SECURITIES AND EXCHANGE COMMISSION
In the Matter of the Application of
JOHN R. D'ALESSIO, and
For Review of Disciplinary Action Taken by the
NEW YORK STOCK EXCHANGE, INC.
ORDER DENYING REQUEST FOR A STAY AND DENYING REQUEST FOR AN ORDER DIRECTING THE NEW YORK STOCK EXCHANGE, INC. TO SUPPLEMENT THE RECORD
On April 5, 2001, the New York Stock Exchange, Inc. ("NYSE" or "Exchange") issued a final decision imposing disciplinary sanctions against John R. D'Alessio, formerly a member of the NYSE, and D'Alessio Securities, Inc. ("D'Alessio Securities" or "the Firm"), formerly a member organization of the NYSE. At all relevant times, D'Alessio was the president and owner of D'Alessio Securities and worked as a broker on the floor of the Exchange. The NYSE determined that, between June 1994 and February 1998, D'Alessio and the Firm engaged in conduct inconsistent with just and equitable principles of trade, in violation of NYSE Rule 476(a)(6), and engaged in acts detrimental to the interest or welfare of the Exchange, in violation of NYSE Rule 476(a)(7). The NYSE determined that D'Alessio: (1) had an interest in an account maintained by the Oakford Corporation ("Oakford"), a non-member firm, for which he effected transactions on the floor of the Exchange; (2) used his position on the floor to accord preferential treatment to that account; and (3) generally controlled the trading activity and was vested with, and exercised, investment discretion with regard to that account. The NYSE further found that D'Alessio and the Firm violated Section 11(a) of the Securities Exchange Act of 1934,1Exchange Act Rule 11a-1,2 and NYSE Rules 90(a), 95(a), and 111(a) by engaging in proprietary and discretionary trading on the floor of the Exchange; violated NYSE Rule 91 by crossing orders; and violated NYSE Rule 92 by trading in front of, or along with, customer orders. Finally, the NYSE determined that D'Alessio and the Firm violated NYSE Rule 440 and Exchange Act Rules 17a-3 and 17a-4 by failing to make and preserve required records.3
The NYSE censured D'Alessio and D'Alessio Securities, permanently barred them from Exchange membership or employment on the floor of the Exchange, and barred them for seven years from allied membership, from approved person status, and from employment or association in any capacity with any member or member organization. On April 11, 2001, D'Alessio and D'Alessio Securities appealed the NYSE's determination to the Commission. They have not sought from the Commission a stay of the NYSE sanctions pending resolution of their appeal.
On February 15, 2002, D'Alessio and the Firm filed a motion "to stay all proceedings" pending before the Commission in this matter. In addition, D'Alessio and the Firm request that the Commission order the NYSE to supplement the appeal record with evidence that they assert will support petitioners' allegations that the Exchange has treated them more harshly than other persons found by the Exchange to have committed similar violations. In their appeal to the Commission, petitioners have posited that the disciplinary action taken by the NYSE against them constitutes a vendetta in retaliation for D'Alessio's suit against the Exchange. D'Alessio and the Firm now assert that, since the issuance of the decision under review here, the Exchange is conducting numerous other proceedings involving similar conduct and is imposing significantly more lenient sanctions. In the instant motion D'Alessio and the Firm point to three NYSE Hearing Panel decisions as examples of more lenient treatment by the Exchange. D'Alessio and the Firm maintain that this asserted evidence that the NYSE has been treating others situated similarly to petitioners more leniently is "further proof that the proceedings herein were infected with unfairness." D'Alessio and the Firm further assert that the three Hearing Panel decisions are representative "of many such instances of more lenient treatment" of which the NYSE has knowledge. Petitioners want the record to be supplemented with information about these three Hearing Panel decisions and other like cases.
The NYSE opposes the motion, arguing that D'Alessio and the Firm have failed to make any showing of good cause for even a brief delay in the proceedings and that a supplementation order would be inappropriate and "substantially delay the instant proceedings." The Exchange advises that the issue of theappropriateness of the sanctions it imposed on D'Alessio and the Firm has been briefed fully by petitioners and the Exchange and has been submitted to the Commission for review. The NYSE represents that a number of the NYSE disciplinary matters that would be in the universe of cases to which petitioners' motion is directed are not final, but rather currently are in litigation or on appeal. The NYSE states that the three Hearing Panel decisions cited by petitioners as asserted evidence of allegedly disparate treatment are not final and that its Enforcement Division has appealed the sanction determinations to the NYSE's Board of Directors. Thus, according to the Exchange, petitioners' motion amounts to a request for indefinite postponement.
With respect to petitioners' request that the Commission order the Exchange to provide information as to the sanctions imposed in disciplinary proceedings conducted subsequent to those at issue here, the NYSE maintains that, while petitioners have alleged in their briefs to the Commission selective and harsh treatment by the Exchange, these claims have been "several times asserted and several times rejected in the proceedings below." According to the NYSE, petitioners have "ignored their burden under the Commission's Rules of Practice" to establish that the additional information they seek to adduce from the NYSE is material and in essence "have asked that [the NYSE] be required to make a showing of no misconduct."
While styled as a motion for a stay, petitioners appear to be seeking: (1) an order directing the NYSE to supplement the record in this proceeding with information as to whether disciplinary proceedings conducted subsequent to this proceeding have resulted in more lenient sanctions; and (2) a postponement of this review proceeding pending NYSE compliance with such an order. Motions to adduce additional evidence are governed by Rule of Practice 452.4 A motion to adduce additional evidence must show with particularity that such additional evidence is material and that there were reasonable grounds for failure to adduce such evidence previously. Requests for postponement are governed by Rule of Practice 161.5 Under Rule of Practice 161,the Commission may order postponements for "good cause."6 In determining whether a postponement is proper, the Commission must consider the length of the proceeding to date, the number of postponements, adjournments, or extensions already granted, the stage of the proceedings at the time of the request, and any other matters as justice may require.7 Postponements may not exceed 21 days unless the Commission finds that a longer period of time is necessary.
We have determined to deny petitioners' request to order the NYSE to supplement the record in this proceeding. D'Alessio and the Firm have not met the requirements of Rule of Practice 452. Briefing has been completed in this matter. To the extent D'Alessio and the Firm seek to supplement the record with information about sanctions imposed in final decisions issued by the Exchange prior to the submissions of briefs, that information, which is public, was available to petitioners for inclusion in their submissions to the Commission.8 To the extent petitioners seek to supplement the record regarding sanctions imposed by an Exchange Hearing Panel in matters that are on appeal to the NYSE's Board of Directors, such as the three matters cited by petitioners, these sanctions do not represent final disciplinary action of the Exchange and, accordingly, ultimately may be modified. We fail to see how such non-final authority is material to this proceeding.
We also have determined to deny petitioners' request to postpone this review proceeding because petitioners have not demonstrated good cause for a postponement of their appeal as required by Rule of Practice 161. Because timely resolution of adjudicatory proceedings promotes public confidence in the securities markets,9 we find that it would not be in the interest of justice to grant a postponement until the NYSE issues final decisions with respect to the three matters cited bypetitioners or with respect to any other matter within the scope of their request (which may be under investigation, or in litigation, or on appeal to the Exchange's Board of Directors).
Accordingly, IT IS ORDERED that D'Alessio's and D'Alessio Securities' request for an indefinite postponement of this review proceeding and for an order directing the NYSE to provide information as to whether disciplinary proceedings conducted subsequent to those at issue here have resulted in more lenient
sanctions be, and it hereby is, denied.
By the Commission.
Jonathan G. Katz
|1||15 U.S.C. § 78k(a).|
|2||17 C.F.R. § 240.11a-1.|
|3||17 C.F.R. §§ 240.17a-3 and 240.17a-4.|
|4||17 C.F.R. § 201.452.|
|5||17 C.F.R. § 201.161(a). See John Roger Faherty, Order Denying Request For an Indefinite Postponement of the Appeal, Securities Exchange Act Rel. No. 41454 (May 26, 1999), 69 SEC Docket 2634, 2637 (concluding that movant had "not shown good cause for an indefinite postponement of his appeal"); Michael J. Markowski, Order Denying Request For a Stay and Granting Extension of Time for Filing Briefs, Securities Exchange Act Rel. No. 40748 (Dec. 4, 1998), 68 SEC Docket 2156, 2160 (same).|
|6||17 C.F.R. § 201.161(a).|
|7||17 C.F.R. § 201.161(b)(1).|
|8||As a general matter, if pertinent and significant final authority comes to a party's attention after briefing to the Commission has been concluded, the party may so advise the Commission. The party should do so by letter brief, with a copy to all parties, setting forth, without argument, the supplemental citation and referring either to the page of the party's brief to which the citation relates or to a point argued orally. Cf. Fed. R. App. P. 28(j) (setting forth requirements for notifying appellate court of supplemental authorities).|
|9||See 17 C.F.R. § 201.900(a)(1).|