SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
SECURITIES EXCHANGE ACT OF 1934
Rel. No. 43523 \ November 6, 2000
Admin. Proc. File No. 3-10190
In the Matter of the Application of
JOSEPH DILLON & COMPANY, INC.
For Review of Action Taken by the
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.
OPINION OF THE COMMISSION
REGISTERED SECURITIES ASSOCIATION -- REVIEW OF ASSOCIATION ACTION
Jurisdiction to Review Action of Association
Member firm of registered securities association was denied exemption
from requirement to establish special supervisory procedures resulting
from firm's employment of a specified number of persons formerly
employed by disciplined firms. Held, the matter is not subject to
Commission review because the exemption denial does not constitute any
of the actions enumerated in Section 19(d) of the Securities Exchange
Act of 1934, and application for review is dismissed.
APPEARANCES
Martin P. Unger and Niral P. Kalaria, of Blank Rome Tenzer Greenblatt
LLP, for Joseph Dillon & Company, Inc.
Alden S. Adkins and Norman Sue, Jr., for NASD Regulation, Inc.
I.
Joseph Dillon & Co., Inc. ("Dillon" or the "Firm"), a member firm of
the National Association of Securities Dealers, Inc. (the "NASD"), has
appealed an NASD decision denying the Firm an exemption from NASD
Conduct Rule 3010(b)(2) (the "Rule"). The Rule requires any NASD
member firm that employs a specified number of registered persons who
were, within the prior three years, associated with any "disciplined
firm" to establish, maintain, and enforce specialwritten procedures
for supervising the telemarketing activities of all of its registered
persons, including tape-recording all telephone conversations between
the firm's registered persons and customers. The Rule permits the NASD
to grant an exemption to any member firm from the Rule's requirements
"upon a satisfactory showing that the member's supervisory procedures
ensure compliance with applicable securities laws and regulations and
SNIPPETS:
SECURITIES AND EXCHANGE COMMISSION
JOSEPH DILLON & COMPANY, INC.
NATIONAL ASSOCIATION OF SECURITIES DEALERS,
OPINION OF THE COMMISSION REGISTERED SECURITIES ASSOCIATION -- REVIEW OF ASSOCIATION ACTION
Member firm of registered securities association was denied exemption from requirement to
Held, the matter is not subject to Commission review because the exemption denial does not
Martin P. Unger and Niral P. Kalaria, of Blank Rome Tenzer Greenblatt LLP, for Joseph Dillon
The Rule requires any NASD member firm that employs a specified number of registered persons
The Rule permits the NASD to grant an exemption to any member firm from the Rule's
On October 5, 1999, the Firm applied to the NASD's Department of Member Regulation for an
The DMR concluded that Dillon had failed to demonstrate that its supervisory procedures would
On February 25, 2000, the NAC affirmed DMR's denial of Dillon's exemption request.
On May 18, 2000, we issued an order directing Dillon and the NASD to file briefs addressing
In Morgan Stanley & Co., we declined to review an NASD exemption denial involving operation
We concluded that Rule G-37's ban on municipal securities business operated automatically
Like the applicant in Morgan Stanley, Dillon automatically became subject to the Rule's
Dillon has not explained to us or the NASD the alleged costs or submitted evidence of its
Thus, unlike the individuals in Rubba and Exchange Services, Dillon's employees' status is
We accordingly dismiss the Firm's application.
42795, 72 SEC Docket 1297.
We previously have reviewed denials of membership and denials of modifications to a firm's
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