UNITED STATES OF AMERICA
|In the Matter of the Application of
For Review of Action Taken by the
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.
ORDER REMANDING PROCEEDING TO REGISTERED SECURITIES ASSOCIATION
On May 5, 2000, PalmWorks, Inc. filed an application for review of the decision of the National Association of Securities Dealers, Inc. ("NASD") to remove the quotation of PalmWorks' securities from the OTC Bulletin Board ("OTCBB"). The NASD had determined, pursuant to NASD Rules 6530 and 6540 (the "Eligibility Rules"), that PalmWorks' securities were no longer eligible for quotation on the OTCBB because the company had not registered its securities prior to the applicable deadline. On the day it filed its request, we granted PalmWorks an interim stay of the NASD's decision to provide an opportunity to determine whether a stay should be granted pending review.1
On September 15, 2000, we ordered the continuance of the stay pending our determination of PalmWorks' application for review.2 We noted that there appeared to be a strong likelihood that PalmWorks would prevail on its argument that its removal from the OTCBB is reviewable by us and that the NASD is required to accord PalmWorks some process before removing it from the OTCBB. We requested thatthe parties file briefs addressing these issues. In addition, we stated that the NASD could request that the proceeding be remanded to it for resolution pursuant to appropriate existing NASD procedures.
On September 18, 2000, the NASD informed PalmWorks that, pursuant to the NASD Rule 9700 Series, it would allow an NASD Hearing Panel to determine whether PalmWorks' securities should continue to be quoted on the OTCBB. Accordingly, on September 19, 2000, the NASD requested that this proceeding be remanded to it for resolution. The hearing currently is scheduled to take place on October 19, 2000.
PalmWorks contends that the hearing that the NASD has proposed does not provide an opportunity for meaningful or fair review because the NASD has not articulated the factors it will consider in determining whether a grace period in which to comply with the Eligibility Rules should be granted. The NASD disagrees and cites our invitation to remand the proceeding should it decide to apply existing procedures to resolve the matter.
We find it appropriate to grant the NASD's request to remand this proceeding. The NASD should have the opportunity to apply its established grievance procedures to make a determination regarding the eligibility of PalmWorks' securities for continued quotation on the OTCBB.3 At the conclusion of this proceeding, should PalmWorks remain dissatisfied with the NASD's determination, it may seek our review under the Exchange Act. We do not intend to suggest any view on the outcome.
Accordingly, IT IS ORDERED that this proceeding be, and it hereby is, remanded to the National Association of Securities Dealers, Inc.By the Commission.
1 PalmWorks, Inc., Order Granting Interim Stay, File No. 3-10200.
2 PalmWorks, Inc., Order Granting Stay and Ordering Briefs, Exchange Act Rel. No. 43294 (Sep. 15, 2000).
3 In another proceeding, J.D. American Workwear, Inc., Administrative Proceeding File No. 3-10281, the company ("JDAW") moved to stay the delisting of its securities from the OTCBB by arguing, in part, that the NASD's review procedure was unfair because the hearing panel apparently had expressed the view that it had no authority to grant JDAW an exception to or exemption from the OTCBB eligibility requirements. See Order Denying Motion For Reconsideration and Request for Emergency Stay, J.D. American Workwear, Inc., Exchange Act Rel. No. 43295 (September 15, 2000). We denied JDAW's motion, finding that JDAW had not demonstrated a likelihood of success on the merits of its application for review. We chose there, as we do so here, not to express a view on the merits of the NASD's position on the permissible scope of an NASD hearing panel's ability, under the Rule 9700 Series, to grant redress, where appropriate, to an aggrieved person.
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