(a) Notice of hearings.

1. (1)

   1. (A) A notice of hearing shall be served upon each party.
   2. (B) This may be by hand delivery or United States Postal Service within a reasonable amount of time prior to the hearing.
   3. (C) For purposes of this section, service of a notice of hearing by the Securities Commissioner upon any registrant may be by United States Postal Service to the business address of the registrant.

2. (2) The notice of hearing will include the following:

   1. (A) A statement of the time, place, and nature of the hearing;
   2. (B) A statement of the legal authority and jurisdiction under which the hearing is to be held;
   3. (C) The name or names of the respondents; and
   4. (D) A short and plain statement of the matters of fact and law asserted.
3. (3) The commissioner may in his or her discretion amend the notice of hearing at any stage of a proceeding provided that the parties are given reasonable notice of the amendment and allowed sufficient time to prepare their case in light of the amendment.

(b) Rights of witnesses.

1. (1) Any person who appears and testifies in a deposition under oath or in a contested case may be accompanied, represented, and advised by an attorney.

2. (2) The right to be accompanied, represented, and advised by an attorney means the right of a person testifying to have an attorney present at all times while testifying and to have an attorney do the following:

   1. (A) Advise the person before and after conclusion of the testimony;
   2. (B) Question the person briefly at the conclusion of testimony to clarify any of the answers given; and
   3. (C) Make summary notes during the testimony solely for the use of the person.

(d) Subpoenas.

1. (1)

   1. (A) At the request of any party, the commissioner shall issue subpoenas for the attendance of witnesses and production of documents for a hearing.
   2. (B) The requesting party shall specify whether the witness is also requested to bring documents and reasonably identify the documents.

2. (2)

   1. (A) A subpoena may be served in a manner as now provided for by statute or rule for the service of subpoenas in civil cases or by any form of mail addressed to the person to be served with return receipt requested and delivery restricted to the addressee or agent of the addressee.
   2. (B) The party seeking the subpoena shall have the burden of obtaining service of the process and shall be charged with the responsibility of tendering appropriate mileage fees and witness fees pursuant to Rule 45 of the Arkansas Rules of Civil Procedure.
   3. (C) The witness must be served a reasonable time prior to the hearing.
3. (3) Any motion to quash or limit the subpoena shall be filed with the commissioner and shall state the grounds relied upon.

(f) Consolidation and severance.

1. (1) If there are separate matters that involve related questions of law or fact, or identical parties, the commissioner, for good cause, upon the commissioner’s own motion or upon motion by a party, may consolidate matters if it appears that consolidation would promote the just, speedy, and inexpensive resolution of the proceedings and would not unduly prejudice the rights of a party.

2. (2)

   1. (A) The commissioner may, for good cause, upon the commissioner’s own motion or upon motion by a party, sever the proceeding for separate resolution of the matter as to any party or issue.
   2. (B) In determining whether to sever the proceeding, the commissioner shall consider whether any undue prejudice or injustice would result from not severing the proceeding outweighs the interests of judicial economy and expeditiousness in the complete and final resolution of the proceeding.

(g) Conduct of hearing.

1. (1) The commissioner presides at the hearing and may rule on motions, require briefs, and issue orders as will ensure the orderly conduct of the proceedings, provided, however, any hearing officer other than the commissioner shall not enter a dispositive order or proposed decision unless expressly authorized in writing to do so.
2. (2) All objections must be made in a timely manner and stated on the record.
3. (3) Parties have the right to participate or to be represented by an attorney in hearings or prehearing conferences related to their case.

4. (4) Subject to the terms and conditions prescribed by the Arkansas Administrative Procedure Act, Arkansas Code § 25-15-201 et seq., parties have the right to:

   1. (A) Introduce evidence on issues of material fact;
   2. (B) Cross-examine witnesses as necessary for a full and true disclosure of the facts;
   3. (C) Present evidence in rebuttal;
   4. (D) Engage in oral argument; and
   5. (E) Upon request, may submit briefs.
5. (5) The commissioner is charged with maintaining the decorum of the hearing and may refuse to admit or may expel anyone whose conduct is disorderly.

(h) Order of proceedings. The commissioner will conduct the hearing in the following manner:

1. (1) The commissioner will give an opening statement, briefly describing the nature of the proceedings;
2. (2) The parties are to be given the opportunity to present opening statements;
3. (3) The parties will be allowed to present their cases in the sequence determined by the commissioner;

4. (4)

   1. (A) Each witness must:

(i) Be sworn or affirmed by the commissioner or the court reporter; and

1. (ii) Be subject to examination and cross-examination as well as questioning by the commissioner.

   1. (B) The commissioner may limit questioning in a manner consistent with the law;
2. (5) When all parties and witnesses have been heard, parties may be given the opportunity to present final arguments; and

3. (6)

   1. (A) The commissioner may, at any time prior to the rendering of a final decision, reopen the hearing upon the motion of the commissioner or any party for good cause shown.

   2. (B) The parties shall be notified of the reopening and the hearing shall be convened not less than ten (10) days after the sending of such notice unless waived by the parties.

      1. (i) Failure to request or appear at a hearing.
4. (1) When a party fails to request a hearing within the time specified in the cease and desist order or other administrative order, the allegations against the party may be deemed admitted.

5. (2)

   1. (A) If a party fails to appear or participate in an administrative adjudication after proper service of notice, the staff may proceed with the hearing and the commissioner may render a decision in the absence of the party.
   2. (B) The allegations against the party may be deemed admitted.
   3. (C) Without further proceedings or notice to the party, the commissioner shall issue a final order.
   4. (D) The commissioner may, if deemed necessary, receive evidence from the staff as part of the record concerning the appropriateness of the amount of any civil penalty sought in the request.

(j) Appearance, practice, and withdrawal before the commissioner.

1. (1)

   1. (A) Any party appearing in any proceeding has the right, at the party’s own expense, to be represented by an attorney.
   2. (B) The attorney must be duly admitted to practice law in the State of Arkansas and in good standing with the Bar of Arkansas.
   3. (C) The commissioner, at his or her discretion, may require any attorney who desires to represent a person before the commissioner to first file with the commissioner a written declaration that he or she is currently qualified and is authorized to represent the particular party in whose behalf he or she acts.
   4. (D) Attorneys in good standing from other jurisdictions may request and, for good cause shown, be allowed to appear in a contested case, provided an attorney admitted to practice in Arkansas is present during the entire proceeding, signs all pleadings and other papers filed in the proceeding, and agrees to take full responsibility for supervising the conduct of the attorney.

2. (2)

   1. (A) The respondent may appear on his or her own behalf in a contested case.

   2. (B) Other duly authorized individuals including a partner, member, or manager of a partnership or limited liability company may appear and represent the partnership or limited liability company, and a duly authorized officer, director, or employee of any agency, institution, corporation, or authority may appear and represent the:

      1. (i) Agency;
      2. (ii) Institution;
      3. (iii) Corporation; or
      4. (iv) Authority.

3. (3)

   1. (A) Any party acting pro se shall so notify the commissioner in writing.
   2. (B) The notice of appearance shall include accurate contact information.
4. (4) Service on the attorney of record is the equivalent of service on the party represented.
5. (5) After a notice of appearance is filed by a party or attorney, copies of all subsequent pleadings, notices, rulings, applications, responses, replies, or decisions shall be provided to the person named in the notice of appearance and staff designated to represent the State Securities Department.

(k) Recording the proceedings and transcript corrections.

1. (1)

   1. (A) The responsibility to record the testimony heard at a hearing is assumed by the department.
   2. (B) Any party may request a copy of the transcript from the court reporter and the copy shall be made available to any party upon payment of the cost of the transcript.

2. (2)

   1. (A) The commissioner shall have the authority to order the transcript corrected upon a motion to correct, upon stipulation of the parties, or upon the commissioner’s own motion following notice to the parties.
   2. (B) The commissioner may call for the submission of proposed corrections and may order the corrections at appropriate times during the course of the proceedings.
   3. (C) Corrections in the official transcript may be made only to make it conform to the evidence presented at the hearing.

   4. (D) Transcript corrections may be incorporated into the record at any time during the hearing or after the close of evidence, but not more than thirty (30) days from the date of receipt of the transcript by the commissioner.

      1. (l) Evidence.
3. (1) The commissioner shall rule on the admissibility of evidence and may, when appropriate, take official notice of facts and generally recognized technical or scientific facts.

4. (2)

   1. (A) Stipulation of facts is encouraged.
   2. (B) Parties may stipulate as to any relevant matters of fact or the authentication of any relevant documents that may be entered as evidence at the commencement of or during the hearing.
   3. (C) The commissioner may make a decision based on stipulated facts.

5. (3)

   1. (A) A party seeking admission of an exhibit must provide four (4) copies of each exhibit at the hearing.
   2. (B) The commissioner must provide the opposing parties with an opportunity to examine the exhibit prior to the ruling on its admissibility.
   3. (C) All exhibits admitted into evidence must be appropriately marked and be made part of the record.

6. (4)

   1. (A) Formal exceptions to rulings on evidence and procedure are unnecessary.
   2. (B) It is sufficient that a party, at the time an evidentiary ruling is sought, makes known to the commissioner the objections to such action and the grounds for such objection.
   3. (C) The objection, the ruling on the objection, and the reasons for the ruling will be noted in the record.
   4. (D) Failure to object to the admission of evidence or any ruling constitutes a waiver of the objection.
   5. (E) The commissioner may rule on the objection at the time it is made or may reserve the ruling until the written decision.

7. (5)

   1. (A) Whenever evidence is ruled inadmissible, the party offering that evidence may submit an offer of proof on the record.
   2. (B) The party making the offer of proof for excluded or rejected oral testimony will briefly provide a summarized statement of the testimony.
   3. (C) If the excluded evidence consists of a document, record, or written form, a copy of such evidence shall be marked as part of an offer of proof and inserted in the record.

8. (6)

   1. (A) Irrelevant, immaterial, and unduly repetitive evidence will be excluded.
   2. (B) Any other oral or documentary evidence, not privileged, may be received if it is of a type commonly relied upon by reasonably prudent people in the conduct of their affairs.

9. (7)

   1. (A) The commissioner may base the finding of facts upon reasonable inferences derived from the evidence received.
   2. (B) The finder of fact shall have the authority to employ the staff’s experience, technical competence, and specialized knowledge in evaluating the evidence presented at the hearing for the purpose of making findings of fact and arriving at a decision in any contested case.

10. (8) At any stage of the hearing, the commissioner may call for further evidence upon any issue and require that such evidence be produced by the relevant party or may authorize any party to file specific documentary evidence as part of the record, either at the hearing or within a specified time, provided every party shall be afforded a reasonable opportunity to review and rebut or object to such evidence.

    1. (m) Orders.

11. (1) Generally.

    1. (A) All decisions and orders of the commissioner concluding a proceeding shall be in writing and served on all parties.

    2. (B)

       1. (i) The order will include a recitation of facts found based on testimony, other evidence presented, and reasonable inferences derived from the evidence pertinent to the issues of the case.
       2. (ii) It will also state conclusions of law and directives or other dispositions entered against or in favor of the respondent.

    3. (C)

       1. (i) The order will be served personally or by mail on the parties.
       2. (ii) If respondent is represented by an attorney, service of the order on respondent’s attorney shall be deemed service on the respondent.

12. (2) Summary order. In addition to the procedures set forth in subsections (a) and (j) of this section, subdivision (m)(1) of this section, and 23 CAR §§ 300-604, 300-607, and 300-608, the commissioner may issue a summary order for the following:

    1. (A) Whether a person is an applicant, registrant, issuer, or other person, to cease and desist from an act or practice or apply directly to a court of competent jurisdiction for such relief as the commissioner deems appropriate pursuant to Arkansas Code § 23-42-209 of the Arkansas Securities Act, Arkansas Code § 23-42-101 et seq., if the following occurs:

       1. (i) It is in the public interest; and
       2. (ii) The commissioner deems it necessary;

    2. (B)

       1. (i) To retroactively deny or suspend effectiveness of a registration statement filed pursuant to Arkansas Code § 23-42-402 of the Arkansas Securities Act if the required notification and pricing amendment is not received.
       2. (ii) If a summary order is entered, the commissioner must promptly notify the registrant by electronic mail (email), facsimile, or telephone call followed by a letter.
       3. (iii) If the registrant proves compliance, the summary order is void as of the time of its entry.
       4. (iv) The summary order remains in effect pending final determination of a proceeding to deny or revoke the effectiveness.
       5. (v)

(b) (b) If no hearing is requested, the summary order will remain in effect until modified or vacated by the commissioner; and

1. (C)

   1. (i) To suspend or postpone registration of an applicant or registration filed pursuant to Arkansas Code § 23-42-301 of the Arkansas Securities Act if the staff learns of an applicant’s or registrant’s failure to comply with the Arkansas Securities Act or this part or when it is determined that the applicant or registrant might be subject to one (1) of the provisions set forth in Arkansas Code § 23-42-308(a) of the Arkansas Securities Act or a cancellation of registration pursuant to Arkansas Code § 23-42-308(d) of the Arkansas Securities Act.

      1. (ii) If such a summary order is entered, the commissioner must promptly notify the applicant or registrant (as well as the employer or prospective employer if the applicant or registrant is an agent or an investment adviser representative).
      2. (iii)

(b) (b) A requested hearing shall be held within fifteen (15) days of receipt of a written request, but if no hearing is requested and none is ordered by the commissioner, the order will remain in effect as a final order.

1. (iv) If a hearing is requested or ordered, the summary order remains in effect pending final determination of a proceeding to deny or revoke the application or registration as a result of the hearing.
2. (3) Stop order. A stop order, as discussed in subdivision (m)(2)(B) of this section, referring to Arkansas Code § 23-42-402 of the Arkansas Securities Act, may mean a final order entered in disposition of the institution of a proceeding except as that term is used in Arkansas Code § 23-42-509 of the Arkansas Securities Act.
3. (4) Amended order. All orders may be vacated or modified if conditions change or it is otherwise in the public interest to do so.

4. (5)

   1. (A) Nothing shall prohibit or restrict informal disposition of a pleading or order by stipulation, settlement, consent, or default in lieu of a formal or informal hearing on the matter or in lieu of sanctions imposed.
   2. (B) An order shall be entered if administrative proceedings have been instituted or a pleading filed.
   3. (C) All orders shall be public.