From: dpatch@inspex.com [mailto:dpatch@inspex.com]
Sent: Tuesday, February 24, 2004 2:42 PM
To: terri.reicher@nasd.com; robert.glauber@nasd.com; pat.clem@nasd.com;
heinej@sec.gov; donaldsonw@sec.gov; nazaretha@sec.gov; cutlers@sec.gov;
marketreg@sec.gov
Cc: judith.burns@dowjones.com; rwherry@forbes.com; gayle@investrend.com;
janderson@nypost.com
Subject: August 1996 SEC Findings against NASD - Bias against Investors.


The 1996 report by the SEC identified major flaws in the working regulation
and enforcement of it's members by the NASD.  Ultimately the NASD was found
to be biased against the investing public and was informed they must change
their attitudes if they are to be effective.  Here we are nearly a decade
later and the problems and issues we read in this document continue to
exist today.  In fact, the massive settlement issues on the books of the
Member Firms, and the ability to delay a correction for nearly 2 years for
the financial benefit of the members, clearly show the attitudes of the
NASD as unfavorable to the investing public.

Below is the summary to the document.  Also attached is the link by which
you can read the entire report dated August 1996.

http://www.sec.gov/litigation/investreport/nd21a-report.txt

This is also the link to the 2001 proposal for reforms to close a loophole
that abused investors through offshore shorting.  The NASD never followed
through with this as revenues increased at the member firms as they
executed these trades.

http://www.nasdr.com/pdf-text/rf01_85.pdf

Dave Patch


 C.   Summation

     The paramount goals for the NASD are to ensure the free flow
of competition to the Nasdaq market and to attain the
impartiality, objectivity, and public-interest orientation
statutorily required of an SRO.  The long term interests of the
Nasdaq market are to provide investors with a free and open
market where execution costs are set through dynamic competition.

To move forward as an effective SRO, the NASD must transform its
attitudes and conduct and renew its commitment to the interests
of investors and the public.  The confidence of the public and
investors in the Nasdaq market and in the NASD requires nothing
less, and investors and the public deserve nothing less.