NASD Loses Document Production Case

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Anonymous's picture
Anonymous

The SEC just issued what will likely be viewed as a historic rebuke of NASD's efforts to extend the reach of its Procedural Rule 8210 jurisdiction.  Rule 8210 is a constant source of friction between NASD and members --- it is the rule by which NASD demands the production of documents and testimony.
Read this somewhat odd case in which the NASD demands the production of Church documents, bars an RR for refusing to make the production, and the SEC rules in favor of the RR!
Case Analysis: SEC Appeal of Jay Alan Ochanpaugh (NASD): Rule 8210; Rule 3030; Failure to Produce Third-Party Documents

NASD Newbie's picture
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OK, so the SEC has reaffirmed the NASD's lack of power to subpoena third party documents.
The fact is that Northwestern Mutual had every right to terminate the relationship with the church guy--employment at will and all that.
They then covered themselves by notifying the NASD--such notification also has the compounding power of notifying other NASD members that the church guy might apply with. That is good.
The NASD then barred the church guy, and the church guy appealed to the SEC which found that the NASD does not have to power to subpoena the checks.
Did the SEC reinstate the church guy?  If not, then at best the celebration is hollow.  The appeal was against the lifetime bar from the industry--if that was not overturned the SEC's reminder to the NASD that they do not have subpoena power is essentially meaningless.

knucklehead's picture
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First NASDY argues the investment business with stockbrokers and now he wants to argue the law with a lawyer. This should be fun.

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rrbdlawyer wrote:
No, you cannot legally fire anyone in derogation of their First Amendment rights --- even if the business is in at at will state.  Following Newbie's logic, a business could fire any Jew or Black person (for those reasons) simply because they were at-will employees. 

An employee can be terminated for any reason, without stating the precise reason.  If an employer wants to fire a Jew for no reason other than the fact that they're Jewish the employer will cite a simple layoff--"I'm sorry Mr. Steinberg, we have to cut costs and I am going to have to let you go."
Care must be taken to not replace Mr. Steinberg with somebody who will have the same duties--so reshuffle your deck a bit, reassign duties and move on.
The NASD must retain the right to fine, censure and bar individuals who the NASD deem worthy of being fined, censured and barred.
The NASD would have been derilict in its fiduciary duty to the industry and the protection of investors had they not investigated the church guy--especially in light of the fact that Northwestern had reported the church guy as having been terminated for suspected NASD infractions.
Had the church guy simply hired on with another broker/dealer and ultimately ended up defrauding people people would be screaming about the NASD's failure to investigate.
I happen to agree that what the church guy was doing was not a violation of NASD rules--quirky, but not against the NASD rules.
What it was, however, is clearly a crime--and as a citizen I object to criminals.
Why don't you?  Why do you wring your hands and gnash your teeth because a guy who was clearly attempting to commit a criminal act was barred from the business?
Does your moral compass point in the wrong way all the time, or does it spin wildly out of control?

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rrbdlawyer wrote:Knucklehead:
I have absolutely no intention of responding to any posting from NASD Newbie --- let alone engaging him in a debate.  He or she has no interest in any dialog.  The sole purpose of posters such as NASD Newbie is masturbatory and disruptive.  I wish that everyone on this forum would shun that poster rather than give him the perverse gratification he desperately seeks. 
His numerous postings clearly underscore that he wishes to have an opinion about everything --- even when he has no idea what he is talking about or even bothered to understand the facts. Bravo Bill, Bravo!   (that emoticon posted especially for the annoyance of NASD Newbie)

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joedabrkr wrote: Bravo Bill, Bravo!   (that emoticon posted especially for the annoyance of NASD Newbie)
Joe, do you believe that the NASD should be empowered to bar a guy who was involved in a scheme to defraud the IRS?

ymh_ymh_ymh's picture
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I may as well weigh in here and say I support the NASD 100% for trying to eliminate securities fraud. It's too bad everyone at the SEC isn't more like the NASD or Roel Campos/Walter Ricciardi.
 
Now, on to more interesting matters to discuss like that mess in San Antonio. I take it everyone's read Mr. Burke's article by now.

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Counsellor, reminding the NASD that they do not have subpoena power is not an "Historic rebuke."
Instead it is a gentle reminder.
Grasping at ridiculous things like the church guy's attempt at fraud as a reson to support your silly organization is not going to make it past the smell test.
Did you stop in at SIA to ask them to join your crusade?  If not, why not--they're right there in your building you won't even have to get near the crowd across the street at Ground Zero.

Philo Kvetch's picture
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Does it strike anyone else that NASD Newbie has spent an inordinate amount of time studying, and seems to have a working knowledge of, how to circumvent regulations and the law?
Despite his posing, preening and his claims of erudition, his moral character seems to be of the lowest order.

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rrbdlawyer wrote:
No, I'm sorry, Philo, but NASD Newbie has crossed a line --- and, sadly, it doesn't even bother him.  And you wonder why I won't respond to him?

What in the world are you whining about Bill?  Crossed the line?  What line would that be?  You're right I am not bothered by slights that others imagine.
All I said is you can go anywhere in 120 B'way without having to encounter the crowds over at Ground Zero.
I'm trying to encourage you to jump on the elevator and go see the SIA--according to your online bio you were (or are) in their Compliance Division but that's not really the SIA.  You need to be dealing with the lawyers--and Gerry Quinn would be your best bet there in New York.
He could introduce you to Marc, who is probably going to be there tomorrow--normally he tries to spend two days a week in NYC and three days a week in the DC office.  Lots of Delta Shuttles to go with the 1.2 million salary.
Go see them, they'll join your crusade if what you're doing makes sense.
Use it as a test.  If they don't join you come to the realization that what you're doing is going to fail and you're wasting a lot of time.

ymh_ymh_ymh's picture
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Newbie and Bill:
I had a recent very positive experience with the SIA and think they're pretty open to having substantive and productive discussions with persons who have less than traditional views on things.
My recent experiences with them have to do with getting silly rules in Utah put on the back burner and more support for SELL side analysts who have been blackballed for not being cheerleaders.
I truly wish BOTH of you would put aside past differences you have had via this forum and smoke the peace pipe. It's possible to disagree with people and still respect their opinion and passion for this business.
 
 

knucklehead's picture
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Bill,
Isn't it true that we also have a right to NOT exercise our right to free speech? In layman's terms, some of us can shut the F up and still be within the spirit of the First Amendment.
Let's get the word out. I don't think some people know about THIS right.

ymh_ymh_ymh's picture
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Bill:
I "outed" myself over the weekend. I agree, I don't like the personal attacks against you or anyone else (especially persons who are "known" entities and not hiding behind an alias).
I like you and respect you, Bill, even if we choose not to agree on everything.
 

troll's picture
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Do you think a comment like that causes people to perceive you as a mature
rational adult? Even considering he's a lawyer, Bill strikes me as
being a pretty decent guy who tries to make a productive contribution to the
board by posting on topics where he has some knowledge.  Unlike some
folks we know who believe themselves to be knowledgeable about
EVERYTHING. No newbie, it is you who is wearing brown shoes at the
formal.  Hey I have an idea, how 'bout if you go don't to Harry's at Hanover
this afternoon and hang out with all the other ex-Wall Streeters and get
soused and reminisce about the good old days.  Take your cute little doggie
along in one of those little carry bags, oh and don't forget to trim your nose
hairs before you leave.

Indyone's picture
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Joined: 2005-05-30

Bill, check THIS out...
http://forums.registeredrep.com/forum_posts.asp?TID=3141&amp ;PN=1
Have at it, man!!!

troll's picture
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No problem Bill, and I'll keep your offer in mind if I'm ever in need.  You sound like someone I'd like to have in my corner in a time of need.  (Boy I bet Newbie's gonna jump all over that one!)It's a problem when things get to a point where when 'the man' comes by making an accusation or an implication, that you feel you're in a situation where even if you are in the right the costs of defending yourself could be so high as to be prohibitive.  It's more like extortion at that point.  Especially when that person trying to enforce the rules doesn't even fully understand the game as you are playing it.OH and the lawyer thing?  That was just easy humor that I couldn't resist!emoticons for Newbie!

knucklehead's picture
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Bill's already in our corner in our time of need. The problem is that most of us can't recognize that fact or that it's our time of need.

troll's picture
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rrbdlawyer wrote:Knucklehead:
Thanks to you too.  Well, at least I know a few folks may actually show up at my funeral and say a few nice words.I'll even get drunk at your wake.....

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rrbdlawyer wrote:Indyone:
Thank you for tossing that raw meat to me but I think I'll pass on responding to that poster.  Frankly, I suspect that poster is merely another alias for NASD Newbie --- note the poster is brand new and tends to write his postings using the same style, cadence, and grammar as NN.  Moreover, if one were to believe the alleged fact pattern, the poster is contemptible and should be fully prosecuted for both criminal misconduct and regulatory violations.
 
 I think it's likely fake as well.If not, however, the guy needs to go to his BOM.  No need for prosecution just yet, calm down tiger!  If it is to be believed, he is a rookie who just recently made a very stupid mistake.  Now he needs to avoid compounding that with another MUCH BIGGER mistake.

Indyone's picture
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rrbdlawyer wrote:Indyone:
Thank you for tossing that raw meat to me but I think I'll pass on responding to that poster.  Frankly, I suspect that poster is merely another alias for NASD Newbie --- note the poster is brand new and tends to write his postings using the same style, cadence, and grammar as NN.  Moreover, if one were to believe the alleged fact pattern, the poster is contemptible and should be fully prosecuted for both criminal misconduct and regulatory violations.
...I think you're right.  The more I reflected, the worse it looked...each response incorporates a new problem and that's just almost too perfect.  Furthermore, it follows his established pattern of creating alternative IDs and then letting them lay dormant for several months, or in this case, well  over a year, and then using them.
I should have gone with my first instinct and just had a good laugh, but just in case this moron really existed, I tried to encourage him to come clean quickly and try to fix the mess while it was still financially manageable.
I also find it amusing that so many posters pegged the imposter as Newbie...he's not nearly as clever as he thinks he is...

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