Opinion ID: 781210
Heading Depth: 2
Heading Rank: 3

Heading: NASD Disciplinary Proceedings

Text: 9 On September 27, 1991, the NASD's District Business Conduct Committee sanctioned Appellants for violating the NASD's Rules of Fair Practice. The NASD District Committee found that Atlanta-One's commissions were excessive and unfair. Specifically, they were held to be in violation of Article III, Section 1 of the NASD Rules. Article III, Section 1 requires NASD members to observe high standards of commercial honor and just and equitable principles of trade. McCarthy and Blodgett were fined $75,000 and $50,000 respectively in addition to $413 in costs. They were also suspended for thirty days and ordered to requalify before acting again in any capacity requiring qualification within the securities industry. Appellants appealed to the NASD's Business Conduct Committee. On March 10, 1992, the NASD Business Conduct Committee affirmed the decision of the NASD District Committee and imposed an additional $721 in costs. 10 Appellants appealed to the Commission. The Commission reviewed the matter de novo. On March 8, 1995, the Commission affirmed the NASD decision and sustain[ed] the NASD's findings that [Appellants] charged excessive commissions in violation of Article III, Section 1 of the Rules of Practice. In re Atlanta-One, Inc., Exchange Act Release No. 34-35455, 58 S.E.C. Docket 2483, 1995 WL 103844 (Mar. 8, 1995), available at 337 Md. 641, 655 A.2d 400, 1995 WL 103975, at . 11 Appellants subsequently petitioned us for review of the Commission's decision. In a published opinion filed November 12, 1996, we denied the petition and affirmed the Commission's order, noting that Appellants charged their clients excessive commissions that blatantly exceeded a fair and equitable level. Atlanta-One, Inc. v. SEC, 100 F.3d 105, 110 (9th Cir.1996). 12 On November 7, 2001, the Commission filed an Application in district court, requesting Appellants be ordered to comply with the Commission's order of March 8, 1995, and pay sanctions. That same day, the Commission served Appellants with the Application and all supporting documents filed in district court. No summons, however, was ever issued by the district court. Two weeks later on November 21, 2001, the district court summarily granted the Commission's Application without first convening a hearing or, alternatively, permitting Appellants to respond. Appellants appealed. 13 On June 21, 2002, the Commission moved to remand this action to district court. The Commission argued that Appellants should be given an opportunity to (1) respond to the Commission's Application and (2) raise affirmative defenses before the district court. The Commission explained that, Remand is ... appropriate because [Appellants'] purported defenses raise substantive arguments whose resolution requires the development of facts not currently in the record. On August 30, 2002, this Court denied the motion without prejudice.