If the parties are unable to settle a pending disciplinary matter, the case proceeds to the Chief Regulatory Officer for issuance of charges. If charges are issued, Enforcement Counsel will send the respondent notice of the charges with a Charging Memorandum.  The respondent has 21 calendar days after notice to submit a written answer to the charges. The answer must state that the respondent admits, denies, or lacks sufficient knowledge to admit or deny a charge.

Motion to Deem Charges Admitted by Default

If the respondent fails to answer the charges, or answers but fails to deny the charges, or answers but not within 21 days, Market Regulation will file a written motion with the BCC Hearing Panel Chair asking for an order finding the respondent to be deemed to have admitted the charges issued by default. The respondent may file a response to the motion by contacting counsel to the Panel.

After the motion to deem the charges admitted has been filed by Market Regulation, and a response, if any, is filed by the respondent, the Hearing Panel Chair will decide the motion on the written filings of the parties or by oral argument.

If the charges are deemed admitted, the respondent waives the right to a hearing on the merits of the charges. Once the charges are deemed admitted, the BCC Panel will convene to find the respondent guilty of committing the charged rule violations and issue a penalty.

Prior to the hearing on the penalty, Enforcement Counsel will notify the respondent of the hearing, the right to appear before the panel for the hearing, and the names of the panel members. Enforcement will also prepare a packet that is provided to the BCC Panel and respondent containing a memorandum outlining Market Regulation’s requested sanction or penalty and a draft notice of disciplinary action.

BCC Hearing on Default Cases

Once the BCC Panel convenes, the hearing is bi-furcated. In the first segment, the BCC Panel finds the respondent guilty of committing the charged violations, which the BCC is required to do under Rule 407.C. In the second segment, the BCC determines what sanctions should be issued and, in doing so, considers Enforcement’s recommended sanctions.

After the BCC Panel issues its penalty, a written decision will be prepared and sent to the respondent. The decision of the Panel can be appealed if the total monetary sanction is greater than $25,000 and/or an access denial or suspension of any membership privileges for greater than ten-business-days is issued.

Test your knowledge

ACCREDITED COURSE

In case you didn’t know, the CFA Institute allows its members to self-determine and report continuing education credits earned from external sources. CFA Institute members are encouraged to self-document such credits in their online CE tracker. CME Institute offers a variety of courses, webinars, and white papers to support your professional education.

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