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(2) Twenty days after the date the notice of intent to deny provided under $ 3.52(a) is served upon the applicant, such notice shall be effective as a final order of the Commission denying registration. The Director of the Division of Trading and Markets or the Director's designee shall written confirmation upon the applicant in accordance with the provisions of $ 3.50(a) that such registration has been denied.

(b) Vacating of order. Notwithstanding the foregoing, an applicant for registration against whom an order referred to in paragraph (a)(2) of this section is effective may file a petition and supporting affidavit with the Director of the Division of Trading and Markets if the notice under $ 3.52 was not timely received by the applicant. Upon receipt of such a petition, such order shall be vacated, and the Director of the Division of Trading and Markets shall serve upon the applicant the written notice required under § 3.52. The procedures set forth in this paragraph shall be available only once to an applicant.

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(b) Written submission. If the registrant wishes to challenge the accuracy of the allegations set forth in the notice, the registrant may submit written evidence limited to the type described in $ 3.53(a). Such written submission must be served upon the Division of Enforcement and filed with the Hearing Clerk within twenty days of the date of service of notice to the reg. istrant.

(c) Reply. Within ten days of receipt of any written submission filed by the registrant, the Division of Enforcement may serve upon the registrant and file with the Hearing Clerk a reply.

(d) Determination by Administrative Law Judge. A determination by the Administrative Law Judge whether the registrant is subject to a statutory disqualification must be based upon the evidence of the statutory disqualification, notice with proof of service, the written submission, if any, filed by the registrant in response thereto, any written reply submitted by the Division of Enforcement and such other papers as the Administrative Law Judge may require or permit.

(e) Suspension and order to show cause. (1) If the registrant is found to be subject to a statutory disqualification, the Administrative Law Judge, within thirty days after receipt of the registrant's written submission, if any, and any reply thereto, shall issue an interim order suspending the registration of the registrant and requiring the registrant to show cause within twenty days of the date of the order why, notwithstanding the existence of the statutory disqualification, the reg. istration of the registrant should not be revoked. The registration of the registrant shall be suspended, effective five days after the order is served upon the registrant in accordance with $ 3.50(a), until a final order with respect to the order to show cause has been issued: Provided, That if the sole basis upon which the registrant is subject to a statutory disqualification is the existence of a temporary order, judgment or decree of the type described in section 8a(2)(C) of the Act, the order to show cause shall not be issued and the registrant shall be suspended until such time as the tempo

8 3.55 Suspension and revocation of regis

tration pursuant to section 8a(2) of the

Act. (a) Notice. On the basis of information obtained by the Commission, the Director of the Division of Trading and Markets or the Director's designee, with the concurrence of the Director of the Division of Enforcement and the General Counsel or their designees, may at any time serve notice upon a registrant in any capacity under the Act that:

(1) The Commission alleges and is prepared to prove that the registrant is subject to one or more of the statutory disqualifications set forth in section 8a(2) of the Act;

(2) An Administrative Law Judge shall make a determination, based upon written evidence, as to whether the registrant is subject to such statutory disqualification; and

(3) If the registrant is found to be subject to a statutory disqualification, the registration of the registrant shall be suspended and the registrant ordered to show cause why such registration should not be revoked.

rary order, judgment or decree shall have expired: Provided, however, That in no event shall the registrant be suspended for a period to exceed six months.

(2) If the registrant is found not to be subject to a statutory disqualification, the Administrative Law Judge shall issue an order to that effect which shall be effective as a final order of the Commission fifteen days after the date it is served upon the registrant in accordance with the provisions of $ 3.50(a), unless a timely application for review under paragraph (k) of this section is received. A copy of such order shall be served upon the Division of Trading and Markets and the Division of Enforcement.

(f) Response. Within twenty days of the date of the order to show cause, the registrant shall file a written response which may include briefs, affidavits and supporting memoranda, but in any event shall be limited in content to:

(1) Evidence, not previously set forth in any written submission filed under paragraph (b) of this section, challenging the accuracy of the allegations establishing the statutory disqualification;

(2) The existence of any facts which constitute a clear and compelling showing that, notwithstanding the existence of the statutory disqualification, the continued registration of the registrant would be in the public interest; or

(3) In the case of an associated person, written confirmation by the registrant's sponsor that, notwithstanding the existence of the statutory disqualification, the sponsor is willing to supervise the activities of the registrant subject to such restrictions as the Administrative Law Judge shall impose: Provided, That, with respect to such sponsor, (i) an adjudicatory proceeding brought by or before the Commission pursuant to the provisions of section 6(b), 6(c), 6d or sa of the Act is not pending, and (ii) in the case of a sponsor which is a futures commission merchant or leverage transaction merchant, the sponsor is not subject to the reporting requirements of $$ 1.12(b) or 31.7(b) of this chapter, respectively.

(g) Reply. Within ten days after receipt of the response of the registrant, the Division of Enforcement may serve upon the registrant and file with the Hearing Clerk a reply.

(h) Oral hearings. Oral hearing shall not be granted except under extraordinary circumstances and upon written request, which shall include the issues to be addressed, the evidence to be adduced and a showing of compelling need. If the Administrative Law Judge determines to grant a request for oral hearing, such hearing shall be conducted pursuant to such sections of the Commission's Rules of Practice, 17 CFR Part 10, as the Administrative Law Judge deems necessary and in a manner which shall ensure that the proceeding is resolved expeditiously.

(i) Order. (1) Upon receipt of a response, and any reply thereto, the Administrative Law Judge shall within thirty days, upon consideration of the record as a whole, make a finding as to whether the registrant has shown cause why his registration should not be revoked and shall issue an order accordingly, which shall be deemed to be a final order of the Commission fifteen days after the date it is served upon the registrant in accordance with the provisions of $ 3.50(a), unless a timely application for review under paragraph (k) of this section is filed. If the Administrative Law Judge, on the basis of the showing described in paragraph (f)(2) of this section, finds that, notwithstanding the existence of the statutory disqualification, the registration of the registrant should not be revoked, the Administrative Law Judge may issue an order further suspending, for a period not to exceed six months, or, in the case of an associated person, restricting the registration of the registrant. Any such order shall be served upon the registrant, the Division of Enforcement and the Division of Trading and Markets in accordance with the provisions of $ 3.50(a).

(2) Notwithstanding the sponsor's written confirmation under paragraph (f)(3) of this section, the Administrative Law Judge may issue an order revoking or further suspending for a period not to exceed six months the registration of an associated person

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and, in any event, may not issue an order restricting such registration if:

(i) The associated person is subject to a statutory disqualification under section 8a(2) of the Act as a result of his conviction of a felony or misdemeanor under section 9 of the Act; or

(ii) The associated person has been the subject of more than one proceeding in which findings of fact constituting a statutory disqualification under section 8a(2) of the Act have been entered against the associated person; or

(iii) The associated person is subject to an adjudicatory proceeding brought by or before the Commission pursuant to the provisions of section 6(b), 6(c), 6d or 8a of the Act; or

(iv) The associated person was previously granted a conditional or restricted registration and was found to have failed to conform to such condition or restriction; or

(v) The associated person willfully made any material false or misleading statement or willfully omitted to state any material fact in any written submission filed under this section as to any facts which would constitute statutory disqualifications under section 8a(2) of the Act; or

(vi) The registrant with whom the associated person is associated willfully made any false or misleading statement of a material fact in the confirmation referred to in paragraph (d)(3) of this section or willfully failed to state any material fact that was required to be stated therein.

(j) Default. (1) If the registrant fails to file a timely response to the order to show cause, the registrant shall be deemed in default, and the Administrative Law Judge shall within fifteen days thereafter, upon a finding that service was effected pursuant to $ 3.50(a), enter an order revoking the registrant's registration based upon the evidence of the statutory disqualification, any written submission filed by the registrant in response to the notice provided in accordance with paragraph (a) of this section and any written reply submittted by the Division of Trading and Markets or the Division of Enforcement. Any such order shall be served upon the registrant in accordance with the provisions of $ 3.50(a) and shall be deemed a final

order of the Commission five days after the date it is served upon the registrant.

(2) Notwithstanding the foregoing, if the Administrative Law Judge issues an order under paragraph (j)(1) of this section revoking the registration of the registrant, the registrant may file a petition and supporting affidavit with the Administrative Law Judge setting forth the reasons the registrant failed to file a response to the order to show cause. Such petition must be accompanied by the response. Upon receipt of such a petition, the Administrative Law Judge may, for good cause shown, vacate such order.

(k) Appeal to the Commission. (1) Within fifteen days of service of the Administrative Law Judge's order under paragraph (e)(2), paragraph (i) or paragraph (j)(2) of this section, the registrant or the Division of Enforcement may file with the Commission an application for review thereof, togeth

with supporting argument and proof of service on the other party.

(2) Within ten days after service of the application, the other party may file a response opposing the application.

(3) Based upon the application and any response thereto, the Commission may in its discretion grant review of the Administrative Law Judge's order. Should the Commission grant review, the Commission shall thereafter issue an order establishing a schedule for the filing of any additional briefs.

(4) Should the Commission refuse to grant review, the Administrative Law Judge's order shall be deemed a final order of the Commission five days after service upon the registrant of notice of such refusal in accordance with the provisions of $ 3.50(a). $ 3.56 Applicability of the Rules of Prac

tice. With the exception of $$ 10.2, 10,410.11, and 10.12(a)(2)-10.12(g), unless otherwise provided in $$ 3.523.55 herein, the provisions of the Commission's Rules of Practice, 17 CFR Part 10, shall not apply in any proceeding to deny, suspend, revoke or restrict registration pursuant to section

or

a(2) of the Commodity Exchange ict.

3.57 Proceedings under section 8a(2)(E)

of the Act. The Commission will not initiate a roceeding under section 8a(2)(E) of he Act, if respondeat superior is the ole basis upon which the registrant nay be found subject to a statutory lisqualification.

within twenty days after the date the notice is served on the applicant or registrant, which shall state whether the applicant or registrant admits or denies or does not have and is unable to obtain sufficient information to admit or deny each allegation set forth in the notice; and

(e) If the applicant or registrant does not timely request a hearing:

(1) The applicant or registrant will be deemed to have waived his right to a hearing on all issues and the facts stated in the notice shall be deemed to be true for the purpose of finding that the applicant or registrant is subject to a statutory disqualification under section 8a (3) or (4) of the Act; and

(2) A presiding officer may thereafter decide whether to deny, condition, suspend, revoke, or place restrictions upon registration based upon the facts set forth in the notice.

8 3.58–3.59 (Reserved]

or

} 3.60 Authority to deny, condition, sus

pend, revoke or place restrictions upon registration pursuant to section 8a (3)

and (4) of the Act. On the basis of information obtained by the Commission, the Director of the Division of Trading and Markets or the Director's designee, with the concurrence of the Director of the Division of Enforcement and the General Counsel or their designees, may at any time give written notice to any applicant for registration or any registrant in any capacity under the Commodity Exchange Act that:

(a) The Commission alleges and is prepared to prove that the registrant or applicant is subject to one or more of the statutory disqualifications set forth in sections 8a(3) or 8a(4) of the Act;

(b) The allegations set forth in the notice, if true, constitute a basis upon which registration may be denied, conditioned, suspended, revoked or restricted. If the notice proposes conditioning or placing of restrictions upon registration, the notice shall specify these conditions or restrictions;

(c) The applicant or registrant is entitled to a hearing at which the applicant or registrant may challenge the accuracy of the allegations set forth in the notice or show cause why, notwithstanding the accuracy of those allegations, registration should nevertheless be granted or should not be conditioned, suspended, revoked or restricted;

(d) A hearing for these purposes may be obtained by filing a written request with the Hearing Clerk, Office of Hearings and Appeals, Commodity Futures Trading Commission, 2033 K Street, N.W., Washington, D.C. 20581,

$ 3.61 Request for hearing.

(a) If an applicant or registrant should request a hearing, an adjudicatory proceeding on the question of whether the applicant or registrant is subject to a statutory disqualification under section 8a (3) or (4) of the Commodity Exchange Act, or whether, notwithstanding the existence of the statutory disqualification, registration should nevertheless be granted should not be conditioned, suspended, revoked or restricted, shall thereafter be conducted and concluded in accordance with the Commission's Rules of Practice, 17 CFR Part 10.

(b) For purposes of that proceeding:

(1) The notice given in accordance with $ 3.60 shall be treated as a duly authorized complaint by the Division of Enforcement seeking the relief specified therein; and

(2) The request for hearing shall be treated as an answer.

$ 3.62 Waiver of hearing.

If no request for a hearing is received by the Hearing Clerk within twenty days after a notice has been given in accordance with $ 3.60, the Hearing Clerk shall transmit the record to a presiding officer who shall determine whether the applicant or registrant is subject to a statutory disqualification and thereafter issue an order under section 8a(3) or 8a(4) of the Act denying, suspending, revoking, conditioning or placing restrictions upon registration based upon the notice with proof of service, an appropriate showing that a hearing has not been requested, and the evidence of the statutory disqualification.

8 3.63 Service of order issued by a Presid

ing Officer. (a) A copy of any order issued pursuant to $ 3.62 shall be served promptly upon the applicant or registrant, the Division of Trading and Markets and the Division of Enforcement in accordance with the provisions of $ 3.50(a) and shall be deemed a final order of the Commission fifteen days after the date of such service, unless a timely application for review under paragraph (b) of this section is filed.

(b) Within fifteen days after such service, the applicant, the registrant or the Division of Enforcement may file with the Commission a petition for review setting forth the grounds in support thereof. The petition for review of an applicant or reg trant shall not be based upon any matter other than those as to which the applicant or registrant had notice and opportunity for hearing under $ 3.60. Should the Commission refuse to grant review, the presiding officer's order shall be deemed a final order of the Commission five days after service upon the registrant of notice of such refusal in a manner in accordance with the provisions of $ 3.50(a).

8a(2) of the Act within ten busines days of the date upon which the regis trant first knows or should han known such facts. Notice to the Com mission shall be sufficient if the regis trant gives notice to the Director a the Division of Trading and Market or the Director's designee by tele phone and confirms such notice ir writing by certified or registered mai or equivalent means to the Commis sion at its Washington, D.C. offic (Attn: Chief Counsel, Division of Trad ing and Markets, Commodity Future Trading Commission, 2033 K Street N.W., Washington, D.C. 20581).

(b) Unlawful to act as an associated person. Upon the earlier of notifica tion to the Commission by the regis trant pursuant to paragraph (a) of this section, or actual receipt of notice to the registrant pursuant to $ 3.50(b)(1) of this part, that an associ ated person of the registrant or an ap plicant for registration as an associat ed person may be subject to a statuto ry disqualification as set forth in sec tion 8a(2) of the Act, it shall be unlaw. ful for the registrant to permit such person to act in the capacity of an associated person of the registrant unti the Commission determines that such person should nonetheless be regis tered.

(c) Proceedings under Subpart C Upon notification to the Commission by the registrant under paragraph (a) of this section, the Commission will promptly issue notice under $ 3.52 or § 3.55, as appropriate, to deny or suspend and revoke the registration of the applicant for registration or the associated person of the registrant.

Subpart D-Notice Under Section

4k(5) of the Act

(Secs. 2(a)(1), 4, 4b, 40, 40, 4e, 41, 4g, 4h, 4i. 4k, 4m, 4n, 40, 4p, 6, 8, 8a, 14, 15, 17 and 19 of the Commodity Exchange Act, 7 U.S.C. 2 and 4, 6, 6b, 6c, 60, 6e, 6f, 6g, 6h, 6i, 6k, 6m. 6n, 60, 6p, 8, 9, 9a and 13b, 12, 12a, 18, 19, 21 and 23 (1982); 5 U.S.C. 552 and 552b). (49 FR 8223, Mar. 5, 1984)

8 3.70 Notification of certain information

regarding associated persons. (a) Notice. A registrant must notify the Commission under section 4k(5) of the Act of any facts regarding an associated person of the registrant or an applicant for registration as an associated person whom it has sponsored pursuant to the provisions of $ 3.12, § 3.16 or $ 3.18 or whom it intends to hire or otherwise employ as an associated person which are set forth as statutory disqualifications in section

Subpart E-Delegation and Reservation of Authority

$ 3.75 Delegation and reservation of au

thority. (a) The Commission hereby delegates, until such time as it orders oth

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