The Financial Industry Association (FIA) applauds the NASD's announcement today in its Notice to Members 06-55 that it is revising the much-criticized Sanctions Guidelines to clearly reflect that regulatory sanctions are not supposed to be punitive. In a stunning victory for FIA's recent reform initiatives, the new NASD Chairperson and CEO Mary L. Schapiro stated that:
"NASD sanctions are intended to be remedial, not punitive," said NASD Chairman and CEO Mary L. Schapiro. "In the absence of fraud or egregious conduct, their purpose is to correct violative conduct, not to damage a firm's ability to conduct business and to serve the investing public. NASD is committed to being a vigorous regulator, but it is equally committed to fairness in the way sanctions are levied."
FIA argued during its historic contested elections last year for the very reform that NASD has finally granted. Further, members of our coalition have publicly championed this exact issue for many years --- please see, http://www.rrbdlaw.com/2006/nasddis.htm.
in which the following proposal was presented to Ms. Schapiro's predecessor in 2002 by Bill Singer and his colleagues, and was summarily rejected by the Glauber team:
IV. REGULATORY SANCTIONS
We would seek a membership vote on whether monetary sanctions should be based upon a percentage of gross revenues or similar baseline. We believe that today's system of fines is unfairly biased in favor of major, national firms. The imposition of a flat, across-the-board fine, e.g., $25,000 fine, may be a hardship on smaller firms where it may be viewed as nuisance value by a larger one.)
FIA looks forward to continued dialog with NASD and hopes to further engage Chairperson Schapiro on further matters on our reform agenda. This is proof positive that a constructive program of reform can achieve results if smaller NASD members will continue to work with us and support our efforts. We thank the Schapiro regime for its positive response to our suggestions and hope that this is but a first step in restoring faith and confidence in self-regulation.