SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
SECURITIES EXCHANGE ACT OF 1934
Rel. No. 34-40646 / November 9, 1998
Admin. Proc. File No. 3-9212
________________________________________________
:
In the Matter of the Application of :
:
SCATTERED CORPORATION :
and :
LEON AARON GREENBLATT, III :
ANDREW ALVIN JAHELKA :
RICHARD OWEN NICHOLS :
LAURA BRYANT :
:
For Review of Action Taken by the :
:
THE CHICAGO STOCK EXCHANGE, INC. :
________________________________________________:
OPINION OF THE COMMISSION
REGISTERED SECURITIES ASSOCIATION -- REVIEW OF DISCIPLINARY
PROCEEDINGS
Market-making firm, its principals, and floor nominee
were found, after disciplinary proceeding, to have
violated antifraud, market manipulation, and books and
recordkeeping provisions of the Exchange Act, Exchange
Act rules, and stock exchange rules. Held, proceeding
set aside because fairness of proceeding was impaired
when outside private law firm simultaneously provided
legal counsel to the exchange hearing examiner and to
the exchange in litigation against Applicants based on
the same facts.
APPEARANCES:
C. Philip Curley and Judi A. Lamble, of Robinson Curley &
Clayton, P.C., for Scattered Corporation, Andrew A. Jahelka, and
Richard O. Nichols.
Leland W. Hutchinson, Jr. and Elizabeth D. Sharp, of
Freeborn & Partners, for Leon A. Greenblatt, III.
SNIPPETS:
SECURITIES AND EXCHANGE COMMISSION
recordkeeping provisions of the Exchange Act,
Act rules, and stock exchange rules.
the exchange in litigation against Applicants based on
and Elizabeth D. Sharp, of Freeborn & Partners, for Leon A. Greenblatt, III.
Scattered Corporation, an Illinois corporation and former member of The Chicago Stock
Further, the CHX found that the Applicants, other than Bryant, excessively traded Old LTV
This case arises out of the Applicants' massive short selling of Old LTV Stock during LTV's
This issue became a focal point in the disciplinary proceeding.
This possibility alarmed the CHX and its subsidiaries the Midwest Clearing Corporation (the
Securities Trust Corporation (the "MSTC") because it placed the MCC and the MSTC at risk of
The court concluded that Scattered had neither made misleading statements nor engaged in
Foley & Lardner's Representation Of The CHX
the CHX dissolved its in-house legal department and contracted with the law firm of Foley &
Once the proceeding was instituted, Simon, on behalf of the CHX, hired Gordon L. Nash to
The Screened Attorneys were also restricted from access to Early's computer hardware and
The Screen Agreement was extremely limited in scope.
In June 1994, the Applicants sought to have Foley and Sachnoff disqualified from
In addition, however, Foley attorney James M. Caragher filed two briefs on behalf of Foley
the Hearing Examiner denied the disqualification motions.
SRO rules, as well as the rules of many government agencies, by necessity address the
Since we have not previously been presented with a situation raising this issue, we have
ORDER DISMISSING DISCIPLINARY ACTION TAKEN BY REGISTERED SECURITIES ASSOCIATION
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