March 29, 2007
On behalf of myself and other broker/dealer owners, I strongly disagree with this NASD proposal, both as to substance and process. The industry can have "one regulator" without giving up "one member one vote" for the National Board of Governors. Should this vote and proposal be approved, the investment industry will be surrendering the principle of using an SRO to regulate the members. That is, we will no longer be a "self regulatory organization" since for the most part the staff (read: staff appointed board) will drive rule making.
Furthermore as to process of the vote, NASD staff tainted the process because they added language and so called facts which were not contained in the proxy statement. Lead staff said at more than one pre-vote, informational meeting that in the event the members did not support this proposal that the SEC would step in to force consolidation.
Others will comment on what was omitted from the proxy statement, including an opinion about the rights of the minority, an examination of the impacts should the vote not succeed and viable alternatives to the proposal.
As to what NASD staff-directed practices have been doing to the membership: they have been driving members from the business; we have lost some 500 members over the past two years. Recent rules have imposed unnecessary and inappropriate layers of regulation on the small business employers across the nation. Also, prosecutions and fines imposed against the smaller broker/dealers in matters unrelated to client protection have distracted staff from client protection and have moved the members away from client services. Not much of this makes any sense. But the staff-directed National Board has not been turned from this destructive direction.
Please deny this application so as to allow the membership to regrasp the lead in the regulation/consolidation issues. We are accomplishing this as we speak with the numbers of alternative nominees/independents elected to committees, the national board and other leadership positions.
Do not allow this proposal to succeed for to do so will end 69 years of self regulation in the industry and further harm the smaller broker/dealers now crushed under the weight of inappropriate/unnecessary regulation.
Deny this application and the broker dealer community will accomplish consolidation without complications of a merger; we will regulate the 200 NYSE firms via contract.
Deny this application so as to allow to flower recent breathed-in democracy within NASD
Deny this application so as to allow growth of recent trends toward regulatory transparency.
Deny this application and give to the public what was promised 69 years ago and until recently abrogated: a self-governed, business oriented, appropriately ruled, private enterprise regulator.
Thank you for this opportunity to comment.
March 29, 2007