RR Obstructs NASD Investigation
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The Securities Industry Commentator™
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April 5, 2005
Every month Wall Street’s regulators issue disciplinary decisions that fine and suspend stockbrokers and their firms --- but many of the more interesting stories get buried among the sheer volume of cases. Nationally-known regulatory lawyer Bill Singer analyzes the just-released SEC opinion In the Matter of Michael A. Rooms. http://rrbdlaw.com/2005/0504rooms.htm (an appeal of an NASD Bar for violations of the Penny Stock Rules and for obstructing an investigation).
Is it fair to permit public customers to testify against their stockbrokers solely through affidavits and not in person?
If a stockbroker can’t afford legal counsel and submits an Answer prepared by another respondent’s attorney, what happens if he subsequently argues that his responses weren’t accurate?
Is it fair to charge a stockbroker with failing to cooperate in an investigation when the NASD never personally notified him?
Should a stockbroker get some credit when sentenced if he has a clean disciplinary records, no customer complaints, and eventually told the truth?
In Rooms, the SEC dramatically suggests that “iability under the rule may possibly extend to associated persons of a firm who are aware of an 8210 request directed to the firm and seek to falsify or impede the firm's response.” Will individuals no longer have the protection of due process? Will regulators merely have to show that they “should have known” about an investigation?
RRBDLAW.com is a leading securities-industry legal/regulatory website. The content is published by Bill Singer, a veteran Wall Street regulatory lawyer who represents both the industry and the public.
As I am sure most decisions posted do not cover alot of detail, neither does mine. This NAC/SEC decision fails to state that the original panel in this hearing found, although I was liable, it was without intent and it was the Firms owner/compliance officer that was responsible for turning any and all documents over to the investigator and informing them of there origination. Throuout a 2 year examination the NASD contacted several members of my firm and customers, however, they never had ANY contact, whatsoever, with me. This decision does not dicuss the fact that, the firms owner, knew these documents were received in 1999 for 1997 transactions, and when I turned over these unsolicited letters, that were backdated, they all contained the date and time of receipt on them. The firms owner, prior to turning these letters over to regulators admitted to cutiing off this information without notifying me. This is on appeal to the tenth circuit, any case law advice would be appreciated.