Keith Springer
SECURITIES EXCHANGE ACT OF 1934
Rel. No. 45439 / February 13, 2002
Admin. Proc. File No. 3-10247
In the Matter of the Application of KEITH SPRINGER
For Review of Action Taken by the NEW YORK STOCK EXCHANGE, INC. |
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ORDER SUSTAINING DISCIPLINARY ACTION TAKEN
BY NATIONAL SECURITIES EXCHANGE
On the basis of the Commission's opinion issued this day, it is
ORDERED that the disciplinary action taken by the New York Stock Exchange, Inc., against Keith Springer, be, and it hereby is, sustained.
By the Commission.
Jonathan G. Katz
Secretary
Footnotes
| 1 | These charges were pursuant to NYSE Rule 476(a), which subjects members or employees of members to disciplinary sanctions if, inter alia, they engage in conduct inconsistent with just and equitable principles of trade. |
| 2 | NYSE Rule 401 requires brokers and dealers to adhere to the principles of good business practice.
NYSE Rule 401 has been read by the courts to require brokers to conduct dealings with high standards of commercial honor, consistent with just and equitable principles of trade. Sacks v. Reynolds Securities, 593 F.2d 1234, 1242 (DC Cir. 1978). |
| 3 | NYSE Rule 440 requires brokers and dealers to make and preserve books and records prescribed by the NYSE and by Exchange Act Rules 17a-3 and 17a-4.
Exchange Act Rules 17a-3 and 17a-4 require brokers and dealers to keep current books and records regarding executedsecurities transactions and customer accounts. 17 C.F.R. §§ 240.17a-3 and 240.17a-4. |
| 4 | Springer also asks that we compel the NYSE to release a memorandum prepared by the NYSE's Office of the General Counsel for the use of the NYSE Board of Directors in its review of Springer's case. Springer made this request via a separate motion on August 18, 2000, but reiterates his request in his brief. We addressed this request in a separately issued order on November, 13, 2000, in which we denied Springer's motion. Securities Exchange Act Rel. No. 43548 (Nov. 13, 2000), 73 SEC Docket 2496. |
| 5 | EPM was a wrap-fee investment program administered by Everen, in which the registered representative exercised discretionary authority over the accounts in the program. |
| 6 | A bunched order is a purchase or sale of the same security for several accounts at one time. |
| 7 | Access to the cage at Everen was limited to the wire operator and compliance personnel -- registered representatives were not allowed in the cage. |
| 8 | The time-stamp of the trading sheet by the cage thusoccurred slightly after the time-stamp by the trading desk, and trade allocations were not made until the information from the trading sheets was transmitted by the cage to the trading desk. |
| 9 | Springer did not use APL at all. Bolter's trading was almost entirely personal trading for his own account. |
| 10 | Springer's personal trading information would be listed on the trading sheet with that of his customers. |
| 11 | If the order was filled by more than one trade, the price would be averaged. |
| 12 | During the meeting Baker stepped out and called Stahlberg to see whether he agreed that Springer should be terminated. Stahlberg did. |
| 13 | These delayed allocations were not, as Springer characterized them at the hearing, "isolated instances." Complaints by traders and staff about his delay in submitting his trading documentation were so vocal and frequent that they prompted the investigation of his activities. Baker's staff uncovered 150 instances of trading activity when Springer delayed allocations. Although Bates testified and submitted records as to only eight of those instances, his testimony was that those eight were typical of the 150 discovered by Baker's staff. In any event, the eight instances analyzed by Bates at the hearing amply demonstrate misconduct. |
| 14 | Springer admits to writing these letters to Bolter, but argues that they are not admissions of wrongdoing. It is hard to see how they could be characterized otherwise. |
| 15 | Some of the evidence against Springer is circumstantial. However, circumstantial evidence can be more than sufficient to prove a violation of the securities laws. See Jonathan Feins, Exchange Act Rel. No. 41943, (Sept. 29, 1999) 70 SEC Docket 2116, 2124; Herman & MacLean v. Huddleston, 459 U.S. 375, 390 n.30 (1983) (citations omitted). |
| 16 | Keith L. DeSanto, 52 S.E.C. 316, 319 (1995), petition denied, 101 F.3d 108 (2d Cir. 1996)(Table). |
| 17 | Anthony Tricarico, 51 S.E.C. 457, 460 (1993)(citations omitted). |
| 18 | Kevin Lee Otto, Exchange Act Rel. No. 43296 (Sept. 15, 2000), 73 SEC Docket 964, 969, aff'd, 253 F.3d 960 (7th Cir.), cert. denied, 122 S.Ct. 548 (2001); Harry Gliksman, Exchange Act Rel. No. 42255 (Dec. 20, 1999), 71 SEC Docket 892, 901, appeal pending, No. 00-70141 (9th Cir.) (Gallagher); No. 00-70258 (9th Cir.) (Gliksman); Charles D. Tom, 50 S.E.C. 1142, 1145 (1992) (citations omitted). |
| 19 | Charles D. Tom, (citing Calhoun v. Bailar, 626 F.2d 145, 148-49 (9th Cir. 1980), cert. denied, 452 U.S. 906 (1981)). |
| 20 | Id. |
| 21 | See n.8 supra and accompanying text. |
| 22 | Kenneth Sonken, 48 S.E.C. 832, 835-836 (1987). |
| 23 | In 1996 Everen sued Springer to recover a portion of the bonus it advanced him when he and Bolter joined Everen. Springer counter-sued, in part charging Marcia Patik with intentional and malicious defamation. The case was eventually settled out of court. |
| 24 | In deciding on an appropriate sanction, the hearing panel found Springer's serious misconduct mitigated somewhat by Everen's failure adequately to supervise him. Everen was the subject of a separate disciplinary proceeding as a direct consequence of Springer's conduct, and consented to the imposition of a $120,000 fine and a censure.
The Committee for Review disagreed, and found that the sanctions imposed by the hearing panel were not severe enough to address Springer's "egregious misconduct." |
| 25 | Section 19 (e)(2) of the Securities Exchange Act of 1934, 15 U.S.C. § 78s(e)(2). Springer does not claim, and the record does not show, that the NYSE's action has imposed an undue burden on competition. |
| 26 | See Butz v. Glover Livestock Comm'n. Co., 411 U.S. 182, 187 (1973); Jonathan Feins, Exchange Act Rel. No. 41943 (Sept. 29, 1999), 70 SEC Docket 2116, 2131 n. 36. We note, moreover, that most of the cases on which Springer relies involved negotiated settlements. Sanctions in litigated matters are often more severe. See Brian L. Gibbons, 52 S.E.C. 791, 795 (1996), aff'd, 112 F.3d 516 (9th Cir. 1997); James Alan Schneider, 52 S.E.C. 840, 844 (1996), aff'd, 118 F.3d 1577 (3d Cir. 1997)(Table). |
| 27 | We have considered all of the contentions advanced by the parties. We have rejected or sustained them to the extent that they are inconsistent or in accord with the views expressed in this opinion. |