[I] will hear both from fact witnesses, who can testify to events that are relevant to the allegations in the order instituting proceedings or Respondents' defenses, and character witnesses, who can speak to the character and integrity of a Respondent.1= = = = =Footnote 1: If wrongdoing is found, character witnesses are important because character can inform whether one should be denied the privilege of practicing before the Securities and Exchange Commission, and can bear on whether a cease-and-desist order or a civil penalty is warranted. See Steadman v. SEC, 603 F.2d 1126, 1140 (5th Cir. 1979), aff'd on other grounds, 450 U.S. 91 (1981) (concerning a respondent's sincerity about keeping away from future violations and recognition of wrongdoing); see also 15 U.S.C. § 78u-2(c)(5), (6) (concerning the need for deterrence and other matters that justice requires).
Respondents should be aware that under the Securities and Exchange Commission's Rules of Practice, they are permitted to present evidence of an inability to pay, which I can consider in my discretion as a mitigating factor in deciding whether to grant any Division request to impose monetary sanctions. 17 C.F.R. § 201.630. To be clear, claiming an inability to pay is not an admission of liability. A Respondent who establishes an inability to pay will still receive an impartial ruling on the alleged violations at issue, but, in the event that liability is established, could then benefit from my consideration of their financial circumstances.If any Respondent wishes to claim an inability to pay, he or she should submit a Form D-A (model disclosure of assets and financial information form) by November 18, 2019. The form can be found at https://www.sec.gov/alj/form-da.pdf.A Respondent should attach the following information to the Form D-A as applicable:(1) supporting documentation (such as, for example, bank statements, credit card statements, mortgage statements, corporate financial statements, etc.) for all assets, liabilities, income, and expenses claimed on the form;(2) any federal tax returns, including business returns, for 2013 and all subsequent years;(3) recent pay stubs or other documentation that demonstrate current income;(4) any other financial information they deem relevant to my consideration of their inability to pay.A Respondent who files a Form D-A may also file a motion for a protective order pursuant to Rules 322 and 630(c), 17 C.F.R. §§ 201.322, .630(c), to seal their confidential financial information from public view.
If any Respondent files a Form D-A, I will require each such Respondent to affirm, under oath, the filing at the hearing. The Division will have the right to cross-examination on inability to pay, and to raise other relevant arguments.