PART 171—RULES RELATING TO REVIEW OF NATIONAL FUTURES ASSOCIATION DECISIONS IN DISCIPLINARY, MEMBERSHIP DENIAL, REGISTRATION AND MEMBER RESPONSIBILITY ACTIONS Authority: 7 U.S.C. 4a, 12a and 21, unless otherwise noted. Source: 55 FR 41068, Oct. 9, 1990, unless otherwise noted. Subpart A—General Provisions § 171.1 Scope of rules. (a) Matters included. (b) Matters excluded. (1) A decision in a disciplinary action if the party aggrieved by the decision knowingly failed to pursue the right to appeal an adverse decision to the Appeals Committee of the National Futures Association and there are no extraordinary circumstances that otherwise warrant Commission consideration of the aggrieved party's appeal; (2) A decision in an arbitration action brought pursuant to section 17(b)(10) of the Act or any rule of the National Futures Association; (3) Suspension of a member based solely on that member's failure to pay National Futures Association dues; (4) A decision to disqualify any member for service on the National Futures Association Board of Directors, Business Conduct Committees, Hearing Committee or arbitration panels pursuant to the standards for service adopted by the National Futures Association to implement Commission rule 1.63; (5) Suspension of a member or a person associated with a member based solely on that person's failure to pay an arbitration award or a settlement agreement resulting from an arbitration action brought pursuant to section 17(b)(10) of the Act or rules and regulations of the National Futures Association, or a settlement agreement resulting from a mediation proceeding sponsored by the National Futures Association, unless there are extraordinary circumstances that involve something more than the ministerial application of a predetermined sanction, or raise a colorable claim that the National Futures Assocaition has acted arbitrarily. (c) Appeals from excluded decisions. (d) Applicability of these part 171 rules. [55 FR 41068, Oct. 9, 1990, as amended at 70 FR 2352, Jan. 13, 2005; 78 FR 1145, Jan. 8, 2013] § 171.2 Definitions. For purposes of this part: (a) Commission decisional employee (b) Disciplinary action (c) Ex parte communication (d) Final Decision (e) To mail (f) Member (g) Member Responsibility Action (h) Membership denial action (i) Party (j) Person associated with a member (k) Record of the proceeding (l) Registration action (m) Rule of the National Futures Association [55 FR 41068, Oct. 9, 1990, as amended at 89 FR 71821, Sept. 4, 2024] § 171.3 Business address; hours. The headquarters of the Commission is located at Three Lafayette Centre, 1155 21st Street, NW., Washington, DC 20581. It is open each day, except Saturdays, Sundays, and legal public holidays, from 8:15 a.m. until 4:45 p.m., eastern standard time or eastern daylight savings time, whichever is currently in effect in Washington, DC. [55 FR 41068, Oct. 9, 1990, as amended at 60 FR 49336, Sept. 25, 1995; 89 FR 71821, Sept. 4, 2024] § 171.4 Computation of time. (a) In general. (b) Date of service of orders. § 171.5 Extension of time. (a) In general. (b) Filing of motion. § 171.6 Ex parte communications. (a) Prohibition of ex parte communications. ex parte (2) No Commissioner, member of the personal staff of a Commissioner or Commission decisional employee shall make or knowingly cause to be made to a party to a proceeding subject to these rules or to any person outside the Commission who has a direct or indirect interest (pecuniary or otherwise) in the outcome of the proceeding or might be aggrieved by the outcome of the proceeding, an ex parte (b) Procedure for handling. ex parte (1) Place on the public record of the proceeding: (i) All such written communications; (ii) Memoranda stating the substance of all such oral communications; and (iii) All written responses, and memoranda stating the substance of all oral responses, to the materials described in paragraphs (b)(1)(i) and (b)(1)(ii) of this section; and (2) Promptly give written notice of such communications and responses thereto to all parties to the proceedings to which the communication or responses relate. (c) Sanctions. ex parte (2) Any Commissioner, member of a Commissioner's personal staff or Commission decisional employee who knowingly makes or knowingly causes to be made, or who knowingly solicits or knowingly causes the solicitation of, an ex parte (d) Applicability of prohibitions and sanctions against ex parte communications. (ii) The Commission may, by specific order entered in a particular proceeding, determine that these prohibitions shall commence from some date prior, or shall continue until a date subsequent, to the times specified in paragraph (d)(1)(i) of this section. (2) The sanctions in paragraph (c)(1) of this section shall not apply to a person making a prohibited communication (or causing it to be made) absent evidence that the person acted with actual or constructive knowledge that the person receiving the communication was a Commissioner, member of the personal staff of a Commissioner or a Commission decisional employee. § 171.7 [Reserved] § 171.8 Filing with the Proceedings Clerk. (a) How to file. [email protected]. (b) Proof of filing. (c) Formalities of filing Number of copies. (2) Title page. (3) Paper, spacing, type. 1/2 1/2 1/2 (4) Signature By whom. (A) By the person or persons on whose behalf they are tendered for filing; (B) By a general partner, officer or director of a partnership, corporation, association, or other legal entity; or (C) By an attorney-at-law having authority with respect thereto. The Proceedings Clerk may require appropriate evidence of the authority of a person subscribing a document on behalf of another person. (ii) Effect. (A) He has read the document subscribed and knows the contents thereof; (B) If executed in any representative capacity, it was done with full power and authority to do so; (C) To the best of his knowledge, information, and belief, every statement contained in the document is true and not misleading; and (D) The document is not being interposed for delay. [55 FR 41068, Oct. 9, 1990, as amended at 60 FR 49336, Sept. 25, 1995; 78 FR 12937, Feb. 26, 2013; 89 FR 71821, Sept. 4, 2024] § 171.9 Service. (a) General requirements. (b) Manner of service. (c) Proof of service. (d) Designation of person to receive service. (e) Service of orders and decisions. [55 FR 41068, Oct. 9, 1990, as amended at 72 FR 42277, Aug. 2, 2007] § 171.10 Motions. (a) In general. (b) Answers to motions. (c) Motions for procedural orders. (d) Dilatory motions. § 171.11 Sanctions. In the event a party fails to fulfill his obligations under these Rules, the Commission may impose appropriate sanctions including dismissal of the appeal or summary reversal of the decision under appeal. Sanctions may be imposed on the motion of a party or on the Commission's own motion. § 171.12 Settlement. At any time before the Commission has reached a final determination in a proceeding, the parties may request dismissal of the appeal based on a settlement agreement. If, in its view, the settlement is consistent with the public interest, the Commission will dismiss the proceeding. § 171.13 Practice before the Commission. (a) Practice By non-attorneys. pro se bona fide (2) By attorneys. (b) Debarment of counsel or representative during the course of a proceeding. (c) Withdrawal from representation. pro se. pro se, § 171.14 Waiver of rules. To prevent undue hardship on any party or for other good cause shown, the Commission may waive any rule in this part in a particular case and may order proceedings in accordance with its direction. Such an order shall be based upon a determination that no party will be prejudiced thereby and that the ends of justice will be served. Reasonable notice will be given to all parties of any action taken pursuant to this paragraph. Subpart B—Notice and Effective Date of Final Decisions in Disciplinary, Membership Denial and Registration Actions § 171.20 [Reserved] § 171.21 Notice of final decision. (a) When required. (b) Content of the notice. (1) The names of the parties to the proceeding; (2) The date the notice was served and the effective date of the decision; (3) A statement informing the parties of their right to appeal the decision to the Commission pursuant to § 171.28 as well as their right to seek a stay of the effective date of the decision pursuant to § 171.27. (4) For a disciplinary action: (i) A statement setting forth the relevant acts of practices engaged in or omitted by the parties to the proceeding; (ii) A statement setting forth the specific rule or rules of the association violated by the relevant acts or practices or omissions to act of the parties to the proceeding; (iii) A statement setting forth the penalty imposed and the basis for its imposition. (5) For a membership action: (i) The specific grounds for the denial, bar, expulsion, or restriction; (ii) The findings made concerning those grounds; (iii) An explanation of the result reached in light of the grounds for ineligibility found and the findings made. (6) For a registration action: (i) The statutory disqualification at issue; (ii) The findings made concerning the statutory disqualification; (iii) An explanation of the result reached in light of the statutory disqualification shown and the findings made. (c) Effect of inadequate notice. (2) When a notice is struck, the final decision of the National Futures Association shall not be effective until a proper notice is served. § 171.22 Effective date of final decisions in disciplinary, membership denial and registration actions. (a) General rule. (b) Petitions for stay pending review or for an emergency effective date Stay pending review. (2) Emergency effective date. (3) Contents of petition for stay and petition for an emergency effective date. (4) Response. (c) Standards for determining petitions for a stay or an emergency effective date petition. (1) The likelihood that a challenge to the merits of the decision will be successful; and (2) The likelihood that the denial of the petition would result in irreparable harm to the petitioner; and (3) The effect a grant of the petition would have on the opposing party; and (4) The effect a grant or denial of the petition would have on the public interest. (d) Expedited consideration. § 171.23 Notice of appeal. (a) Time to file. (b) Contents. (1) The name and address of the person appealing and, if represented, the name and address of his representative; (2) The case name and docket number of the National Futures Association proceeding; and (3) The date of the decision. (c) Filing fee. (d) Defective notices of appeal. § 171.24 Submission of the record. Within thirty days after service of a notice of appeal, the National Futures Association shall file with the Proceedings Clerk two copies of the record of the proceeding (as defined by § 171.2(k)). The record shall be bound as a unit, chronologically indexed and tabbed, and certified as correct by a duly authorized official, agent or employee of the National Futures Asssociation. The National Futures Association shall serve on the party appealing, in lieu of the record, a copy of the index of the record and a copy of any document in the record not previously served on the party appealing. If the party appealing objects to the materials included or excluded in preparing the record, he shall file his objections with his brief on appeal. The Commission may, at any time, direct that an omission or misstatement be corrected and, if necessary, that a supplemental record be prepared and filed. § 171.25 Appeal brief. (a) Time to file. (b) Contents. (1) A statement of the issues presented for review; (2) A statement of the case. The statement shall indicate briefly the nature of the case and include a full description of the action being challenged. There shall follow a clear and concise statement of all facts relevant to the consideration of the appeal with appropriate citations to the record; (3) An argument. The argument shall contain the contentions of the appellant with respect to the issues presented and the reasons supporting those contentions. It shall cite specifically to the relevant authorities and to those parts of the record that support appellant's contentions; and (4) A conclusion stating the precise relief sought. (c) Length of appeal brief. § 171.26 Answering brief. (a) Time for filing answering brief. (b) Contents of answering brief. (c) Length of the answering brief. § 171.27 Limited participation by interested persons. (a) Upon motion of any interested person or, on its own motion, the Commission may permit, or solicit, limited participation in the proceeding by such interested person. A motion for leave to participate in the proceeding shall be filed promptly, shall identify the interest of that person and shall show why participation in the proceeding by that person would serve the public interest. If the Commission determines that participation would serve the public interest, it shall by order establish a supplementary briefing schedule for the interested person and the parties to the proceeding. (b) For purposes of this subsection, interested person § 171.28 Participation by Commission staff. The Division of Enforcement, the Market Participants Division, the Division of Clearing and Risk, the Division of Market Oversight, or the Division of Data may participate in any proceeding by filing a notice of appearance. Such a notice shall be filed and served on or before the twentieth day following the date of service of its brief by the National Futures Association. The Commission shall by order establish a supplementary briefing schedule for the Commission staff and other parties to the proceeding. If it concludes that participation of the Commission staff will not serve the public interest, the Commission shall prohibit further participation. [55 FR 41068, Oct. 9, 1990, as amended at 67 FR 62353, Oct. 7, 2002; 78 FR 22419, Apr. 16, 2013; 89 FR 71821, Sept. 4, 2024] Subpart C—Commission Review of Final Decisions in Disciplinary, Membership Denial and Registration Actions § 171.30 Scope of review. On review, the Commission may, in its discretion and after appropriate consideration of the notice given to the parties, consider sua sponte § 171.31 Commission review in the absence of an appeal. (a) Request by Commission staff. (b) Response by the National Futures Association. (c) Commission determination of staff request. (d) Commission review on its own motion. [55 FR 41068, Oct. 9, 1990, as amended at 67 FR 62353, Oct. 7, 2002; 78 FR 22419, Apr. 16, 2013; 89 FR 71821, Sept. 4, 2024] § 171.32 Oral argument. (a) On motion of Commission. (b) On request of party. (c) Reporting and transcription. § 171.33 Final decision by the Commission. (a) Opinion and order. (b) Order of summary affirmance. § 171.34 Standards of review. (a) Disciplinary actions. (1) The proceedings were not conducted in a manner consistent with fundamental fairness; (2) The proceedings were not conducted in a manner consistent with the rules of the National Futures Association; (3) The weight of the evidence does not support the findings of the National Futures Association concerning the relevant acts or practices engaged in or omitted; (4) The determination that the acts or practices engaged in or omitted violated rules of the National Futures Association does not rest on a reasonable interpretation of the rules at issue; (5) The National Futures Association's application of its rules is not consistent with the purposes of the Act; (6) The National Futures Association's choice of sanction is excessive or oppressive in light of the violations found having due regard for the public interest. (b) Membership denial actions. (1) The proceedings were not conducted in a manner consistent with fundamental fairness; (2) The proceedings were not conducted in a manner consistent with the rules of the National Futures Association; (3) The weight of the evidence does not support the findings made or adopted in the final decision; (4) The conclusion of the National Futures Association is not consistent with the purposes of the Act. (c) Registration actions. (1) The proceedings were not conducted in a manner consistent with fundamental fairness; (2) The proceedings were not conducted in a manner consistent with the rules of the National Futures Association; (3) The weight of the evidence does not support the findings made or adopted in the final decision; (4) The conclusion of the National Futures Association is not consistent with the purposes of the Act. Subpart D—Commission Review of Decisions by the National Futures Association In Member Responsibility Actions § 171.40 Notice of the commencement of a member responsibility action. The notice of a Member Responsibility Action provided by the National Futures Association pursuant to its rules shall advise the affected parties of their right to petition the Commission pursuant to § 171.41 to stay the effective date of the action pending a hearing before the National Futures Association on the factual issues relevant to the suspension, restriction or remedial action ordered. § 171.41 Petition for a stay of effective date of a member responsibility action pending a hearing by the National Futures Association. (a) Time to file. (b) Content. (c) Response. (d) Standards for granting petition for stay. (1) Whether, in the circumstances presented, the notice and opportunity for a hearing provided by the National Futures Association are consistent with principles of fundamental fairness; and (2) The likelihood that the denial of the petition would result in irreparable harm to petitioner; and (3) The effect a grant of the petition would have on the interests of the National Futures Association; and (4) The effect a grant or denial of the petition would have on the public interest. (e) If the suspension, restriction or remedial action imposed by the National Futures Assocation in a member responsibility action is effective at the time a petition for a stay is filed with the Commission, the Commission shall not delay its decision on the petition to await the receipt of the National Futures Association's response. If the action is not effective at the time the petition is filed, the Commission will not act upon the petition prior to the receipt of a response from the National Futures Association unless, in its view, expedited action on the petition is necessary to protect petitioner's right to a meaningful determination of the right to a stay. If the Commission grants the petition prior to the receipt of the response of the National Futures Association, the association may seek reconsideration of the Commission's action within seven days of service of the decision. (f) Proceedings following Commission disposition. § 171.42 Notice of a final decision of the National Futures Association in a member responsibility action. (a) When required. (b) Contents of the written notice. (1) The name of the parties to the proceeding; (2) The date the notice was served and the effective date of the decision; (3) A statement informing the parties of their right to appeal the decision to the Commission pursuant to § 171.44 as well as their right to seek a stay of the decision pending Commission consideration of their appeal pursuant to § 171.43; (4) A description of the action taken and the reasons for the action; (5) Findings of fact and conclusions of law on all issues relevant to its decision; (6) A determination of the appropriate relief based on the findings and conclusions. § 171.43 Petition for a stay of the effective date of a final decision of the National Futures Association in a member responsibility action. (a) Filing the petition. (b) Contents. (c) Response. (d) Standards for determining petitions for a stay. (1) The likelihood that petitioner's challenge to the merits of the decision will be successful; and (2) The likelihood that the denial of the petition would result in irreparable harm to the petitioner; and (3) The effect a grant of the petition would have on the National Futures Association; and (4) The effect a grant or denial of the petition would have on the public interest. (e) Expedited consideration. § 171.44 Notice of appeal. (a) Time to file. (b) Contents. (c) Filing fee. (d) Defective notices of appeal. § 171.45 General procedures. The following procedural rules applicable to review of decisions of the National Futures Association in disciplinary, membership denial and registration actions shall also apply to the review of decisions of the National Futures Association in member responsibility actions: (a) Section 171.24 Submission of the Record. (b) Section 171.25 Appeal Brief. (c) Section 171.26 Answering Brief. (d) Section 171.27 Limited Participation By Interested Persons. (e) Section 171.28 Participation By Commission Staff. (f) Section 171.30 Scope of Review. (g) Section 171.31 Commission Review In the Absence of An Appeal. (h) Section 171.32 Oral Argument. (i) Section 171.33 Final Decision By the Commission. § 171.46 Standards of review. In reviewing the decision of the National Futures Association in a member responsibility action, the Commission shall consider whether: (a) The proceedings were conducted in a manner consistent with fundamental fairness; (b) The proceedings were conducted in a manner consistent with the rules of the National Futures Association; (c) The weight of the evidence supports the findings of the National Futures Association concerning the reasons for the action; (d) The determination that summary action is necessary to protect the commodity futures markets, customers, or members of the National Futures Association rests on a reasonable interpretation of the NFA rules at issue; (e) The National Futures Association's application of its rules is consistent with the purposes of the Act; (f) In light of the findings of the National Futures Association concerning the reasons for the action and the public interest, the suspension, restriction or remedial action imposed by the National Futures Association is not excessive, oppressive or an abuse of discretion. Subpart E—Delegation of Functions § 171.50 Delegation to the General Counsel. (a) The Commission hereby delegates, until it orders otherwise, to the General Counsel, or any employee under the General Counsel's supervision as the General Counsel may designate, the authority: (1) To waive or modify any of the requirements of §§ 171.25, 171.26, 171.27 and to waive or modify any requirement of the part 171 Rules insofar as it pertains to changes in the time permitted for filing, or the form, execution, service and filing of documents; (2) To enter orders under §§ 171.10, 171.12, 171.21 and 171.31(c); (3) To decline to accept any notice of appeal, or petition for stay pending review, of matters specified in § 171.1(b) and to so notify the appellant and the registered futures association; (4) To stay the effective date of a decision of the National Futures Association in a disciplinary, membership denial or registration action, or a decision relating to such actions issued by the Commission pursuant to these rules, for a reasonable period of time, not to exceed 10 days, when such a stay is necessary to allow the Commission to consider a petition to stay the effective date of such a decision or a motion for similar relief; (5) To decline to accept any document which has not been filed or perfected as specified in these rules; (6) To determine motions seeking permission to participate in a proceeding under § 171.27 and to establish the related briefing schedule; (7) To establish briefing schedules under § 171.28; and (8) To enter any order which, in his judgment, will facilitate or expedite Commission review of a decision by the National Futures Association in a disciplinary, membership denial or registration action. (b) Within seven days after service of a ruling issued pursuant to paragraph (a) of this section, a party may file with the Proceedings Clerk a petition for Commission reconsideration of the ruling. Unless the Commission orders otherwise, the filing of a petition for reconsideration will not operate to stay the effective date of such ruling. (c) The General Counsel, or his designee, may submit to the Commission for its consideration any matter which has been delegated pursuant to paragraph (a) of this section. (d) Nothing in this section will be deemed to prohibit the Commission, at its election, from exercising the authority delegated to the General Counsel, or his designee, under this section. [55 FR 41068, Oct. 9, 1990, as amended at 64 FR 46271, Aug. 25, 1999; 78 FR 1145, Jan. 8, 2013]