[Federal Register Volume 62, Number 169 (Tuesday, September 2, 1997)]
[Notices]
[Pages 46363-46364]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-23186]


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FEDERAL TRADE COMMISSION


Notice Regarding Compliance Assistance and Civil Penalty Leniency 
Policies for Small Entities

AGENCY: Federal Trade Commission.

ACTION: Notice of policies.

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SUMMARY: On April 8, 1997, the Federal Trade Commission issued two 
statements describing its policies for assisting small businesses and 
other small entities, in implementation of requirements of the Small 
Business Regulatory Enforcement Fairness Act of 1996. The first policy 
statement discussed the variety of mechanism available for small 
entities to obtain advice about their obligations under statutes and 
rules enforced by the Commission. The second policy statement described 
the Commission's approach to reduction or waiver of civil penalties for 
small entities in various mitigating circumstances. The Commission 
solicited comments about these statements from interested persons. 
After considering the one comment it received, the Commission has 
determined not to advise either policy.

DATES: The policy statements were effective on March 28, 1997.

FOR FURTHER INFORMATION CONTACT: Neil J. Blickman, Federal Trade 
Commission, Bureau of Consumer Protection, Division of Enforcement, 
Sixth St. and Pennsylvania Ave., N.W., Washington, DC 20580, 202-326-
3038.

SUPPLEMENTARY INFORMATION: The statement of the Commission's Small 
Entity Compliance Assistance Policy explains to small businesses and 
other small entities what assistance is available to them from the 
Commission and its staff to help them understand and comply with 
obligations imposed by the statutes and rules enforced by the 
Commission. The statement of the Commission's Civil Penalty Leniency 
Policy discusses how the Commission expects to consider mitigating 
factors in matters where small entities are subject to civil penalties. 
These statements were issued in implementation of sections 213 and 223 
of the Small Business Regulatory Enforcement Fairness Act (``SBREFA''), 
Pub. L. No. 104-121, enacted March 29, 1996. 62 FR 16809 (Apr. 8, 
1997).

[[Page 46364]]

Public Comments

    Members of the public were invited to comment on any issues or 
concerns that they believed were relevant or appropriate to these 
policies. 62 FR 16809, 16814. The only comment received in response to 
the Commission's notice was submitted by Jerome S. Lamet, Esq., an 
attorney in Chicago, Illinois.\1\ The comment addressed issues not 
encompassed within the scope of the notice, and did not relate to any 
specific aspect of the policies adopted by the Commission. The comment 
appeared to relate to actions brought by the Commission in federal 
district court under sections 13(b) and 19 of the FTC Act, 15 U.S.C. 
53(b) and 57b, following entry of a court order restraining a defendant 
from disposing of individual or corporate assets. Mr. Lamet commented 
that when the defendant in such a case is a small business, the 
Commission should not oppose the defendant's motion to release frozen 
assets to pay its attorney. In the alternative, the commenter stated 
that the Commission should provide legal counsel for defendants who are 
small businesses, or funds for that purpose.\2\
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    \1\ The comment submitted in response to the notice has been 
placed on the public record, and is filed as document number 
B21946900001. In today's notice, the comment is cited as Lamet, #1.
    \2\ Lamet, #1.
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    When the Commission brings actions under sections 13(b) and 19 of 
the FTC Act, it considers a number of factors in determining whether to 
seek a court order freezing assets and thereafter oppose motions to 
release frozen assets to pay defendants' attorneys. These factors 
include, but are not limited to, the seriousness of any fraud, the 
threat of dissipation of assets, the degree of consumer injury, and the 
funds necessary to redress injury to consumers. Typically, when the 
Commission opposes motion to release frozen assets to pay defendants' 
attorneys, it does so based on the theory that it only will be able to 
achieve relief if the frozen assets identified by the Commission are 
preserved to provide restitution to the victims of the defendants' 
fraud, and the defendants should not be permitted to use the proceeds 
of fraud to finance their defense of the fraud. The Commission 
addresses this issue on a case-by-case basis based on individual facts 
and circumstances. It is beyond the Commission's statutory authority, 
as mandated by Congress pursuant to the FTC Act, to provide legal 
counsel to defendants who are small businesses, or, except in the 
limited circumstances provided in the Equal Access to Justice Act,\3\ 
to provide funds for that purpose. Accordingly, the Commission has 
determined not to revise either its small business compliance 
assistance policy or its civil penalty leniency policy.

    \3\ 5 U.S.C. 504; 28 U.S.C. 2412.
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    Authority: Secs. 213 and 223, Pub. L. 104-121, 110 Stat. 847.

    By direction of the Commission.
Benjamin I. Berman,
Acting Secretary.
[FR Doc. 97-23186 Filed 8-29-97; 8:45 am]
BILLING CODE 6750-01-M