June 5, 2007

The New York Court of Appeals (the state's highest court) today accepted leave to hear a case on GKB&N's application.

In this case, the National Association of Securities Dealers, Inc. (NASD) sued in state court to recover more than $1 million in fines it imposed in a disciplinary proceeding that barred a broker and expelled a brokerage firm. Since its inception in 1939, until recently, the NASD has never sued to collect such awards, and has collected them only as a condition to reinstatement. GKB&N argued that the NASD had no authority to enforce collection of such awards, and had been given no such authority by the SEC.

For the leave application, GKB&N provided NASD-published statistics showing that the NASD could now flood the courts with these cases. GKB&N also pointed to recent defaults that the NASD obtained in various cases against individuals who may not have had the resources or understanding to advance the arguments GKB&N pressed on the appeal.