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SECURITIES AND EXCHANGE COMMISSION
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In the Matter of the Application of JAMES L. BARI, JR. For Review of Disciplinary Action Taken by NASD |
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OPINION OF THE COMMISSION
REGISTERED SECURITIES ASSOCIATION -- REVIEW OF DISCIPLINARY PROCEEDINGS
Failure to Provide Requested Information
Former registered representative of member firm of registered securities association who failed to respond to requests for information appealed association's sanction on grounds that he never received the association's notices. Held, proceedings remanded for further consideration.
COUNSEL:
James L. Bari, pro se.
Nancy C. Libin, for NASD.
Appeal filed: February 19, 2003
Last brief received: June 4, 2003
James L. Bari, Jr., formerly a registered representative associated with JPR Capital Corporation ("JPR"), an NASD member firm, seeks review of NASD disciplinary action. NASD found that Bari violated NASD Procedural Rule 8210 by failing to provide information requested by NASD. 1 NASD barred Bari from association with any member firm in any capacity. To the extent that we make findings, we base them on an independent review of the record.
Bari worked at JPR from February 2000 until October 2001. He left the securities industry upon terminating his employment with JPR. While at JPR, he was the subject of a customer complaint alleging unauthorized trading.
On January 8, 2002, an NASD compliance examiner sent Bari a letter pursuant to NASD Procedural Rule 8210. 2 The letter requested that he appear on January 23, 2002, for an on-the-record interview regarding NASD's review of matters related to his employment in the securities industry, specifically referencing the customer who had made the complaint against Bari. NASD sent the letter by first class mail and certified mail to Bari at a mailing address in Woodhaven, New York ("the Woodhaven address"). Bari did not respond to the letter and failed to appear for the interview. On January 23, 2002, the examiner sent a second request to the Woodhaven address. Bari again failed to respond.
On April 30, 2002, NASD sent Bari a Pre-Suspension Notice pursuant to NASD Procedural Rule 9541(b) for failing to respond to the requests for information. 3 On May 22, 2002, NASD sent Bari a Suspension Notice for failing to take corrective action within 20 days of the Pre-Suspension Notice. On October 31, 2002, NASD sent Bari a Notice of Bar pursuant to NASD Procedural Rule 9544. 4 The Notice of Bar informed Bari that he was immediately barred from associating with any NASD member firm in any capacity because he failed to provide the information requested by NASD and to move for reinstatement within six months of the service of the Pre-Suspension Notice. NASD sent all correspondence to the Woodhaven address. Bari did not respond to any of the NASD communications. 5
On February 7, 2003, Bari appealed the bar to the Commission on the grounds that he was not properly notified because the letters were sent to an incorrect address.
Bari's claim on appeal is that NASD mailed its correspondence to an improper address. Rule 8210(d) provides for establishing notice of a request for information by mailing the request to the person's last known residential address as reflected in the Central Registration Depository ("CRD"). A copy shall also be mailed to any other known, more current address if NASD knows that the CRD address is out of date or inaccurate.
NASD asserts in its brief that, in sending the request for information to the Woodhaven address, it "sent the letter to the most current residential address that NASD had on file for Bari." However, the record contains no evidence to support this factual statement. The only CRD report in the record is dated February 20, 2003, and lists no residential or other address for Bari. The record includes neither an NASD document demonstrating nor an NASD staff member's affidavit affirming that the Woodhaven address represented Bari's last known residential address in the CRD or the most current address in NASD's records at the time of NASD's correspondence with Bari. NASD's brief points to Bari's admission in his petition for review that he lived at the Woodhaven address in the past, but this acknowledgment does not establish that this address was the last known CRD address or the most current address on file with NASD when NASD made its requests for information. 6 Absent some evidence in the record establishing that mailing correspondence to the Woodhaven address fulfilled the notice requirements of Rule 8210(d), we cannot make the requisite findings necessary to complete our review.
Accordingly, we remand this proceeding to NASD to address this issue. 7 In remanding, we do not intend to suggest any view as to a particular outcome.
An appropriate order will issue. 8
By the Commission (Chairman DONALDSON and Commissioners GLASSMAN, GOLDSCHMID, ATKINS, and CAMPOS).
Jonathan G. Katz
Secretary
In the Matter of the Application of JAMES L. BARI, JR. For Review of Disciplinary Action Taken by NASD |
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ORDER REMANDING PROCEEDINGS TO REGISTERED SECURITIES ASSOCIATION
On the basis of the Commission's opinion issued this day, it is
ORDERED that the proceedings on the application of James L. Bari, Jr. be, and they hereby are, remanded to NASD for further proceedings consistent with that opinion.
By the Commission.
Jonathan G. Katz
Secretary
| 1 | NASD Procedural Rule 8210(a) requires registered persons to respond to NASD requests for information |
| 2 | Article V, Section 4(a) of NASD By-Laws provides that a person whose association with a member has been terminated and who is no longer associated with any NASD member continues to be subject to the filing of a complaint based upon a failure to provide information requested by NASD for two years after the effective date of the termination. |
| 3 | NASD Procedural Rule 9541(b) authorizes NASD to issue to any person associated with a member who fails to provide information requested by NASD a written notice specifying the nature of the failure and stating that the failure to take corrective action within 20 days after service of such written notice constitutes grounds for suspending the person's association with the NASD member. |
| 4 | NASD Procedural Rule 9544 provides that persons associated with a member who are suspended pursuant to NASD Rule 9541(b) and who fail to request a hearing to challenge the suspension within six months of receipt of a pre-suspension notice will be automatically barred or expelled. |
| 5 | NASD sent the Pre-Suspension, Suspension, and Bar Notices by Federal Express, certified mail, and first class mail. The Pre-Suspension Notice sent by Federal Express was signed for by a person other than Bari. The Suspension Notice sent by Federal Express was returned to NASD. The Notice of Bar sent by Federal Express was returned to NASD marked "recipient moved and left no forwarding address or phone number." |
| 6 | As NASD notes, we have previously sustained Rule 8210 violations over objections that the notices were sent to the wrong address where NASD sent the requests for information to the CRD address and any known, more current address. See Warren B. Minton, Jr., Exchange Act Rel. No. 46709, 2002 SEC Lexis 2712 (Oct. 23, 2002); Ashton Noshir Gowadia, 53 S.E.C. 786 (1998); Nazmi C. Hassanieh, 52 S.E.C. 87 (1994). However, NASD maintains the burden of establishing that therequests were sent to such locations. |
| 7 | See Stephen R. Flaks, 46 S.E.C. 891, 895 n.8 (1977); John P. Goldsworthy, 53 S.E.C. 576, 580 (1998). |
| 8 | We have considered all of the parties' arguments. We reject or sustain them to the extent that they are inconsistent or in accord with the views expressed in this opinion. |
http://www.sec.gov/litigation/opinions/34-48292.htm
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