Securities Exchange Act of 1934
Rel. No. 47461 / March 7, 2003
Admin. Proc. File No. 3-10671
In the Matter of the Application of BARRY WAYNE BLANK For Review of Disciplinary Action Taken by the American Stock Exchange LLC |
ORDER SUSTAINING DISCIPLINARY ACTION TAKEN BY REGISTERED SECURITIES EXCHANGE
On the basis of the Commission's opinion issued this day it is
ORDERED that the disciplinary action taken by the American Stock Exchange LLC against Barry Wayne Blank be, and it hereby is, sustained.
By the Commission.
Jonathan G. Katz
Secretary
Endnotes
1 The Amex also charged Blank with violating Article V, Section 4(b) of the Exchange's Constitution, which prohibits fraud or fraudulent acts, based on the filing of the same affidavit. The Exchange Disciplinary Panel found that the record did not support this charge because the record did not establish that Blank acted with scienter.
2 Blank had signed a promissory note in the amount of$137,500, payable to Coleman. The record contains conflicting explanations as to why Blank owed Coleman the money.
3 As noted, the stock certificates bore a restrictive legend. The record contains conflicting explanations as to why Coleman thought the shares could be sold on the market notwithstanding the restriction on them.
4 Because the Amex's charges against Blank were based solely on the filing of the affidavit, the veracity of the representations in Blank's letter to AST is not at issue.
5 Securities Act Rule 144, 17 C.F.R. § 230.144, in relevant part, provides a non-exclusive safe harbor from registration for resales of restricted securities. In February 1997, the Commission adopted amendments to Rule 144 that became effective April 29, 1997. See Securities Act Rel. No. 7390, 62 Fed. Reg. 9242 (Feb. 28, 1997) (adoption of final rule). We take no position as to whether Rule 144 permitted public trading of the shares on April 29.
6 Blank obtained the certificate numbers from AST so that he could complete the affidavit.
7 Blank poses a hypothetical example: suppose a shareholder transferred shares, then reacquired them, and all steps necessary to have them transferred back are taken. The transfer agent sends the certificate to the shareholder, who does not receive it. Under these circumstances, he argues, it would not be false for the shareholder to sign the affidavit in the form in question even though he had at one time transferred the shares.
In Blank's hypothetical, the transferee took all necessary steps to transfer the certificate back to the original shareholder, and the transfer agent in fact sent the certificate to the shareholder. The shareholder expected to receive a certificate, which never arrived. That did not happen here. Coleman did not take steps to have the certificate sent to Blank, AST did not send a certificate to Blank, and Blank had no expectation of receiving a certificate until he filed the affidavit.
8 We take no position as to whether Blank was indeed the rightful owner of the shares when he signed the affidavit.
9 See Section 19(e)(2) of the Exchange Act, 15 U.S.C. § 78s(e)(2). Blank does not argue, and the record does not show, that the sanctions impose a burden on competition.
10 The Amex does not have published sanction guidelines. By May 10, 2001, when the Panel issued its decision, the NASD had published revised Sanction Guidelines. Those revised Guidelines were effective as of April 10, 2001, and applied to all NASD disciplinary actions pending as of that date. NASD Notice to Members 01-27. The sanctions for falsification of records and negligent misrepresentation were not changed in any relevant respect in the 2001 revision.
11 We note that, although the panel expressed its view that the sanction should be drawn "from the high end" of the ranges recommended in the Guidelines, the monetary sanction is in the middle of the range recommended for falsification of records and the suspension is far shorter than the maximum recommended for such a violation.
12 We have considered all of the parties' contentions. We have rejected or sustained them to the extent that they are inconsistent or in accord with the views expressed herein.