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Retain an independent consultant to report to the board of governors and the Commission on Compliance with respect to all of the above undertakings
The NASD proposed to operate through two subsidiaries. The market activity was separated from a new regulatory organization. NASD Regulation (NASDR), Inc., now has primary responsibility for regulatory matters. The other subsidiary, the Nasdaq Stock Market, has primary responsibility for operating the Nasdaq stock market.
The SEC, having determined that the NASD failed in its self-regulatory duties, "remedially" reorganized the NASD board to include a majority of nonindustry members. The hope is that these outside directors will follow their own independent hearts and minds and lead the NASD in a fashion congruent with their own sense of fairness and integrity.
How do nonindustry members become elected to the board if the members of the nominating committee are the same people previously in charge of the NASD? While all board members are created equal, I pray that the industry board members are not more equal. The NASD swears that members of all three of these boards were carefully selected to represent a wide range of the NASD's constituencies. I have a friend who is such a doubter that his colleagues made a baseball cap for him containing the words "We'll See" on the peak.
The NASD swears that it will not unduly influence its committee and business office system, which in the past anonymously wielded the executioner's ax of bad news toward DAET firms. This concept of balance, of industry and outside, or in some cases, a majority of nonindustry members, will allegedly be extended to certain important committees of the NASD and its subsidiaries. These include the NASD Audit Committee, the NASDR Executive Committee, the NASDR National Business Conduct Committee, the NASDR National Arbitration and Mediation Committee, the Nasdaq Executive Committee, and the Nasdaq Quality of Markets Committee. It was no accident, I believe, that no DAET firm had ever been represented on a committee at this critical juncture. These

 
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