June 5, 2007

The New York Court of Appeals (the state's highest court) today accepted leave to hear a case on GKN'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, GKN provided NASD-published statistics showing that the NASD could now flood the courts with these cases. GKN 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 GKN pressed on the appeal.