ty imposed and the effective date of such penalty.

§ 8.20 Final decision.

Each exchange shall establish rules setting forth when a decision rendered pursuant to this subpart B shall become the final decision of such exchange.

Subpart C-Summary Actions

§ 8.25 Member responsibility actions.

An exchange may suspend at any time, or take other summary action against, a person subject to its jurisdiction upon a reasonable belief that such immediate action is necessary to protect the best interest of the marketplace.

§ 8.26 Procedure for member responsibility actions.

An action pursuant to § 8.25 shall be taken in accordance with an exchange procedure which provides for the following:

(a) The respondent shall, whenever practicable, be served with a notice before the action is taken. If prior notice is not practicable, the respondent shall be served with a notice at the earliest possible opportunity. The notice shall:

(1) State the action,

(2) Briefly state the reasons for the action, and

(3) State the effective time and date and the duration of the action.

(b) The respondent shall have the right to be represented by legal counsel or any other representative of his choosing in all proceedings subsequent to the summary action taken pursuant to § 8.25.

(c) The respondent shall promptly be given opportunity for a subsequent hearing. The hearing shall be fair and shall be held before one or more persons authorized by the exchange to conduct hearings pursuant to this section. The hearing shall be conducted in accordance with the requirements set forth in §§ 8.17(a)(4)-(9) and (b).

(d) Promptly following the hearing provided for in paragraph (c) of this section, the exchange shall render a written decision based upon the

weight of the evidence contained in the record of the proceeding and shall provide a copy to the respondent. The decision shall include:

(1) A description of the summary action taken,

(2) The reasons for the summary action,

(3) A brief summary of the evidence produced at the hearing,

(4) Findings and conclusions,

(5) A determination that the summary action should be affirmed, modified or reversed, and

(6) A declaration of any action to be taken pursuant to the determination specified in paragraph (d)(5) of this section and the effective date and duration of such action.

(e) The rules of an exchange may permit the respondent to appeal promptly an adverse decision. Such rules shall be established in accordance with the requirements set forth in § 8.19.

review of an exchange disciplinary action on its own motion.

§ 9.2 Definitions.

For purposes of this part:

(a) "Disciplinary action” means the suspension, expulsion or other penalty imposed on a member of an exchange by that exchange or any action by an exchange which denies access to that exchange to any person; but does not include the imposition of a minor sanction against a person for violation of exchange rules of decorum, attire or similar rule.

(b) "Disciplinary proceeding” means any formal or informal proceeding by an exchange which results in a disciplinary action.

(c) "Division of Trading and Markets" means that division within the Commission which, among other things, reviews notices of disciplinary action under this part.

(d) "Exchange" means any board of trade which has been designated as a contract market for one or more commodities pursuant to Section 5 of the Commodity Exchange Act.

(e) "Hearing Clerk" means the employee of the Commission designated as such in the Commission's Office of Hearings and Appeals.

(f) "Member of an exchange" means any person who is admitted to membership or has been granted membership privileges on an exchange, any employee, officer, partner, director or affiliate of such member or person with membership privileges including any agent or associated person, and any other person under the supervision or control of such member or person with membership privileges.

(g) "Party" means both the person who has been the subject of a disciplinary action or other adverse action by an exchange and that exchange.

(h) "Record of the exchange disciplinary proceeding or other adverse action" means all testimony, exhibits, papers and records produced at or filed in an exchange disciplinary proceeding or served on a party to that proceeding; all documents, minutes or other exchange records serving as a basis for or reflecting the deliberations concerning other adverse action

taken by an exchange; and a transcript or recording of any oral argument made before any body of the exchange in connection with the disciplinary proceeding or other adverse action.

(i) "Rules of an exchange" means any constitutional provision, article of incorporation, bylaw, rule, regulation, resolution, interpretation, or stated policy of an exchange or instrument corresponding thereto.

(j) "Rules of Practice" mean the Commission's Rules of Practice contained in Part 10 of this chapter.

§ 9.3 Provisions incorporated by refer

ence.

The following provisions of the rules of practice apply to this part: Section 10.4 (Business Address; Hours), Section 10.5 (Computation of Time), Section 10.6 (Changes in Time Permitted for Filing), Section 10.7 (Date of Entry of Orders), Section 10.10 (Ex Parte Communications), Section 10.11 (Appearance in Adjudicatory Proceedings), Section 10.12 (a), (b), (c), (d), (e)(1)-(e)(4), (e)(6), (f) and (g) (Service and Filing of Documents; Form and Execution) and such other sections of the rules of practice as the Commission shall declare to be applicable during a proceeding under this part. For purposes of this part, functions assigned by the rules of practice to an “Admininstrative Law Judge” shall be performed by the Commission.

§ 9.4 Default by the parties.

In the event that either party fails to file any document or make any appearance which is required under this part, the Commission, in its discretion, may dismiss the proceeding before it, or, based on the record before it, may affirm, modify, or set aside the exchange decision or remand the matter for further proceedings before the exchange, as it deems appropriate.

§ 9.5 Settlement.

At any time before there has been a final determination by the Commission of any review proceeding sought or initiated under this part, the parties may propose offers of settlement. All offers of settlement shall be in

writing and shall be filed with the Commission. All offers of settlement shall:

(a) Acknowledge service of the order instituting review,

(b) Admit the jurisdiction of the Commission with respect to the matters stated in the order,

(c) Include a waiver of (1) all subsequent procedures in the proceeding, (2) judicial review, and (3) any objection to staff participation in the Commission's consideration of the offer,

(d) Stipulate the record basis on which an order may be entered, and

(e) Consent to the entry of an order reflecting the terms of the settlement agreed upon.

The Commission will issue an order based on the settlement which will terminate the proceeding before the Commission as to all parties. Notwithstanding the entry of such an order, the Commission may undertake review of the exchange action on its own motion.

§ 9.6 Waiver of rules.

(a) To prevent undue hardship on any party or for other good cause the Commission may waive any rule in Subparts A through D of this part in a particular case and may order proceedings in accordance with its direction upon a determination that no party will be prejudiced and that the ends of justice will be served. Reasonable notice shall be given to all parties of any action taken pursuant to this provision.

(b) The Commission hereby delegates, until the Commission orders otherwise, to the General Counsel and such person or persons under his supervision as he may designate from time to time, the authority to waive or modify any of the requirements of § 9.35 and to waive or modify the requirements of the Commission's rules of practice incorporated by § 9.3 insofar as such requirements pertain to exchanges in time permitted for filing, and to the form, execution, service and filing of documents.

Subpart B-Notice of Disciplinary Action

§ 9.11 Form and content of notice.

(a) Whenever an exchange decision pursuant to which a disciplinary action or other disciplinary penalty (as defined in § 8.03(i)) of this chapter is to be imposed becomes final, the exchange shall, within thirty (30) days thereafter provide written notice of such action to the person against whom the action was taken and to the Commission. For purposes of this part, the written notice of disciplinary action may be either a copy of a written decision which accords with §§ 8.16, 8.18, or 8.19(c) (including copies of any materials incorporated by reference) of this chapter or other written notice which shall include:

(1) The name of the person against whom disciplinary action was taken;

(2) A statement of the reasons for the exchange action together with a listing of any rules which the person who was the subject of the disciplinary action was charged with having violated or which otherwise serve as the basis of the exchange action;

(3) A statement of the conclusions and findings made by the exchange with regard to each rule violation charged; or, in the event of settlement, a statement specifying those rule violations which the exchange has reason to believe were committed; and

(4) The terms of the disciplinary action.

(b) Delivery of the notice shall be made either personally to the person who was the subject of the disciplinary action or by mail to such person at his last known address. Copies of the notice shall be delivered to the Commission, either in person during normal business hours or by mail at its principal office in Washington, D.C., to the attention of the Division of Trading and Markets. Notice by mail to the Commission shall be effective upon receipt.

(c) Upon review of the notice, the Division of Trading and Markets may request that the exchange provide the record of the disciplinary proceeding or other adverse action or designated portions of the record, a brief state

ment of the evidence and testimony adduced to support the exchange's findings that a rule or rules of the exchange were violated and such recordings, transcripts and other documents applicable to the particular disciplinary or other proceedings as may aid the Commission in the review of such proceeding and of the decision rendered therein. The exchange shall promptly advise the person who is the subject of the disciplinary action of the Division's request. Within thirty (30) days the exchange shall deliver the information requested to the Division and upon request to the person who is the subject of the disciplinary action. Delivery shall be in the manner prescribed by paragraph (b) of this section. A person subject to the disciplinary action requesting a copy of the information furnished to the Division, shall, if the exchange rules so provide, pay the exchange reasonable fees for the reproduction of his copy.

(d) Copies of the notice and the submission of any additional information provided pursuant to this section shall be certified as true and correct by a duly authorized officer, agent or employee of the exchange.

§ 9.12 [Reserved]

§ 9.13 Effective date of disciplinary actions.

(a) Any disciplinary action taken by an exchange shall not become effective until at least ten (10) days after written notice prescribed by § 9.11(a) is delivered to the Commission. However, the exchange may cause the disciplinary action to become effective prior to that time if:

(1) In accordance with § 8.25, the exchange reasonably believes that immediate action is necessary to protect the best interests of the marketplace;

(2) In accordance with § 8.17(b), the actions of a person who is within an exchange's jurisdiction impede the progess of disciplinary hearing;

(3) In accordance with § 8.27, a person has failed to timely submit accurate records required for clearing or verifying each day's transactions or other similar activities; or

(4) The person against whom the action is taken has consented to the sanction to be imposed.

(b) If the exchange determines in accordance with paragraph (a)(1) of this section that the disciplinary action shall become effective prior to the expiration of ten (10) days after written notice thereof, it shall by telegram or other means of written telecommunication immediately notify the Commission and the person against whom the action is taken, stating the reasons for that determination.

Subpart C-Initial Procedure With Respect to Applications for Review

§ 9.21 Application.

(a) Any person who is the subject of disciplinary action by an exchange or any person who is adversely affected by any other action of an exchange may, at any time within ten (10) days after notice of the disciplinary action has been provided to the person in accordance with § 9.11(a) or within ten (10) days of that adverse action, file a written notice of appeal with the Commission stating an intention to apply to the Commission for review of such action and within thirty (30) days after the notice of disciplinary or other adverse action has been mailed, file with the Commission a written application for review of the exchange action.

(b) Each application submitted to the Commission pursuant to this section shall include:

(1) The name and residence address of the applicant;

(2) The name of the exchange;

(3) If known, the specific rule or rules of the exchange which resulted in the applicant's being the subject of disciplinary or other adverse action;

(4) A concise statement of all facts relevant to the consideration of the application, including, if known, the date and place of each alleged act or omission forming the basis of the exchange's action;

(5) The date on which the disciplinary or other adverse action was imposed by the exchange or the date on which the final exchange decision was rendered;

(6) A full description of the disciplinary or other adverse action imposed and the relief sought; and

(7) A statement of the reasons why it is claimed that the disciplinary action or other adverse action is not in accordance with the rules of the exchange or the policies of the Act, and the specific facts which support those

reasons.

(c) Each application shall be signed personally by an individual applicant or by a duly authorized officer or agent of an applicant that is not a natural person. The applicant must attest that he knows the facts set forth in the application to be true, or believes the facts set forth to be true, in which event the information upon which he formed that belief shall be set forth with particularity. The application must also include a certification showing that a true copy of the application has been served on the exchange involved concurrently with its filing with the Commission.

§ 9.22 Stay pending review.

(a) A party who is the subject of a disciplinary action taken pursuant to § 9.13(a)(1) may petition the Commission to stay the effectiveness of the disciplinary action pending completion of the exchange hearing conducted under § 8.26. A party who has filed a notice of appeal in accordance with § 9.21(a) may petition the Commission to stay the disciplinary or other adverse action, pending consideration by the Commission of the application for review and, if granted, the appeal underlying the application. A petition filed under this section shall state the reasons that the stay is requested and the facts relied upon, and if the facts are subject to dispute, the petition shall be supported by affidavits or other sworn statements or copies thereof. The petition must also include a certification showing that a true copy of the petition has been served on the exchange involved concurrent with the filing of the petition with the Commission. Based upon the petition, the Commission, in its discretion, may order a stay of the disciplinary or other adverse action.

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