entity until a determination has been made by the regulatory
authority to take remedial or other enforcement related action, or
unless otherwise subject to a legally enforceable demand. The
inspection, audit or investigation should be conducted at all times
with due attention to the privacy and confidentiality concerns of all
affected parties, including licensed market participants, their
directors, officers, employees, and clients.
B.
Regulatory proceedings to impose a sanction
1.
Notice and opportunity to be heard
a.
Notice of applicable law and regulation. A regulatory
proceeding to impose a sanction should only be instituted
based on the violation of laws or regulations that were in
effect at the time that the relevant activity occurred and
where the subject of the proceeding had timely notice of
them.
b.
Notice of determination to take action. Licensed market
participants should be notified in a timely manner both
when: 1) a determination has been made to hold a
regulatory proceeding concerning the conduct of that
participant; and 2) a decision in, or on the status of, that
proceeding has been made.
c.
Opportunity to be heard. Except in situations where
emergency temporary relief is necessary, in all regulatory
proceedings, licensed market participants should be given a
reasonable opportunity to be heard and to submit, on the
record, position papers and other documentary evidence.
2.
Representation by counsel and access to evidence
a.
Right to legal counsel. The subjects of a regulatory
proceeding should have the right to have legal counsel of
their choice represent them in all meetings with, and
interviews by, regulatory authorities. A regulatory
authority should not suggest or imply that the attendance of
counsel will in any manner alter the character of the
proceedings being conducted, the level of supervisory
firms. Depending on the system, the term may encompass criminal and judicial
authorities as well as non governmental entities such as self regulatory organizations.
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