GREAT ARTICLE ON NASDAQ ARBITRATION SYSTEM AND SHOWS WHAT ONE CAN EXPECT WHEN YOU ARE RIPPED OFF BY A BROKER. I MIGHT ADD THAT IF YOU HAVE A CROOK FOR A BROKER MANY TIMES THE FIRM WILL SETTLE WITH A CLIENT AND THE BROKER GETS OFF AND JUST WALKS OVER TO THE NEXT BOILER ROOM. THE BOILER ROOM THAT MADE THE SETTLEMENT OFTEN NEVER PAYS ONE THIN DIME AND GOES BELLY UP LEAVING THE CLIENT WITH NOTHING. I HAVE READ MANY CRD'D AND THE HISTORY OF BROKERS WORKING FOR MANY BOILER ROOMS IS COMMON PLACE. THE BEST EXAMPLE I COULD GIVE SOMEONE IS THE CRD OF ONE WILLIAM PRESTON STRONG WHO IS A REAL CRIM. BRENT MUDRY IS WRONG. THE U.S.OTC BB and Boca Raton isthe "SCAM CAPITAL OF THE WORLD". HOW DARE HIM SAY ITS HOWE STREET.
Boston Herald
Copyright 1998
Thursday, June 18, 1998
FINANCE
ON STATE STREET; Lawyer takes tough stand on damages Beth Healy
Mark Maddox is mad.
The Indianapolis lawyer has penned a letter to Securities and Exchange Commission chief Arthur Levitt, urging him to make good on his promise to stamp out penny-stock fraud - and not to limit punitive damages investors can seek if they're ripped off.
Maddox is a former Indiana state securities commissioner, who now represents investors in disputes with brokers. One of his clients claims to be out $400,000 in a dispute with H.J. Meyers & Co., a brokerage firm that's fighting to keep its Massachusetts license.
Why does Maddox care about punitive damages? After all, they're rarely awarded in securities cases. It's hard enough for investors to get back money they've lost with unscrupulous brokers.
Maddox says easing up sends the wrong message to bad brokers.
"Capping punitive damages in securities arbitration cases will destroy the minimal progress made against penny stock firms over the last decade," Maddox writes. "Do not take from investors the last protection they have against penny stock criminals."
At issue is a proposed rule sent to the SEC by the brokerage industry's self-regulating body, the National Association of Securities Dealers. The NASD wants to cap punitive damages in investor-broker disputes at two-times actual damages, with a $750,000 maximum. If that's approved, Maddox argues, "the SEC will be aligned with the crooks . . ."
The SEC has received 68 letters commenting on the proposed rule. Maddox's letter, dated June 16, was sent after the close of the official comment period, but an SEC spokesman says, "We read and consider all letters."
David Shellenberger, a Boston lawyer and frequent critic of penny- stock hawkers, says he's not worked up about the punitive damages issue because they're almost never awarded in New England. His concern goes even deeper - to the core of the NASD's dispute resolution process itself.
By law, investors who feel they've been wronged by a broker must first take their complaints not to a normal court of law, but to an NASD panel. A typical panel includes both industry insiders and outsiders.
"Arbitration just isn't working," Shellenberger says. "You can't have the foxes judging other foxes as to whether it's OK to eat the hens."
Even when they do get caught, Maddox asks, why do the bad guys in the securities business get off so easily? To Levitt, he says: "Unfortunately, even when regulators catch penny stock firms, you give them nothing more than a slap on the wrist and let them go on their merry way."
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