CFTC Proposes to Amend Its Rules Regarding Suspension or Disbarment from Appearance and Practice (Fed. Reg.)
Commentary by Bob Zwirb
The CFTC's proposal to amend its Rules Part 14 ("Rules Relating to Suspension or Disbarment from Appearance and Practice") was published in the Federal Register.
Under the proposed rule change, the CFTC may deny, temporarily or permanently, the privilege of certain persons to appear or practice before it. Additionally, the amendment clarifies the CFTC's standard for determining when an accountant has engaged in "unethical or improper professional conduct," which has been established as a basis for denying to such an accountant the privilege of appearing or practicing before the CFTC.
Comments on the proposal must be submitted by November 24, 2014.
See: 79 FR 66343.
Commentary
An interesting facet of this development is whether the CFTC intends to apply the same standard for disbarment to its own accountants. A matter from the early 2000s would seem to suggest otherwise. In June 2000, a CFTC administrative law judge ("ALJ") precluded the Assistant Director of the Division of Enforcement and another CFTC counsel of record from continuing to act as counsel in a market manipulation case after the ALJ found that they filed and certified a report in that proceeding which they knew to be false. Shortly thereafter, the Commission vacated the ALJ's order of debarment, holding that such a sanction could be imposed only for conduct that was "contemptuous" under a criminal standard. See In re Matter of Global Minerals Metals Corp, CFTC Docket No. 99-11 (June 7, 2000 and July 13, 2000).
Prior to Global Minerals, an ALJ could preclude an attorney who lied willfully in court filings from further participation in a case. CFTC Rules 10.11(b) and 10.12(f) governed in these circumstances, providing the ALJ with clear authority to debar an attorney found to have been dishonest. In addition, the ALJ enjoyed "wide latitude" to employ this sanction against an attorney for such misconduct. But in Global Minerals, where the alleged misconduct involved CFTC employees, the Commission adopted a new standard, based upon the principles for sanctioning an individual for criminal contempt pursuant to 18 U.S.C. § 401 and Rule 42(a) of the Federal Rules of Criminal Procedure. Under this new standard, hastily erected by the Commission in that moment, where it lay in a document submitted to the court, the egregiousness was not considered contemptuous and hence, not warranting debarment.