To: DSPetry who wrote (24207 ) 10/26/1999 2:15:00 AM From: Jeffrey S. Mitchell Respond to
Indeed it appears the SEC also thought Scattered was derelict in their operation, so they told Scattered they would only approve them as a market maker if they opened a "V Account" which would allow the SEC to track Scattered's net positions in stocks they traded. Scattered sued the SEC saying that the SEC didn't have a right to impose such a limitation. The Court said the SEC sure did.Authority for the SEC to control what stock exchanges put in (or find in) their operating rules appears not in sec. 11A but in sec. 19(c), 15 U.S.C. sec. 78s(c), which was rewritten as part of the legislative package that included sec. 11A. Until 1975 stock exchanges could adopt, change, repeal, and interpret rules without the SEC's approval, although the Commission was authorized to review them later. In the 1975 amendments the SEC acquired a power of prior review, coupled with authority to "abrogate, add to, and delete from" exchanges' existing rules. Scattered appealed to the SEC's power under sec. 19(c) when asking the Commission for relief from the "V Account" requirement. Although the SEC dismissed Scattered's application after the Exchange dropped the requirement, it invited Scattered to file anew if it encountered continuing troubles registering as a market maker. So enforcement of sec. 11A(c)(5) is readily available; aggrieved parties complain to the SEC, not to a judge. Separate provision of authority in sec. 11A(c)(5) would have been redundant. And that is not all. Section 21, 15 U.S.C. sec. 78u, confers on the Commission power to investigate and provide remedies for any violation of the '34 Act, and to initiate litigation that will lead to monetary penalties. Section 21(d)(3) includes a table of monetary penalties, which a private damages action would evade. Section 21C, 15 U.S.C. sec. 78u-3, gives the SEC cease-and-desist authority for the '34 Act. Finally, sec. 32(a), 15 U.S.C. sec. 78ff(a), makes any wilful violation of sec. 11A (like all but one provision of the '34 Act) a felony, punishable by fine and imprisonment. Section 11A(c)(5) does not lack for enforcement mechanisms. kentlaw.edu
