[Title 17 CFR 11]
[Code of Federal Regulations (annual edition) - April 1, 2003 Edition]
[Title 17 - COMMODITY AND SECURITIES EXCHANGES]
[Chapter I - COMMODITY FUTURES TRADING COMMISSION]
[Part 11 - RULES RELATING TO INVESTIGATIONS]
[From the U.S. Government Printing Office]
17COMMODITY AND SECURITIES EXCHANGES12003-04-012003-04-01falseRULES RELATING TO INVESTIGATIONS11PART 11COMMODITY AND SECURITIES EXCHANGESCOMMODITY FUTURES TRADING COMMISSION
PART 11--RULES RELATING TO INVESTIGATIONS--Table of Contents
Sec.
11.1 Scope and applicability of rules.
11.2 Authority to conduct investigations.
11.3 Confidentiality of investigations.
11.4 Subpoenas.
11.5 Transcripts.
11.6 Oath; false statements.
11.7 Rights of witnesses.
11.8 Sequestration.
Appendix A to Part 11--Informal Procedure Relating to the Recommendation
of Enforcement Proceedings
Authority: 7 U.S.C. 4a(j), 9 and 15, 12, 12a(5), 12(f).
Source: 41 FR 29799, July 19, 1976, unless otherwise noted.
Sec. 11.1 Scope and applicability of rules.
The rules of this part apply to investigatory proceedings conducted
by the Commission or its staff pursuant to sections 6(c) and 8 and 12(f)
of the Commodity Exchange Act, as amended, 7 U.S.C. 9 and 15 and 12 and
16(f) (Supp. IV, 1974), to determine whether there have been violations
of that Act, or the rules, regulations or orders adopted thereunder, or,
in accordance with the provisions of section 12(f) of the Act, whether
there have been violations of the laws, rules or regulations relating to
futures or options matters administered or enforced by a foreign futures
authority, or whether an application for designation or registration
under the Act should be denied. Except as otherwise specified herein,
the rules will apply to the conduct of investigation whether or not the
Commission has authorized the use of subpoenas in the particular matter
to compel the production of evidence.
[63 FR 5233, Feb. 2, 1998]
Sec. 11.2 Authority to conduct investigations.
(a) The Director of the Division of Enforcement and members of the
Commission staff acting pursuant to his authority and under his
direction may conduct such investigations as he deems appropriate to
determine whether any persons have violated, are violating, or are about
to violate the provisions of the Commodity Exchange Act, as amended, or
the rules, regulations or orders adopted by the Commission pursuant to
that Act, or, in accordance with the provisions of section 12(f) of the
Act, whether any persons have violated, are violating or are about to
violate the laws, rules or regulations relating to futures or options
matters administered or enforced by a foreign futures authority, or
whether an applicant for registration or designation meets the requisite
statutory criteria. For this purpose, the Director may obtain evidence
through voluntary statements and submissions, through exercise of
inspection powers over boards of trade, reporting traders, and persons
required by law to register with the Commission, or when authorized by
order of the Commission, through the issuance of subpoenas. The Director
shall report to the Commission the results of his investigations and
recommend to the Commission such enforcement action as he deems
appropriate. In particular matters the Director of the Division of
Clearing and Intermediary Oversight and the Chief Economist and Director
of the Division of Market Oversight, and members of their staffs acting
within the scope of their respective responsibilities, are also
authorized to investigate, report and recommend to the Commission in
accordance with these rules.
(b) The Commission hereby delegates, until the Commission orders
otherwise, to its Regional Directors and to the Director, the Deputy
Directors, the Program Coordinator, the Chief Counsel, the Associate
Directors, and the Regional Counsel of the Division of Enforcement the
authority to grant to any employee of the Division
[[Page 252]]
of Enforcement all or a portion of the authority which the Commission,
by order, has authorized specified employees of the Commission to
perform in connection with a Commission investigation conducted by the
Division of Enforcement. With the approval of the Executive Director,
the Director of the Division of Enforcement may also grant such
authority to any Commission employee under the direction of the
Executive Director.
(Secs. 2a(11) and 6(b) of the Act, 7 U.S.C. 4a(j) and 15 (1976), as
amended by the Futures Trading Act of 1978, Pub. L. 95-405, sec. 13, 92
Stat. 871 (1978))
[41 FR 29799, July 19, 1976, as amended at 43 FR 55348, Nov. 28, 1978;
60 FR 54802, Oct. 26, 1995; 61 FR 1709, Jan. 23, 1996; 62 FR 17702, Apr.
11, 1997; 63 FR 5233, Feb. 2, 1998; 67 FR 62352, Oct. 7, 2002]
Sec. 11.3 Confidentiality of investigations.
All information and documents obtained during the course of an
investigation, whether or not obtained pursuant to subpoena, and all
investigative proceedings shall be treated as non-public by the
Commission and its staff except to the extent that (a) the Commission
directs or authorizes the public disclosure of the investigation; (b)
the information or documents are made a matter of public record during
the course of an adjudicatory proceeding; or (c) disclosure is required
by the Freedom of Information Act, 5 U.S.C. 552, and the rules adopted
by the Commission thereunder, 17 CFR part 145. Procedures by which
persons submitting information to the Commission during the course of an
investigation may specifically seek confidential treatment of
information for purposes of Freedom of Information Act disclosure are
set forth in 17 CFR 145.9. A request for confidential treatment of
information for purposes of the Freedom of Information Act shall not,
however, prevent disclosure for law enforcement purposes or when
disclosure is otherwise found appropriate in the public interest and
permitted by law.
Sec. 11.4 Subpoenas.
(a) Issuance of subpoenas. The Commission or any member of the
Commission or of its staff who, by order of the Commission, has been
authorized to issue subpoenas in the course of a particular
investigation may issue a subpoena directing the person named therein to
appear before a designated person at a specified time and place to
testify or to produce documentary evidence, or both, relating to any
matter under investigation.
(b) Authorization to issue subpoenas. An order of the Commission
authorizing one or more members of the Commission or of its staff to
issue subpoenas in the course of a particular investigation shall
include:
(1) A general description of the scope of the investigation;
(2) The authority under which the investigation is being conducted;
and
(3) A designation of the members of the Commission or of its staff
authorized by the Commission to issue subpoenas.
(c) Service. Service of subpoenas issued for investigative purposes
shall be effected in the following manner:
(1) Service upon a natural person. Delivery of a copy of a subpoena
to a natural person may be effected by
(i) Handing it to the person;
(ii) Leaving it at his office with the person in charge thereof or,
if there is no one in charge, by leaving it in a conspicuous place
therein;
(iii) Leaving it at his dwelling place or usual place of abode with
some person of suitable age and discretion then residing therein;
(iv) Mailing it by registered or certified mail to him at his last
known address; or
(v) Any other method whereby actual notice is given to him.
(2) Service upon other persons. When the person to be served is not
a natural person, delivery of a copy of the subpoena may be effected by
(i) handing it to a registered agent for service, or to any officer,
director, or agent in charge of any office of such person; (ii) mailing
it by registered or certified mail to any such representative at his
last known address; or (iii) any other method whereby actual notice is
given to any such representative.
(d) Witness fees and mileage. Witnesses appearing pursuant to
subpoena shall be paid the same fees and mileage that are paid to
witnesses in the courts of the United States.
[[Page 253]]
(e) Pursuant to the authority granted under Sections 2(a)(11) and
8a(5) of the Act, the Commission hereby delegates to the Director of the
Division of Enforcement, with the concurrence of the General Counsel or
General Counsel's delegee, and until such time as the Commission orders
otherwise, the authority to invoke, in case of contumacy by, or refusal
to obey a subpoena issued to, any person, the aid of any court of the
United States within the jurisdiction in which the investigation or
proceeding is conducted, or where such person resides or transacts
business, in requiring the attendance and testimony of witnesses and the
production of books, papers, correspondence, memoranda and other records
pursuant to subpoenas issued in accordance with section 6(c) of the Act
for the purpose of securing effective enforcement of the provisions of
this Act, for the purpose of any investigation or proceeding under this
Act, and for the purpose of any action taken under section 12(f) of the
Act.
(f) Notwithstanding the delegation of authority to the Director set
forth in paragraph (e) of this section, in any case in which the
Director believes it appropriate the matter may be submitted to the
Commission for its consideration. Nothing in this section shall prohibit
the Commission from exercising the authority delegated in paragraph (e)
of this section.
[41 FR 29799, July 19, 1976, as amended at 67 FR 37322, May 29, 2002]
Sec. 11.5 Transcripts.
Transcripts of testimony taken in the course of an investigative
proceeding shall be recorded solely by an official reporter or other
person or by other means authorized by the Commission or by a member of
the Commission or its staff conducting the investigation for the
Commission.
Sec. 11.6 Oath; false statements.
(a) Oath. At the discretion of the member of the Commission or staff
member conducting the investigation, testimony of a witness may be taken
under oath.
(b) Penalties for false statements and other false information. Any
person making false statements under oath during the course of a
Commission investigation is subject to the criminal penalties for
perjury in 18 U.S.C. 1621. Any person who knowingly and willfully makes
false or fraudulent statements, whether under oath or otherwise, or who
falsifies, conceals or covers up a material fact, or submits any false
writing or document, knowing it to contain false, fictitious or
fraudulent information, is subject to the criminal penalties set forth
in 18 U.S.C. 1001.
Sec. 11.7 Rights of witnesses.
(a) Orders authorizing issuance of subpoenas. Any person upon whom a
subpoena has been served compelling him to furnish documentary evidence
or testimony in an investigation shall, upon his request, be permitted
to examine a copy of the Commission's order pursuant to which the
subpoena has been issued. However, a copy of the order shall not be
furnished for his retention except with the express approval of either
the Director, a Deputy Director, the Program Coordinator, the Chief
Counsel, an Associate Director, or a Regional Counsel of the Division of
Enforcement, or a Regional Director of the Commission; approval shall
not be given unless it has been shown by the person seeking to retain a
copy that his retention of a copy would be consistent both with the
protection of privacy of persons involved in the investigation and with
the unimpeded conduct of the investigation.
(b) Copies of testimony or data. A person compelled to submit data
or evidence in the course of an investigatory proceeding shall be
entitled to retain or, upon payment of appropriate fees as set forth in
the Schedule of Fees for records services, 17 CFR part 145b, procure a
copy or transcript thereof, except that the witness may for good cause
be limited to inspection of the official transcript of his testimony.
(c) Right to counsel. A person compelled to appear, or who appears
in person by request or permission of the Commission or its staff during
an investigation, may be accompanied, represented, and advised by
counsel. Subject to the provisions of Sec. 11.8(b) of this
[[Page 254]]
part, he may be represented by any attorney-at-law who is admitted to
practice before the highest court in any State or territory or the
District of Columbia, who has not been suspended or disbarred from
appearance and practice before the Commission in accordance with the
provisions of part 14 of this title, and who has not been excluded from
further participation in the particular investigatory proceeding for
good cause established in accordance with paragraph (c)(2) of this
section.
(1) The right to be accompanied, represented and advised by counsel
shall mean the right of a person testifying to have an attorney present
with him during any aspect of an investigative proceeding and to have
this attorney advise his client before, during and after the conclusion
of such examination. At the conclusion of the examination, counsel may
request the person presiding to permit the witness to clarify any of his
answers which may need clarification in order that his answers not be
left equivocal or incomplete on the record. For his use in protecting
the interests of his client with respect to that examination counsel may
make summary notes during the examination.
(2) With due regard for the rights of a witness, the Commission may
for good cause exclude a particular attorney from further participation
in any investigation in which the Commission has found the attorney to
have engaged in dilatory, obstructionist or contumacious conduct. The
person conducting an investigation may report to the Commission
instances of apparently dilatory, obstructionist or contumacious conduct
on the part of an attorney. After due notice to the attorney, the
Commission may take such action as the circumstances warrant based upon
a written transcript evidencing the conduct of the attorney in that
investigation or such other or additional written or oral presentation
as the Commission may permit or direct.
(d) Self-Incrimination; immunity--(1) Self-Incrimination. Except as
provided in paragraph (d)(2) of this section, a witness testifying or
otherwise giving information in an investigation may refuse to answer
questions on the basis of the right against self-incrimination granted
by the Fifth Amendment of the Constitution of the United States.
(2) Immunity.\2\ If the Commission believes that the testimony or
other information sought to be obtained from any individual may be
necessary to the public interest and that individual has refused or is
likely to refuse to testify or provide other information on the basis of
his privilege against self-incrimination, the Commission, with the
approval of the Attorney General, may issue an order requiring the
individual to give testimony or provide other information which he
previously refused to give on the basis of self-incrimination. Whenever
a witness refuses, on the basis of his privilege against self-
incrimination, to testify or provide other information in an
investigation under this part, and the person presiding over the
investigation communicates to the witness an order issued by the
Commission requiring the witness to give testimony or provide other
information, the witness may not refuse to comply with the order on the
basis of his privilege against self-incrimination; but no testimony or
other information compelled under the order (or any information directly
or indirectly derived from such testimony or other information) may be
used against the witness in any criminal case, except a prosecution for
perjury, giving a false statement, or otherwise failing to comply with
the order.
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\2\ This subsection shall be effective on and after such date as
section 6001 of Title 18 of the United States Code has been amended to
include the Commodity Futures Trading Commission among those agencies
which may, with the approval of the Attorney General, grant immunity to
witnesses to the extent and in the manner prescribed in 18 U.S.C. 6001
et seq.
[41 FR 29799, July 19, 1976, as amended at 61 FR 1709, Jan. 23, 1996]
Sec. 11.8 Sequestration.
(a) Sequestration of witnesses. All witnesses and potential
witnesses shall be sequestered and prohibited from being present during
the examination of any other witness unless otherwise permitted in the
discretion of the person conducting the investigation.
(b) Sequestration of counsel. When a reasonable basis exists to
believe that
[[Page 255]]
an investigation may be obstructed or impeded, directly or indirectly,
by an attorney's representation of more than one witness during the
course of an investigation, the member of the Commission or of the
Commission's staff conducting the investigation may prohibit that
attorney from being present during the testimony of any witness other
than the witness in whose behalf counsel first appeared in the
investigatory proceeding. To the extent practicable, consistent with the
integrity of the investigation, the attorney will be advised of the
reasons for his having been sequestered.
Appendix A to Part 11--Informal Procedure Relating to the Recommendation
of Enforcement Proceedings
The Division of Enforcement (``Division''), in its discretion, may
inform persons who may be named in a proposed enforcement proceeding of
the nature of the allegations pertaining to them. The Division, in its
discretion, may advise such persons that they may submit a written
statement prior to the consideration by the Commission of any staff
recommendation for the commencement of such proceeding. Unless otherwise
provided for by either the Director, a Deputy Director, the Program
Coordinator, the Chief Counsel, an Associate Director, or a Regional
Counsel of the Division, or a Regional Director of the Commission, such
written statements shall be submitted within 14 days after persons are
informed by the Division of Enforcement of the nature of the proposed
allegations pertaining to them and shall be no more than 20 pages,
double spaced on 8\1/2\ by 11 inch paper, setting forth their views of
factual, legal or policy matters relevant to the commencement of an
enforcement proceeding. Any statement of fact included in the submission
must be sworn to by a person with personal knowledge of such fact.
Statements shall be forwarded to the Director, Division of Enforcement,
Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st
Street, NW., Washington, DC 20581, with copies to the staff conducting
the investigation, shall clearly identify the specific investigation,
and, if desired, may request that the statement be forwarded to the
Commission. Similarly, persons who become involved in an investigation,
and submit a written statement on their initiative, should follow the
relevant procedures described herein. In the event the Division
recommends the commencement of an enforcement proceeding to the
Commission, any written statement will be forwarded to the Commission if
so requested. The Commission may, in its discretion, consider all, any
portion or none of the submission when it considers the staff
recommendation to commence an enforcement proceeding.
[52 FR 19501, May 26, 1987, as amended at 60 FR 49334, Sept. 25, 1995;
61 FR 1709, Jan. 23, 1996]