FINAL ENFORCEMENT DECISION ISSUED BY THE BOARD OF GOVERNORS.

In the Matter of Guillaume Henry Andrew Fonkenell An Institution-Affiliated Party of

Bankers Trust Company New York, New York

Docket Nos. 98-032-B-I, 98-032-CMP-I

Determination on Request for Private Hearing

Background

This is an enforcement proceeding brought by the Board of Governors of the Federal Reserve System (the "Board") against Guillaume Henri Andre Fonkenell (the "Respondent") pursuant to the Federal Deposit Insurance Act (the "FDI Act"). Respondent is a former Vice President of Bankers Trust Company, New York, New York. In a Notice of Charges and of Hearing and Notice of the Assessment of a Civil Money Penalty (the "Notice") issued October 29, 1998, the Board alleged that Respondent violated the law, breached his fiduciary duty, and engaged in unsafe and unsound banking practices in connection with the marketing and sale of leveraged derivative transactions. The Notice seeks a cease and desist order and a civil money penalty against the Respondent.

In accordance with section 8(u)(2) of the FDI Act, 12 U.S.C. 1818(u)(2), the Notice advised the Respondent that any hearing held in this matter would be public, unless the Board determined that an open hearing would be contrary to the public interest. The Notice informed Respondent that he could submit a statement detailing any reasons why the heating should not be public. On January 14, 1999, Respondent duly filed a motion with the Board seeking a private hearing in this matter. Board Enforcement Counsel opposed the motion.

Discussion

In a recent case, In the Matter of Incus Co., Ltd., 85 Federal Reserve Bulletin 284 (1999), the Board set forth the standard by which such requests would be determined.

Specifically, the Board ruled that:

   Before the Board exercises its discretion to close a heating, there should
   be a substantial basis for concluding that the case reflects unusual
   circumstances that overcome the presumption in favor of open hearings. In
   general, in light of the congressional requirement that the proceeding be
   open unless "contrary to the public interest," those circumstances should
   involve serious safety and soundness concerns flowing from a public
   hearing.... [A] party seeking a closed heating should be required to
   demonstrate how the effects of this proceeding differ so significantly from
   those involving other banks in terms of the public interest as to warrant
   special treatment. Slip. op. at 3-4.

Respondent's arguments do not meet the standard set out in the Incus case. Respondent asserts that a private hearing would protect materials obtained by the Board and the Securities and Exchange Commission in the course of their investigations and maintained under seal by those agencies, and would protect the privacy and reputations of persons and firms whose conduct was the subject of investigation. He also claims that a closed hearing would assist him in obtaining information from persons who may resist providing evidence without adequate confidentiality protections. Finally, he asserts that holding the hearing in private would expedite and simplify the hearing process.

These arguments are insufficient to overcome the congressional presumption of open hearings in enforcement matters. To the extent law enforcement agencies need to protect the confidentiality of a particular document, existing regulations relating to hearing procedure provide an adequate means to do so. See 12 U.S.C. 1818(u)(6); 12 C.F.R. 263.33(b). Respondent's argument that the privacy interests of third parties would be impaired by a public hearing fails to present reasons why it would be contrary to the public interest to hold an open heating. See Incus, slip op. at 4-5. With respect to Respondent's claim that a private hearing would assist him in obtaining necessary evidence, the administrative law judge handling the proceeding is empowered to issue subpoenas requiring production of documents and attendance at depositions or at the hearing. 12 C.F.R. 263.26, 263.27, 263.34(a). Finally, as the Board has previously held, the argument that "a private hearing is likely to be resolved more efficiently than a public hearing ... could be used to justify a private hearing in most enforcement cases, a result that would be inconsistent with the intent of the statute." In the Matter of Zbinden, 80 Federal Reserve Bulletin 360, 362 (1994).

Accordingly, Respondent's request for a private heating is denied.

By Order of the Board of Governors, this 29th day of March, 1999.

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

JENNIFER J. JOHNSON Secretary of the Board3