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Dec 29, 2005 1:45 pm

(For additional information, please visit:

December 29, 2005

As with far too many undertakings of great import, time is short and much has to be done on the run and at the last minute. Under the circumstances I hope you will understand that this message has been written quickly and will likely not be as comprehensive as I would otherwise wish.

For nearly a decade I have been in the forefront of what is often referred to as the NASD Dissident Movement. I helped to plan and oversee the first contested NASD Board of Governors election (with two candidates elected), and I have served as pro bono publico Legal Counsel to subsequent dissident efforts to contest Board and local District Committee elections.

How is the NASD run? The process is simple. The NASD nominates a hand-picked slate of candidates for its few elective offices, and those candidates historically run unopposed. As to be expected, far too many of those elected officials don't seem to have much interest in biting the hand that feeds them and the NASD tends to run as a rubber-stamped company. In recent years, we've seen the dire results of such corporate governance in the private sector. It has not been a pretty picture. It is not a pretty picture at NASD either. The bureaucracy bloats unabated and its effectiveness seems to diminish in reverse relationship to its expansion. If only the organization would reach out to its critics and encourage debate. Alas, that is not the way things are done in corporate America. It's always hardball. Always about smashing dissent. Temporary window dressing to qualm the uproar.

During the past few years, unrelated dissident factions have attempted to contest District (local) and Board of Governor (national) NASD elections. The results have been mixed --- that is, until 2005. Daniel Roberts won a contested seat in District 1. Then, following on the heels of that upset, Howard Spindel overcame many NASD manuevers to gain election in District 10. A few days ago, the NASD announced (well, they hid it as best they could) that a dissident slate of candidates swept the District 7 election --- an unprecedented development in the regulators' history. So, as this year comes to an end, dissidents sit on three separate NASD Districts.

And now an even more exciting development!

On December 30, 2005, the NASD will be sending out paper ballots for its Board of Governors election. There are three dissident candidates running in this now contested election.
Mr. Richard Goble, North American Clearing (Industry Position),
Mr. Brian Kovack, Kovack Securities (Independent Firms Position), and
RADM Tyler Dedman (retired) (Public Position)

The amazing part of this dissident slate is that it was nominated by over 600 NASD Executive Representatives. More than 10 percent of the NASD's membership took the dramatic step of signing their name and that of their broker-dealer on a petition. On a petition that let the NASD know that they were fed up and not going to take it any more. On a petition that said, in effect, the years of intimidation are over. On a petition that said, in effect, we are no longer going to sit idly by while bureaucrats destroy smaller NASD brokerage firms through inept regulation and administration.

The dissident slate presents a fairly simple eight-point platform, which I commend to your consideration:

1) Expanded educational notification to Members of potential compliance problems before
any disciplinary process is forced upon you;
2) Expediting and improving the fairness of disciplinary process;
3) Lessening penalties for rule violations with no customer harm;
4) Simplifying supervisory systems with a return to the "reasonableness" standard;
5) Shortening the process requirement to expand your business;
6) Reduction on costly Rule 8210 requests for information;
7) Open and fair election process;
8) A presumption of innocence at all times.

Rather than wax prolific about my admiration and respect for this slate and its agenda, let me simply conclude with the following. Wall Street must be effectively regulated to protect the public and the industry. I do not and will never support any watering down of regulation. Nonetheless, the entire self-regulatory system has failed and it is time to throw the baby out with the bath water and create a new, national regulator more in step with the times. Outdated regulators such as the New York Stock Exchange and the NASD have had their day in the sunshine, but it is now sunset. If they could have been more effective these past few years, then they should have been. At best, the recent flurry of regulatory prosecutions is merely a public relations effort to placate a disappointed public and a betrayed industry. It is simply not appropriate to drive forward while constantly looking in the rear view mirror. And that's what is happening today.

In the absence of dramatic change, I fear that Wall Street is headed for the same fate as far too many of our once core industries. We will be overwhelmed by off-shore competition that will challenge us from the vantage point of cheaper costs of doing business but with woefully inadequate regulatory safeguards. We will gradually see the loss of mom-and-pop securities businesses in favor of what the NASD and NYSE seem to prefer --- the huge, multinational conglomerates that make millions in campaign contributions and will not hesitate to outsource as many American jobs as they can when the opportunity arises. This is the reality of Wall Street --- a political agenda that is in lock step with a regulatory agenda. It is a dangerous marriage. The regulatory community has painted all smaller business as "boiler rooms," and gone out of its way to depict the national firms as "reputable." Neither is the truth.
Please. I urge you for your future and the economic well-being of our financial markets, vote for Messrs. Goble, Kovack, and Dedman. Your vote will make a difference. This is your opportunity to voice your opinion about what you, as an NASD Member, deserve.

If you need more information, contact Richard Goble at 800 770-9049 or by email: [email protected].

Dec 29, 2005 2:40 pm

I agree that we needs a grass roots effort to overthrow the status quo. However, I dont understand what you asking of us. Please dumb is down to broker talk.

Thanks, Giff

Dec 29, 2005 2:43 pm

Just to elaborate, I do get the gist of new blood being elected already and more to come and an improved agenda is in place. I really point number 8! 

Dec 30, 2005 1:44 pm


Dumb it down?  Okay.




Good dumbing it down! Maybe I have missed out working for a big broker dealer, but how do we vote? Dont make fun, I just have never been asked before.