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Commission Continues 35 Year Old Administrative Bar

Mark S. Parnass, Exchange Act Rel. 65261, September 2, 2011

Parnass moved to vacate a Commission order issued in 1975 that barred him from association with any broker, dealer, investment company or investment adviser. He was allowed to associate with a broker-dealer in a non-supervisory non-proprietary capacity after eighteen months and in a supervisory or proprietary capacity after three and one-half years. The Commission vacated that part of the order barring him from investment adviser or investment company association but kept the remainder of the bar order in place. Since 1980 Parnass has been associated with broker-dealers in a supervised capacity.

Parnass consented to the 1975 order which followed an injunction based on his firm's violation of the net capital rule. He was also suspended from association with a broker-dealer for sixty days in a 1986 action charging him with sales of unregistered securities.

In 2004 Parnass sought relief from the 1975 bar order arguing that it subjected him to onerous application procedures and fees. The Commission denied that petition.

The Commission uses an extremely high bar (couldn't resist the pun) in determining whether to vacate previous disciplinary orders. In fact, administrative sanctions will "remain in place in the usual case and be removed only in compelling circumstances." The bar is even higher in Commission orders entered by consent as in the Commission's view violators receive significant benefits from settlement.

The Commission rejected Parnass' argument that the passage of thirty five years since the entry of the order alone constituted a compelling reason to vacate the order. His cause certainly was not helped by the 1986 registration violations. However the language used by the Commission made it clear that the passage of time argument standing alone would have failed under any circumstances.

The Commission did lift the investment company/investment adviser bars as it no longer imposes such collateral sanctions when the individual was not at the time of the violation associated with an adviser or investment company.