Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Monday, November 10, 2008

SEC Sets Aside NASD Findings & Sanctions as to Two Brokers

The SEC set aside NASD's findings of violation and sanctions against registered representatives James Wade Browne and Kevin Calandro. NASD had previously found that Browne and Calandro violated NASD Conduct Rules 3040 and 2110 by engaging in private securities transactions involving the securities of e2 Communications, Inc. without prior notice to, and prior written approval from, their member firms. NASD concluded that Browne and Calandro "participated" in the purchases of e2 stock by fourteen investors, for which NASD imposed upon Browne a six-month suspension and $25,000 fine and imposed upon Calandro a three-month suspension and $5,000 fine.

In setting aside NASD's findings of violation, the SEC found that, with respect to several investor purchases, "the record before us does not establish by a preponderance of the evidence . . . a factual nexus between the conduct of Browne or Calandro and the specific [stock] purchases at issue" sufficient to satisfy the definition of "participation" in a securities transaction as established by Commission precedent. With respect to other investor purchases, the Commission found that the "evidence is insufficient to find Applicants liable under Rule 3040 for participating" in those purchases as charged.

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