Notice, Pursuant to Exchange By-law 18-2, of Disciplinary
Action Against D&D Securities, Inc., Member Organization
To:Members, Member Organizations, Participants and Participant Organizations

From:

Mark Schepps, Chief Enforcement Counsel, NASDAQ OMX PHLXSMDATE:July 1, 2009

NASDAQ OMX PHLX No. 09-18
Enforcement No. 2009-16
On June 22, 2009, the Business Conduct Committee (the “Committee”) issued adisciplinary decision against D&D Securities, Inc. (“D&D”), a member organization of theExchange. In response to a Statement of Charges issued in this action, D&D submitted an
Offer of Settlement, Stipulation of Facts and Consent to Sanctions (“Offer”). Solely tosettle this proceeding, and without either admitting or denying the charges, D&D
consented to findings that it violated Sections 15 and 17 of the Securities Exchange Act of1934, as amended (the “Exchange Act”), Rules 15c3-1(a), 17a-3, 17a-3(a)(19)(ii), 17a-5,
and 17f-2 promulgated thereunder, and Exchange Rules 604, 623, 703, 748(e), 748(g),760, 1024(b)(ii), 1024(b)(iv), 1024(b)(v), 1025 and 1029, by failing to: (i) maintain, onfour separate dates, the minimum required amount of net capital while engaging in asecurities business; (ii) keep accurate books and records and file accurate reports with theExchange; (iii) make and keep written records reflecting its relationship and compensation
arrangements or agreements with twenty-nine of its employees and/or associatedpersons; (iv) submit to FINRA the fingerprint records of twelve employees and/or
associated persons and to amend the Form U-4 of one of its employees; (v) ensure, orotherwise document, that all of its employees or associated persons attended its annualcompliance meeting; (vi) request and/or capture required information regarding its
options customers, their financial condition or investment objectives; (vii) ensure that: (i)written customer options agreements were obtained from customers within 15 days after
the customers’ accounts were approved by a Registered Options Principal for optionstransactions; and (ii) the written customer options agreements specified that thecustomers’ accounts would be managed in accordance with the rules of the Options
Clearing Corporation and the Exchange, including in compliance with the position orexercise limits set forth in Exchange Rules 1001 and 1002; (viii) deliver an Options
Disclosure Document to its customers at, prior, or subsequent to the time the customers’
accounts were approved for options trading; (ix) identify and designate a proper Senior
Registered Options Principal; and (x) establish, maintain and enforce adequate written
supervisory procedures, and a system for applying such procedures, reasonably expected
to prevent and detect, insofar as practicable, violations of the applicable securities laws
and regulations, including the by-laws and rules of the Exchange. D&D’s Offer wasaccepted by the Committee and was the basis of its decision.

The Committee found that D&D violated Sections 15 and 17 of the Exchange Act, Rules
15c3-1(a), 17a-3, 17a-3(a)(19)(ii), 17a-5, and 17f-2 promulgated thereunder, andExchange Rules 604, 623, 703, 748(e), 748(g), 760, 1024(b)(ii), 1024(b)(iv), 1024(b)(v),
1025 and 1029, concurred in the sanctions consented to by it, and ordered the impositionof the following sanctions: (i) a censure and (ii) a fine of $18,500.
For more information, contact:•Mark Schepps, Chief Enforcement Counsel, NASDAQ OMX PHLX, at +1 215 496 5153

© Copyright 2009 The NASDAQ OMX Group, Inc. All Rights Reserved.

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