(a) Applications and orders for depositions. Any party desiring to take deposition shall make written application therefor, setting forth the reasons why such deposition should be taken, the name and residence of the witness, the matters concerning which it is expected to question the witness, and the time and place proposed for the taking of the deposition. If it appears that a prospective witness may be unable to attend or may be prevented from attending a hearing, that his testimony is material and that it is necessary to take his deposition in the interest of justice, the hearing officer or the Commission, as the case may be, may in his or its discretion, issue an order which will name the witness whose deposition is to be taken, state the scope of the testimony to be taken, and specify the time when, the place where, and the designated officer before whom the witness is to testify. Such order shall be served upon the parties by the Secretary, or other duly designated officer of the Commission, a reasonable time in advance of the time fixed for taking testimony.

(b) Testimony on depositions. Witnesses whose testimony is taken by deposition shall be sworn or shall affirm before any questions are put to them. Each question propounded shall be recorded and the answers shall be taken down in the words of the witness. Examination and cross-examination of deponents may proceed as permitted at the hearing.

(c) Objections to questions or evidence. Objections to questions or evidence shall be in short form, stating the grounds of objection relied upon, but no transcript filed by the officer shall include argument or debate. Objections to questions or evidence shall be noted by the officer upon the deposition, but he shall not have power to decide on the competency or materiality or relevance of evidence. Failure to object to questions or evidence before the officer shall not be deemed a waiver unless the ground of the objection is one which might have been obviated or removed if presented at that time.

(d) Filing of depositions. The testimony shall be reduced to writing by the

officer, or under his direction, after which the deposition shall be subscribed by the witness and certified in usual form by the officer. The original deposition and exhibits shall be forwarded under seal to the Secretary of the Commission with such number of copies as may be requested by the Secretary of the Commission. Upon receipt thereof the Secretary or other duly designated officer shall file the original in the proceeding and shall forward a copy to each party or his attorney of record.

(e) Form of depositions. Such depositions shall conform to the specifications of §201.22 (e), (f) and (g), but deficiencies of form shall not invalidate the deposition if properly executed.

(f) Depositions as part of the record. At a hearing, a part or all of a deposition, so far as otherwise admissible in the proceeding, may be used if it appears: (1) That the witness is dead; (2) that the witness is out of the United States, unless it appears that the absence of the witness was procured by the party offering the deposition; (3) that the witness is unable to attend or testify because of age, sickness, infirmity or imprisonment; (4) that the party offering the deposition has been unable to procure the attendance of the witness by subpoena; or (5) upon application and notice, that such exceptional circumstances exist as to make it desirable, in the interest of justice and with due regard to the importance of presenting the testimony of witnesses orally in open hearing, to allow the deposition to be used. If only part of a deposition is offered in evidence by a party, any other party may require him to introduce all of it which is relevant to the part introduced, and any party may introduce any other parts. Any part of a deposition not received in evidence at a hearing before the Commission or a hearing offcer shall not constitute a part of the record in such proceeding, unless the parties shall so agree or the Commission so orders.

(g) Interrogatories. Depositions may also be taken and submitted on written interrogatories in substantially the same manner as depositions taken by oral examination upon application of any party as provided in paragraph (a) of this section. The interrogatories shall be filled with the application in triplicate. Within ten (10) days after service, any party may file with the Secretary his

objections, if any, to such interrogatories, and may file such cross-interrogatories as he desires to submit. Such objections and cross-interrogatories shall be filed in triplicate and all other parties shall have ten (10) days after service to file their objections, if any, to such interrogatories.

Objections to interroga

tories or cross-interrogatories shall be settled by the hearing officer. Objections to interrogatories shall be made before the order for taking the deposition issues and if not so made shall be deemed waived. When a deposition is taken upon written interrogatories and cross-interrogatories, no party shall be present or represented, and no person other than the witness, a stenographic reporter, and the officer shall be present at the examination of the witness, which fact shall be certified by the officer, who shall propound the interrogatories and cross-interrogatories to the witness in their order. The testimony shall be reduced to writing by the officer or under his direction and shall be subscribed by the witnesses and certified in usual form by the officer.

[25 FR. 6732, July 15, 1960, as amended at 31 F.R. 10573, Aug. 6, 1966]

§ 201.16 Proposed findings and conclusions; initial decision.'

(a) Content of initial decisions. An initial decision shall include: Findings and conclusions, with the reasons or bases therefor, upon all the material issues of fact, law or discretion presented on the record; an appropriate order; a statement of the time within which a petition for review of the initial decision may be filled; a statement that pursuant to Rule 17(f) of these rules the initial decision shall become the final decision of the Commission as to each party unless he filles a petition for review of the initial decision (pursuant to Rule 17(b) of these rules) or the Commission (pursuant to Rule 17(c) of these rules) determines on its own initiative to review the initial decision as to him; and a statement that if a party timely files a petition for review or the Commission takes action to review as to a party, the initial decision shall not become final with respect to that party.

(b) When initial decision required. The hearing officer shall make an initial decision in any proceeding in which a

See 201.19 for special time limits applicable to broker-dealer suspension cases.

hearing is required to be conducted in conformity with section 7 of the Administrative Procedure Act, unless an initial decision is waived by all parties who appear at the hearing and the Commission does not subsequently order that an initial decision nevertheless be made by the hearing officer, and in any other proceeding in which the Commission directs him to make such a decision.

(c) [Reserved]

(d) Proposed findings and conclusions; briefs. In any proceeding involving a hearing or an opportunity for hearing, the parties may file in writing proposed findings and conclusions. Proposed findings of fact shall indicate the basis therefor by appropriate citations to the record. Briefs in support of such proposals may be filed therewith or as a part thereof, and any proposed finding or conclusion not briefed may be regarded as waived.

(e) Time for filling proposed findings and briefs prescribed by hearing officer. At the end of every hearing, the hearing officer shall, after consultation with the parties, prescribe the period within which such proposed findings and conclusions and supporting briefs are to be filled and shall direct such filings to be either simultaneous or successive: Provided, however, That the period within which the first filing is to be made, normally should be no more than 30 days after the close of the hearing, and if the hearing officer directs that the first filling be made at a date later than 30 days after the close of the hearing, the reasons for so doing shall be stated in his order. If successive filings are directed the proposed findings and conclusions of the moving party 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 as to which paragraphs of the moving party's proposals there is no dispute. Reply briefs may be filed by the moving party or, where simultaneous filings are directed, reply briefs may be filled by all parties, within the period prescribed therefor by the hearing officer.

(f) Service of record; preparation and filing of initial decision. In proceedings in which an initial decision by a hearing officer is to be made, the record in the proceeding shall, promptly after the time for the last filing of briefs in reply to proposed findings, be served by the Records Officer upon the hearing officer.

The hearing officer shall file his initial decision with the Secretary within 30 days after such service. The Secretary shall promptly serve the initial decisions upon the parties and shall promptly pubHish notice of the filling thereof in the Securities and Exchange Commission News Digest; provided, however, in private proceedings, no such notice shall be published unless the Commission otherwise directs.

(g) Oral argument. At his discretion the hearing officer may hear oral argument by the parties any time before he files his initial decision with the Secretary.

(Secs. 1, 2, 76 Stat. 394, 395; 15 U.S.C. 78d-1, 78d-2) [25 FR 6733, July 15, 1960, as amended at 29 FR 9488, July 11, 1964; 81 FR 5688, Apr. 13, 1966; 37 FR 23829, Nov. 9, 1972]

§ 201.17 Review by the Commission 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 to the proceeding, and any person who would have been entitled to judicial review of the final order entered in the proceeding if the Commission itself had made the initial decision, may file a petition for Commission review of the initial decision.

(b) Petition for review; procedure. Any person who seeks Commission review of an initial decision by a hearing officer shall, within 15 days after service of such initial decision, serve and file a petition for Commission review containing exceptions thereto indicating specifically the findings and conclusions as to which exceptions are taken together with supporting reasons for such exceptions. These reasons may be stated in summary form. Any objection to an initial decision not saved by written exception filled pursuant to this rule will be deemed to have been abandoned and may be disregarded.

(c) Review by the Commission on its own initiative. The Commission may on its own initiative order review of any initial decision by a hearing officer within 30 days after the initial decision has been served on all parties. When parties who do not intend to file a petition for review desire this determination to be made in a shorter time, they may so advise the Commission in writing; stating that they

See § 201.19 for special time limits applicable to broker-dealer suspension cases.

waive their right to file a petition for review. Notice of any order of the Commission directing review on its own initiative shall be served on all parties by the Secretary.

(d) Review by the Commission pursuant to petition for review. After a petition for review has been filled the Commission may decline to review the initial decision except that it will order review where

(1) The initial decision:

(1) Suspends, denies or revokes a broker-dealer registration pursuant to section 15(b) of the Securities Exchange Act of 1934; or

(11) Suspends, denies or withdraws any registration or suspends or expels a member of a national securities exchange pursuant to section 19(a) of the Securities Exchange Act of 1934; or

(H) Suspends trading on an exchange pursuant to section 19(a) of the Securities Exchange Act of 1934; or

(2) The petition for review makes reasonable showing that

(1) A prejudicial procedural error was committed in the conduct of the proceeding; or

(11) The initial decision embodies

(a) A finding or conclusion of material fact which is clearly erroneous; or (b) A legal conclusion which is erroneous; or

(c) An exercise of discretion or decision of law or policy which is important and which the Commission should review.

After ordering review the Commission may summarily affirm the initial decision except where the petition for review presents a matter within subparagraph (2) of this paragraph.

(e) Time for filing briefs. (1) Unless the Commission has summarily affirmed the initial decision, the petitioner and any other person entitled to Commission review may serve and file briefs in support of the petition within 30 days after the Commission has ordered review pursuant to a petition for review. Other persons entitled to Commission review in the proceeding may serve and file reply briefs within 30 days of service of a brief in support of the petition.

(2) When the Commission orders review on its own initiative pursuant to paragraph (c) of this section, within 30 days after the Commission has ordered review, any persons entitled to Commission review may serve and fille

cross briefs in support of their positions and reply briefs within 30 days of service of the original briefs.

(3) The time periods specified in this paragraph shall not be applicable where the order for review specifies other time periods.

(f) Effect of initial decisions. Unless a party or other person entitled to seek review of an initial decision timely files a petition for review, or unless the Commission on its own initiative orders review, such initial decision shall become the final decision of the Commission with respect to those parties who have not timely filed a petition for review of the initial decision. In the event that the initial decision becomes the final decision of the Commission with respect to a party, such party shall be duly notified thereof by the Secretary of the Commission and a notice thereof shall be published, unless the Commission otherwise directs, in the Securities and Exchange Commission News Digest. The notice to the party shall state that the time for filing of a petition for review of the initial decision by the party has expired and that the Commission has determined not to order review of the initial decision on its own initiative and shall specify the date on which the order shall become effective. If a petition for review is timely filed by a party or action to review as to a party is taken by the Commission upon its own initiative, the initial decision shall not become final as to that party.

(g) Scope of review. (1) Review by the Commission of an initial decision by a hearing officer shall be limited to the matters specified in the order for review. On notice to all parties, however, the Commission on review may raise and determine any other matters which it deems material, with opportunity for oral or written argument thereon by the parties.

(2) On review the Commission may affirm, reverse, modify, set aside or remand for further proceedings, in whole or in part, the initial decision by the hearing officer and make any findings or conclusions which in its judgment are proper on the record.

(h) Petition for review a prerequisite to judicial review. Pursuant to the provisions of section 10 (c) of the Administrative Procedure Act, a petition to the Commission for review of an initial de

cision in any proceeding is a prerequisite to the seeking of judicial review of a final order entered pursuant to the initial decision.

(Secs. 1, 2, 76 Stat. 394, 395; 15 U.S.C. 78d-1, 78d-2) [29 F.R. 9488, July 11, 1964, amended at 31 F.R. 5688, Apr. 18, 1966] § 201.18 Briefs.

Briefs shall be confined to the particular matters remaining at issue. Briefs not filed at or before the time provided will not be received except upon special permission of the Commission. Each exception which is briefed shall be supported by a concise argument and by citation of such statutes, decisions and other authorities and by page references to such portions of the record, 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 with appropriate references to the transcript. Reply briefs shall be confined to matters in original briefs or other parties.

[25 F.R. 6733, July 15, 1960]

$201.19 Special provisions relating to proceedings for suspension of brokerdealer registrations pending final determination.

In any proceeding pursuant to section 15(b) of the Securities Exchange Act of 1934 on the question of suspension of registration of a broker or dealer pending final determination whether such registration shall be revoked, the following time limits shall be applicable, unless otherwise ordered by the Commission, in lieu of the time limits prescribed by other provisions of this part:

(a) Proposed findings and briefs. Proposed findings and conclusions and briefs in support thereof may be filed within 3 days after the close of the hearing.

(b) Service of record; filing of decision. In proceedings in which an initial decision by a hearing officer is to be prepared, the record in the proceedings shall, promptly after the time for filing proposed findings and conclusions and briefs in support thereof, be served by the Records Officer upon the hearing officer. The initial decision shall be filed with the Secretary within 5 days after such service.

(c) Petition for review. Any petition for review must be filed within 3 days after receipt of the initial decision.

(d) Briefs.

Briefs in support of a petition for review, or in support of or in opposition to any portion of an initial decision, may be served and filled within 5 days after receipt of notice that the Commission has ordered review of the initial decision. Reply briefs may be served and filed within 5 days of receipt of an original brief.

(e) No review by the Commission on its own initiative. The provisions of § 201.17(c) shall not be applicable to the proceedings to which this rule applies. (Secs. 1, 2, 76 Stat. 394, 395; 15 U.S.C. 78d-1, 78d-2) [25 FR. 6733, July 15, 1960, as amended at 29 F.R. 9489, July 11, 1964]

§ 201.20 Contents and certification of record.

(a) Contents of Record. (1) The record in every proceeding before the Commission for final decision shall include:

(1) The order for proceedings, the notice of hearing and any amendments thereto;

(ii) Any responsive pleading and any amendments thereto;

(iii) The moving papers to the extent the same are not comprehended under subdivision (1) of this subparagraph;

(iv) Any other document or portion thereof which constitutes part of the official public records of the Commission and which is specified in the documents listed in subdivision (1), (ii) or (iii) of this subparagraph, unless the hearing officer shall determine the same to be irrelevant, immaterial or unduly repetitious;

(v) Any affidavit and response, testimony taken and decision in connection with a request to withdraw under § 201.11 (c);

(vi) Proofs of service;

(vii) Any application, motion or objection made in the course of the proceeding, rulings thereon and exceptions thereto;

(viii) Any stipulation between the parties as to any matter of fact, law or procedure;

(ix) The transcript of testimony and any specification of corrections thereof;

(x) Any exhibit received at the hearing, including any document or portion thereof constituting part of the official public records of the Commission which the hearing officer during the course of the hearing may incorporate by reference upon a determination that it is relevant, material and not unduly repetitious;

(xi) Any written communication accepted by the hearing officer pursuant to 201.9 (f);

(xii) Any proposed findings and conclusions; and

(xiii) Any initial decision and any petition for review.

(2) At the beginning of the hearing, the hearing officer shall read into the record a list of the documents which at that time constitute the record.

(3) The documents or portions thereof referred to in subdivisions (iv) and (x) of subparagraph (1) of this paragraph shall be deemed to have been received in evidence as exhibits whether or not they have been physically introduced.

(4) Promptly after the close of the hearing, the hearing officer shall transmit to the Records Officer of the Commission or his designated deputy a list of documents or portions thereon constituting part of the public official records of the Commission which during the course of the hearing have been admitted as exhibits pursuant to subparagraph (1) (x) of this paragraph, or excluded pursuant to subparagraph (1) (iv) of this paragraph, and a copy of any written communication accepted pursuant to § 201.9 (f), application, motion, objection, ruling or stipulation made in writing during the proceeding which has not theretofore been filed with the Secretary or other duly designated officer of the Commission or included in the transcript. Promptly after the last date for filing briefs where the Commission has ordered review of the initial decision, or at such earlier time as the Commission may direct after receipt of a petition for review, and prior to any oral arguments before the Commission, the Records Officer of the Commission or his duly designated deputy shall certify the entire record to the Commission, provided that documents or portions thereof constituting part of the official records of the Commission may be incorporated by reference and need not be physically transferred to the record.

(b) Retention of documents not admitted in evidence; substitution of copies. (1) Documents offered in evidence during the course of a hearing but excluded by the hearing officer, and documents marked for identification but not offered as exhibits, shall not be considered as a part of the record, but any such document shall be retained in the custody of the Commission.