"Secrets" Surrounding the NASD/NYSE Merger: Did Merger Proxy Solicitation Violate Federal Securities Laws?
This month we are disclosing documents related to the NASD/NYSE merger that question whether the proxy materials used in soliciting NASD member approval of the merger may have violated the federal securities laws. A May 4, 2007 letter submitted to Chairman Cox by our counsel directs the Commission to certain highly relevant “secret” documents that were filed under seal in connection with a class action lawsuit brought by certain members of the NASD. (We were not part of that original class action but have subsequently joined.)
We believe the SEC should require NASD to come clean and produce all relevant documents related to the proxy solicitation. If NASD did not violate the requirements or spirit of the federal securities laws, this should be a painless exercise. On the other hand, the fact that NASD is spending members’ money (including ours) in a desperate legal effort to thwart disclosure is disturbing. What does NASD have to hide?
Our position has always been that this nation cannot afford to permit the brokerage industry to continue to self-regulate, self-adjudicate (through mandatory arbitration), self- insure (through SIPC), as well as even control public access to information regarding the disciplinary records of the industry. Self-regulation may have made sense in 1933 (when less than 1% of Americans had brokerage accounts) but today, when workers are virtually forced to do business with brokerages regarding their retirement planning, it makes no sense. As we have said before, the merger of the NASD and NYSE may, like the merger of Laurel and Hardy, make for good comedy. However, merging two seriously flawed (conflicted) self-regulators is tragedy and will not enhance investor protection one iota. Our original comment letter to the SEC dated April 13, 2007, opposing the NASD/NYSE merger and questioning the NASD proxy statement, is included, as is a copy of the class action lawsuit referred to above. The recent decision dismissing the class action lawsuit is provided. In addition, the Redacted Version (i.e., dangerous information hidden) of the Plaintiff's Memorandum of Law In Opposition to Defendant's Motion to Dismiss Plaintiff's Amended Complaint is provided. Finally our May 4, 2007 letter drawing the Commission’s attention to the “secret” information is provided. It is our hope that the SEC will remember that it, a true regulator, has the final responsibility for ensuring that NASD action is in the public interest
-------------------------------------------------------------------------------- Standard Investment Chartered, Inc v. NASD April 9th, 2007 http://www.benchmarkalert.com/f/07-cv-2014_Amended_Complaint_FINAL.PDF
Order Dismissing Case May 2nd, 2007 http://www.benchmarkalert.com/f/07-cv-2014_Amended_Complaint_FINAL.PDF
Redacted Version Plaintiff's Memorandum of Law In Opposition To Defendant's Motion To Dismiss Plaintiff's Amended Complaint
