Securities Law Prof Blog

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

Monday, June 25, 2007

SEC Allows Specialist to Argue State Action Claim

The SEC has remanded to the NYSE a proceeding against Warren E.Turk, a former NYSE member and former specialist  associated  with  an NYSE member firm. The NYSE censured and permanently barred Turk  based on his failure to testify in  connection  with  its  investigation  of improper trading practices by NYSE specialists. Turk claims  that  the NYSE could not force him to testify because,  at  the  time  the  NYSE requested  his  testimony,  Turk  was  the  subject  of   a   criminal investigation and could therefore invoke the Fifth  Amendment's  right against self-incrimination. Turk argues that the right  against  self-incrimination applied to the NYSE because, under the particular  facts and circumstances of this case, the NYSE engaged in "state action"  in conducting its investigation of Turk. The  Commission  rejected Turk's argument that the NYSE is a state  actor  generally  and  found that the evidence Turk has presented thus far in support of his  state action argument is insufficient to establish that the NYSE has engaged in state action.  It concluded,  however,  that  "it  is appropriate  to  provide  Turk  an  opportunity  to  develop  a   full  evidentiary record on the state action question."

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