SECURITIES AND EXCHANGE COMMISSION
                                   Washington, D.C.
          SECURITIES EXCHANGE ACT OF 1934
          Rel. No. 40600 / October 26,1998
          Admin. Proc. File No. 3-9195
          _________________________________________________
                                                           :
                 In the Matter of the Applications of      :
                                                           :
                         STEVEN P. SANDERS                 :
                         13-28 208th Place                 :
                      Bayside, New York 11360              :
                                                           :
                                and                        :
                                                           :
                          DANIEL M. PORUSH                 :
                         Two Bayclub Drive                 :
                      Bayside, New York 11360              :
                                                           :
           For Review of Disciplinary Action Taken by the  :
                                                           :
          NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. :
                                                           :
          OPINION OF THE COMMISSION
               REGISTERED SECURITIES ASSOCIATION -- REVIEW OF DISCIPLINARY
               PROCEEDINGS
                    Violations of Rules of Fair Practice
                         Excessive and Fraudulent Markups
                         Failure to Supervise
               Head trader of member firm of registered securities
               association was responsible for excessive and fraudulent
               markups, and firm's president failed to comply with
               supervisory requirements.  Held, association's findings of
               violation and sanctions it imposed sustained.
          APPEARANCES:
               Andrew M. Zeitlin and Martin P. Unger, of Tenzer Greenblatt
          LLP, for Steven Sanders.
               Charles A. Stillman and Michael J. Grudberg, of Stillman &
          Friedman, P.C., for Daniel M. Porush.
               Alden S. Adkins and Norman Sue, Jr., for NASD Regulation,
          Inc.
          Appeal filed:  December 6, 1996
          Last brief filed:  May 6, 1997
                                          I.
               Steven P. Sanders, the former manager of the trading
          department at Stratton Oakmont, Inc. ("Stratton" or the "Firm"),
          which was at the time a member of the National Association of
          Securities Dealers, Inc. ("NASD"), and Daniel M. Porush,
          Stratton's president, appeal from NASD disciplinary action. [1]
          The NASD found that Stratton, acting through Sanders, charged
          excessive and fraudulent markups in violation of Article III,
          Sections 1, 4, and 18 of the NASD's Rules of Fair Practice (the
          "NASD Rules") [2]  The NASD further found that Stratton and
          Porush violated Article III, Sections 1 and 27 of the NASD Rules
          as a result of the Firm's deficient supervisory system and
          written supervisory procedures. [3]  Sanders was censured, fined
          $25,000, and barred in all capacities.  Porush was censured,
          fined $250,000 and barred in all capacities. [4]  We base our
          findings on an independent review of the record.
                                         II.
                                Pricing Violations.
               A.  This case concerns Stratton's sales to retail customers
          of warrants issued by Master Glazier's Karate International, Inc.
          ("Glazier"), the operator of five martial arts and fitness
          centers in Pennsylvania and New Jersey, during the period October
          18, 1993 to November 17, 1993.  Stratton was the sole underwriter
          for Glazier's initial public offering ("IPO") of its units on
          October 15, 1993.
               Each unit consisted of one share of common stock, one Class
          A warrant, and one Class B warrant, each of which was separately
          transferable immediately.  The warrants were exercisable one year
          after the offering date and entitled the holder, within the
          following four years, to purchase one share of Glazier common
          stock at $4.75 per share (in the case of the Class A warrants)
          and at $5.50 per share (in the case of the Class B warrants).
          Glazier's prospectus stated that Stratton might "become a
          dominating influence in the market for the units or the common
          stock and warrants contained therein."
               In the IPO, Glazier sold 2,070,000 units, at a price of $4
          per unit.  Stratton sold 1,623,500 of the Glazier units, 78% of
          the total number of units issued, to the Firm's own retail
          customers.
               Porush, who shared responsibility for allocating the Glazier
          IPO to Stratton's sales personnel, apparently allocated to
          himself the largest block of Glazier units. [5]  Certain of
          Porush's customers "flipped," i.e., immediately sold, over
          300,000 units acquired in the IPO back to the Firm at the start
          of aftermarket trading at prices of $4-15/16 to $5-1/16.
          Additional units were flipped shortly after trading in the
          aftermarket began at prices of between $8 and $9.  In addition to
          obtaining units from its retail customers, the Firm, during the
          first five minutes of aftermarket trading, acquired 360,000
          additional units from two other firms that had been members of
          the selling group, at prices of $5 and $5-1/8.  Sanders, as
          Stratton's head trader, was responsible for executing these
          trades.  As a result, Stratton soon controlled, either through
          holdings in its own proprietary accounts or through the holdings
          of its retail customers, over 95% of all the Glazier units that
          had been sold.
               Stratton then used its control over the supply of Glazier
          units, which it subsequently broke into their component parts, to
          dominate trading in the warrants.  Stratton bought both units and
          warrants in both the wholesale and retail markets.  From October
          18, 1993 to November 17, 1993, Stratton bought or sold 2,942,500
          Class A warrants in wholesale and retail transactions, roughly
          95% of all Class A warrants traded in those markets during this
          period.  In the interdealer market, 154,220 Class A warrants were
          traded during this period.  Stratton was on one side of
          interdealer trades for all but 20,520 warrants.  Stratton bought
          or sold 4,829,650 Class B warrants in wholesale and retail
          transactions, close to 96% of all Class B warrants traded during
          this period.  In the interdealer market, 204,510 Class B warrants
          were traded, and Stratton was on one side of the trade involving
          all but 66,810 warrants.
               The record also reflects that Stratton controlled
          approximately 87% of the float for the Class A warrants on
          October 25, 1993, the regular settlement date for the first day
          of trading during the review period, and 89% of the float on
          November 24, 1993, the regular settlement date for the last day
          of trading.  For the Class B warrants, the Firm controlled
          approximately 87% of the float on October 25 and over 80% on
          November 24, 1993.
               The NASD found that the Firm dominated and controlled the
          market for both the Class A and Class B warrants.  The NASD
          further found that, in 85 retail sales of Class A warrants, at
          prices ranging from $2 to $2-6/16, Stratton charged markups in
          excess of 5% over its contemporaneous costs.  In 21 of those
          trades, the markups exceeded 10% and ranged as high as 22%.  In
          73 retail sales of Class B warrants, ranging in price from $1-1/8
          to $1-9/16, the NASD found that Stratton charged markups in
          excess of 5%.  In 64 of those trades, the markups ranged from 10%
          to 33%.  The total amount of excessive markups charged was
          $416,528 on 158 trades.
               B.  Applicants do not dispute the NASD's calculations but,
          instead, whether the markups should be calculated based on the
          Firm's wholesale contemporaneous cost.  It is well established
          that, "if an integrated dealer dominates the market to such a
          degree that it controls wholesale prices for the security, then
          the dealer should use its contemporaneous purchase price as the
          basis for computing markups, rather than its quotations or its
          sales prices." [6]  In determining whether that degree of
          domination exists, we have considered several factors including
          whether the firm at issue was an underwriter of the initial
          public offering of the security and whether it sold a substantial
          percentage of the offering to its own customers; whether the firm
          was responsible for a significant portion of trading in the
          aftermarket; and whether the remaining amount of aftermarket
          trading was fragmented among other dealers. [7]
               Based on these factors, we conclude that Stratton controlled
          the Glazier market and that, therefore, the NASD correctly
          calculated Stratton's markups based on the Firm's contemporaneous
          cost.  As discussed, the Firm sold the bulk of the IPO to its own
          retail customers, and then quickly bought in the aftermarket most
          of the remaining units that had been allocated to other firms in
          the IPO.  Although several other dealers identified themselves as
          market makers in Glazier warrants, applicants concede that
          Stratton dominated secondary trading in the securities during the
          relevant period. [8]
          **FOOTNOTES**
          [1]: Stratton  also  appealed  the  NASD's  decision  against it.
               Stratton  subsequently  notified  us  that  it  had filed  a
               petition  in bankruptcy and that an order of relief  on  its
               petition was  entered  on  January  24,  1997  by the United
               States  Bankruptcy  Court for the Southern District  of  New
               York.  Under 11 U.S.C.    362, Stratton's bankruptcy filing
               triggered  an automatic stay  of  these  proceedings  as  to
               Stratton.  Our findings with respect to Stratton, therefore,
               are made only  for  the  purposes of this proceeding and are
               binding only with respect to Sanders and Porush.
               [2]:The NASD has revised and  renumbered  its  rules, but no
               substantive  changes  were made to the particular  rules  at
               issue here.  Section 1 (new NASD Conduct Rule 2110) requires
               adherence to "high standards  of  commercial  honor and just
               and equitable principles of trade."  Section 4  (new Conduct
               Rule 2440) requires that prices charged in transactions with
               customers  be "fair, taking into consideration all  relevant
               circumstances.  .  .  ."  Section 18 (new Conduct Rule 2120)
               provides that "[n]o member  shall effect any transaction in,
               or induce the purchase or sale  of, any security by means of
               any manipulative, deceptive or other  fraudulent  device  or
               contrivance."
               [3]:Section   27   (new  Conduct  Rule  3010)  mandates  the
               establishment and maintenance  of  a system to supervise the
               activities of registered representatives that "is reasonably
               designed  to achieve compliance with  applicable  securities
               laws and regulations, and with the rules of [the NASD]."
               [4]:The  NASD  also  assessed  costs  against  each  of  the
               applicants.
               [5]:Although  he  did  not state explicitly that he took the
               largest allocation of Glazier  units,  Porush testified that
               allocations were generally determined based  upon "how big a
               broker [someone was], how many assets they had  of  clients,
               how many active accounts they had."  Porush also stated that
               "at that time I was still the biggest broker in the firm, so
               I  would take a lot of allocations."  Sanders also testified
               that  Porush  usually  took  the  largest  allocation of new
               issues.
               [6]:Meyer Blinder, 50 S.E.C. 1215, 1218 (1992).
               [7]:See, e.g., Michael Alan Leeds, 51 S.E.C. 500, 503 (1993)
               (finding  domination  and  control  where firm sold  82%  of
               offering to its own retail customers  because  the  firm had
               "control  of  most of the available supply"); Meyer Blinder,
               50  S.E.C.  at  1218  n.14  (identifying  these  factors  as
               probative of whether  market  is dominated); Pagel, Inc., 48
               S.E.C. 223, 225-6 (1985)(holding  that,  where  dealer sells
               90% of an offering to its own customers and the remainder is
               fragmented  among other dealers, "trading in the aftermarket
               is necessarily  contingent  on  the  underwriter's customers
               furnishing the supply"), aff'd, 803 F.2d 942 (1986).
               [8]:Although  the  NASD  found that Stratton  dominated  and
               controlled the market for  Glazier  warrants,  it found that
               the Firm was not a market maker in the warrants  "due  to  a
               low level of warrant sales by Stratton to dealers during the
               review  period."   Because  we  find  that  Stratton was the
               dominant firm in the secondary market, and because  no other
               firm exercised nearly the influence of Stratton, we need not
               determine  whether Stratton was a market maker under Section
               3(a)(38) of  the Securities Exchange Act of 1934.  See Adams
               Securities,  Inc.,   51  S.E.C.  311  (1993)  (declining  to
               characterize firm as market  maker  where  firm evidenced no
               willingness to buy and sell the security at  issue  to other
               dealers during the review period).
                                Applicants' Contentions
          Whether Stratton Controlled Market for Glazier Units.
               While applicants concede that the Firm dominated trading in
          the warrants, they contend that they did not control the pricing
          of these securities because, they argue, there was an active and
          competitive market during this period for the Glazier units, from
          which the warrants were derived.  They note that Stratton was
          neither a buyer nor a seller in 212 out of a total of 289
          interdealer transactions, involving 579,730 units out of a total
          of 1,219,160 units traded (approximately 48%).
               We conclude that trading in the units away from the Firm did
          not represent an accurate reflection of the prevailing market
          price for the warrants.  We note initially that, even with
          respect to the units, Stratton was involved in over 52% of the
          trades by volume and the remaining volume was divided among many
          firms.  In any event, Stratton had "unique access to its
          customers to obtain its supply of [Glazier units and, in turn,
          Glazier warrants] for secondary market activities." [9]  Such
          control of the supply of the Glazier units enabled the Firm "to
          control wholesale pricing [of the Glazier warrants] to such an
          extent as to preclude an independent, competitive market from
          arising, notwithstanding the presence of other dealers who [were]
          entering quotations." [10]  In addition, on October 28, 1993,
          Stratton broke up close to 1.6 million units then in its
          inventory, thereby reducing the float for the units by over 70%.
          We conclude that Stratton was, as a result, "empowered `to set
          prices arbitrarily.'" [11]
          Whether Markups Should Be Based on Retail Not Wholesale Costs.
               Applicants contend that, even assuming that Stratton was
          required to calculate its markups on the warrants based on its
          contemporaneous cost, these costs should be based on purchases
          from the Firm's retail customers, not interdealer transactions.
          They note that a 1992 NASD Notice to Members "stated that it may
          be `far more appropriate to use retail purchase prices as the
          prevailing market price in lieu of . . . wholesale cost' where
          wholesale transactions are isolated and could be called into
          question due, inter alia, to size or frequency."  However, this
          same Notice to Members further states that "the actual cost to
          the dominant and controlling market maker based on prices it paid
          to other broker/dealers . . . is the best indicator of the
          prevailing market price."  The Notice, moreover, advises that
          interdealer trades should be rejected only if the trades' "size,
          frequency, price or other features . . . suggest that [they] are
          not bona fide trades but rather are designed to artificially
          establish a particular prevailing market price."
               Although we occasionally have declined to use interdealer
          purchases to establish a firm's contemporaneous cost, we have
          done so because of concerns about the legitimacy of the
          interdealer trades in question. [12]  There is nothing in the
          record that leads us to conclude that the interdealer trades at
          issue here (while fewer in number than the retail trades) were
          "artificial."  We therefore consider those interdealer trades to
          be a better indication of the prevailing market price than
          Stratton's purchases from retail customers. [13]
          Whether NASD Failed to Show that Markups Were Unfair.
               Applicants argue that the NASD impermissibly shifted to them
          the burden of proving that these markups were appropriate.  We
          disagree.  Once the NASD presented evidence that the Firm's
          markups exceeded 5% over its contemporaneous cost, the burden
          properly shifted to the applicants to show that the facts
          surrounding these transactions justified higher markups. [14]
          The NASD's Mark-Up Policy acknowledges the possibility that,
          under certain circumstances, markups above 5% may be justified.
          The factors listed in the Mark-up Policy include: the type of
          security involved; its availability and price of the security in
          the market; disclosure of pricing information; the amount of
          money involved in the transaction; pattern of markups; and nature
          of the firm's business. [15]  It is entirely appropriate that
          applicants bear the burden of coming forward with evidence
          justifying markups above 5% because they were in the best
          position to know about any of these special circumstances
          surrounding these trades.
               Applicants nonetheless assert that the NASD should bear the
          burden of establishing that the prices Stratton charged were not
          "fair, taking into consideration all relevant circumstances
          . . . ." [16]  They cite their expert witness, Lee Pickard, who
          testified that the NASD failed to demonstrate, based on the
          factors identified in the Mark-Up Policy, [17] that markups above
          5% were excessive under the circumstances of this case.
               Pickard did not give an opinion on what would have
          constituted fair prices for these warrants or that the prices
          Stratton charged were fair.  Rather, Pickard identified four
          factors that, in his view, might have justified higher markups in
          this case: the type of securities involved; the prices charged
          for the securities; the amount of money involved in the
          transactions; and the level of customer service provided in
          connection with the transactions.
               Based on these factors and the record here, we find no
          justification for the markups charged by Stratton.  On cross
          examination, Pickard admitted that the NASD had in fact
          considered the amount of the transactions when it excluded each
          transaction in which Stratton's markup, although above 5%, failed
          to exceed $100 above the Firm's cost.  We also believe that the
          NASD's decision to exclude trades in which the markups did not
          exceed $100 reflects consideration of the fact that these
          transactions involved lower-priced securities. [18]  In any
          event, we have held that markups above 5% generally are not
          justified even in the sale of lower-priced securities. [19]
               In addition, neither Pickard nor either of the applicants
          presented evidence that the Firm provided any special services to
          its customers in connection with these transactions or that the
          securities were not readily available.  To the contrary,
          Stratton's control of a large supply of Glazier warrants meant
          that the Firm had to expend minimal effort to obtain the
          securities, a factor weighing in favor of lower rather than
          higher markups.
          Whether Prices Charged Were Justified by Common Stock Prices.
               Applicants assert that the prices customers paid Stratton
          "were eminently fair and reasonable" because, among other
          reasons, they correlated directly with the contemporaneous market
          prices of the Glazier common stock and units.  They support this
          assertion with a report written by James Ohlson, a professor at
          Columbia University.  In the report, Ohlson concluded that
               Compared to the contemporaneous prices in the underlying
               stock . . . the prices paid by the retail customers for the
               warrants were low rather than high.  Further, there is no
               evidence, nor has it been claimed, that the trading prices in
               [the Glazier common stock and units] deviated from their
               intrinsic values.
          **FOOTNOTES**
               [9]: Alstead,  Dempsey  &  Company, Incorporated,
               47 S.E.C. 1034, 1035-36  (1984)(94%  of  the  IPO
               placed  with  firm's  own customers).  See also Pagel,
               48 S.E.C. at 226 ("Because the identity  of  those
               customers  is   known   only   to   the underwriter,
               tapping  that  supply for resale lies uniquely within the
               underwriter's control.").
               [10]:Pagel, 48 S.E.C. at 225-26.  See also Leeds, 51 S.E.C.
               at 503-04 (citing Pagel).
               [11]:George Salloum, Securities Exchange Act Release No.
               35563 (April 5, 1995), 59 SEC Docket 43, 47 (quoting Pagel,
               48 S.E.C. at 226).
               [12]:See, e.g., George Salloum, 59 SEC Docket at 50.
               [13]:See, e.g., George Salloum, 59 SEC Docket at 49 ("prices
               paid in wholesale trades are a more reliable indication of
               the prevailing market price [than retail trades] because
               they occur between informed market professionals . . . .").
               See also Robert A. Amato, 51 S.E.C. 316, 317-18 (1993) ("the
               best evidence of the prevailing market price is the price
               that the dealer pays other dealers . . . .  If there are no
               contemporaneous purchases from other dealers, purchases from
               retail customers may be used  . . . ."), aff'd, 18 F.3d 1281
               (5th Cir.), cert. denied, 115 S.Ct. 316 (1994).
               [14]:See First Honolulu Securities, Inc., 51 S.E.C. 695, 701
               n.23 (1993) ("Once the NASD presented evidence of the
               markups, the burden shifted to Applicants to refute this
               evidence."); Investment Planning, Inc., 51 S.E.C. at 596
               (burden shifts to applicants to produce evidence
               establishing the fairness of markups after NASD showed a
               pattern of high markups); Richard R. Perkins, 51 S.E.C. 380,
               383 n.16 (1993) ("Once the NASD presented its prima facie
               case, it was incumbent on Applicants to explain why,
               notwithstanding the evidence to the contrary, their pricing
               was fair.").  See also NASD Notice to Members 92-16. at 91
               ("markups exceeding 5% . . . are generally viewed as
               excessive . . . unless the member can show the
               markup/markdown charged to be fair under the unique
               circumstances of the trade.").
               [15]:See Interpretation of the NASD Board of Governors,
               Article III, Section 4 of the NASD Rules, NASD Manual  2154
               (April 1993).
               [16]:See Article III, Section 4 of the NASD Rules.
               [17]:See Interpretation of the NASD Board of Governors
               accompanying Article III, Section 4, NASD Manual (April
               1993)  2154.
               [18]:Our analysis should not be construed as suggesting that
               minimum transaction charges of $100 or less, under all
               circumstances, are appropriate.
               [19]:See Century Capital Corp. of South Carolina, 50 S.E.C.
               1280, 1283-84 n.10 (1992) (holding that a markup higher than
               5 percent may be appropriate for transactions in low-priced
               securities stocks "only if the size of the total transaction
               is small and the total compensation charged is equal to or
               less than a reasonable minimum ticket charge"), aff'd, 22
               F.3d 1184 (D.C. Cir. 1994).
               This report was submitted as part of applicants' appeal of
          the decision of the NASD's District Business Conduct Committee
          ("District Committee") to the NASD's National Business Conduct
          Committee (the "National Committee").  Ohlson did not appear at
          any NASD hearing, and his views were not subject to cross-
          examination.
               The NASD did not allege improper pricing by Stratton in the
          sale of the Glazier units or stock.  However, it introduced
          evidence indicating that the markets for those securities, like
          those for the Glazier warrants, were dominated and controlled.
          As discussed, Stratton controlled over 95% of all the Glazier
          units that had been sold in the IPO.  The NASD also introduced
          evidence showing that Stratton was responsible for 95% of all
          trading that occurred in Glazier common stock.  Sanders,
          moreover, conceded before the NASD that the market for Glazier
          stock was not active and that Stratton dominated the markets for
          Glazier stock and warrants.
               Under the circumstances, it does not appear that the market
          for the Glazier common was active and competitive.  Any
          correlation between the stock and warrant prices, therefore, was
          irrelevant to a consideration of the fairness of Stratton's
          pricing of the warrants.  Confirming the unreliability of this
          correlation is the fact that Stratton, in contemporaneous
          interdealer transactions, was able to acquire the warrants at
          prices that were substantially below what Ohlson hypothesized was
          the warrants' "fair value."
          Whether NASD Provided Inadequate Guidance.
               Applicants also contend that the NASD provided inadequate
          guidance regarding the pricing of what they describe as
          derivative securities, e.g., the Glazier warrants that were
          separated from the Glazier units.  They point to differences in
          the analysis of the pricing used by the District Committee and
          that used by the National Committee. [20]  We do not agree that
          there was a lack of guidance regarding the applicable markup
          rules.  The appropriate method for calculating markups in a non-
          competitive market is well established, [21] and this method was
          employed by the National Committee. [22]
               Finally, applicants note that the NASD examined the Firm
          during the period at issue and failed to identify any deficiency
          in Stratton's approach to pricing securities.  However, the
          responsibility for complying with regulatory requirements cannot
          be shifted to regulatory authorities. [23]
               C.  The record fully supports the NASD determination that
          Sanders, as the manager of the Firm's trading department, was
          responsible for these markups.  Sanders testified that he was
          responsible for pricing these trades and ensuring that pricing
          complied with NASD requirements.
               Sanders admitted before the NASD that, in determining
          whether the Firm exercised a controlling influence over the
          market for a security, he never considered the extent to which
          the Firm's customers held that security in their Stratton
          accounts.  He further admitted that he did not consider the
          Firm's interdealer cost -- the appropriate basis for calculating
          markups where a market is dominated and controlled -- in
          determining the prevailing market price for the Glazier warrants.
               Sanders claimed that he generally set prices for the
          warrants based on the inside ask quotations and continually
          compared the Firm's prices for the warrants with the Glazier
          common to determine whether they were "in parity," i.e., that the
          price of the warrants plus the exercise price of the warrants
          roughly equalled the quotes for the common stock although the
          warrants could not be exercised for a year.  Sanders conceded,
          however, that he knew of no other firm that employed this pricing
          methodology.  He further conceded, as mentioned above, that the
          Glazier common stock, with which he was purportedly seeking
          pricing parity, was trading in an inactive market dominated by
          Stratton.
               We accordingly find that Sanders violated Article III,
          Sections 1 and 4 of the NASD Rules.  We further find that Sanders
          knew or was reckless in not knowing that the Firm dominated and
          controlled the market for these warrants and that customers would
          be charged excessive markups if those markups were not based on
          the Firm's contemporaneous cost.  Given the number and size of
          these markups and Sanders' reckless disregard for the rules and
          principles governing the retail pricing of securities, the
          requisite degree of scienter has been shown to support a finding
          that Sanders also violated Article III, Section 18 of the NASD
          Rules. [24]
                                         III.
                                Supervisory Failings.
               We now turn to the question of whether Porush should be held
          liable for supervisory failings in connection with the pricing
          violations found above.
          Firm Procedures.
               A.  The record establishes that the Firm's procedures
          regarding pricing were totally inadequate.  Its compliance manual
          [25] contained a section titled "Fair Prices" which briefly
          summarized some of the rules relating to the pricing of
          securities.  This section correctly discussed the pricing
          situation "[w]here no independent market exists for" a security,
          i.e., the situation presented here, by stating that, in such a
          situation, "the most reliable evidence of the prevailing market
          price is the  contemporaneous prices . . . paid other dealers . .
          . ."  However, the compliance manual gave no guidance about how
          to determine whether an independent market existed.  Moreover,
          there were no written procedures governing the manner in which
          Firm personnel were to make such a determination or, more
          generally, to ensure that Stratton's pricing practices were in
          compliance with NASD pricing requirements.  Sanders testified
          that he was unaware that the Firm even had any written procedures
          relating to such pricing requirements.
               Beyond its inadequate written procedures, it is clear that
          the Firm in practice lacked adequate supervisory procedures to
          avoid the pricing violations at issue.  For example, it appears
          the Firm had an unwritten policy of setting markups up to 5%
          above the inside quotations, regardless of whether these
          quotations were validated.  In addition, the testimony of Sanders
          showed that the individual with primary responsibility for
          setting the Firm's retail prices seriously misunderstood the
          principles governing pricing in a dominated and controlled
          market.  For the reasons set forth below, we believe that Porush
          was responsible for these inadequate procedures.
               B.  Every firm is required to assign supervisory
          responsibilities in writing, including names of the responsible
          personnel and date assigned. [26]  The record contains competing
          but undated written compliance bulletins that purport to assign
          these responsibilities.
               Record Exhibit 11 is comprised of a compliance manual and a
          series of numbered compliance bulletins.  Record Exhibit 11 was
          produced by Stratton's compliance director, Paul Byrne, in
          response to an NASD request for the manual in effect during the
          period October 1993 to February 1994.  Although Byrne later
          testified that he could not remember whether the NASD had
          specified a particular time period, an NASD examiner, Hannah
          Huynh, testified that an NASD representative had made the request
          for that period and, despite vigorous cross-examination on this
          point, Huynh never wavered in her testimony.
               Record Exhibit 11 contains two different documents entitled
          "Compliance Bulletin # 1."  Neither version is dated, and both
          versions purport to assign supervisory responsibility to Firm
          personnel.  The first version of Compliance Bulletin # 1 (the
          "Porush Bulletin") identifies Sanders as being responsible for
          Stratton's trading and Porush, along with two other Firm
          principals, as responsible for "review[ing] the Firm's
          supervisory procedures and recommend[ing] appropriate action
          reasonably designed to achieve Stratton's compliance with
          applicable securities laws and regulations and with the rules of
          the NASD."
               Record Exhibit 11 also contains a second version of
          Compliance Bulletin # 1 (the "Belfort Bulletin"), which purports
          to assign supervisory responsibility to Jordan Belfort, Porush's
          predecessor as Firm president.  Apparently at the time it was
          copied, the Belfort Bulletin had been partially covered over with
          a "post-it" marked "leave out . . . ."  As a result, certain of
          the information on the Belfort Bulletin was blocked out on the
          copy provided to the NASD.
               The NASD made a second written request specifically for the
          Stratton compliance manual in effect from October 1993 through
          February 1994.  In response to this second request, the Firm
          produced a different compliance manual, Record Exhibit 12.
          Record Exhibit 12 contains only a single version of Compliance
          Bulletin # 1, which assigned Belfort supervisory responsibility
          as Firm president and which in all other respects appears to be
          identical to the Belfort Bulletin blocked out in Record Exhibit
          11.
               Porush argues that the NASD failed to establish that Record
          Exhibit 11 was in effect during the period at issue.  We conclude
          that Record Exhibit 11 was the Firm's compliance manual during
          this time and that the Porush Bulletin reflects the then-current
          assignments of supervisory responsibility.
               Byrne testified before the District Committee that the
          Belfort Bulletin was not in effect during this period.  This view
          is confirmed by the fact that the Belfort Bulletin contains
          information that is not current as of the relevant period.  For
          example, the Belfort Bulletin lists Belfort as president of the
          Firm, although Porush admittedly assumed that title in August
          1993.  The Belfort Bulletin further states that Frank Casillo is
          compliance director, although Casillo had left the Firm in 1992.
               In contrast, the Porush Bulletin's supervisory assignments
          correspond to Stratton's supervisory personnel during the time at
          issue.  The Porush Bulletin correctly identifies Porush as
          president (a position that he assumed in August 1993) and Byrne
          as compliance director.  It also identifies one William Mooney,
          who was associated with the Firm during the relevant period but
          who left Stratton in February 1994, as sharing supervisory
          responsibilities with Porush.  Additionally, the Porush Bulletin
          assigns supervisory responsibilities to Porush that were
          inconsistent with a supervisory bar that Porush became subject to
          in March 1994. [27]  Thus, we conclude that the Porush Bulletin
          was in effect for a period between August 1993 and February
          1994.
               Applicants have suggested below that there might have been
          an interim Compliance Bulletin # 1 between the Belfort Bulletin
          and the Porush Bulletin.  Applicants have not produced any such
          document, nor suggested what it contained.  Given the limited
          period that Porush was able to act in a supervisory capacity as
          president (August 1993 to March 1994) and the fact that Mooney
          left the Firm in early 1994, we question the likelihood that a
          different set of supervisory documents would have been in effect
          during October and November 1993.
          Porush's Supervisory Role at the Firm.
               A.  It is undisputed that Porush was president of the Firm
          during the period at issue.  Porush asserts that he became
          president only because his predecessor was then subject to
          disciplinary proceedings brought by this Commission. [28]  Porush
          further asserts that, while he was president, Belfort remained as
          the Firm's "chief executive officer" and retained all supervisory
          responsibility for regulatory compliance, including the pricing
          of securities.  The record refutes Porush's assertion that
          Belfort retained exclusive supervisory responsibility for
          regulatory compliance.
               During the NASD investigation, Paul Byrne, Stratton's
          compliance director, stated that he and Porush met on a daily
          basis and discussed "market surveillance, regulatory inquiries,
          customer complaints, arbitrations, the general function of the
          compliance department."  Byrne also stated during the
          investigation that Sanders reported to Porush during the period
          at issue.  Although Byrne subsequently testified before the
          District Committee that Belfort was his supervisor and was
          responsible for Firm compliance, he conceded that he also
          reported to Porush as "president" of the Firm. [29]
               Sanders also testified before the District Committee that he
          reported to Belfort as his supervisor.  During the NASD
          investigation, however, Sanders stated that he consulted with
          Porush when Belfort was unavailable regarding the advisability of
          making certain significant trades.
               Assuming, as Porush contends, that Belfort continued to
          exercise supervisory authority at the Firm after Porush became
          president, this fact would not preclude a finding that Porush
          also had such authority.  As we have held, even where supervisory
          responsibility is shared between firm executives, each can be
          held liable for supervisory failure. [30]
               B.  While Porush now claims that Belfort was the senior
          executive at the Firm during the period at issue, Porush
          downplayed Belfort's role in a contemporaneously filed
          registration form.  On September 30, 1993, Porush executed on
          behalf of the Firm an amendment to Stratton's Form BD -- Uniform
          Application for Broker-Dealer Registration.  The Form BD's
          instructions expressly require that a firm list its chief
          executive officer.  While Stratton's 1993 amendment to Form BD
          did not explicitly identify any person at the Firm as chief
          executive officer, the amendment lists Porush as "Director &
          Pres." and Belfort as merely a "Director."  In executing the Form
          BD, Porush represented that the information contained therein was
          "current, true and complete."  In light of Porush's
          representation to regulatory authorities in the amendment to the
          Firm's Form BD, we consider it appropriate to regard him as the
          Firm's president and senior executive, and to consider that he
          had the corresponding supervisory responsibilities. [31]  As we
          have held,
                    The president of a brokerage firm is responsible for the
                    firm's compliance with all applicable requirements
                    unless and until he reasonably delegates a particular
                    function to another person in the firm, and neither
                    knows nor has reason to know that such person is not
                    properly performing his duties. [32]
          Porush's Direct Involvement with the Glazier Offering.
               A.  The record establishes that Porush knew that it was the
          Firm's policy to charge a markup of up to 5% over the offer
          quotation, although we have previously voiced our disapproval of
          such a practice. [33]  He also typically was in the trading room
          during the initial aftermarket for the Firm's new offerings.
          Additionally, Porush had access to a Nasdaq terminal which gave
          him information about pricing.  As Porush conceded, he "knew what
          prices customers were getting, because you could see prints on
          the NASDAQ machine."
               Significantly, Porush testified that his compensation from
          Stratton, which in 1993 was roughly $3.4 million, was tied to the
          Firm's profitability, and that 80% of the Firm's revenue was
          derived from its trading activity.  Porush, therefore, had a
          strong incentive to follow closely those securities, like the
          Glazier warrants, in which the Firm had taken a stake.
               B.  The record further establishes that Porush was directly
          involved in the Glazier offering.  Because he admittedly shared
          supervisory responsibility for the Firm's retail sales force as
          well as responsibility for allocating the distribution of the
          Glazier units among salespersons in the IPO, he was aware that
          the Firm had retained close to 80% of the IPO for its own
          customers.  He also "probably knew the next day" that Stratton
          had repurchased most of the Glazier units that the Firm had
          allocated to other firms in the selling group.
               Porush's customers, who typically flipped new issues, sold a
          significant number of their Glazier units in the aftermarket, and
          Porush was aware of the prices those customers received for their
          units.  Additionally, Porush admitted that he knew that the Firm
          was responsible for the majority of trading in the Glazier
          warrants and common stock.  Also, as mentioned, the Glazier
          prospectus expressly warned that Stratton might become a
          dominating influence in the market for the warrants.  All things
          considered, it is inconceivable that Porush was unaware of the
          circumstances that made the Firm's normal pricing policy
          problematic.
               C.  The NASD's District Committee, which heard him testify,
          found "incredible" Porush's claim that he was uninvolved in the
          pricing of the Glazier warrants.  The District Committee further
          described his effort to pin all supervisory responsibility on
          Belfort as a "transparent attempt to avoid blame."  We have
          consistently held that "credibility determinations of an initial
          fact finder are entitled to considerable weight [and] can be
          overcome only where the record contains `substantial evidence'
          for doing so." [34]  As discussed herein, the record here
          confirms the District Committee's credibility determination.
               We conclude that Stratton's procedures were inadequate to
          ensure compliance with NASD pricing requirements.  Porush was
          aware of the Firm's approach to pricing, including its practice
          of basing prices on quotations, which led directly to the markups
          violations found herein.  We further conclude that it is
          appropriate, based on the evidence in this case, to hold Porush
          liable for violating the NASD's supervisory requirements in
          connection with the pricing violations at issue.
                                         III.
               Applicants raise various procedural and constitutional
          objections.  They argue that the NASD's disciplinary structure
          violates due process requirements set forth in the Securities
          Exchange Act of 1934 (the "Exchange Act") and the Constitution
          because it fails to separate prosecutorial and adjudicatory
          functions, i.e., the same body that initially decides whether a
          complaint should be issued -- the District Committee -- also has
          responsibility for adjudicating the merits of that complaint.  It
          is well established, however, that the NASD "may combine
          investigatory, prosecutorial, and quasi-judicial functions
          without violating due process." [35]
               Applicants further claim that they were prevented from
          calling witnesses and introducing evidence related to their
          contention that the NASD's procedures denied them due process.
          Applicants sought to establish that there was inappropriate
          contact between the NASD staff and the members of the District
          Committee during the investigation and consideration of this
          matter.  There is, however, nothing in the record to suggest that
          there was anything unusual or inappropriate about the interaction
          between the NASD staff and the District Committee. [36]  We
          previously have held that such interaction is permissible because
          the decision that is ultimately issued by the District Committee
          "is reviewed and must be accepted by the DBCC before the opinion
          is issued." [37]  We also have held that, "even if there had been
          inappropriate procedures, the de novo review of the record by
          both the NASD Board of Governors and the Commission dissipates
          any harm that may have resulted from any such impropriety." [38]
          As discussed above, the NASD's findings of violation are amply
          supported by the record.
               Applicants further complain about the appointment of an NASD
          enforcement staff member as attorney-advisor to the District
          Committee's hearing panel that presided over the hearing.
          Sanders has identified no basis for the disqualification of this
          individual -- such as personal bias -- other than that the
          attorney-advisor's other NASD responsibilities involved the
          prosecution of unrelated complaints in a different NASD district.
          We do not consider these facts disqualifying. [39]
                                         IV.
               Respondents complain that the sanctions are excessive.
          Sanders claims that the sanctions exceed those recommended in the
          NASD's own sanction guidelines and those imposed in other cases
          involving comparable facts.  In addition, Sanders states that he
          has no prior disciplinary history regarding excessive pricing.
               According to the NASD's Sanction Guidelines, the monetary
          sanction for markup violations should equal "[t]he gross amount
          of the excessive markup . . . plus $5,000 to $50,000."  The
          guidelines also provide for a suspension of up to three years or
          bar of the responsible employee "[w]here . . . [the] excessive
          markups/markdowns are egregious."  We believe that these markups,
          which in some cases exceeded 20% and which generated several
          hundred thousand dollars of illegal profits, were egregious.
               In addition, we are troubled by Sanders' reckless disregard
          for the principles governing the pricing of securities.  Although
          he was the Firm's head trader, he apparently had made virtually
          no effort to familiarize himself with these principles or the
          manner in which they are to be applied in particular situations.
          Sanders' disregard for regulatory requirements in this case
          augurs poorly for his fitness generally to remain in the
          industry.  We also observe that, while Sanders has no prior
          disciplinary record relating to excessive pricing, this is not
          the first time the NASD has brought proceedings against
          him. [40]  Under the circumstances, we do not consider the
          sanctions imposed on Sanders to be excessive or oppressive. [41]
               Porush complains that the sanctions imposed on him are so
          grossly disproportionate to the single violation found that the
          NASD must have improperly considered matters wholly separate from
          the instant proceeding in assessing them.  We are deeply troubled
          by Porush's neglect of his supervisory responsibilities, which
          resulted in Stratton's customers being charged unfair and
          fraudulent markups.  As discussed, Porush personally profited
          from Stratton's excessive pricing because his compensation, which
          as mentioned exceeded $3 million during 1993, was tied to the
          Firm's trading profits.  In addition, like Sanders, this is not
          the first time Porush has run afoul of regulatory requirements.
          [42]  As with Sanders, Porush's behavior in this case causes us
          to doubt his fitness to remain in the securities industry.  We
          further believe that a substantial fine is necessary here to
          impress upon Porush and others in the industry the seriousness
          with which we view such supervisory failures. [43]  Thus, we find
          that the sanctions imposed by the NASD are neither excessive nor
          oppressive. [44]
               An appropriate order will issue. [45]
               By the Commission (Chairman LEVITT and Commissioners
          JOHNSON, HUNT and CAREY); Commissioner UNGER not participating.
        Jonathan G. Katz
        Secretary
          **FOOTNOTES**
               [20]:The District Committee evaluated  the fairness of Stratton's
               pricing by looking at the prices it  paid to acquire Glazier
               units  in  an  apparent  attempt to respond  to  applicants'
               argument that the fairness  of  its  pricing of the warrants
               should  be judged by reference to the contemporaneous  price
               of  the  units.    Based  on  this  analysis,  the  District
               Committee concluded  that Stratton charged excessive markups
               of  $1,876,205.  The National  Committee  did  not  use  the
               District Committee's analysis.
               [21]:See, e.g., Alstead, Dempsey & Company, Incorporated, 47
               S.E.C.  at  1037  (markups  calculated  based upon wholesale
               contemporaneous cost where market dominated and controlled).
               [22]:The National Committee has the power to affirm, modify,
               or  reverse the District Committee (which  it  properly  did
               here).   Its opinion, if not modified by the NASD's Board of
               Governors,  is  subject  to  appeal  to the Commission.  See
               Article III of the NASD's Code of Procedure,  NASD  Manual
               3041 et seq. (April 1993).
               [23]:See Richard R. Perkins, 51 S.E.C. at 384 n.20, and  the
               cases there cited.
               [24]:See,  e.g.,  G.K. Scott & Co., Inc., 51 S.E.C. 961, 968
               (1994) (firm trader  is  charged  with  "knowing fundamental
               standards for charging fair prices to the public," including
               those governing a dominated and controlled  market,  and his
               reckless   disregard   for  these  standards  satisfies  the
               scienter requirement), aff'd,  56 F.3d 1531 (D.C. Cir. 1995)
               (Table).
               [25]:As discussed below, applicants  contend  that  the NASD
               failed  to  establish that a compliance manual contained  in
               the record was  in  effect  during  the period at issue.  We
               reject that contention.
               [26]:See Article III, Section 27(b) of the NASD Rules.
               [27]:See n.28, infra.
               [28]:On   November  2,  1992,  this  Commission   filed   an
               injunctive  action  against  the  Firm, Belfort, Porush, and
               other Firm personnel.  On March 17, 1994, the Firm, Belfort,
               and Porush settled Commission proceedings, without admitting
               or denying the allegations.  Pursuant  to  this  settlement,
               the  Firm  agreed,  among other things, to pay disgorgement,
               interest  and a civil  penalty  of  over  $2.5  million,  to
               appoint an  independent  consultant  to  review  the  Firm's
               policies,  and  to  prepare  a  supervisory  procedures  and
               compliance   manual.    Belfort  agreed  to  be  permanently
               enjoined from further violations of the antifraud provisions
               of the securities laws, to  pay a civil penalty of $100,000,
               and to be barred from association  with  any broker, dealer,
               investment   company,   investment   adviser  or   municipal
               securities  dealer.   Porush  agreed  to be  suspended  from
               acting  in a supervisory capacity with any  broker,  dealer,
               investment   company,   investment   adviser,  or  municipal
               securities dealer for 12 months and to  pay  a civil penalty
               of $100,000.
               On July 31, 1998, Porush's attorney informed this Commission
               that Porush settled unrelated NASD disciplinary  proceedings
               on  July  23,  1998.  Pursuant to this settlement agreement,
               Porush consented,  for  the purpose of that proceeding only,
               without admitting or denying  the  allegations of the NASD's
               complaint, to findings that he failed  to supervise Stratton
               salespersons  who  "engaged in widespread  fraudulent  sales
               practices and other egregious misconduct."  Porush agreed to
               be censured, barred from association with any NASD member in
               any capacity and fined  $500,000.   Porush also acknowledged
               that  the  settlement  would become part  of  his  permanent
               disciplinary record and may be considered in any future NASD
               proceedings.
               [29]:Byrne explained the  apparent  inconsistencies  in  his
               testimony  by  stating  that,  before the District Committee
               hearing, he viewed documents showing  that  Belfort remained
               at  the  Firm  as  a director until March 1994.   As  noted,
               however, before the  District  Committee he conceded that he
               reported to Porush as president of the Firm.
               [30]:Cf.   Houston  A.  Goddard,  51   S.E.C.   668   (1993)
               (compliance  director  and  principal both held liable under
               NASD rules for failure to supervise  salesperson).  See also
               John  H.  Gutfreund,  51 S.E.C. 93, 111-12  (1992)  (settled
               case) (finding supervisory  failure  by  both  president and
               chief executive officer of firm); Robert J. Check, 49 S.E.C.
               1004,  1008  (1988) ("The fact that other officials  .  .  .
               shared responsibility  for  supervising  the firm's salesmen
               did    not   relieve   [respondent]   of   his   supervisory
               obligations.") (citation omitted).
               [31]:Cf. William S. Mentis, Securities Exchange Act Rel. No.
               37952 (November 15, 1996), 63 SEC Docket 661, 664 (principal
               violated  NASD  supervisory requirements by failing properly
               to designate supervisor  for firm's trading activities where
               principal was identified in  firm  documents  as  having the
               designation   responsibility  and  where  he  provided  such
               documents to the  NASD  as reflecting the firm's supervisory
               system); Kirk A. Knapp, 50 S.E.C. 858, 862 (1992) (president
               of firm violated NASD supervisory  requirements  even though
               barred firm owner continued to exercise managerial control).
               [32]:Kirk A. Knapp, 50 S.E.C. at 862.
               [33]:Frank  L.  Palumbo,  Securities  Exchange Act Rel.  No.
               36427 (Oct. 26, 1995), 60 SEC Docket 1736  (firm  president,
               chief  executive  officer  and  vice-president each violated
               NASD supervisory requirements where  they  knew  that firm's
               policy  was  to  charge retail prices of up to 5% above  the
               inside offer quotation).   See  also  D.E. Wine Investments,
               Inc., Securities Exchange Act Rel. No. 39517 (Jan. 6, 1998),
               66  SEC  Docket  763,  770  (quotations constitute  "a  less
               reliable  measure  of  the  market"   than  actual  trades);
               Alstead, Dempsey & Company, Incorporated,  47 S.E.C. at 1036
               ("[b]y   their  very  nature,  quotations  only  propose   a
               transaction;  they  do  not  reflect  the actual result of a
               completed arms-length sale").
               [34]:Anthony Tricarico, 51 S.E.C. 457, 460 (1993).  See also
               Universal Camera v. NLRB, 340 U.S. 474 (1950).
               [35]:David  A. Gingras, 50 S.E.C. 1286,  1292  (1992).   See
               also Withrow v. Larkin, 421 U.S. 35, 52 (1975) ("our cases .
               . . offer no  support  for  the  bald proposition . . . that
               agency  members  who  participate in  an  investigation  are
               disqualified   from   adjudicating.");    Austin   Municipal
               Securities, Inc. v. NASD, 757 F.2d 676, 689  (1985)  ("There
               is  nothing  constitutionally  infirm  about  the  [District
               Committee]  performing  both  prosecutorial and adjudicatory
               functions."); Stratton Oakmont,  Inc.,  Securities  Exchange
               Act  Rel.  No.  38390  (March  12, 1997), 64 SEC Docket 164;
               Daniel C. Adams, 47 S.E.C. 919,  922 (1983) ("While the NASD
               as a whole, like this Commission,  exercises  investigatory,
               prosecutory and quasi-judicial functions, the combination of
               such functions in one agency does not violate due process of
               law."); Richard W. Perkins, 47 S.E.C. 847, 849-50 (1982).
               We   note  that  the  NASD  has  modified  its  disciplinary
               procedures.   Under  current  procedures, the members of the
               hearing panel are not responsible for investigating possible
               misconduct  or  instituting disciplinary  proceedings.   See
               Rule 9144 of the NASD's Code of Procedure.
               [36]:In  this  connection,   we   note   that  the  District
               Committee's analysis of the Firm's pricing differed markedly
               from that proposed by the NASD staff.  See n.20, supra.
               [37]:David A. Gingras, 50 S.E.C. at 1292.
               [38]:Frank  J.  Custable,  Jr.,  51 S.E.C. 855,  862  (1993)
               (rejecting claim that the NASD staff,  through prosecutorial
               zeal, improperly influenced the NASD's district  committee).
               See  also Frank J. Custable, Jr., 51 S.E.C. 643, 650  (1993)
               (commission's  independent  de novo review of the record and
               that  of  the  NASD's  National Committee  "`dissipates  the
               possibility of abuse.'").
               [39]:See  Stratton Oakmont,  Inc.,  64  SEC  Docket  at  171
               (rejecting similar due process challenge).
               [40]:The NASD  notes  that,  in  April  1996, it accepted an
               Offer  of  Settlement from Stratton and Sanders  to  resolve
               allegations  that, among other things, Stratton had effected
               sales  in an IPO  before  the  offering  had  been  declared
               effective,  had  failed  to  notify  customers of its market
               maker status, and had "given customers  arbitrary  prices in
               purchases from customers in violation of SEC Rule 10b-5  . .
               .  ."  Sanders was censured, fined $50,000 and suspended for
               45 days  in  all  capacities and thereafter for 5 additional
               days  in any capacity  related  to  trading.   Sanders  also
               settled two other NASD proceedings in 1990 and 1991, but the
               NASD  expressly   declined   to   consider   these   earlier
               settlements in assessing a sanction.
               [41]:As  we  have  previously  noted,  appropriate  remedial
               action  depends  on  the  facts  and  circumstances  of each
               particular  case  and  cannot  be  precisely  determined  by
               comparison with the actions taken in other proceedings.  See
               Butz  v.  Glover Livestock Commission Co., 411 U.S. 182, 187
               (1973); Hiller v. SEC, 429 F.2d 856, 858-59 (2d Cir. 1970).
               [42]:See n.28, supra.
               [43]:Porush  notes  that  the sanctions imposed exceed those
               called for in the NASD's Sanction  Guidelines.   As  we have
               previously  pointed out, however, the NASD's guidelines  are
               not meant to prescribe fixed penalties but merely to provide
               a  "starting  point"   in   the  determination  of  remedial
               sanctions.  Peter W. Schellenbach, 50 S.E.C. 798, 803 (1991)
               (noting that there are "instances  where the particular case
               facts and circumstances justify sanctions  other  than those
               suggested" in the guidelines), aff'd, 989 F.2d 907 (7th Cir.
               1993).
               [44]:Porush moves to strike an exhibit attached to  the NASD
               brief   purporting  to  summarize  the  Firm's  disciplinary
               record, noting  that it was not part of the record below nor
               the subject of a motion to adduce additional evidence before
               us.   We  have  not  considered  this  "exhibit"  and  grant
               Porush's motion.
               [45]:All of the arguments  advanced by the parties have been
               considered.  They are rejected  or  sustained  to the extent
               that  they  are  inconsistent  or  in accord with the  views
               expressed in this opinion.
                          UNITED STATES OF AMERICA
                                      before the
                          SECURITIES AND EXCHANGE COMMISSION
          SECURITIES EXCHANGE ACT OF 1934
          Rel. No. 40600 / October 26, 1998
          Admin. Proc. File No. 3-9195
          _________________________________________________
                                                           :
                 In the Matter of the Applications of      :
                                                           :
                         STEVEN P. SANDERS                 :
                         13-28 208th Place                 :
                      Bayside, New York 11360              :
                                                           :
                                  and                      :
                                                           :
                            DANIEL M. PORUSH               :
                            Two Bayclub Drive              :
                       Bayside, New York 11360             :
                                                           :
           For Review of Disciplinary Action Taken by the  :
                                                           :
          NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. :
                                                           :
          ORDER SUSTAINING DISCIPLINARY ACTION TAKEN BY REGISTERED
          SECURITIES ASSOCIATION
               On the basis of the Commission's opinion issued this day, it
          is
               ORDERED that the disciplinary action taken by the National
          Association of Securities Dealers, Inc. against Steven P. Sanders
          and Daniel M. Porush, and the Association's assessment of costs,
          be, and they hereby are, sustained.
          By the Commission.
          Jonathan G. Katz
          Secretary