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Summary
When does the Commission have jurisdiction over a NASD action? Only when the order is final and imposes a disciplinary sanction, denies membership, prohibits or limits access to NASD services, or bars a person from association.
Wedbush appealed a NASD hearing officer decision finding the firm had failed to make full payment of an arbitration award that totaled $3.8 million. The firm's registration was ordered suspended unless it provided documentary evidence it had paid the award by a specified date. Wedbush paid the award by that date and the suspension therefore did not take effect. It nevertheless appealed to the Commission, claiming the decision was wrong and that it was denied due process by the hearing officer.
The Commission dismissed the appeal. The NASD argued that the Commission has no jurisdiction over the appeal as it was not the type of proceeding covered by Section 19 of the Exchange Act which gives the Commission jurisdiction over NASD sanctions of various types. Wedbush was not subject to a final NASD disciplinary decision appealable to the Commission because the suspension never went into effect. Nor did the NASD's action meet any of the other jurisdictional actions covered by Section 19.
Comments
Section 19 of the Exchange Act governs Commission appellate jurisdiction over NASD appeals. The Commission will interpret the section strictly.
