SECURITIES AND EXCHANGE COMMISSION
In the Matter of the Application of
SIERRA NEVADA SECURITIES, INC.
For Review of Action Taken by the
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.
OPINION OF THE COMMISSION
REGISTERED SECURITIES ASSOCIATION -- PROHIBITION OR LIMITATION OF ACCESS TO SERVICES
Request to Amend Restrictive Agreement
Registered securities association denied member firm's application to modify restrictive agreement to allow firm to make a market in no more than 50 securities. Held, review proceeding is dismissed.
James M. Hensley, for Sierra Nevada Securities, Inc.
Alden S. Adkins and Norman Sue, Jr., for NASD Regulation, Inc.
Appeal filed: June 8, 1998
Last brief filed: September 15, 1998
Sierra Nevada Securities, Inc. ("Sierra"), a member of the National Association of Securities Dealers, Inc. ("NASD"), has applied for review of a decision by the NASD, dated May 11, 1998. The NASD denied Sierra's request to modify the terms of its restrictive agreement to permit it to make markets in the securities of no more than 50 issuers. We base our findings on an independent review of the record.
Sierra was admitted to NASD membership on July 1, 1997. As a condition of its membership in the NASD, the firm executed an agreement with the NASD ("Restrictive Agreement") limiting its business activities. The Restrictive Agreement required that Sierra operate on an agency basis, not hold customer accounts or receive funds or securities, and clear all customer transactions with a clearing broker that would maintain customer accounts and all required books and records. 1 The Restrictive Agreement incorporated by reference Sierra's business plan, dated June 4, 1997. That business plan stated that the firm intended to petition the NASD to expand its business activities to include market making, once the firm had accumulated sufficient net capital from the conduct of its brokerage business. Sierra, however, has never conducted any retail or wholesale securities business.
On October 27, 1997, Sierra requested, pursuant to NASD Membership and Registration Rule 1017, that the Director of NASD District One (the "District Director") modify the Restrictive Agreement to allow the firm to expand its business to make markets in the securities of no more than 50 issuers. Sierra stated in its application that its president, James Hensley, and his son Jeffrey Hensley, a general securities principal, would serve as the firm's traders. The application further proposedthat James Hensley would serve as the principal responsible for supervising the firm's market making activities. 2
James Hensley is 55 years old and served as an officer in the U.S. Navy for 28 years, where he was responsible for supervising personnel and managing budgets. James Hensley's securities industry experience is limited. In 1995, he was employed for five months by a firm that was never approved for NASD membership. He currently is associated with Sierra, which, as noted, has never conducted any securities business. James Hensley testified that he "tutored under" a securities trader in early 1995, but characterized this training as "inconsequential." He testified that this course of study consisted of three half-day sessions at the trader's office watching the trader conduct his business. He also corresponded with the trader and spoke with the trader on the telephone.
Jeffrey Hensley is 26 years old. During college he worked with a money manager and investment adviser. He also was employed by the same broker-dealer as his father -- i.e., the firm that applied for NASD membership but never was approved. Jeffrey Hensley was a registered representative with two different broker-dealers for a total of four months in 1995. In late 1995, he interned for three months as an unpaid and unregistered assistant to a trader at a market making firm in Arizona. He currently is associated with Sierra.
The District Director denied Sierra's application on January 6, 1998, "based on investor protection considerations." She concluded that the firm did not meet the standards for modification of the Restrictive Agreement set forth in NASD Membership and Registration Rule 1014. Specifically, she found, pursuant to Rule 1014(a)(9)(A), that Sierra did not have adequate personnel to supervise a person of Jeffrey Hensley's experience and qualifications. She also found that James Hensley, the person designated to perform the supervisory function, did not have at least one year of direct experience in market making or two years of related experience, as required by Rule 1014(a)(9)(C).
On January 28, 1998, Sierra notified the District Director that Dr. John Gallo, a business school professor, had agreed to associate with it as a supervisory principal. Although Gallo had ten years' experience as a supervisor at NASD member firms, Sierra offered no evidence that he had any experience trading or making markets in securities.
Sierra appealed the District Director's decision to the NASD's National Adjudicatory Council ("NAC"), which on May 11, 1998, affirmed the District Director's decision. The NAC also concluded that Gallo's proposed association with Sierra "cannot establish the adequacy of the firm's market making or supervision of market making absent a showing that Gallo has relevant experience in these areas."
We review the NASD's denial of Sierra's application to modify its Restrictive Agreement under Section 19(f) of the Securities Exchange Act of 1934 ("Exchange Act"). 3 Section 19 provides that any action by the NASD that "prohibits or limits any person in respect to access to services offered by [the NASD]" is subject to our review. 4 In reviewing any such prohibition or limitation of access to services by the NASD we consider whether the prohibition or limitation is in accordance with NASD rules, whether the specific grounds on which the prohibition or limitation is based exist in fact, and whether the rules are, and were applied in a manner, consistent with the purposes of the Exchange Act. 5 If we do not make any of these findings, or if we find that the alleged prohibition or limitation of access imposes any unnecessary or inappropriate burden on competition, we set aside the NASD action. 6
NASD Rules Consistent with Exchange Act
The Exchange Act recognizes the importance of establishing and enforcing standards of training and experience for broker-dealers and their personnel. Thus, Exchange Act Section 15A(g)(3)(A) 7 authorizes the NASD to restrict the NASD member ship of any broker or dealer that "does not meet such standards of . . . operational capacity or such broker or dealer or any natural person associated with such broker or dealer does not meet such standards of training, experience, and competence as are prescribed by [the NASD rules]."
NASD Membership and Registration Rules 1017 and 1014(a)(9) give effect to this mandate by requiring NASD members that wish to modify restrictions on their business activities to have in place a supervisory system adequate to conduct the business in which they intend to engage. Rule 1017 provides that an NASD member firm may apply to the Director of the NASD District in which it is located to modify a restrictive agreement, and that the District Director is to consider, among other criteria, "whether maintenance of the restriction is appropriate in light of . . . the standards set forth in Rule 1014." Rule 1014 requires that the "number, location, experience, and qualifications of supervisory personnel" be adequate in light of the number, location, experience, and qualifications of the persons to be supervised, and that each associated person designated in the business plan to perform a supervisory function have "at least one year of direct experience or two years of related experience in the subject area." 8
The NASD amended its rules August 7, 1997, to include Membership and Registration Rules 1014 and 1017. 9 Sierra claims that the NASD rules in effect in June 1997, when the firm was approved for NASD membership, should govern this matter. The firm's application, however, was not filed with the NASD until October 27, 1997. All applications to modify business restrictions received after August 7, 1997, are subject to the new rules. 10 In any event, the NASD rules in effect at the time that the NASD initially approved Sierra for membership contained provisions requiring NASD members to have adequate supervisory personnel. 11
Grounds for Denial of Application "Exist in Fact"
The NASD found that neither James nor Jeffrey Hensley had either the requisite one year of market making experience or, in the alternative, two years of experience related to market making. The record amply supports this finding. Neither James nor Jeffrey Hensley has any direct experience making markets. In addition, their experience related to market making is very limited: i.e., Jeffrey Hensley's internship as a trading assistant and James Hensley's three-day tutelage with a trader.
Sierra argues that James Hensley's military experience as a supervisor is related to supervision of market making. Acting as a market maker, however, is a highly specialized vocation, requiring compliance with complex laws and regulations. 12 A market maker that is unable to meet its financial or regulatory obligations poses a grave risk to itself, investors, other broker-dealers, and the market as a whole. 13 James Hensley's military experience does not relate to the supervision of highly technical and specialized market making activities.
Sierra also argues that the Hensleys are qualified by virtue of their being licensed by the NASD as general securities principals. Sierra asserts that, as general securities principals, both James and Jeffrey Hensley could trade or make markets at any other NASD firm "without the necessity of petitioning authorization from the bureaucracy." That the Hensleys might be able to become associated with an NASD firm already engaged in market making does little to demonstrate that Sierra Nevada has adequate personnel to supervise market making by a person of Jeffrey Hensley's experience. While registration as a general securities principal is a requirement to be a supervisor, Rule 1014(a)(9) further requires that a firm have principals with specialized training and expertise. Here, neither James nor Jeffrey Hensley has the hands-on experience making markets or the related experience required by the NASD rules.
Sierra argues that the NASD did not take into account the firm's offer to have Dr. John Gallo associate with it as a supervisory principal. Gallo has ten years experience supervising NASD member firms. Sierra, however, did not presentevidence that Gallo had any experience trading or making markets. We agree with the NASD's conclusion that Sierra has not demonstrated that Gallo's proposed association satisfies the requirements of Rule 1014(a)(9).
Sierra also complains that the NASD District Director wrongly denied its application based on "investor protection concerns." Sierra contends that the NASD did not consider "several safeguards the Firm had put in place to strengthen investor protection." 14 The only safeguard Sierra cites is its intention not to maintain customer accounts. 15 The firm's determination not to hold customer accounts is not, however, relevant to adequate supervision of market making activity. A market maker pledges to buy and sell at any time the securities in which it makes a market. 16 This function is critical to the protection of market integrity and market pricing. A market maker has to be able to assess the value of the security in which it is making a market, and its quotations must fairly reflect that assessment. Poorly conceived quotations can send erroneous information to the public, and, in extreme situations, lock or cross the market. A market maker that is not sufficiently experienced also may assume undue financial risks. If the market maker is unable to make good on these obligations, the clearing broker and the contra party and its customer are at increased risk.
Sierra further asserts that, because the issue of investor protection was not raised by the NASD when the firm was granted limited NASD membership in July 1997, the NASD cannot deny its application to become a market maker based on investor protection concerns. In July 1997, however, the NASD approved Sierra for membership only as a $5,000 broker-dealer. The firm thus was prohibited from maintaining customer accounts and making markets in securities. The NASD approval of Sierra's NASD membership was contingent on its observance of the terms of the RestrictiveAgreement. Although the firm's business plan, which was incorporated by reference into the Restrictive Agreement, stated that Sierra intended to apply to the NASD to make markets in securities, the NASD was entitled to defer assessment of the market making training, experience, and competence of Sierra's personnel until such time as Sierra formally requested to make markets.
NASD's Actions in Accordance with Exchange Act
A. Sierra claims that a member of the NAC panel that reviewed the NASD staff's denial of the firm's application was biased against Sierra because he also serves as an officer and director of Hambrecht & Quist, Inc., an NASD member firm and market maker. Sierra states that, because the panel member's compensation is related to his firm's market making profits, he ostensibly would suffer if Sierra were permitted to make markets in securities and thereby compete with Hambrecht & Quist. Sierra did not object to the member's presence on the panel at or before the hearing, however, and thereby waived any objection to his participation. We previously have made clear that a party should not "suppress his misgivings while waiting anxiously to see whether the decision goes in his favor." 17 In any event, the mere fact that the panel member is employed by a potential competitor of Sierra and has a possible general pecuniary interest in the resolution of the matter does not mean that Sierra did not receive a fair hearing. "Self-regulation of the securities industry necessarily entails adjudication by competitors." 18 Given this necessity, Sierra must demonstrate a "particularized bias or a showing of bias beyond merely being a competitor" in order to prove an impermissibleconflict of interest. 19 Sierra has not alleged any such particularized bias.
B. Sierra also states that it was not given an adequate opportunity to examine the NASD District Director who initially denied its application. Specifically, Sierra asserts that "[a]lthough the hearing was scheduled . . . weeks in advance . . . the District Director made unrelated travel plans severely restricting her availability for questioning during the hearing." Sierra, however, did not complain about the District Director's availability for questioning at the hearing. Our review of the record, moreover, shows that Sierra's counsel had substantial time to examine the District Director, and in fact stated at the hearing that he had no further questions of her. We find no denial of due process.
C. Sierra argues further that it was denied an opportunity for a fair hearing because the NASD failed to comply with NASD Membership and Registration Rule 1015, which requires that the NASD provide it with "copies of all documents that were considered in connection with" the NASD's denial of its application. Sierra complains that the NASD did not produce a draft decision letter prepared by an NASD staff member and dated December 29, 1997, that was rejected by the District Director. The draft decision letter recommended that Sierra should be allowed to make markets in not more than 25 securities, rather than the 50 securities requested in the application, given that the firm "does not have adequate supervisory resources to afford adequate customer protection." The NASD claims that it is not required to produce the draft decision letter to Sierra because the draft letter was "an internal memorandum reflecting only deliberative process and opinion" and "contained no facts not already disclosed to [Sierra]."
We disagree with the NASD'S analysis and conclude that the NASD should have produced the draft decision letter to Sierra. Our review of the record indicates that the substance of the December 29 draft letter already had been disclosed by members of the NASD staff to Sierra. This disclosure waived any privilege that the NASD might have enjoyed with respect to the December 29 draft letter. The draft decision letter simply repeats the recommendations made in an earlier NASD staff memorandumanalyzing Sierra's application, the conclusions of which were disclosed to Sierra by NASD staff. 20
However, any error was harmless. The draft decision letter contains no independent information regarding Sierra's ability to make markets in securities. As noted, the December 29 letter simply repeats the conclusions of the earlier staff memorandum. Moreover, at the hearing in this matter, both the District Director and the staff member responsible for the draft decision letter were examined by Sierra with respect to the analysis and recommendations in the letter and the earlier staff memorandum.
D. NASD Membership and Registration Rule 1014(d)(1) requires that the NASD issue a decision on an application for modification of a restrictive agreement within 30 days after the last submission of information from the applicant. Sierra states that it last submitted information to the NASD with respect to its application on December 3, 1997, and that the NASD did not deny the application until 34 days later, January 6, 1998, thereby violating Rule 1014(d)(1). Sierra, however, has not averred that it was prejudiced in any way by the NASD's alleged delay, and has not requested any specific relief. The only remedy for delay provided by Rule 1014 is an order requiring that a decision be issued immediately. Given that the NASD's decision on Sierra's application has issued, Sierra's claim is moot. 21
NASD Rules Applied Consistently with Purposes of Exchange Act
The NASD properly determined that the Hensleys' lack of market making and related experience was dispositive of Sierra's application to make markets in securities. It is consistent with the purposes of the Exchange Act to require that experienced personnel supervise market making and trading. In fact, when we approved Rule 1014(a)(9) we noted that "the NASD expects that an applicant's failure to meet the supervision requirements could be a sole basis for denying an application." 22
Sierra argues that NASD Membership and Registration Rule 1014 is inconsistent with Section 213 of the Uniform Securities Act ("Uniform Act"). 23 In states that have adopted the relevant provisions of the Uniform Act, Section 213 provides that state securities regulators may not suspend, deny or revoke the registration of a broker-dealer or its representative "solely because of lack of experience of the [broker-dealer or its representative] if [he] is qualified by training or knowledge or both." 24 The comment to Section 213 states that the provision "makes it clear that adequate training or knowledge generally may be substituted for experience." 25 We do not believe that the NASD's decision is inconsistent with the Uniform Act -- the market making "training or knowledge" of both Hensleys is minimal, and does not, we believe, serve as an adequate substitute for the requisite market making experience. In any event, by its terms, Section 213 of the Uniform Act applies only to the securities regulators of states that have adopted the relevant provisions of the Uniform Act, and not to the NASD or to this Commission.
Burden on Competition
Sierra contends that the NASD's denial of its application to modify the Restrictive Agreement imposes an unnecessary or inappropriate burden on competition. 26 We disagree. Sierra claims that the NASD seeks to exclude new market makers in order to protect the valuable franchise of existing market makers. 27 While a restriction may in theory impose a burden on competition because it limits a competitor's access to the marketplace, the issue is whether this burden is unnecessary or inappropriate, given the regulatory purpose to be served. 28 The record shows that the NASD denied Sierra's application because the market making experience of Sierra's principals was inadequate. The NASD concluded that to allow the firm to make markets in securities would put the public, other broker-dealers, and the market itself at risk. 29
Sierra cites our decision Domestic Securities, 30 and states that the NASD's denial of its application "illustrate[s] a blatant continuation of anti-competitive denial of access to services for new member firms." We believe that Domestic is inapposite. In Domestic, we set aside the NASD's denial of applicant's request to increase the number of securities in which it makes markets because the NASD did not "state the specific grounds on which" the denial is based. 31 Here, the NASD has stated that it is restricting Sierra's ability to make markets in securities because the firm's principals do not have relevant experience. Moreover, in Domestic, the firm in question had been in business for 12 years, its two principals had more than 40 years of trading experience between them, and it employed numerous experienced traders each of whom were assigned to make markets in no more than seven issues. By contrast, Sierra has never conducted any securities business, its principals have no trading experience, and it has two traders, with little or no trading experience, who wish to make a market in 50 issues.
An appropriate order will issue. 32
By the Commission (Chairman LEVITT and Commissioners JOHNSON, HUNT, CAREY and UNGER).
Jonathan G. Katz
UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Rel. No. 41330 \ April 26, 1999
Admin. Proc. File No. 3-9623
In the Matter of the Application of
SIERRA NEVADA SECURITIES, INC.
For Review of Action Taken by the
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.
ORDER DISMISSING APPEAL
On the basis of the Commission's opinion issued this day, it is
ORDERED that the appeal of Sierra Nevada Securities, Inc. of the denial of its application to modify its restrictive agreement to permit it to make a market in no more than 50 securities be, and it hereby is, dismissed.
By the Commission.
Jonathan G. Katz
1 The Restrictive Agreement required that Sierra comply with Rule 15c3-1(a)(2)(vi) under the Securities Exchange Act of 1934, 17 C.F.R. § 240.15c3-1(a)(2)(vi) (1998), which prohibits so-called "$5,000 broker-dealers" from maintaining customer accounts. It also required that the firm comply with Exchange Act Rule 15c3-3(k)(2)(ii), 17 C.F.R.
§ 240.15c3-3(k)(2)(ii) (1998), which exempts from the customer protection rule broker-dealers who clear all customer transactions with a clearing broker who maintains customer accounts and records of transactions.
2 Sierra stated that its only other associated person, Mark Christman, whom it characterized as a "reserve" principal, would not play any role in the firm's market making operations.
3 15 U.S.C. § 78s(f). See Monroe Parker Securities, Inc., Exchange Act Rel. No. 39057 (Sept. 11, 1997), 65 SEC Docket 1030, 1034 (stating that NASD denials of requests to modify restrictive agreements are reviewed by this Commission under Exchange Act § 19(f)).
4 Exchange Act § 19(d)(1), 15 U.S.C. § 78s(d)(1).
5 Exchange Act § 19(f), 15 U.S.C. § 78s(f).
7 15 U.S.C. § 78o-3(g)(3)(A).
8 NASD Membership and Registration Rules 1014(a)(9)(A) and 1014(a)(9)(C), respectively.
9 Order Approving Proposed Rules Change, Exchange Act Rel. No. 38908 (Aug. 7, 1997), 65 SEC Docket 265, 278, 62 Fed. Reg. 43,385, 43,398 (Aug. 13, 1997) (hereinafter, "Order Approving Proposed Rules Change") (approving the NASD's proposed changes to the Rule 1010 series, including NASD Membership and Registration Rules 1014(a)(9)(A) and 1014(a)(9)(C)), and finding that the new rules are consistent with the Exchange Act).
10 See id., 65 SEC Docket at 270, 62 Fed. Reg. at 43,390 (stating that effective date of amendments to Rule 1010 series is August 7, 1997).
11 See, e.g., NASD Membership and Registration Rule 1011(c)(5)(D) (July 1996) (providing that premembership interviews shall review the applicant's "capability to properly conduct the type of business intended in view of [its] . . . supervisory personnel, methods and procedures").
12 See, e.g., NASD Conduct Rule 2400 et seq. (regarding mark-ups and mark-up policy); NASD Conduct Rule 3310 et seq. (concerning bona fide quotations).
13 With regard to these regulatory obligations, the District Director testified that "[t]he transparency of the market requires prompt time reporting, accurate quotation . . . customers make decisions based on that information."
14 Sierra also believes that the District Director's denial of its application based on "investor protection concerns" is vague. We disagree. The District Director made clear in her letter denying the application and in her testimony that her "investor protection concerns" were predicated on Sierra's failure to comply with Rule 1014(a)(9). This rule is intended to protect investors and markets by ensuring that only firms with experienced supervisors are admitted to membership.
15 See Exchange Act Rule 15c3-1(a)(2)(vi), 17 C.F.R. § 240.15c3-1(a)(2)(vi) (1998); Exchange Act Rule 15c3-3(k)(2)(ii), 17 C.F.R. § 240.15c3-3(k)(2)(ii) (1998).
16 Exchange Act § 3(a)(38), 15 U.S.C. §78(c)(a)(38).
17 First Nevada Securities, Inc., 50 S.E.C. 1015, 1018 (1992) (quoting Marcus v. Director, 548 F.2d 1044, 1051 (D.C. Cir. 1976). See also Stephen R. Boadt, 51 S.E.C. 683, 685 (1993) (respondent required to challenge composition of hearing panel "at a time when it could have been remedied, if appropriate"). NASD Procedural Rule 9234 provides that a respondent may move for the disqualification of a hearing panelist "not later than 15 days after the later of when the [respondent] learned of the facts believed to constitute the disqualification; or when the [respondent] was notified of the appointment of the [p]anelist." Sierra was notified of the identity of the panel member in question and his affiliation with Hambrecht & Quist on January 27, 1998, and the hearing in this matter was held February 10, 1998.
18 Datek Securities Corp., 51 S.E.C. 542, 545 (1993).
19 Id. See also Conrad C. Lysiak, 51 S.E.C. 841, 847-48 (1993) (noting that the argument that competitors on review panels taints the panels "has been repeatedly rejected" and citing First Jersey Securities v. Bergen, 605 F.2d 690, 698-99 (3d Cir. 1979), cert. denied, 444 U.S. 1074 (1980), among other cases), aff'd 47 F.3d 1175 (9th Cir. 1995) (table).
20 The NASD staff earlier had refused to produce this memorandum as well, but were ordered to do so by the NASD's NAC. The NAC held, correctly, that any privilege enjoyed by the NASD with respect to the document had been waived by the staff's disclosures.
21 See GTE California v. FCC, 39 F.3d 940, 945-46 (9th Cir. 1994) (complaint is moot where no relief can be granted); Friends of the Earth v. Bergland 576 F.2d 1377, 1379 (9th Cir. 1978) (same).
22 See Order Approving Proposed Rules Change, supra n.9, 65 SEC Docket at 272, 62 Fed. Reg. at 43,392.
Sierra also claims that the NASD's denial of its application is "not based on any defined standard," because the NASD District Director, when testifying in this matter, failed to articulate a standard for determining the number of issues in which a firm should be authorized to make markets. We disagree with Sierra's analysis of the District Director's testimony. The District Director testified that, given the Hensleys' lack of experience, Sierra should not be authorized to make a market in even one security. In any event, the number of securities in which the firm should make markets under a set of circumstances other than those presented to us here is not material to our inquiry.
23 Uniform acts, such as the Uniform Securities Act, are approved by the National Conference of Commissioners on Uniform State Laws for adoption by individual states, in an effort to make more uniform the laws of the various states. See 7B U.L.A. at iii-iv (West 1985) (describing model acts and the National Conference of Commissioners on Uniform State Laws generally).
24 Unif. Securities Act § 213 (amended 1988), 7B U.L.A. 164 (West Supp. 1998).
25 Unif. Securities Act § 213 cmt. 3 (amended 1988), 7B U.L.A. 165 (West Supp. 1998).
26 Sierra also claims that the NASD's decision denying its request violates an NASD agreement with this Commission to "enhanc[e] market maker competitiveness." See Report Pursuant to Section 21(a) of the Securities Exchange Act of 1934 Regarding the NASD and the Nasdaq Market, Exchange Act Rel. No. 37542 (Aug. 8, 1996), 62 SEC Docket 1375, 1431 (hereinafter "21(a) Report"). For the reasons stated in this Opinion, we disagree.
27 Sierra argues simply that the NASD's anti-competitive practices are "reflected in the minuscule increase in new market making firms."
28 See Domestic Securities, Inc., Exchange Act Rel. No. 37559 (Aug. 13, 1996), 62 SEC Docket 1647, 1653 (stating that "[w]ithout a connection to a regulatory purpose, [a limitation on market making activity] appears to impose a burden on competition 'not necessary or appropriate in furtherance of the purposes'" of the Exchange Act). See also, e.g., Revcon, Inc., Exchange Act Rel. No. 39298 (Nov. 5, 1997), 65 SEC Docket 2479, 2492 (holding that SRO denial of access to services was "aimed reasonably" at an important regulatory purpose and did not burden competition unnecessarily); DHB Capital Group, Inc., Exchange Act Rel. No. 37069 (Apr. 5, 1996), 61 SEC Docket 2049, 2056 (same). Cf. Gordon v. New York Stock Exchange, 422 U.S. 659, 688-91 (1975) (holding that the antitrust laws are deemed repealed to the extent necessary to permit the securities laws to function in the manner envisioned by Congress).
29 See First Choice Securities Corp., 50 S.E.C. 1167, 1170 (1992) ("The ability of the NASD to impose [restrictions on its membership] protects the prospective member, itscustomers and other firms," and "[a]pplicants have failed to make a showing that [these restrictions], as applied to them, imposed a burden upon competition that was either unnecessary or inappropriate . . . .").
30 Exchange Act Rel. No. 37559 (Aug. 13, 1996), 62 SEC Docket 1647.
31 Id. at 1654.
32 We have considered all of the contentions made by the parties. We reject or sustain their arguments to the extent that they are inconsistent or in accord with the views expressed in this opinion.
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