NASD Publishes Sanction Guidelines To Familiarize Members With Major Violations And Penalties

Executive Summary

The NASD announces the publication of the NASD Sanction Guidelines (Guidelines). The Guidelines are being published so that members may become more familiar with some of the typical securities industry violations that occur and the disciplinary sanctions that may result.

Background

The Guidelines are being published and distributed so that members may become more familiar with some of the typical securities industry rule violations that occur and the disciplinary sanctions that may result. The Guidelines address more than 40 different types of violations.

Originally disseminated by the NASD National Business Conduct Committee (NBCC) for use by the various NASD District Business Conduct Committees and the Market Surveillance Committee, the Guidelines help the committees decide on appropriate remedial sanctions in NASD disciplinary proceedings. The Guidelines are not, however, predetermined, fixed sanctions for particular violations. Rather, they serve as a guide for the committees in an effort to achieve greater consistency, uniformity, and fairness when imposing sanctions.

Developed for the most frequent violations, the Guidelines include a listing of the basic considerations concerning the gravity of an offense and discuss a range of appropriate sanctions. Depending on the mitigating or aggravating factors present in individual cases, sanctions may be increased or decreased beyond the limits set forth in the Guidelines.

A significant consideration in determining appropriate sanctions for each type of violation listed in the Guidelines is a respondent's history of similar misconduct. This reflects the NBCC's belief that a primary objective of the NASD disciplinary process is to deter future violations by imposing progressively escalating sanctions upon repeat violators.

For more information on the Guidelines, call Norman Sue, Jr., Associate General Counsel, at (202) 728-8117, or Lewis E. Antone, Jr., Attorney, at (202) 728-8245. In addition to the enclosed copy of the Guidelines, additional copies of the Guidelines are available for purchase at $35 each ($10 each for employees of NASD member firms) by contacting NASD MediaSource^SM at (301) 590-6578 for credit card orders or by writing to: NASD, NASD MediaSource, P.O. Box 9403, Gaithersburg, MD 208989403. Please make checks payable to the National Association of Securities Dealers, Inc.