Opinion ID: 675852
Heading Depth: 2
Heading Rank: 3

Heading: legality of the markup policy

Text: 45 Orkin asserts that the markup policy 1) is illegal under federal anti-trust laws in that it results in price fixing and unduly restrains trade; 2) has never been approved in accordance with the Administrative Procedures Act; 3) is based on an antiquated survey of dealer pricing practices and its enforcement is arbitrary and capricious; and 4) as administered, is so difficult to comply with that it is rendered unconstitutional. 46 In Meyer Blinder, 52 S.E.C. Docket 1145, 1992 WL 21607,  3,  6- 8, the SEC considered the arguments that the NASD markup policy violates the Exchange Act, the antitrust laws, and the Administrative Procedures Act as well as the assertions that the policy is unconstitutionally vague, arbitrary, and capricious. For the reasons set forth in that opinion as well as those cited by the SEC in its opinion 14 , we concur with the SEC's conclusion that the NASD's markup policy is not illegal, unfair, or unconstitutional as applied to the facts of this case or otherwise. 47 We are similarly unpersuaded by Orkin's argument that the markup policy is unfair because no reported cases involve similar facts. Specifically, Orkin notes that no published decision addresses markups where a dealer exercises warrants to fill retail orders or where the market of a security is dominated and controlled by a party not charged in the complaint. As a result, Orkin argues that he did not have adequate notice of the rules he was required to abide by as an NASD member. 48 While we have been unable to locate a decision involving the precise factual situation before us, none of the SEC cases that Orkin has cited or that we have reviewed preclude the SEC's findings. 15 The markup policy is clear, well-established, and capable of being fairly applied to the facts of this case. Orkin had sufficient notice that the NASD Rules prohibited his conduct in this case. By its definition, the markup policy must be applied case-by-case and all relevant circumstances must be considered in determining the prevailing market price for a security and whether a fair retail price has been charged. For the reasons set forth above, we cannot find that the SEC unfairly or improperly concluded that Orkin was responsible for excessive markups in 201 retail sales of Ortech stock. These arguments by Orkin do not warrant reversal of the SEC's order.