SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
SECURITIES EXCHANGE ACT OF 1934
Rel. No. 41777 / August 23, 1999
Admin. Proc. File No. 3-8580
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In the Matter of the Application of
DONALD R. GATES
532 Old Country Lane
Cabot, AR 72073
For Review of the Disciplinary Action Taken by the
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.
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OPINION OF THE COMMISSION
Sanctions Imposed by Association on Remand
Commission remanded to registered securities association proceedings
against former registered representative who accepted commissions for
securities transactions while unregistered. Commission sought to
clarify the number of trades found violative and the amount of
commissions derived from those trades. Held, the association's
findings of violation and sanctions it imposed are sustained, except
for modification of fine.
APPEARANCES
Donald R. Gates, pro se.
Alden S. Adkins, Norman Sue, Jr., Susan L. Beesley, and Shannon V.
Lane, for NASD Regulation, Inc.
Appeal filed December 3, 1998
Last brief received March 22, 1999
I.
Donald R. Gates, a former registered representative of Prudential
Securities, Inc., a member firm of the National Association of
Securities Dealers, Inc. (NASD), again appeals from disciplinary
action taken against him. In his first appeal, Gates sought review of
the NASD's determination that he violated Schedule C of the NASD's
By-Laws and Article III, Section 1 of the NASD's Rules of Fair
Practice^ when he traded in a public customer's margin account before
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SECURITIES AND EXCHANGE COMMISSION
Commission remanded to registered securities association proceedings against former
Commission sought to clarify the number of trades found violative and the amount of
Held, the association's findings of violation and sanctions it imposed are sustained, except
Donald R. Gates, pro se.
Donald R. Gates, a former registered representative of Prudential Securities, Inc., a member
In his first appeal, Gates sought review of the NASD's determination that he violated
On remand, the NASD found that Gates engaged in twenty-five transactions while unregistered.
In addition, the NASD censured Gates and suspended him for six months in all capacities, with
Gates was not registered to do securities business in the State of West Virginia until August
According to the former Elkins treasurer, who testified in the initial proceedings, Gates was
the 45% sales commission on each trade in the Elkins account during this period was paid to
Attached to the complaint was a schedule indicating that twenty-five securities transactions
the District Committee found that Gates received commissions for an unspecified number of
The National Committee reduced Gates' bar to a six-month suspension, ordered him to requalify
The NAC also agreed that the record failed to show that the checks from Prince to Gates
The NAC determined that these sanctions were both "fitting" and an "appropriate deterrent"
Our review of the NASD's sanctions is governed by Section 19of the Securities Exchange Act of
Schedule C of the NASD's By-Laws provides that all persons engaged in the securities business
Hiegel was censured, fined $10,000, and barred as a principal for failing to supervise
Where an associated person recklessly or knowingly violates the NASD's registration
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