Friday, June 1, 2007

SEC Rejects Broker's Anti-NASD Complaint

Here is an interesting tidbit - not so much for the actual story, but for what appears to be lurking under the surface.

According to the article, Sky Capital, an NASD member firm, filed a complaint with the SEC against the NASD alleging that the NASD staff employed delay tactics in reviewing its membership application and was biased against the firm's chief executive.

The SEC kicked the complaint, but not because it did not have substance, but rather because the firm did not exhaust its administrative remedies - you have to follow the chain of command, and the complaint should have first gone to the National Adjuicatory Council.

So, we may not have seen the last of this dispute. The NASD is in a tough spot, since they obviously need to make sure that the approval of new firms and new ownership is appropriate, but we have all seen the delays that the NASD can cause.

The article blows off the damages, stating that the firm was ultimately approved. That is overly simplistic, given the severe damage that is caused by NASD delays - even when they do not have a bias against anyone. One recent change in control of a BD that I was involved in took 6 months to get approval, with an application that was complete, and owners with clean licenses.

Six months of limbo is damage. I can only imagine what damage was caused by a longer, and more organized delay, if that is truly what happened.
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