[Federal Register Volume 61, Number 223 (Monday, November 18, 1996)]
[Rules and Regulations]
[Pages 58627-58628]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-28842]
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COMMODITY FUTURES TRADING COMMISSION
17 CFR Part 3
Amendment to Interpretative Statement Regarding Statutory
Disqualification From Registration
AGENCY: Commodity Futures Trading Commission.
ACTION: Publication of Amended Interpretative Statement.
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SUMMARY: The Commodity Futures Trading Commission has determined to
amend its interpretation of the ``for other good cause'' standard
contained in the Commission's Interpretative Statement With Respect to
Section 8a(2) (C) and (E) and Section 8a(3) (J) and (M) of the
Commodity Exchange Act. The amendment revises the existing statement by
clarifying that violation of a settlement agreement with a contract
market, registered futures association or other self-regulatory
organization to withdraw from registration and/or not to apply for
registration constitutes ``other good cause'' for adverse registration
action under Section 8a(3)(M) of the Commodity Exchange Act, 7 U.S.C.
12a(3)(M).
EFFECTIVE DATE: November 18, 1996.
FOR FURTHER INFORMATION CONTACT:
Stephen Mihans, Senior Attorney, Division of Enforcement, Commodity
Futures Trading Commission, Three Lafayette Centre, 1155 21st Street,
NW, Washington, DC. 20581. Telephone: (202) 418-5399.
SUPPLEMENTARY INFORMATION: The Commodity Futures Trading Commission
(``Commission'') has determined to amend its Interpretative Statement
With Respect to Section 8a(2) (C) and (E) and Section 8a(3) (J) and (M)
of the Commodity Exchange Act (``Interpretative Statement'') by adding
language clarifying that an applicant's violation of an explicit
agreement, made in the context of a settlement with a contract market,
registered futures association or other self-regulatory organization
(``SRO''), to withdraw from registration and/or not to apply for
registration constitutes ``other good cause'' for adverse registration
action under section 8a(3)(M) of the Commodity Exchange Act, 7 U.S.C.
12a(3)(M).\1\
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\1\ The Interpretative Statement is printed as Appendix A
following the Commission's part 3 (Registration) rules, 17 CFR part
3.
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The Commission's Interpretative Statement, among other things,
provides guidance on the scope and meaning of section 8a(3)(M), 7
U.S.C. 12a(3)(M), by identifying situations in which ``other good
cause'' to affect a person's registration exists. \2\ The Commission,
by this release, amends the Interpretative Statement to describe an
additional situation in which ``other good cause'' will be deemed to
exist--namely, when a person, in a settlement with a contract market,
registered futures association or other SRO, agrees to withdraw from
and/or not to apply for Commission registration and then fails to
withdraw from registration or applies for registration in violation of
that agreement. Neither the existing
[[Page 58628]]
Interpretative Statement nor the statutory bases for adverse
registration action set forth in Section 8a of the Act, 7 U.S.C.
Sec. 12a, establish a specific basis for denying or otherwise affecting
registration in this situation. The Commission is publishing its
amendment of the 8a(3)(M) Interpretative Statement to inform the public
that failure to comply with an exchange or other SRO settlement
agreement to withdraw from registration and/or not to apply for
registration constitutes ``other good cause'' to deny or otherwise
affect registration under Section 8a(3)(M).
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\2\ It states, for example, that the Commission interprets
paragraph (M) as authorizing the Commission to refuse to register a
person if he or she is the subject of an administrative action
brought by the Commission to revoke the person's existing
registration, pending a final determination in that proceeding.
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List of Subjects in 17 CFR Part 3
Registration, Statutory disqualifications.
PART 3--[AMENDED]
For the reasons set forth above, part 3 of title 17 of the Code of
Federal Regulations is amended as follows:
1. The authority citation for Part 3 continues to read as follows:
Authority: 7 U.S.C. 1a, 2, 4, 4a, 6, 6b, 6c, 6d, 6e, 6f, 6g, 6h,
6i, 6k, 6m, 6n, 6o, 6p, 8, 9, 9a, 12, 12a, 13b, 13c, 16a, 18, 19,
21, 23; 5 U.S.C. 552, 552b.
Appendix A to Part 3 [Amended]
2. Appendix A to part 3 is amended by adding a new paragraph after
the paragraph which bears the heading ``Section 8a(3)(M),'' to read as
follows:
* * * * *
Similarly, the Commission interprets paragraph (M) to authorize the
Commission to refuse to register, register conditionally or otherwise
affect the registration of any person if such person has consented, in
connection with an agreement of settlement with a contract market, a
registered futures association, or any other self-regulatory
organization, to comply with an undertaking to withdraw all forms of
existing or pending registration and/or not to apply for registration
with the National Futures Association or the Commission in any
capacity. Such person's effort to violate his or her prior undertaking
to withdraw from and/or not to apply for registration shall be
considered to constitute ``other good cause'' under paragraph (M). The
Commission believes that allowing such a person to be registered would
be inappropriate and inconsistent with the intention of parties to the
prior settlement agreement. The failure to withdraw or the attempt to
register in the face of such an undertaking would indicate the lack of
fair and honest dealing which the Commission believes constitutes
``other good cause'' for denying, revoking or conditioning registration
under the Act. The Commission also believes that allowing registration
in such a situation would be inconsistent with both Section 8a(2)(A),
which authorizes the Commission to refuse to register, to register
conditionally, or to revoke, suspend or place restrictions upon the
registration of any person if such person's prior registration has been
suspended (and the period of such suspension has not expired) or has
been revoked, and Section 8a(3)(J), which authorizes the Commission to
refuse to register or to register conditionally any person if he or she
is subject to an outstanding order denying, suspending, or expelling
such person from membership in a contract market, a registered futures
association, or any other self-regulatory organization.
Issued in Washington, D.C., on October 31, 1996.
Jean A. Webb,
Secretary to the Commission, Commodity Futures Trading Commission.
[FR Doc. 96-28842 Filed 11-15-96; 8:45 am]
BILLING CODE 6351-01-M