Rules of Practice

and

Rules on Fair Fund and 

Disgorgement Plans 

U.S. Securities and Exchange Commission

January 2006

Corrected March 2006
i

COMMISSION RULES OF PRACTICE

TABLE OF CONTENTS

GENERAL RULES

Rule 100. Scope of the Rules of Practice ............................. 1

Rule 101. Definitions ............................................. 1

Rule 102. Appearance and Practice Before the Commission ............. 3

Rule 103. Construction of Rules .................................... 9

Rule 104. Business Hours .......................................... 9

Rule 110. Presiding Officer ....................................... 10

Rule 111. Hearing Officer: Authority .............................. 10

Rule 112. Hearing Officer: Disqualification and Withdrawal .......... 11

Rule 120. Ex Parte Communications ............................... 12

Rule 121. Separation of Functions ................................. 12

Rule 140. Commission Orders and Decisions: Signature and 

Availability ........................................... 12

Rule 141. Orders and Decisions: Service of Orders Instituting 

Proceedings and Other Orders and Decisions ............... 13

Rule 150. Service of Papers by Parties ............................. 15

Rule 151. Filing of Papers with the Commission: Procedure ............ 16

Rule 152. Filing of Papers: Form .................................. 17

Rule 153. Filing of Papers: Signature Requirement and Effect .......... 19

Rule 154. Motions .............................................. 19
ii

Rule 155. Default; Motion to Set Aside Default ...................... 20

Rule 160. Time Computation ..................................... 21

Rule 161. Extensions of Time, Postponements and Adjournments ....... 21

Rule 180. Sanctions ............................................. 23

Rule 190. Confidential Treatment of Information in Certain Filings ..... 25

Rule 191. Adjudications Not Required to Be Determined on the Record

After Notice and Opportunity for Hearing ................. 26

Rule 192. Rulemaking: Issuance, Amendment and Repeal of Rules of

General Application .................................... 26

Rule 193. Applications by Barred Individuals for Consent to Associate . . 27

INITIATION OF PROCEEDINGS AND PREHEARING RULES

Rule 200. Initiation of Proceedings ................................. 31

Rule 201. Consolidation and Severance of Proceedings ................ 32

Rule 202. Specification of Procedures by Parties in Certain 

Proceedings ........................................... 33

Rule 210. Parties, Limited Participants and Amici Curiae ............. 34

Rule 220. Answer to Allegations ................................... 38

Rule 221. Prehearing Conference .................................. 39

Rule 222. Prehearing Submissions ................................. 40

Rule 230. Enforcement and Disciplinary Proceedings: Availability of

Documents for Inspection and Copying .................... 41

Rule 231. Enforcement and Disciplinary Proceedings: Production of

Witness Statements ..................................... 44
iii

Rule 232. Subpoenas ............................................ 45

Rule 233. Depositions Upon Oral Examination ....................... 47

Rule 234. Depositions Upon Written Questions ...................... 48

Rule 235. Introducing Prior Sworn Statements of Witnesses into 

the Record ............................................ 49

Rule 240. Settlement ............................................. 50

Rule 250. Motion for Summary Disposition ......................... 51

RULES REGARDING HEARINGS

Rule 300. Hearings .............................................. 52

Rule 301. Hearings to Be Public ................................... 52

Rule 302. Record of Hearings ..................................... 53

Rule 310. Failure to Appear at Hearings: Default .................... 53

Rule 320. Evidence: Admissibility ................................. 53

Rule 321. Evidence: Objections and Offers of Proof .................. 54

Rule 322. Evidence: Confidential Information, Protective Orders ...... 54

Rule 323. Evidence: Official Notice ................................ 55

Rule 324. Evidence: Stipulations .................................. 55

Rule 325. Evidence: Presentation Under Oath or Affirmation .......... 55

Rule 326. Evidence: Presentation, Rebuttal and Cross-examination ..... 56

Rule 340. Proposed Findings, Conclusions and Supporting Briefs ....... 56
iv

Rule 350. Record in Proceedings Before Hearing Officer; Retention of

Documents; Copies ..................................... 57

Rule 351. Transmittal of Documents to Secretary; Record Index;

Certification ........................................... 58

Rule 360. Initial Decision of Hearing Officer ........................ 59

APPEAL TO THE COMMISSION AND COMMISSION REVIEW

Rule 400. Interlocutory Review ................................... 61

Rule 401. Consideration of Stays .................................. 62

Rule 410. Appeal of Initial Decisions by Hearing Officers .............. 64

Rule 411. Commission Consideration of Initial Decisions by Hearing

Officers ............................................... 65

Rule 420. Appeal of Determinations by Self-Regulatory Organizations . . 67

Rule 421. Commission Consideration of Determinations by 

Self-Regulatory Organizations ............................ 68

Rule 430. Appeal of Actions Made Pursuant to Delegated Authority ..... 69

Rule 431. Commission Consideration of Actions Made Pursuant to

Delegated Authority .................................... 69

Rule 440. Appeal of Determinations by the Public Company Accounting

Oversight Board ....................................... 71

Rule 441. Commission Consideration of Board Determinations ......... 72

Rule 450. Briefs Filed with the Commission ......................... 72

Rule 451. Oral Argument Before the Commission .................... 74

Rule 452. Additional Evidence .................................... 75

Rule 460. Record Before the Commission ........................... 75
v

Rule 470. Reconsideration ........................................ 76

Rule 490. Receipt of Petitions for Judicial Review Pursuant to 

28 U.S.C. 2112(a)(1) .................................... 77

RULES RELATING TO TEMPORARY ORDERS AND SUSPENSIONS

Rule 500. Expedited Consideration of Proceedings ................... 77

Rule 510. Temporary Cease-and-Desist Orders: Application Process .... 78

Rule 511. Temporary Cease-and-Desist Orders: Notice; Procedures for

Hearing ............................................... 78

Rule 512. Temporary Cease-and-Desist Orders: Issuance After

Notice and Opportunity for Hearing ....................... 80

Rule 513. Temporary Cease-and-Desist Orders: Issuance Without Prior

Notice and Opportunity for Hearing ....................... 81

Rule 514. Temporary Cease-and-Desist Orders: Judicial Review; 

Duration .............................................. 82

Rule 520. Suspension of Registration of Brokers, Dealers, or Other

Exchange Act-Registered Entities: Application ............. 82

Rule 521. Suspension of Registration of Brokers, Dealers, or Other

Exchange Act-Registered Entities: Notice and Opportunity 

for Hearing on Application .............................. 83

Rule 522. Suspension of Registration of Brokers, Dealers, or Other

Exchange Act-Registered Entities: Issuance and 

Review of Order ....................................... 84

Rule 524. Suspension of Registrations: Duration ..................... 85

Rule 530. Initial Decision on Permanent Order: Timing for Submitting

Proposed Findings and Preparation of Decision ............. 86
vi

Rule 531. Initial Decision on Permanent Order: Effect on Temporary

Order ................................................ 86

Rule 540. Appeal and Commission Review of Initial Decision Making a

Temporary Order Permanent ............................ 87

Rule 550. Summary Suspensions Pursuant to Exchange Act Section

12(k)(1)(A) ............................................ 87

RULES REGARDING DISGORGEMENT AND PENALTY PAYMENTS

Rule 600. Interest on Sums Disgorged .............................. 88

Rule 601. Prompt Payment of Disgorgement, Interest and Penalties ..... 88

Rule 630. Inability to Pay Disgorgement, Interest or Penalties .......... 89

FORM D-A ........................................... 91

* * *

Rule 900. Informal Procedures and Supplementary Information

Concerning Adjudicatory Proceedings .................... 101

FAIR FUND AND DISGORGEMENT PLANS

Rule 1100. Creation of Fair Fund .................................. 103

Rule 1101. Submission of Plan of Distribution; Contents of Plan ........ 104

Rule 1102. Provisions for Payment ................................. 104

Rule 1103. Notice of Proposed Plan and Opportunity for Comment 

by Non-parties ........................................ 105

Rule 1104. Order Approving, Modifying, or Disapproving 

Proposed Plan ........................................ 105

Rule 1105. Administration of Plan ................................. 106

Rule 1106. Right to Challenge ..................................... 107
1

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 rule; or 

(2) actions taken by the duty officer pursuant to delegated authority

under 17 CFR 200.43.

(c) The Commission, upon its determination that to do so would serve the

interests of justice and not result in prejudice to the parties to the proceeding, may

by order direct, in a particular proceeding, that an alternative procedure shall apply

or that compliance with an otherwise applicable rule is unnecessary.

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 200.43; 

(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);
2

(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 Rule 200(a)(2) or any person seeking Commission review of a

decision;

(9) proceeding means any agency process initiated:

(i) by an order instituting proceedings; or 

(ii) by the filing, pursuant to Rule 410, of a petition for

 review of an initial decision by a hearing officer; or 

(iii) by the filing, pursuant to Rule 420, of an application for

 review of a self-regulatory organization determination; or 

(iv) 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; or 

(v) by the filing, pursuant to Rule 440, of an application for

 review of a determination by the Public Company Accounting

Oversight Board; or

(vi) by the filing, pursuant to 17 CFR 240.11Aa3-1(f), 

of an application for review of an action or failure to act in connection

with the implementation or operation of any effective transaction

reporting plan; or 
3

(vii) by the filing, pursuant to 17 CFR 240.11Aa3-2(e),

 of an application for review of an action taken or failure to act in

connection with the implementation or operation of any effective

national market system plan; or

 (viii) by the filing, pursuant to Section 11A(b)(5) of the

 Securities Exchange Act of 1934, of an application for review of a

determination of a registered securities information processor;

(10) Secretary means the Secretary of the Commission;

(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; and

(12) Board means the Public Company Accounting Oversight

 Board.

(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. 
4

(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 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. Any person seeking to withdraw his or her

appearance in a representative capacity shall file a notice of withdrawal with

the Commission or the hearing officer. The notice shall state the name,

address, and telephone number of the withdrawing representative; the name,

address, and telephone number of the person for whom the appearance was

made; and the effective date of the withdrawal. If the person seeking to

withdraw knows the name, address, and telephone number of the new

representative, or knows that the person for whom the appearance was made

intends to represent him- or herself, that information shall be included in the

notice. The notice must be served on the parties in accordance with Rule
5

150. The notice shall be filed at least five days before the proposed effective

date of the 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.

(iv) with respect to persons licensed to practice as

accountants, “improper professional conduct” under Rule 102(e)(1)(ii)

means:

(A) intentional or knowing conduct, including

reckless conduct, that results in a violation of applicable

professional standards; or

(B) either of the following two types of negligent

 conduct:

(1) a single instance of highly unreasonable

 conduct that results in a violation of applicable

professional standards in circumstances in which an

accountant knows, or should know, that heightened

scrutiny is warranted. 

(2) repeated instances of unreasonable conduct,

 each resulting in a violation of applicable professional

standards, that indicate a lack of competence to practice

before the Commission. 
6

(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

to which he or she is a party to have violated (unless the
7

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 540 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
8

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.

(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.
9

(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.

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. 

Rule 104. Business Hours.

The Headquarters office of the Commission, at 100 F Street, N.E.,

Washington, DC 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
10

Daylight Saving Time, whichever is currently in effect in Washington, DC 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, DC 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. 

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 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;
11

(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 of 

Practice, considering and ruling upon all procedural and other motions, including a

motion to correct a manifest error of fact in the initial decision. A motion to

correct is properly filed under this Rule only if the basis for the motion is a patent

misstatement of fact in the initial decision. Any motion to correct must be filed

within ten days of the initial decision. A brief in opposition may be filed within

five days of a motion to correct. The hearing officer shall have 20 days from the

date of filing any brief in opposition filed to rule on a motion to correct;

(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. 

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 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. 
12

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.

Rule 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 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.

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. 
13

Rule 141. Orders and Decisions: Service of Orders Instituting Proceedings

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. 

(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 law to

receive such notice, by any method specified in paragraph (a)(2)(i) of

this rule, or, in the case of an issuer of a class of securities registered

with the Commission, by sending a copy of the order addressed to the

most recent address shown on the entity’s most recent filing with the

Commission by U.S. Postal Service certified, registered, or Express

Mail and obtaining a confirmation of attempted delivery. 

(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,
14

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. 

(vi) To Persons Registered with Self-Regulatory

Organizations. Notice of a proceeding shall be made to a person

registered with a self-regulatory organization by any method specified

in paragraph (a)(2)(i) of this rule, or by sending a copy of the order

addressed to the most recent address for the person shown in the

Central Registration Depository by U.S. Postal Service certified,

registered, or Express Mail and obtaining a confirmation of attempted

delivery. 

(3) Record of Service. The Secretary shall maintain a record of

service on parties (in hard copy or computerized format), 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 of service 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 or Express Mail, the Secretary shall maintain the
15

confirmation of receipt or of attempted delivery. If service is made to an

agent authorized by appointment to receive service, the certificate of service

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 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)(1) - (3). Such

orders or decisions may also be served by facsimile transmission if the party to be

served has agreed to accept such service in a writing, signed by the party, and has

provided the Commission with information concerning the facsimile machine

telephone number and hours of facsimile machine operation. 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.

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:
16

(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 transmission where the

 following conditions are met: 

(i) the persons so serving each other have provided the

Commission and the parties with notice of the facsimile machine

telephone number to be used and the hours of facsimile machine

operation;

(ii) the transmission is made at such a time that it is received

 during the Commission's business hours as defined in Rule 104; and

(iii) the sender of the transmission previously has not been

 served in accordance with Rule 150 with a written notice from the

recipient of the transmission declining service by facsimile

transmission.

(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.

 

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 contemporaneously with the Commission. Papers required to

be filed with the Commission must be received within the time limit, if any, for
17

such filing. Filing with the Commission may be made by facsimile transmission if

the party also contemporaneously transmits to the Commission a non-facsimile

original with a manual signature. However, any person filing with the Commission

by facsimile transmission will be responsible for assuring that the Commission

receives a complete and legible filing within the time limit set 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. 

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 81⁄2 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;
18

(2) be typewritten or printed in 12-point or larger 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 singlespaced 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, unless filing is made by facsimile in accordance with Rule 151. If filing is

made by facsimile, the filer shall also transmit to the Office of the Secretary one

non-facsimile original with a manual signature, contemporaneously with the

facsimile transmission. The non-facsimile original must be accompanied by a

statement of the date on which, and the facsimile number to which, the party made

transmission of the facsimile filing.

(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. 
19

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;

(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.

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
20

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. No motion (together with the brief in support of

the motion), brief in opposition to the motion, or reply brief shall exceed 7,000

words, exclusive of any table of contents or table of authorities. The word limit

shall not apply to any addendum that consists solely of copies of applicable cases,

pertinent legislative provisions or rules, or relevant exhibits. Requests for leave to

file motions and briefs in excess of 7,000 words are disfavored. A motion or brief,

together with any accompanying brief, that does not exceed 15 pages in length,

exclusive of pages containing the table of contents, table of authorities, and any

addendum that consists solely of copies of applicable cases, pertinent legislative

provisions, or rules and exhibits, but inclusive of pleadings incorporated by

reference, is presumptively considered to contain no more than 7,000 words. Any

motion or brief that exceeds these page limits must include a certificate by the

attorney, or an unrepresented party, stating that the document complies with the

length limitation set forth in this paragraph and stating the number of words in the

document. The person preparing the certificate may rely on the word count of a

word-processing program to prepare the document.

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

(3) to cure a deficient filing within the time specified by the

Commission or the hearing officer pursuant to Rule 180(b).
21

(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. 

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 unless an order of the

Commission or the hearing officer specifies a date certain for filing. In the event

that an order of the Commission or the hearing officer specifies a date certain for

filing, no time shall be added for service by mail.

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
22

prescribed by these Rules of Practice for the filing of any papers and may,

consistent with paragraphs (b) and (c) of this rule, postpone or adjourn any hearing.

(b) Considerations in Determining Whether to Extend Time Limits or

Grant Postponements, Adjournments and Extensions. 

(1) In considering all motions or requests pursuant to paragraph (a) 

or (b) of this rule, the Commission or the hearing officer should adhere to a

policy of strongly disfavoring such requests, except in circumstances where

the requesting party makes a strong showing that the denial of the request or

motion would substantially prejudice their case. In determining whether to

grant any requests, the Commission or hearing officer shall consider, in

addition to any other relevant 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;

(iv) the impact of the request on the hearing officer’s ability 

to complete the proceeding in the time specified by the Commission;

and

(v) any other such matters as justice may require.

(2) To the extent that the Commission has chosen a timeline under

 which the hearing would occur beyond the statutory 60-day deadline, this

 policy of strongly disfavoring requests for postponement will not apply to a

 request by a respondent to postpone commencement of a cease -and-desist

 proceeding hearing beyond the statutory 60-day period.

(c) (1) 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. 

(2) Stay Pending Commission Consideration of Offers of 

Settlement.

(i) If the Commission staff and one or more respondents in 

the proceeding file a joint motion notifying the hearing officer that

hey have agreed in principle to a settlement on all major terms, then
23

the hearing officer shall stay the proceeding as to the settling

respondent(s), or in the discretion of the hearing officer as to all

respondents, pending completion of Commission consideration of the

settlement offer. Any such stay will be contingent upon: 

(A) the settling respondent(s) submitting to the

 Commission staff, within 15 business days of the stay, a signed

offer of settlement in conformance with Rule 240; and 

(B) within 20 business days of receipt of the signed 

offer, the staff submitting the settlement offer and

accompanying recommendation to the Commission for

consideration. 

(ii) If the parties fail to meet either of these deadlines or if 

the Commission rejects the offer of settlement, the hearing officer

must be promptly notified and, upon notification of the hearing

officer, the stay shall lapse and the proceeding will continue. In the

circumstance where: 

(A) a hearing officer has granted a stay because the

 parties have “agreed in principle to a settlement;” 

(B) the agreement in principle does not materialize into

a signed settlement offer within 15 business days of the stay;

and 

(C) the stay lapses, the hearing officer will not be

 required to grant another stay related to the settlement process

until both parties have notified the hearing officer in writing

that a signed settlement offer has been prepared, received by the

Commission’s staff, and will be submitted to the Commission. 

(iii) The granting of any stay pursuant to this paragraph (c) 

shall not affect any deadline set pursuant to Rule 360.

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
24

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

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:
25

(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.

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 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
26

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.

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. 

(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. 

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
27

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.

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)
28

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 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.
29

(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
30

(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 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
31

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 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
32

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. 

Rule 201. Consolidation and Severance of Proceedings.

(a) Consolidation. By order of the Commission or a hearing officer,

 proceedings involving a common question of law or fact may be consolidated for
33

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. 

(b) Severance. By order of the Commission, any proceeding may be

severed with respect to one or more parties. Any motion to sever must be made

solely to the Commission and must include a representation that a settlement offer

is pending before the Commission or otherwise show good cause.

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, a proceeding to review a determination by

a self-regulatory organization pursuant to Rules 420 and 421, or a proceeding to

review a determination of the Board pursuant to Rules 440 and 441, 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. 
34

(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. 

Rule 210. Parties, Limited Participants and Amici Curiae.

(a) Parties in an Enforcement or Disciplinary Proceeding, a Proceeding

to Review a Self-Regulatory Organization Determination, or a Proceeding to

Review a Board 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, a proceeding to review a determination by a selfregulatory organization pursuant to Rules 420 and 421, or a proceeding to

review a determination by the Board pursuant to Rules 440 and 441, except

as authorized by paragraph (c) of this rule.

(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 1103. 

(b) Intervention as a Party.

(1) Generally. In any proceeding, other than an enforcement

proceeding, a disciplinary proceeding, a proceeding to review a selfregulatory determination, or a proceeding to review a Board 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 the person's 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. 
35

(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, a proceeding to review

a self-regulatory determination, or a proceeding to review a Board 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 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
36

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. 

(3) Leave to Participate in Certain Commission Proceedings by a

Representative of the United States Department of Justice, a United States

Attorney's Office, or a Criminal Prosecutorial Authority of any State or any

Other Political Subdivision of a State. The Commission or the hearing

officer may grant leave to participate on a limited basis to an authorized

representative of the United States Department of Justice, an authorized

representative of a United States Attorney, or an authorized representative of

any criminal prosecutorial authority of any State or any other political

subdivision of a State for the purpose of requesting a stay during the

pendency of a criminal investigation or prosecution arising out of the same

or similar facts that are at issue in the pending Commission enforcement or

disciplinary proceeding. Upon a showing that such a stay is in the public

interest or for the protection of investors, the motion for stay shall be
37

favored. A stay granted under this paragraph (c)(3) may be granted for such

a period and upon such conditions as the Commission or the hearing officer

deems appropriate.

(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 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. 
38

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. 
39

(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). 

Rule 221. Prehearing Conference. 

(a) Purposes of Conference. The purposes of a prehearing conference

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;
40

(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 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 Conference. Except where the emergency

nature of a proceeding would make a prehearing conference clearly inappropriate,

at least one prehearing conference should be held.

(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). 

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; 
41

(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
42

(vi) any final examination or inspection reports prepared by

the Office of Compliance Inspections and Examinations, the Division

of Market Regulation, or the Division of Investment Management, if

the Division of Enforcement intends either to introduce any such

report into evidence or to use any such report to refresh the

recollection of any witness.

(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)(vi) of this rule, 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 or categories of

documents withheld pursuant to paragraphs (b)(1)(i) through (b)(1)(iv) of this rule 

or to submit any document withheld, and may determine whether any such

document should be made available for inspection and copying. When similar

documents are withheld pursuant to paragraphs (b)(1)(i) through (b)(1)(iv) of this
43

rule, those documents may be identified by category instead of by individual

document. The hearing officer retains discretion to determine when an

identification by category is insufficient.

(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 seven days after service of the order instituting

proceedings. 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
44

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 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. 

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 of Enforcement 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. For purposes of this rule, statement shall have the meaning set forth

in 18 U.S.C. 3500(e). 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. 
45

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 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. 
46

(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, or any party 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 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
47

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. 

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 a 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, who is then within the

United States, will be unable to attend or testify at the hearing because of age,

sickness, infirmity, imprisonment, other disability, or absence from the United

States, unless it appears that the absence of the witness was procured by the party

requesting the deposition; 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. 
48

(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 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.

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
49

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 crossexamination shall be made. 

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. 

(b) [Reserved]
50

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 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
51

(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.

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. 
52

(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, together with any supporting

memorandum of points and authorities (exclusive of any declarations, affidavits, or

attachments), shall not exceed 9,800 words. Requests for leave to file motions and

accompanying documents in excess of 9,800 words are disfavored. A motion that

does not, together with any accompanying memorandum of points and authorities,

exceed 35 pages in length, inclusive of pleadings incorporated by reference (but

excluding any declarations, affidavits, or attachments) is presumptively considered

to contain no more than 9,800 words. Any motion that exceeds these page limits

must include a certificate by the attorney, or an unrepresented party, stating that the

brief complies with the length limitation set forth in this paragraph and stating the

number of words in the motion. The person preparing the certificate may rely on

the word count of a word-processing program to prepare the document.

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-
53

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. 

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. 

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. 
54

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

(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
55

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. 

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. 

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. 

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. 
56

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 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. 

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. 
57

(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. 

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 into

evidence but excluded shall not be considered a part of the record. The Secretary

shall retain any such document until the later of the date upon which a Commission
58

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, transmit to the Secretary motions,

exhibits or any other original documents filed with or accepted into evidence by

the hearing officer, together with a list of such documents. 

(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
59

hearing, the Secretary shall inform the hearing officer if any portions of the record

are not in the Secretary's custody. 

Rule 360. Initial Decision of Hearing Officer.

(a)(1) 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. 

(2) Time Period for Filing Initial Decision. In the order instituting

proceedings, the Commission will specify a time period in which the hearing

officer's initial decision must be filed with the Secretary. In the Commission's

discretion, after consideration of the nature, complexity, and urgency of the subject

matter, and with due regard for the public interest and the protection of investors,

this time period will be either 120, 210 or 300 days from the date of service of the

order. Under the 300-day timeline, the hearing officer shall issue an order

providing that there shall be approximately 4 months from the order instituting the

proceeding to the hearing, approximately 2 months for the parties to obtain the

transcript and submit briefs, and approximately 4 months after briefing for the

hearing officer to issue an initial decision. Under the 210-day timeline, the

hearing officer shall issue an order providing that there shall be approximately

2-1/2 months from the order instituting the proceeding to the hearing,

approximately 2 months for the parties to review the transcript and submit briefs,

and approximately 2-1/2 months after briefing for the hearing officer to issue an

initial decision. Under the 120-day timeline, the hearing officer shall issue an

order providing that there shall be approximately 1 month from the order

instituting the proceeding to the hearing, approximately 2 months for the parties to

review the transcript and submit briefs, and approximately 1 month after briefing

for the hearing officer to issue an initial decision. These deadlines confer no

substantive rights on respondents. If a stay is granted pursuant to Rule 210(c)(3),

the time period specified in the order instituting proceedings in which the hearing

officer's initial decision must be filed with the Secretary, as well as any other time
60

limits established in orders issued by the hearing officer in the proceeding, shall be

automatically tolled during the period while the stay is in effect.

(3) Motion for Extension. In the event that the hearing officer presiding

over the proceeding determines that it will not be possible to issue the initial

decision within the specified period of time, the hearing officer should consult with

the Chief Administrative Law Judge. Following such consultation, the Chief

Administrative Law Judge may determine, in his or her discretion, to submit a

motion to the Commission requesting an extension of the time period for filing the

initial decision. This motion must be filed no later than 30 days prior to the

expiration of the time specified in the order for issuance of an initial decision. The

motion will be served upon all parties in the proceeding, who may file with the

Commission statements in support of or in opposition to the motion. If the

Commission determines that additional time is necessary or appropriate in the

public interest, the Commission shall issue an order extending the time period for

filing the initial decision.

(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 rule: 

(1) The Commission will enter an order of finality as to each party

unless a party or an aggrieved person entitled to review timely files a

petition for review of the initial decision or a motion to correct a manifest

error of fact in the initial decision with the hearing officer, or the

Commission determines on its own initiative to review the initial decision;

and

(2) If a party or an aggrieved person entitled to review timely files a

petition for review or a motion to correct a manifest error of fact in the initial

decision with the hearing officer, or if the Commission takes action to
61

review as to a party or an aggrieved person entitled to review, the initial

decision shall not become final as to that party or person.

(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) Finality. 

(1) If a party or an aggrieved person entitled to review timely files a

petition for review or a motion to correct a manifest error of fact in the

initial decision, or if the Commission on its own initiative orders 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. 

(2) If a party or aggrieved person entitled to review fails to file

timely a petition for review or a motion to correct a manifest error of fact in

the initial decision, and if the Commission does not order review of a

decision on its own initiative, the Commission will issue an order that the

decision has become final as to that party. The decision becomes final upon

issuance of the order. 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 Docket and on the SEC Web site.

APPEAL TO THE COMMISSION AND COMMISSION REVIEW

Rule 400. Interlocutory Review.

(a) Availability. The Commission may, at any time, on its own motion,

direct that any matter be submitted to it for review. Petitions by parties for

interlocutory review are disfavored, and the Commission ordinarily will grant a

petition to review a hearing officer ruling prior to its consideration of an initial

decision only in extraordinary circumstances. The Commission may decline to

consider a ruling certified by a hearing officer pursuant to paragraph (c) of this rule 
62

or the petition of a party who has been denied certification if it determines that

interlocutory review is not warranted or appropriate under the circumstances. This

section is the exclusive remedy for review of a hearing officer's ruling prior to

Commission consideration of the entire proceeding and is the sole mechanism for

appeal of actions delegated pursuant to 17 CFR 200.30-9 and 200.30-10.

(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.

Rule 401. Consideration 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
63

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 selfregulatory 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 at the time an

application for review is filed in accordance with Rule 420 or thereafter.

(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. 

(e) Lifting of Stay of Action by the Public Company Accounting Oversight

Board. 

(1) Availability. Any person aggrieved by a stay of action by the

 Board entered in accordance with 15 U.S.C. 7215(e) for which review has

been sought pursuant to Rule 440 or which the Commission has taken up on

its motion pursuant to Rule 441 may make a motion to lift the stay. The
64

Commission may, at any time, on its own motion determine whether to lift

the automatic stay.

(2) Summary Action. The Commission may lift a stay summarily,

 without notice and opportunity for hearing.

(3) Expedited Consideration. The Commission may expedite

consideration of a motion to lift a stay of Board action, consistent with the

Commission's other responsibilities. Where consideration is expedited,

persons opposing the lifting of the stay may file a statement in opposition

within two days of service of the motion requesting lifting of the stay unless

the Commission, by written order, shall specify a different period.

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) unless a party has filed a

motion to correct an initial decision with the hearing officer. If such correction has

been sought, a party shall have 21 days from the date of the hearing officer's order

resolving the motion to correct to file a petition for review. 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. In the event a petition for review is

filed, any other party to the proceeding may file a cross-petition for review within

the original time allowed for seeking review or within ten days from the date that

the petition for review was filed, whichever is later.

(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
65

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). 

(d) [Reserved]

(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. 

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 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
66

(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

any 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). 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.

(1) At any time within 21 days after the filing of a petition for

review pursuant to Rule 410(b), any party may file a motion in accordance

with Rule 154 asking that the Commission summarily affirm an initial

decision. Any party may file an opposition and reply to such motion in

accordance with Rule 154. Pending determination of the motion for

summary affirmance, the Commission, in its discretion, may delay issuance

of a briefing schedule order pursuant to Rule 450.

(2) Upon consideration of the motion and any opposition or upon

its own initiative, the Commission may summarily affirm an initial decision. 

The Commission may grant summary affirmance if it finds that no issue
67

raised in the initial decision warrants consideration by the Commission of

further oral or written argument. The Commission will decline to grant

summary affirmance upon a reasonable showing that a prejudicial error was

committed in the conduct of the proceeding or that the decision embodies an

exercise of discretion or decision of law or policy that is important and that

the Commission should review.

(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. 

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. As required by section 19(d)(1) of the Securities Exchange

Act of 1934, 15 U.S.C. 78s(d)(1), an applicant must file an application for review

with the Commission within 30 days after the notice of the determination is filed

with the Commission and received by the aggrieved person applying for review. 

The Commission will not extend this 30-day period, absent a showing of

extraordinary circumstances. This rule is the exclusive remedy for seeking an

extension of the 30-day period.

(c) Application. The application shall be filed with the Commission

pursuant to Rule 151. The applicant shall serve the application on the

self-regulatory organization. The application shall identify the determination

complained of and set forth in summary form a brief statement of the alleged errors

in the determination and supporting reasons therefor. The application shall state an
68

address where the applicant can be served. The application should not exceed two

pages in length. If the applicant will be represented by a representative, the

application shall be accompanied by the notice of appearance required by Rule

102(d).

(d) 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. 

(e) Certification of the Record; Service of the Index. Fourteen days after

receipt of an application for review or a Commission order for review, the selfregulatory 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. 

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. 
69

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 17 CFR 200.30-1 through 200.30-8 or 17 CFR 200.30-11 through

200.30-18 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 to an action

made pursuant to delegated authority, or a person aggrieved by such action,

may seek Commission review of the action by filing a written notice of

intention to petition for review within five days after actual notice of the

action to that party or aggrieved person, or 15 days after publication of the

notice of action in the Federal Register, or five days after service of notice of

the action on that party or aggrieved person pursuant to Rule 141(b),

whichever is the earliest.

(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 17 CFR 200.30-1 through

200.30-18 is a prerequisite to the seeking of judicial review of a final order entered

pursuant to such an action. 

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 17 CFR 200.30-1 through 200.30-18. 
70

(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 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). 
71

(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. 

Rule 440. Appeal of Determinations by the Public Company Accounting

Oversight Board.

(a) Application for Review; When Available. Any person who is

aggrieved by a determination of the Board with respect to any final disciplinary

sanction, including disapproval of a completed application for registration of a

public accounting firm, may file an application for review.

(b) Procedure. An aggrieved person may file an application for review

with the Commission pursuant to Rule 151 within 30 days after the notice filed by

the Board of its determination with the Commission pursuant to 17 CFR 240.19d-4

is received by the aggrieved person applying for review. The applicant shall serve

the application on the Board at the same time. 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. The notice of appearance required by

Rule 102(d) shall accompany the application.

(c) Stay of Determination. Filing an application for review with the

Commission pursuant to paragraph (b) of this rule operates as a stay of the Board's

determination unless the Commission otherwise orders either pursuant to a motion

filed in accordance with Rule 401(e) or upon its own motion.

(d) Certification of the Record; Service of the Index. Within fourteen

days after receipt of an application for review, the Board shall certify and file with

the Commission one copy of the record upon which it took the complained-of

action. The Board shall file with the Commission three copies of an index of such

record, and shall serve one copy of the index on each party.
72

Rule 441. Commission Consideration of Board Determinations.

(a) Commission Review Other than Pursuant to an Application for

Review. The Commission may, on its own initiative, order review of any final

disciplinary sanction, including disapproval of a completed application for

registration of a public accounting firm, imposed by the Board that could be

subject to an application for review pursuant to Rule 440(a) within 40 days after

the Board filed notice thereof pursuant to 17 CFR 240.19d-4.

(b) Supplemental Briefing. The Commission may at any time prior to the

issuance of its decision raise or consider any matter that it deems material, whether

or not raised by the parties. The Commission will give notice to the parties and an

opportunity for supplemental briefing with respect to issues not briefed by the

parties where the Commission believes that such briefing could significantly aid

the decisional process.

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 30 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:
73

(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 an index to the record of a

 determination by the Board filed pursuant to Rule 440(d);

(iv) receipt by the Commission of the mandate of a court of

appeals with respect to a judicial remand; or

(v) 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. Except with leave of the Commission, opening

and opposition briefs shall not exceed 14,000 words and reply briefs shall not

exceed 7,000 words, exclusive of pages containing the table of contents, table of

authorities, and any addendum that consists solely of copies of applicable cases,

pertinent legislative provisions or rules, and exhibits. The number of words shall

include pleadings incorporated by reference. Motions to file briefs in excess of

these limitations are disfavored.

(d) Certificate of Compliance. An opening or opposition brief that does

not exceed 30 pages in length, exclusive of pages containing the table of contents,

table of authorities, and any addendum that consists solely of copies of applicable

cases, pertinent legislative provisions, or rules and exhibits, but inclusive of

pleadings incorporated by reference, is presumptively considered to contain no
74

more than 14,000 words. A reply brief that does not exceed 15 pages in length,

exclusive of pages containing the table of contents, table of authorities, and any

addendum that consists solely of copies of applicable cases, pertinent legislative

provisions, or rules and exhibits, but inclusive of pleadings incorporated by

reference, is presumptively considered to contain no more than 7,000 words. Any

brief that exceeds these page limits must include a certificate by the party's

representative, or an unrepresented party, stating that the brief complies with the 

length limitation set forth in Rule 450(c) and stating the number of words in the

brief. The person preparing the certificate may rely on the word count of the

word-processing system used to prepare the brief.

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. 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

changes. No visual aids may be used at oral argument unless copies have been

provided to the Commission and all parties at least five business days before the

argument is to be held.

(c) Time Allowed. Unless the Commission orders otherwise, not more

than one half-hour per side will be allowed for oral argument. The Commission
75

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. 

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 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. 

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
76

(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 selfregulatory organization;

(ii) any application for review; and

(iii) any submissions, moving papers, and briefs filed on

appeal or review. 

(3) In a proceeding for final decision before the Commission

 reviewing a determination of the Board, the record shall consist of:

(i) the record certified pursuant to Rule 440(d) by the Board;

(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. 
77

(b) Procedure. A motion for reconsideration shall be filed within 10 days

after service of the order complained of, or within such time as the Commission

may prescribe upon motion for extension of time filed by the person seeking

reconsideration, if the motion is 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. A motion for reconsideration shall conform to the requirements, including

the limitation on the numbers of words, provided in Rule 154. No response to a

motion for reconsideration shall be filed unless requested by the Commission. Any

response so requested shall comply with Rule 154.

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. 

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:

(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, 17 CFR 230.258, 230.336, 230.610 or 230.656; or
78

(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). 

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 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. 

Rule 511. Temporary Cease-and-Desist Orders: Notice; Procedures for

Hearing.

(a) Notice: How Given. Notice of an application for a temporary ceaseand-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
79

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.

(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
80

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. 

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. 77h1(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
81

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. 

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
82

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. 

Rule 514. Temporary Cease-and-Desist Orders: Judicial Review; Duration.

(a) Availability of Judicial Review. Judicial review of a temporary ceaseand-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. 80a9(f)(4)(B), or Section 203(k)(4)(B) of the Investment Advisers Act, 15 U.S.C. 80b3(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. 

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
83

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 Rule 302. 

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
84

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 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.
85

(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. 

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 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. 
86

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 ceaseand-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
87

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.

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. 
88

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.

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 in accordance with the

order of finality issued pursuant to Rule 360(d)(2). 

(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.

(c) Method of Making Payment. Payment shall be made by United States
89

postal money order, wire transfer, certified check, bank cashier's check, or bank

money order made payable to the Securities and Exchange Commission. The

payment shall be mailed or delivered to the office designated by this Commission. 

Payment shall be accompanied by a letter that identifies the name and number of

the case and the name of the respondent making payment. A copy of the letter and

the instrument of payment shall be sent to counsel for the Division of Enforcement.

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 transfer or convey the information to any

other person without the prior permission of the Commission or the hearing officer.
90

(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. 
91

FORM D-A

17 CFR 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 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.
92

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.
93

United States of America

Before the 

Securities and Exchange Commission

 

 )

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.
94

United States of America

Before the 

Securities and Exchange Commission

 

)

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)
95

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.

B. Assets:

List all assets owned by you, directly or indirectly,

and all assets that are subject to your enjoyment or

control, regardless of whether legal title or

ownership is held in your name.

1. Cash 

2. Listed Securities 

3. Surrender Value of Insurance 

4. Loans, Notes, Accounts 

Receivable Due to You 

5. Real Estate 

6. Furniture 

7. Jewelry, Art, Rugs, Silver 

Collectibles, Other Valuables 

8. Automobiles 

9. Unlisted Securities 

10. Partnership Interests 

(non-securities) 

11. Net Value of Ownership 

Interest in Business 

 

12. IRA, Keogh, 401(k), Annuity 

or Pension Accounts 

13. Other (Itemize): 

 

 

14. Total Assets 

C. Liabilities:

 

List all your liabilities including, but not limited

to, the items listed below. 

1. Mortgages 

2. Auto Loans 

3. Credit Card Debt 

4. Margin Loans 

5. Insurance Policy Loans 

6. Installment Loans 

7. Other Loans, Notes

 or Accounts Payable 

8. Accrued Real Estate 

 Taxes 

9. Judgments/Settlements 

 Owed

10. Other (Itemize):

 

 

11. Total Liabilities 

D. Net Worth

(Assets Less Liabilities) 
96

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 

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.
97

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

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

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.
98

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. 

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 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.
99

J. Personal Information

Current residence: 

street unit

 

city state zip code

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

business: ( ) - 

car: ( ) - 

other: ( ) - 

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 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.
100

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 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 , 200 .

[Seal]

 

Notary Public 

My commission expires on (date)
101

Rule 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) 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. 

(ii) 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.

(iii) Ordinarily, 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 seven

months from the date the petition for review, application for review, or

mandate of the court is filed, unless the Commission determines that the

matter presents unusual complicating circumstances, in which case a

decision by the Commission on the matter may be issued within 11

months from the date the petition for review, application for review, or

mandate of the court is filed. The Commission retains discretion to take

additional time to dispose of an appeal from the initial decision of a

hearing officer, a review of a determination by a self-regulatory
102

organization, or a remand of a prior Commission decision by a court of

appeals when the Commission determines that extraordinary facts and

circumstances of the matter so require. The deadlines in Rule 900 confer

no substantive rights on the parties.

(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. 

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 pending before the Commission has not been concluded within 30

days of the guidelines established in paragraph (a) of this rule, the General Counsel

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
103

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. 

FAIR FUND AND DISGORGEMENT PLANS

Rule 1100. Creation of Fair Fund.

In any agency process initiated by an order instituting proceedings in which the

Commission or the hearing officer issues an order requiring the payment of

disgorgement by a respondent and also assessing a civil money penalty against that

respondent, the Commission or the hearing officer may order that the amount of the

disgorgement and of the civil money penalty, together with any funds received by the

Commission pursuant to 15 U.S.C. 7246(b), be used to create a fund for the benefit of

investors who were harmed by the violation.
104

Rule 1101. Submission of Plan of Distribution; Contents of Plan.

(a) Submission. The Commission or the hearing officer may, at any time,

order any party to submit a plan for the administration and distribution of funds in a

Fair Fund or disgorgement fund. Unless ordered otherwise, the Division of

Enforcement shall submit a proposed plan no later than 60 days after the respondent

has turned over the funds or other assets pursuant to the Commission's order imposing 

disgorgement and, if applicable, a civil money penalty and any appeals of the

Commission's order have been waived or completed, or appeal is no longer available.

(b) Contents of Plan. Unless otherwise ordered, a plan for the administration

of a Fair Fund or a disgorgement fund shall include the following elements:

(1) Procedures for the receipt of additional funds, including the

specification of any account where funds will be held, the instruments in which

the funds may be invested; and, in the case of a Fair Fund, the receipt of any

funds pursuant to 15 U.S.C. 7246(b), if applicable;

(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 who were harmed by the violation; and

(7) Such other provisions as the Commission or the hearing officer

may require.

Rule 1102. Provisions for Payment.

(a) 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
105

plan for the administration of a Fair Fund or a disgorgement fund may provide for

payment of 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.

(b) 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 disgorgement funds and any civil penalty shall be paid directly to the general fund 

of the United States Treasury.

Rule 1103. Notice of Proposed Plan and Opportunity for Comment by

Non-parties.

 Notice of a proposed plan of disgorgement or a proposed Fair Fund plan shall

be published in the SEC Docket, on the SEC website, 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.

Rule 1104. Order Approving, Modifying, or Disapproving Proposed Plan.

At any time after 30 days following publication of notice of a proposed plan of

disgorgement or of a proposed Fair Fund plan, the Commission shall, by order,

approve, approve with modifications, or disapprove the proposed plan. In the

discretion of the Commission, a proposed plan that is substantially modified prior to

adoption may be republished for an additional comment period pursuant to Rule 1103. 

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.
106

Rule 1105. Administration of Plan.

(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 or a Fair Fund plan and to

delegate to that person responsibility for administering the plan. An administrator

may be removed at any time by order of the Commission or hearing officer.

(b) Assistance by Respondent. 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 deems appropriate

to ensure the proper distribution of the funds.

(c) 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 in 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.

(d) 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, the administrator 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.

(e) Source of Funds. Unless otherwise ordered, fees and other expenses of

administering the plan shall be paid first from the interest earned on the funds, and if

the interest is not sufficient, then from the corpus.

(f) 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.

(g) Amendment. A plan may be amended upon motion by any party or by 

the plan administrator or upon the Commission's or the hearing officer's own motion.
107

Rule 1106. Right to Challenge.

Other than in connection with the opportunity to submit comments as provided

in Rule 1103, no person shall be granted leave to intervene or to participate or

otherwise to appear in any agency proceeding or otherwise to challenge an order of

disgorgement or creation of a Fair Fund; or an order approving, approving with 

modifications, or disapproving a plan of disgorgement or a Fair Fund plan; or any

determination relating to a plan based solely upon that person's eligibility or potential

eligibility to participate in a fund or based upon any private right of action such person

may have against any person who is also a respondent in the proceeding.