Preparation

If the respondent submits an offer of settlement and Market Regulation supports the offer, the case will be set for a hearing before a panel of the Business Conduct Committee (BCC).

The BCC acts through a Panel composed of a Hearing Panel Chair, two Exchange members or employees of member firms, and two non-members. Any BCC Panel that conducts a hearing or proceeding consists of panelists who possess sufficiently diverse interests to ensure fairness.

To avoid any potential conflicts of interest, the names of the panelists are provided to the respondent, who can request that the Hearing Panel Chair excuse any of the panelists if necessary. Further, prospective panelists alert Market Regulation of any potential conflict they recognize after being advised of the respondent’s name and affiliation.

Market Regulation prepares a packet of materials, which is provided to both the BCC Panel and the respondent prior to the hearing.

The packet contains respondent’s settlement offer, a draft disciplinary posting, and a memorandum from Market Regulation explaining the reasons it believes the settlement offer is appropriate and should be approved. The packet also includes a list of comparable cases, along with the sanctions imposed in these cases.

Procedure

During the settlement hearing before the BCC Panel, the Chair calls the meeting to order, after which the panelists, Market Regulation, and the respondent introduce themselves.

The Chair then asks Enforcement Counsel to make a statement in support of the offer of settlement, including a detailed explanation of the relevant facts and issues involved in the case.

Next, the respondent is invited to make a statement in support of the settlement if he or she wishes.

Finally, the Panel is provided an opportunity to ask questions of the parties regarding the case and the offered settlement. Afterwards, the parties are excused so the Panel can deliberate outside of their presence.

The BCC Panel may only accept or reject the offer of settlement, and cannot impose a sanction different from the one respondent offered.

Decision of the Panel

If the Panel accepts an offer of settlement, a written decision is issued, and the settlement becomes effective—and publicly posted—two business days later.

Market Regulation subsequently sends a Notice of Decision to the respondent, along with a copy of the written decision, the public Notice of Disciplinary Action, and the date any monetary sanction must be paid.

Pursuant to federal law, Market Regulation also sends notice of the settlement to the NFA and publicly posts the Notice of Disciplinary Action.

If the BCC Panel rejects an offer of settlement, the parties are notified of the rejection, and the offer of settlement is deemed withdrawn.

Any subsequent offers of settlement supported by Market Regulation will be heard by the same Panel.

If the case proceeds to a contested hearing after an offer of settlement is rejected, a new BCC Panel will be appointed for the contested hearing.

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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