Subject: File No. SR-NASD-2003-69
From: Douglas K. Traynor
May 28, 2004
Subject: File Number SR-NASD-2003-69
May 28, 2004
In July, 2002, I contacted the NASD to have a license suspension expunged from my record, based upon information I had obtained regarding a Non-Summary Proceeding, Number ARB980006, Department of Enforcement v. Jonathan Winston Winston. That information indicated that the NASD Board had directed the Office of Hearing Officers to dismiss the proceeding against Winston on the basis that the NASD staff had no jurisdiction to bring charges for failure to pay an arbitration award, when such conduct, i.e., the failure to pay, did not commence until after the person had terminated association with a member organization. Both Winston and I had failed to pay the same arbitration award. I had filed for Vacatur in Federal court in Massachusetts regarding this arbitration decision and had advised NASD. Regardless, NASD took action against me and suspended my license for failure to pay an arbitration award.It was my contention that, since NASD had no jurisdiction under Article V, Section 4 of the NASD By-Laws to suspend my license in the first instance and the NASD Board had advised NASD staff of that fact through the Winston decision, then NASD had no legitimate basis upon which to initiate an action against me, could not suspend my license, could not consider their action as a final regulatory action and needed to advise SEC of these facts and reverse their actions against me. I had, of course, sent a copt of this letter to then SEC Chairman Harvey Pitt.
On July 23, 2002, Catherine McGuire, Chief Consel, Division of Market Regulation, SEC, wrote to me indicating receipt of my letter and that NASDR had been contacted for a copy of their response to me. When receive that communication, we will take appropriate action. I have never heard anything further fron the SEC.
On August 9, 2002, Sarah J. Williams, Assistant General Counsel, Regulatory Policy and Oversight, NASD wrote to me a totally inane letter, which, basically, told me to go to Hell.
In January, 2003, NASD issues a Special Notice to Members soliciting votes on amendments to the NASD By-Laws concerning the definition of disqualification and failure to pay arbitration awards. The last voting date was February 10, 2003. On Page 3 of this Special NTM, footnote number 3 appears. Under Endnotes, footnote 3 states, See Department of Enforcement v. Jonathan Winston, Non-Summary Proceeding No ARB980006 Office of Hearing Officers, December 15, 1998. On April 7, 2003, NASD filed a proposed rule change and on March 5, 2004, NASD filed Amendment 1 to this proposed rule change. This is he situation I brought to their attention. This is NASD covering its backside without making amends for failures..
The point is this: There are hundreds, perhaps thousands of persons who have had their licenses suspended by NASD as a final disciplinary action for failure to pay an arbitration award and the SEC reviewed those disciplinary actions without comment. Those actions made those persons subject to such actions statutorily disqualified and economically destroyed many, especially those who knew no other industry. Neither the NASD or the SEC, it would appear, has the ability to review the bases upon which an action rests. Article V, Section 4 of the NASD By-Laws is clear. But NASD staff assumed it had jurisdiction and the SEC assumed that the NASD had jurisdiction. Both were wrong.
And Im still waiting for NASD and SEC to make my situation right