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SECURITIES AND EXCHANGE COMMISSION
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In the Matter of the Application of KEITH SPRINGER
For Review of Action Taken by the NEW YORK STOCK EXCHANGE, INC. |
: |
ORDER DENYING MOTION FOR RECONSIDERATION
Keith Springer, by motion dated March 1, 2002, requests that we reconsider our opinion issued in this matter on February 13, 2002 ("Opinion"). In the Opinion, we sustained disciplinary action taken by the New York Stock Exchange, Inc. against Springer for conduct occurring when he was a registered representative with Everen Securities, Inc. ("Everen"), a member firm of the New York Stock Exchange, Inc.
We found that Springer effected improper post-execution allocation of trades, delayed allocation of trades, allocated to his personal account trades with better execution than those allocated to his customers, and attempted to obstruct Everen's internal investigation of his violations. We concluded that this conduct was inconsistent with just and equitable principles of trade. We also found that Springer violated the NYSE's requirement that members adhere to the principles of good business practice by effecting improper post-execution allocation of trades which resulted in the granting of preferential treatment to himself. Finally, we concluded that Springer's conduct caused violations of NYSE and Commission rules requiring brokers and dealers to keep accurate and timely records.
Our determinations in the Opinion were based on a thorough examination of the record and consideration of a number of factors which in the aggregate led us to conclude that Springer engaged in the violations we found. Springer now asks us to reconsider ourdecision based on two alleged errors.1 As discussed below, we deny that request.
First, Springer argues that we improperly relied on "hearsay, conclusory and inadmissible testimony" concerning the "purported annualized return in his own account compared to the clients' accounts . . . ." We rejected Springer's contentions concerning the admissibility of hearsay testimony in the Opinion at 10-11.
In this motion, Springer argues that, because the Exchange's Hearing Officer ruled inadmissible evidence comparing Springer's rate of return on his personal account to that of his clients, we were precluded from considering the same evidence.2 However, the Hearing Officer admitted testimony about a report showing only Springer's rates of return. In language quoted by Springer in his motion, the Hearing Officer specifically overruled Springer's objection to the admission of this latter evidence. The Hearing Officer pointed out that evidence limited to Springer's rates of return did not fall within his prohibition on evidence showing comparative rates and that Springer's rates of return might provide relevant information.3
It was on this evidence that we relied in making the finding that Springer's 220 percent annualized rate of return "was far in excess of what even an experienced trader might be expected to achieve . . .." We concluded that this suspicious circumstance combined with others led to the conclusion that Springer was intentionally delaying the allocation of trades to his own advantage.4
Second, Springer claims that we "erroneously concluded that, in evaluating whether Springer delayed allocations, that [sic] the most reliable piece of evidence was the time stamps placed by the wire operator", citing to the Opinion at 11. The Opinion makes no such conclusion, either at page 11 or anywhere else. Rather, after stating that our findings regarding the violative nature of Springer's conduct were supported by many factors in the record, we addressed and rejected what we understood to be Springer's argument that trading desk time stamps are a more accurate reflection of the time allocation than the cage time stamps. Opinion at 11.
Springer now states that, in fact, he does not believe either time stamp accurately reflects the actual time that Springer allocated the trade. Springer argues, without citation to the record, that we ignored "credible and relevant evidence" and that "the testimony supports that [his] procedure in almost all instances was to allocate the trades before he telephoned the order to the trade desk on either the trade sheet or the order ticket." According to Springer, the wire operator time stamp reflects "not when Springer allocated the trade but, rather, when the wire operator receives the information and has an opportunity to input into Everen's systems."
This appears to be a reworking of his argument on appeal that we should credit his testimony about when the trades were allocated and not the contrary documentary evidence and testimony of other witnesses. We considered and rejected this argument, noting the great deference paid to credibility determinations by the trier of fact, the consistency of the testimony of the other witnesses against Springer and that the documentary evidence tended to corroborate that testimony. Opinion at 9-10. The evidence showed, among other things, that Spinger's trading sheets and order tickets were consistently submitted late, and that his trading for himself was consistently at prices superior to his trading for his customers. Opinion at 8. Our decision determined, based on all the record evidence, that Springer delayed his allocations to benefit himself at the expense of his customers, and Springer offers nothing here to persuade us to reconsider that determination.
Accordingly, it is ORDERED that the motion of Keith Springer that we reconsider our opinion issued in this matter on February 13, 2002 be, and it hereby is, denied.
By the Commission.
Jonathan G. Katz
Secretary
___________________________
| 1 | He asserts that the Opinion "is erroneous in numerous respects", but his reconsideration request identifies specifically only the two discussed in this order. |
| 2 | The Hearing Officer was of the view that such comparative rates of return might be unduly prejudicial to Springer, since higher rates of return in Springer's account could be explained by innocent factors such as a willingness to take greater risks in his trading. |
| 3 | Springer offers no substantiation or explanation for his claim that he was "precluded from cross-examining or introducing contrary evidence" about his rates of return. |
| 4 | Moreover, notwithstanding the Hearing Officer's evidentiary ruling, the record contains some evidence concerning comparing Springer's rates of return and those of his clients. However the extent of this evidence is the characterization by Steven Stahlberg, the branch manager of the Everen office whereSpringer worked, of Springer's rates of return as being greatly in excess of the closest client's return. The Opinion mentions that Stahlberg's discovery of this discrepancy prompted him to initiate Everen's internal investigation. Opinion at 6. The Opinion repeats this characterization to underscore its finding that Springer's success in his own account was one of several suspicious factors considered by the Commission. Opinion at 8. Our de novo review of the record permits us to make our own findings based on a review of all material in the record. See Exchange Act § 19(3), 15 U.S.C. § 78s(e). |
http://www.sec.gov/litigation/opinions/34-45944.htm
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Modified: 05/17/2002