April 5, 2001
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UNITED ASSOCIATION OF EQUIPMENT LEASINGS STANDARDS OF
PROFESSIONAL PRACTICE AND DISPUTE RESOLUTION PROCEDURES
Kit Menkin requested me to describe the ethics program of the United Association Of Equipment Leasing (UAEL), because I have been the Chairperson of the UAEL Standards Committee during the last four years. I am pleased to have this opportunity, because it is important for everyone to know how they can use UAELs long-standing ethics program. UAEL is one of the few trade associations which has a program permitting any person or entity whatsoever (members and nonmembers, without restriction), to file an ethics Complaint against a UAEL member and have that Complaint resolved.
I. Introduction. The UAEL ethics program was initially established by the Western Association Of Equipment Lessors during the 1970s, and was revised during 1995, after the association changed its name to UAEL. The UAEL program has two parts: (A) UAEL Standards Of Professional Practice (the Standards); and (B) UAEL Dispute Resolution Procedures (the Procedures). The Standards and the Procedures are part of UAELs Bylaws and both are implemented by the UAEL Standards Committee (the Committee). The Standards and the Procedures are printed in their entirety at the end of this discussion.
II. The Standards. The Standards serve as guiding principles for everyone engaged in equipment leasing and can be flexibly applied to many situations. The Standards have several purposes, including the following: (A) to ensure fair dealing among members of UAEL; (B) to ensure fair treatment for everyone participating in equipment leasing transactions; and (c) to diminish increased governmental regulation. To achieve these purposes, the Standards are broader than legal rules, which means that certain conduct may violate one or more of the Standards, even though such conduct may not breach a contract or violate a specific statute, ordinance or regulation. The Standards are binding on UAEL members only.
III. The Committee. The function of the 9-person UAEL Standards Committee is to ensure fair application of the Standards Of Professional Practice by addressing every Standards Complaint filed with the UAEL. The composition of the Committee is intended to be a cross-section of UAEL membership as a whole, and currently is comprised of three brokers, one lessor, three funders, and two service providers.
IV. The Procedures. The UAEL Dispute Resolution Procedures reflect a balance between two conflicting goals: speed and fairness. The complaining party generally wants its matter resolved immediately. The responding party wants to make sure the matter is resolved fairly. Achieving fairness takes time, especially because most Standards disputes involve incomplete and/or inconsistent documentation by the complaining party, responding party, or both parties.
A. Complaints. The UAEL Procedures require the filing of a complaint letter (the Complaint) with UAEL, as the first step in enforcing the Standards. The written Complaint requirement has several purposes, including without limitation the fact that it provides some assurance that the complaining party will eventually have enough strength to present evidence in support of the claim being asserted. The Complaint states the facts and attaches the basic documents supporting the Standards violation allegedly committed by a particular UAEL member. As noted above, the Procedures expressly permit any person or firm to file a Complaint. The complaining party does not even have to be a party to the particular transaction involved in the Complaint. And the UAEL Standards Committee has resolved Complaints against UAEL members by non-member lessees, vendors, and brokers.
B. Conflicts Of Interest And Confidentiality. Once received, the Complaint is sent to the Committee members. However, before any Committee member may do anything on the case, each member must determine whether he or she has any conflict of interest concerning the case, and either disqualify himself/herself or submit a written statement of non-conflict. Also, any other person or entity has the right to request the Committee to disqualify any member from the case, upon stated grounds. The Committee decides that issue. Further, every Committee member has a duty to avoid discussing the merits of any particular case with anyone except other Committee members.
C. Initial Notification To Respondent. Upon sending the Complaint to the Committee, UAEL headquarters informs the respondent UAEL member that a Standards Complaint has been filed against the member.
D. Pre-Hearing And Other Proceedings. The second step in the process requires the Committee to determine whether the Complaint alleges enough facts which, if true, may constitute a Standards violation. To assist in that process, the Chairperson may appoint a Committee member to act as a Facilitator. The Facilitator reviews the Complaint, contacts the complainant to obtain any additional information thought necessary, and reports to the Chairperson. Each Committee member is eligible to act as a Facilitator, and I have assigned numerous Facilitators in the past. You do not have to be a lawyer to be a Facilitator. However, on two occasions, I have acted as the Facilitator.
Thereafter, the Committee meets, generally by teleconference. If the Committee determines that the Complaint does not involve a Standards violation, the Chairperson advises the parties, and no further action is taken, except the complaining party has a right to appeal that decision to the UAEL Board Of Directors.
If the Committee determines the Complaint may involve a Standards violation, then UAEL headquarters sends a copy of the Complaint and all supporting materials to the respondent UAEL member. The respondent has a duty to file an Answer to the Complaint. Once received by UAEL, the Answer is sent to the complainant and all Committee members, and the complainant has the right to file a Reply to the Answer.
At this point, the Facilitator becomes involved again. The Facilitator contacts both parties and obtains whatever information he/she thinks is appropriate, to enable the Facilitator to prepare a report to the entire Committee with a recommendation for the further action to be taken.
It is important to note that the Facilitator may receive indications from one or both parties that a voluntary resolution of the issues is desired on some monetary basis. In that event, the Facilitator may bring the parties together for them to discuss a voluntary resolution of their dispute. Such resolutions have been reached in several cases, with the complaining party withdrawing its Complaint in exchange for monetary consideration.
If the matter is not voluntarily resolved, the Committee promptly votes on what action to take concerning the case, after the Committee receives the Facilitators recommendation. The Committee may decide the case solely upon the written materials received, or it may decide that a hearing is necessary to resolve the case. The Committee has made both types of discussions in the past.
E. Hearing And Appeals. Sections 8 and 10 of the Procedures detail these aspects and readers are urged to read those sections below.
F. Sanctions. If the Committee decides that a Standards violation has occurred, the Committees decision also states the disciplinary or other action to be taken, which may include the following: (1) private censure consisting of attaching the decision to the respondents UAEL membership records; (2) public censure consisting of UAELs publication of the decision; (3) probationary membership with the conditions set by the Committee; (4) suspension of membership for a term determined by the Committee; and/or (5) expulsion from membership. During the time period I have been a member of the Committee, all of these sanctions have been imposed except public censure and expulsion. However, it should be noted that at least two firms against whom other adverse sanctions were imposed, subsequently removed themselves from UAEL membership.
V. Conclusion. This discussion was initially prepared during 1999. In fact, the UAEL Standards Committee thought this topic was so important that the Committee invested many hours preparing a presentation on this topic at the 1999 UAEL Annual Conference And Exposition (including a program brochure, slide show and hypotheticals). Unfortunately, very few people attended the Committees presentation even though attendance at the conference was outstanding. Regardless of whether this lack of attendance was simply a sign of better economic times during 1999, the UAEL ethics program has been and continues to be available to those who choose to use it.
AND DISPUTE RESOLUTION PROCEDURES
As a member of UAEL [United Association of Equipment Leasing], we acknowledge that there are certain fundamental standards of practice which should serve as guiding principles for all engaged in, commercial finance and equipment leasing. As a member of UAEL, we further accept the UAEL Standards of Professional Practice and the UAEL Dispute Resolution Procedures.
In the event of a dispute regarding an alleged violation of these Standards, we agree to submit that dispute to the UAEL Standards Committee for resolution in accordance with procedures adopted by the Association.
Neither an alleged violation of the UAEL Standards of Professional Practice nor any determination that an actual violation has occurred shall delay, impair or otherwise affect the rights, remedies or obligations of the parties to a commercial finance or an equipment leasing transaction.
We will at all times conduct our activities with integrity, dignity and professionalism and will encourage such conduct by others in the commercial finance and equipment leasing industry.
We will maintain respect for keen competition and for all competitors and will seek no advantage by dishonest or unethical means.
We will adhere to the principles of confidentiality and accuracy of inquiries and replies in all exchanges of financial and credit information.
We will treat in a fiduciary capacity all funds received in that capacity.
We will at all times adhere to the specific terms of our funding commitments, commission agreements, and/or purchase orders.
We will not make payments directly to employees of a vendor or other business source without that company's knowledge.
We will never knowingly make false or misleading statements or withhold information vital to a business decision and we will correctly represent our relationships with all parties to the transaction.
We will not simultaneously seek commitments from more than one funding source without revealing that action.
UAEL DISPUTE RESOLUTION PROCEDURES
(b) To submit to hearings and/or other proceedings through the Association concerning alleged violations of the Standards in any commercial finance or equipment lease transaction, as described in these UAEL Dispute Resolution Procedures ("Procedures") and as the some may be amended from time to time.
Section 2. Standards Committee
(a) There shall be a committee, known as the Standards Committee ("Committee"), which shall have nine (9) members (each of whom shall be a representative of a UAEL member). The nine (9) Committee members shall consist of the following: Chairperson; Vice Chairperson, UAEL Board Liaison; Immediate Past President of UAEL; and five (5) other individuals, one (1) of whom shall be an attorney and no more than two of whom may be members of the UAEL Board of Directors ("Board"). The President shall appoint all Committee members, subject to confirmation by the Board. If a Committee member must disqualify himself or herself from a particular case, the President shall appoint a qualified replacement from the appropriate category to satisfy these requirements for that particular case.
(c) A quorum shall consist of five (5) Committee members. The majority vote at any meeting at which a quorum is present shall constitute the determination or decision of the Committee. The Committee may conduct meetings in person, by teleconferences, or by correspondence.
Section 3. Privilege to File Complaints
Section 4. Initiating a Complaint
(b) The Complaint must be signed by the Complainant, and must do all of the following: (i) concisely state the facts supporting the alleged violation(s) of the Standards; (ii) attach the basic documents in Complainant's possession (which may include declarations) supporting the alleged violation(s); and (iii) contain a statement in substantially the following form:
The undersigned hereby requests that a hearing on the within Complaint be held through the United Association of Equipment Leasing. The undersigned hereby agrees to abide by the decision and findings of the Standards Committee and the UAEL Board of Directors. We further agree to abide by the UAEL Dispute Resolution Procedures, including without limitation the Section 11 waiver of further action against the Association and others.
(d) UAEL headquarters shall promptly send a copy of the Complaint to the Committee members to determine whether the Complaint may involve a Standards' violation. Based on that determination, the Committee may (i) dismiss the Complaint, (ii) request further information from the Complainant, (iii) proceed with plans for a hearing, (iv) conduct a proceeding based solely on written submissions, or (v) take any other action not inconsistent with these Procedures.
(e) A person shall automatically be disqualified to serve on the Committee for any case in which in which he/she (i) is a party, or (ii) is related by blood or marriage (to the fourth degree in either case) to, or is an employer, employee, partner or other business associate of a party, or (iii) has any monetary interest. Promptly after receiving a copy of any Complaint pursuant to Section 4(d) above, and before considering anything other than qualification on any case, each member of the Committee shall sign a statement that he/she is not disqualified for any of the foregoing reasons, and that he/she knows of no other reason that might prevent him/her from rendering an impartial decision.
(f) The Complainant may withdraw the Complaint, subject to forfeiture of the $100 filing fee.
Section 5. Notification
When the Complaint is sent to the Committee members, UAEL headquarters shall inform the principal contact person on record with the Association that a Complaint was filed against that UAEL member firm. All members shall abide by these Procedures, including without limitation, the Preamble, and shall be bound thereby with respect to any dispute arising during the term of such membership.
Section 6. Pre‑Hearing and Other Proceedings
(a) After the Committee receives the Complaint, and before the Committee determines whether the Complaint may involve a Standards' violation, the Chairperson may assign the case to a Committee member (a "Facilitator") to analyze whether the Complaint contains enough written information for the Committee to make such a determination. To assist the Facilitator's analysis, the Complainant must give the Facilitator all such additional documents and written information as the Facilitator requests. When the Facilitator believes he/she has enough written information to make a determination whether the Complaint may involve a Standards' violation, the Facilitator shall advise the Chairperson, and also send all such additional documents and written information (received from the Complainant) to the Chairperson at UAEL headquarters. UAEL headquarters shall promptly send copies of all such additional documents and written information to the Committee members.
(b) If the Committee determines the Complaint does not involve a Standards' violation, the Chairperson, through UAEL headquarters, shall send appropriate notification to the Complainant and each party named in the Complaint (each a "Respondent"), and no further action shall be taken.
(c) If the Committee determines the Complaint may involve a Standards' violation, the Chairperson, through UAEL headquarters, shall send a copy of the Complaint and supporting materials to each Respondent, by certified mail with return receipt requested, with notification that Respondent should file an Answer with the Committee, within twenty (20) working days after mailing such notice, and that if no Answer is made, the charges may be deemed admitted. If no Answer is received at UAEL headquarters within forty‑five (45) calendar days, a second notice shall be mailed to each Respondent, stating that if no Answer is received by UAEL headquarters within ten (10) calendar days, Respondent may be held to be in violation of the Standards and the Procedures, and subject to action by the Committee pursuant to Section 9(b) below.
(d) The Answer must be signed by the Respondent, and must do both of the following: (i) concisely state the facts showing that no violation of the Standards has occurred; and (ii) attach the basic documents in Respondent's possession (which may include declarations) supporting the position that no such violation has occurred. The Answer must be sent by certified mail with return receipt requested to the Committee Chairperson at UAEL headquarters, or be personally delivered at said location. UAEL headquarters shall promptly send a copy of any Answer to the Committee members.
(e) The Chairperson, through UAEL headquarters, shall promptly send a copy of the Answer and all supporting materials to the Complainant by certified mail with return receipt requested, and notify Complainant that Complainant may file a written Reply within twenty (20) working days after mailing such notice. The Reply shall be filed in the same manner as the Complaint, and UAEL shall send copies to Committee members and Respondent.
(f) After the Committee receives the Complaint, Answer and any Reply, the Chairperson may assign the case to a Committee member to facilitate further analysis (a "Facilitator"). This Facilitator may be the same person assigned pursuant to Section 6(a) above, if one was assigned. The Complainant and each Respondent must give the Facilitator such information and documents as the Facilitator requests. Based on the Facilitator's analysis of the Complaint, Answer, Reply, and input from the parties, the Facilitator shall prepare and present a confidential written or oral report to the Committee as a whole, with a recommendation for the further action to be taken. The Committee shall promptly vote on what action to take in response to the Facilitator's recommendation.
(h) If a dispute is not otherwise resolved pursuant to the foregoing provisions of these Procedures, the Committee may decide to hold a hearing or other proceeding, shall set a date therefor, and through UAEL headquarters, mail reasonable notice to all parties to the dispute. Said notices shall be sent by certified mail with return receipt requested, and shall include the names of the Committee members or the appropriate replacements and a complete copy of the Procedures.
(i) If the Complaint involves parties and issues in litigation (or administrative proceedings), or which subsequently are in such litigation or proceedings, the Committee may stay its proceedings pending a final determination of the issues by a court or administrative agency.
(j) The Committee may prescribe any other procedure not inconsistent with these Procedures.
Section 7. Committee Representation at Hearings and Other Proceedings
(b) Every Committee member shall endeavor to avoid discussing the case with anyone other than Committee members. If he/she does engage in such discussion before the hearing or other proceeding, he/she must disclose the fact to the parties and to the other members of the Committee immediately. After the hearing or other proceeding and before decision, no Committee member shall discuss the merits of the case with any person, other than in formal Committee session; to do so shall be a violation of membership duty.
(c) Any person or firm may file a request with the Committee to disqualify any member(s) from serving at a hearing or other proceeding, stating the grounds for disqualification. Any such request shall be filed at least ten (10) working days before the hearing or proceeding. If a majority of a Committee quorum finds any automatic ground of disqualification to be present or finds any other fact which in the majority's judgment may prevent the member from rendering an impartial decision, or appear to do so, that member shall be disqualified.
Section 8. Conduct of Hearing
(b) Hearings will be conducted informally. Each party must try to convince the Committee of the correctness of its position and no hearing will be closed until each party has had a full opportunity to do so.
(c) Each party will present its case as follows: (i) an opening statement to describe the controversy; (ii) presentation of testimony and other evidence and arguments in support of the party's position; and (iii) a closing statement to summarize evidence and arguments, and to refute points made by the opposing party.
(d) Every party has the right to present witnesses, pertinent evidence, and submit questions for the Committee to examine witnesses. There will be no cross‑examination; the Committee shall conduct all questioning of witnesses. Evidence shall be oral testimony, declarations, authenticated documents, or other papers verified to the Committee's satisfaction.
(f) Witnesses giving oral testimony shall be sworn by the Committee Chairperson. Any testimony given by a representative of a member firm which is proven to be knowingly false will be considered a violation under the Standards.
(g) When the Committee, through the Chairperson, has determined that all parties have had a fair opportunity to present all their evidence, the Chairperson will declare the hearing closed.
Section 9. Decision
(b) The Committee's decision shall state whether a Standards' violation has occurred, and the disciplinary or other action, if any, to be taken. Such action may be one or more of the following: (i) dismissal of the Complaint; (ii) private censure consisting of attaching the decision to the Respondent's UAEL membership records; (iii) public censure consisting of UAEL's publication of the decision; (iv) probationary membership with the conditions set by the Committee; (v) suspension of membership for a term determined by the Committee; and/or (vi) expulsion from membership.
Section 10. Appeals
(a) Any party to a case not satisfied with the Committee's decision, may file a written appeal to the Board by filing some at UAEL headquarters within sixty (60) days after the Committee's decision is filed. A filing fee of $100 must accompany the appeal.
(b) If an appeal is filed, the hearing on it will occur at the next scheduled Board meeting in connection with the Spring Conference or Annual Conference, which is not less than fifteen (15) working days after the appeal is filed.
(c) UAEL headquarters shall send notice to all parties to the case, by certified mail with return receipt requested, within ten (10) working days after an appeal is filed, of the time and place of the appeal hearing by the Board. At the some time, UAEL headquarters shall send to each Board member an entire copy of the file with respect to the case.
(e) At the hearing before the Board, the Committee Chairperson shall present a summary of the case. Each party shall be heard to correct the summary, if he/she wishes to do so. Each party may present to the Board his/her reasons why the Committee's decision should be followed or not, but no new evidence shall be presented.
(f) The Board shall render its decision within ten (10) working days of said hearing. The decision shall be filed with UAEL headquarters, which shall send a copy to each party. The appeal decision may adopt, reject or modify the Committee decision. The Board's decision shall be final.
Section 11. Waiver
Each member firm and its employees and representatives, by virtue of membership, waive any right of redress against the Association, the Board, the Committee, and its members for any action taken in implementation of the Standards or Procedures.
Section 12. Effect on Rights and Obligations
Neither an alleged violation of these Standards nor any determination that an actual violation has occurred shall delay, impair or otherwise affect the rights, remedies or obligations of the parties to a commercial finance or an equipment leasing transaction.