursuant to Rule
450(a).  On notice to all parties, however, the Commission may,
at any time prior to issuance of its decision, raise and
determine any other matters that it deems material, with
opportunity for oral or written argument thereon by the parties. 
     (e)  Summary Affirmance.  The Commission may summarily
affirm an initial decision based upon the petition for review and
any response thereto, without further briefing, if it finds that
no issue raised in the petition for review warrants further
consideration by the Commission. 
     (f)  Failure to Obtain a Majority.  In the event a majority
of participating Commissioners do not agree to a disposition on
the merits, the initial decision shall be of no effect, and an
order will be issued in accordance with this result. 
 
-------------------- BEGINNING OF PAGE #80 ---------------------

COMMENT (a):  Section 557(b) of the Administrative Procedure Act,
5 U.S.C   557(b), provides that "[o]n appeal from or review of
the initial decision, the agency has all the powers which it
would have in making the initial decision except as it may limit
the issues on notice or by rule."

COMMENT (b):  Paragraph (b) is based, in part, on the
requirements of Exchange Act Section 4A, 15 U.S.C.   78d-1.

COMMENT (c):  Paragraph (c) is based, in part, on the
requirements of Exchange Act Section 4A.
     Before the Commission determines whether to order review of
an issue on its own motion, petitions for review and cross-
petitions, if any, should be filed in accordance with Rule 410(b)
and opposition briefs, if any, should be filed in accordance with
Rule 410(d).  Under Rule 411(c), there is a 21-day period after
the end of the period for the filing of a petition for review
during which the Commission may determine whether to grant
review.  If time is allowed for filing an opposition, there would
be a corresponding increase in the time allowed for the
Commission to order review on its own motion. 

COMMENT (e):  A provision for summary affirmance was added to the
Rules of Practice in 1964 based upon Recommendation Number 9 of
the Administrative Conference of the United States (ACUS).  See
also ACUS Recommendation No. 68-6 (suggesting that an agency may
accord administrative finality to an initial decision by
summarily affirming the initial decision or denying a petition
for review).  Summary affirmance may be appropriate when
exception is taken to conclusions of law, but there is no genuine
dispute as to any material facts, or when the Commission believes
that deliberation by the Commission would not be useful or
appropriate.  Summary affirmance has very rarely been granted. 
But see In the Matter of Joseph A. Lugo, Exchange Act Release No.
25982 (Aug. 8, 1988), 41 SEC Docket 946 (Aug 23, 1988)
(petitioners failed to file required briefs).  

REVISION COMMENT (c):  The period during which the Commission can
determine whether to grant review on its own initiative has been
extended from 15 days to 21 days to conform to the 21-day period
allowed in Rule 450(a)(2) for the issuance of a briefing schedule
order.

REVISION COMMENT (e):  Comment was requested as to whether, in
light of the Commission's summarily affirming an initial decision
only rarely, the possibility of a summary affirmance should be
eliminated.  One commenter objected to summary affirmance based
solely upon the petition for review and suggested that to the
extent that review of an initial decision can be denied at the
Commission's discretion, summary affirmance is unnecessary and
counteracts the benefits of joint deliberation.  The commenter
suggested that if summary affirmance is retained it should be
considered only after briefs have been filed, and should not be
available at all where the Commission has granted review based
upon a reasonable showing of error.  
     While summary affirmance has rarely been used in the past,
the Commission's adjudication workload changes over time. 
Summary affirmance provides a potentially useful mechanism to
resolve quickly certain cases.  The Commission has decided to
retain summary affirmance as a mechanism for disposition of
appropriate cases.  See In the Matter of Joseph Lugo, Admin.
Proc. File No. 3-6740 (Aug. 8, 1988), Exchange Act Release No.
25982, 41 SEC Docket 946 (1988) (petitioners failed to file
required briefs).  
 
-------------------- BEGINNING OF PAGE #81 ---------------------



Rule 420. Appeal of Determinations by Self-Regulatory
          Organizations.
     (a)  Application for Review; When Available.  An application
for review by the Commission may be filed by any person who is
aggrieved by a determination of a self-regulatory organization
with respect to any 
          (i) final disciplinary sanction;
          (ii) denial or conditioning of membership or
     participation;
          (iii) prohibition or limitation in respect to access to
     services offered by that self-regulatory organization or a
     member thereof; or 
          (iv) bar from association as to which a notice is
     required to be filed with the Commission pursuant to Section
     19(d)(1) of the Exchange Act, 15 U.S.C. 78s(d)(1).    
     (b)  Procedure.  An application for review may be filed with
the Commission pursuant to Rule 151 within 30 days after notice
of the determination was filed with the Commission pursuant to
Section 19(d)(1) of the Exchange Act, 15 U.S.C. 78s(d)(1), and
received by the aggrieved person applying for review.  The
application shall be served by the applicant on the self-
regulatory organization.  The application shall identify the
determination complained of, set forth in summary form a brief
statement of alleged errors in the determination and supporting
reasons therefor and state an address where the applicant can be
served with the record index.  The application shall be
accompanied by the notice of appearance required by Rule 102(d). 

     (c)  Determination Not Stayed.  Filing an application for
review with the Commission pursuant to paragraph (b) of this rule
shall not operate as a stay of the complained of determination
made by the self-regulatory organization unless the Commission
otherwise orders either pursuant to a motion filed in accordance
with Rule 401 or on its own motion.   
     (d)  Certification of the Record; Service of the Index. 
Fourteen days after receipt of an application for review or a
Commission order for review, the self-regulatory organization
shall certify and file with the Commission one copy of the record
upon which the action complained of was taken, and shall file
with the Commission three copies of an index to such record, and
shall serve upon each party one copy of the index.   

COMMENT:  Rule 420(a) and (b) are based in part on Exchange Act
Section 19(d)(2), 15 U.S.C   78s(d)(2).  

COMMENT (b):  It is the responsibility of the person seeking
review to assure that the application for review is actually
received by the Commission within the time limit provided.  See
Rule 151.  While a method of service that provides proof of
delivery is not mandatory, in the event there is a question as to
whether an application was timely filed, it is the applicant's
burden to establish when the filing was made.  
     Commission review of self-regulatory organization
determinations for which an application may be filed pursuant to
paragraph (a) is required by statute.  The purpose of the
statement of alleged errors and supporting reasons is to provide
general notice of the basis for the application, not to justify
the need for review.  Citations to the record are not required
because at the time the application is filed the record index has
not been served on the applicant.  
 
-------------------- BEGINNING OF PAGE #82 ---------------------

REVISION COMMENT (a)-(d):  Rules 420 and 421 are the only rules
within the Rules of Practice limited expressly to self-regulatory
organization (SRO) determinations.  The substantive provisions of
former Exchange Act Rules 19d-2 (concerning applications for
stays of SRO determinations) and 19d-3 (concerning applications
for review of SRO determinations generally) have been
incorporated into Rules 420, 421 and other rules in the Rules of
Practice.  Rules 19d-2 and 19d-3 have been revised to cross-
reference the Rules of Practice.  Their substantive provisions
have been deleted.  These two rules were not deleted entirely at
this time in order to provide a transition period for the
updating of reference works, materials published by SROs and
other guides relied upon by associated persons of SROs or others
who seek information about the Commission's review of SRO
determinations.  
     Comment was requested whether, in light of the potential
benefits of a summary statement of the contested issues early in
the review process, respondents appealing the determination of an
SRO should be required to file a petition for review that
includes a statement of the issues on review and the alleged
errors by the SRO.  The National Association of Securities
Dealers (NASD) suggested that the application for review process
should require parallel levels of specificity with the petition
for review process governing appeals from an initial decision of
a hearing officer.  The NASD commented that it believes that the
Commission's obligation to conduct a de novo review of an SRO
disciplinary proceeding requires that the Commission apply a non-
deferential standard of review, but does not mandate that the
Commission raise issues that the party seeking review overlooked.


     The NASD suggested, therefore, that the Rules should provide
that issues not raised by the party seeking review are deemed
waived.  The NASD asserted that briefs filed by the NASD with the
Commission typically address not only those issues raised by the
parties seeking review, but all issues that the NASD believes
that the Commission may wish to address.  The NASD stated that in
its view, "[i]t is not uncommon for briefs to devote more
discussion to issues that are not in dispute than those that have
been raised by the parties."  Letter from T. Grant Callery, V.P.
and General Counsel, NASD, to Jonathan G. Katz, Secretary, SEC 25
n.63 (Jan. 31, 1994).  
     The Commission believes that the de novo standard requires
consideration of the entire record of a proceeding including
material issues on that record, even if the parties have
themselves failed to raise those issues.  Over the 10-year period
from 1983 through 1992, review of NASD disciplinary sanctions has
been sought in less than five per cent of all cases.  Commission
opinions on review play a critical role in setting standards for
the securities industry.  While it is not inconsistent with a de
novo standard for the Commission to expect the parties to raise
material issues and to bring forward relevant portions of the
record, the Commission should not, as a matter of policy, ignore
material issues or allow errors unaddressed by the parties to
stand.  Moreover, since the person seeking review would not have
a record index at the time an application for review is filed,
failure to note an exception at this preliminary stage would not
constitute a waiver of any matters.  
     In response to the suggestions of the NASD, Rule 420
requires the person seeking review to make a summary statement of
alleged errors in the determination complained of, so as to give
the Commission and other parties notice of issues on review. 
This procedure allows the Commission to make a more informed
briefing schedule order, pursuant to Rule 450, and to provide
 
-------------------- BEGINNING OF PAGE #83 ---------------------

earlier opportunities for all parties to consider the content of
their briefs.  
     The NASD also suggested that the Rules of Practice should
provide that the Commission give parties notice and an
opportunity to address any additional issues that the Commission
raises in an administrative appeal.  The NASD urged that adoption
of a policy advising litigants when the Commission is raising an
issue sua sponte could make SRO briefs "more focused, more
succinct, and presumably more helpful."
     Revised Rule 421(b) states that the Commission will provide
an opportunity for supplemental briefing with respect to issues
not raised by the parties when the Commission believes such
briefing would significantly aid the decisional process. 
Supplemental briefing is not appropriate, however, in each case
where the parties overlook an issue deemed material by the
Commission.  For example, where the law on an issue overlooked by
the parties is clear, requiring briefs can inject unnecessary
delay and expense with no corresponding benefit to the Commission
or the parties.  
     Comment was also requested whether the requirement to
include a financial disclosure statement if a respondent makes a
claim of inability to pay should be extended to SRO proceedings. 
One commentator agreed that the requirement should be added, for
purposes of consistency, to the rules governing appeals from SRO
decisions.  The Commission has decided not to add a financial
disclosure requirement for appeals of SRO sanctions.  The
Commission, however, may require additional evidence as to a
respondent's claim of inability to pay, including submission of a
financial disclosure form, in particular cases.  See Rule 452
(regarding additional evidence).  A self-regulatory organization
may choose to impose a financial disclosure requirement when a
person intends to argue an inability to pay on appeal to the
self-regulatory organization.  Such a financial statement would
provide a standardized baseline for consideration of claims of
inability to pay.


Rule 421. Commission Consideration of Determinations by Self-
          Regulatory Organizations.
     (a)  Commission Review Other than Pursuant to a Petition for
Review.  The Commission may, on its own initiative, order review
of any determination by a self-regulatory organization that could
be subject to an application for review pursuant to Rule 420(a)
within 40 days after notice thereof was filed with the Commission
pursuant to Section 19(d)(1) of the Exchange Act, 15 U.S.C.
78s(d)(1). 
     (b)  Supplemental Briefing.  The Commission may at any time
prior to issuance of its decision raise or consider any matter
that it deems material, whether or not raised by the parties. 
Notice to the parties and an opportunity for supplemental
briefing with respect to issues not briefed by the parties shall
be given where the Commission believes that such briefing would
significantly aid the decisional process. 

COMMENT:  Exchange Act Section 19(e) sets forth standards
regarding the scope of the Commission's review of a self-
regulatory organizations' imposition of a final disciplinary
sanction.  Exchange Act Section 19(f) sets forth standards with
respect to the Commission's review of a self-regulatory
organization's denial of membership or participation to an
applicant, the barring of a person from becoming associated with
a member of a self-regulatory organization, and a self-regulatory
organization's prohibition or limitation of a person with respect
to access to services offered by the self-regulatory organization
 
-------------------- BEGINNING OF PAGE #84 ---------------------

or any member thereof.  Among the many opinions in which the
Commission and the courts of appeal have explained the scope of
the Commission's review under Sections 19(e) and 19(f) are the
following:  Schellenbach v. SEC, 989 F.2d 907, 909 (7th Cir.
1993) (in considering an appeal under Section 19(e), Commission
undertakes an independent review of facts and law); Todd & Co. v.
SEC, 557 F.2d 1008, 1013 (7th Cir. 1977) (self-regulatory
organization rules and actions are subject to full review by
Commission, which must base its decision on its own findings);
R.H. Johnson & Co. v. SEC, 198 F.2d 690, 695 (2d Cir.), cert.
denied, 344 U.S. 855 (1952) (noting that provisions of former 15
U.S.C.   78o-3 called for de novo findings by Commission); Paul
Edward Van Dusen, 47 S.E.C. 668, 690 (1981) (on appeal taken
under Section 19(f), in order to sustain self-regulatory
organization's action, Commission must find that grounds on which
self-regulatory organization based that action exist, that action
was in accordance with organization's rules, and that those rules
are, and were applied in a manner, consistent with purposes of
Exchange Act); Sumner B. Cotzin, 45 S.E.C. 575, 580 (1974) ("[W]e
must make our own findings as to the conduct of applicants
seeking review of [self-regulatory organization disciplinary
action], determine whether such conduct violated the
organization's rules, and, if so, determine whether the sanctions
imposed are excessive or oppressive having due regard to the
public interest.").  
COMMENT (a):  Rule 421(a) allows the Commission 40 days to
determine whether to order review on its own initiative.  The
time limit for Commission review is tied to the Commission's
receipt of the notice required by Exchange Act Section 19(d)(1),
not receipt of the notice by the respondent, since the Commission
would have no practical way of knowing when such receipt
occurred.  


Rule 430. Appeal of Actions Made Pursuant to Delegated Authority.
     (a)  Scope of Rule.  Any person aggrieved by an action made
by authority delegated in    200.30-1 through 200.30-17 of this
chapter may seek review of the action pursuant to paragraph (b)
of this rule.  
     (b)  Procedure.  
          (1)  Notice of Intention to Petition for Review.  A
     party or any person aggrieved by an action made pursuant to
     delegated authority may seek Commission review of the action
     by filing a written notice of intention to petition for
     review within five days after actual notice to the party of
     the action or service of notice of the action pursuant to
     Rule 141(b), whichever is earlier.  The notice shall
     identify the petitioner and the action complained of, and
     shall be accompanied by a notice of appearance pursuant to
     Rule 102(d).
          (2)  Petition for Review.  Within five days after the
     filing of a notice of intention to petition for review
     pursuant to paragraph (b)(1) of this rule, the person
     seeking review shall file a petition for review containing a
     clear and concise statement of the issues to be reviewed and
     the reasons why review is appropriate.  The petition shall
     include exceptions to any findings of fact or conclusions of
     law made, together with supporting reasons for such
     exceptions based on appropriate citations to such record as
     may exist.  These reasons may be stated in summary form.   
     (c)  Prerequisite to Judicial Review.  Pursuant to Section
704 of the Administrative Procedure Act, 5 U.S.C. 704, a petition
to the Commission for review of an action made by authority
delegated in    200.30-1 through 200.30-17 of this chapter is a
 
-------------------- BEGINNING OF PAGE #85 ---------------------

prerequisite to the seeking of judicial review of a final order
entered pursuant to such an action.    

COMMENT (a):  Congress granted the Commission explicit authority
to delegate certain functions to an individual commissioner,
division directors and others in 1962.  Pub. L. No. 87-592, 76
Stat. 394.  This authority appears in Sections 4A and 4B of the
Exchange Act, 15 U.S.C. 78d-1 and 78d-2, and was amended most
recently in 1987.  See Pub. L. No. 100-181, Title III,   308(a),
101 Stat. 1254.  The predecessor rule to Rules 430 and 431,
former Rule 26, was adopted in 1963.  See Securities Act Release
No. 4588 (Mar. 8, 1963) (adopting release).  
     Due to the different nature of matters delegated to hearing
officers, senior staff or the duty officer, the Commission's
rules provide different mechanisms for review of such actions. 
See Rules 410 and 411 (procedures relating to initial decisions
by a hearing officer); 17 CFR 200.42 (procedures relating to duty
officer).  Rule 430 relates to certain delegations made to staff.

It applies only to review of actions taken pursuant to authority
delegated in 17 CFR 200.30-1 through 200.30-17.  Authority
delegated by other provisions -- for example, the delegation of
authority to issue subpoenas pursuant to a private order
directing investigation ("formal order") -- is not subject to the
Rule.  

COMMENT (b):  Decisions made by division directors or other
senior staff pursuant to delegated authority often relate to
registration statements, proxy statements, applications, periodic
filings or other matters which are highly time sensitive. 
Generally, the record in actions made pursuant to delegated
authority is not extensive.  The rule therefore requires a prompt
decision by a party as to whether review will be sought.  Under
Rule 430, a party or other aggrieved person must file a notice of
intent to petition for review within five days after actual
notice of the decision, or within five days after service of a
written decision pursuant to Rule 141(b), whichever is earlier. 
Actual notice of a decision pursuant to delegated authority may
be conveyed by any means, including a telephone call.  The
required information in a petition for review is essentially the
same as that required for a petition for review of a hearing
officer's initial decision.  See Rule 410(b).


Rule 431. Commission Consideration of Actions Made Pursuant to
          Delegated Authority.
     (a)  Scope of Review.  The Commission may affirm, reverse,
modify, set aside or remand for further proceedings, in whole or
in part, any action made pursuant to authority delegated in   
200.30-1 through 200.30-17 of this chapter.  
     (b)  Standards for Granting Review Pursuant to a Petition
for Review. 
          (1)  Mandatory Review.  After a petition for review has
     been filed, the Commission shall review any action that it
     would be required to review pursuant to Rule 411(b)(1) if
     the action was made as the initial decision of a hearing
     officer.  
          (2)  Discretionary Review.  The Commission may decline
     to review any other action.  In determining whether to grant
     review, the Commission shall consider the factors set forth
     in Rule 411(b)(2). 
     (c)  Commission Review Other Than Pursuant to a Petition for
Review.  The Commission may, on its own initiative, order review
of any action made pursuant to delegated authority at any time,
provided, however, that where there are one or more parties to
 
-------------------- BEGINNING OF PAGE #86 ---------------------

the matter, such review shall not be ordered more than ten days
after the action.  The vote of one member of the Commission,
conveyed to the Secretary, shall be sufficient to bring a matter
before the Commission for review.  
     (d)  Required Items in an Order for Review.  In an order
granting a petition for review or directing review on the
Commission's own initiative, the Commission shall set forth the
time within which any party or other person may file a statement
in support of or in opposition to the action made by delegated
authority and shall state whether a stay shall be granted, if
none is in effect, or shall be continued, if in effect pursuant
to paragraph (e) of this rule.  
     (e)  Automatic Stay of Delegated Action.  An action made
pursuant to delegated authority shall have immediate effect and
be deemed the action of the Commission.  Upon filing with the
Commission of a notice of intention to petition for review, or
upon notice to the Secretary of the vote of a Commissioner that a
matter be reviewed, an action made pursuant to delegated
authority shall be stayed until the Commission orders otherwise,
provided, however, there shall be no automatic stay of an action:
          (1)  to grant a stay of action by the Commission or a
     self-regulatory organization as authorized by 17 CFR
     200.30-14(g)(5) - (6); or 
          (2)  to commence a subpoena enforcement proceeding as
     authorized by 17 CFR 200.30-4(a)(10). 
     (f)  Effectiveness of Stay or of Commission Decision to
Modify or Reverse a Delegated Action.  As against any person who
shall have acted in reliance upon any action at a delegated
level, any stay or any modification or reversal by the Commission
of such action shall be effective only from the time such person
receives actual notice of such stay, modification or reversal.   

COMMENT:  See Comment (a) to Rule 430.

COMMENT (b):  Paragraph (b) is based, in part, on requirements of
Exchange Act Section 4A, 15 U.S.C.   78d-1.

COMMENT (c):  Paragraph (c) is based, in part, on requirements of
Exchange Act Section 4A, 15 U.S.C.   78d-1.  In practice, the
authority to review decisions on the Commission's own initiative
is used very rarely.  

REVISION COMMENT (c):  Comment was requested as to whether the
period in which the Commission could order review on its own
initiative should be retained at five days or extended to 15
days.  One commenter supported the extension of the period to 10
days.  The Commission has adopted a 10-day standard.

REVISION COMMENT (e):  After publication of the proposed rules,
the delegation to the Director of the Division of Enforcement was
amended to permit the Director to authorize a subpoena
enforcement proceeding in Federal Court.  See 17 CFR 200.30-
4(a)(10).  Under Rule 431, the Director's decision to commence a
proceeding is not automatically stayed when notice of intention
to file a petition for review is given since a stay would
unnecessarily disrupt judicial proceedings commenced on the basis
of the Director's decision.  The presence of a Federal judge
overseeing the subpoena enforcement proceeding makes an automatic
stay unnecessary for the limited period before the Commission
reviews the Director's decision.
 
-------------------- BEGINNING OF PAGE #87 ---------------------

Rule 450. Briefs Filed with the Commission. 
     (a)  Briefing Schedule Order.  Other than review ordered
pursuant to Rule 431, if review of a determination is mandated by
statute, rule, or judicial order or the Commission determines to
grant review as a matter of discretion, the Commission shall
issue a briefing schedule order directing the party or parties to
file opening briefs and specifying particular issues, if any, as
to which briefing should be limited or directed.  Unless
otherwise provided, opening briefs shall be filed within 40 days
of the date of the briefing schedule order.  Opposition briefs
shall be filed within 30 days after the date opening briefs are
due.  Reply briefs shall be filed within 14 days after the date
opposition briefs are due.  No briefs in addition to those
specified in the briefing schedule order may be filed except with
leave of the Commission.  The briefing schedule order shall be
issued: 
          (1)  at the time the Commission orders review on its
     own initiative pursuant to Rules 411 or 421, or orders
     interlocutory review on its own motion pursuant to Rule
     400(a); or 
          (2)  within 21 days, or such longer time as provided by
     the Commission, after:
               (i)  the last day permitted for filing a petition
          for review pursuant to Rule 410(b) or a brief in
          opposition to a petition for review pursuant to Rule
          410(d); 
               (ii) receipt by the Commission of an index to the
          record of a determination of a self-regulatory
          organization filed pursuant to Rule 420(d); 
               (iii)     receipt by the Commission of the mandate
          of a court of appeals with respect to a judicial
          remand; or
               (iv) certification of a ruling for interlocutory
          review pursuant to Rule 400(c).  
     (b)  Contents of Briefs.  Briefs shall be confined to the
particular matters at issue.  Each exception to the findings or
conclusions being reviewed shall be stated succinctly. 
Exceptions shall be supported by citation to the relevant
portions of the record, including references to the specific
pages relied upon, and by concise argument including citation of
such statutes, decisions and other authorities as may be
relevant.  If the exception relates to the admission or exclusion
of evidence, the substance of the evidence admitted or excluded
shall be set forth in the brief, in an appendix thereto, or by
citation to the record.  Reply briefs shall be confined to
matters in opposition briefs of other parties.  
     (c)  Length Limitation.  Opening and opposition briefs shall
not exceed 50 pages and reply briefs shall not exceed 25 pages,
exclusive of pages containing the table of contents, table of
authorities, and any addendum, except with leave of the
Commission.  

COMMENT (a):  When the Commission reviews an action made by
delegated authority pursuant to Rules 430 and 431, briefs are
generally not submitted and no briefing schedule order is
required.  
     Under Rule 450, the first brief on the merits would usually
be due 40 days from the date of the scheduling order.  The rules
allot substantial time prior to issuance of the scheduling order
for filing of a petition for review or, in the case of an appeal
from a self-regulatory organization decision, for filing of a
notice pursuant to Exchange Act Rule 19d-1, 17 CFR 240.19d-1, an
application for review and the record index.  See Rule 360 (21-
day maximum for filing petition for review of initial decision);
 
-------------------- BEGINNING OF PAGE #88 ---------------------

Rule 420(b) (30 days for filing application for review of
determination by self-regulatory organization); Rule 420(d) (14
days to file record index).  The time taken by the Commission to
issue the briefing schedule order -- up to 21 days in the
ordinary case -- affords additional time for parties to review
the record and begin preparation of a merits brief.  Accordingly,
requests for extensions of time to file briefs will be
disfavored.  Failure to file a required brief may be grounds for
dismissal.  See Rule 180(c). 

COMMENT (b):  Failure to cite to the record in briefs can result
in unnecessary delay, particularly where the record is long. 
Under Rule 450, the obligation to support claims made in a brief
lies with the person submitting the brief.  Briefs that fail to
include appropriate citations to the record, or to conform to
other requirements of the Rules of Practice relating to the form
and content of briefs, may be rejected or subject to other
sanction.  See Rule 180(b). 

REVISION COMMENT (a):  Paragraph (a) requires that if review is
granted or ordered, the Commission shall issue a briefing
schedule order in all cases except pursuant to Rule 431 for
review of an action made pursuant to certain delegated authority.

Prior to the submission of merits briefs the Commission will make
a formal determination whether to grant petitions for review
where review is not mandatory, and in any case may choose to
specify particular issues as to which briefing should be limited
or directed.  Also, where there are cross-petitions for review,
there may be particular reasons to designate the side that will
file opening briefs.  In proceedings arising on review of self-
regulatory organization proceedings a scheduling order is useful
in assuring that the respondent is on notice of applicable filing
deadlines.  The briefing schedule order therefore provides an
efficient, uniform mechanism for the Commission to address issues
raised by a petition for review, to order review on its own
initiative if it chooses to do so, and to establish a schedule
for the filing of briefs.  
     As revised, Rule 450 includes a requirement for issuance of
a briefing schedule order when the Commission is ordered to
conduct further proceedings on remand from a court.  
     Comment was requested as to whether the time ordinarily
allowed for filing of briefs under Rule 450 should be increased
to 45 days for the opening brief, 35 days for a brief in
opposition and 21 days for a reply brief.  One commenter
supported such an increase.  The Commission has decided, however,
that the presumptive filing deadlines set forth in paragraph (a),
which are identical to those under the Federal Rules of Appellate
Procedure, are reasonable and do not need to be extended in the
typical appeal.  See Fed. R. App. P. 31.
     Unless the Commission provides for a longer time, the
Commission will have 21 days to issue the briefing schedule order
after the filing of the last petition for review or other filing
that triggers the issuance of a briefing schedule order.  In the
revised rule, this period was increased from 15 days to
correspond to the 21-day period allowed the Commission pursuant
to Rule 411 to decide whether to order review of an initial
decision on its own initiative if no petition for review is
received.
     Ordinarily, issuance of a briefing schedule order will be a
ministerial act, undertaken by staff in the Office of the General
Counsel, pursuant to delegated authority.  See 17 CFR 200.30-14. 
Timely issuance of the briefing schedule order is a crucial step
in assuring that matters on appeal to the Commission are
completed promptly.  Consistent with the recommendation of the
 
-------------------- BEGINNING OF PAGE #89 ---------------------

Task Force on Administrative Proceedings that the Commission
itself be involved in resolving problems if proceedings are
delayed, the delegation to issue a briefing schedule order is
limited.  See, Fair and Efficient Administrative Proceedings:
Report of the Task Force on Administrative Proceedings (1993) at
45.  If an order is not issued within the 21-day time-frame
established by Rule 450, the Secretary shall submit a proposed
order for consideration by the Commission.  


Rule 451. Oral Argument Before the Commission.
     (a)  Availability.  The Commission, on its own motion or the
motion of a party or any other aggrieved person entitled to
Commission review, may order oral argument with respect to any
matter.  Motions for oral argument with respect to whether to
affirm all or part of an initial decision by a hearing officer
shall be granted unless exceptional circumstances make oral
argument impractical or inadvisable.  The Commission will
consider appeals, motions and other matters properly before it on
the basis of the papers filed by the parties without oral
argument unless the Commission determines that the presentation
of facts and legal arguments in the briefs and record and the
decisional process would be significantly aided by oral argument.
     (b)  Procedure.  Requests for oral argument shall be made by
separate motion accompanying the initial brief on the merits. 
The Commission shall issue an order as to whether oral argument
is to be heard, and if so, the time and place therefor.  The
grant or denial of a motion for oral argument shall be made
promptly after the filing of the last brief called for by the
briefing schedule.  If oral argument is granted, the time fixed
for oral argument shall be changed only by written order of the
Commission, for good cause shown.  The order shall state at whose
request the change is made and the reasons for any such change.  
     (c)  Time Allowed.  Unless the Commission orders otherwise,
not more than one half-hour per side will be allowed for oral
argument.  The Commission may, in its discretion, determine that
several persons have a common interest, and that the interests
represented will be considered a single side for purposes of
allotting time for oral argument.  Time will be divided equally
among persons on a single side, provided, however, that by mutual
agreement they may reallocate their time among themselves.  A
request for additional time must be made by motion filed
reasonably in advance of the date fixed for argument.  
     (d)  Participation of Commissioners.  A member of the
Commission who was not present at the oral argument may
participate in the decision of the proceeding, provided that the
member has reviewed the transcript of such argument prior to such
participation.  The decision shall state whether the required
review was made.  

COMMENT:  Rule 451 is based on former Rule of Practice 21(a) and
former Exchange Act Rule 19d-3(f).  

COMMENT (c):  The term "side" is used in this rule to indicate
that the time allowed is afforded to opposing interests rather
than to individual parties.  See Fed. R. App. P. 34(b).  If
multiple appellants or appellees have a common interest, they may
constitute only a single side.  

REVISION COMMENT (a):  Comment was requested as to (1) whether
the Commission's practice with respect to granting requests for
oral argument should be changed to limit the opportunity for oral
argument on appeals from decisions of administrative law judges
to the most significant cases; and (2) whether the Commission
 
-------------------- BEGINNING OF PAGE #90 ---------------------

should change its standards for granting oral argument in self-
regulatory organization appeals to allow argument only in the
most significant cases -- such as cases in which fines exceed
certain dollar limits, in which a member or associated person
with no prior disciplinary record is permanently barred from
membership, or in which the decisional process as to an important
matter of law would be significantly aided by oral argument.  
     The Commission received a number of comments on the proposed
changes to its oral argument rule.  The commenters were divided
as to whether the Commission should change its standards for
granting oral argument in self-regulatory organization appeals. 
Some commenters objected to the Commission's current practice of
denying oral argument in such proceedings.  The comments were
also divided as to whether to support the proposed criteria for
identifying self-regulatory organization cases that warrant oral
argument.  One commenter recommended that the Commission provide
for oral argument in cases where self-regulatory organization
sanctions (either by fine or permanent membership bar) are
significant, or where an important issue of law is in question. 
Another suggested that certain of the proposed criteria
(specifically a large fine or bar against a person without a
disciplinary record) would not assist the Commission in
identifying those self-regulatory organization cases that warrant
oral argument.  According to this commenter, the total
circumstances of the case should be considered.  One commenter
suggested that as an alternative to increasing oral argument in
self-regulatory organization cases, the Commission consider
adopting a policy of requesting additional briefing on issues
that are of particular interest and not raised by the parties in
their briefs.  In response to this comment, the Commission has
adopted Rule 421(b) relating to supplemental briefing on review
of self-regulatory organization determinations.
     One commenter supported the proposal to require that
requests for oral argument be set forth in a separate motion
accompanying the initial brief on the merits.  The Commission
believes that this requirement will make oral argument requests
more readily identifiable than at present.
     Where the Commission itself has instituted proceedings, a
respondent has a substantial claim for the opportunity to argue
directly to the Commission.  In the context of issues presented
in appeals from self-regulatory organizations, the Commission has
determined that, in general, its decisionmaking process would not
be significantly aided by oral argument.  Accordingly, after
careful consideration of the other comments and given the
Commission's decision to adopt Rule 421(b) on supplemental
briefing, the Commission has decided to modify its oral argument
rule. The Rule continues the Commission policy of ordinarily
granting requests for oral arguments on appeals from an initial
decision of an administrative law judge, but not holding oral
argument on review of a determination by a self-regulatory
organization.  The Rule makes clear, however, that oral argument
will be allowed where the Commission believes the presentation of
facts and legal arguments in the briefs and record and the
decisional process would be significantly aided by oral argument.




Rule 452. Additional Evidence.
     Upon its own motion or the motion of a party, the Commission
may allow the submission of additional evidence.  A party may
file a motion for leave to adduce additional evidence at any time
prior to issuance of a decision by the Commission.  Such motion
shall show with particularity that such additional evidence is
material and that there were reasonable grounds for failure to
 
-------------------- BEGINNING OF PAGE #91 ---------------------

adduce such evidence previously.  The Commission may accept or
hear additional evidence, may remand the proceeding to a self-
regulatory organization, or may remand or refer the proceeding to
a hearing officer for the taking of additional evidence, as
appropriate.  

COMMENT:  Rule 452 is based on former Rule 21(d) and former
Exchange Act Rule 19d-3(e).  See In the Matter of Jonathan Scott
Saluk, Exchange Act Release No. 35371 (Feb. 14, 1995), 58 SEC
Docket 2273 (Mar. 14, 1995) (Order Remanding Proceedings) (remand
to a self-regulatory organization to consider new evidence not
available when decision was reached); In the Matter of Klaus
Langheinrich, Exchange Act Release No. 32603 (July 8, 1993), 54
SEC Docket 1376 (July 27, 1993) (Order Remanding Proceedings)
(remand on motion of Commission to a self-regulatory organization
to supplement record with additional evidence). 


Rule 460. Record Before the Commission.   
     The Commission shall determine each matter on the basis of
the record.
     (a)  Contents of the Record.  
          (1)  In proceedings for final decision before the
     Commission other than those reviewing a determination by a
     self-regulatory organization, the record shall consist of:
               (i)  all items part of the record below in
          accordance with Rule 350;
               (ii) any petitions for review, cross-petitions or
          oppositions; and
               (iii)     all briefs, motions, submissions and
          other papers filed on appeal or review. 
          (2)  In a proceeding for final decision before the
     Commission reviewing a determination by a self-regulatory
     organization, the record shall consist of: 
               (i)  the record certified pursuant to Rule 420(d)
          by the self-regulatory organization;
               (ii) any application for review; and
               (iii)     any submissions, moving papers, and
          briefs filed on appeal or review.  
     (b)  Transmittal of Record to Commission.  Within 14 days
after the last date set for filing briefs or such later date as
the Commission directs, the Secretary shall transmit the record
to the Commission.
     (c)  Review of Documents Not Admitted.  Any document offered
in evidence but excluded by the hearing officer or the Commission
and any document marked for identification but not offered as an
exhibit shall not be considered a part of the record before the
Commission on appeal but shall be transmitted to the Commission
by the Secretary if so requested by the Commission.  In the event
that the Commission does not request the document, the Secretary
shall retain the document not admitted into the record until the
later of 
     (1)  the date upon which the Commission's order becomes
final, or 
     (2)  the conclusion of any judicial review of that order.


Rule 470. Reconsideration.
     (a)  Scope of Rule.  A party or any person aggrieved by a
determination in a proceeding may file a motion for
reconsideration of a final order issued by the Commission.  
     (b)  Procedure.  A motion for reconsideration shall be filed
within 10 days after service of the order complained of on each
party, or within such time as the Commission may prescribe upon
 
-------------------- BEGINNING OF PAGE #92 ---------------------

motion of the person seeking reconsideration, if made within the
foregoing 10-day period.  The motion for reconsideration shall
briefly and specifically state the matters of record alleged to
have been erroneously decided, the grounds relied upon, and the
relief sought.  Except with permission of the Commission, a
motion for reconsideration shall not exceed 15 pages.  No
responses to a motion for reconsideration shall be filed unless
requested by the Commission.  

COMMENT: This rule is based in part on former Rules of Practice
21(e), Rules 35 and 40 of the Federal Rules of Appellate
Procedure with respect to petitions for rehearing, and Rule 450
of the Model Adjudication Rules, Administrative Conference of the
United States (Dec. 1993).  The page limit for motions for
reconsideration is based on the page limit for petitions for
reconsideration before federal courts of appeals.  A motion for
reconsideration is intended to be an exceptional remedy.  As a
result, Rule 470 provides that no responses to motions for
reconsideration shall be filed unless requested by the
Commission. 


Rule 490. Receipt of Petitions for Judicial Review Pursuant to 28
          U.S.C. 2112(a)(1).
     The Commission officer and office designated pursuant to 28
U.S.C. 2112(a)(1) to receive copies of petitions for review of
Commission orders from the persons instituting review in a court
of appeals, are the Secretary and the Office of the Secretary at
the Commission's Headquarters.  Ten copies of each petition shall
be submitted.  Each copy shall state on its face that it is being
submitted to the Commission pursuant to 28 U.S.C. 2112 by the
person or persons who filed the petition in the court of appeals.


COMMENT:  Unless directed otherwise by statute, appeals of
Commission orders and decisions to a court of appeals are
instituted by the filing of a petition for review in accordance
with the Federal Rules of Appellate Procedure.  See Fed. R. App.
P. 15(a).  Section 2112(a)(2) of Title 28 of the U.S. Code
requires the Commission to designate the officer and office who
must receive copies of any petitions for review of Commission
orders filed in the federal courts of appeals.  
     Persons seeking judicial review of Commission orders should
be aware that if the Commission receives, within ten days after
approval of its order, petitions for judicial review properly
filed in more than one court of appeals, the Judicial Panel on
Multidistrict Litigation will randomly select one of those courts
to have jurisdiction over all cases challenging the order.  See
28 U.S.C.   2112(a).  If no petition for review is received
during the 10-day period and petitions are subsequently filed in
two or more courts of appeals, the appeal will be heard in the
court of appeals where the first petition for review was filed. 
Id.


RULES RELATING TO TEMPORARY ORDERS AND SUSPENSIONS


Rule 500. Expedited Consideration of Proceedings.
     Consistent with the Commission's or the hearing officer's
other responsibilities, every hearing shall be held and every
decision shall be rendered at the earliest possible time in
connection with:
 
-------------------- BEGINNING OF PAGE #93 ---------------------

     (a)  an application for a temporary sanction, as defined in
Rule 101(a), or a proceeding to determine whether a temporary
sanction should be made permanent;
     (b)  a motion or application to review an order suspending
temporarily the effectiveness of an exemption from registration
pursuant to Regulations A, B, E or F under the Securities Act,
   230.258, 230.336, 230.610 or 230.656 of this chapter; or,
     (c)  a motion to or petition to review an order suspending
temporarily the privilege of appearing before the Commission
under Rule 102(e)(3), or a sanction under Rule 180(a)(1). 

COMMENT:  Rule 500's requirement that "Consistent with the
Commission's or the hearing officer's other responsibilities,
every hearing shall be held and every decision shall be rendered
at the earliest possible time" is derived from two sources. 
First, when a temporary cease-and-desist order is entered ex
parte and the respondent timely seeks Commission review of the
decision, the Commission is required by statute to hold a hearing
and render its decision "at the earliest possible time."  See,
e.g., Exchange Act   21C(d)(1), 15 U.S.C.   78u-3(d)(1).  Second,
former Rule 2(e)(3)(iii) contained the requirement that
proceedings in connection with Commission review of temporary
suspensions of persons appearing or practicing before the
Commission "be expedited in every way consistent with the
Commission's other responsibilities."
     The rule requires expedited consideration when temporary
sanctions are sought or ordered against a respondent.  Temporary
sanction orders generally arise from exigent circumstances. 
Expedited consideration of the decision whether to enter or
continue such an order is necessary both to protect the public
from harm, by promptly restraining improper ongoing or threatened
activities, and to protect the rights of respondents, who may be
adversely affected by an application for a temporary sanction
even if the sanction is ultimately denied.  After a temporary
sanction is entered, fairness to the public -- especially persons
harmed by violative conduct -- and to the respondent further
dictates expediting proceedings to determine whether a permanent
sanction or other appropriate relief is warranted.  
     The rule also requires expedited consideration of a motion,
application or petition to review a temporary suspension of an
exemption from registration, a temporary suspension from practice
before the Commission pursuant to Rule 102(e)(3), or a sanction
for misconduct during the course of the hearing pursuant to Rule
180(a)(1).  


Rule 510. Temporary Cease-and-Desist Orders:  Application
          Process. 
     (a)  Procedure.  A request for entry of a temporary cease-
and-desist order shall be made by application filed by the
Division of Enforcement.  The application shall set forth the
statutory provision or rule that each respondent is alleged to
have violated; the temporary relief sought against each
respondent, including whether the respondent would be required to
take action to prevent the dissipation or conversion of assets;
and whether the relief is sought ex parte.  
     (b)  Accompanying Documents.  The application shall be
accompanied by a declaration of facts signed by a person with
knowledge of the facts contained therein, a memorandum of points
and authorities, a proposed order imposing the temporary relief
sought, and, unless relief is sought ex parte, a proposed notice
of hearing and order to show cause whether the temporary relief
should be imposed.  If a proceeding for a permanent cease-and-
desist order has not already been commenced, a proposed order
 
-------------------- BEGINNING OF PAGE #94 ---------------------

instituting proceedings to determine whether a permanent cease-
and-desist order should be imposed shall also be filed with the
application.  
     (c)  With Whom Filed.  The application shall be filed with
the Secretary or, if the Secretary is unavailable, with the duty
officer.  In no event shall an application be filed with an
administrative law judge. 
     (d)  Record of Proceedings.  Hearings, including ex parte
presentations made by the Division of Enforcement pursuant to
Rule 513, shall be recorded or transcribed pursuant to Rule 302. 


COMMENT (a)-(c):  Rule 510 requires requests for a temporary
cease-and-desist order be made by application, not motion, to
make clear that the time limitations governing the filing of an
opposition to a motion do not apply.  The information required in
the application and accompanying documents is similar to the type
of information required in a request for a temporary restraining
order under Rule 65(b) of the Federal Rules of Civil Procedure.
     The rule requires the Division of Enforcement to file a
declaration of facts and a memorandum of points and authorities
in order to provide the Commission with a clearly articulated
record on which to base the temporary cease-and-desist order.  A
declaration may be made by a staff member or any other person.  
     If notice of the application is to be given to the
respondent, the rule requires the Division to file a proposed
notice of hearing and order to show cause why a temporary cease-
and-desist order should not be issued.  A proposed temporary
order is also required.  If warranted, and with such
modifications as may be appropriate, these orders can be entered
by the Commission without the delay otherwise required while an
order is drafted and then submitted to the Commission.  
     A temporary cease-and-desist order may only be issued
pending a proceeding to determine whether to issue a permanent
cease-and-desist order.  See, e.g., Exchange Act   21C(c)(1), 15
U.S.C.   78u-3(c)(1).  If an order instituting proceedings has
not already been issued, a proposed order is required so that
proceedings can be instituted before action is taken on the
application for a temporary cease-and-desist order. 
     The rule also specifies that the application and
accompanying documents are to be filed with the Secretary.  The
Secretary will promptly forward such documents to each
Commissioner.  If the Secretary is unavailable, the application
may be filed with the duty officer.  Rule 151(b), which provides
generally that a hearing officer may allow filings to be made
with the hearing officer, does not authorize the filing of an
application for a temporary cease-and-desist order with an
administrative law judge, even if the request for a temporary
order arises from an ongoing proceeding where an administrative
law judge has been assigned.  

COMMENT (d):  Rule 302 requires that except as otherwise ordered,
all hearings are to be recorded or transcribed.  Paragraph (d)
clarifies that the appearance of the Division of Enforcement, ex
parte, to seek entry of a temporary cease-and-desist order after
institution of proceedings constitutes a hearing subject to Rule
302.  A Commission meeting prior to the institution of
proceedings at which the Commission considers a recommendation by
the Division of Enforcement that the Commission authorize the
filing of an application for a temporary cease-and-desist order
is not a hearing, however, and a transcript of the meeting would
not be a part of the record or otherwise available to a
respondent.  
 
-------------------- BEGINNING OF PAGE #95 ---------------------

REVISION COMMENT:  As proposed, Rule 510 included a provision
allowing the Commission to waive the filing of any or all of the
supporting documents that would ordinarily accompany the
application for a temporary cease-and-desist order.  The proposed
rule also provided that proceedings should be recorded or
transcribed "or otherwise memorialized to the extent that
circumstances permit."  As the comments to the proposed rules
stated, the possible waiver of requirements with respect to
accompanying documents or the creation of a transcript was
included in the proposed rule to address limited circumstances
such as the need to hold a hearing in emergency circumstances at
night, over a weekend, or when no Commissioners were present in
Washington, and certain hearing formalities could not be
observed.  However, as noted by one commenter, the proposed rule
was subject to interpretations which could have allowed the use
of waivers more frequently than intended.  In addition,
consideration of a request for a waiver could raise collateral
issues that would delay prompt, effective remedial action.  
     The Commission has authority under these rules, see, e.g.,
Rule 161 (extension of time to file documents) and Rule 302
(hearings to be recorded and transcribed except as otherwise
ordered), and in its inherent powers as an adjudicative body to
respond to truly exigent or emergency conditions.  The Commission
concluded that the extraordinary circumstances justifying the
proposed waivers have been so rare that having separate
provisions to account for them is unnecessary at this time.  


Rule 511. Temporary Cease-and-Desist Orders:  Notice; Procedures
          for Hearing.
     (a)  Notice:  How Given.  Notice of an application for a
temporary cease-and-desist order shall be made by serving a
notice of hearing and order to show cause pursuant to Rule 141(b)
or, where timely service of a notice of hearing pursuant to Rule
141(b) is not practicable, by any other means reasonably
calculated to give actual notice that a hearing will be held,
including telephonic notification of the general subject matter,
time, and place of the hearing.  If an application is made ex
parte, pursuant to Rule 513, no notice to a respondent need be
given prior to the Commission's consideration of the application.
     (b)  Hearing Before the Commission.  Except as provided in
paragraph (d) of this rule, hearings on an application for a
temporary cease-and-desist order shall be held before the
Commission.  
     (c)  Presiding Officer: Designation.  The Chairman shall
preside or designate a Commissioner to preside at the hearing. 
If the Chairman is absent or unavailable at the time of hearing
and no other Commissioner has been designated to preside, the
duty officer on the day the hearing begins shall preside or
designate another Commissioner to preside.  
     (d)  Procedure at Hearing.  
          (1)  The presiding officer shall have all those powers
     of a hearing officer set forth in Rule 111 and shall rule on
     the admissibility of evidence and other procedural matters,
     including, but not limited to: whether oral testimony will
     be heard; the time allowed each party for the submission of
     evidence or argument; and whether post-hearing submission of
     briefs, proposed findings of fact and conclusions of law
     will be permitted and if so, the procedures for submission;
     provided, however, that the person presiding may consult
     with other Commissioners participating in the hearing on
     these or any other question of procedure.
 
-------------------- BEGINNING OF PAGE #96 ---------------------

          (2)  Each Commissioner present at the hearing shall be
     afforded a reasonable opportunity to ask questions of
     witnesses, if any, or of counsel.  
          (3)  A party or witness may participate by telephone. 
     Alternative means of remote access, including a video link,
     shall be permitted in the Commission's discretion.  Factors
     the Commission may consider in determining whether to permit
     alternative means of remote access include, but are not
     limited to, whether allowing an alternative means of access
     will delay the hearing, whether the alternative means is
     reliable, and whether the party proposing its use has made
     arrangements to pay for its cost.
          (4)  After a hearing has begun, the Commission may, on
     its own motion, or the motion of a party, assign a hearing
     officer to preside at the taking of oral testimony or other
     evidence and to certify the record of such testimony or
     other evidence to the Commission within a fixed period of
     time.  No recommended or initial decision shall be made by
     such a hearing officer.  

COMMENT (a):  If an order instituting proceedings has not been
issued prior to the filing of an application for a temporary
cease-and-desist order, an order instituting proceedings must be
entered in conjunction with entry of a notice of hearing and
order to show cause.  See, e.g., Exchange Act   21C(c)(1), 15
U.S.C.   78u-3(c)(1).  Provided that the respondent receives
actual notice of the hearing, which may be made by telephone,
formal service of the order instituting proceedings pursuant to
Rule 141 is not required prior to the commencement of the
hearing.  Absent a waiver, as provided for in Rule 141(a)(4),
furnishing a copy of the order by facsimile transmission would
not meet the service requirements of Rule 141.  At or promptly
after the hearing, however, the Secretary must serve a copy of
the order instituting proceedings and the notice of hearing in
accord with Rule 141 and the Division of Enforcement must serve
its application and accompanying documents pursuant to Rule 150. 


COMMENT (b):  Rule 101(a) defines the term "Commission" to
include the duty officer as provided for by 17 CFR 200.42. 
Pursuant to that section, the duty officer may preside at the
taking of evidence.  

COMMENT (d):  Hearings held pursuant to the Commission's
authority to impose a temporary cease-and-desist order are not
required to be formal, "on the record" adjudications within the
meaning of Sections 554, 556-557 of the Administrative Procedure
Act, 5 U.S.C.    554, 556-57.  See Chemical Waste Management,
Inc. v. EPA, 873 F.2d 1477, 1481-82 (D.C. Cir. 1989) (no
presumption that a statutory "hearing" requirement compels the
agency to undertake a formal "hearing on the record").  A full,
trial-type evidentiary hearing will not ordinarily be held
because of the exigent nature of the proceedings, the temporary
nature of any sanction, and the opportunity for immediate post-
sanction review by a federal district court.  See Boddie v.
Connecticut, 401 U.S. 371, 378 (1971) ("The formality and
procedural requisites for the hearing can vary, depending upon
the importance of the interests involved and the nature of the
subsequent proceedings.").
     Rule 511(d) incorporates the statutory provision that the
hearing does not have to be a formal, trial-type proceeding.  The
amount of process due will vary based on the facts and
circumstances of each case.  See Boddie, 401 U.S. at 378.  The
Commission may determine the form of evidence (for example,
 
-------------------- BEGINNING OF PAGE #97 ---------------------

whether live or by affidavit), the duration of the hearing (for
example, by restricting the time for argument) or the extent of
post-hearing procedures (for example, whether to allow
submissions of post-hearing briefs).  Relevant factors in making
these determinations may include, among others, the risk of harm
to investors or the public, the nature of the alleged or
threatened violations, the nature of the proposed sanction, the
potential effect of a sanction on the respondent, and the likely
duration of the sanction before opportunity for further hearings.

     Ordinarily, the Commission expects that the hearing on an
application for a temporary cease-and-desist order will proceed
on the basis of affidavits and oral argument in similar fashion
to a hearing on a Commission request under Rule 65 of the Federal
Rules of Civil Procedure for a temporary restraining order in
federal court.  
     Due to the exigent circumstances in cases in which a
temporary cease-and-desist order would be sought, respondents,
their counsel and the participating Commission staff may not be
able to be present in Washington, D.C., where the Commission
ordinarily meets.  The rule provides that parties and witnesses
may participate by telephone.  Alternative technologies that
would allow remote access to the hearing may be used in the
Commission's discretion.  

REVISION COMMENT (b):  The comment to proposed Rule 41 noted the
recommendation of the Task Force on Administrative Proceedings
that applications for temporary cease-and-desist orders be heard
by the Commission.  The proposed rules provided, in addition,
that a hearing could be held before a hearing officer, which was
defined as an administrative law judge or duty officer.  While
the comment noted that "the Commission could make such an
assignment when an application for a temporary sanction has
arisen during the course of a proceeding already assigned to a
hearing officer," the proposed rule did not, by its terms, limit
the proceedings that would be assigned to a hearing officer to
such rare circumstances.
     Referral of a temporary cease-and-desist order application
to a hearing officer for hearing and preparation of an initial
decision would likely require approximately three days at a
minimum, and up to a week or more, depending upon the time
allowed for submission of proposed findings of fact and
conclusions of law and for the preparation of the initial
decision.  It would be inconsistent for the Commission to
authorize a proceeding in which the Division of Enforcement
alleged that there were exigent circumstances warranting a
temporary order and to then assign the matter to a hearing
officer for preparation of a non-binding initial decision, which
would be subject to briefing and argument to the Commission
before a binding order could be entered.  
     After careful consideration, the Commission has decided to
require that hearings on an application for a temporary cease-
and-desist order be held before the Commission, not a hearing
officer.  In judicial proceedings on an application for a
temporary restraining order, evidence is often submitted solely
by affidavit.  Proceedings for a temporary cease-and-desist order
also may not involve live testimony.  The Rules recognize,
however, that testimony may be offered and allowed.  See Rule
510.  Due to considerations of efficiency, expertise and the
demands of other Commission business, the Commission itself does
not ordinarily preside at the taking of testimony in an
enforcement or disciplinary proceeding.  In recognition of this
fact, the rule permits the Commission to assign a hearing officer
to preside solely at the taking of testimony and to certify the
 
-------------------- BEGINNING OF PAGE #98 ---------------------

resulting record to the Commission, without a recommended or
initial decision.  There would be no argument, briefing or
submissions to the hearing officer. 


Rule 512. Temporary Cease-and-Desist Orders:  Issuance After
          Notice and Opportunity for Hearing.  
     (a)  Basis for Issuance.  A temporary cease-and-desist order
shall be issued only if the Commission determines that the
alleged violation or threatened violation specified in an order
instituting proceedings whether to enter a permanent cease-and-
desist order pursuant to Securities Act Section 8A(a), 15 U.S.C.
77h-1(a), Exchange Act Section 21C(a), 15 U.S.C. 78u-3(a),
Investment Company Act Section 9(f)(1), 15 U.S.C. 80a-9(f)(1), or
Investment Advisers Act Section 203(k)(1), 15 U.S.C. 80b-3(k)(1),
or the continuation thereof, is likely to result in significant
dissipation or conversion of assets, significant harm to
investors, or substantial harm to the public interest, including,
but not limited to, losses to the Securities Investor Protection
Corporation, prior to the completion of proceedings on the
permanent cease-and-desist order.  
     (b)  Content, Scope and Form of Order.  Every temporary
cease-and-desist order granted shall: 
          (1)  describe the basis for its issuance, including the
     alleged or threatened violations and the harm that is likely
     to result without the issuance of an order; 
          (2)  describe in reasonable detail, and not by
     reference to the order instituting proceedings or any other
     document, the act or acts the respondent is to take or
     refrain from taking; and
          (3)  be indorsed with the date and hour of issuance. 
     (c)  Effective Upon Service.  A temporary cease-and-desist
order is effective upon service upon the respondent.   
     (d)  Service:  How Made.  Service of a temporary cease-and-
desist order shall be made pursuant to Rule 141(a).  The person
who serves the order shall promptly file a declaration of service
identifying the person served, the method of service, the date of
service, the address to which service was made and the person who
made service; provided, however, failure to file such a
declaration shall have no effect on the validity of the service. 

     (e)  Commission Review.  At any time after the respondent
has been served with a temporary cease-and-desist order, the
respondent may apply to the Commission to have the order set
aside, limited or suspended.  The application shall set forth
with specificity the facts that support the request.  

COMMENT (a):  Rule 512(a) sets forth the statutory criteria for
issuance of a temporary cease-and-desist order when the order is
preceded by notice and an opportunity to be heard.  See, e.g.,
Exchange Act   21C(c), 15 U.S.C.   78u-3(c).  

COMMENT (b):  Rule 512(b) requires that a temporary cease-and-
desist order describe the basis for the order and the acts that
the respondent is to take or refrain from taking to comply with
the order.  These requirements, which are modeled on Rule 65(d)
of the Federal Rules of Civil Procedure, are meant to ensure that
a respondent will have adequate notice of the constraints placed
upon him or her by the order and to provide the predicate notice
for enforcement of the order if the respondent fails to comply
with it.  
     Rule 512(b) also requires that a temporary cease-and-desist
order be indorsed with the date and hour of issuance.  Although a
temporary cease-and-desist order is not effective until served,
 
-------------------- BEGINNING OF PAGE #99 ---------------------

requiring this indorsement minimizes the potential for disputes
over when an order was entered.  A similar provision is included
in Rule 65(b) of the Federal Rules of Civil Procedure. 

COMMENT (c):  A temporary cease-and-desist order becomes
effective upon service upon the respondent.  See, e.g., Exchange
Act   21C(c)(1), 15 U.S.C.   78u-3(c)(1).  
COMMENT (e):  Paragraph (e) is based on statutory provisions
permitting respondents to seek to set aside, limit or suspend a
temporary order at any time.  See, e.g., Exchange Act  
21C(d)(1), 15 U.S.C.   78u-3(d)(1).  


Rule 513. Temporary Cease-and-Desist Orders:  Issuance Without
          Prior Notice and Opportunity For Hearing. 
     In addition to the requirements for issuance of a temporary
cease-and-desist order set forth in Rule 512, the following
requirements shall apply if a temporary cease-and-desist order is
to be entered without prior notice and opportunity for hearing:
     (a)  Basis for Issuance Without Prior Notice and Opportunity
for Hearing.  A temporary cease-and-desist order may be issued
without notice and opportunity for hearing only if the Commission
determines, from specific facts in the record of the proceeding,
that notice and hearing prior to entry of an order would be
impracticable or contrary to the public interest.  
     (b)  Content of the Order.  An ex parte temporary cease-
and-desist order shall state specifically why notice and hearing
would have been impracticable or contrary to the public interest.
     (c)  Hearing Before the Commission.  If a respondent has
been served with a temporary cease-and-desist order entered
without a prior Commission hearing, the respondent may apply to
the Commission to have the order set aside, limited, or
suspended, and if the application is made within 10 days after
the date on which the order was served, may request a hearing on
such application.  The Commission shall hold a hearing and render
a decision on such an application at the earliest possible time. 
The hearing shall begin within two days of the filing of the
application unless the applicant consents to a longer period or
the Commission, by order, for good cause shown, sets a later
date.  The Commission shall render a decision on the application
within five calendar days of its filing, provided, however, that
the Commission, by order, for good cause shown, may extend the
time within which a decision may be rendered for a single period
of five calendar days, or such longer time as consented to by the
applicant.  If the Commission does not render its decision within
10 days of the respondent's application or such longer time as
consented to by the applicant, the temporary order shall be
suspended until a decision is rendered.  
     (d)  Presiding Officer, Procedure at Hearing.  Procedures
with respect to the selection of a presiding officer and the
conduct of the hearing shall be in accordance with Rule 511.  

COMMENT (a):  The rule sets forth the statutory requirement for
entry of a temporary cease-and-desist order without prior notice.

See, e.g., Exchange Act   21C(c)(1), 15 U.S.C.   78u-3(c)(1). 
The requirement that the Commission's determination be based on
"specific facts" is modeled on Rule 65(b) of the Federal Rules of
Civil Procedure.  
COMMENT (b):  The requirement that an ex parte order state why it
was issued without notice and hearing is modeled on Rule 65(b) of
the Federal Rules of Civil Procedure which requires a similar
statement of reasons if a temporary restraining order is issued
without notice.  A statement of the reasons why an order was
entered ex parte aids the Commission's decisional process by
 
-------------------- BEGINNING OF PAGE #100 ---------------------

ensuring that the statutory criteria for ex parte action have
been met and facilitates review of the order.  See Rule 514 (ex
parte order must be appealed to the Commission before seeking
judicial review). 

COMMENT (c):  Rule 513(c) restates the statutory standards with
respect to opportunity for a hearing after service of a temporary
cease-and-desist order entered ex parte.  See, e.g., Exchange Act
  21C(d)(1), 15 U.S.C.   78u-3(d)(1).  The requirement that a
hearing be held and a decision rendered "at the earliest possible
time" is not elaborated upon in the legislative history.  
     The Due Process Clause of the Fifth Amendment requires that
if a person is subject to an ex parte deprivation of property, he
or she shall be provided a "prompt" opportunity for hearing
thereafter.  FDIC v. Mallen, 486 U.S. 230, 241-42 (1988); Barry
v. Barchi, 443 U.S. 55, 65-66 (1979) (hearing must be provided
"at a meaningful time") (citation omitted).  While the hearing
must be held and a decision rendered promptly, judicial decisions
should be made in a "considered and deliberate manner," and
without excessive or undue haste.  Mallen, 486 U.S. at 244.  The
Commission must allow an appropriate amount of time for each
party to prepare its case prior to hearing and must allow time
for each Commissioner to review all evidence or other submissions
and, as necessary, to engage in joint deliberation.  See id. at
243-244.  What would be "possible" in terms of the earliest time
for hearing or resolution of a case would depend, therefore, on
the specific facts of each case and the Commission's other
responsibilities. 
     When a temporary cease-and-desist order is entered ex parte,
the respondent must, as a prerequisite to judicial review of the
order, first apply to the Commission to have the order set aside,
limited or suspended, and the Commission must then hold a
hearing, if requested, and render a decision on the application. 
See, e.g., Exchange Act   21C(d)(2), 15 U.S.C.   78u-3(d)(2). 
While recognizing that some cases may demand more time than
others, Rule 513(c) establishes a maximum time limit on the
continuing effectiveness of an ex parte order pending its review
by the Commission.
     Under the rule, a hearing on the application to set aside a
temporary cease-and-desist order will begin within two days of
the filing of the application, unless the respondent requests a
longer period or the Commission determines, by order, for good
cause shown, that a longer time is necessary.  A temporary cease-
and-desist order entered ex parte will be suspended, however, if
the Commission does not hold the hearing and render a decision on
an application to set aside, limit or suspend the order within 10
calendar days of the date of application, or such longer time as
consented to by the respondent.  While the Commission may take as
long as needed to decide the application, after the 10-day period
or such longer time as consented to by the respondent, the
respondent does not remain bound by the temporary order pending
the Commission's decision.  If the Commission then upholds the
temporary cease-and-desist order, the order will once again
become binding and the respondent can seek judicial review.  
     The time limits set forth in Rule 513 are consistent with
the statutory time limits established with respect to orders
entered after notice and hearing.  If an order is entered after
notice and hearing, the respondent is allowed to seek judicial
review within 10 days of service of the order.  Under Rule 513, a
respondent will not be subject to an ex parte order for any
longer than 10 days prior to having the opportunity to seek
judicial review.
     The provisions of Rule 513(c) are similar to the provisions
of Rule 65(b) of the Federal Rules of Civil Procedure, that a
 
-------------------- BEGINNING OF PAGE #101 ---------------------

party subject to a temporary restraining order obtained without
notice may, on two days notice to the adverse party, or such
shorter time as permitted by the court, appear and move for
dissolution of the temporary restraining order.  Rule 65(b) does
not require that a hearing be held or a decision on the motion be
issued within the two-day period allowed for the making of a
motion to dissolve the temporary restraining order.  Rather, the
rule requires the court to hear and determine the motion "as
expeditiously as the ends of justice require."  Such motions are
ordinarily resolved within the initial 10-day duration of a
temporary restraining order.  Extension of an ex parte temporary
restraining order for an additional ten days, though permitted by
rule, is uncommon.


REVISION COMMENT (c):  By statute, a respondent given notice and
opportunity to be heard prior to entry of a temporary cease-and-
desist order may seek judicial review of the order within 10 days
of service of the order.  In contrast, under the proposed rules a
respondent could be subject to a temporary order entered ex parte
for an indefinite period of time without access to judicial
review.  Judicial review of an ex parte order is unavailable
until the Commission acts on the respondent's application to set
aside, limit or suspend the order.  The proposed rules
established no time limit for the Commission to act or, in the
alternative, for the effectiveness of the order.  As adopted, the
rule includes standards for the start of the hearing on a
respondent's application for review of an ex parte order and
limits the effectiveness of an ex parte order to 10 days after
the respondent files an application for review of the order.  


Rule 514. Temporary Cease-and-Desist Orders:  Judicial Review;
          Duration.
     (a)  Availability of Judicial Review.  Judicial review of a
temporary cease-and-desist order shall be available as provided
in Section 8A(d)(2) of the Securities Act, 15 U.S.C. 77h-1(d)(2),
Section 21C(d)(2) of the Exchange Act, 15 U.S.C. 78u-3(d)(2),
Section 9(f)(4)(B) of the Investment Company Act, 15 U.S.C. 80a-
9(f)(4)(B), or Section 203(k)(4)(B) of the Investment Advisers
Act, 15 U.S.C. 80b-3(k)(4)(B).
     (b)  Duration.  Unless set aside, limited, or suspended,
either by order of the Commission, a court of competent
jurisdiction, or a hearing officer acting pursuant to Rule 531,
or by operation of Rule 513, a temporary cease-and-desist order
shall remain effective and enforceable until the earlier of: 
          (1)  the completion of proceedings to determine whether
          a permanent order shall be entered; or 
          (2)  180 days, or such longer time as consented to by
     the respondent, after issuance of a briefing schedule order
     pursuant to Rule 540(b), if an initial decision whether a
     permanent order should be entered is appealed. 

COMMENT:  Rule 514(b) sets forth provisions governing the
duration of a temporary cease-and-desist order.  After entry of a
temporary cease-and-desist order, proceedings to determine
whether a permanent order is warranted will be assigned to an
administrative law judge.  The case will follow the same
procedural steps as any other proceeding assigned to an
administrative law judge for hearing.  Depending upon the pace of
judicial review of the temporary order, the filing of the
respondent's answer, prehearing preparation or the hearing on
issuance of the permanent order may take place prior to the
completion of judicial review of the temporary order.
 
-------------------- BEGINNING OF PAGE #102 ---------------------

     Unless set aside, limited, or suspended, either by order of
the Commission, a court of competent jurisdiction, or a hearing
officer acting pursuant to Rule 531, or pursuant to the operation
of Rule 513(c), a temporary cease-and-desist order remains
effective and enforceable pending issuance of the administrative
law judge's initial decision as to whether a permanent order will
be issued.  See, e.g., Exchange Act   21C(c)(1), 15 U.S.C.   78u-
3(c)(1).  
     Rule 500 requires that during the pendency of the temporary
order every hearing be held and every decision be rendered at the
earliest possible time, consistent with the Commission's or the
hearing officer's other responsibilities.  The number of
respondents, the complexity of the allegations, the number and
location of witnesses and other such factors, however, will
affect, to a substantial degree, the length of the hearing before
the administrative law judge.  Rule 530 provides for expedited
preparation of an initial decision once the hearing is concluded.

When the initial decision is issued, Rule 531 requires that if
the original terms of a temporary order are not to be made
permanent, the administrative law judge shall set aside, limit or
suspend the terms of the order in accordance with their initial
decision.  See 17 CFR 200.30-9 (authority delegated to the
administrative law judges to set aside, limit or suspend
temporary orders in accord with an initial decision).  Hence, if
the initial decision denies a permanent cease-and-desist order,
the temporary order may be suspended pending any appeal of the
initial decision.  
     If an initial decision would make a pending temporary order
permanent the temporary order will not be suspended.  If the
initial decision is appealed, the Commission may take as long as
needed to reach a decision on the need for a permanent order. 
Rule 514(b) provides, however, that the temporary order shall be
suspended after 180 days from issuance of the briefing schedule
order pursuant to Rule 540 in connection with the appeal, or such
longer time as consented to by the respondent, if the Commission
has not issued its decision by that time. 


Rule 520. Suspension of Registration of Brokers, Dealers, or
          other Exchange Act-Registered Entities:  Application.
     (a)  Procedure.  A request for suspension of a registered
broker, dealer, municipal securities dealer, government
securities broker, government securities dealer, or transfer
agent pending a final determination whether the registration
shall be revoked shall be made by application filed by the
Division of Enforcement.  The application shall set forth the
statutory provision or rule that each respondent is alleged to
have violated and the temporary suspension sought as to each
respondent. 
     (b)  Accompanying Documents.  The application shall be
accompanied by a declaration of facts signed by a person with
knowledge of the facts contained therein, a memorandum of points
and authorities, a proposed order imposing the temporary
suspension of registration sought, and a proposed notice of
hearing and order to show cause whether the temporary suspension
of registration should be imposed.  If a proceeding to determine
whether to revoke the registration permanently has not already
been commenced, a proposed order instituting proceedings to
determine whether a permanent sanction should be imposed shall
also be filed with the application. 
     (c)  With Whom Filed.  The application shall be filed with
the Secretary or, if the Secretary is unavailable, with the duty
officer.  In no event shall an application be filed with an
administrative law judge.  
 
-------------------- BEGINNING OF PAGE #103 ---------------------

     (d)  Record of Hearings.  All hearings shall be recorded or
transcribed pursuant to Rule 302. 

COMMENT:  The Exchange Act provides for the Commission's
authority to suspend certain entities registered under the Act. 
See Exchange Act    15(b)(5), 15B(c)(3), 15C(c)(1)(B),
17A(c)(4)(A), 15 U.S.C.    78o(b)(5), 78o-4(c)(3), 78o-
5(c)(1)(B), 78q-1(c)(4)(A).  The procedures for the suspension of
Exchange Act-registered entities are based upon the applicable
statutory standards and modeled upon provisions applicable to
temporary cease-and-desist order proceedings.  From 1936 through
1981, the Commission brought over 30 proceedings to suspend
temporarily the registration of a broker or dealer pending final
determination whether the registration would be permanently
revoked.  In contrast to practice before 1981, the Rules provide
that the Commission, without prior assignment to a hearing
officer for initial decision, will decide applications to suspend
a registration pending final determination whether the
registration should be permanently revoked.


Rule 521. Suspension of Registration of Brokers, Dealers, or
          other Exchange Act-Registered Entities:  Notice and
          Opportunity for Hearing on Application.  
     (a)  How Given.  Notice of an application to suspend a
registration pursuant to Rule 520 shall be made by serving a
notice of hearing and order to show cause pursuant to Rule 141(b)
or, where timely service of a notice of hearing pursuant to Rule
141(b) is not practicable, by any other means reasonably
calculated to give actual notice that a hearing will be held,
including telephonic notification of the general subject matter,
time, and place of the hearing.
     (b)  Hearing: Before Whom Held.  Except as provided in
paragraph (d) of this rule, hearings on an application to suspend
a registration pursuant to Rule 520 shall be held before the
Commission.  
     (c)  Presiding Officer: Designation.  The Chairman shall
preside or designate a Commissioner to preside at the hearing. 
If the Chairman is absent or unavailable at the time of hearing
and no other Commissioner has been designated to preside, the
duty officer on the day the hearing begins shall preside or
designate another Commissioner to preside.  
     (d)  Procedure at Hearing.  
          (1)  The presiding officer shall have all those powers
     of a hearing officer set forth in Rule 111 and shall rule on
     the admissibility of evidence and other procedural matters,
     including, but not limited to: whether oral testimony will
     be heard; the time allowed each party for the submission of
     evidence or argument; and whether post-hearing submission of
     briefs, proposed findings of fact and conclusions of law
     will be permitted and if so, the procedures for submission;
     provided, however, that the person presiding may consult
     with other Commissioners participating in the hearing on
     these or any other question of procedure.
          (2)  Each Commissioner present at the hearing shall be
     afforded a reasonable opportunity to ask questions of
     witnesses, if any, or counsel.  
          (3)  A party or witness may participate by telephone. 
     Alternative means of remote access, including a video link,
     shall be permitted in the Commission's discretion.  Factors
     the Commission may consider in determining whether to permit
     alternative means of remote access include, but are not
     limited to, whether allowing an alternative means of access
     will delay the hearing, whether the alternative means is
 
-------------------- BEGINNING OF PAGE #104 ---------------------

     reliable, and whether the party proposing its use has made
     arrangements to pay for its cost.
          (4)  After a hearing has begun, the Commission may, on
     its own motion or the motion of a party, assign a hearing
     officer to preside at the taking of oral testimony or other
     evidence and to certify the record of such testimony or
     other evidence to the Commission within a fixed period of
     time.  No recommended or initial decision shall be made.    


Rule 522. Suspension of Registration of Brokers, Dealers, or
          other Exchange Act-Registered Entities:  Issuance and
          Review of Order.
     (a)  Basis for Issuance.  An order suspending a
registration, pending final determination as to whether the
registration shall be revoked shall be issued only if the
Commission finds that the suspension is necessary or appropriate
in the public interest or for the protection of investors.
     (b)  Content, Scope and Form of Order.  Each order
suspending a registration shall: 
          (1)  describe the basis for its issuance, including the
     alleged or threatened violations and the harm that is likely
     to result without the issuance of an order; 
          (2)  describe in reasonable detail, and not by
     reference to the order instituting proceedings or any other
     document, the act or acts the respondent is to take or
     refrain from taking; and
          (3)  be indorsed with the date and hour of issuance. 
     (c)  Effective Upon Service.  An order suspending a
registration is effective upon service upon the respondent.  
     (d)  Service:  How Made.  Service of an order suspending a
registration shall be made pursuant to Rule 141(a).  The person
who serves the order shall promptly file a declaration of service
identifying the person served, the method of service, the date of
service, the address to which service was made and the person who
made service; provided, however, failure to file such a
declaration shall have no effect on the validity of the service. 

     (e)  Commission Review.  At any time after the respondent
has been served with an order suspending a registration, the
respondent may apply to the Commission or the hearing officer to
have the order set aside, limited, or suspended.  The application
shall set forth with specificity the facts that support the
request. 

COMMENT (b):   When an order suspending a registration is issued,
there may be trades in process or other commitments which the
respondent is obligated to meet as well as other ongoing
activities which would have to be addressed to permit an orderly
cessation of business.  The Rule, therefore, requires a
description, in reasonable detail of the act or acts the
respondent is to take or refrain from taking.  To protect
investors or the public, the order may provide that a suspension
will be effective in stages, or only after a period of time. 


Rule 523. [Reserved].


Rule 524. Suspension of Registrations: Duration.  
     Unless set aside, limited or suspended by order of the
Commission, a court of competent jurisdiction, or a hearing
officer acting pursuant to Rule 531, an order suspending a
 
-------------------- BEGINNING OF PAGE #105 ---------------------

registration shall remain effective and enforceable until the
earlier of: 
     (a)  the completion of proceedings to determine whether the
     registration shall be permanently revoked; or
     (b)  180 days, or such longer time as consented to by the
respondent, after issuance of a briefing schedule order pursuant
to Rule 540(b), if an initial decision whether the registration
shall be permanently revoked is appealed. 


Rule 530. Initial Decision on Permanent Order:  Timing for
          Submitting Proposed Findings and Preparation of
          Decision.  
     Unless otherwise ordered by the Commission or hearing
officer, if a temporary cease-and-desist order or suspension of
registration order is in effect, the following time limits shall
apply to preparation of an initial decision as to whether such
order should be made permanent:  
     (a)  proposed findings and conclusions and briefs in support
thereof shall be filed 30 days after the close of the hearing;  
     (b)  the record in the proceedings shall be served by the
Secretary upon the hearing officer three days after the date for
the filing of the last brief called for by the hearing officer;
and 
     (c)  the initial decision shall be filed with the Secretary
at the earliest possible time, but in no event more than 30 days
after service of the record, unless the hearing officer, by
order, shall extend the time for good cause shown for a period
not to exceed 30 days.  


Rule 531. Initial Decision on Permanent Order:  Effect on
          Temporary Order. 
     (a)  Specification of Permanent Sanction.  If, at the time
an initial decision is issued, a temporary sanction is in effect
as to any respondent, the initial decision shall specify: 
          (1)  which terms or conditions of a temporary cease-
     and-desist order, if any, shall become permanent; and 
          (2)  whether a temporary suspension of a respondent's
     registration, if any, shall be made a permanent revocation
     of registration.
     (b)  Modification of Temporary Order.  If any temporary
sanction shall not become permanent under the terms of the
initial decision, the hearing officer shall issue a separate
order setting aside, limiting or suspending the temporary
sanction then in effect in accordance with the terms of the
initial decision.  The hearing officer shall decline to suspend a
term or condition of a temporary cease-and-desist order if it is
found that the continued effectiveness of such term or condition
is necessary to effectuate any term of the relief ordered in the
initial decision, including the payment of disgorgement, interest
or penalties.  An order modifying temporary sanctions shall be
effective 14 days after service.  Within one week of service of
the order modifying temporary sanctions any party may seek a stay
or modification of the order from the Commission pursuant to Rule
401.

COMMENT:  If, after hearing all the evidence as to whether a
permanent cease-and-desist order or permanent suspension of
registration should be issued, a hearing officer issues an
initial decision denying a permanent order, consideration must be
given to the necessity for continuation of the temporary order.  
     Rule 531 requires that the hearing officer modify the
temporary sanction order in accordance with the initial decision.

 
-------------------- BEGINNING OF PAGE #106 ---------------------

See 17 CFR 200.30-9 (authority delegated to the administrative
law judges to set aside, limit or suspend temporary orders in
accord with an initial decision).  In order to allow time for
each party to seek Commission review of any modification to the
temporary sanction, the hearing officer's order will not become
effective for 14 days.  
     The initial decision of the hearing officer to deny a
permanent order in whole or in part is reached after all evidence
has been heard and briefs have been submitted.  By contrast, the
decision to enter a temporary sanction, and in the case of a
temporary cease-and-desist order, any judicial review, is more
limited in scope.  Nonetheless, the hearing officer's judgment
that continuation of a temporary order is not necessary must be
balanced against the fact that the initial decision may be
reversed.  The Commission's decision whether to stay or modify
the hearing officer's order is an interim procedural ruling that
is not be subject to judicial review.


Rule 540. Appeal and Commission Review of Initial Decision Making
          a Temporary Order Permanent.
     (a)  Petition for Review.  Any person who seeks Commission
review of an initial decision as to whether a temporary sanction
shall be made permanent shall file a petition for review pursuant
to Rule 410, provided, however, that the petition must be filed
within 10 days after service of the initial decision.  
     (b)  Review Procedure.  If the Commission determines to
grant or order review, it shall issue a briefing schedule order
pursuant to Rule 450.  Unless otherwise ordered by the
Commission, opening briefs shall be filed within 21 days of the
order granting or ordering review, and opposition briefs shall be
filed within 14 days after opening briefs are filed.  Reply
briefs shall be filed within seven days after opposition briefs
are filed.  Oral argument, if granted by the Commission, shall be
held within 90 days of the issuance of the briefing schedule
order.


Rule 550. Summary Suspensions Pursuant to Exchange Act Section
          12(k)(1)(A).  
     (a)  Petition for Termination of Suspension.  Any person
adversely affected by a suspension pursuant to Section
12(k)(1)(A) of the Exchange Act, 15 U.S.C. 78l(k)(1)(A), who
desires to show that such suspension is not necessary in the
public interest or for the protection of investors may file a
sworn petition with the Secretary, requesting that the suspension
be terminated.  The petition shall set forth the reasons why the
petitioner believes that the suspension of trading should not
continue and state with particularity the facts upon which the
petitioner relies. 
     (b)  Commission Consideration of a Petition.  The
Commission, in its discretion, may schedule a hearing on the
matter, request additional written submissions, or decide the
matter on the facts presented in the petition and any other
relevant facts known to the Commission.  If the petitioner fails
to cooperate with, obstructs, or refuses to permit the making of
an examination by the Commission, such conduct shall be grounds
to deny the petition.  

COMMENT:  Exchange Act Section 12(k) authorizes the Commission
summarily to suspend trading in securities for 10-day periods, if
in its opinion the public interest or the protection of investors
so requires.  See 15 U.S.C.   78l(k).  Orders suspending trading
in particular securities pursuant to Section 12(k)(1)(A) are
 
-------------------- BEGINNING OF PAGE #107 ---------------------

directed towards a security; they do not name a person or entity
as a respondent.  Accordingly, Rule 550 establishes a special
mechanism to allow persons adversely affected by a suspension to
petition for relief.  
     The usual purpose of a suspension is to alert the investing
public that there is insufficient public information about the
issuer upon which an informed investment judgment can be made or
that the market for the securities may be reacting to
manipulative forces or deceptive practices.  Consequently, the
primary issues normally to be considered by the Commission in
determining whether or not a 10-day suspension should be
instituted are whether or not there is sufficient public
information upon which to base an informed investment decision or
whether the market for the security appears to reflect
manipulative or deceptive activities.  

RULES REGARDING DISGORGEMENT AND PENALTY PAYMENTS

Rule 600. Interest on Sums Disgorged.
     (a)  Interest Required.  Prejudgment interest shall be due
on any sum required to be paid pursuant to an order of
disgorgement.  The disgorgement order shall specify each
violation that forms the basis for the disgorgement ordered; the
date which, for purposes of calculating disgorgement, each such
violation was deemed to have occurred; the amount to be disgorged
for each such violation; and the total sum to be disgorged. 
Prejudgment interest shall be due from the first day of the month
following each such violation through the last day of the month
preceding the month in which payment of disgorgement is made. 
The order shall state the amount of prejudgment interest owed as
of the date of the disgorgement order and that interest shall
continue to accrue on all funds owed until they are paid.

     (b)  Rate of Interest.  Interest on the sum to be disgorged
shall be computed at the underpayment rate of interest
established under Section 6621(a)(2) of the Internal Revenue
Code, 26 U.S.C. 6621(a)(2), and shall be compounded quarterly. 
The Commission or the hearing officer may, by order, specify a
lower rate of prejudgment interest as to any funds which the
respondent has placed in an escrow or otherwise guaranteed for
payment of disgorgement upon a final determination of the
respondent's liability.  Escrow and other guarantee arrangements
must be approved by the Commission or the hearing officer prior
to entry of the disgorgement order.

COMMENT:  The Commission is authorized to order disgorgement,
"including reasonable interest," in any administrative proceeding
in which a cease-and-desist order is sought or a civil monetary
penalty could be imposed. See, e.g., Exchange Act   21B(e), 15
U.S.C.   78u-2(e) (monetary penalty proceedings); Exchange Act
  21C(e), 15 U.S.C.   78u-3(e) (cease-and-desist proceedings). 
The purpose of disgorgement in Commission administrative
proceedings is to deny a wrongdoer his ill-gotten gains.  See The
Securities Law Enforcement Remedies and Penny Stock Reform Act of
1990, S. Rep. No. 337, 101st Cong., 2d Sess. 16 (1990)
("[D]isgorgement forces a defendant to give up the amount by
which he was unjustly enriched.").  Unless prejudgment interest
is assessed on funds to be disgorged, the wrongdoer benefits
unjustly by having had the equivalent of an interest free loan
from the victims of his wrongdoing.  In order to effectuate fully
the remedial purposes of disgorgement, Rule 600 therefore
requires that prejudgment interest be assessed on all funds to be
disgorged.  
 
-------------------- BEGINNING OF PAGE #108 ---------------------

     Rule 600 prescribes the payment of prejudgment interest at
the underpayment rate of interest established under Section
6621(a)(2) of the Internal Revenue Code, 26 U.S.C. 6621(a)(2). 
The Commission or hearing officer, by order, may specify a lower
rate of prejudgment interest, however, as to funds which the
respondent, with the approval of the Commission or hearing
officer, and prior to entry of the disgorgement order, placed in
an approved escrow or otherwise guaranteed for payment of
disgorgement upon a finding of liability.  In calculating the
rate of prejudgment interest as to such funds, the Commission or
hearing officer may take into account the actual interest
obtained on the funds while in escrow, with appropriate
adjustments for expenses of the escrow or guarantee.  
     An adjustment to the rate of prejudgment interest may be
appropriate if a respondent makes arrangements to escrow or
guarantee payment of disputed funds prior to a formal
adjudication of liability because the respondent's continuing
benefit from those funds is significantly limited.  Providing
such an adjustment to the prejudgment interest facilitates the
prompt and cost-efficient return of investor funds upon a finding
of liability, and permits a respondent to limit its liability for
prejudgment interest pending resolution of a proceeding.  A
person who concludes prior to the institution of proceedings that
he or she may be liable for disgorgement claims may, in
anticipation of proceedings, seek to limit potential prejudgment
interest by establishing an escrow or equivalent arrangement on
terms in accord with this rule.  Such terms would include
approval of the escrow by the Commission or by the staff,
pursuant to delegated authority.  

REVISION COMMENT:  A number of comments addressed criteria for
whether prejudgment interest should be assessed and what an
appropriate rate of prejudgment interest would be.  A respondent
who wrongfully takes for his own use monies that belong to
investors or other persons has received the equivalent of an
interest free loan from the victims of his wrongdoing.  The
proper measurement of the benefit of this loan to the respondent
is the cost the respondent would otherwise have paid for a
comparable, unsecured loan.  The actual use to which the
respondent put the funds, or the rate of return the respondent
earned is irrelevant.  Similarly, it is irrelevant to the
calculation of the respondent's economic benefit whether he
obtained use of the funds by fraud or negligence.  In order to
fulfill the remedial purposes of disgorgement, a respondent
should never be allowed free use of funds wrongfully obtained
from others.  Therefore, the Commission concluded that
prejudgment interest should be assessed on all funds to be
disgorged.  
     Seeking to determine the specific interest rate for borrowed
funds a particular respondent might have obtained in an arms
length transaction would involve an inquiry into a wide variety
of factors, including unique characteristics of the respondent's
credit history and general economic conditions at the time of the
violation.  Typically, however, the interest rate charged to
small entities or individuals for unsecured credit by a lender
with no prior relationship to the borrower will be at the prime
rate plus two to five points.  The Internal Revenue Code
underpayment rate of interest established under Section
6621(a)(2) of the Internal Revenue Code, 26 U.S.C.   6621(a)(2),
a widely published, floating rate based on a fixed margin above
the rate for treasury bills, is a reasonable proxy for an
unsecured loan rate.  Accordingly, Rule 600 prescribes the
payment of prejudgment interest at the Internal Revenue Code
underpayment rate.
 
-------------------- BEGINNING OF PAGE #109 ---------------------

     Commenters suggested that a lower rate, such as the treasury
bill rate, was a more appropriate measure of prejudgment
interest.  The treasury bill rate, which reflects the rate paid
by the U.S. Government to borrow money, is lower than the cost of
funds rate that ordinarily could be obtained by an unsecured,
private borrower.  That rate, or any other below-market rate for
the cost of funds is therefore not an appropriate measure of
prejudgment interest to charge in remedial proceedings, where the
purpose of the prejudgment interest is to deny a wrongdoer any
economic benefit from his violations.  One commenter advocated
that in assessing prejudgment interest the Commission should be
guided by factors which a court would consider in awarding
prejudgment interest in a dispute between private parties.  The
criteria courts use in seeking to balance competing private
economic interests, particularly in commercial settings
voluntarily entered into by the parties, should not govern
assessment of prejudgment interest authorized by statute in a
remedial law enforcement action.
     The Commission considered whether any other prejudgment
interest rate, or a case by case determination of a rate, would
be more appropriate than the Internal Revenue Code underpayment
rate.  No other widely published, floating rate appears to offer
a proxy for borrowing costs which would better approximate a
typical respondent's cost of funds.  A case-by-case approach to
assessing prejudgment interest would be unduly complicated,
particularly in light of the speculative nature of a post-hoc
determination of the costs a particular respondent would have
been able to obtain in connection with activities that violated
the federal securities laws.  Finally, restitution payments or
other factors that might be appropriately considered to have
diminished the duration of a respondent's use of ill-gotten gains
would affect the calculation of disgorgement principal owed at
various times, and thereby reduce prejudgment interest by a
corresponding amount, but should not alter the rate of interest. 
Based on all these considerations, the Commission concluded that
ordinarily, the IRS underpayment rate is a reasonable and
appropriate rate to use in assessing prejudgment interest on
disgorgement ordered as the result of remedial administrative
proceedings.
     If, however, a respondent, with the approval of the
Commission or the hearing officer, sets aside allegedly ill-
gotten gains in an escrow, or makes other approved arrangements
guaranteeing payment upon a finding of liability, the rationale
for assessing prejudgment interest at a cost of funds rate is
less compelling.  Since the rate of return a respondent can earn
by placing potential disgorgement funds in a conservative, risk-
free investment will ordinarily be less than the rate established
under 26 U.S.C.   6621(a)(2), an adjustment to the rate of
prejudgment interest may be appropriate when an approved escrow
is established.  Cases in which respondents have sought to return
or escrow funds prior to a finding of liability have been rare. 
Rule 600 has been revised, however, to adopt Commission practice
which permits an adjustment to the prejudgment interest rate when
an approved escrow or equivalent arrangement is established prior
to a finding of liability.  

Rule 601. Prompt Payment of Disgorgement, Interest and Penalties.
     (a)  Timing of Payments.  Unless otherwise provided, funds
due pursuant to an order by the Commission requiring the payment
of disgorgement, interest or penalties shall be paid no later
than 21 days after service of the order, and funds due pursuant
to an order by a hearing officer shall be paid on the first day
after the order becomes final pursuant to Rule 360. 
 
-------------------- BEGINNING OF PAGE #110 ---------------------

     (b)  Stays.  A stay of any order requiring the payment of
disgorgement, interest or penalties may be sought at any time
pursuant to Rule 401.  

COMMENT (a):  Prompt collection of disgorgement, interest and
penalties is essential to prevent a dissipation of assets that
would thwart the disgorgement order.  Since collection of
disgorgement, interest and penalties becomes increasingly more
difficult the longer it is delayed, timely determination of
whether a respondent will pay disgorgement, interest and
penalties as ordered is necessary so that appropriate collection
efforts can be initiated.  Procedures for execution of a money
judgment are not available in an administrative proceeding.  If a
respondent does not pay disgorgement, interest and penalties as
ordered, the Commission must determine whether to seek
enforcement of its order by bringing a judicial action or by
referring the matter to the Department of Justice for collection.

Both processes often require significant periods of time.  
     Rule 601 provides, therefore, that funds due pursuant to an
order by a hearing officer are to be paid on the first day after
the order becomes final.  Since Rule 360 provides at least a 21-
day period before a hearing officer's order becomes final, even
if no review of the order is sought, a respondent will have at
least 22 days notice before payment is due.  If a respondent
seeks review of the hearing officer's order, the Commission, by
order, must deny the petition for review or affirm the initial
decision before payment would be required.  Rule 601 provides
that disgorgement, interest and penalties owed pursuant to an
order by the Commission are to be paid no later than 21 days
after service of the order.  The one-day and 21-day time periods
specified in Rule 601(a) may be modified by order in a particular
case.  

Rule 610. Submission of Proposed Plan of Disgorgement.
     The Commission or the hearing officer may, at any time,
order any party to submit a plan for the administration and
distribution of disgorgement funds.  Unless ordered otherwise,
the Division of Enforcement shall submit a proposed plan no later
than 60 days after funds or other assets have been turned over by
the respondent pursuant to a Commission disgorgement order and
any appeals of the disgorgement order have been waived or
completed, or appeal is no longer available.

COMMENT:  The rules relating to disgorgement are based on the
Commission's experience in judicial actions involving
disgorgement.  In most civil actions the court orders the
Commission to submit a proposed plan for administration and
distribution of disgorgement funds which, after notice and a
hearing, the court later approves, modifies or disapproves.  At
the hearing, parties and other persons may present their
objections to the court.  Ordinarily, the Division of Enforcement
seeks to avoid disputes over the plan and attempts, when
preparing the plan, to consult with other parties and any other
persons who have notified the staff or the court of an interest
in the disposition of disgorgement funds.  Since the development
of a disgorgement plan may be a significant undertaking, it is
not required in most proceedings until the funds to be disgorged
have been transferred from the control of the respondent and, if
the disgorgement order is subject to appeal, until after the
appeal is decided.  
     Similar procedures are established under Rules 610 through
614.  Rule 610 requires that unless ordered otherwise, the
Division of Enforcement shall submit a plan of disgorgement no
later than 60 days after funds are turned over by the respondent
 
-------------------- BEGINNING OF PAGE #111 ---------------------

pursuant to a disgorgement order and appeals of the order, if
any, are concluded.  In some cases a respondent may be in a
better position than the Division of Enforcement to propose a
disgorgement plan.  Any party, therefore, may be required to
submit a plan of disgorgement in addition to or in lieu of the
plan of the Division of Enforcement.  Also, the presumptive 60
day period set forth in the Rule may be modified by order.  For
example, in a case with multiple respondents, where some
respondents settle and others choose to litigate, it may be
appropriate to await the resolution of the case against all
respondents before making a determination as to the disposition
of disgorgement funds received from those who settled.  

Rule 611. Contents of Plan of Disgorgement; Provisions for
          Payment.
     (a)  Required Plan Elements.  Unless otherwise ordered, a
plan for the administration of a disgorgement fund shall include
the following elements:
          (1)  procedures for the receipt of additional funds,
     including the specification of an account where funds will
     be held and the instruments in which the funds may be
     invested; 
          (2)  specification of categories of persons potentially
     eligible to receive proceeds from the fund;
          (3)  procedures for providing notice to such persons of
     the existence of the fund and their potential eligibility to
     receive proceeds of the fund;
          (4)  procedures for making and approving claims,
     procedures for handling disputed claims and a cut-off date
     for the making of claims;
          (5)  a proposed date for the termination of the fund,
     including provision for the disposition of any funds not
     otherwise distributed;
          (6)  procedures for the administration of the fund,
     including selection, compensation and, as necessary,
     indemnification of a fund administrator to oversee the fund,
     process claims, prepare accountings, file tax returns and,
     subject to the approval of the Commission, make
     distributions from the fund to investors; and
          (7)  such other provisions as the Commission or the
     hearing officer may require. 
     (b)  Payment to Registry of the Court or Court-Appointed
Receiver.  Subject to such conditions as the Commission or the
hearing officer shall deem appropriate, a plan of disgorgement
may provide for payment of disgorgement funds into a court
registry or to a court-appointed receiver in any case pending in
federal or state court against a respondent or any other person
based upon a complaint alleging violations arising from the same
or substantially similar facts as those alleged in the
Commission's order instituting proceedings.  
     (c)  Payment to the United States Treasury Under Certain
Circumstances.  When, in the opinion of the Commission or the
hearing officer, the cost of administering a plan of disgorgement
relative to the value of the available disgorgement funds and the
number of potential claimants would not justify distribution of
the disgorgement funds to injured investors, the plan may provide
that the funds shall be paid directly to the general 
fund of the United States Treasury.  

COMMENT (b):  To minimize the costs of administering a plan of
disgorgement, the Commission has in certain civil injunctive
proceedings consented to the payment of disgorgement funds
obtained as the result of a Commission initiated proceeding into
a fund established for the benefit of persons in a related
 
-------------------- BEGINNING OF PAGE #112 ---------------------

private civil action.  See, e.g., SEC v. Levin, No. 3-92CV-399D
(N.D. Tex. Mar. 2, 1992) (settlement directed payment into court
registry); SEC v. Boesky, No. 86-CIV-2299, slip op. (S.D.N.Y.
Nov. 14, 1986) (settlement directed payment to escrow agent). 
Rule 611 provides for a similar disposition of disgorgement funds
obtained in an administrative proceeding.  Transfer of
disgorgement funds into a fund established in a judicial
proceeding may be subject to conditions on the use of the funds. 
For example, the Commission has routinely prohibited the use of
any funds obtained in a Commission initiated action to pay
attorneys' fees in a private lawsuit.  

COMMENT  (c):  The Commission has the authority to provide for
the return of ill-gotten gains to investors, but there is no
requirement that it do so.  See, e.g., Exchange Act    21B(e)
and 21C(e), 15 U.S.C.    78u-2(e) and 78u-3(e) ("[t]he Commission
is authorized to adopt rules, regulations, and orders . . .
concerning payments to investors").  Returning funds to the
United States Treasury when the expense of locating or making
distributions to injured investors is prohibitive is consistent
with treatment by the courts in similar situations.  SEC v.
Marcus Schloss & Co., 714 F. Supp. 100 (S.D.N.Y. 1989); SEC v.
Courtois, [1984-85 Transfer Binder] Fed. Sec. L. Rep. (CCH)
  92,000 (S.D.N.Y. 1985); SEC v. Lund, 570 F. Supp. 1397, 1404-
1405 (C.D. Cal. 1983).

REVISION COMMENT (b):  The respondent named in a Commission
action may have settled a related civil action brought by private
parties or may not have been named in a related private party
litigation.  The rule has been revised to permit the payment of
disgorged funds to a fund established in connection with a
judicial proceeding against the respondent or against any other
person based upon a complaint alleging violations arising from
the same or substantially similar facts as those alleged in the
Commission's order instituting proceedings. 

Rule 612. Notice of Proposed Plan of Disgorgement and Opportunity
          for Comment by Non-Parties.
     Notice of a proposed plan of disgorgement shall be published
in the SEC News Digest, in the SEC Docket, and in such other
publications as the Commission or the hearing officer may
require.  The notice shall specify how copies of the proposed
plan may be obtained and shall state that persons desiring to
comment on the proposed plan may submit their views, in writing,
to the Commission.  

COMMENT:  Publication of notice that a proposed plan has been
submitted is required in order to provide potential claimants or
other persons with an opportunity to make known their views prior
to adoption of the plan.  

Rule 613. Order Approving, Modifying or Disapproving Proposed
          Plan of Disgorgement.
     At any time more than 30 days after publication of notice of
a proposed plan of disgorgement, the hearing officer or the
Commission shall, by order, approve, approve with modifications,
or disapprove the proposed plan.  In the discretion of the
Commission or the hearing officer, a proposed plan of
disgorgement that is substantially modified prior to adoption may
be republished for an additional comment period pursuant to Rule
612.  The order approving or disapproving the plan should be
entered within 30 days after the end of the final period allowed
for comments on the proposed plan unless the Commission or the
 
-------------------- BEGINNING OF PAGE #113 ---------------------

hearing officer, by written order, allows a longer period for
good cause shown.  

COMMENT:  After submission of comments, if any, the plan should
be promptly approved, approved as modified or disapproved.  The
Commission or the hearing officer may hold a hearing on the
proposed plan or may rule on the plan based only on written
submissions, if any.  

Rule 614. Administration of Plan of Disgorgement.
     (a)  Appointment and Removal of Administrator.  The
Commission or the hearing officer shall have discretion to
appoint any person, including a Commission employee, as
administrator of a plan of disgorgement and to delegate to that
person responsibility for administering the plan.  A respondent
may be required or permitted to administer or assist in
administering a plan of disgorgement, subject to such terms and
conditions as the Commission or the hearing officer deem
appropriate to ensure the proper distribution of funds.  An
administrator may be removed at any time by order of the
Commission or hearing officer.  
     (b)  Administrator to Post Bond.  If the administrator is
not a Commission employee, the administrator shall be required to
obtain a bond in the manner prescribed by 11 U.S.C. 322, in an
amount to be approved by the Commission.  The cost of the bond
may be paid for as a cost of administration.  The Commission may
waive posting of a bond for good cause shown. 
     (c)  Administrator's Fees.  If the administrator is a
Commission employee, no fee shall be paid to the administrator
for his or her services.  If the administrator is not a
Commission employee, he or she may file an application for fees
for completed services, and upon approval by the Commission or a
hearing officer, may be paid a reasonable fee for those services.

Any objections thereto shall be filed within 21 days of service
of the application on the parties.  
     (d)  Source of Funds.  Unless otherwise ordered, fees and
other expenses of administering the plan of disgorgement shall be
paid first from the interest earned on disgorged funds, and if
the interest is not sufficient, then from the corpus.  
     (e)  Accountings.  During the first 10 days of each calendar
quarter, or as otherwise directed by the Commission or the
hearing officer, the administrator shall file an accounting of
all monies earned or received and all monies spent in connection
with the administration of the plan of disgorgement.  A final
accounting shall be submitted for approval of the Commission or
hearing officer prior to discharge of the administrator and
cancellation of the administrator's bond, if any. 
     (f)  Amendment.  A plan may be amended upon motion by any
party or the plan administrator or upon the Commission's or
hearing officer's own motion.  

COMMENT (a):  In some circumstances, for example, where the
number of potential claimants to a fund is small and the identity
of the claimants is known in advance, the plan of disgorgement
may be relatively uncomplicated and may not require extensive
resources to administer.  In such a case, an administrative law
judge or a staff member may administer the plan of disgorgement
most effectively.
     As in court actions, however, if the amount of disgorgement
is large or there are many potential claimants, administration of
a disgorgement plan may involve extensive time and resources and
may be accomplished most effectively by selecting an
administrator with expertise in handling disgorgement-type
proceedings.  Such a person would, as necessary, be able to
 
-------------------- BEGINNING OF PAGE #114 ---------------------

retain an accounting firm, a law firm, or any other entity
necessary to assist in the administration of the disgorgement
plan.
     Rule 614 does not specify a method for selecting an
administrator.  In court proceedings, the Commission may have an
advisory role in recommending individuals to the court as
possible administrators, but the court itself must select and
appoint the administrator.  In administrative proceedings,
however, the Commission itself is responsible for appointing the
administrator.  Selection of an administrator by the Commission
may be subject to various statutory provisions or regulations
regarding personnel matters, procurement and contract
requirements, or other matters.  In addition, the selection
process should promote public confidence that the selection was
made on an impartial basis.  
     In some proceedings, particularly those in which a
settlement has been reached, the respondent may be required or
allowed to assist in administering a disgorgement plan.  See,
e.g., In the Matter of Donaldson, Lufkin & Jenrette Sec. Corp.,
Exchange Act Release No. 27889 (Apr. 11, 1990), 45 SEC Docket
1826, 1834 (Apr. 24, 1990).  Especially in such self-administered
disgorgement plans, the Commission may require affidavits, an
accountant's certification, or other safeguards to assure that
funds have been distributed only in accordance with the plan.

COMMENT (b):  Funds or other assets paid as disgorgement will be
placed into an escrow, custodial or similar account established
by the Commission or with the Commission's approval for the
purpose of holding such funds or assets until they are disbursed.

No funds will be transferred to the Commission itself.  See 31
U.S.C.   3302(b) (requiring agencies receiving funds for the
government to deposit the money into the Treasury without
deduction for any charge or claim).  
     Funds paid pursuant to a disgorgement order do not become
the property of the Commission and internal control and audit
procedures mandated by statute for the Commission's own funds are
not applicable to disgorgement funds.  Rule 614(b) requires,
therefore, that if the administrator is not a Commission
employee, the administrator must obtain a surety bond comparable
to that when a trustee is appointed in a SIPC liquidation or
bankruptcy proceeding.  See 15 U.S.C.   78eee(b)(3); 11 U.S.C.
  322.  See also Rule 614(e) (quarterly accountings required).

COMMENT (c):  If the administrator is not a Commission employee,
reasonable fees may be paid to the administrator.  Payment of the
administrator's fees may be made only upon a public application
filed by the administrator and subject to the approval of the
Commission or a hearing officer.  Filings by the administrator,
including fee applications, should conform to the filing
requirements of Rule 151 and be served on all parties pursuant to
Rule 150.  

COMMENT (d):  The Commission has broad authority to adopt rules,
regulations and orders it deems appropriate to implement its
authority to order disgorgement.  See, e.g., Exchange Act  
21B(e), 15 U.S.C.   78u-2(e).  Paragraph (d) provides that fees
and expenses be paid first out of interest earned on disgorged
funds, and if the interest is insufficient, then out of the
corpus of the funds.  Subject to any applicable requirements
established by Congress with respect to the use of appropriated
funds, and except to the extent a Commission employee is
appointed administrator, or an administrative law judge
administers a disgorgement fund without the assistance of an
administrator, appropriated funds ordinarily will not be used to
 
-------------------- BEGINNING OF PAGE #115 ---------------------

defray the direct costs of administering a disgorgement plan. 
Where the value of the available disgorgement funds relative to
the expense of administrating a plan of disgorgement from the
corpus or the interest earned would not justify distribution of
funds, the disgorged funds may be turned over to the general fund
of the United States Treasury.  See Rule 611(c).  

COMMENT (f):  After a plan is approved, changed circumstances may
require amendment of the plan.  A plan may be amended upon motion
by any party or the plan administrator or upon the Commission's
or hearing officer's own motion.  Procedures for publication of
notice or hearing on the motion will be subject to case by case
determination.

Rule 620. Right to Challenge Order of Disgorgement.
     Other than in connection with the opportunity to submit
comments as provided in Rule 612, no person shall be granted
leave to intervene or to participate in a proceeding or otherwise
to appear to challenge an order of disgorgement; or an order
approving, approving with modifications, or disapproving a plan
of disgorgement; or any determination relating to a plan of
disgorgement based solely upon that person's eligibility or
potential eligibility to participate in a disgorgement fund or
based upon any private right of action such person may have
against any person who is also a respondent in an enforcement
proceeding.  

COMMENT:  The opportunity to submit comments on a plan of
disgorgement does not give a person any right to become a party
to or intervene in an enforcement proceeding.  See Rule 210 (no
one may become a party or receive leave to intervene in an
enforcement proceeding).  
     Although return of ill-gotten gains to injured investors is
often an appropriate disposition of disgorged funds, the purpose
of the Commission's administrative disgorgement remedy is to
deprive violators of ill-gotten gains and thus serve as a
deterrent to violations, rather than to compensate injured
investors.  See The Securities Law Enforcement Remedies and Penny
Stock Reform Act of 1990, S. Rep. No. 337, 101st Cong., 2d Sess.
16 (1990) ("In contrast to an award of damages in a private
action, which is designed to compensate an injured plaintiff,
disgorgement forces a defendant to give up the amount by which he
was unjustly enriched.").  The statutory remedy is consistent in
this regard with the equitable remedy available in civil
injunctive actions brought by the Commission.  See, e.g.,  SEC v.
First City Financial Corp., 890 F.2d 1215, 1230, 1232 n.24 (D.C.
Cir. 1989)(the primary purpose of disgorgement is not to
compensate investors); SEC v. Tome, 833 F.2d 1086, 1096 (2d Cir.
1987), cert. denied, 486 U.S. 1014 (1988); SEC v. Texas Gulf
Sulphur Co., 446 F.2d 1301, 1307 (2d Cir.), cert. denied, 404
U.S. 1005 (1971); Securities Law Enforcement Remedies and Penny
Stock Reform Act of 1990, H.R. Rep. No. 616, 101st Cong., 2d
Sess. at 22 (1990).  
     Where it is not practical to locate persons who have been
harmed, disgorgement in injunctive actions has been ordered paid
into the general fund of the U.S. Treasury.  See SEC v. Marcus
Schloss & Co., 714 F. Supp. 100, 103 (S.D.N.Y. 1989); SEC v.
Courtois, [1984-85 Transfer Binder] Fed. Sec. L. Rep. (CCH)
  92,000, at 90,959 (S.D.N.Y. 1985); SEC v. Lund, 570 F. Supp.
1397, 1404-1405 (C.D. Cal. 1983).  In insider trading cases,
courts have required that disgorgement be made available to
persons other than investors.  See SEC v. Materia, [1983-84
Transfer Binder] Fed. Sec. L. Rep. (CCH)   99,583, at 97,284-85
(S.D.N.Y. 1983), aff'd on other grounds, 745 F.2d 197 (2d Cir.
 
-------------------- BEGINNING OF PAGE #116 ---------------------

1984), cert. denied, 471 U.S. 1053 (1985).  See generally Louis
Loss, Fundamentals of Securities Regulation 1007 (2d ed. 1988)
(discussing discretion exercised by courts in designating
recipients of disgorged funds). 
     Since there is not a requirement that funds obtained in an
administrative enforcement proceeding be paid to investors,
persons who may have a private right of action in federal court
against a respondent do not thereby have standing in the
Commission's enforcement proceeding against that respondent to
challenge a plan of disgorgement solely because of
dissatisfaction with their potential eligibility to receive funds
from the Commission's disgorgement pool.  See Marino v. Ortiz,
484 U.S. 301, 304 (1988) (per curiam) (explicitly disapproving of
the suggestion in SEC v. Certain Unknown Purchasers, 817 F.2d
1018, 1021 & n.1 (2d Cir. 1987), cert. denied, 484 U.S. 1060
(1988), that a person has standing to appeal whenever he "has an
interest that is affected by the trial court's judgment.").  
     The limitations in Rule 620 on participation in the
proceedings before a hearing by a person with potential claims
against the disgorgement pool does not preclude a person who is
aggrieved by a decision concerning the disposition of
disgorgement assets and entitled to review of the decision from
petition the Commission for such review. A person aggrieved by a
final decision of the Commission who is entitled to review may
also seek a stay of the Commission order or judicial review of
the order.  See Rules 360, 401 and 410; Section 702 of the
Administrative Procedure Act, 5 U.S.C.   702.  See also SEC v.
Wozniak, 33 F.3d 13 (7th Cir. 1994) (persons not parties to the
litigation who objected to a disgorgement plan could have sought
a stay of district court's judgment and distribution of the plan
in order to have standing to appeal). 

Rule 630. Inability to Pay Disgorgement, Interest or Penalties.
     (a)  Generally.  In any proceeding in which an order
requiring payment of disgorgement, interest or penalties may be
entered, a respondent may present evidence of an inability to pay
disgorgement, interest or a penalty.  The Commission may, in its
discretion, or the hearing officer may, in his or her discretion,
consider evidence concerning ability to pay in determining
whether disgorgement, interest or a penalty is in the public
interest.  
     (b)  Financial Disclosure Statement.  Any respondent who
asserts an inability to pay disgorgement, interest or penalties
may be required to file a sworn financial disclosure statement
and to keep the statement current.  The financial statement shall
show the respondent's assets, liabilities, income or other funds
received and expenses or other payments, from the date of the
first violation alleged against that respondent in the order
instituting proceedings, or such later date as specified by the
Commission or a hearing officer, to the date of the order
requiring the disclosure statement to be filed.  By order, the
Commission or the hearing officer may prescribe the use of the
Disclosure of Assets and Financial Information Form (see Form D-
A at   209.1 of this chapter) or any other form, may specify
other time periods for which disclosure is required, and may
require such other information as deemed necessary to evaluate a
claim of inability to pay.  
     (c)  Confidentiality.  Any respondent submitting financial
information pursuant to this rule or Rule 410(c) may make a
motion, pursuant to Rule 322, for the issuance of a protective
order against disclosure of the information submitted to the
public or to any parties other than the Division of Enforcement. 
Prior to a ruling on the motion, no party receiving information
as to which a motion for a protective order has been made may
 
-------------------- BEGINNING OF PAGE #117 ---------------------

transfer or convey the information to any other person without
the prior permission of the Commission or the hearing officer.
     (d)  Service Required.  Notwithstanding any provision of
Rule 322, a copy of the financial disclosure statement shall be
served on the Division of Enforcement.  
     (e)  Failure to File Required Financial Information:
Sanction.  Any respondent who, after making a claim of inability
to pay either disgorgement, interest or a penalty, fails to file
a financial disclosure statement when such a filing has been
ordered or is required by rule may, in the discretion of the
Commission or the hearing officer, be deemed to have waived the
claim of inability to pay.  No sanction pursuant to Rules 155 or
180 shall be imposed for a failure to file such a statement. 

COMMENT (a):  A respondent may present evidence of ability to pay
a penalty, and the Commission may, in its discretion, consider
such evidence.  See, e.g., Exchange Act   21B(d), 15 U.S.C.  
78u-2(d).  A respondent's ability to pay becomes a significant
issue not only in proceedings in which a penalty is ordered, but
also when disgorgement and interest is ordered.  Although no
statutory requirement addresses inability to pay disgorgement or
interest, the Commission considers evidence of ability to pay as
a factor in determining whether a respondent should be required
to pay disgorgement and interest as well as penalties.  Rule 630
codifies this practice.  

COMMENT (b):  A respondent may not be entirely candid about his
or her financial position when asserting an inability to pay
disgorgement, interest or penalties.  The Commission or a hearing
officer may require persons who assert an inability to pay
disgorgement, interest or penalties to file sworn, verifiable
financial disclosure statements before consideration of inability
to pay as a basis for waiving disgorgement, interest or
penalties.  
     Rule 630 provides that the Commission or the hearing officer
may require "such other information as deemed necessary to
evaluate a claim of inability to pay."  Accordingly, the Division
of Enforcement may seek an order to question the respondent under
oath or may seek the issuance of subpoenas to obtain documents or
testimony concerning an asserted inability to pay.   In addition,
the rule provides that, by order, the Commission or the hearing
officer may prescribe a particular financial disclosure form to
be used and may specify time periods for which disclosure is
required.  Form D-A, the Disclosure of Assets and Financial
Information Form, includes a waiver by the respondent that
authorizes "The Securities and Exchange Commission and any of its
staff . . . to obtain any such information from credit bureaus,
financial institutions or any other source as may be needed to
verify the statements made on this form."  If such a waiver is
obtained, the Division of Enforcement may rely on it as a basis
to seek confirmation of information in the financial disclosure
form without further approval from the hearing officer or
Commission.

COMMENT (c):  The public's right to review financial disclosure
statements submitted in connection with a respondent's claim of
inability to pay should be balanced against the respondent's
legitimate interest in protecting confidential or personal
information from premature or unnecessary disclosure.  Each
request for confidentiality must be decided based on the
procedural status of the case, the extent to which financial
information has already been disclosed, and the individual facts
and circumstances underlying the request.  
 
-------------------- BEGINNING OF PAGE #118 ---------------------

     While financial circumstances may change during the course
of a proceeding, a respondent who intends to assert a claim of
inability to pay may be required by the hearing officer to
specify in connection with prehearing submissions or conferences
whether the issue will be raised.  Early submission of a
financial disclosure form to support a planned claim of inability
to pay will allow the hearing officer and parties to better
prepare for hearing and to assess the time needed for the
hearing.  Part I of Form D-A requires only summary information as
to which confidentiality interests are limited.  Part II requires
detailed back-up information that is more likely to call for
personal, confidential data, such as bank account numbers and
information about regular medical payments.  The earlier in a
proceeding the respondent is required to submit financial
information, however, the more compelling the case for the
confidentiality of personal financial information such as that
called for in Part II of Form D-A.  Providing for confidential
treatment of personal financial information at the early stages
of a proceeding or prior to the respondent's own introduction of
evidence of inability to pay protects a respondent's privacy
interests to the maximum extent in the event that the Division
fails in its case in chief or that the case settles prior to
completion of the hearing.  

COMMENT (d):  A copy of the financial disclosure statement must
be served on the Division of Enforcement notwithstanding any
motion for a protective order.  The Division of Enforcement must
have the respondent's financial information in order to determine
whether to challenge a claim of inability to pay.  Notice that a
disclosure statement has been filed must also be provided to
other respondents, who may seek all or part of the information
submitted unless a protective order has been sought or granted
pursuant to Rule 322.  

FORM

209.1.    Form D-A: Disclosure of Assets and Financial
          Information.
     (a)  Rules 410 and 630 of the Rules of Practice (17 CFR
201.410 and 630 of this chapter) provide that under certain
circumstances a respondent who asserts or intends to assert an
inability to pay disgorgement, interest or penalties may be
required to disclose certain financial information.  Unless
otherwise ordered, this form may be used by individuals required
to supply such information.
     (b)  The respondent filing Form D-A is required promptly to
notify the Commission of any material change in the answer to any
question on this form.
     (c)  Form D-A may not be withheld from the Division of
Enforcement.  A respondent making financial information
disclosures on this form after the institution of proceedings may
make a motion, pursuant to Rule 322 of the Commission's Rules of
Practice (17 CFR 201.322 of this chapter), for the issuance of a
protective order to limit disclosure of the information submitted
on Form D-A to the public or parties other than the Division of
Enforcement.  A request for a protective order allows the
requester an opportunity to justify the need for confidentiality.

The making of a motion for a protective order does not, however,
guarantee that disclosure will be limited.  
     (d)  No party receiving information for which a motion for a
protective order has been made may transfer or convey the
information to any other person prior to a ruling on the motion
without the prior permission of the Commission or a hearing
officer.
 
-------------------- BEGINNING OF PAGE #119 ---------------------

     (e)  A person making financial information disclosures on
Form D-A prior to the institution of proceedings, in connection
with an offer of settlement or otherwise, may request
confidential treatment of the information pursuant to the Freedom
of Information Act.  See the Commission's Freedom of Information
Act ("FOIA") regulations, 17 CFR 200.83.  A request for
confidential treatment allows the requester an opportunity to
substantiate the need for confidentiality.  No determination as
to the validity of any request for confidential treatment will be
made until a request for disclosure of the information under FOIA
is received.
[Form D-A appears following the formal text of the Rules of
Practice]
V.   REGULATORY FLEXIBILITY ANALYSIS
     The initial Regulatory Flexibility Analysis was prepared in
accordance with 5 U.S.C. 603 and published in the Proposing
Release.  No comments were received on this analysis.  The
Commission has prepared a Final Regulatory Flexibility Analysis,
a copy of which may be obtained by writing to Andrew Glickman,
Esq., Office of the General Counsel, Mail Stop 6-6, Securities
and Exchange Commission, 450 5th Street, N.W., Washington, D.C.
20549.

VI.  STATUTORY BASIS FOR RULES
     These amendments to the Rules of Practice and related rules
are being adopted pursuant to: 15 U.S.C. 77f, 77g, 77h, 77h-1,
77j, 77s, 77u, 78c(b), 78d-1, 78d-2, 78l, 78m, 78n, 78o(d),
78o-3, 78s, 78u-2, 78u-3, 78v, 78w, 79c, 79s, 79t, 79z-5a, 77sss,
77ttt, 80a-8, 80a-9, 80a-37, 80a-38, 80a-39, 80a-40, 80a-41, 80a-
44, 80b-3, 80b-9, 80b-11, and 80b-12.  

LIST OF SUBJECTS 
17 CFR Part 200 
     Administrative practice and procedure, Authority delegations
     (Government agencies), Organization and functions
     (Government agencies), Securities. 
17 CFR Part 201 
     Accountants, Administrative practice and procedure, Brokers,
     Claims, Confidential business information, Equal access to
     justice, Fraud, Lawyers, Penalties, Securities.
17 CFR Part 209
     Administrative practice and procedure - financial disclosure
form
17 CFR Part 229
     Accounting, Reporting and recordkeeping requirements,
     Securities.
17 CFR Part 240
     Accountants, Administrative practice and procedure, Brokers,
     Claims, Confidential business information, Fraud, Lawyers,
     Penalties, Reporting and recordkeeping requirements,
     Securities.

TEXT OF ADOPTED RULES:
     For the reasons set out in the preamble, Title 17, Chapter
II of the Code of Federal Regulations is amended as follows:
PART 200  ORGANIZATION; CONDUCT AND ETHICS; AND INFORMATION AND
          REQUESTS
Subpart A -- Organization and Program Management
     1.   The authority citation for part 200, subpart A,
continues to read in part as follows:
     Authority:  15 U.S.C. 77s, 78d-1, 78d-2, 78w, 78ll(d), 79t,
79sss, 80a-37, 80b-11, unless otherwise noted.
                      *    *    *    *    *
 
-------------------- BEGINNING OF PAGE #120 ---------------------

     2.   Section 200.1(j) is revised to read as follows:
 200.1    General statement and statutory authority.
                      *    *    *    *    *
     (j) Administrative sanctions, injunctive remedies, civil
money penalties and criminal prosecution.  There are also private
rights of action for investors injured by violations of the Acts.
 200.16 [Amended]
     3.   In  200.16, remove the words "Rule 2(e) of the
Commission's Rules of Practice (  201.2(e) of this chapter)",
and, in their place, add the words "Rule 102(e) of the
Commission's Rules of Practice (  201.102(e) of this chapter)".
 200.30-4  [Amended]
     4.   In  200.30-4(a)(5), remove the words "Rule 29 of the
Commission's Rules of Practice (17 CFR 201.1-201.29)", and, in
their place, add the words "Rule 193 of the Commission's Rules of
Practice,  201.193 of this chapter".

 200.30-7  [Amended]
     5.   In  200.30-7(a)(1), remove the words "Rule 21(a) of the
Commission's rules of practice,  201.21(a)", and, in their place,
add the words "Rule 451 of the Commission's Rules of Practice,
 201.451".
     6.   In  200.30-7(a)(2), remove the words "Rule 21(b) of the
Commission's rules of practice,  201.21(b)", and, in their place,
add the words "Rule 451(c) of the Commissions Rules of Practice,
 201.451(c)".
     7.   In  200.30-7(a)(3) and (a)(4), remove the words "Rule
13 of the Commission's rules of practice,   201.13", and, in
their place, add the words "Rule 161 of the Commission's Rules of
Practice,  201.161" .
     8.   In  200.30-7(a)(5), remove the words "Rule 22(d) of the
Commission's rules of practice,   201.22(d)", and, in their
place, add the words "Rule 450(c) of the Commission's Rules of
Practice,  201.450(c)".
     9.   In  200.30-7(a)(9), remove the words "rules 6 and 23 of
the Commission's rules of practice", and, in their place, add the
words "Rules 141 and 150 of the Commission's Rules of Practice,
  201.141 and 201.150 of this chapter".  
     10.  In  200.30-7 paragraph (a)(10) is added to read as
follows:  "To set the date for sanctions to take effect if an
initial decision is not appealed and becomes final pursuant to
Rule 360(d) or if an initial decision is affirmed pursuant to
Rule 411."
     11.  Section 200.30-9 is revised to read as follows:
 200.30-9  Delegation of authority to hearing officers.
     Pursuant to the provisions of Section 4A of the Securities
Exchange Act of 1934 (15 U.S.C. 78d-1), the Securities and
Exchange Commission hereby delegates, until the Commission orders
otherwise, to each Administrative Law Judge ("Judge") the
authority: 
     (a)  To make an initial decision in any proceeding at which
the Judge presides in which a hearing is required to be conducted
in conformity with the Administrative Procedure Act (5 U.S.C.
557) unless such initial decision is waived by all parties who
appear at the hearing and the Commission does not subsequently
order that an initial decision nevertheless be made by the Judge,
and in any other proceeding in which the Commission directs the
Judge to make such a decision; and
     (b)  To issue, upon entry pursuant to Rule 531 of the
Commission's Rules of Practice,   201.531 of this chapter, of an
initial decision on a permanent order, a separate order setting
aside, limiting or suspending any temporary sanction, as that
term is defined in Rule 101(a)(11) of the Commission's Rules of
 
-------------------- BEGINNING OF PAGE #121 ---------------------

Practice,   201.101(a) of this chapter, then in effect in
accordance with the terms of the initial decision.
 200.30-10  [Amended]
     12.  In  200.30-10(a)(1), remove the words "Rule 6(b) of the
Commission's rules of practice,  201.6(b) of this chapter, and
Rule 11(a) of the Commission's rules of practice ( 201.11(a) of
this chapter)", and, in their place, add the words "Rule 200 of
the Commission's Rules of Practice,  201.200 of this chapter".
     13.  In  200.30-10(a)(2), remove the words "Rule 11(b) of
the Commission's rules of practice ( 201.11(b) of this chapter)",
and, in their place, add the words "Rule 110 of the Commission's
Rules of Practice,  201.110 of this chapter".
     14.  In  200.30-10(a)(3), remove the words "Rule 13 of the
Commission's rules of practice,  201.13", and, in their place,
add the words  "Rule 161 of the Commission's Rules of Practice,
 201.161".
     15.  In  200.30-10(a)(4), remove the words "Rule 13 of the
Commission's rules of practice ( 201.13 of this chapter)", and,
in their place, add the words "Rule 161 of the Commission's Rules
of Practice,  201.161 of this chapter".
     16.  In  200.30-10(a)(5), remove the words "Rule 22(d) of
the Commission's rules of practice ( 201.22(d) of this chapter)",
and, in their place, add the words "Rule 450(c) of the
Commission's Rules of Practice,  201.450(c) of this chapter".
     17.  In  200.30-10 paragraph (a)(6) is removed and
paragraphs (a)(7) and (a)(8) are redesignated as paragraphs
(a)(6) and (a)(7).
     18.  In newly redesignated  200.30-10(a)(6), remove the
words "Rule 14(b) of the Commission's rules of practice
(201.14(b) of this chapter)", and, in their place, add the words
"Rule 232 of the Commission's Rules of Practice,  201.232 of this
chapter".
     19.  Section 200.30-14 is amended by revising the
introductory text of paragraph (g)(1), adding paragraphs
(g)(1)(x) through (g)(1)(xiv), and revising paragraphs (g)(2),
and (g)(4) through (g)(7) to read as follows:
       200.30-14 Delegation of authority to the General Counsel.
                      *    *    *    *    *
     (g)(1)    With respect to proceedings conducted pursuant to
the Securities Act of 1933 (15 U.S.C. 77a, et seq.), the
Securities Exchange Act of 1934 (15 U.S.C. 78a, et seq.), the
Public Utility Holding Company Act of 1935 (15 U.S.C. 79a, et
seq.), the Trust Indenture Act of 1939 (15 U.S.C. 77aaa, et
seq.), the Investment Company Act of 1940 (15 U.S.C. 80a-1, et
seq.), the Investment Advisers Act of 1940 (15 U.S.C. 80b-1, et
seq.),the Securities Investor Protection Act of 1970 (15 U.S.C.
78aaa, et seq.) and the provisions of Rule 102(e) of the
Commission's Rules of Practice (  201.102(e) of this chapter);
     *    *    *    *    *
     (x)    To determine motions to consolidate proceedings
pending before the Commission.
     (xi)   To determine whether to permit or require that a
record of proceedings be supplemented with additional evidence.
     (xii)  To determine requests for leave to file an opposition
to a petition for review filed pursuant to the provisions of Rule
411 of the Commission's Rules of Practice,   201.411 of this
chapter.
     (xiii)   To issue a briefing schedule order pursuant to Rule
450 of the Commission's Rules of Practice,   201.450 of this
chapter.
     (xiv)  To determine motions for expedited briefing
schedules.
     (2)  With respect to proceedings conducted pursuant to the
Securities Act of 1933 (15 U.S.C. 77a, et seq.), the Securities
 
-------------------- BEGINNING OF PAGE #122 ---------------------

Exchange Act of 1934 (15 U.S.C. 78a, et seq.), the Investment
Company Act of 1940 (15 U.S.C. 80a-1, et seq.), the Investment
Advisers Act of 1940 ( 15 U.S.C. 80b-1, et seq.), the Securities
Investor Protection Act of 1970 (15 U.S.C. 78aaa, et seq.) and
the provisions of Rule 102(e) of the Commission's Rules of
Practice (  201.102(e) of this chapter), to issue findings and
orders taking the remedial action described in the order for
proceedings where the respondents expressly consent to such
action, fail to appear or default in the filing of answers
required to be filed; or to grant a request, based upon a showing
of good cause, to vacate an order of default, so as to permit
presentation of a defense.
     *    *    *    *    *
     (4)  With respect to proceedings under Sections 19(d), (e)
and (f) of the Securities Exchange Act of 1934 (15 U.S.C. 78s(d),
(e) and (f)), to determine that an application for review under
those sections has been abandoned, under the provisions of Rule
420,   201.420 of this chapter, or otherwise, and to issue an
order dismissing the application in such event.
     (5)  With respect to proceedings conducted or reviewed
pursuant to the Securities Exchange Act of 1934 (15 U.S.C. 78a,
et seq.), the Investment Company Act of 1940 (15 U.S.C. 80a-1, et
seq.), the Investment Advisers Act of 1940 ( 15 U.S.C. 80b-1, et
seq.) and the provisions of Rule 102(e) of the Commission's Rules
of Practice,   201.102(e) of this chapter, to determine
applications to stay Commission orders pending appeal of those
orders to the federal courts and to determine applications to
vacate such stays.
     (6)  With respect to review proceedings pursuant to Sections
19(d), (e), and (f) of the Securities Exchange Act of 1934 (15
U.S.C. 78s(d), (e), and (f)), to determine applications for a
stay of action taken by a self-regulatory organization pending
Commission review of that action and to determine applications to
vacate such stays.
     (7)  In connection with Commission review of actions taken
by self-regulatory organizations, pursuant to Sections 19(d), (e)
and (f) of the Securities Exchange Act of 1934 (15 U.S.C. 78s(d),
(e) and (f)), to grant or deny requests for oral argument in
accordance with the provisions of Rule 451,   201.451 of this
chapter.
     *    *    *    *    *
Subpart B -- Disposition of Commission Business
     20.  The authority citation for part 200, subpart B
continues to read as follows:
     Authority: 5 U.S.C. 522b.
     21.  Section 200.42 is amended by removing the "." and
adding the following language at the end of paragraph (a)(1)(iii)
to read as follows:
 200.42   Disposition of business by exercise of authority
          delegated to individual Commissioner.
     (a)    *    *    * 
     (1)    *    *    * 
     (iii)  *    *    * , except that the duty officer may
preside at the taking of evidence with respect to the issuance of
a temporary cease-and-desist order as provided by Rule 511(c) of
the Commission's Rules of Practice,   201.511(c) of this chapter.

Subpart F -- Code of Behavior Governing Ex Parte Communications
Between Persons Outside the Commission and Decisional Employees
     22.  The authority citation for part 200, subpart F is
revised to read as follows:
     Authority:  15 U.S.C. 77s, 78w, 79t, 77sss, 80a-37, 80b-11; 
5 U.S.C. 557.
 
-------------------- BEGINNING OF PAGE #123 ---------------------

 200.111  [Amended]
     23.  In  200.111(d)(1)(i), remove the words "Rule 23 of the
Commission's Rules of Practice,  201.23", and, in their place,
add the words "Rule 150 of the Commission's Rules of Practice,
 201.150 ".
     24.  In  200.111(d)(2), remove the words "Rule 9(c) of the
Commission's Rules of Practice,  201.9(c)", and, in their place,
add the words " Rule 210(c) of the Commission's Rules of
Practice,  201.210(c)".
Subpart H -- Regulations Pertaining to the Privacy of Individuals
and Systems of Records Maintained by the Commission
     25.  The general authority citation for part 200, subpart H
is revised to read as follows:
     Authority:  5 U.S.C. 552a(f), unless otherwise noted.
                      *    *    *    *    *

 200.312 [Amended]
     26.  In  200.312(a)(8), remove the words "Rule 2(e)", and,
in their place, add the words "Rule 102(e)".

Subpart K -- Regulations Pertaining to the Protection of the
Environment
     27.  The authority citation for part 200, subpart K is
revised to read as follows:
     Authority:  15 U.S.C. 78w(a)(2).

 200.554 [Amended]
     28. In  200.554(a), remove the words " 201.20", and, in
their place, add the words "Rule 460 of the Commission's Rules of
Practice,  201.460".

Subpart M -- Regulation Concerning Conduct of Members and
Employees and Former Members and Employees of the Commission
     29.  The authority citation for part 200, subpart M
continues to read as follows:
     Authority:  15 U.S.C. 77s, 78w, 79t, 77sss, 80a-37, 80b-11;
E. O. 11222; 3 CFR, 1964-1965 Comp.; 5 CFR 735.104 unless
otherwise noted.

 200.735-13 [Amended]
     30.  In  200.735-13(c), remove the words "Rule 2(e) of the
Commission's Rules of Practice, 17 CFR 201.2(e)", and "17 CFR
201.1" and, in their place, add the words "Rule 102(e) of the
Commission's Rules of Practice,  201.102(e) of this chapter" and
"17 CFR 201.100".

PART 201 -- RULES OF PRACTICE
     31.  The authority citation for Part 201 is removed.
Subpart A -- [Removed and Reserved] 
     32.  Subpart A is removed and reserved.
Subpart B -- Regulations Pertaining to the Equal Access to
Justice Act
     33.  The authority citation for Subpart B of Part 201 is
revised to read as follows:
     AUTHORITY: 15 U.S.C. 77s, 78w, 78x, 79t, 77sss, 80a-37 and
80b-11; 5 U.S.C. 504(c)(1).
     34.  In  201.42: the reference to "201.25" in paragraph (b)
is corrected to read "201.190".
     35.  In  201.54: the reference to "201.8" is corrected to
read "201.240".
     36.  In  201.57: the reference to "201.17" is corrected to
read "201.410 and 201.411".
     37.  Section 201.60 is removed and reserved.
 
-------------------- BEGINNING OF PAGE #124 ---------------------

Subpart C -- Procedures Pertaining to the Payment of Bounties
Pursuant to Subsection 21A(e) of the Securities Exchange Act of
1934
     38. The authority citation for Subpart C of Part 201 is
revised to read as follows:
     AUTHORITY: 15 U.S.C. 78u-1 and 78w.
     39. Subpart D is added to read as follows:
Subpart D -- Rules of Practice
     GENERAL RULES
Sec.
201.100   Scope of the Rules of Practice.
201.101   Definitions.
201.102   Appearance and practice before the Commission.
201.103   Construction of rules. 
201.104   Business hours. 
201.110   Presiding officer. 
201.111   Hearing officer:  authority.
201.112   Hearing officer:  disqualification and withdrawal. 
201.120   Ex parte communications. 
201.121   Separation of functions. 
201.140   Commission orders and decisions:  signature and
          availability. 
201.141   Orders and decisions:  service of orders instituting
          proceeding and other orders and decisions. 
201.150   Service of papers by parties. 
201.151   Filing of papers with the Commission:  procedure.
201.152   Filing of papers:  form. 
201.153   Filing of papers:  signature requirement and effect. 
201.154   Motions. 
201.155   Default; motion to set aside default. 
201.160   Time computation. 
201.161   Extensions of time, postponements and adjournments. 
201.180   Sanctions. 
201.190   Confidential treatment of information in certain
          filings. 
201.191   Adjudications not required to be determined on the
          record after notice and opportunity for hearing. 
201.192   Rulemaking:  issuance, amendment and repeal of rules of
          general application. 
201.193   Applications by barred individuals for consent to
          associate. 

     INITIATION OF PROCEEDINGS AND PREHEARING RULES

201.200   Initiation of proceedings.
201.201   Consolidation of proceedings.
201.202   Specification of procedures by parties in certain
          proceedings.
201.210   Parties, limited participants and amici curiae.
201.220   Answer to allegations. 
201.221   Prehearing conferences. 
201.222   Prehearing submissions.
201.230   Enforcement and disciplinary proceedings:  availability
          of documents for inspection and copying. 
201.231   Enforcement and disciplinary proceedings:  production
          of witness statements.
201.232   Subpoenas.
201.233   Depositions upon oral examination.
201.234   Depositions upon written questions.
201.235   Introducing prior sworn statements of witnesses into
          the record.
201.240   Settlement.
201.250   Motion for summary disposition.
 
-------------------- BEGINNING OF PAGE #125 ---------------------

     RULES REGARDING HEARINGS

201.300   Hearings.
201.301   Hearings to be public.
201.302   Record of hearings.
201.310   Failure to appear at hearings:  default.
201.320   Evidence:  admissibility.
201.321   Evidence:  objections and offers of proof.
201.322   Evidence:  confidential information, protective orders.
201.323   Evidence:  official notice.
201.324   Evidence:  stipulations.
201.325   Evidence:  presentation under oath or affirmation.
201.326   Evidence:  presentation, rebuttal and cross-
          examination.
201.340   Proposed findings, conclusions and supporting briefs.
201.350   Record in proceedings before hearing officer; retention
          of documents; copies.
201.351   Transmittal of documents to Secretary; record index;
          certification.
201.360   Initial decision of hearing officer.

     APPEAL TO THE COMMISSION AND COMMISSION REVIEW

201.400   Interlocutory review.
201.401   Issuance of stays.
201.410   Appeal of initial decisions by hearing officers.
201.411   Commission consideration of initial decisions by
          hearing officers.
201.420   Appeal of determinations by self-regulatory
          organizations.
201.421   Commission consideration of determinations by self-
          regulatory organizations.
201.430   Appeal of actions made pursuant to delegated authority.
201.431   Commission consideration of actions made pursuant to
          delegated authority.
201.450   Briefs filed with the Commission.
201.451   Oral argument before the Commission.
201.452   Additional evidence.
201.460   Record before the Commission.
201.470   Reconsideration.
201.490   Receipt of petitions for judicial review pursuant to 28
          U.S.C. 2112(a)(1).

     RULES RELATING TO TEMPORARY ORDERS AND SUSPENSIONS

201.500   Expedited consideration of proceedings.
201.510   Temporary cease-and-desist orders:  application
          process.
201.511   Temporary cease-and-desist orders:  notice; procedures
          for hearing.
201.512   Temporary cease-and-desist orders:  issuance after
          notice and opportunity for hearing.
201.513   Temporary cease-and-desist orders:  issuance without
          prior notice and opportunity for hearing.
201.514   Temporary cease-and-desist orders:  judicial review;
          duration.
201.520   Suspension of registration of brokers, dealers, or
          other Exchange Act-registered entities:  application.
201.521   Suspension of registration of brokers, dealers, or
          other Exchange Act-registered entities:  notice and
          opportunity for hearing on application.
201.522   Suspension of registration of brokers, dealers, or
          other Exchange Act-registered entities: issuance and
          review of order.
 
-------------------- BEGINNING OF PAGE #126 ---------------------

201.523   [Reserved].
201.524   Suspension of registrations:  duration.
201.530   Initial decision on permanent order:  timing for
          submitting proposed findings and preparation of
          decision.
201.531   Initial decision on permanent order:  effect on
          temporary order.
201.540   Appeal and Commission review of initial decision making
          a temporary order permanent.
201.550   Summary suspensions pursuant to Exchange Act Section
          12(k)(1)(A).

     RULES REGARDING DISGORGEMENT AND PENALTY PAYMENTS

201.600   Interest on sums disgorged.
201.601   Prompt payment of disgorgement, interest and penalties.
201.610   Submission of proposed plan of disgorgement.
201.611   Contents of plan of disgorgement; provisions for
          payment.
201.612   Notice of proposed plan of disgorgement and opportunity
          for comment by non-parties.
201.613   Order approving, modifying or disapproving proposed
          plan of disgorgement.
201.614   Administration of plan of disgorgement.
201.620   Right to challenge order of disgorgement.
201.630   Inability to pay disgorgement, interest or penalties.

     INFORMAL PROCEDURES AND SUPPLEMENTARY INFORMATION
CONCERNING
     ADJUDICATORY PROCEEDINGS

201.900   Informal Procedures and Supplementary Information
          Concerning Adjudicatory Proceedings.

Table I: Adversary Adjudications Conducted by the Commission
under 5 U.S.C. 554

Table II: Cross-reference table showing location of Rules of
Practice adopted in 1995 with former Rules of Practice, related
rules and statutory provisions. 

Table III: Cross-reference table showing location of former Rules
of Practice and related rules with Rules of Practice adopted in
1995 

Subpart D -- Rules of Practice
     AUTHORITY: 15 U.S.C. 77f, 77g, 77h, 77h-1, 77j, 77s, 77u,
78c(b), 78d-1, 78d-2, 78l, 78m, 78n, 78o(d), 78o-3, 78s, 78u-2,
78u-3, 78v, 78w, 79c, 79s, 79t, 79z-5a, 77sss, 77ttt, 80a-8, 80a-
9, 80a-37, 80a-38, 80a-39, 80a-40, 80a-41, 80a-44, 80b-3, 80b-9,
80b-11, and 80b-12 unless otherwise noted.

                          GENERAL RULES
  201.100 Scope of the Rules of Practice.
     (a)  Unless provided otherwise, these Rules of Practice
govern proceedings before the Commission under the statutes that
it administers.  
     (b)  These rules do not apply to:
     (1)  Investigations, except where made specifically
applicable by the Rules Relating to Investigations, part 203 of
this chapter; or 
     (2)  Actions taken by the duty officer pursuant to delegated
authority under 17 CFR 200.42.
  201.101 Definitions.
 
-------------------- BEGINNING OF PAGE #127 ---------------------

     (a)  For purposes of these Rules of Practice, unless
explicitly stated to the contrary:
     (1)  Commission means the United States Securities and
Exchange Commission, or a panel of Commissioners constituting a
quorum of the Commission, or a single Commissioner acting as duty
officer pursuant to 17 CFR 200.42; 
     (2)  Counsel means any attorney representing a party or any
other person representing a party pursuant to   201.102(b);
     (3)  Disciplinary proceeding means an action pursuant to
  201.102(e);
     (4)  Enforcement proceeding means an action, initiated by an
order instituting proceedings, held for the purpose of
determining whether or not a person is about to violate, has
violated, has caused a violation of, or has aided or abetted a
violation of any statute or rule administered by the Commission,
or whether to impose a sanction as defined in Section 551(10) of
the Administrative Procedure Act, 5 U.S.C. 551(10);
     (5)  Hearing officer means an administrative law judge, a
panel of Commissioners constituting less than a quorum of the
Commission, an individual Commissioner, or any other person duly
authorized to preside at a hearing;
     (6)  Interested division means a division or an office
assigned primary responsibility by the Commission to participate
in a particular proceeding;
     (7)  Order instituting proceedings means an order issued by
the Commission commencing a proceeding or an order issued by the
Commission to hold a hearing;
     (8)  Party means the interested division, any person named
as a respondent in an order instituting proceedings, any
applicant named in the caption of any order, persons entitled to
notice in a stop order proceeding as set forth in   201.200(a)(2)
or any person seeking Commission review of a decision;
     (9)  Proceeding means any agency process initiated by an
order instituting proceedings; or by the filing, pursuant to
  201.410, of a petition for review of an initial decision by a
hearing officer; or by the filing, pursuant to   201.420, of an
application for review of a self-regulatory organization
determination; or by the filing, pursuant to   201.430, of a
notice of intention to file a petition for review of a
determination made pursuant to delegated authority; 
     (10) Secretary means the Secretary of the Commission; and
     (11) Temporary sanction means a temporary cease-and-desist
order or a temporary suspension of the registration of a broker,
dealer, municipal securities dealer, government securities
broker, government securities dealer, or transfer agent pending
final determination whether the registration shall be revoked.
     (b)  [Reserved]
  201.102 Appearance and practice before the Commission.
     A person shall not be represented before the Commission or a
hearing officer except as stated in paragraphs (a) and (b) of
this section or as otherwise permitted by the Commission or a
hearing officer.
     (a)  Representing oneself.  In any proceeding, an individual
may appear on his or her own behalf. 
     (b)  Representing others.  In any proceeding, a person may
be represented by an attorney at law admitted to practice before
the Supreme Court of the United States or the highest court of
any State (as defined in Section 3(a)(16) of the Exchange Act, 15
U.S.C. 78c(a)(16)); a member of a partnership may represent the
partnership; a bona fide officer of a corporation, trust or
association may represent the corporation, trust or association;
and an officer or employee of a state commission or of a
department or political subdivision of a state may represent the
 
-------------------- BEGINNING OF PAGE #128 ---------------------

state commission or the department or political subdivision of
the state. 
     (c)  Former Commission employees.  Former employees of the
Commission must comply with the restrictions on practice
contained in the Commission's Conduct Regulation, Subpart M, 17
CFR 200.735.
     (d)  Designation of address for service; notice of
appearance; power of attorney; withdrawal. 
     (1)  Representing oneself.  When an individual first makes
any filing or otherwise appears on his or her own behalf before
the Commission or a hearing officer in a proceeding as defined in
  201.101(a), he or she shall file with the Commission, or
otherwise state on the record, and keep current, an address at
which any notice or other written communication required to be
served upon him or her or furnished to him or her may be sent and
a telephone number where he or she may be reached during business
hours.
     (2)  Representing others.  When a person first makes any
filing or otherwise appears in a representative capacity before
the Commission or a hearing officer in a proceeding as defined in
  201.101(a), that person shall file with the Commission, and
keep current, a written notice stating the name of the
proceeding; the representative's name, business address and
telephone number; and the name and address of the person or
persons represented.  
     (3)  Power of attorney.  Any individual appearing or
practicing before the Commission in a representative capacity may
be required to file a power of attorney with the Commission
showing his or her authority to act in such capacity.
     (4)  Withdrawal.  Withdrawal by any individual appearing in
a representative capacity shall be permitted only by order of the
Commission or the hearing officer.  A motion seeking leave to
withdraw shall state with specificity the reasons for such
withdrawal.
     (e)  Suspension and disbarment. 
     (1)  Generally.  The Commission may censure a person or
deny, temporarily or permanently, the privilege of appearing or
practicing before it in any way to any person who is found by the
Commission after notice and opportunity for hearing in the
matter: 
     (i)  Not to possess the requisite qualifications to
represent others; or 
     (ii) To be lacking in character or integrity or to have
engaged in unethical or improper professional conduct; or 
     (iii)     To have willfully violated, or willfully aided and
abetted the violation of any provision of the Federal securities
laws or the rules and regulations thereunder.
     (2)  Certain professionals and convicted persons.  Any
attorney who has been suspended or disbarred by a court of the
United States or of any State; or any person whose license to
practice as an accountant, engineer, or other professional or
expert has been revoked or suspended in any State; or any person
who has been convicted of a felony or a misdemeanor involving
moral turpitude shall be forthwith suspended from appearing or
practicing before the Commission.  A disbarment, suspension,
revocation or conviction within the meaning of this section shall
be deemed to have occurred when the disbarring, suspending,
revoking or convicting agency or tribunal enters its judgment or
order, including a judgment or order on a plea of nolo
contendere, regardless of whether an appeal of such judgment or
order is pending or could be taken. 
     (3)  Temporary suspensions.  An order of temporary
suspension shall become effective upon service on the respondent.

No order of temporary suspension shall be entered by the
 
-------------------- BEGINNING OF PAGE #129 ---------------------

Commission pursuant to paragraph (e)(3)(i) of this section more
than 90 days after the date on which the final judgment or order
entered in a judicial or administrative proceeding described in
paragraph (e)(3)(i)(A) or (e)(3)(i)(B) of this section has become
effective, whether upon completion of review or appeal procedures
or because further review or appeal procedures are no longer
available.
     (i)  The Commission, with due regard to the public interest
and without preliminary hearing, may, by order, temporarily
suspend from appearing or practicing before it any attorney,
accountant, engineer, or other professional or expert who has
been by name:
     (A)  Permanently enjoined by any court of competent
jurisdiction, by reason of his or her misconduct in an action
brought by the Commission, from violating or aiding and abetting
the violation of any provision of the Federal securities laws or
of the rules and regulations thereunder; or
     (B)  Found by any court of competent jurisdiction in an
action brought by the Commission to which he or she is a party or
found by the Commission in any administrative proceeding to which
he or she is a party to have violated (unless the violation was
found not to have been willful) or aided and abetted the
violation of any provision of the Federal securities laws or of
the rules and regulations thereunder.
     (ii) Any person temporarily suspended from appearing and
practicing before the Commission in accordance with paragraph
(e)(3)(i) of this section may, within 30 days after service upon
him or her of the order of temporary suspension, petition the
Commission to lift the temporary suspension.  If no petition has
been received by the Commission within 30 days after service of
the order, the suspension shall become permanent. 
     (iii)     Within 30 days after the filing of a petition in
accordance with paragraph (e)(3)(ii) of this section, the
Commission shall either lift the temporary suspension, or set the
matter down for hearing at a time and place designated by the
Commission, or both, and, after opportunity for hearing, may
censure the petitioner or disqualify the petitioner from
appearing or practicing before the Commission for a period of
time or permanently.  In every case in which the temporary
suspension has not been lifted, every hearing held and other
action taken pursuant to this paragraph (e)(3) shall be expedited
in accordance with   201.500.  If the hearing is held before a
hearing officer, the time limits set forth in   201.531 will
govern review of the hearing officer's initial decision. 
     (iv) In any hearing held on a petition filed in accordance
with paragraph (e)(3)(ii) of this section, the staff of the
Commission shall show either that the petitioner has been
enjoined as described in paragraph (e)(3)(i)(A) of this section
or that the petitioner has been found to have committed or aided
and abetted violations as described in paragraph (e)(3)(i)(B) of
this section and that showing, without more, may be the basis for
censure or disqualification.  Once that showing has been made,
the burden shall be upon the petitioner to show cause why he or
she should not be censured or temporarily or permanently
disqualified from appearing and practicing before the Commission.

In any such hearing, the petitioner may not contest any finding
made against him or her or fact admitted by him or her in the
judicial or administrative proceeding upon which the proceeding
under this paragraph (e)(3) is predicated.  A person who has
consented to the entry of a permanent injunction as described in
paragraph (e)(3)(i)(A) of this section without admitting the
facts set forth in the complaint shall be presumed for all
purposes under this paragraph (e)(3) to have been enjoined by
reason of the misconduct alleged in the complaint.
 
-------------------- BEGINNING OF PAGE #130 ---------------------

     (4)  Filing of prior orders.  Any person appearing or
practicing before the Commission who has been the subject of an
order, judgment, decree, or finding as set forth in paragraph
(e)(3) of this section shall promptly file with the Secretary a
copy thereof (together with any related opinion or statement of
the agency or tribunal involved).  Failure to file any such
paper, order, judgment, decree or finding shall not impair the
operation of any other provision of this section.
     (5)  Reinstatement. 
     (i)  An application for reinstatement of a person
permanently suspended or disqualified under paragraph (e)(1) or
(e)(3) of this section may be made at any time, and the applicant
may, in the Commission's discretion, be afforded a hearing;
however, the suspension or disqualification shall continue unless
and until the applicant has been reinstated by the Commission for
good cause shown.
     (ii) Any person suspended under paragraph (e)(2) of this
section shall be reinstated by the Commission, upon appropriate
application, if all the grounds for application of the provisions
of that paragraph are subsequently removed by a reversal of the
conviction or termination of the suspension, disbarment, or
revocation.  An application for reinstatement on any other
grounds by any person suspended under paragraph (e)(2) of this
section may be filed at any time and the applicant shall be
accorded an opportunity for a hearing in the matter; however,
such suspension shall continue unless and until the applicant has
been reinstated by order of the Commission for good cause shown.
     (6)  Other proceedings not precluded.  A proceeding brought
under paragraph (e)(1), (e)(2) or (e)(3) of this section shall
not preclude another proceeding brought under these same
paragraphs.
     (7)  Public hearings.  All hearings held under this
paragraph (e) shall be public unless otherwise ordered by the
Commission on its own motion or after considering the motion of a
party. 
     (f)  Practice defined.  For the purposes of these Rules of
Practice, practicing before the Commission shall include, but
shall not be limited to:
     (1)  Transacting any business with the Commission; and
     (2)  The preparation of any statement, opinion or other
paper by any attorney, accountant, engineer or other professional
or expert, filed with the Commission in any registration
statement, notification, application, report or other document
with the consent of such attorney, accountant, engineer or other
professional or expert.
  201.103 Construction of rules.
     (a)  The Rules of Practice shall be construed and
administered to secure the just, speedy, and inexpensive
determination of every proceeding. 
     (b)  In any particular proceeding, to the extent that there
is a conflict between these rules and a procedural requirement
contained in any statute, or any rule or form adopted thereunder,
the latter shall control.
     (c)  For purposes of these rules:
     (1)  Any term in the singular includes the plural, and any
term in the plural includes the singular, if such use would be
appropriate;
     (2)  Any use of a masculine, feminine, or neuter gender
encompasses such other genders as would be appropriate; and
     (3)  Unless the context requires otherwise, counsel for a
party may take any action required or permitted to be taken by
such party.  
  201.104 Business hours.
 
-------------------- BEGINNING OF PAGE #131 ---------------------

     The Headquarters office of the Commission, at 450 Fifth
Street, N.W., Washington, D.C. 20549, is open each day, except
Saturdays, Sundays, and Federal legal holidays, from 9 a.m. to
5:30 p.m., Eastern Standard Time or Eastern Daylight Saving Time,
whichever is currently in effect in Washington, D.C.  Federal
legal holidays consist of New Year's Day; Birthday of Martin
Luther King, Jr.; Presidents Day; Memorial Day; Independence Day;
Labor Day; Columbus Day; Veterans Day; Thanksgiving Day;
Christmas Day; and any other day appointed as a holiday in
Washington, D.C. by the President or the Congress of the United
States. 
  201.110 Presiding officer.
     All proceedings shall be presided over by the Commission or,
if the Commission so orders, by a hearing officer.  When the
Commission designates that the hearing officer shall be an
administrative law judge, the Chief Administrative Law Judge
shall select, pursuant to 17 CFR 200.30-10, the administrative
law judge to preside. 
  201.111 Hearing officer: authority.  
     The hearing officer shall have the authority to do all
things necessary and appropriate to discharge his or her duties. 
No provision of these Rules of Practice shall be construed to
limit the powers of the hearing officer provided by the
Administrative Procedure Act, 5 U.S.C. 556, 557.  The powers of
the hearing officer include, but are not limited to, the
following:
     (a)  Administering oaths and affirmations; 
     (b)  Issuing subpoenas authorized by law and revoking,
quashing, or modifying any such subpoena;
     (c)  Receiving relevant evidence and ruling upon the
admission of evidence and offers of proof;
     (d)  Regulating the course of a proceeding and the conduct
of the parties and their counsel;
     (e)  Holding prehearing and other conferences as set forth
in   201.221 and requiring the attendance at any such conference
of at least one representative of each party who has authority to
negotiate concerning the resolution of issues in controversy; 
     (f)  Recusing himself or herself upon motion made by a party
or upon his or her own motion;
     (g)  Ordering, in his or her discretion, in a proceeding
involving more than one respondent, that the interested division
indicate, on the record, at least one day prior to the
presentation of any evidence, each respondent against whom that
evidence will be offered;
     (h)  Subject to any limitations set forth elsewhere in these
rules, considering and ruling upon all procedural and other
motions; 
     (i)  Preparing an initial decision as provided in   201.360;

     (j)  Upon notice to all parties, reopening any hearing prior
to the filing of an initial decision therein, or, if no initial
decision is to be filed, prior to the time fixed for the filing
of final briefs with the Commission; and
     (k)  Informing the parties as to the availability of one or
more alternative means of dispute resolution, and encouraging the
use of such methods.  
  201.112 Hearing officer: disqualification and withdrawal.
     (a)  Notice of disqualification.  At any time a hearing
officer believes himself or herself to be disqualified from
considering a matter, the hearing officer shall issue a notice
stating that he or she is withdrawing from the matter and setting
forth the reasons therefor.  
     (b)  Motion for withdrawal.  Any party who has a reasonable,
good faith basis to believe that a hearing officer has a personal
 
-------------------- BEGINNING OF PAGE #132 ---------------------

bias, or is otherwise disqualified from hearing a case, may make
a motion to the hearing officer that the hearing officer
withdraw.  The motion shall be accompanied by an affidavit
setting forth in detail the facts alleged to constitute grounds
for disqualification.  If the hearing officer finds himself or
herself not disqualified, he or she shall so rule and shall
continue to preside over the proceeding. 
  201.120 Ex parte communications.
     (a)  Except to the extent required for the disposition of ex
parte matters as authorized by law, the person presiding over an
evidentiary hearing may not: 
     (1)  Consult a person or party on a fact in issue, unless on
notice and opportunity for all parties to participate; or 
     (2)  Be responsible to or subject to the supervision or
direction of an employee or agent engaged in the performance of
investigative or prosecuting functions for the Commission.
     (b)  The Commission's code of behavior regarding ex parte
communications between persons outside the Commission and
decisional employees, 17 CFR 200.110 - 200.114, governs other
prohibited communications during a proceeding conducted under the
Rules of Practice.
  201.121 Separation of functions.
     Any Commission officer, employee or agent engaged in the
performance of investigative or prosecutorial functions for the
Commission in a proceeding as defined in   201.101(a) may not, in
that proceeding or one that is factually related, participate or
advise in the decision, or in Commission review of the decision
pursuant to Section 557 of the Administrative Procedure Act, 5
U.S.C. 557, except as a witness or counsel in the proceeding.
  201.140 Commission orders and decisions: signature and
          availability.
     (a)  Signature required.  All orders and decisions of the
Commission shall be signed by the Secretary or any other person
duly authorized by the Commission. 
     (b)  Availability for inspection.  Each order and decision
shall be available for inspection by the public from the date of
entry, unless the order or decision is nonpublic.  A nonpublic
order or decision shall be available for inspection by any person
entitled to inspect it from the date of entry. 
     (c)  Date of entry of orders.  The date of entry of a
Commission order shall be the date the order is signed.  Such
date shall be reflected in the caption of the order, or if there
is no caption, in the order itself.  
  201.141 Orders and decisions: service of orders instituting
          proceeding and other orders and decisions.
     (a)  Service of an order instituting proceedings. 
     (1)  By whom made.  The Secretary, or another duly
authorized officer of the Commission, shall serve a copy of an
order instituting proceedings on each person named in the order
as a party.  The Secretary may direct an interested division to
assist in making service.  
     (2)  How made. 
     (i)  To individuals.  Notice of a proceeding shall be made
to an individual by delivering a copy of the order instituting
proceedings to the individual or to an agent authorized by
appointment or by law to receive such notice.  Delivery means --
handing a copy of the order to the individual; or leaving a copy
at the individual's office with a clerk or other person in charge
thereof; or leaving a copy at the individual's dwelling house or
usual place of abode with some person of suitable age and
discretion then residing therein; or sending a copy of the order
addressed to the individual by U.S. Postal Service certified,
registered or Express Mail and obtaining a confirmation of
receipt; or giving confirmed telegraphic notice.  
 
-------------------- BEGINNING OF PAGE #133 ---------------------

     (ii)  To corporations or entities.  Notice of a proceeding
shall be made to a person other than a natural person by
delivering a copy of the order instituting proceedings to an
officer, managing or general agent, or any other agent authorized
by appointment or by law to receive such notice, by any method
specified in paragraph (a)(2)(i) of this section.  
     (iii)  Upon persons registered with the Commission.   In
addition to any other method of service specified in paragraph
(a)(2) of this section, notice may be made to a person currently
registered with the Commission as a broker, dealer, municipal
securities dealer, government securities broker, government
securities dealer, investment adviser, investment company or
transfer agent by sending a copy of the order addressed to the
most recent business address shown on the person's registration
form by U.S. Postal Service certified, registered or Express Mail
and obtaining a confirmation of attempted delivery.    (iv)  Upon
persons in a foreign country.  Notice of a proceeding to a person
in a foreign country may be made by any method specified in
paragraph (a)(2) of this section, or by any other method
reasonably calculated to give notice, provided that the method of
service used is not prohibited by the law of the foreign country.


     (v)  In stop order proceedings.  Notwithstanding any other
provision of paragraph (a)(2) of this section, in proceedings
pursuant to Sections 8 or 10 of the Securities Act of 1933, 15
U.S.C. 77h or 77j, or Sections 305 or 307 of the Trust Indenture
Act of 1939, 15 U.S.C. 77eee or 77ggg, notice of the institution
of proceedings shall be made by personal service or confirmed
telegraphic notice, or a waiver obtain pursuant to paragraph
(a)(4) of this section.
     (3)  Certificate of service.  The Secretary shall place in
the record of the proceeding a certificate of service identifying
the party given notice, the method of service, the date of
service, the address to which service was made and the person who
made service.  If service is made in person, the certificate
shall state, if available, the name of the individual to whom the
order was given.  If service is made by U.S. Postal Service
certified, registered or Express Mail, the certificate shall be
accompanied by a confirmation of receipt or of attempted
delivery, as required.  If service is made to an agent authorized
by appointment to receive service, the certificate shall be
accompanied by evidence of the appointment. 
     (4)  Waiver of service.  In lieu of service as set forth in
paragraph (a)(2) of this section, the party may be provided a
copy of the order instituting proceedings by first class mail or
other reliable means if a waiver of service is obtained from the
party and placed in the record.  
     (b)  Service of orders or decisions other than an order
instituting proceedings.  Written orders or decisions issued by
the Commission or by a hearing officer shall be served promptly
on each party pursuant to any method of service authorized under
paragraph (a) of this section or   201.150(c).  Service of orders
or decisions by the Commission, including those entered pursuant
to delegated authority, shall be made by the Secretary or, as
authorized by the Secretary, by a member of an interested
division.  Service of orders or decisions issued by a hearing
officer shall be made by the Secretary or the hearing officer.  
  201.150 Service of papers by parties.
     (a)  When required.  In every proceeding as defined in
  201.101(a), each paper, including each notice of appearance,
written motion, brief, or other written communication, shall be
served upon each party in the proceeding in accordance with the
provisions of this section; provided, however, that absent an
 
-------------------- BEGINNING OF PAGE #134 ---------------------

order to the contrary, no service shall be required for motions
which may be heard ex parte. 
     (b)  Upon a person represented by counsel.  Whenever service
is required to be made upon a person represented by counsel who
has filed a notice of appearance pursuant to   201.102, service
shall be made pursuant to paragraph (c) of this section upon
counsel, unless service upon the person represented is ordered by
the Commission or the hearing officer. 
     (c)  How made.  Service shall be made by delivering a copy
of the filing.  Delivery means: 
     (1)  Personal service -- handing a copy to the person
required to be served; or leaving a copy at the person's office
with a clerk or other person in charge thereof, or, if there is
no one in charge, leaving it in a conspicuous place therein; or,
if the office is closed or the person to be served has no office,
leaving it at the person's dwelling house or usual place of abode
with some person of suitable age and discretion then residing
therein;
     (2)  Mailing the papers through the U.S. Postal Service by
first class, registered, or certified mail or Express Mail
delivery addressed to the person;  
     (3)  Sending the papers through a commercial courier service
or express delivery service; or
     (4)  Transmitting the papers by facsimile machine where the
following conditions are met:
     (i)  The persons serving each other by facsimile
transmission have agreed to do so in a writing, signed by each
party, which specifies such terms as they deem necessary with
respect to facsimile machine telephone numbers to be used, hours
of facsimile machine operation, the provision of non-facsimile
original or copy, and any other such matters; and
     (ii) Receipt of each document served by facsimile is
confirmed by a manually signed receipt delivered by facsimile
machine or other means agreed to by the parties.  
     (d)  When service is complete.  Personal service, service by
U.S. Postal Service Express Mail or service by a commercial
courier or express delivery service is complete upon delivery. 
Service by mail is complete upon mailing.  Service by facsimile
is complete upon confirmation of transmission by delivery of a
manually signed receipt.  
  201.151 Filing of papers with the Commission: procedure.
     (a)  When to file.  All papers required to be served by a
party upon any person shall be filed with the Commission at the
time of service or promptly thereafter.  Papers required to be
filed with the Commission must be received within the time limit,
if any, for such filing.  
     (b)  Where to file.  Filing of papers with the Commission
shall be made by filing them with the Secretary.  When a
proceeding is assigned to a hearing officer, a person making a
filing with the Secretary shall promptly provide to the hearing
officer a copy of any such filing, provided, however, that the
hearing officer may direct or permit filings to be made with him
or her, in which event the hearing officer shall note thereon the
filing date and promptly provide the Secretary with either the
original or a copy of any such filings. 
     (c)  To whom to direct the filing.  Unless otherwise
provided, where the Commission has assigned a case to a hearing
officer, all motions, objections, applications or other filings
made during a proceeding prior to the filing of an initial
decision therein, or, if no initial decision is to be filed,
prior to the time fixed for the filing of briefs with the
Commission, shall be directed to and decided by the hearing
officer. 
 
-------------------- BEGINNING OF PAGE #135 ---------------------

     (d)  Certificate of service.  Papers filed with the
Commission or a hearing officer shall be accompanied by a
certificate stating the name of the person or persons served, the
date of service, the method of service and the mailing address or
facsimile telephone number to which service was made, if not made
in person.  If the method of service to any party is different
from the method of service to any other party or the method for
filing with the Commission, the certificate shall state why a
different means of service was used. 
  201.152 Filing of papers: form.
     (a)  Specifications.  Papers filed in connection with any
proceeding as defined in   201.101(a) shall:
     (1)  Be on one grade of unglazed white paper measuring 8  x
11 inches, except that, to the extent that the reduction of
larger documents would render them illegible, such documents may
be filed on larger paper;  
     (2)  Be typewritten or printed in either 10- or 12-point
typeface or otherwise reproduced by a process that produces
permanent and plainly legible copies; 
     (3)  Include at the head of the paper, or on a title page,
the name of the Commission, the title of the proceeding, the
names of the parties, the subject of the particular paper or
pleading, and the file number assigned to the proceeding;
     (4)  Be paginated with left hand margins at least 1 inch
wide, and other margins of at least 1 inch; 
     (5)  Be double-spaced, with single-spaced footnotes and
single-spaced indented quotations; and
     (6)  Be stapled, clipped or otherwise fastened in the upper
left corner.
     (b)  Signature required.  All papers must be dated and
signed as provided in   201.153.
     (c)  Suitability for recordkeeping.  Documents which, in the
opinion of the Commission, are not suitable for computer scanning
or microfilming may be rejected.  
     (d)  Number of copies.  An original and three copies of all
papers shall be filed.  
     (e)  Form of briefs.  All briefs containing more than 10
pages shall include a table of contents, an alphabetized table of
cases, a table of statutes, and a table of other authorities
cited, with references to the pages of the brief wherein they are
cited.
     (f)  Scandalous or impertinent matter.  Any scandalous or
impertinent matter contained in any brief or pleading or in
connection with any oral presentation in a proceeding may be
stricken on order of the Commission or the hearing officer. 
  201.153 Filing of papers: signature requirement and effect. 
     (a)  General requirements.  Following the issuance of an
order instituting proceedings, every filing of a party
represented by counsel shall be signed by at least one counsel of
record in his or her name and shall state that counsel's business
address and telephone number.  A party who acts as his or her own
counsel shall sign his or her individual name and state his or
her address and telephone number on every filing.
     (b)  Effect of signature.  
     (1)  The signature of a counsel or party shall constitute a
certification that: 
     (i)  the person signing the filing has read the filing;
     (ii) to the best of his or her knowledge, information, and
belief, formed after reasonable inquiry, the filing is well
grounded in fact and is warranted by existing law or a good faith
argument for the extension, modification, or reversal of existing
law; and 
 
-------------------- BEGINNING OF PAGE #136 ---------------------

     (iii)     the filing is not made for any improper purpose,
such as to harass or to cause unnecessary delay or needless
increase in the cost of adjudication.  
     (2)  If a filing is not signed, the hearing officer or the
Commission shall strike the filing, unless it is signed promptly
after the omission is called to the attention of the person
making the filing.
  201.154 Motions.
     (a)  Generally.  Unless made during a hearing or conference,
a motion shall be in writing, shall state with particularity the
grounds therefor, shall set forth the relief or order sought, and
shall be accompanied by a written brief of the points and
authorities relied upon.  All written motions shall be served in
accordance with   201.150, be filed in accordance with   201.151,
meet the requirements of   201.152, and be signed in accordance
with   201.153.  The Commission or the hearing officer may order
that an oral motion be submitted in writing.  Unless otherwise
ordered by the Commission or the hearing officer, if a motion is
properly made to the Commission concerning a proceeding to which
a hearing officer is assigned, the proceeding before the hearing
officer shall continue pending the determination of the motion by
the Commission.  No oral argument shall be heard on any motion
unless the Commission or the hearing officer otherwise directs.  
     (b)  Opposing and reply briefs.  Except as provided in
  201.401, briefs in opposition to a motion shall be filed within
five days after service of the motion.  Reply briefs shall be
filed within three days after service of the opposition.
     (c)  Length limitation.  A brief in support of or opposition
to a motion shall not exceed 10 pages, exclusive of pages
containing any table of contents, table of authorities, and/or
addendum.  Requests for leave to file briefs in excess of 10
pages are disfavored.
  201.155 Default; motion to set aside default.
     (a)  A party to a proceeding may be deemed to be in default
and the Commission or the hearing officer may determine the
proceeding against that party upon consideration of the record,
including the order instituting proceedings, the allegations of
which may be deemed to be true, if that party fails: 
     (1)  To appear, in person or through a representative, at a
hearing or conference of which that party has been notified; 
     (2)  To answer, to respond to a dispositive motion within
the time provided, or otherwise to defend the proceeding; or
     (3)  To cure a deficient filing within the time specified by
the commission or the hearing officer pursuant to   201.180(b).
     (b)  A motion to set aside a default shall be made within a
reasonable time, state the reasons for the failure to appear or
defend, and specify the nature of the proposed defense in the
proceeding.  In order to prevent injustice and on such conditions
as may be appropriate, the hearing officer, at any time prior to
the filing of the initial decision, or the Commission, at any
time, may for good cause shown set aside a default. 
  201.160 Time computation.
     (a)  Computation.  In computing any period of time
prescribed in or allowed by these Rules of Practice or by order
of the Commission, the day of the act, event, or default from
which the designated period of time begins to run shall not be
included.  The last day of the period so computed shall be
included unless it is a Saturday, Sunday, or Federal legal
holiday (as defined in   201.104), in which event the period runs
until the end of the next day that is not a Saturday, Sunday, or
Federal legal holiday.  Intermediate Saturdays, Sundays, and
Federal legal holidays shall be excluded from the computation
when the period of time prescribed or allowed is seven days or
less, not including any additional time allowed for service by
 
-------------------- BEGINNING OF PAGE #137 ---------------------

mail in paragraph (b) of this section.  If on the day a filing is
to be made, weather or other conditions have caused the
Secretary's office or other designated filing location to close,
the filing deadline shall be extended to the end of the next day
that is neither a Saturday, a Sunday, nor a Federal legal
holiday.  
     (b)  Additional time for service by mail.  If service is
made by  filings shall not be part
of the record.  The Commission or the hearing officer may direct
a party to cure any deficiencies and to resubmit the filing
within a fixed time period. 
     (c)  Failure to make required filing or to cure deficient
filing.  The Commission or the hearingf his or her initial
decision or, if no
initial decision is to be filed, at any time prior to the closing
of the record, may, for good cause shown, extend or shorten any
time limits prescribed by these Rules of Practice for the filing
of any papers and may, consistent with paragraph (b) of this
section, postpone or adjourn any hearing.  
     (b)  Limitations on postponements, adjournments and
extensions.  A hearing shall begin at the time and place ordered,
provided that, within the limits provided by statute, the
Commission or the hearing officer may for good cause shown
postpone the commencement of the hearing or adjourn a convened
hearing for a reasonable period of time or change the place of
hearing. 
     (1)  Additional considerations.  In considering a motion for
postponement of the start of a hearing, adjournment once a
hearing has begun, or extensions of time for filing papers, the
hearing officer or the Commission shall consider, in addition to
any other factors:  
     (i)  The length of the proceeding to date;
     (ii) The number of postponements, adjournments or extensions
already granted;
     (iii)     The stage of the proceedings at the time of the
request; and
     (iv) Any other such matters as justice may require. 
     (2)  Time limit.  Postponements, adjournments or extensions
of time for filing papers shall not exceed 21 days unless the
Commission or the hearing officer states on the record or sets
forth in a written order the reasons why a longer period of time
is necessary. 
  201.180 Sanctions.  
     (a)  Contemptuous conduct.  
     (1)  Subject to exclusion or suspension.  Contemptuous
conduct by any person before the Commission or a hearing officer
during any proceeding, including any conference, shall be grounds
for the Commission or the hearing officer to:
     (i)  Exclude that person from such hearing or conference, or
any portion thereof; and/or
     (ii) Summarily suspend that person from representing others
in the proceeding in which such conduct occurred for the
duration, or any portion, of the proceeding. 
     (2)  Review procedure.  A person excluded from a hearing or
conference, or a counsel summarily suspended from practice for
the duration or any portion of a proceeding, may seek review of
the exclusion or suspension by filing with the Commission, within
three days of the exclusion or suspension order, a motion to
vacate the order.  The Commission shall consider such motion on
an expedited basis as provided in   201.500. 
     (3)  Adjournment.  Upon motion by a party represented by
counsel subject to an order of exclusion or suspension, an
adjournment shall be granted to allow the retention of new
counsel.  In determining the length of an adjournment, the
Commission or hearing officer shall consider, in addition to the
 
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factors set forth in   201.161, the availability of co-counsel
for the party or of other members of a suspended counsel's firm.
     (b)  Deficient filings; leave to cure deficiencies.  The
Commission or the hearing officer may reject, in whole or in
part, any filing that fails to comply with any requirements of
these Rules of Practice or of any order issued in the proceeding
in which the filing was made.  Any such filings shall not be part
of the record.  The Commission or the hearing officer may direct
a party to cure any deficiencies and to resubmit the filing
within a fixed time period. 
     (c)  Failure to make required filing or to cure deficient
filing.  The Commission or the hearing officer may enter a
default pursuant to   201.155, dismiss the case, decide the
particular matter at issue against that person, or prohibit the
introduction of evidence or exclude testimony concerning that
matter if a person fails:
     (1)  To make a filing required under these Rules of
Practice; or 
     (2)  To cure a deficient filing within the time specified by
the Commission or the hearing officer pursuant to paragraph (b)
of this section.
  201.190 Confidential treatment of information in certain
          filings.  
     (a)  Application.  An application for confidential treatment
pursuant to the provisions of Clause 30 of Schedule A of the
Securities Act of 1933, 15 U.S.C. 77aa(30), and Rule 406
thereunder, 17 CFR 230.406; Section 24(b)(2) of the Securities
Exchange Act of 1934, 15 U.S.C. 78x(b)(2), and Rule 24b-2
thereunder, 17 CFR 240.24b-2; Section 22(b) of the Public Utility
Holding Company Act of 1935, 15 U.S.C. 79v(b), and Rule 104
thereunder, 17 CFR 250.104; Section 45(a) of the Investment
Company Act of 1940, 15 U.S.C. 80a-44(a), and Rule 45a-1
thereunder, 17 CFR 270.45a-1; or Section 210(a) of the Investment
Advisers Act of 1940, 15 U.S.C. 80b-10(a), shall be filed with
the Secretary.  The application shall be accompanied by a sealed
copy of the materials as to which confidential treatment is
sought. 
     (b)  Procedure for supplying additional information.  The
applicant may be required to furnish in writing additional
information with respect to the grounds for objection to public
disclosure.  Failure to supply the information so requested
within 14 days from the date of receipt by the applicant of a
notice of the information required shall be deemed a waiver of
the objection to public disclosure of that portion of the
information to which the additional information relates, unless
the Commission or the hearing officer shall otherwise order for
good cause shown at or before the expiration of such 14-day
period.
     (c)  Confidentiality of materials pending final decision. 
Pending the determination of the application for confidential
treatment, transcripts, non-final orders including an initial
decision, if any, and other materials in connection with the
application shall be placed under seal; shall be for the
confidential use only of the hearing officer, the Commission, the
applicant, and any other parties and counsel; and shall be made
available to the public only in accordance with orders of the
Commission.  
     (d)  Public availability of orders.  Any final order of the
Commission denying or sustaining an application for confidential
treatment shall be made public.  Any prior findings or opinions
relating to an application for confidential treatment under this
section shall be made public at such time as the material as to
which confidentiality was requested is made public.
 
-------------------- BEGINNING OF PAGE #139 ---------------------

  201.191 Adjudications not required to be determined on the
          record after notice and opportunity for hearing. 
     (a)  Scope of the rule.  This rule applies to every case of
adjudication, as defined in 5 U.S.C. 551, pursuant to any statute
which the Commission administers, where adjudication is not
required to be determined on the record after notice and
opportunity for hearing and which the Commission has not chosen
to determine on the record after notice and opportunity for
hearing. 
     (b)  Procedure.  In every case of adjudication under
paragraph (a) of this section, the Commission shall give prompt
notice of any adverse action or final disposition to any person
who has requested the Commission to make (or not to make) any
such adjudication, and furnish to any such person a written
statement of reasons therefor.  Additional procedures may be
specified in rules relating to specific types of such
adjudications.  Where any such rule provides for the publication
of a Commission order, notice of the action or disposition shall
be deemed to be given by such publication. 
     (c)  Contents of the record.  If the Commission provides
notice and opportunity for the submission of written comments by
parties to the adjudication or, as the case may be, by other
interested persons, written comments received on or before the
closing date for comments, unless accorded confidential treatment
pursuant to statute or rule of the Commission, become a part of
the record of the adjudication.  The Commission, in its
discretion, may accept and include in the record written comments
filed with the Commission after the closing date.  
  201.192 Rulemaking: issuance, amendment and repeal of rules of
          general application. 
     (a)  By petition.  Any person desiring the issuance,
amendment or repeal of a rule of general application may file a
petition therefor with the Secretary.  Such petition shall
include a statement setting forth the text or the substance of
any proposed rule or amendment desired or specifying the rule the
repeal of which is desired, and stating the nature of his or her
interest and his or her reasons for seeking the issuance,
amendment or repeal of the rule.  The Secretary shall
acknowledge, in writing, receipt of the petition and refer it to
the appropriate division or office for consideration and
recommendation.  Such recommendations shall be transmitted with
the petition to the Commission for such action as the Commission
deems appropriate.  The Secretary shall notify the petitioner of
the action taken by the Commission.
     (b)  Notice of proposed issuance, amendment or repeal of
rules.  Except where the Commission finds that notice and public
procedure are impracticable, unnecessary, or contrary to the
public interest, whenever the Commission proposes to issue,
amend, or repeal any rule or regulation of general application
other than an interpretive rule; general statement of policy; or
rule of agency organization, procedure, or practice; or any
matter relating to agency management or personnel or to public
property, loans, grants, benefits, or contracts, there shall
first be published in the Federal Register a notice of the
proposed action.  Such notice shall include:  
     (1)  A statement of the time, place, and nature of the
rulemaking proceeding, with particular reference to the manner in
which interested persons shall be afforded the opportunity to
participate in such proceeding;
     (2)  Reference to the authority under which the rule is
proposed; and 
     (3)  The terms or substance of the proposed rule or a
description of the subjects and issues involved.
 
-------------------- BEGINNING OF PAGE #140 ---------------------

  201.193 Applications by barred individuals for consent to
          associate. 
                         PRELIMINARY NOTE
     This rule governs applications to the Commission by certain
persons, barred by Commission order from association with
brokers, dealers, municipal securities dealers, government
securities brokers, government securities dealers, investment
advisers, investment companies or transfer agents, for consent to
become so associated.  Applications made pursuant to this section
must show that the proposed association would be consistent with
the public interest.  In addition to the information specifically
required by the rule, applications should be supplemented, where
appropriate, by written statements of individuals (other than the
applicant) who are competent to attest to the applicant's
character, employment performance, and other relevant
information.  Intentional misstatements or omissions of fact may
constitute criminal violations of 18 U.S.C. 1001 et seq. and
other provisions of law.
     The nature of the supervision that an applicant will receive
or exercise as an associated person with a registered entity is
an important matter bearing upon the public interest.  In meeting
the burden of showing that the proposed association is consistent
with the public interest, the application and supporting
documentation must demonstrate that the proposed supervision,
procedures, or terms and conditions of employment are reasonably
designed to prevent a recurrence of the conduct that led to
imposition of the bar.  As an associated person, the applicant
will be limited to association in a specified capacity with a
particular registered entity and may also be subject to specific
terms and conditions.
     Normally, the applicant's burden of demonstrating that the
proposed association is consistent with the public interest will
be difficult to meet where the applicant is to be supervised by,
or is to supervise, another barred individual.  In addition,
where an applicant wishes to become the sole proprietor of a
registered entity and thus is seeking Commission consent
notwithstanding an absence of supervision, the applicant's burden
will be difficult to meet.
     In addition to the factors set forth in paragraph (d) of
this section, the Commission will consider the nature of the
findings that resulted in the bar when making its determination
as to whether the proposed association is consistent with the
public interest.  In this regard, attention is directed to Rule
5(e) of the Commission's Rules on Informal and Other Procedures,
17 CFR 202.5(e).  Among other things, Rule 5(e) sets forth the
Commission's policy "not to permit a . . . respondent [in an
administrative proceeding] to consent to . . . [an] order that
imposes a sanction while denying the allegations in the . . .
order for proceedings."  Consistent with the rationale underlying
that policy, and in order to avoid the appearance that an
application made pursuant to this section was granted on the
basis of such denial, the Commission will not consider any
application that attempts to reargue or collaterally attack the
findings that resulted in the Commission's bar order.
     (a)  Scope of rule.  Applications for Commission consent to
associate, or to change the terms and conditions of association,
with a registered broker, dealer, municipal securities dealer,
government securities broker, government securities dealer,
investment adviser, investment company or transfer agent may be
made pursuant to this section where a Commission order bars the
individual from association with a registered entity and:
     (1)  Such barred individual seeks to become associated with
an entity that is not a member of a self-regulatory organization;
or
 
-------------------- BEGINNING OF PAGE #141 ---------------------

     (2)  The order contains a proviso that application may be
made to the Commission after a specified period of time.
     (b)  Form of application.  Each application shall be
supported by an affidavit, manually signed by the applicant, that
addresses the factors set forth in paragraph (d) of this section.

One original and three copies of the application shall be filed
pursuant to    201.151, 201.152 and 201.153.  Each application
shall include as exhibits: 
     (1)  A copy of the Commission order imposing the bar; 
     (2)  An undertaking by the applicant to notify immediately
the Commission in writing if any information submitted in support
of the application becomes materially false or misleading while
the application is pending; 
     (3)  The following forms, as appropriate:
     (i)  A copy of a completed Form U-4, where the applicant's
proposed association is with a broker-dealer or municipal
securities dealer; 
     (ii) A copy of a completed Form MSD-4, where the applicant's
proposed association is with a bank municipal securities dealer; 
     (iii)     The information required by Form ADV, 17 CFR
279.1, with respect to the applicant, where the applicant's
proposed association is with an investment adviser; 
     (iv) The information required by Form TA-1, 17 CFR 249b.100,
with respect to the applicant, where the applicant's proposed
association is with a transfer agent; and
     (4)  A written statement by the proposed employer that
describes: 
     (i)  The terms and conditions of employment and supervision
to be exercised over such applicant and, where applicable, by
such applicant; 
     (ii) The qualifications, experience, and disciplinary
records of the proposed supervisor(s) of the applicant; 
     (iii)     The compliance and disciplinary history, during
the two years preceding the filing of the application, of the
office in which the applicant will be employed; and
     (iv) The names of any other associated persons in the same
office who have previously been barred by the Commission, and
whether they are to be supervised by the applicant.
     (c)  Required showing.  The applicant shall make a showing
satisfactory to the Commission that the proposed association
would be consistent with the public interest.
     (d)  Factors to be addressed.  The affidavit required by
paragraph (b) of this section shall address each of the
following:  
     (1)  The time period since the imposition of the bar; 
     (2)  Any restitution or similar action taken by the
applicant to recompense any person injured by the misconduct that
resulted in the bar; 
     (3)  The applicant's compliance with the order imposing the
bar; 
     (4)  The applicant's employment during the period subsequent
to imposition of the bar; 
     (5)  The capacity or position in which the applicant
proposes to be associated; 
     (6)  The manner and extent of supervision to be exercised
over such applicant and, where applicable, by such applicant; 
     (7)  Any relevant courses, seminars, examinations or other
actions completed by the applicant subsequent to imposition of
the bar to prepare for his or her return to the securities
business; and 
     (8)  Any other information material to the application.
     (e)  Notification to applicant and written statement.  In
the event an adverse recommendation is proposed by the staff with
respect to an application made pursuant to this section, the
 
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applicant shall be so advised and provided with a written
statement of the reasons for such recommendation.  The applicant
shall then have 30 days to submit a written statement in
response.
     (f)  Concurrent applications.  The Commission will not
consider any application submitted pursuant to this section if
any other application for consent to associate concerning the
same applicant is pending before any self-regulatory
organization.  
INITIATION OF PROCEEDINGS AND PREHEARING RULES
  201.200 Initiation of proceedings.
     (a)  Order instituting proceedings: notice and opportunity
for hearing.  
     (1)  Generally.  Whenever an order instituting proceedings
is issued by the Commission, appropriate notice thereof shall be
given to each party to the proceeding by the Secretary or another
duly designated officer of the Commission.  Each party shall be
given notice of any hearing within a time reasonable in light of
the circumstances, in advance of the hearing; provided, however,
no prior notice need be given to a respondent if the Commission
has authorized the Division of Enforcement to seek a temporary
sanction ex parte.  
     (2)  Stop order proceedings: additional persons entitled to
notice.  Any notice of a proceeding relating to the issuance of a
stop order suspending the effectiveness of a registration
statement pursuant to Section 8(d) of the Securities Act of 1933,
15 U.S.C. 77h(d), shall be sent to or served on the issuer; or,
in the case of a foreign government or political subdivision
thereof, sent to or served on the underwriter; or, in the case of
a foreign or territorial person, sent to or served on its duly
authorized representative in the United States named in the
registration statement, properly directed in the case of
telegraphic notice to the address given in such statement.  In
addition, if such proceeding is commenced within 90 days after
the registration statement has become effective, notice of the
proceeding shall be given to the agent for service named on the
facing sheet of the registration statement and to each other
person designated on the facing sheet of the registration
statement astturn to the securities
business; and 
     (8)  Any other information material to the application.
     (e)  Notifiituting proceedings
shall: 
     (1)  State the nature of any hearing; 
     (2)  State the legal authority and jurisdiction under which
the hearing is to be held;
     (3)  Contain a short and plain statement of the matters of
fact and law to be considered and determined, unless the order
directs an answer pursuant to   201.220 in which case the order
shall set forth the factual and legal basis alleged therefor in
such detail as will permit a specific response thereto; and 
     (4)  State the nature of any relief or action sought or
taken. 
     (c)  Time and place of hearing.  The time and place for any
hearing shall be fixed with due regard for the public interest
and the convenience and necessity of the parties, other
participants, or their representatives.  
     (d)  Amendment to order instituting proceedings.
     (1)  By the Commission.  Upon motion by a party, the
Commission may, at any time, amend an order instituting
proceedings to include new matters of fact or law.  
     (2)  By the hearing officer.  Upon motion by a party, the
hearing officer may, at any time prior to the filing of an
initial decision or, if no initial decision is to be filed, prior
to the time fixed for the filing of final briefs with the
 
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Commission, amend an order instituting proceedings to include new
matters of fact or law that are within the scope of the original
order instituting proceedings.  
     (e)  Publication of notice of public hearings.  Unless
otherwise ordered by the Commission, notice of any public hearing
shall be given general circulation by release to the public, by
publication in the SEC News Digest and, where directed, by
publication in the Federal Register. 
  201.201 Consolidation of proceedings.
     By order of the Commission or a hearing officer, proceedings
involving a common question of law or fact may be consolidated
for hearing of any or all the matters at issue in such
proceedings.  The Commission or the hearing officer may make such
orders concerning the conduct of such proceedings as it deems
appropriate to avoid unnecessary cost or delay.  Consolidation
shall not prejudice any rights under these Rules of Practice and
shall not affect the right of any party to raise issues that
could have been raised if consolidation had not occurred.  For
purposes of this section, no distinction is made between joinder
and consolidation of proceedings.  
  201.202 Specification of procedures by parties in certain
          proceedings.
     (a)  Motion to specify procedures.  In any proceeding other
than an enforcement or disciplinary proceeding or a proceeding to
review a determination by a self-regulatory organization pursuant
to    201.420 and 201.421, a party may, at any time up to 20 days
prior to the start of a hearing, make a motion to specify the
procedures necessary or appropriate for the proceeding, with
particular reference to: 
     (1)  Whether there should be an initial decision by a
hearing officer; 
     (2)  Whether any interested division of the Commission may
assist in the preparation of the Commission's decision; and 
     (3)  Whether there should be a 30-day waiting period between
the issuance of the Commission's order and the date it is to
become effective.  
     (b)  Objections; effect of failure to object.  Any other
party may object to the procedures so specified, and such party
may specify such additional procedures as it considers necessary
or appropriate.  In the absence of such objection or such
specification of additional procedures, such other party may be
deemed to have waived objection to the specified procedures. 
     (c)  Approval required.  Any proposal pursuant to paragraph
(a) of this section, even if not objected to by any party, shall
be subject to the written approval of the hearing officer.  
     (d)  Procedure upon agreement to waive an initial decision. 
If an initial decision is waived pursuant to paragraph (a) of
this section, the hearing officer shall notify the Secretary and,
unless the Commission directs otherwise within 14 days, no
initial decision shall be issued. 
  201.210 Parties, limited participants and amici curiae.
     (a)  Parties in an enforcement or disciplinary proceeding or
a proceeding to review a self-regulatory organization
determination.  
     (1)  Generally.  No person shall be granted leave to become
a party or a non-party participant on a limited basis in an
enforcement or disciplinary proceeding or a proceeding to review
a determination by a self-regulatory organization pursuant to
   201.420 and 201.421. 
     (2)  Disgorgement proceedings.  In an enforcement
proceeding, a person may state his or her views with respect to a
proposed plan of disgorgement or file a proof of claim pursuant
to   201.612. 
     (b)  Intervention as a party.
 
-------------------- BEGINNING OF PAGE #144 ---------------------

     (1)  Generally.  In any proceeding, other than an
enforcement proceeding, a disciplinary proceeding or a proceeding
to review a self-regulatory organization determination, any
person may seek leave to intervene as a party by filing a motion
setting forth the person's interest in the proceeding.  No
person, however, shall be admitted as a party to a proceeding by
intervention unless it is determined that leave to participate
pursuant to paragraph (c) of this section would be inadequate for
the protection of his or her interests.  
     (i)  In a proceeding under the Public Utility Holding
Company Act of 1935, any representative of interested consumers
or security holders, or any other person whose participation in
the proceeding may be in the public interest or for the
protection of investors or consumers, may be admitted as a party
upon the filing of a written motion setting forth the person's
interest in the proceeding.  
     (ii) In a proceeding under the Investment Company Act of
1940, any representative of interested security holders, or any
other person whose participation in the proceeding may be in the
public interest or for the protection of investors, may be
admitted as a party upon the filing of a written motion setting
forth the person's interest in the proceeding. 
     (2)  Intervention as of right.
     (i)  In proceedings under the Public Utility Holding Company
Act of 1935, any interested representative, agency, authority or
instrumentality of the United States or any interested State,
State commission, municipality or other political subdivision of
a state shall be admitted as a party to any proceeding upon the
filing of a written motion requesting leave to be admitted.  
     (ii) In proceedings under the Investment Company Act of
1940, any interested State or State agency shall be admitted as a
party to any proceeding upon the filing of a written motion
requesting leave to be admitted. 
     (c)  Leave to participate on a limited basis.  In any
proceeding, other than an enforcement proceeding, a disciplinary
proceeding or a proceeding to review a self-regulatory
organization determination, any person may seek leave to
participate on a limited basis as a non-party participant as to
any matter affecting the person's interests.
     (1)  Procedure.  Motions for leave to participate shall be
in writing, shall set forth the nature and extent of the movant's
interest in the proceeding, and, except where good cause for late
filing is shown, shall be filed not later than 20 days prior to
the date fixed for the commencement of the hearing.  Leave to
participate pursuant to this paragraph (c) may include such
rights of a party as the hearing officer may deem appropriate. 
Persons granted leave to participate shall be served in
accordance with   201.150; provided, however, that a party to the
proceeding may move that the extent of notice of filings or other
papers to be provided to persons granted leave to participate be
limited, or may move that the persons granted leave to
participate bear the cost of being provided copies of any or all
filings or other papers.  Persons granted leave to participate
shall be bound, except as may be otherwise determined by the
hearing officer, by any stipulation between the parties to the
proceeding with respect to procedure, including submission of
evidence, substitution of exhibits, corrections of the record,
the time within which briefs or exceptions may be filed or
proposed findings and conclusions may be submitted, the filing of
initial decisions, the procedure to be followed in the
preparation of decisions and the effective date of the
Commission's order in the case.  Where the filing of briefs or
exceptions or the submission of proposed findings and conclusions
are waived by the parties to the proceedings, a person granted
 
-------------------- BEGINNING OF PAGE #145 ---------------------

leave to participate pursuant to this paragraph (c) shall not be
permitted to file a brief or exceptions or submit proposed
findings and conclusions except by leave of the Commission or of
the hearing officer.  
     (2)  Certain persons entitled to leave to participate.  The
hearing officer is directed to grant leave to participate under
this paragraph (c) to any person to whom it is proposed to issue
any security in exchange for one or more bona fide outstanding
securities, claims or property interests, or partly in such
exchange and partly for cash, where the Commission is authorized
to approve the terms and conditions of such issuance and exchange
after a hearing upon the fairness of such terms and conditions. 
     (d)  Amicus participation.  
     (1)  Availability.  An amicus brief may be filed only if:
     (i)  A motion for leave to file the brief has been granted; 
     (ii) The brief is accompanied by written consent of all
parties; 
     (iii)     The brief is filed at the request of the
Commission or the hearing officer; or
     (iv) The brief is presented by the United States or an
officer or agency thereof, or by a State, Territory or
Commonwealth.
     (2)  Procedure.  An amicus brief may be filed conditionally
with the motion for leave.  The motion for leave shall identify
the interest of the movant and shall state the reasons why a
brief of an amicus curiae is desirable.  Except as all parties
otherwise consent, any amicus curiae shall file its brief within
the time allowed the party whose position the amicus will
support, unless the Commission or hearing officer, for cause
shown, grants leave for a later filing.  In the event that a
later filing is allowed, the order granting leave to file shall
specify when an opposing party may reply to the brief.  A motion
of an amicus curiae to participate in oral argument will be
granted only for extraordinary reasons.
     (e)  Permission to state views.  Any person may make a
motion seeking leave to file a memorandum or make an oral
statement of his or her views.  Any such communication may be
included in the record; provided, however, that unless offered
and admitted as evidence of the truth of the statements therein
made, any assertions of fact submitted pursuant to the provisions
of this paragraph (e) will be considered only to the extent that
the statements therein made are otherwise supported by the
record.  
     (f)  Modification of participation provisions.  The
Commission or the hearing officer may, by order, modify the
provisions of this section which would otherwise be applicable,
and may impose such terms and conditions on the participation of
any person in any proceeding as it may deem necessary or
appropriate in the public interest.  
  201.220 Answer to allegations. 
     (a)  When required.  In its order instituting proceedings,
the Commission may require any party to file an answer to each of
the allegations contained therein.  Even if not so ordered, any
party in any proceeding may elect to file an answer.  Any other
person granted leave by the Commission or the hearing officer to
participate on a limited basis in such proceedings pursuant to
  201.210(c) may be required to file an answer.  
     (b)  When to file.  Except where a different period is
provided by rule or by order, a party required to file an answer
as provided in paragraph (a) of this section shall do so within
20 days after service upon the party of the order instituting
proceedings.  Persons granted leave to participate on a limited
basis in the proceeding pursuant to   201.210(c) may file an
answer within a reasonable time, as determined by the Commission
 
-------------------- BEGINNING OF PAGE #146 ---------------------

or the hearing officer.  If the order instituting proceedings is
amended, the Commission or the hearing officer may require that
an amended answer be filed and, if such an answer is required,
shall specify a date for the filing thereof.      (c)  Contents;
effect of failure to deny.  Unless otherwise directed by the
hearing officer or the Commission, an answer shall specifically
admit, deny, or state that the party does not have, and is unable
to obtain, sufficient information to admit or deny each
allegation in the order instituting proceedings.  When a party
intends in good faith to deny only a part of an allegation, the
party shall specify so much of it as is true and shall deny only
the remainder.  A statement of a lack of information shall have
the effect of a denial.  A defense of res judicata, statute of
limitations or any other matter constituting an affirmative
defense shall be asserted in the answer.  Any allegation not
denied shall be deemed admitted.  
     (d)  Motion for more definite statement.  A party may file
with an answer a motion for a more definite statement of
specified matters of fact or law to be considered or determined. 
Such motion shall state the respects in which, and the reasons
why, each such matter of fact or law should be required to be
made more definite.  If the motion is granted, the order granting
such motion shall set the periods for filing such a statement and
any answer thereto. 
     (e)  Amendments.  A party may amend its answer at any time
by written consent of each adverse party or with leave of the
Commission or the hearing officer.  Leave shall be freely granted
when justice so requires.  
     (f)  Failure to file answer: default.  If a party respondent
fails to file an answer required by this section within the time
provided, such person may be deemed in default pursuant to
  201.155(a).  A party may make a motion to set aside a default
pursuant to   201.155(b).  
  201.221 Prehearing conferences. 
     (a)  Purposes of conferences.  The purposes of prehearing
conferences include, but are not limited to:
     (1)  Expediting the disposition of the proceeding;
     (2)  Establishing early and continuing control of the
proceeding by the hearing officer; and
     (3)  Improving the quality of the hearing through more
thorough preparation.  
     (b)  Procedure.  On his or her own motion or at the request
of a party, the hearing officer may, in his or her discretion,
direct counsel or any party to meet for an initial, final or
other prehearing conference.  Such conferences may be held with
or without the hearing officer present as the hearing officer
deems appropriate.  Where such a conference is held outside the
presence of the hearing officer, the hearing officer shall be
advised promptly by the parties of any agreements reached.  Such
conferences also may be held with one or more persons
participating by telephone or other remote means.   
     (c)  Subjects to be discussed.  At a prehearing conference
consideration may be given and action taken with respect to any
and all of the following:
     (1)  Simplification and clarification of the issues;
     (2)  Exchange of witness and exhibit lists and copies of
exhibits;
     (3)  Stipulations, admissions of fact, and stipulations
concerning the contents, authenticity, or admissibility into
evidence of documents;
     (4)  Matters of which official notice may be taken;
     (5)  The schedule for exchanging prehearing motions or
briefs, if any;
 
-------------------- BEGINNING OF PAGE #147 ---------------------

     (6)  The method of service for papers other than Commission
orders;
     (7)  Summary disposition of any or all issues;
     (8)  Settlement of any or all issues; 
     (9)  Determination of hearing dates;
     (10) Amendments to the order instituting proceedings or
answers thereto;
     (11) Production of documents as set forth in   201.230, and
prehearing production of documents in response to subpoenas duces
tecum as set forth in   201.232;
     (12) Specification of procedures as set forth in   201.202;
and 
     (13) Such other matters as may aid in the orderly and
expeditious disposition of the proceeding. 
     (d)  Required prehearing conferences.  Except where the
emergency nature of a proceeding would make a prehearing
conference clearly inappropriate, both an initial and a final
prehearing conference should be held.  Unless ordered otherwise,
an initial prehearing conference shall be held within 14 days of
the service of an answer, or if no answer is required, within 14
days of service of the order instituting proceedings.  A final
conference shall be held as close to the start of the hearing as
reasonable under the circumstances.  
     (e)  Prehearing orders.  At or following the conclusion of
any conference held pursuant to this section, the hearing officer
shall enter a ruling or order which recites the agreements
reached and any procedural determinations made by the hearing
officer.  
     (f)  Failure to appear: default.  Any person who is named in
an order instituting proceedings as a person against whom
findings may be made or sanctions imposed and who fails to
appear, in person or through a representative, at a prehearing
conference of which he or she has been duly notified may be
deemed in default pursuant to   201.155(a).  A party may make a
motion to set aside a default pursuant to   201.155(b).   
  201.222 Prehearing submissions. 
     (a)  Submissions generally.  The hearing officer, on his or
her own motion, or at the request of a party or other
participant, may order any party, including the interested
division, to furnish such information as deemed appropriate,
including any or all of the following: 
     (1)  An outline or narrative summary of its case or defense;
     (2)  The legal theories upon which it will rely; 
     (3)  Copies and a list of documents that it intends to
introduce at the hearing; and 
     (4)  A list of witnesses who will testify on its behalf,
including the witnesses' names, occupations, addresses and a
brief summary of their expected testimony. 
     (b)  Expert witnesses.  Each party who intends to call an
expert witness shall submit, in addition to the information
required by paragraph (a)(4) of this section, a statement of the
expert's qualifications, a listing of other proceedings in which
the expert has given expert testimony, and a list of publications
authored or co-authored by the expert.  
  201.230 Enforcement and disciplinary proceedings: availability
          of documents for inspection and copying. 
     For purposes of this section, the term documents shall
include writings, drawings, graphs, charts, photographs,
recordings and other data compilations, including data stored by
computer, from which information can be obtained. 
     (a)  Documents to be available for inspection and copying.
     (1)  Unless otherwise provided by this section, or by order
of the Commission or the hearing officer, the Division of
Enforcement shall make available for inspection and copying by
 
-------------------- BEGINNING OF PAGE #148 ---------------------

any party documents obtained by the Division prior to the
institution of proceedings, in connection with the investigation
leading to the Division's recommendation to institute
proceedings.  Such documents shall include:
     (i)  Each subpoena issued; 
     (ii) Every other written request to persons not employed by
the Commission to provide documents or to be interviewed; 
     (iii)     The documents turned over in response to any such
subpoenas or other written requests;
     (iv) All transcripts and transcript exhibits; 
     (v)  Any other documents obtained from persons not employed
by the Commission; and
     (vi) Any final examination or inspection reports prepared by
the Division of Market Regulation or the Division of Investment
Management.
     (2)  Nothing in this paragraph (a) shall limit the right of
the Division to make available any other document, or shall limit
the right of a respondent to seek access to or production
pursuant to subpoena of any other document, or shall limit the
authority of the hearing officer to order the production of any
document pursuant to subpoena. 
     (b)  Documents that may be withheld.  
     (1)  The Division of Enforcement may withhold a document if:
     (i)  The document is privileged; 
     (ii) The document is an internal memorandum, note or writing
prepared by a Commission employee, other than an examination or
inspection report as specified in paragraph (a)(1)(f) of this
section, or is otherwise attorney work product and will not be
offered in evidence; 
     (iii)     The document would disclose the identity of a
confidential source; or
     (iv) The hearing officer grants leave to withhold a document
or category of documents as not relevant to the subject matter of
the proceeding or otherwise, for good cause shown.  
     (2)  Nothing in this paragraph (b) authorizes the Division
of Enforcement in connection with an enforcement or disciplinary
proceeding to withhold, contrary to the doctrine of Brady v.
Maryland, 373 U.S. 83, 87 (1963), documents that contain material
exculpatory evidence.  
     (c)  Withheld document list.  The hearing officer may
require the Division of Enforcement to submit for review a list
of documents withheld pursuant to paragraphs (b)(1) - (b)(4) of
this section or to submit any document withheld, and may
determine whether any such document should be made available for
inspection and copying.  
     (d)  Timing of inspection and copying.  Unless otherwise
ordered by the Commission or the hearing officer, the Division of
Enforcement shall commence making documents available to a
respondent for inspection and copying pursuant to this section no
later than 14 days after the respondent files an answer.  In a
proceeding in which a temporary cease-and-desist order is sought
pursuant to   201.510 or a temporary suspension of registration
is sought pursuant to   201.520, documents shall be made
available no later than the day after service of the decision as
to whether to issue a temporary cease-and-desist order or
temporary suspension order.
     (e)  Place of inspection and copying.  Documents subject to
inspection and copying pursuant to this section shall be made
available to the respondent for inspection and copying at the
Commission office where they are ordinarily maintained, or at
such other place as the parties, in writing, may agree.  A
respondent shall not be given custody of the documents or leave
to remove the documents from the Commission's offices pursuant to
the requirements of this section other than by written agreement
 
-------------------- BEGINNING OF PAGE #149 ---------------------

of  the Division of Enforcement.  Such agreement shall specify
the documents subject to the agreement, the date they shall be
returned and such other terms or conditions as are appropriate to
provide for the safekeeping of the documents.
     (f)  Copying costs and procedures.  The respondent may
obtain a photocopy of any documents made available for
inspection.  The respondent shall be responsible for the cost of
photocopying.  Unless otherwise ordered, charges for copies made
by the Division of Enforcement at the request of the respondent
will be at the rate charged pursuant to the fee schedule at 17
CFR 200.80e for copies.  The respondent shall be given access to
the documents at the Commission's offices or such other place as
the parties may agree during normal business hours for copying of
documents at the respondent's expense.  
     (g)  Issuance of investigatory subpoenas after institution
of proceedings.  The Division of Enforcement shall promptly
inform the hearing officer and each party if investigatory
subpoenas are issued under the same investigation file number or
pursuant to the same order directing private investigation
("formal order") under which the investigation leading to the
institution of proceedings was conducted.  The hearing officer
shall order such steps as necessary and appropriate to assure
that the issuance of investigatory subpoenas after the
institution of proceedings is not for the purpose of obtaining
evidence relevant to the proceedings and that any relevant
documents that may be obtained through the use of investigatory
subpoenas in a continuing investigation are made available to
each respondent for inspection and copying on a timely basis.  
     (h)  Failure to make documents available - harmless error. 
In the event that a document required to be made available to a
respondent pursuant to this section is not made available by the
Division of Enforcement, no rehearing or redecision of a
proceeding already heard or decided shall be required, unless the
respondent shall establish that the failure to make the document
available was not harmless error. 
  201.231 Enforcement and disciplinary proceedings: production of
          witness statements.
     (a)  Availability.  Any respondent in an enforcement or
disciplinary proceeding may move that the Division of Enforcement
produce for inspection and copying any statement of any person
called or to be called as a witness by the division that
pertains, or is expected to pertain, to his or her direct
testimony and that would be required to be produced pursuant to
the Jencks Act, 18 U.S.C. 3500.  Such production shall be made at
a time and place fixed by the hearing officer and shall be made
available to any party, provided, however, that the production
shall be made under conditions intended to preserve the items to
be inspected or copied. 
     (b)  Failure to produce - harmless error.  In the event that
a statement required to be made available for inspection and
copying by a respondent is not turned over by the Division of
Enforcement, no rehearing or redecision of a proceeding already
heard or decided shall be required unless the respondent
establishes that the failure to turn over the statement was not
harmless error. 
  201.232 Subpoenas.
     (a)  Availability; procedure.  In connection with any
hearing ordered by the Commission, a party may request the
issuance of subpoenas requiring the attendance and testimony of
witnesses at the designated time and place of hearing, and
subpoenas requiring the production of documentary or other
tangible evidence returnable at any designated time or place. 
Unless made on the record at a hearing, requests for issuance of
a subpoena shall be made in writing and served on each party
 
-------------------- BEGINNING OF PAGE #150 ---------------------

pursuant to   201.150.  A person whose request for a subpoena has
been denied or modified may not request that any other person
issue the subpoena.  
     (1)  Unavailability of hearing officer.  In the event that
the hearing officer assigned to a proceeding is unavailable, the
party seeking issuance of the subpoena may seek its issuance from
the first available of the following persons: the Chief
Administrative Law Judge, the law judge most senior in service as
a law judge, the duty officer, any other member of the
Commission, or any other person designated by the Commission to
issue subpoenas.  Requests for issuance of a subpoena made to the
Commission, or any member thereof, must be submitted to the
Secretary, not to an individual Commissioner.  
     (2)  Signing may be delegated.  A hearing officer may
authorize issuance of a subpoena, and may delegate the manual
signing of the subpoena to any other person authorized to issue
subpoenas.  
     (b)  Standards for issuance.  Where it appears to the person
asked to issue the subpoena that the subpoena sought may be
unreasonable, oppressive, excessive in scope, or unduly
burdensome, he or she may, in his or her discretion, as a
condition precedent to the issuance of the subpoena, require the
person seeking the subpoena to show the general relevance and
reasonable scope of the testimony or other evidence sought.  If
after consideration of all the circumstances, the person
requested to issue the subpoena determines that the subpoena or
any of its terms is unreasonable, oppressive, excessive in scope,
or unduly burdensome, he or she may refuse to issue the subpoena,
or issue it only upon such conditions as fairness requires.  In
making the foregoing determination, the person issuing the
subpoena may inquire of the other participants whether they will
stipulate to the facts sought to be proved. 
     (c)  Service.  Service shall be made pursuant to the
provisions of   201.150(b) - (d).  The provisions of this
paragraph (c) shall apply to the issuance of subpoenas for
purposes of investigations, as required by 17 CFR 203.8, as well
as hearings.  
     (d)  Tender of fees required.  When a subpoena compelling
the attendance of a person at a hearing or deposition is issued
at the instance of anyone other than an officer or agency of the
United States, service is valid only if the subpoena is
accompanied by a tender to the subpoenaed person of the fees for
one day's attendance and mileage specified by paragraph (f) of
this section.  
     (e)  Application to quash or modify.  
     (1)  Procedure.  Any person to whom a subpoena is directed
or who is an owner, creator or the subject of the documents that
are to be produced pursuant to a subpoena may, prior to the time
specified therein for compliance, but in no event more than 15
days after the date of service of such subpoena, request that the
subpoena be quashed or modified.  Such request shall be made by
application filed with the Secretary and served on all parties
pursuant to   201.150.  The party on whose behalf the subpoena
was issued may, within five days of service of the application,
file an opposition to the application.  If a hearing officer has
been assigned to the proceeding, the application to quash shall
be directed to that hearing officer for consideration, even if
the subpoena was issued by another person.  
     (2)  Standards governing application to quash or modify.  If
compliance with the subpoena would be unreasonable, oppressive or
unduly burdensome, the hearing officer or the Commission shall
quash or modify the subpoena, or may order return of the subpoena
only upon specified conditions.  These conditions may include but
are not limited to a requirement that the party on whose behalf
 
-------------------- BEGINNING OF PAGE #151 ---------------------

the subpoena was issued shall make reasonable compensation to the
person to whom the subpoena was addressed for the cost of copying
or transporting evidence to the place for return of the subpoena.

     (f)  Witness fees and mileage.  Witnesses summoned before
the Commission shall be paid the same fees and mileage that are
paid to witnesses in the courts of the United States, and
witnesses whose depositions are taken and the persons taking the
same shall severally be entitled to the same fees as are paid for
like services in the courts of the United States.  Witness fees
and mileage shall be paid by the party at whose instance the
witnesses appear.  
  201.233 Depositions upon oral examination.
     (a)  Procedure.  Any party desiring to take the testimony of
a witness by deposition shall make a written motion setting forth
the reasons why such deposition should be taken including the
specific reasons why the party believes the witness will be
unable to attend or testify at the hearing; the name and address
of the prospective witness; the matters concerning which the
prospective witness is expected to be questioned; and the
proposed time and place for the taking of the deposition. 
     (b)  Required finding when ordering a deposition.  In the
discretion of the Commission or the hearing officer, an order for
deposition may be issued upon a finding that the prospective
witness will likely give testimony material to the proceeding,
that it is likely the prospective witness will be unable to
attend or testify at the hearing because of age, sickness,
infirmity, imprisonment or other disability, and that the taking
of a deposition will serve the interests of justice.  
     (c)  Contents of order. An order for deposition shall
designate by name a deposition officer.  The designated officer
may be the hearing officer or any other person authorized to
administer oaths by the laws of the United States or of the place
where the deposition is to be held.  An order for deposition also
shall state: 
     (1)  The name of the witness whose deposition is to be
taken; 
     (2)  The scope of the testimony to be taken; 
     (3)  The time and place of the deposition; 
     (4)  The manner of recording, preserving and filing the
deposition; and 
     (5)  The number of copies, if any, of the deposition and
exhibits to be filed upon completion of the deposition. 
     (d)  Procedure at depositions.  A witness whose testimony is
taken by deposition shall be sworn or shall affirm before any
questions are put to him or her.  Examination and cross-
examination of deponents may proceed as permitted at a hearing. 
The witness being deposed may have counsel present during the
deposition.
     (e)  Objections to questions or evidence.  Objections to
questions or evidence shall be in short form, stating the grounds
of objection relied upon.  Objections to questions or evidence
shall be noted by the deposition officer upon the deposition, but
a deposition officer other than the hearing officer shall not
have the power to decide on the competency, materiality or
relevance of evidence.  Failure to object to questions or
evidence before the deposition officer shall not be deemed a
waiver unless the ground of the objection is one that might have
been obviated or removed if presented at that time.  
     (f)  Filing of depositions.  The questions propounded and
all answers or objections shall be recorded or transcribed
verbatim, and a transcript prepared by the deposition officer, or
under his or her direction.  The transcript shall be subscribed
by the witness and certified by the deposition officer.  The
 
-------------------- BEGINNING OF PAGE #152 ---------------------

original deposition and exhibits shall be filed with the
Secretary.  A copy of the deposition shall be available to the
deponent and each party for purchase at prescribed rates.  
     (g)  Payment.  The cost of the transcript shall be paid by
the party requesting the deposition.
  201.234 Depositions upon written questions.
     (a)  Availability.  Depositions may be taken and submitted
on written questions upon motion of any party.  The motion shall
include the information specified in   201.233(a).  A decision on
the motion shall be governed by the provisions of   201.233(b). 
     (b)  Procedure.  Written questions shall be filed with the
motion.  Within 10 days after service of the motion and written
questions, any party may file objections to such written
questions and any party may file cross-questions.  When a
deposition is taken pursuant to this section no persons other
than the witness, counsel to the witness, the deposition officer,
and, if the deposition officer does not act as reporter, a
reporter, shall be present at the examination of the witness.  No
party shall be present or represented unless otherwise permitted
by order.  The deposition officer shall propound the questions
and cross-questions to the witness in the order submitted.  
     (c)  Additional requirements.  The order for deposition,
filing of the deposition, form of the deposition and use of the
deposition in the record shall be governed by paragraphs (c)
through (g) of   201.233, except that no cross-examination shall
be made. 
  201.235 Introducing prior sworn statements of witnesses into
          the record.
     (a)  At a hearing, any person wishing to introduce a prior,
sworn statement of a witness, not a party, otherwise admissible
in the proceeding, may make a motion setting forth the reasons
therefor.  If only part of a statement is offered in evidence,
the hearing officer may require that all relevant portions of the
statement be introduced.  If all of a statement is offered in
evidence, the hearing officer may require that portions not
relevant to the proceeding be excluded.  A motion to introduce a
prior sworn statement may be granted if: 
     (1)  The witness is dead;
     (2)  The witness is out of the United States, unless it
appears that the absence of the witness was procured by the party
offering the prior sworn statement;
     (3)  The witness is unable to attend or testify because of
age, sickness, infirmity, imprisonment or other disability;
     (4)  The party offering the prior sworn statement has been
unable to procure the attendance of the witness by subpoena; or,
     (5)  In the discretion of the Commission or the hearing
officer, it would be desirable, in the interests of justice, to
allow the prior sworn statement to be used.  In making this
determination, due regard shall be given to the presumption that
witnesses will testify orally in an open hearing.  If the parties
have stipulated to accept a prior sworn statement in lieu of live
testimony, consideration shall also be given to the convenience
of the parties in avoiding unnecessary expense. 
  201.240 Settlement.
     (a)  Availability.  Any person who is notified that a
proceeding may or will be instituted against him or her, or any
party to a proceeding already instituted, may, at any time,
propose in writing an offer of settlement.  
     (b)  Procedure.  An offer of settlement shall state that it
is made pursuant to this section; shall recite or incorporate as
a part of the offer the provisions of paragraphs (c)(4) and (5)
of this section; shall be signed by the person making the offer,
not by counsel; and shall be submitted to the interested
division.  
 
-------------------- BEGINNING OF PAGE #153 ---------------------

     (c)  Consideration of offers of settlement.
     (1)  Offers of settlement shall be considered by the
interested division when time, the nature of the proceedings, and
the public interest permit.
     (2)  Where a hearing officer is assigned to a proceeding,
the interested division and the party submitting the offer may
request that the hearing officer express his or her views
regarding the appropriateness of the offer of settlement.  A
request for the hearing officer to express his or her views on an
offer of settlement or otherwise to participate in a settlement
conference constitutes a waiver by the persons making the request
of any right to claim bias or prejudgment by the hearing officer
based on the views expressed.  
     (3)  The interested division shall present the offer of
settlement to the Commission with its recommendation, except
that, if the division's recommendation is unfavorable, the offer
shall not be presented to the Commission unless the person making
the offer so requests.
     (4)  By submitting an offer of settlement, the person making
the offer waives, subject to acceptance of the offer:
     (i)  All hearings pursuant to the statutory provisions under
which the proceeding is to be or has been instituted;
     (ii) The filing of proposed findings of fact and conclusions
of law;
     (iii)     Proceedings before, and an initial decision by, a
hearing officer;
     (iv) All post-hearing procedures; and
     (v)  Judicial review by any court.
     (5)  By submitting an offer of settlement the person further
waives:
     (i)  Such provisions of the Rules of Practice or other
requirements of law as may be construed to prevent any member of
the Commission's staff from participating in the preparation of,
or advising the Commission as to, any order, opinion, finding of
fact, or conclusion of law to be entered pursuant to the offer;
and
     (ii) Any right to claim bias or prejudgment by the
Commission based on the consideration of or discussions
concerning settlement of all or any part of the proceeding.  
     (6)  If the Commission rejects the offer of settlement, the
person making the offer shall be notified of the Commission's
action and the offer of settlement shall be deemed withdrawn. 
The rejected offer shall not constitute a part of the record in
any proceeding against the person making the offer, provided,
however, that rejection of an offer of settlement does not affect
the continued validity of waivers pursuant to paragraph (c)(5) of
this section with respect to any discussions concerning the
rejected offer of settlement.
     (7)  Final acceptance of any offer of settlement will occur
only upon the issuance of findings and an order by the
Commission.
  201.250 Motion for summary disposition.
     (a)  After a respondent's answer has been filed and, in an
enforcement or a disciplinary proceeding, documents have been
made available to that respondent for inspection and copying
pursuant to   201.230, the respondent, or the interested division
may make a motion for summary disposition of any or all
allegations of the order instituting proceedings with respect to
that respondent.  If the interested division has not completed
presentation of its case in chief, a motion for summary
disposition shall be made only with leave of the hearing officer.

The facts of the pleadings of the party against whom the motion
is made shall be taken as true, except as modified by
 
-------------------- BEGINNING OF PAGE #154 ---------------------

stipulations or admissions made by that party, by uncontested
affidavits, or by facts officially noted pursuant to   201.323.  
     (b)  The hearing officer shall promptly grant or deny the
motion for summary disposition or shall defer decision on the
motion.  The hearing officer may grant the motion for summary
disposition if there is no genuine issue with regard to any
material fact and the party making the motion is entitled to a
summary disposition as a matter of law.  If it appears that a
party, for good cause shown, cannot present by affidavit prior to
hearing facts essential to justify opposition to the motion, the
hearing officer shall deny or defer the motion.  A hearing
officer's decision to deny leave to file a motion for summary
disposition is not subject to interlocutory appeal.  
     (c)  The motion for summary disposition, supporting
memorandum of points and authorities, and any declarations,
affidavits or attachments shall not exceed 35 pages in length.  
RULES REGARDING HEARINGS
  201.300 Hearings.
     Hearings for the purpose of taking evidence shall be held
only upon order of the Commission.  All hearings shall be
conducted in a fair, impartial, expeditious and orderly manner.  
  201.301 Hearings to be public.
     All hearings, except hearings on applications for
confidential treatment filed pursuant to   201.190, hearings held
to consider a motion for a protective order pursuant to
  201.322, and hearings on ex parte application for a temporary
cease-and-desist order, shall be public unless otherwise ordered
by the Commission on its own motion or the motion of a party.  No
hearing shall be nonpublic where all respondents request that the
hearing be made public.  
  201.302 Record of hearings.
     (a)  Recordation.  Unless ordered otherwise by the hearing
officer or the Commission, all hearings shall be recorded and a
written transcript thereof shall be prepared.  
     (b)  Availability of a transcript.  Transcripts of public
hearings shall be available for purchase at prescribed rates. 
Transcripts of nonpublic proceedings, and transcripts subject to
a protective order pursuant to   201.322, shall be available for
purchase only by parties, provided, however, that any person
compelled to submit data or evidence in a hearing may purchase a
copy of his or her own testimony.  
     (c)  Transcript Correction.  Prior to the filing of post-
hearing briefs or proposed findings and conclusions, or within
such earlier time as directed by the Commission or the hearing
officer, a party or witness may make a motion to correct the
transcript.  Proposed corrections of the transcript may be
submitted to the hearing officer by stipulation pursuant to
  201.324, or by motion.  Upon notice to all parties to the
proceeding, the hearing officer may, by order, specify
corrections to the transcript.  
  201.310 Failure to appear at hearings:  default.  
     Any person named in an order instituting proceedings as a
person against whom findings may be made or sanctions imposed who
fails to appear at a hearing of which he or she has been duly
notified may be deemed to be in default pursuant to   201.155(a).

A party may make a motion to set aside a default purspuision. 
Pending
a determination of a motion under this section, the documents as
to which confidential treatment is sought and any other documents
that would reveal the confidential information in those
documenious. 
  201.321 Evidence:  objections and offers of proof.
     (a)  Objections.  Objections to the admission or exclusion
of evidence must be made on the record and shall be in short
 
-------------------- BEGINNING OF PAGE #155 ---------------------

form, stating the grounds relied upon.  Exceptions to any ruling
thereon by the hearing officer need not be noted at the time of
the ruling.  Such exceptions will be deemed waived on appeal to
the Commission, however, unless raised:
     (1)  Pursuant to interlocutory review in accordance with
  201.400; 
     (2)  In a proposed finding or conclusion filed pursuant to
  201.340; or
     (3)  In a petition for Commission review of an initial
decision filed in accordance with   201.410.  
     (b)  Offers of proof.  Whenever evidence is excluded from
the record, the party offering such evidence may make an offer of
proof, which shall be included in the record.  Excluded material
shall be retained pursuant to   201.350(b).  
  201.322 Evidence:  confidential information, protective orders.
     (a)  Procedure.  In any proceeding as defined in
  201.101(a), a party; any person who is the owner, subject or
creator of a document subject to subpoena or which may be
introduced as evidence; or any witness who testifies at a hearing
may file a motion requesting a protective order to limit from
disclosure to other parties or to the public documents or
testimony that contain confidential information.  The motion
should include a general summary or extract of the documents
without revealing confidential details.  If the movant seeks a
protective order against disclosure to other parties as well as
the public, copies of the documents shall not be served on other
parties.  Unless the documents are unavailable, the movant shall
file for in camera inspection a sealed copy of the documents as
to which the order is sought.  
     (b)  Basis for issuance.  Documents and testimony introduced
in a public hearing are presumed to be public.  A motion for a
protective order shall be granted only upon a finding that the
harm resulting from disclosure would outweigh the benefits of
disclosure.  
     (c)  Requests for additional information supporting
confidentiality.  A movant under paragraph (a) of this section
may be required to furnish in writing additional information with
respect to the grounds for confidentiality.  Failure to supply
the information so requested within five days from the date of
receipt by the movant of a notice of the information required
shall be deemed a waiver of the objection to public disclosure of
that portion of the documents to which the additional information
relates, unless the Commission or the hearing officer shall
otherwise order for good cause shown at or before the expiration
of such five-day period.
     (d)  Confidentiality of documents pending decision.  Pending
a determination of a motion under this section, the documents as
to which confidential treatment is sought and any other documents
that would reveal the confidential information in those documents
shall be maintained under seal and shall be disclosed only in
accordance with orders of the Commission or the hearing officer. 
Any order issued in connection with a motion under this section
shall be public unless the order would disclose information as to
which a protective order has been granted, in which case that
portion of the order that would reveal the protected information
shall be nonpublic.  
  201.323 Evidence:  official notice.
     Official notice may be taken of any material fact which
might be judicially noticed by a district court of the United
States, any matter in the public official records of the
Commission, or any matter which is peculiarly within the
knowledge of the Commission as an expert body.  If official
notice is requested or taken of a material fact not appearing in
 
-------------------- BEGINNING OF PAGE #156 ---------------------

the evidence in the record, the parties, upon timely request,
shall be afforded an opportunity to establish the contrary.  
  201.324 Evidence:  stipulations.
     The parties may, by stipulation, at any stage of the
proceeding agree upon any pertinent facts in the proceeding.  A
stipulation may be received in evidence and, when received, shall
be binding on the parties to the stipulation.  
  201.325 Evidence:  presentation under oath or affirmation.  
     A witness at a hearing for the purpose of taking evidence
shall testify under oath or affirmation.  
  201.326 Evidence:  presentation, rebuttal and cross-
          examination.
     In any proceeding in which a hearing is required to be
conducted on the record after opportunity for hearing in accord
with 5 U.S.C. 556(a), a party is entitled to present its case or
defense by oral or documentary evidence, to submit rebuttal
evidence, and to conduct such cross-examination as, in the
discretion of the Commission or the hearing officer, may be
required for a full and true disclosure of the facts.  The scope
and form of evidence, rebuttal evidence, if any, and cross-
examination, if any, in any other proceeding shall be determined
by the Commission or the hearing officer in each proceeding.  
  201.340 Proposed findings, conclusions and supporting briefs.
     (a)  Opportunity to file.  Before an initial decision is
issued, each party shall have an opportunity, reasonable in light
of all the circumstances, to file in writing proposed findings
and conclusions together with, or as a part of, its brief.  
     (b)  Procedure.  Proposed findings of fact must be supported
by citations to specific portions of the record.  If successive
filings are directed, the proposed findings and conclusions of
the party assigned to file first shall be set forth in serially
numbered paragraphs, and any counter statement of proposed
findings and conclusions must, in addition to any other matter,
indicate those paragraphs of the proposals already filed as to
which there is no dispute.  A reply brief may be filed by the
party assigned to file first, or, where simultaneous filings are
directed, reply briefs may be filed by each party, within the
period prescribed therefor by the hearing officer.  No further
briefs may be filed except with leave of the hearing officer.  
     (c)  Time for filing.  In any proceeding in which an initial
decision is to be issued:
     (1)  At the end of each hearing, the hearing officer shall,
by order, after consultation with the parties, prescribe the
period within which proposed findings and conclusions and
supporting briefs are to be filed.  The party or parties directed
to file first shall make its or their initial filing within 30
days of the end of the hearing unless the hearing officer, for
good cause shown, permits a different period and sets forth in
the order the reasons why the different period is necessary.  
     (2)  The total period within which all such proposed
findings and conclusions and supporting briefs and any counter
statements of proposed findings and conclusions and reply briefs
are to be filed shall be no longer than 90 days after the close
of the hearing unless the hearing officer, for good cause shown,
permits a different period and sets forth in an order the reasons
why the different period is necessary.  
  201.350 Record in proceedings before hearing officer; retention
          of documents; copies.
     (a)  Contents of the record.  The record shall consist of:  
     (1)  The order instituting proceedings, each notice of
hearing and any amendments;
     (2)  Each application, motion, submission or other paper,
and any amendments, motions, objections, and exceptions to or
regarding them;
 
-------------------- BEGINNING OF PAGE #157 ---------------------

     (3)  Each stipulation, transcript of testimony and document
or other item admitted into evidence; 
     (4)  Each written communication accepted by the hearing
officer pursuant to   201.210;
     (5)  With respect to a request to disqualify a hearing
officer or to allow the hearing officer's withdrawal under
  201.112, each affidavit or transcript of testimony taken and
the decision made in connection with the request;
     (6)  All motions, briefs and other papers filed on
interlocutory appeal;
     (7)  All proposed findings and conclusions; 
     (8)  Each written order issued by the hearing officer or
Commission; and
     (9)  Any other document or item accepted into the record by
the hearing officer.  
     (b)  Retention of documents not admitted.  Any document
offered in evidence but excluded, and any document marked for
identification but not offered as an exhibit, shall not be
considered a part of the record.  The Secretary shall retain any
such documents until the later of the date upon which a
Commission order ending the proceeding becomes final, or the
conclusion of any judicial review of the Commission's order.
     (c)  Substitution of copies.  A true copy of a document may
be substituted for any document in the record or any document
retained pursuant to paragraph (b) of this section. 
  201.351 Transmittal of documents to Secretary; record index;
          certification.
     (a)  Transmittal from hearing officer to Secretary of
partial record index.  The hearing officer may, at any time,
transmit to the Secretary motions, exhibits or any other original
documents filed with or accepted into evidence by the hearing
officer, together with an index of such documents.  The hearing
officer, may, by order, require the interested division or other
persons to assist in promptly transporting such documents from
the hearing location to the Office of the Secretary. 
     (b)  Preparation, certification of record index.  Promptly
after the close of the hearing, the hearing officer shall
transmit to the Secretary an index of the originals of any
motions, exhibits or any other documents filed with or accepted
into evidence by the hearing officer that have not been
previously transmitted to the Secretary, and the Secretary shall
prepare a record index.  Prior to issuance of an initial
decision, or if no initial decision is to be prepared, within 30
days of the close of the hearing, the Secretary shall transmit
the record index to the hearing officer and serve a copy of the
record index on each party.  Any person may file proposed
corrections to the record index with the hearing officer within
15 days of service of the record index.  The hearing officer
shall, by order, direct whether any corrections to the record
index shall be made.  The Secretary shall make such corrections,
if any, and issue a revised record index.  If an initial decision
is to be issued, the initial decision shall include a
certification that the record consists of the items set forth in
the record index or revised record index issued by the Secretary.
     (c)  Final transmittal of record items to the Secretary. 
After the close of the hearing, the hearing officer shall
transmit to the Secretary originals of any motions, exhibits or
any other documents filed with, or accepted into evidence by, the
hearing officer, or any other portions of the record that have
not already been transmitted to the Secretary.  Prior to service
of the initial decision by the Secretary, or if no initial
decision is to be issued, within 60 days of the close of the
hearing, the Secretary shall inform the hearing officer if any
portions of the record are not in the Secretary's custody.  
 
-------------------- BEGINNING OF PAGE #158 ---------------------

  201.360 Initial decision of hearing officer.
     (a)  When required.  Unless the Commission directs
otherwise, the hearing officer shall prepare an initial decision
in any proceeding in which the Commission directs a hearing
officer to preside at a hearing, provided, however, that an
initial decision may be waived by the parties with the consent of
the hearing officer pursuant to   201.202.  
     (b)  Content.  An initial decision shall include:  findings
and conclusions, and the reasons or basis therefor, as to all the
material issues of fact, law or discretion presented on the
record and the appropriate order, sanction, relief, or denial
thereof.  The initial decision shall also state the time period,
not to exceed 21 days after service of the decision, except for
good cause shown, within which a petition for review of the
initial decision may be filed.  The reasons for any extension of
time shall be stated in the initial decision.  The initial
decision shall also include a statement that, as provided in
paragraph (d) of this section: 
     (1)  The initial decision shall become the final decision of
the Commission as to each party unless a party files a petition
for review of the initial decision or the Commission determines
on its own initiative to review the initial decision as to a
party; and 
     (2)  If a party timely files a petition for review or the
Commission takes action to review as to a party, the initial
decision shall not become final with respect to that party.  
     (c)  Filing, service and publication.  The hearing officer
shall file the initial decision with the Secretary.  The
Secretary shall promptly serve the initial decision upon the
parties and shall promptly publish notice of the filing thereof
in the SEC News Digest.  Thereafter, the Secretary shall publish
the initial decision in the SEC Docket; provided, however, that
in nonpublic proceedings no notice shall be published unless the
Commission otherwise directs. 
     (d)  When final.  
     (1)  Unless a party or an aggrieved person entitled to
review files a petition for review in accordance with the time
limit specified in the initial decision, or unless the Commission
on its own initiative orders review pursuant to   201.411, an
initial decision shall become the final decision of the
Commission. 
     (2)  If a petition for review is timely filed by a party or
an aggrieved person entitled to review, or if the Commission upon
its own initiative has ordered review of a decision with respect
to a party or a person aggrieved who would be entitled to review,
the initial decision shall not become final as to that party or
person.
     (e)  Order of finality.  In the event that the initial
decision becomes the final decision of the Commission with
respect to a party, the Commission shall issue an order that the
decision has become final as to that party.  The order of
finality shall state the date on which sanctions, if any, take
effect.  Notice of the order shall be published in the SEC News
Digest and the SEC Docket. 
APPEAL TO THE COMMISSION AND COMMISSION REVIEW
  201.400 Interlocutory review.
     (a)  Availability.  The Commission will not review a hearing
officer's ruling prior to its consideration of the entire
proceeding in the absence of extraordinary circumstances.  The
Commission may decline to consider a ruling certified by a
hearing officer pursuant to paragraph (c) of this section if it
determines that interlocutory review is not warranted or
appropriate under the circumstances.  The Commission may, at any
 
-------------------- BEGINNING OF PAGE #159 ---------------------

time, on its own motion, direct that any matter be submitted to
it for review.  
     (b)  Expedited consideration.  Interlocutory review of a
hearing officer's ruling shall be expedited in every way,
consistent with the Commission's other responsibilities.  
     (c)  Certification process.  A ruling submitted to the
Commission for interlocutory review must be certified in writing
by the hearing officer and shall specify the material relevant to
the ruling involved.  The hearing officer shall not certify a
ruling unless:
     (1)  His or her ruling would compel testimony of Commission
members, officers or employees or the production of documentary
evidence in their custody; or
     (2)  Upon application by a party, within five days of the
hearing officer's ruling, the hearing officer is of the opinion
that:
     (i)  The ruling involves a controlling question of law as to
which there is substantial ground for difference of opinion; and 
     (ii) An immediate review of the order may materially advance
the completion of the proceeding. 
     (d)  Proceedings not stayed.  The filing of an application
for review or the grant of review shall not stay proceedings
before the hearing officer unless he or she, or the Commission,
shall so order.  The Commission will not consider the motion for
a stay unless the motion shall have first been made to the
hearing officer.  
  201.401 Issuance of stays.  
     (a)  Procedure.  A request for a stay shall be made by
written motion, filed pursuant to   201.154, and served on all
parties pursuant to   201.150.  The motion shall state the
reasons for the relief requested and the facts relied upon, and,
if the facts are subject to dispute, the motion shall be
supported by affidavits or other sworn statements or copies
thereof.  Portions of the record relevant to the relief sought,
if available to the movant, shall be filed with the motion.  The
Commission may issue a stay based on such motion or on its own
motion.  
     (b)  Scope of relief.  The Commission may grant a stay in
whole or in part, and may condition relief under this section
upon such terms, or upon the implementation of such procedures,
as it deems appropriate. 
     (c)  Stay of a Commission order.  A motion for a stay of a
Commission order may be made by any person aggrieved thereby who
would be entitled to review in a federal court of appeals.  A
motion seeking to stay the effectiveness of a Commission order
pending judicial review may be made to the Commission at any time
during which the Commission retains jurisdiction over the
proceeding. 
     (d)  Stay of an action by a self-regulatory organization. 
     (1)  Availability.  A motion for a stay of an action by a
self-regulatory organization for which the Commission is the
appropriate regulatory agency, for which action review may be
sought pursuant to   201.420, may be made by any person aggrieved
thereby.  
     (2)  Summary entry.  A stay may be entered summarily,
without notice and opportunity for hearing.  
     (3)  Expedited consideration.  Where the action complained
of has already taken effect and the motion for stay is filed
within 10 days of the effectiveness of the action, or where the
action complained of, will, by its terms, take effect within five
days of the filing of the motion for stay, the consideration of
and decision on the motion for a stay shall be expedited in every
way, consistent with the Commission's other responsibilities. 
Where consideration will be expedited, persons opposing the
 
-------------------- BEGINNING OF PAGE #160 ---------------------

motion for a stay may file a statement in opposition within two
days of service of the motion unless the Commission, by written
order, shall specify a different period.  
  201.410 Appeal of initial decisions by hearing officers.
     (a)  Petition for review; when available.  In any proceeding
in which an initial decision is made by a hearing officer, any
party, and any other person who would have been entitled to
judicial review of the decision entered therein if the Commission
itself had made the decision, may file a petition for review of
the decision with the Commission. 
     (b)  Procedure.  The petition for review of an initial
decision shall be filed with the Commission within such time
after service of the initial decision as prescribed by the
hearing officer pursuant to   201.360(b).  The petition shall set
forth the specific findings and conclusions of the initial
decision as to which exception is taken, together with supporting
reasons for each exception.  Supporting reasons may be stated in
summary form.  Any exception to an initial decision not stated in
the petition for review, or in a previously filed proposed
finding made pursuant to   201.340, may, at the discretion of the
Commission, be deemed to have been waived by the petitioner.  
     (c)  Financial disclosure statement requirement.  Any person
who files a petition for review of an initial decision that
asserts that person's inability to pay either disgorgement,
interest or a penalty shall file with the opening brief a sworn
financial disclosure statement containing the information
specified in   201.630(b). 
     (d)  Opposition to review.  A party may seek leave to file a
brief in opposition to a petition for review within five days of
the filing of the petition.  The Commission will grant leave, or
order the filing of an opposition on its own motion, only if it
determines that briefing will significantly aid the decisional
process.  A brief in opposition shall identify those issues which
do not warrant consideration by the Commission and shall state
succinctly the reasons therefore.  
     (e)  Prerequisite to judicial review.  Pursuant to Section
704 of the Administrative Procedure Act, 5 U.S.C. 704, a petition
to the Commission for review of an initial decision is a
prerequisite to the seeking of judicial review of a final order
entered pursuant to such decision.  
  201.411 Commission consideration of initial decisions by
          hearing officers.
     (a)  Scope of review.  The Commission may affirm, reverse,
modify, set aside or remand for further proceedings, in whole or
in part, an initial decision by a hearing officer and may make
any findings or conclusions that in its judgment are proper and
on the basis of the record. 
     (b)  Standards for granting review pursuant to a petition
for review.
     (1)  Mandatory review.  After a petition for review has been
filed, the Commission shall review any initial decision that: 
     (i)  Denies any request for action pursuant to Section 8(a)
or Section 8(c) of the Securities Act of 1933, 15 U.S.C. 77h(a),
(c), or the first sentence of Section 12(d) of the Exchange Act,
15 U.S.C. 78l(d); 
     (ii) Suspends trading in a security pursuant to Section
12(k) of the Exchange Act, 15 U.S.C. 78l(k); or
     (iii)     Is in a case of adjudication (as defined in 5
U.S.C. 551) not required to be determined on the record after
notice and opportunity for hearing (except to the extent there is
involved a matter described in 5 U.S.C. 554(a)(1) through (6)). 
     (2)  Discretionary review.  The Commission may decline to
review any other decision.  In determining whether to grant
 
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review, the Commission shall consider whether the petition for
review makes a reasonable showing that:
     (i)  A prejudicial error was committed in the conduct of the
proceeding; or
     (ii) The decision embodies:
     (A)  A finding or conclusion of material fact that is
clearly erroneous; or 
     (B)  A conclusion of law that is erroneous; or 
     (C)  An exercise of discretion or decision of law or policy
that is important and that the Commission should review.  
     (c)  Commission review other than pursuant to a petition for
review.  The Commission may, on its own initiative, order review
of any initial decision, or a portion of any initial decision,
within 21 days after the end of the period established for filing
a petition for review pursuant to   201.410(b) or any brief in
opposition to a petition for review permitted pursuant to
  201.410(d).  A party who does not intend to file a petition for
review, and who desires the Commission's determination whether to
order review on its own initiative to be made in a shorter time,
may make a motion for an expedited decision, accompanied by a
written statement that the party waives its right to file a
petition for review.  The vote of one member of the Commission,
conveyed to the Secretary, shall be sufficient to bring a matter
before the Commission for review.  
     (d)  Limitations on matters reviewed.  Review by the
Commission of an initial decision shall be limited to the issues
specified in the petition for review or the issues, if any,
specified in the briefing schedule order issued pursuant to
  201.450(a).  On notice to all parties, however, the Commission
may, at any time prior to issuance of its decision, raise and
determine any other matters that it deems material, with
opportunity for oral or written argument thereon by the parties. 
     (e)  Summary affirmance.  The Commission may summarily
affirm an initial decision based upon the petition for review and
any response thereto, without further briefing, if it finds that
no issue raised in the petition for review warrants further
consideration by the Commission. 
     (f)  Failure to obtain a majority.  In the event a majority
of participating Commissioners do not agree to a disposition on
the merits, the initial decision shall be of no effect, and an
order will be issued in accordance with this result. 
  201.420 Appeal of determinations by self-regulatory
          organizations.
     (a)  Application for review; when available.  An application
for review by the Commission may be filed by any person who is
aggrieved by a self-regulatory organization determination as to
which a notice is required to be filed with the Commission
pursuant to Section 19(d)(1) of the Exchange Act, 15
U.S.C. 78s(d)(1).  Such determinations include any:
     (1)  Final disciplinary sanction;
     (2)  Denial or conditioning of membership or participation;
     (3)  Prohibition or limitation in respect to access to
services offered by that self-regulatory organization or a member
thereof; or 
     (4)  Bar from association.  
     (b)  Procedure.  An application for review may be filed with
the Commission pursuant to   201.151 within 30 days after notice
of the determination was filed with the Commission pursuant to
Section 19(d)(1) of the Exchange Act, 15 U.S.C. 78s(d)(1), and
received by the aggrieved person applying for review.  The
application shall be served by the applicant on the self-
regulatory organization.  The application shall identify the
determination complained of, set forth in summary form a brief
statement of alleged errors in the determination and supporting
 
-------------------- BEGINNING OF PAGE #162 ---------------------

reasons therefor and state an address where the applicant can be
served with the record index.  The application shall be
accompanied by the notice of appearance required by   201.102(d).


     (c)  Determination not stayed.  Filing an application for
review with the Commission pursuant to paragraph (b) of this
section shall not operate as a stay of the complained of
determination made by the self-regulatory organization unless the
Commission otherwise orders either pursuant to a motion filed in
accordance with   201.401 or on its own motion.  
     (d)  Certification of the record; service of the index. 
Fourteen days after receipt of an application for review or a
Commission order for review, the self-regulatory organization
shall certify and file with the Commission one copy of the record
upon which the action complained of was taken, and shall file
with the Commission three copies of an index to such record, and
shall serve upon each party one copy of the index.  
  201.421 Commission consideration of determinations by self-
          regulatory organizations.
     (a)  Commission review other than pursuant to a petition for
review.  The Commission may, on its own initiative, order review
of any determination by a self-regulatory organization that could
be subject to an application for review pursuant to   201.420(a)
within 40 days after notice thereof was filed with the Commission
pursuant to Section 19(d)(1) of the Exchange Act, 15 U.S.C.
78s(d)(1). 
     (b)  Supplemental briefing.  The Commission may at any time
prior to issuance of its decision raise or consider any matter
that it deems material, whether or not raised by the parties. 
Notice to the parties and an opportunity for supplemental
briefing with respect to issues not briefed by the parties shall
be given where the Commission believes that such briefing would
significantly aid the decisional process. 
  201.430 Appeal of actions made pursuant to delegated authority.
     (a)  Scope of rule.  Any person aggrieved by an action made
by authority delegated in    200.30-1 through 200.30-17 of this
chapter may seek review of the action pursuant to paragraph (b)
of this section.  
     (b)  Procedure.  
     (1)  Notice of intention to petition for review.  A party or
any person aggrieved by an action made pursuant to delegated
authority may seek Commission review of the action by filing a
written notice of intention to petition for review within five
days after actual notice to the party of the action or service of
notice of the action pursuant to   201.141(b), whichever is
earlier.  The notice shall identify the petitioner and the action
complained of, and shall be accompanied by a notice of appearance
pursuant to   201.102(d).
     (2)  Petition for review.  Within five days after the filing
of a notice of intention to petition for review pursuant to
paragraph (b)(1) of this section, the person seeking review shall
file a petition for review containing a clear and concise
statement of the issues to be reviewed and the reasons why review
is appropriate.  The petition shall include exceptions to any
findings of fact or conclusions of law made, together with
supporting reasons for such exceptions based on appropriate
citations to such record as may exist.  These reasons may be
stated in summary form.  
     (c)  Prerequisite to judicial review.  Pursuant to Section
704 of the Administrative Procedure Act, 5 U.S.C. 704, a petition
to the Commission for review of an action made by authority
delegated in    200.30-1 through 200.30-17 of this chapter is a
prerequisite to the seeking of judicial review of a final order
entered pursuant to such an action.  
 
-------------------- BEGINNING OF PAGE #163 ---------------------

  201.431 Commission consideration of actions made pursuant to
          delegated authority.
     (a)  Scope of review.  The Commission may affirm, reverse,
modify, set aside or remand for further proceedings, in whole or
in part, any action made pursuant to authority delegated in   
200.30-1 through 200.30-17 of this chapter.  
     (b)  Standards for granting review pursuant to a petition
for review. 
     (1)  Mandatory review.  After a petition for review has been
filed, the Commission shall review any action that it would be
required to review pursuant to   201.411(b)(1) if the action was
made as the initial decision of a hearing officer.  
     (2)  Discretionary review.  The Commission may decline to
review any other action.  In determining whether to grant review,
the Commission shall consider the factors set forth in
  201.411(b)(2). 
     (c)  Commission review other than pursuant to a petition for
review.  The Commission may, on its own initiative, order review
of any action made pursuant to delegated authority at any time,
provided, however, that where there are one or more parties to
the matter, such review shall not be ordered more than ten days
after the action.  The vote of one member of the Commission,
conveyed to the Secretary, shall be sufficient to bring a matter
before the Commission for review.  
     (d)  Required items in an order for review.  In an order
granting a petition for review or directing review on the
Commission's own initiative, the Commission shall set forth the
time within which any party or other person may file a statement
in support of or in opposition to the action made by delegated
authority and shall state whether a stay shall be granted, if
none is in effect, or shall be continued, if in effect pursuant
to paragraph (e) of this section.  
     (e)  Automatic stay of delegated action.  An action made
pursuant to delegated authority shall have immediate effect and
be deemed the action of the Commission.  Upon filing with the
Commission of a notice of intention to petition for review, or
upon notice to the Secretary of the vote of a Commissioner that a
matter be reviewed, an action made pursuant to delegated
authority shall be stayed until the Commission orders otherwise,
provided, however, there shall be no automatic stay of an action:
     (1)  To grant a stay of action by the Commission or a self-
regulatory organization as authorized by 17 CFR 200.30-14(g)(5) -
 (6); or 
     (2)  To commence a subpoena enforcement proceeding as
authorized by 17 CFR 200.30-4(a)(10). 
     (f)  Effectiveness of stay or of Commission decision to
modify or reverse a delegated action.  As against any person who
shall have acted in reliance upon any action at a delegated
level, any stay or any modification or reversal by the Commission
of such action shall be effective only from the time such person
receives actual notice of such stay, modification or reversal.  
  201.450 Briefs filed with the Commission. 
     (a)  Briefing schedule order.  Other than review ordered
pursuant to   201.431, if review of a determination is mandated
by statute, rule, or judicial order or the Commission determines
to grant review as a matter of discretion, the Commission shall
issue a briefing schedule order directing the party or parties to
file opening briefs and specifying particular issues, if any, as
to which briefing should be limited or directed.  Unless
otherwise provided, opening briefs shall be filed within 40 days
of the date of the briefing schedule order.  Opposition briefs
shall be filed within 30 days after the date opening briefs are
due.  Reply briefs shall be filed within 14 days after the date
opposition briefs are due.  No briefs in addition to those
 
-------------------- BEGINNING OF PAGE #164 ---------------------

specified in the briefing schedule order may be filed except with
leave of the Commission.  The briefing schedule order shall be
issued: 
     (1)  At the time the Commission orders review on its own
initiative pursuant to    201.411 or 200.421, or orders
interlocutory review on its own motion pursuant to   201.400(a);
or 
     (2)  Within 21 days, or such longer time as provided by the
Commission, after:
     (i)  The last day permitted for filing a petition for review
pursuant to   201.410(b) or a brief in opposition to a petition
for review pursuant to   201.410(d); 
     (ii) Receipt by the Commission of an index to the record of
a determination of a self-regulatory organization filed pursuant
to   201.420(d); 
     (iii)     Receipt by the Commission of the mandate of a
court of appeals with respect to a judicial remand; or
     (iv) Certification of a ruling for interlocutory review
pursuant to   201.400(c).  
     (b)  Contents of briefs.  Briefs shall be confined to the
particular matters at issue.  Each exception to the findings or
conclusions being reviewed shall be stated succinctly. 
Exceptions shall be supported by citation to the relevant
portions of the record, including references to the specific
pages relied upon, and by concise argument including citation of
such statutes, decisions and other authorities as may be
relevant.  If the exception relates to the admission or exclusion
of evidence, the substance of the evidence admitted or excluded
shall be set forth in the brief, in an appendix thereto, or by
citation to the record.  Reply briefs shall be confined to
matters in opposition briefs of other parties.  
     (c)  Length limitation.  Opening and opposition briefs shall
not exceed 50 pages and reply briefs shall not exceed 25 pages,
exclusive of pages containing the table of contents, table of
authorities, and any addendum, except with leave of the
Commission.  
  201.451 Oral argument before the Commission.
     (a)  Availability.  The Commission, on its own motion or the
motion of a party or any other aggrieved person entitled to
Commission review, may order oral argument with respect to any
matter.  Motions for oral argument with respect to whether to
affirm all or part of an initial decision by a hearing officer
shall be granted unless exceptional circumstances make oral
argument impractical or inadvisable.  The Commission will
consider appeals, motions and other matters properly before it on
the basis of the papers filed by the parties without oral
argument unless the Commission determines that the presentation
of facts and legal arguments in the briefs and record and the
decisional process would be significantly aided by oral argument.
     (b)  Procedure.  Requests for oral argument shall be made by
separate motion accompanying the initial brief on the merits. 
The Commission shall issue an order as to whether oral argument
is to be heard, and if so, the time and place therefor.  The
grant or denial of a motion for oral argument shall be made
promptly after the filing of the last brief called for by the
briefing schedule.  If oral argument is granted, the time fixed
for oral argument shall be changed only by written order of the
Commission, for good cause shown.  The order shall state at whose
request the change is made and the reasons for any such change.  
     (c)  Time allowed.  Unless the Commission orders otherwise,
not more than one half-hour per side will be allowed for oral
argument.  The Commission may, in its discretion, determine that
several persons have a common interest, and that the interests
represented will be considered a single side for purposes of
 
-------------------- BEGINNING OF PAGE #165 ---------------------

allotting time for oral argument.  Time will be divided equally
among persons on a single side, provided, however, that by mutual
agreement they may reallocate their time among themselves.  A
request for additional time must be made by motion filed
reasonably in advance of the date fixed for argument.  
     (d)  Participation of Commissioners.  A member of the
Commission who was not present at the oral argument may
participate in the decision of the proceeding, provided that the
member has reviewed the transcript of such argument prior to such
participation.  The decision shall state whether the required
review was made.  
  201.452 Additional evidence.
     Upon its own motion or the motion of a party, the Commission
may allow the submission of additional evidence.  A party may
file a motion for leave to adduce additional evidence at any time
prior to issuance of a decision by the Commission.  Such motion
shall show with particularity that such additional evidence is
material and that there were reasonable grounds for failure to
adduce such evidence previously.  The Commission may accept or
hear additional evidence, may remand the proceeding to a self-
regulatory organization, or may remand or refer the proceeding to
a hearing officer for the taking of additional evidence, as
appropriate.  
  201.460 Record before the Commission.  
     The Commission shall determine each matter on the basis of
the record.
     (a)  Contents of the record.  
     (1)  In proceedings for final decision before the Commission
other than those reviewing a determination by a self-regulatory
organization, the record shall consist of:
     (i)  All items part of the record below in accordance with
  201.350;
     (ii) Any petitions for review, cross-petitions or
oppositions; and
     (iii)     All briefs, motions, submissions and other papers
filed on appeal or review. 
     (2)  In a proceeding for final decision before the
Commission reviewing a determination by a self-regulatory
organization, the record shall consist of: 
     (i)  The record certified pursuant to   201.420(d) by the
self-regulatory organization;
     (ii) Any application for review; and
     (iii)     Any submissions, moving papers, and briefs filed
on appeal or review.
     (b)  Transmittal of record to Commission.  Within 14 days
after the last date set for filing briefs or such later date as
the Commission directs, the Secretary shall transmit the record
to the Commission.
     (c)  Review of documents not admitted.  Any document offered
in evidence but excluded by the hearing officer or the Commission
and any document marked for identification but not offered as an
exhibit shall not be considered a part of the record before the
Commission on appeal but shall be transmitted to the Commission
by the Secretary if so requested by the Commission.  In the event
that the Commission does not request the document, the Secretary
shall retain the document not admitted into the record until the
later of: 
     (1)  The date upon which the Commission's order becomes
final, or 
     (2)  The conclusion of any judicial review of that order.
  201.470 Reconsideration.
     (a)  Scope of rule.  A party or any person aggrieved by a
determination in a proceeding may file a motion for
reconsideration of a final order issued by the Commission.
 
-------------------- BEGINNING OF PAGE #166 ---------------------

     (b)  Procedure.  A motion for reconsideration shall be filed
within 10 days after service of the order complained of on each
party, or within such time as the Commission may prescribe upon
motion of the person seeking reconsideration, if made within the
foregoing 10-day period.  The motion for reconsideration shall
briefly and specifically state the matters of record alleged to
have been erroneously decided, the grounds relied upon, and the
relief sought.  Except with permission of the Commission, a
motion for reconsideration shall not exceed 15 pages.  No
responses to a motion for reconsideration shall be filed unless
requested by the Commission.  
  201.490 Receipt of petitions for judicial review pursuant to 28
          U.S.C. 2112(a)(1).
     The Commission officer and office designated pursuant to 28
U.S.C. 2112(a)(1) to receive copies of petitions for review of
Commission orders from the persons instituting review in a court
of appeals, are the Secretary and the Office of the Secretary at
the Commission's Headquarters.  Ten copies of each petition shall
be submitted.  Each copy shall state on its face that it is being
submitted to the Commission pursuant to 28 U.S.C. 2112 by the
person or persons who filed the petition in the court of appeals.

RULES RELATING TO TEMPORARY ORDERS AND SUSPENSIONS
  201.500 Expedited consideration of proceedings.
     Consistent with the Commission's or the hearing officer's
other responsibilities, every hearing shall be held and every
decision shall be rendered at the earliest possible time in
connection with:
     (a)  An application for a temporary sanction, as defined in
  201.101(a), or a proceeding to determine whether a temporary
sanction should be made permanent;
     (b)  A motion or application to review an order suspending
temporarily the effectiveness of an exemption from registration
pursuant to Regulations A, B, E or F under the Securities Act,
   230.258, 230.336, 230.610 or 230.656 of this chapter; or,
     (c)  A motion to or petition to review an order suspending
temporarily the privilege of appearing before the Commission
under   201.102(e)(3), or a sanction under   201.180(a)(1). 
  201.510 Temporary cease-and-desist orders:  application
          process. 
     (a)  Procedure.  A request for entry of a temporary cease-
and-desist order shall be made by application filed by the
Division of Enforcement.  The application shall set forth the
statutory provision or rule that each respondent is alleged to
have violated; the temporary relief sought against each
respondent, including whether the respondent would be required to
take action to prevent the dissipation or conversion of assets;
and whether the relief is sought ex parte.  
     (b)  Accompanying documents.  The application shall be
accompanied by a declaration of facts signed by a person with
knowledge of the facts contained therein, a memorandum of points
and authorities, a proposed order imposing the temporary relief
sought, and, unless relief is sought ex parte, a proposed notice
of hearing and order to show cause whether the temporary relief
should be imposed.  If a proceeding for a permanent cease-and-
desist order has not already been commenced, a proposed order
instituting proceedings to determine whether a permanent cease-
and-desist order should be imposed shall also be filed with the
application.  
     (c)  With whom filed.  The application shall be filed with
the Secretary or, if the Secretary is unavailable, with the duty
officer.  In no event shall an application be filed with an
administrative law judge. 
 
-------------------- BEGINNING OF PAGE #167 ---------------------

     (d)  Record of proceedings.  Hearings, including ex parte
presentations made by the Division of Enforcement pursuant to
  201.513, shall be recorded or transcribed pursuant to
  201.302.  
  201.511 Temporary cease-and-desist orders:  notice; procedures
          for hearing.
     (a)  Notice:  how given.  Notice of an application for a
temporary cease-and-desist order shall be made by serving a
notice of hearing and order to show cause pursuant to
  201.141(b) or, where timely service of a notice of hearing
pursuant to   201.141(b) is not practicable, by any other means
reasonably calculated to give actual notice that a hearing will
be held, including telephonic notification of the general subject
matter, time, and place of the hearing.  If an application is
made ex parte, pursuant to   201.513, no notice to a respondent
need be given prior to the Commission's consideration of the
application.
     (b)  Hearing before the Commission.  Except as provided in
paragraph (d) of this section, hearings on an application for a
temporary cease-and-desist order shall be held before the
Commission.  
     (c)  Presiding officer: designation.  The Chairman shall
preside or designate a Commissioner to preside at the hearing. 
If the Chairman is absent or unavailable at the time of hearing
and no other Commissioner has been designated to preside, the
duty officer on the day the hearing begins shall preside or
designate another Commissioner to preside.  
     (d)  Procedure at hearing.  
     (1)  The presiding officer shall have all those powers of a
hearing officer set forth in   201.111 and shall rule on the
admissibility of evidence and other procedural matters,
including, but not limited to whether oral testimony will be
heard; the time allowed each party for the submission of evidence
or argument; and whether post-hearing submission of briefs,
proposed findings of fact and conclusions of law will be
permitted and if so, the procedures for submission; provided,
however, that the person presiding may consult with other
Commissioners participating in the hearing on these or any other
question of procedure.
     (2)  Each Commissioner present at the hearing shall be
afforded a reasonable opportunity to ask questions of witnesses,
if any, or of counsel.  
     (3)  A party or witness may participate by telephone. 
Alternative means of remote access, including a video link, shall
be permitted in the Commission's discretion.  Factors the
Commission may consider in determining whether to permit
alternative means of remote access include, but are not limited
to, whether allowing an alternative means of access will delay
the hearing, whether the alternative means is reliable, and
whether the party proposing its use has made arrangements to pay
for its cost.
     (4)  After a hearing has begun, the Commission may, on its
own motion, or the motion of a party, assign a hearing officer to
preside at the taking of oral testimony or other evidence and to
certify the record of such testimony or other evidence to the
Commission within a fixed period of time.  No recommended or
initial decision shall be made by such a hearing officer.  
  201.512 Temporary cease-and-desist orders:  issuance after
          notice and opportunity for hearing.  
     (a)  Basis for issuance.  A temporary cease-and-desist order
shall be issued only if the Commission determines that the
alleged violation or threatened violation specified in an order
instituting proceedings whether to enter a permanent cease-and-
desist order pursuant to Securities Act Section 8A(a), 15 U.S.C.
 
-------------------- BEGINNING OF PAGE #168 ---------------------

77h-1(a), Exchange Act Section 21C(a), 15 U.S.C. 78u-3(a),
Investment Company Act Section 9(f)(1), 15 U.S.C. 80a-9(f)(1), or
Investment Advisers Act Section 203(k)(1), 15 U.S.C. 80b-3(k)(1),
or the continuation thereof, is likely to result in significant
dissipation or conversion of assets, significant harm to
investors, or substantial harm to the public interest, including,
but not limited to, losses to the Securities Investor Protection
Corporation, prior to the completion of proceedings on the
permanent cease-and-desist order.  
     (b)  Content, scope and form of order.  Every temporary
cease-and-desist order granted shall: 
     (1)  Describe the basis for its issuance, including the
alleged or threatened violations and the harm that is likely to
result without the issuance of an order; 
     (2)  Describe in reasonable detail, and not by reference to
the order instituting proceedings or any other document, the act
or acts the respondent is to take or refrain from taking; and
     (3)  Be indorsed with the date and hour of issuance. 
     (c)  Effective upon service.  A temporary cease-and-desist
order is effective upon service upon the respondent.  
     (d)  Service:  how made.  Service of a temporary cease-and-
desist order shall be made pursuant to   201.141(a).  The person
who serves the order shall promptly file a declaration of service
identifying the person served, the method of service, the date of
service, the address to which service was made and the person who
made service; provided, however, failure to file such a
declaration shall have no effect on the validity of the service. 

     (e)  Commission review.  At any time after the respondent
has been served with a temporary cease-and-desist order, the
respondent may apply to the Commission to have the order set
aside, limited or suspended.  The application shall set forth
with specificity the facts that support the request.  
  201.513 Temporary cease-and-desist orders:  issuance without
          prior notice and opportunity for hearing. 
     In addition to the requirements for issuance of a temporary
cease-and-desist order set forth in   201.512, the following
requirements shall apply if a temporary cease-and-desist order is
to be entered without prior notice and opportunity for hearing:
     (a)  Basis for issuance without prior notice and opportunity
for hearing.  A temporary cease-and-desist order may be issued
without notice and opportunity for hearing only if the Commission

determines, from specific facts in the record of the proceeding,
that notice and hearing prior to entry of an order would be
impracticable or contrary to the public interest.  
     (b)  Content of the order.  An ex parte temporary cease-
and-desist order shall state specifically why notice and hearing
would have been impracticable or contrary to the public interest.
     (c)  Hearing before the Commission.  If a respondent has
been served with a temporary cease-and-desist order entered
without a prior Commission hearing, the respondent may apply to
the Commission to have the order set aside, limited, or
suspended, and if the application is made within 10 days after
the date on which the order was served, may request a hearing on
such application.  The Commission shall hold a hearing and render
a decision on the respondent's application at the earliest
possible time.  The hearing shall begin within two days of the
filing of the application unless the applicant consents to a
longer period or the Commission, by order, for good cause shown,
sets a later date.  The Commission shall render a decision on the
application within five calendar days of its filing, provided,
however, that the Commission, by order, for good cause shown, may
extend the time within which a decision may be rendered for a
single period of five calendar days, or such longer time as
 
-------------------- BEGINNING OF PAGE #169 ---------------------

consented to by the applicant.  If the Commission does not render
its decision within 10 days of the respondent's application or
such longer time as consented to by the applicant, the temporary
order shall be suspended until a decision is rendered.  
     (d)  Presiding officer, procedure at hearing.  Procedures
with respect to the selection of a presiding officer and the
conduct of the hearing shall be in accordance with   201.511.  
  201.514 Temporary cease-and-desist orders:  judicial review;
          duration.
     (a)  Availability of judicial review.  Judicial review of a
temporary cease-and-desist order shall be available as provided
in Section 8A(d)(2) of the Securities Act, 15 U.S.C. 77h-1(d)(2),
Section 21C(d)(2) of the Exchange Act, 15 U.S.C. 78u-3(d)(2),
Section 9(f)(4)(B) of the Investment Company Act, 15 U.S.C. 80a-
9(f)(4)(B), or Section 203(k)(4)(B) of the Investment Advisers
Act, 15 U.S.C. 80b-3(k)(4)(B).
     (b)  Duration.  Unless set aside, limited, or suspended,
either by order of the Commission, a court of competent
jurisdiction, or a hearing officer acting pursuant to   201.531,
or by operation of   201.513, a temporary cease-and-desist order
shall remain effective and enforceable until the earlier of: 
     (1)  The completion of the proceedings whether a permanent
order shall be entered; or 
     (2)  180 days, or such longer time as consented to by the
respondent, after issuance of a briefing schedule order pursuant
to   201.540(b), if an initial decision whether a permanent order
should be entered is appealed. 

  201.520 Suspension of registration of brokers, dealers, or
          other Exchange Act-registered entities:  application.
     (a)  Procedure.  A request for suspension of a registered
broker, dealer, municipal securities dealer, government
securities broker, government securities dealer, or transfer
agent pending a final determination whether the registration
shall be revoked shall be made by application filed by the
Division of Enforcement.  The application shall set forth the
statutory provision or rule that each respondent is alleged to
have violated and the temporary suspension sought as to each
respondent. 
     (b)  Accompanying documents.  The application shall be
accompanied by a declaration of facts signed by a person with
knowledge of the facts contained therein, a memorandum of points
and authorities, a proposed order imposing the temporary
suspension of registration sought, and a proposed notice of
hearing and order to show cause whether the temporary suspension
of registration should be imposed.  If a proceeding to determine
whether to revoke the registration permanently has not already
been commenced, a proposed order instituting proceedings to
determine whether a permanent sanction should be imposed shall
also be filed with the application. 
     (c)  With whom filed.  The application shall be filed with
the Secretary or, if the Secretary is unavailable, with the duty
officer.  In no event shall an application be filed with an
administrative law judge.  
     (d)  Record of hearings.  All hearings shall be recorded or
transcribed pursuant to   201.302. 
  201.521 Suspension of registration of brokers, dealers, or
          other Exchange Act-registered entities:  notice and
          opportunity for hearing on application.  
     (a)  How given.  Notice of an application to suspend a
registration pursuant to   201.520 shall be made by serving a
notice of hearing and order to show cause pursuant to
  201.141(b) or, where timely service of a notice of hearing
pursuant to   201.141(b) is not practicable, by any other means
 
-------------------- BEGINNING OF PAGE #170 ---------------------

reasonably calculated to give actual notice that a hearing will
be held, including telephonic notification of the general subject
matter, time, and place of the hearing.
     (b)  Hearing: before whom held.  Except as provided in
paragraph (d) of this section, hearings on an application to
suspend a registration pursuant to   201.520 shall be held before
the Commission.  
     (c)  Presiding officer: designation.  The Chairman shall
preside or designate a Commissioner to preside at the hearing. 
If the Chairman is absent or unavailable at the time of hearing
and no other Commissioner has been designated to preside, the
duty officer on the day the hearing begins shall preside or
designate another Commissioner to preside.  
     (d)  Procedure at hearing.  
     (1)  The presiding officer shall have all those powers of a
hearing officer set forth in   201.111 and shall rule on the
admissibility of evidence and other procedural matters,
including, but not limited to whether oral testimony will be
heard; the time allowed each party for the submission of evidence
or argument; and whether post-hearing submission of briefs,
proposed findings of fact and conclusions of law will be
permitted and if so, the procedures for submission; provided,
however, that the person presiding may consult with other
Commissioners participating in the hearing on these or any other
question of procedure.
     (2)  Each Commissioner present at the hearing shall be
afforded a reasonable opportunity to ask questions of witnesses,
if any, or counsel.  
     (3)  A party or witness may participate by telephone. 
Alternative means of remote access, including a video link, shall
be permitted in the Commission's discretion.  Factors the
Commission may consider in determining whether to permit
alternative means of remote access include, but are not limited
to, whether allowing an alternative means of access will delay
the hearing, whether the alternative means is reliable, and
whether the party proposing its use has made arrangements to pay
for its cost.
     (4)  After a hearing has begun, the Commission may, on its
own motion or the motion of a party, assign a hearing officer to
preside at the taking of oral testimony or other evidence and to
certify the record of such testimony or other evidence to the
Commission within a fixed period of time.  No recommended or
initial decision shall be made.  
  201.522 Suspension of registration of brokers, dealers, or
          other Exchange Act-registered entities:  issuance and
          review of order.
     (a)  Basis for issuance.  An order suspending a
registration, pending final determination as to whether the
registration shall be revoked shall be issued only if the
Commission finds that the suspension is necessary or appropriate
in the public interest or for the protection of investors.
     (b)  Content, scope and form of order.  Each order
suspending a registration shall:
     (1)  Describe the basis for its issuance, including the
alleged or threatened violations and the harm that is likely to
result without the issuance of an order; 
     (2)  Describe in reasonable detail, and not by reference to
the order instituting proceedings or any other document, the act
or acts the respondent is to take or refrain from taking; and
     (3)  Be indorsed with the date and hour of issuance. 
     (c)  Effective upon service.  An order suspending a
registration is effective upon service upon the respondent.  
     (d)  Service:  how made.  Service of an order suspending a
registration shall be made pursuant to   201.141(a).  The person
 
-------------------- BEGINNING OF PAGE #171 ---------------------

who serves the order shall promptly file a declaration of service
identifying the person served, the method of service, the date of
service, the address to which service was made and the person who
made service; provided, however, failure to file such a
declaration shall have no effect on the validity of the service.
     (e)  Commission review.  At any time after the respondent
has been served with an order suspending a registration, the
respondent may apply to the Commission or the hearing officer to
have the order set aside, limited, or suspended.  The application
shall set forth with specificity the facts that support the
request. 
  201.523 [Reserved].
  201.524 Suspension of registrations: duration.  
     Unless set aside, limited or suspended by order of the
Commission, a court of competent jurisdiction, or a hearing
officer acting pursuant to   201.531, an order suspending a
registration shall remain effective and enforceable until the
earlier of: 
     (a)  The completion of the proceedings whether the
registration shall be permanently revoked; or 
     (b)  180 days, or such longer time as consented to by the
respondent, after issuance of a briefing schedule order pursuant
to   201.540(b), if an initial decision whether the registration
shall be permanently revoked is appealed.    

201.530   Initial decision on permanent order:  timing for
submitting proposed findings and preparation of decision. 

     Unless otherwise ordered by the Commission or hearing
officer, if a temporary cease-and-desist order or suspension of
registration order is in effect, the following time limits shall
apply to preparation of an initial decision as to whether such
order should be made permanent:  
     (a)  Proposed findings and conclusions and briefs in support
thereof shall be filed 30 days after the close of the hearing;  
     (b)  The record in the proceedings shall be served by the
Secretary upon the hearing officer three days after the date for
the filing of the last brief called for by the hearing officer;
and 
     (c)  The initial decision shall be filed with the Secretary
at the earliest possible time, but in no event more than 30 days
after service of the record, unless the hearing officer, by
order, shall extend the time for good cause shown for a period
not to exceed 30 days.  
  201.531 Initial decision on permanent order:  effect on
          temporary order.  
     (a)  Specification of permanent sanction.  If, at the time
an initial decision is issued, a temporary sanction is in effect
as to any respondent, the initial decision shall specify:
     (1)  Which terms or conditions of a temporary cease-and-
desist order, if any, shall become permanent; and 
     (2)  Whether a temporary suspension of a respondent's
registration, if any, shall be made a permanent revocation of
registration.
 
-------------------- BEGINNING OF PAGE #172 ---------------------

     (b)  Modification of temporary order.  If any temporary
sanction shall not become permanent under the terms of the
initial decision, the hearing officer shall issue a separate
order setting aside, limiting or suspending the temporary
sanction then in effect in accordance with the terms of the
initial decision.  The hearing officer shall decline to suspend a
term or condition of a temporary cease-and-desist order if it is
found that the continued effectiveness of such term or condition
is necessary to effectuate any term of the relief ordered in the
initial decision, including the payment of disgorgement, interest
or penalties.  An order modifying temporary sanctions shall be
effective 14 days after service.  Within one week of service of
the order modifying temporary sanctions any party may seek a stay
or modification of the order from the Commission pursuant to
  201.401.
  201.540 Appeal and Commission review of initial decision making
          a temporary order permanent. 
     (a)  Petition for review.  Any person who seeks Commission
review of an initial decision as to whether a temporary sanction
shall be made permanent shall file a petition for review pursuant
to   201.410, provided, however, that the petition must be filed
within 10 days after service of the initial decision.  
     (b)  Review procedure.  If the Commission determines to
grant or order review, it shall issue a briefing schedule order
pursuant to   201.450.  Unless otherwise ordered by the
Commission, opening briefs shall be filed within 21 days of the
order granting or ordering review, and opposition briefs shall be
filed within 14 days after opening briefs are filed.  Reply
briefs shall be filed within seven days after opposition briefs
are filed.  Oral argument, if granted by the Commission, shall be
held within 90 days of the issuance of the briefing schedule
order.
  201.550 Summary suspensions pursuant to Exchange Act Section
          12(k)(1)(A).  
     (a)  Petition for termination of suspension.  Any person
adversely affected by a suspension pursuant to Section
12(k)(1)(A) of the Exchange Act, 15 U.S.C. 78l(k)(1)(A), who
desires to show that such suspension is not necessary in the
public interest or for the protection of investors may file a
sworn petition with the Secretary, requesting that the suspension
be terminated.  The petition shall set forth the reasons why the
petitioner believes that the suspension of trading should not
continue and state with particularity the facts upon which the
petitioner relies. 
     (b)  Commission consideration of a petition.  The
Commission, in its discretion, may schedule a hearing on the
matter, request additional written submissions, or decide the
matter on the facts presented in the petition and any other
relevant facts known to the Commission.  If the petitioner fails
to cooperate with, obstructs, or refuses to permit the making of
an examination by the Commission, such conduct shall be grounds
to deny the petition.  
RULES REGARDING DISGORGEMENT AND PENALTY PAYMENTS
  201.600 Interest on sums disgorged.
     (a)  Interest required.  Prejudgment interest shall be due
on any sum required to be paid pursuant to an order of
disgorgement.  The disgorgement order shall specify each
violation that forms the basis for the disgorgement ordered; the
date which, for purposes of calculating disgorgement, each such
violation was deemed to have occurred; the amount to be disgorged
for each such violation; and the total sum to be disgorged. 
Prejudgment interest shall be due from the first day of the month
following each such violation through the last day of the month
preceding the month in which payment of disgorgement is made. 
 
-------------------- BEGINNING OF PAGE #173 ---------------------

The order shall state the amount of prejudgment interest owed as
of the date of the disgorgement order and that interest shall
continue to accrue on all funds owed until they are paid.
     (b)  Rate of interest.  Interest on the sum to be disgorged
shall be computed at the underpayment rate of interest
established under Section 6621(a)(2) of the Internal Revenue
Code, 26 U.S.C. 6621(a)(2), and shall be compounded quarterly. 
The Commission or the hearing officer may, by order, specify a
lower rate of prejudgment interest as to any funds which the
respondent has placed in an escrow or otherwise guaranteed for
payment of disgorgement upon a final determination of the
respondent's liability.  Escrow and other guarantee arrangements
must be approved by the Commission or the hearing officer prior
to entry of the disgorgement order.
  201.601 Prompt payment of disgorgement, interest and penalties.
     (a)  Timing of payments.  Unless otherwise provided, funds
due pursuant to an order by the Commission requiring the payment
of disgorgement, interest or penalties shall be paid no later
than 21 days after service of the order, and funds due pursuant
to an order by a hearing officer shall be paid on the first day
after the order becomes final pursuant to   201.360. 
     (b)  Stays.  A stay of any order requiring the payment of
disgorgement, interest or penalties may be sought at any time
pursuant to   201.401.  
  201.610 Submission of proposed plan of disgorgement.
     The Commission or the hearing officer may, at any time,
order any party to submit a plan for the administration and
distribution of disgorgement funds.  Unless ordered otherwise,
the Division of Enforcement shall submit a proposed plan no later
than 60 days after funds or other assets have been turned over by
the respondent pursuant to a Commission disgorgement order and
any appeals of the disgorgement order have been waived or
completed, or appeal is no longer available.
  201.611 Contents of plan of disgorgement; provisions for
          payment.
     (a)  Required plan elements.  Unless otherwise ordered, a
plan for the administration of a disgorgement fund shall include
the following elements:
     (1)  Procedures for the receipt of additional funds,
including the specification of an account where funds will be
held and the instruments in which the funds may be invested; 
     (2)  Specification of categories of persons potentially
eligible to receive proceeds from the fund;
     (3)  Procedure for providing notice to such persons of the
existence of the fund and their potential eligibility to receive
proceeds of the fund;
     (4)  Procedures for making and approving claims, procedures
for handling disputed claims and a cut-off date for the making of
claims;
     (5)  A proposed date for the termination of the fund,
including provision for the disposition of any funds not
otherwise distributed;
     (6)  Procedures for the administration of the fund,
including selection, compensation and, as necessary,
indemnification of a fund administrator to oversee the fund,
process claims, prepare accountings, file tax returns and,
subject to the approval of the Commission, make distributions
from the fund to investors; and
     (7)  Such other provisions as the Commission or the hearing
officer may require. 
     (b)  Payment to registry of the court or court-appointed
receiver.  Subject to such conditions as the Commission or the
hearing officer shall deem appropriate, a plan of disgorgement
may provide for payment of disgorgement funds into a court
 
-------------------- BEGINNING OF PAGE #174 ---------------------

registry or to a court-appointed receiver in any case pending in
federal or state court against a respondent or any other person
based upon a complaint alleging violations arising from the same
or substantially similar facts as those alleged in the
Commission's order instituting proceedings.  
     (c)  Payment to the United States Treasury under certain
circumstances.  When, in the opinion of the Commission or the
hearing officer, the cost of administering a plan of disgorgement
relative to the value of the available disgorgement funds and the
number of potential claimants would not justify distribution of
the disgorgement funds to injured investors, the plan may provide
that the funds shall be paid directly to the general fund of the
United States Treasury.  
  201.612 Notice of proposed plan of disgorgement and opportunity
          for comment by non-parties.
     Notice of a proposed plan of disgorgement shall be published
in the SEC News Digest, in the SEC Docket, and in such other
publications as the Commission or the hearing officer may
require.  The notice shall specify how copies of the proposed
plan may be obtained and shall state that persons desiring to
comment on the proposed plan may submit their views, in writing,
to the Commission.  
  201.613 Order approving, modifying or disapproving proposed
          plan of disgorgement.
     At any time more than 30 days after publication of notice of
a proposed plan of disgorgement, the hearing officer or the
Commission shall, by order, approve, approve with modifications,
or disapprove the proposed plan.  In the discretion of the
Commission or the hearing officer, a proposed plan of
disgorgement that is substantially modified prior to adoption may
be republished for an additional comment period pursuant to
  201.612.  The order approving or disapproving the plan should
be entered within 30 days after the end of the final period
allowed for comments on the proposed plan unless the Commission
or the hearing officer, by written order, allows a longer period
for good cause shown.  
  201.614 Administration of plan of disgorgement.
     (a)  Appointment and removal of administrator.  The
Commission or the hearing officer shall have discretion to
appoint any person, including a Commission employee, as
administrator of a plan of disgorgement and to delegate to that
person responsibility for administering the plan.  A respondent
may be required or permitted to administer or assist in
administering a plan of disgorgement, subject to such terms and
conditions as the Commission or the hearing officer deem
appropriate to ensure the proper distribution of funds.  An
administrator may be removed at any time by order of the
Commission or hearing officer.  
     (b)  Administrator to post bond.  If the administrator is
not a Commission employee, the administrator shall be required to
obtain a bond in the manner prescribed by 11 U.S.C. 322, in an
amount to be approved by the Commission.  The cost of the bond
may be paid for as a cost of administration.  The Commission may
waive posting of a bond for good cause shown. 
     (c)  Administrator's fees.  If the administrator is a
Commission employee, no fee shall be paid to the administrator
for his or her services.  If the administrator is not a
Commission employee, he or she may file an application for fees
for completed services, and upon approval by the Commission or a
hearing officer, may be paid a reasonable fee for those services.

Any objections thereto shall be filed within 21 days of service
of the application on the parties.  
     (d)  Source of funds.  Unless otherwise ordered, fees and
other expenses of administering the plan of disgorgement shall be
 
-------------------- BEGINNING OF PAGE #175 ---------------------

paid first from the interest earned on disgorged funds, and if
the interest is not sufficient, then from the corpus.  
     (e)  Accountings.  During the first 10 days of each calendar
quarter, or as otherwise directed by the Commission or the
hearing officer, the administrator shall file an accounting of
all monies earned or received and all monies spent in connection
with the administration of the plan of disgorgement.  A final
accounting shall be submitted for approval of the Commission or
hearing officer prior to discharge of the administrator and
cancellation of the administrator's bond, if any. 
     (f)  Amendment.  A plan may be amended upon motion by any
party or the plan administrator or upon the Commission's or
hearing officer's own motion.  

  201.620 Right to challenge order of disgorgement.
     Other than in connection with the opportunity to submit
comments as provided in   201.612, no person shall be granted
leave to intervene or to participate in a proceeding or otherwise
to appear to challenge an order of disgorgement; or an order
approving, approving with modifications, or disapproving a plan
of disgorgement; or any determination relating to a plan of
disgorgement based solely upon that person's eligibility or
potential eligibility to participate in a disgorgement fund or
based upon any private right of action such person may have
against any person who is also a respondent in an enforcement
proceeding.  
  201.630 Inability to pay disgorgement, interest or penalties.
     (a)  Generally.  In any proceeding in which an order
requiring payment of disgorgement, interest or penalties may be
entered, a respondent may present evidence of an inability to pay
disgorgement, interest or a penalty.  The Commission may, in its
discretion, or the hearing officer may, in his or her discretion,
consider evidence concerning ability to pay in determining
whether disgorgement, interest or a penalty is in the public
interest.  
     (b)  Financial disclosure statement.  Any respondent who
asserts an inability to pay disgorgement, interest or penalties
may be required to file a sworn financial disclosure statement
and to keep the statement current.  The financial statement shall
show the respondent's assets, liabilities, income or other funds
received and expenses or other payments, from the date of the
first violation alleged against that respondent in the order
instituting proceedings, or such later date as specified by the
Commission or a hearing officer, to the date of the order
requiring the disclosure statement to be filed.  By order, the
Commission or the hearing officer may prescribe the use of the
Disclosure of Assets and Financial Information Form (see Form D-
A at   209.1 of this chapter) or any other form, may specify
other time periods for which disclosure is required, and may
require such other information as deemed necessary to evaluate a
claim of inability to pay.  
     (c)  Confidentiality.  Any respondent submitting financial
information pursuant to this section or   201.410(c) may make a
motion, pursuant to   201.322, for the issuance of a protective
order against disclosure of the information submitted to the
public or to any parties other than the Division of Enforcement. 
Prior to a ruling on the motion, no party receiving information
as to which a motion for a protective order has been made may
transfer or convey the information to any other person without
the prior permission of the Commission or the hearing officer.
     (d)  Service required.  Notwithstanding any provision of
  201.322, a copy of the financial disclosure statement shall be
served on the Division of Enforcement. 
 
-------------------- BEGINNING OF PAGE #176 ---------------------

     (e)  Failure to file required financial information:
sanction.  Any respondent who, after making a claim of inability
to pay either disgorgement, interest or a penalty, fails to file
a financial disclosure statement when such a filing has been
ordered or is required by rule may, in the discretion of the
Commission or the hearing officer, be deemed to have waived the
claim of inability to pay.  No sanction pursuant to    201.155 or
201.180 shall be imposed for a failure to file such a statement. 
     INFORMAL PROCEDURES AND SUPPLEMENTARY INFORMATION
CONCERNING
     ADJUDICATORY PROCEEDINGS

  201.900 Informal Procedures and Supplementary Information
          Concerning Adjudicatory Proceedings.
     (a)  Guidelines for the timely completion of proceedings.
     (1)  Timely resolution of adjudicatory proceedings is one
factor in assessing the effectiveness of the adjudicatory program
in protecting investors, promoting public confidence in the
securities markets and assuring respondents a fair hearing. 
Establishment of guidelines for the timely completion of key
phases of contested administrative proceedings provides a
standard for both the Commission and the public to gauge the
Commission's adjudicatory program on this criterion.  The
Commission has directed that, to the extent possible:
     (i)  An administrative law judge's initial decision should
be filed with the Secretary within 10 months of issuance of the
order instituting proceedings.  
     (ii)  A decision by the Commission on review of an
interlocutory matter should be completed within 45 days of the
date set for filing the final brief on the matter submitted for
review. 
     (iii)  A decision by the Commission on a motion to stay a
decision that has already taken effect or that will take effect
within five days of the filing of the motion, should be issued
within five days of the date set for filing of the opposition to
the motion for a stay.  If the decision complained of has not
taken effect, the Commission's decision should be issued within
45 days of the date set for filing of the opposition to the
motion for a stay.
     (iv)  A decision by the Commission with respect to an appeal
from the initial decision of a hearing officer, a review of a
determination by a self-regulatory organization, or a remand of a
prior Commission decision by a court of appeals should be issued
within 11 months from the date the petition for review,
application for review, or mandate of the court is filed. 
     (2)  The guidelines in this paragraph (a) do not create a
requirement that each portion of a proceeding or the entire
proceeding be completed within the periods described.  Among
other reasons, a proceeding at either the hearing stage or on
review by the Commission may require additional time because it
is unusually complex or because the record is exceptionally long.

In addition, fairness is enhanced if the Commission's
deliberative process is not constrained by an inflexible
schedule.  In some proceedings, deliberation may be delayed by
the need to consider more urgent matters, to permit the
preparation of dissenting opinions, or for other good cause.  The
guidelines will be used by the Commission as one of several
criteria in monitoring and evaluating its adjudicatory program. 
The guidelines will be examined periodically, and, if necessary,
readjusted in light of changes in the pending caseload and the
available level of staff resources.  
     (b)  Reports to the Commission on pending cases.  The
administrative law judges, the Secretary and the General Counsel
have each been delegated authority to issue certain orders or
adjudicate certain proceedings.  See 17 CFR 200.30-1, et seq. 
 
-------------------- BEGINNING OF PAGE #177 ---------------------

Proceedings are also assigned to the General Counsel for the
preparation of a proposed order or opinion which will then be
recommended to the Commission for consideration.  In order to
improve accountability by and to the Commission for management of
the docket, the Commission has directed that confidential status
reports with respect to all filed adjudicatory proceedings shall
be made periodically to the Commission.  These reports will be
made through the Secretary, with a minimum frequency established
by the Commission.  In connection with these periodic reports, if
a proceeding assigned to an administrative law judge or pending
before the Commission has not been concluded within 30 days of
the guidelines established in paragraph (a) of this section, the
Chief Administrative Law Judge or the General Counsel,
respectively, shall specifically apprise the Commission of that
fact, and shall describe the procedural posture of the case,
project an estimated date for conclusion of the proceeding, and
provide such other information as is necessary to enable the
Commission to determine whether additional steps are necessary to
reach a fair and timely resolution of the matter.  
     (c)  Publication of information concerning the pending case
docket.  Ongoing disclosure of information about the adjudication
program caseload increases awareness of the importance of the
program, facilitates oversight of the program and promotes
confidence in the efficiency and fairness of the program by
investors, securities industry participants, self-regulatory
organizations and other members of the public.  The Commission
has directed the Secretary to publish in the SEC Docket in the
first and seventh months of each fiscal year summary statistical
information about the status of pending adjudicatory proceedings
and changes in the Commission's caseload over the prior six
months.  The report will include the number of cases pending
before the administrative law judges and the Commission at the
beginning and end of the six-month period.  The report will also
show increases in the caseload arising from new cases being
instituted, appealed or remanded to the Commission and decreases
in the caseload arising from the disposition of proceedings by
issuance of initial decisions, issuance of final decisions issued
on appeal of initial decisions, other dispositions of appeals of
initial decisions, final decisions on review of self-regulatory
organization determinations, other dispositions on review of
self-regulatory organization determinations, and decisions with
respect to stays or interlocutory motions.  For each category of
decision, the report shall also show the median age of the cases
at the time of the decision and the number of cases decided
within the guidelines for the timely completion of adjudicatory
proceedings.  

Table I  Adversary Adjudications Conducted by the Commission
under 5 U.S.C. 554
                 SECURITIES EXCHANGE ACT OF 1934
     Section 11A(b)(6), 15 U.S.C. 78k-1(b)(6) (suspension or
revocation of registration, or censure of a securities
information processor).
     Section 11A(c)(3)(A), 15 U.S.C. 78k-1(c)(3)(A) (prohibition
of transactions by brokers and dealers in registered securities
other than on a national securities exchange).
     Section 12(j), 15 U.S.C. 78l(j) (suspensions of effective
date or revocation of registration of a security).
     Section 15(b)(4), 15 U.S.C. 78o(b)(4) (suspension or
revocation of registration, or censure of a broker or dealer).
     Section 15(b)(6)(A), 15 U.S.C. 78o(b)(6)(A) (censure,
suspension or bar an associate of a broker or a dealer).
 
-------------------- BEGINNING OF PAGE #178 ---------------------

     Section 15B(c)(2), 15 U.S.C. 78o-4(c)(2) (suspension or
revocation of registration, or censure of a municipal securities
dealer).
     Section 15B(c)(4), 15 U.S.C. 78o-4(c)(4) (censure,
suspension or bar of an associate of a municipal securities
broker or dealer).
     Section 15B(c)(8), 15 U.S.C. 78o-4(c)(8) (removal or censure
of member of the Municipal Securities Rulemaking Board).
     Section 15C(c)(1)(A), 15 U.S.C. 78o-5(c)(1)(A) (suspension
or revocation of registration, or censure of a government
securities broker or dealer).
     Section 15C(c)(1)(C), 15 U.S.C. 78o-5(c)(1)(C) (censure,
suspension or bar of an associate of a government securities
broker or dealer).
     Section 17A(c)(3), 15 U.S.C. 78q-1(c)(3) (deny registration,
censure, place limitation on, suspend, or revoke registration of
a transfer agent).
     Section 17A(c)(4)(C), 15 U.S.C. 78q-1(c)(4)(C) (censure,
place limitations on, suspend or bar certain persons associated
or seeking to associate with a transfer agent).
     Section 19(h)(1), 15 U.S.C. 78s(h)(1) (suspension or
revocation of registration, or censure of a self-regulatory
organization).
     Section 19(h)(2), 15 U.S.C. 78s(h)(2) (suspension or
expulsion of a member of a self-regulatory organization).
     Section 19(h)(3), 15 U.S.C. 78s(h)(3) (suspension or bar of
a person from being associated with a national securities
exchange or registered securities association).
     Section 19(h)(4), 15 U.S.C. 78s(h)(4) (removal or censure of
a director or officer of a self-regulatory organization).
     Section 21B(a), 15 U.S.C. 78u-2(a) (imposition of civil
penalties against any person for violation of the federal
securities laws).
                  INVESTMENT COMPANY ACT OF 1940
     Section 9(d)(1), 15 U.S.C. 80a-9(d)(1) (imposition of civil
penalties against any person for violation of the federal
securities laws).
                 INVESTMENT ADVISERS ACT OF 1940
     Section 203(e), 15 U.S.C. 80b-3(e) (suspension or revocation
of registration, or censure of an investment adviser).
     Section 203(f), 15 U.S.C. 80b-3(f) (censure, suspension, or
bar of an associate of an investment adviser).
     Section 203(i)(1), 15 U.S.C. 80b-3(i)(1) (imposition of
civil penalties against any person for violation of the federal
securities laws).

Table II Cross-reference table showing location of Rules of
Practice adopted in 1995 with former Rules of Practice, related
rules and statutory provisions

New Rules (17 CFR 201)Former Rules / Act  100 1101 none102
2102(d)(4)none103(a)-(c)none104 5110 11(b)111 11(d)-(e), 16(g)112
11(c)120 5 U.S.C. 554(d)121 5 U.S.C. 554(d)140(a) 22(h)140(b)-
(c)22(k)141(a) 6(a), (b), (f)141(b) 23(d)150(a) 23(a)150(b)2(d),
(h)150(c)23(b)150(d)23(c)151 12(b), 22(a)152(a)-(e) 22(a)-
(h)152(f)20(d)153 7(f)154 11(e)155 12(d)160 22(j), 23(b)161
13180(a) 2(f)180(b)-(c)none190 25191 27, 28192 4193 29200(a)(1)
6(a),(b)200(a)(2)6(f)200(b),(c)6(a),(b)200(d)6(d)200(e)6(c)201
10202 8(b),(c)210 9220 7(a)-(e)221(a)-(c),
(e)8(d)221(d)none221(f) 6(e)222(a) 8(d)222(b) none230 none231(a)
11-1231(b) none232(a)-(d)14(b)232(e)-(f)14(b)(2), (c)233 15(a)-
(e)234 15(g)235 15(f)240 8(a)250 11(e)300 11(a)-(b)301
11(b)302(a) 11(f) 302(b) 25(d)302(c) 20(c)310 6(e)320 14(a)321(a)
11(e)321(b) none322 none323 14(d)324 none325 14(a)326 14(a)340
 
-------------------- BEGINNING OF PAGE #179 ---------------------

16(d)-(e)350 20(a)-(b)35120(a)(4)360(a)
16(b)360(b)16(a)360(c)16(f)360(d), (e)17(f)400 12(a)401
12(c)401(d)(2) 15 U.S.C. 78s(d)(2)410(a) 17(a)410(b) 17(b)410(c)
none410(d)
none410(e)17(h)411(a)17(g)(2)411(b)17(d)411(c)17(c)411(d)17(g)(1)
411(e)17(d)411(f)17(g)(3)420(a), (b), (d)17 CFR 240.19d-
3(b)420(c)15 U.S.C. 78s(d)(2)420(d)58421(a)15 U.S.C. 78s(e)-
(f)421(b)-(c)none430 26(a),
(c)431(a)none431(b)26(b)431(c)26(d)431(d)-(f)26(e)450(a)
17(e)450(b)18, 17 CFR 240.19d-3(c)-(g)450(c)22(d)451 21452
21(d)460 20, 21(c)470 21(e)490 23(e)500 none510 none511 none512
none513 none514none520 none521 none522 none524 none530
19531none540 none550 17 CFR 202.8600 none601 none610 none611
none612 none613 none614 none620 none630 none900none

Table III Cross-reference table showing location of former Rules
of Practice and related Rules with Rules of Practice adopted in
1995 

Former RulesNew Rules (17 CFR 201)1100 2102 2(d),
(h)150(b)2(f)180(a)3 [reserved]n/a 4192 5104
6(a)200(b)6(a),(b),(f)141(a) 6(a), (b)200(a)(1) 6(b)200(c)6(c),
(d)200(d), (e)6(e)221(f), 3106(f)200(a)(2)7(a)-(e)220 7(f)153
8(a)240 8(b)-(c)202 8(d)221, 222(a)9210 10201 11(a)-(b)300
11(b)110, 30111(c)112 11(d), (e)111 11(e)154, 250, 321(a)11(f)
302(a) 11-1231(a) 12(a)400 12(b)151(c)12(c)401 12(d)155 13161
14(a)320, 325, 32614(b)232(a)-(d)14(b)(2), (c)232(e)-(f)14(d)323
15(a)-(e)233 15(f)23515(g)234 16(a)360(b)16(b)360(a) 16(c)
[reserved]n/a 16(d)-(e)340 16(f)351, 360(c)16(g)11117(a)410(a)
17(b)410(b) 17(c)411(c)17(d)411(b), (e)17(e)450(a),
(d)17(f)360(d), (e)17(g)411(d), (a), (f)17(h)410(e) 18450(b)19530
20(a)-(b)350, 351, 460 20(c)302(c) 20(d)152(f)21451 21(c)460
21(d)452 21(e)470 22(a)151(a)-(c), 152 22(b)
[reserved]n/a22(c)152(d)22(d)152(e), 450(c)22(e)-(g)152(a)-
(c)22(h)140(a) 22(i)none22(j), (k)160, 140(c)22(k)140(b)
23(a)150(a) 23(b)150(c), 16023(c)150(d)23(d)141(b) 23(e)490 2417
CFR 228.10(f), 
17 CFR 229.10(d)25190 25(d)302(b) 26(a), (c)430
26(b)431(b)26(d)431(c)26(e)431(d)-(f)27191 28191 29193 17 CFR
202.855017 CFR 240.19d-2401(a)-(b), (d)17 CFR 240.19d-3(a)420,
42117 CFR 240.19d-3(b)420(a), (b), (d)17 CFR 240.19d-3(c)-(d)450,
180(c) 17 CFR 240.19d-3(e)45217 CFR 240.19d-3(f)45117 CFR
240.19d-3(g)100

PART 202 -- INFORMAL AND OTHER PROCEDURES
     40. The authority citation for Part 202 continues to read in
part as follows:
     Authority: 15 U.S.C. 77s, 77t, 78d-1, 78u, 78w, 78ll(d),
79r, 79t, 77sss, 77uuu, 80a-37, 80a-41, 80b-9, and 80b-11, unless
otherwise noted.
                            * * * * *
     41. Section 202.8 is removed and reserved:

PART 203 -- RULES RELATING TO INVESTIGATIONS
     42.  The authority citation for Part 203 continues to read
as follows:
     Authority: 15 U.S.C. 77s, 78w, 79t, 77sss, 80a-37, 80b-11,
unless otherwise noted.
 
 203.3  [Amended]
     43.  In  203.3, remove the words " 201.2(e) of this chapter
(Rule 2(e)", and, in their place, add the words " 201.102(e) of
this chapter (Rule 102(e)".
 
-------------------- BEGINNING OF PAGE #180 ---------------------

 203.7  [Amended]
     44.  In  203.7(b), remove the words " 201.2(b) of this
chapter (Rule 2(b)", and, in their place, add the words
" 201.101(a) of this chapter (Rule 101(a)".

 203.8  [Amended]
     45.  In  203.8, remove the words " 201.14(b) of this chapter
(Rule 14(b) of the Commission's rules of practice)", and, in
their place, add the words "Rule 232(c) of the Commission's Rules
of Practice,  201.232(c) of this chapter".

     46.  Part 209 is added to read as follows:
PART 209 -- FORMS PRESCRIBED UNDER THE COMMISSION'S RULES OF
PRACTICE
Sec.
209.0-1   Availability of forms.
209.1     Form D-A: Disclosure of assets and financial
information.
     Authority: 15 U.S.C. 77h-1, 77u, 78u-2, 78u-3, 78v, 78w,
80a-9, 80a-37, 80a-38, 80a-39, 80a-40, 80a-41, 80a-44, 80b-3,
80b-9, 80b-11, and 80b-12, unless otherwise noted.

 209.0-1  Availability of forms.
     (a)  This part identifies and describes the forms for use
under the Securities and Exchange Commission's Rules of Practice,
part 201 of this chapter.
     (b)  Any person may obtain a copy of any form prescribed for
use in this part by written request to the Securities and
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C.
20549.  Any person may inspect the forms at this address and at
the Commission's regional and district offices.  (See   200.11 of
this chapter for the addresses of the SEC regional and district
offices.)
 209.1    Form D-A: Disclosure of assets and financial
information.
     (a)  Rules 410 and 630 of the Rules of Practice (17 CFR
201.410 and 201.630) provide that under certain circumstances a
respondent who asserts or intends to assert an inability to pay
disgorgement, interest or penalties may be required to disclose
certain financial information.  Unless otherwise ordered, this
form may be used by individuals required to supply such
information.
     (b)  The respondent filing Form D-A is required promptly to
notify the Commission of any material change in the answer to any
question on this form.
     (c)  Form D-A may not be withheld from the interested
division.  A respondent making financial information disclosures
on this form after the institution of proceedings may make a
motion, pursuant to Rule 322 of the Commission's Rules of
Practice (17 CFR 201.322), for the issuance of a protective order
to limit disclosure to the public or parties other than the
interested division of the information submitted on Form D-A.  A
request for a protective order allows the requester an
opportunity to justify the need for confidentiality.  The making
of a motion for a protective order, however, does not guarantee
that disclosure will be limited.  
     (d)  No party receiving information for which a motion for a
protective order has been made may transfer or convey the
information to any other person prior to a ruling on the motion
without the prior permission of the Commission or a hearing
officer.
     (e)  A person making financial information disclosures on
Form D-A prior to the institution of proceedings, in connection
with an offer of settlement or otherwise, may request
 
-------------------- BEGINNING OF PAGE #181 ---------------------

confidential treatment of the information pursuant to the Freedom
of Information Act.  See the Commission's Freedom of Information
Act ("FOIA") regulations, 17 CFR 200.83.  A request for
confidential treatment allows the requester an opportunity to
substantiate the need for confidentiality.  No determination as
to the validity of any request for confidential treatment will be
made until a request for disclosure of the information under FOIA
is received.

Note:     The text of Form D-A will not appear in the Code of
Federal Regulations.

                             Form D-A

Model Disclosure of Assets and Financial Information Form


Instructions:  The Commission's Rules of Practice provide that
under certain circumstances a respondent who asserts or intends
to assert an inability to pay disgorgement, interest or penalties
may be required to disclose certain financial information.  See
Rules 410 and 630.  Unless otherwise ordered, this form may be
used by individuals required to supply such information. 
Partnerships, corporations or other entities should submit a
financial statement, including an income statement, balance sheet
and federal tax returns for each year from the year of the
earliest violation alleged against the entity in the order
instituting proceedings to the present.  

The respondent filing this form is required promptly to notify
the Commission of any material change in the answer to any
question on this form. 

A respondent making financial information disclosures on this
form or in another manner pursuant to the requirements of Rule
410 or Rule 630 may submit the form with a motion for a
protective order pursuant to Rule 322 of the Commission's Rules
of Practice.  Any other person submitting this form may request
that the Commission afford the information submitted confidential
treatment under the Freedom of Information Act under the
Commission's Freedom of Information Act ("FOIA") regulations, see
17 CFR 200.83.  A request for confidential treatment allows the
requester an opportunity to justify the need for confidentiality.

A request for confidential treatment does not, however, guarantee
confidentiality.  

Notwithstanding any request for a protective order or for
confidential treatment, copies of the financial disclosure
statement shall be served on the interested division and will be
included in the record of the proceeding.  See Rule 630(d).  If
confidential treatment is sought, notice that a financial
disclosure statement and request for confidential treatment have
been filed shall be served on all other parties.

No party receiving information for which confidential treatment
has been requested may transfer or convey the information to any
person or entity not a party to the proceeding without the prior
permission of the Commission or a hearing officer.

                     United States of America
                           Before the 
                Securities and Exchange Commission
 
-------------------- BEGINNING OF PAGE #182 ---------------------


                                                         
                                                        )
In the Matter of                                  )
     Administrative
                                                        )
          Proceeding File No.
                                                        )
          3-                          
                                                        )
                                                        )




         Part I:  Summary Financial Disclosure Statement



Full Name:                                                       
                                                             
                     Last                              First
          Middle 


A.  Net Worth 

     1. Assets: (from Part II.B.)                                
                 

     2. Liabilities: (from Part II.C.)                           
                 

     3. Net Worth:  (from Part II.D.)                            
                 


B.  Income and Payments Received 

     1. Gross income reported on most recent federal
         tax filing:                                             

                     

     2. Last 12 calendar months (from Part II.E.):               

                          *

     *  If this amount, divided by 12, does not equal
         your current monthly income, please explain
         the discrepancy on an attached sheet.      

C.  Expenses

     1. Last 12 calendar months (from Part II.F.):               

                                                                 
                                                                
                                                       *

     *  If this amount, divided by 12, does not equal
         your current monthly expenses, please explain
         the discrepancy on an attached sheet.

                     United States of America
                           Before the 
                Securities and Exchange Commission
 
-------------------- BEGINNING OF PAGE #183 ---------------------




                                                         
                                             )
In the Matter of                        )
Administrative
                                             )
Proceeding File No.
                                             )
3-                          
                                             )
                                                         



       Part II:  Detailed Financial Disclosure Information



Full Name:                                                       
                                                             
                     Last                              First
                 Middle 



If this form is filled out by a respondent requesting a
protective order pursuant to Rule of Practice 322 (17 CFR
201.322), please check the box below.
                                                          
     PROTECTIVE ORDER REQUESTED.  Disclosure of this document is
prohibited
     unless specifically authorized below.  This document should
     be placed in a nonpublic file.



For Use Only by the Secretary of the Commission:
                                       
     By order of                   (date), the Commission
     authorized this form
     to be placed in a public file.                              
            





                                                                 
                                
                                             (Signature of
Secretary)

A Scope of Information Requested:

     Requests for information about you include a request for the
     same information about your spouse (unless you are legally
     separated and living apart), minor children and any other
     dependents.
 
-------------------- BEGINNING OF PAGE #184 ---------------------


B.   Assets:                          C.Liabilities:
                                                     
     List all assets owned by           List all your liabilities
     you, directly or                   including, but not limited
     indirectly, and all assets         to, the items listed below. 

     that are subject to your
     enjoyment or control,
     regardless of whether legal
     title or ownership is held         1.  Mortgages            
     
     in your name.                                        
           
     1.   Cash                          2.  Auto Loans           
    
                                                                 
  

     2.   Listed Securities             3.  Credit Card Debt     
     
                                                                 
  

     3.   Surrender Value of            4.  Margin Loans         
     
          Insurance                                              
  

     4.   Loans, Notes, Accounts        5.  Insurance Policy Loans 
   
          Receivable Due to You                           
                       
                                         6.  Installment Loans   
      
     5.   Real Estate                                     
                      
                                         7.  Other Loans, Notes
     6.   Furniture                          or Accounts Payable 
     
                                                                 
  

     7.   Jewelry, Art, Rugs,            8.  Accrued Real Estate 
          Silver                                       Taxes     
         
     
          Collectibles, Other                             
          Valuables                 
                                         9.  Judgments/Settlements 
    
     8.   Automobiles                        Owed             
                                                       
     9.   Unlisted Securities           10.  Other (Itemize):    
        
                                                             
                                                                 
         
    10.  Partnership Interests                                 
          (non-securities)       
                                                                 
   

    11.  Net Value of Ownership

        Interest in Business   
                      

   12.  IRA, Keogh, 401(k),
        Annuity or Pension Accounts    
                                        11.Total Liabilities     
     
                                                                 
  
  13.  Other (Itemize):       
                                        
 
-------------------- BEGINNING OF PAGE #185 ---------------------

   14.  Total Assets           
                      



D.  Net Worth 
                                      (Assets Less Liabilities)  

                          


E.                                    Income/Payments Received

                                      List all income or other
                                      payments received from any
                                      source in the last 12
                                      months by you, or by any
                                      other person or entity if
                                      you have any right, power
                                      or authority to control or
                                      enjoy the use of the money
                                      or property received by
                                      such other person or
                                      entity.  Identify the
                                      source, the recipient and
                                      the amount of payment,
                                      including but not limited
                                      to the items listed below. 


                                      Description/Purpose
                                      Source Amount

                                      1.   Salary/Wages          

                                                                 

    

                                      2.   Commissions/Advances  

                                                                 

    

                                      3.   Bonuses               

                                                                 


                                      4.   Dividends             

                                                                 


                                      5.   Interest              

                                                                 


                                      6.   Distributions of
                                           Capital               
         

                                                             
-------------------- BEGINNING OF PAGE #186 ---------------------

                                      7.   Annuity, Pension
                                           Payments

                                      8.   Rents/Royalties (net) 

                                                                 


                                      9.   Sales of Assets (net) 

                                                                 

    

                                      10.  Repayment of Loans    

                                                                 

                                                                 

                                                              

                                      11.  Alimony/Child Support 

                                                                 

    

                                      12.  Gifts over $1,000     

                                                                 


                                      13.  Payments by Others on
                                           Your Behalf 
                                           (see section I below) 
         
                                           
                                      14.  Other (itemize):

                                      15.  Total Income/Receipts 

                     


                                      16.  If you anticipate
                                      unusual income in the
                                      coming 12 months, please
                                      explain.

F.                                    Expenses/Disbursements

                                      List all your expenditures
                                      for the past 12 months,
                                      including but not limited
                                      to the items listed below. 
                                      Identify the purpose and
                                      the amount of each
                                      expenditure.  

                                      Description
                                      Amount
 
-------------------- BEGINNING OF PAGE #187 ---------------------

                                      1.   Mortgage/Rent         

                      

                                      2.   Food                  

                      

                                      3.   Utilities             

                      

                                      4.   Payments on Loans     

                      

                                      5.   Real Estate Taxes     

                      

                                      6.   Insurance Premiums    

                      

                                      7.   Medical Expenses      

                      

                                      8.   Automobile Expenses   

                      

                                      9.   Alimony/Child Support
                                                                 

                                           

                                      10.  Income Taxes (federal,
state and local)                                                 

     

                                      11.  Other Expenses
(itemize):                          

                                      12.  Total
Expenses/Disbursements                                           
           


                                      13.  If you anticipate
                                      unusual expenses in the
                                      coming 12 months, please
                                      describe them.


G.  Asset Schedules
 
-------------------- BEGINNING OF PAGE #188 ---------------------

                                      1.   For each asset or
                                           class of assets
                                           included in Section
                                           II.B(5-13) with a fair
                                           market value greater
                                           than $2,000, describe
                                           the asset(s), state
                                           the form of ownership
                                           (e.g., individual,
                                           joint, beneficial
                                           interest), provide a
                                           fair market value, and
                                           explain how fair
                                           market value was
                                           determined (e.g.,
                                           appraisal, comparison,
                                           estimate, etc.).

                                      2.   List all securities or
                                           commodities brokerage
                                           accounts and accounts
                                           at banks or other
                                           financial institutions
                                           in your name, under
                                           your control, in which
                                           you have or had a
                                           beneficial interest,
                                           or to which you are or
                                           were a signatory since
                                           the date of the first
                                           violation alleged
                                           against you.  For each
                                           account, specify the
                                           location of the
                                           account, account
                                           number, balance and
                                           balance date.  Please
                                           identify all accounts,
                                           regardless of their
                                           location.

                                      3.   List all 401(k) plans,
                                           pension plans, Keogh
                                           plans, individual
                                           retirement accounts,
                                           profit sharing plans,
                                           thrift plans, life
                                           insurance policies or
                                           annuities in which you
                                           have an interest,
                                           vested or otherwise. 
                                           For each account,
                                           specify the account
                                           name, the location of
                                           the account, account
                                           number, balance and
                                           balance date.  For
                                           each account state
                                           whether you are
                                           permitted to borrow
                                           against or make
                                           withdrawals from the
                                           account.
 
-------------------- BEGINNING OF PAGE #189 ---------------------

                                      4.   Identify the location
                                           and account number of
                                           all your safe deposit
                                           boxes.  Include any
                                           boxes in which you
                                           have property or
                                           papers, whether or not
                                           you are the account
                                           holder. 

                                      5.   Identify all patents,
                                           trademarks, service
                                           marks, royalty
                                           agreements, licenses,
                                           or other general
                                           intangibles in which
                                           you have an interest.


H.  Liability Schedules

                                      1.   For each liability
                                           greater than $2,000
                                           listed in Section
                                           II.C., indicate the
                                           creditor, the account
                                           number, if any; the
                                           date incurred; the
                                           original amount of the
                                           liability; the length
                                           of the obligation; the
                                           interest rate; the
                                           collateral or
                                           security, if any; the
                                           outstanding balance;
                                           and the name(s) and
                                           address(es) of any
                                           other obligee(s). 
                                           State whether you are
                                           related to or have a
                                           personal or social
                                           relationship with the
                                           creditor, its
                                           management or owners.

                                      2.   List all credit cards
                                           and lines of credit in
                                           your name or to which
                                           you are a signatory,
                                           including the name of
                                           the credit issuer,
                                           account number, credit
                                           limit, and amount of
                                           indebtedness.

                                      3.   List all contingent
                                           liabilities.  Include
                                           any notes on which you
                                           are a co-maker,
                                           guarantor or endorser
                                           and all pending
                                           lawsuits in which you
                                           are named as a
                                           defendant.  
 
-------------------- BEGINNING OF PAGE #190 ---------------------



I.                                    Schedules of Income,
Receipts and Disbursements

                                      1.   Disbursements by
                                           Others on Your Behalf. 
                                           List any payments or
                                           disbursements having a
                                           value of $1,000 or
                                           greater made by any
                                           other person or entity
                                           to a third party on
                                           your behalf since the
                                           date of the first
                                           violation alleged
                                           against you.  Include
                                           the amount of the
                                           disbursement and the
                                           name and address of
                                           the person or entity
                                           who made the
                                           disbursement.  If no
                                           such disbursements
                                           have been made, please
                                           so state.

                                      2.   Fringe Benefits.  List
                                           any fringe benefits,
                                           such as the lease of
                                           an automobile,
                                           currently provided by
                                           your employer.

                                      3.   Asset Transfers by
                                           You.  List any assets
                                           or property with a
                                           cost or fair market
                                           value of $2,000 or
                                           more that you
                                           transferred or
                                           otherwise disposed of
                                           since the date of the
                                           first violation
                                           alleged against you. 
                                           State the value of the
                                           asset, the
                                           consideration
                                           received, and your
                                           relationship with the
                                           transferee.  If no
                                           such transfers have
                                           been made, please so
                                           state.

                                      4.   Additional Deposits by
                                           You.  Identify any
                                           financial institution
                                           accounts (other than
                                           those identified in
                                           section G.2. above) in
                                           which you have
                                           deposited more than
                                           $2,000 since the date
 
-------------------- BEGINNING OF PAGE #191 ---------------------

                                           of the first violation
                                           alleged against you. 
                                           If no such deposits
                                           have been made, please
                                           so state.

                                      5.   Trusts and
                                           Inheritances Already
                                           Vested.  Describe any
                                           vested interest in a
                                           trust or will pursuant
                                           to which you are
                                           receiving or will
                                           receive a devise,
                                           bequest, other
                                           inheritance or
                                           distribution.  

                                      6.   Current and Prior
                                           Business Relations. 
                                           List any sole
                                           proprietorships, joint
                                           ventures, corporations
                                           or other business
                                           enterprises in which
                                           you are now or have
                                           been a principal,
                                           holder of 10 percent
                                           or more of the issued
                                           stock, officer,
                                           director, manager or
                                           chief operating
                                           officer at any time
                                           since the date of the
                                           first violation
                                           alleged against you.


J.                                    Personal Information

                                      Current residence:         

                                                                 
street                    unit
city                      state    zip code

Current phone number(s):
home:              (        )        -    

business:          (        )        -         
 
car:               (        )        -           

other:             (        )        -    
      
 
-------------------- BEGINNING OF PAGE #192 ---------------------

                                      Social security number:    

    -      -        


                                      List any other names
(including a maiden name) you have used.

                                      If currently married,
                                      please state your spouse's
                                      name, age and social
                                      security number, whether or
                                      not he or she resides with
                                      you, and the date of your
                                      marriage.

                                      If you have previously been
                                      married, please state the
                                      name of your former
                                      spouse(s) and the date of
                                      your marriage(s).  If the
                                      date of a marriage was
                                      after the date of the first
                                      violation alleged against
                                      you, include your former
                                      spouse's social security
                                      number and last known
                                      address.

                                      Identify all dependents. 
                                      For each, please state his
                                      or her age, social security
                                      number, and whether or not
                                      he or she resides with you.

                                      Identify any other members
                                      of your household.  For
                                      each, please state his or
                                      her age and relationship to
                                      you.  


K.                                    Attachments:

                                      1.   Attach any federal tax
                                           returns filed by you
                                           (including personal,
                                           trust, or business
                                           returns) for the year
                                           of the first violation
                                           alleged against you
                                           and all subsequent
                                           years.

                                      2.   Attach any federal
                                           gift tax returns filed
                                           by you for the year of
                                           the first violation
                                           alleged against you
                                           and all subsequent
                                           years.

                                      3.   Attach any financial
                                           statement that you
                                           prepared for any
 
-------------------- BEGINNING OF PAGE #193 ---------------------

                                           purpose (e.g., a
                                           financial statement
                                           provided to a bank to
                                           secure a loan) in the
                                           year of the first
                                           violation alleged
                                           against you and all
                                           subsequent years.

                                      4.   If you are a trustee,
                                           executor or
                                           administrator, attach
                                           a copy of the
                                           instrument appointing
                                           you as such.

                                      5.   List of Attachments
                                      Submitted With This Form:

                                           Please list all
                                           financial statements,
                                           tax returns and other
                                           materials submitted
                                           with this form.  Do
                                           not submit originals. 
                                           Make sure all copies
                                           are legible. 
                                           Illegible copies do
                                           not satisfy the
                                           requirements for
                                           filing your financial
                                           disclosure
                                           information.








L.                                    Declarations and Signature


                                      I,                         

                                                              ,
                                      hereby declare under
                                      penalty of perjury that I
                                      have examined the
                                      information given in this
                                      statement and attached
                                      hereto and, to the best of
                                      my knowledge and belief, it
                                      is true, correct, and
                                      complete.  I further
                                      declare that I have no
                                      assets, owned either
                                      directly or indirectly, or
                                      income of any nature other
                                      than as shown in, or
                                      attached to, this
                                      statement.  I understand
                                      that any material
                                      misstatements or omissions
 
-------------------- BEGINNING OF PAGE #194 ---------------------

                                      made by me herein, or in
                                      any attachments hereto, may
                                      constitute criminal
                                      violations, punishable
                                      under 18 U.S.C. 1001 or
                                      other statutes.

                                      The Securities and Exchange
                                      Commission and any of its
                                      staff are authorized to
                                      obtain any such information
                                      from credit bureaus,
                                      financial institutions or
                                      any other source as may be
                                      needed to verify the
                                      statements made on this
                                      form.

                                      The statements herein and
                                      attached hereto represent
                                      my financial condition as
                                      of                         
                                      (date).


                                                                 

                                                                 

                                      (signature)                
                                                              
                                      (date)


                                      Sworn before me this       
day of                   , 199   .


                                      [Seal]


                                                                 

                           
                                      Notary Public 

                                      My commission expires on   

                            (date)

PART 228 -- INTEGRATED DISCLOSURE SYSTEM FOR SMALL BUSINESS
ISSUERS

                                      47.  The authority citation
for Part 228 continues to read as follows:
                                      Authority:  15 U.S.C. 77e,
77f, 77g, 77h, 77j, 77k, 77s, 77aa(25), 77aa(26), 77ddd, 77eee,
77ggg, 77hhh, 77jjj, 77nnn, 77sss, 78l, 78m, 78n, 78o, 78w, 78ll,
80a-8, 80a-29, 80a-30, 80a-37, 80b-11, unless otherwise noted.
                                      48.  By amending  228.10 by
adding paragraph (f) to read as follows:
 228.10 (Item 10) General.
*   *   *   *   * 
                                      (f)  Incorporation by
Reference.  Where rules, regulations, or instructions to forms of
the Commission permit incorporation by reference, a document may
be so incorporated by reference to the specific document and to
the prior filing or submission in which such document was
 
-------------------- BEGINNING OF PAGE #195 ---------------------

physically filed or submitted.  Except where a registrant or
issuer is expressly required to incorporate a document or
documents by reference, reference may not be made to any document
which incorporates another document by reference if the pertinent
portion of the document containing the information or financial
statements to be incorporated by reference includes an
incorporation by reference to another document.  No document on
file with the Commission for more than five years may be
incorporated by reference except:
                                      (1)  Documents contained in
registration statements, which may be incorporated by reference
as long as the registrant has a reporting requirement with the
Commission; or
                                      (2)  Documents that the
registrant specifically identifies by physical location by SEC
file number reference, provided such materials have not been
disposed of by the Commission pursuant to its Records Control
Schedule (17 CFR 200.80f).

PART 229 -- STANDARD INSTRUCTIONS FOR FILING FORMS UNDER
SECURITIES ACT OF 1933, SECURITIES EXCHANGE ACT OF 1934 AND
ENERGY POLICY AND CONSERVATION ACT OF 1975 -- REGULATION S-K
                                      49.  The authority citation
for Part 229 continues to read in part as follows: 
                                      Authority:  15 U.S.C. 77e,
77f, 77g, 77h, 77j, 77k, 77s, 77aa(25), 77aa(26), 77ddd, 77eee,
77ggg, 77hhh, 77iii, 77jjj, 77nnn, 77sss, 78c, 78i, 78j, 78l,
78m, 78n, 78o, 78w, 78ll(d), 79e, 79n, 79t, 80a-8, 80a-29, 80a-
30, 80a-37, 80b-11, unless otherwise noted.
*   *   *   *   * 
                                      50.  By amending  229.10 by
adding paragraph (d) to read as follows:
 229.10 General.
*   *   *   *   *
                                      (d) Incorporation by
Reference.  Where rules, regulations, or instructions to forms of
the Commission permit incorporation by reference, a document may
be so incorporated by reference to the specific document and to
the prior filing or submission in which such document was
physically filed or submitted.  Except where a registrant or
issuer is expressly required to incorporate a document or
documents by reference, reference may not be made to any document
which incorporates another document by reference if the pertinent
portion of the document containing the information or financial
statements to be incorporated by reference includes an
incorporation by reference to another document.  No document on
file with the Commission for more than five years may be
incorporated by reference except:
                                      (1)  Documents contained in
registration statements, which may be incorporated by reference
as long as the registrant has a reporting requirement with the
Commission; or
                                      (2)  Documents that the
registrant specifically identifies by physical location by SEC
file number reference, provided such materials have not been
disposed of by the Commission pursuant to its Records Control
Schedule (17 CFR 200.80f). 
PART 230 -- GENERAL RULES AND REGULATIONS, SECURITIES ACT OF 1933
                                      51.  The authority citation
for Part 230 continues to read in part as follows:
                                      Authority: 15 U.S.C. 77b,
77f, 77g, 77h, 77j, 77s, 77sss, 78c, 78l, 78m, 78n, 78o, 78w,
78ll(d), 79t, 80a-8, 80a-29, 80a-30, and 80a-37, unless otherwise
noted.
 
-------------------- BEGINNING OF PAGE #196 ---------------------

                      *     *    *    *    *

 230.406  [Amended]
                                      52.  In  230.406 paragraphs
(e), (h)(1) and (h)(2), remove the words " 201.26", and, in their
place, add the words "  201.431".

 230.411  [Amended]
                                      53.  In   230.411(b)(4),
remove the words "Rule 24 of the Commission's Rules of Practice
( 201.24 of this chapter)" and in paragraph (c) remove the words
"Rule 24 of the Commission's Rules of Practice" and add, in their
place, the words " 228.10(f) and  229.10(d) of this chapter".

PART 232 -- REGULATION S-T -- GENERAL RULES AND REGULATIONS FOR
ELECTRONIC FILINGS
                                      54.  The authority citation
for part 232 continues to read as follows:
                                      Authority: 15 U.S.C. 77f,
77g, 77h, 77j, 77s(a), 77sss(a), 78c(b), 78l, 78m, 78n, 78o(d),
78w(a), 78ll(d), 79t(a), 80a-8, 80a-29, 80a-30 and 80a-37.

 232.101  [Amended]
                                      55.  In  232.101(c)(13),
remove the words "Rules of Practice (  201.1-201.29 of this
chapter)", and add, in their place, the words "Subpart D of Part
201 of this chapter".
 232.102  [Amended]
                                      56.  In  232.102(a), remove
the words "Rule 24 of the Commission's Rules of Practice ( 
201.24 of this chapter)", and add, in their place, the words
" 228.10(f) and  229.10(d) of this chapter".

PART 240 -- GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE
ACT OF 1934
                                      57. The authority citation
for Part 240 continues to read in part as follows:
                                      Authority: 15 U.S.C. 77c,
77d, 77g, 77j, 77s, 77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78d,
78i, 78j, 78l, 78m, 78n, 78o, 78p, 78q, 78s, 78w, 78x, 78ll(d),
79q, 79t, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4 and 80b-
11, unless otherwise noted.
                            * * * * * 
  240.12b-23  [Amended] 
                                      58.  In  240.12b-23(b),
remove the words "Rule 24 of the Commission's Rules of Practice
( 201.24 of this chapter)" and add, in their place, the words
" 228.10(f) and  229.10(d) of this chapter".

 240.12b-32  [Amended]
                                      59.  In  240.12b-32(a),
remove the words " 201.24 of this chapter" and add, in their
place, " 228.10(f) and  229.10(d) of this chapter".

 240.14a-101 [Amended]
                                      60.  In  240.14a-101 NOTE D
1, remove the words "Rule 24 of the Commission's Rules of
Practice (  201.24 of this chapter)" and add, in their place, the
words " 228.10(f) and  229.10(d) of this chapter".

                                      61.  Sections 240.19d-2 and
19d-3 are revised to read as follows:
 240.19d-2                            Applications for stays of
                                      disciplinary sanctions or
 
-------------------- BEGINNING OF PAGE #197 ---------------------

summary suspensions by a self-regulatory organization. 

If any self-regulatory
organization imposes any final disciplinary sanction as to which
a notice is required to be filed with the Commission pursuant to
Section 19(d)(1) of the Exchange Act, 15 U.S.C. 78s(d)(1),
pursuant to Section 6(b)(6), 15A(b)(7) or 17A(b)(3)(G) of the Act
(15 U.S.C. 78f(b)(6), 78o-3(b)(7) or 78q-1(b)(3)(G)), or
summarily suspends or limits or prohibits access pursuant to
Section 6(d)(3), 15A(h)(3) or 17A(b)(5)(C) of the Act (15 U.S.C.
78f(d)(3), 78o-3(h)(3) or 78q-1(b)(5)(C)), any person aggrieved
thereby for which the Commission is the appropriate regulatory
agency may file with the Commission a written motion for a stay
of imposition of such action pursuant to Rule 401 of the
Commission's Rules of Practice,   201.401 of this chapter. 

240.19d-3  Applications for review of final disciplinary sanctions,
denials
of membership, participation or association, or prohibitions or
limitations
of access to services imposed by self-regulatory organizations. 
                                      
Applications to the Commission for review of any final disciplinary
sanction, denial or conditioning of membership, participation, bar
from
association, or prohibition or limitation with respect to access
to
services offered by a self-regulatory organization or a member
thereof by
any such organization shall be made pursuant to Rule 420 of the
Commission's Rules of Practice,   201.420 of this chapter.

 240.24b-2  [Amended]
                                      62.  In   240.24b-2
paragraphs (d)(2), (e)(1), and (e)(2), remove the words "17 CFR
201.26", and, in their place, add the words "  201.431 of this
chapter".
PART 250 -- GENERAL RULES AND REGULATIONS, PUBLIC UTILITY HOLDING
COMPANY ACT OF 1935
                                      63.  The authority citation
for part 250 continues to read as follows:
                                      Authority: 15 U.S.C. 79c,
79f(b), 79i(c)(3), 79t, unless otherwise noted.

 250.22  [Amended]
                                      64.  In  250.22(b)(1),
remove the words " 201.24 of this chapter" and add, in their
place, " 228.10(f) and  229.10(d) of this chapter".
PART 260 -- GENERAL RULES AND REGULATIONS, TRUST INDENTURE ACT
OF
1939
                                      65.  The authority citation
for part 260 continues to read as follows:
                                      Authority: 15 U.S.C. 77eee,
77ggg, 77nnn, 77sss, 78ll(d); 80b-3, 80b-4, and 80b-11.
 260.7a-29  [Amended]
                                      66.  In  260.7a-29(a),
remove the words " 201.24 of this chapter" and add, in their
place, " 228.10(f) and  229.10(d) of this chapter".
PART 270 -- RULES AND REGULATIONS, INVESTMENT COMPANY ACT OF 1940
                                      67.  The authority citation
for part 270 continues to read in part as follows:
 
-------------------- BEGINNING OF PAGE #198 ---------------------

                                      Authority: 15 U.S.C. 80a-1
et seq., 80a-37, 80a-39 unless otherwise noted.
*    *    *    *    *
 270.0-4  [Amended]
                                      68.  In  270.0-4(a), remove
the words " 201.24 of this chapter" and add, in their place,
" 228.10(f) and  229.10(d) of this chapter".

 270.8b-32  [Amended]
                                      69.  In  270.8b-32(a),
remove the words " 201.24 of this chapter" and add, in their
place, " 228.10(f) and  229.10(d) of this chapter".
PART 275 -- RULES AND REGULATIONS, INVESTMENT ADVISERS ACT OF
1940
                                      70.  The authority citation
for part 275 continues to read in part as follows:
                                      Authority: 15 U.S.C. 80b-
3, 80b-4, 80b-6A, 80b-11, unless otherwise noted.
*    *    *    *    *
  275.0-6  [Amended]
                                      71.  In  275.0-6 paragraph
(a) and the NOTE at the end of the section, remove the words
" 201.24 of this chapter" and add, in their place, " 228.10(f)
and  229.10(d) of this chapter".

By the Commission.


Jonathan G. Katz,

Secretary

June 9, 1995 
 