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

Heading: the nasd proceedings

Text: 14 After conducting an evidentiary hearing, the NASD District Business Conduct Committee (DBCC) found that the sales identified on Schedule A were made in violation of the NASD's 5% markup policy. Because Tri-Bradley was not a market maker in Ortech securities, the DBCC used Tri-Bradley's cost of $.0175 to purchase and exercise Ortech warrants as the best evidence of the prevailing market price of Ortech stock. The resulting markups of 100% to 243% for the retail sales identified on Schedule A greatly exceed the 5% markup generally permitted under the NASD's policy and generated approximately $186,000 profit for Tri-Bradley. 15 The DBCC also concluded that despite language in his employment agreement requiring approval and execution of sales by Tri-Bradley's home office, Orkin played a predominant role in setting the retail price for Ortech stock. The DBCC thus found that Orkin violated Article III, Sections 1 and 4 of the NASD Rules. It imposed the following sanctions: censure, $50,000 fine, costs, and suspension from all NASD activity for thirty (30) days. 16 The NASD National Business Conduct Committee (NBCC) upheld the DBCC's utilization of Tri-Bradley's cost in calculating the markups, but found that Orkin's participation in setting the retail price was limited. Nevertheless, the NBCC found that his participation was sufficient to hold him responsible for the excessive markups because he had been involved in Tri-Bradley's purchase of Ortech warrants, as well as in the sales of Ortech stock to public customers. The NBCC upheld the DBCC's sanctions of censure and costs. However, it reduced Orkin's fine to $15,000, and imposed a 90 day suspension from NASD principal activities.