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NASD Sanctions Upheld

Kevin M. Glodek, Exchange Act Rel. 60937, November 4, 2009

Time since appeal – 7 months 11 days
Time since last brief – 4 months 2 days

Glodek was found by the NASD to have committed fraud by making false statements to customers. He was fined $25,000 and suspended from association for six months. He did not dispute the finding of violations or the fine. He did appeal the suspension.

Glodek had a consulting agreement with a company by which he received stock in a company. He recommended the stock to customers making predictions that the company's stock would more than double within a few months. He also claimed the stock, then trading over-the counter would soon be listed on the Amex. Also, despite the company had significant unpaid payroll tax liabilities to the IRS, he claimed to customers the company was debt free.

Predictions of substantial and specific price increase of a stock are fraudulent unless there is a reasonable basis for them.

Glodek argued that it was improper for the NASD to increase the suspension above that imposed by the initial hearing panel. The Commission rejected this claim. It also disagreed with his claim that NASD should have justified its upward departure as the final sanction was within published NASD sanction guidelines. The Commission further noted that a lack of previously disciplinary history is not a mitigating factor.

The statute requires the SEC to uphold NASD sanctions if it finds they achieve the goal of being both remedial and suitable to deter future violations and not excessive or oppressive.