|
|
 |
|
|
|
|
Committee and the NASD President have been informed of this growing resentment. Look for the NASD to take some severe action in the near future or else face a difficult situation with its market makers. |
|
|
|
|
|
|
|
|
In a 1992 memorandum, a senior NASD executive wrote that the market makers are: |
|
|
|
|
|
|
|
|
extremely frustrated and angry. Unless they get some immediate relief the subject of SOES abuse is going to come back to haunt us. |
|
|
|
|
|
|
|
|
One "possible measure" identified in that memorandum was: |
|
|
|
|
|
|
|
|
immediate prosecution of SOES violations with simultaneous suspension from SOES. I can't emphasize how important this is. Even if we bring a precise, abbreviated complaint that can get immediate relief, following up with a full investigation with all i's dotted and t's crossed. |
|
|
|
|
|
|
|
|
The NASD made substantial efforts to identify the SOES firms and closely monitor their trading activity. SOES firms were generally subjected to routine examination every year even though they shouldn't have been. Routine examinations were conducted on 1-, 2-, or 3-year cycles, depending on how the firms were classified. Firms were categorized as Level 1, 2, or 3 on the basis of various characteristics of the firm and its business. The lower the level, the more frequent the examination. SOES firms, along with other types of firms such as penny stockbrokers, were considered Level 1 firms that must be examined every year. |
|
|
|
|
|
|
|
|
Just to put this in proper focus, you should understand that Richard Ketchum, the chief operating officer of the NASD, had been quoted in the New York Times describing SOES as the most "honest" way to execute a transaction. |
|
|
|
|
|
|
|
|
The NASD staff used the lists to identify firms for which special SOES "sweep" exams were conducted. The SOES sweep examinations in January 1991, for example, were scheduled to coincide with the beginning of the Persian Gulf war because the NASD staff believed that the commencement of hostilities might result in a severe market downturn. |
|
|
|
|
|