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99-68 NASD Regulation Announces Its Policy On Enforcement Of Disciplinary Sanctions During The Pendency Of Circuit Court Appeals
Legal & Compliance
NASD Regulation, Inc. (NASD Regulation®) announces its policy to refrain from enforcing disciplinary sanctions, other than bars and expulsions, during the pendency of appeals of National Association of Securities Dealers, Inc. (NASD®) disciplinary cases from the Securities and Exchange Commission (SEC) to Circuit Courts of Appeal.
Questions regarding this Notice to Members may be directed to Carla Carloni, Assistant General Counsel, Office of General Counsel, NASD Regulation, at (202) 728-8019.
In accordance with long-standing practice, NASD Regulation does not bill respondents for disciplinary fines during the course of Circuit Court appeals, notwithstanding whether sanctions are stayed in the matter. In the past, however, NASD Regulation enforced suspensions in cases in which sanctions were not stayed pending Circuit Court appeals. Thus, while NASD Regulation refrained from billing respondents for fines imposed in NASD disciplinary cases pending appeal to Circuit Courts of Appeal, it imposed suspensions and requalification requirements in the very same cases.
In order to harmonize NASD Regulation's sanction enforcement efforts in cases pending appeal to Circuit Courts of Appeal, NASD Regulation has revisited its policy and concluded that the most efficient and fairest method of dealing with the enforcement of sanctions at the Court of Appeals level (and during the pendency of petitions for certiorari or ongoing proceedings before the U.S. Supreme Court) is to follow the policy that it currently follows at the SEC appellate level, i.e., enforce only bars and expulsions (absent a stay), but refrain from enforcing all other sanctions, regardless of whether a stay is in effect. This method ensures investor protection by enforcing bars and expulsions while fairly providing respondents with the opportunity to pursue appeals without the threat of the enforcement of other sanctions.
Legally, NASD Regulation can enforce sanctions absent a stay while a matter is pending appeal in a Circuit Court of Appeals. NASD Regulation has concluded, however, that the fairer and more efficient policy is to refrain from doing so for the following reasons:
NASD Regulation believes that this policy change will ensure the fair and efficient treatment of all disciplinary respondents with respect to the enforcement of sanctions pending Circuit Court appeals.