Mister Discount Stockbrokers, Inc. v. S.E.C., No. 83-2378

CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)
Writing for the CourtBefore ESCHBACH, POSNER, and COFFEY; COFFEY
Citation768 F.2d 875
PartiesFed. Sec. L. Rep. P 92,223 MISTER DISCOUNT STOCKBROKERS, INC. and William F. Miller, Petitioners, v. SECURITIES AND EXCHANGE COMMISSION, Respondent.
Docket NumberNo. 83-2378
Decision Date22 July 1985

Page 875

768 F.2d 875
Fed. Sec. L. Rep. P 92,223
MISTER DISCOUNT STOCKBROKERS, INC. and William F. Miller, Petitioners,
v.
SECURITIES AND EXCHANGE COMMISSION, Respondent.
No. 83-2378.
United States Court of Appeals,
Seventh Circuit.
Argued Jan. 10, 1982.
Decided July 22, 1985.

Page 876

Theodore H. Amshoff, Jr., Amshoff & Amshoff, Louisville, Ky., for petitioners.

Ruth Eisenberg, S.E.C., Washington, D.C., for respondent.

Before ESCHBACH, POSNER, and COFFEY, Circuit Judges.

COFFEY, Circuit Judge.

William F. Miller and Mister Discount Stockbrokers, Inc. petition this court, pursuant to section 25(a)(1) of the Securities Exchange Act of 1934, 15 U.S.C. Sec. 78y(a)(1), to review an order of the Securities Exchange Commission. We affirm the order of the Commission.

I

The Securities and Exchange Commission ("Commission") is a federal agency charged with the regulation of the securities industry. Due to the size of the industry, the Commission relies upon the industry members to aid in the enforcement of federal securities laws. Although regulatory and final authority ultimately rests with the Commission, associations of securities broker dealers registered with the Commission pursuant to section 15A(a) of the Securities Exchange Act, 15 U.S.C. Sec. 78o-3(a), are empowered to enforce association members' compliance with federal securities laws, Commission regulations, and the association's own rules and regulations by imposing an appropriate sanction. 15 U.S.C. Sec. 78o-3(b)(7).

The National Association of Securities Dealers ("NASD") is a registered association of securities broker-dealers, which, when enforcing members' compliance with applicable rules and regulations, must "provide a fair procedure for the disciplining of members and persons associated with members...." 15 U.S.C. Sec. 78o-3(b)(8). The disciplinary process established by the NASD provides that the NASD Regional District Business Conduct Committee ("District Committee") has original jurisdiction of all complaints regarding member violations, and may conduct hearings, make findings, and impose penalties. Any final action taken by the District Committee is, upon timely application of an aggrieved party, subject to review by the NASD Board of Governors, which considers the record before the District Committee and "such other evidence as it may deem relevant" and may in turn either affirm, reverse, or modify the action taken by the District Committee. Any final disciplinary sanction imposed by the Board of Governors is subject to review by the Commission, 15 U.S.C. Sec. 78s(d), and final orders of the Commission are reviewable only in the United States Courts of Appeals. 15 U.S.C. Sec. 78y(a).

In 1977, Mister Discount Stockbrokers, Inc. ("Mister Discount") began conducting business as a discount broker-dealer with William F. Miller as its chief executive officer and sole operating principal and joined the NASD. In March, 1980, the NASD received a letter from Mister Discount's certified public accountant informing the NASD that a deficiency of some $9,000.00 existed in Mister Discount's special reserve account, resulting in a violation of Commission Rule 15c3-3, 17 C.F.R. Sec. 240.15c3-3. On April 9, 1980, the NASD and the Commission commenced a joint examination of Mister Discount's financial records and discovered serious irregularities and violations of both the rules of the NASD and the Commission.

The District Committee of the NASD filed a complaint against Mister Discount and William F. Miller on July 24, 1980 alleging four separate violations of the NASD Rules of Fair Practice. The first count of the complaint alleged that Mister Discount and Miller violated Sections 1 and 18 of Article III of the NASD Rules of Fair Practice by engaging in a general securities business, impliedly representing that Mr. Discount could deal fairly with the public, while they neither knew nor could have known the true net capital condition of Mr. Discount due to its deteriorating

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operational and financial condition. The second count alleged that the petitioners violated Sections 1, 18, and 27 of Article III by failing to take necessary and required steps to remedy the deteriorating financial condition of Mr. Discount, and failed to adequately supervise the operation of Mr. Discount to assure compliance with the applicable regulations. The third count alleged that petitioners violated Sections 1, 18, and 21 of Article III by failing to comply with various provisions of Commission rules regarding keeping accurate financial records and an adequate reserve account. The fourth count alleged that the petitioners violated Section 1 of Article III by violating a restrictive agreement between the petitioners and the Commission and the NASD that had been entered on April 9, 1980. A subcommittee of the District Committee conducted an evidentiary hearing and found that Mister Discount and Miller had violated the Rules of Fair Practice as charged in the first three counts, but dismissed the fourth count. The District Committee censured Mister Discount...

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28 practice notes
  • Mohilef v. Janovici, No. B096420
    • United States
    • California Court of Appeals
    • November 27, 1996
    ...a refusal to do so would so prejudice a party as to deny him due process.' " (Mister Discount Stockbrokers, Inc. v. S.E.C. (7th Cir.1985) 768 F.2d 875, As our Supreme Court has observed: "The Legislature's silence with respect to prehearing discovery in administrative proceedings does not m......
  • Perez v. Wallis, No. 11 C 3019
    • United States
    • United States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)
    • December 30, 2014
    ...1172, 1175 n. † (7th Cir.1991) (“There is so far no parallel to Brady in civil litigation.”); Mister Disc. Stockbrokers, Inc. v. S.E.C., 768 F.2d 875, 878 (7th Cir.1985) (rejecting Brady argument in civil case, because “Brady v. Maryland ... involved a criminal prosecution, while the petiti......
  • Fiero v. Fin. Indus. Regulatory Auth., Inc., Docket Nos. 09–1556–cv(L)
    • United States
    • U.S. Court of Appeals — Second Circuit
    • October 5, 2011
    ...United States Court of Appeals, pursuant to 15 U.S.C. § 78y. 15 U.S.C. §§ 78s(d), 78y(a); see also Mister Discount Stockbrokers v. SEC, 768 F.2d 875, 876 (7th Cir.1985).b) The Disciplinary Action Against the Fieros Fiero Brothers, a New York corporation, was a FINRA member firm and broker-d......
  • U.S. v. Edwards, No. 5:08–HC–02095–BO.
    • United States
    • United States District Courts. 4th Circuit. Eastern District of North Carolina
    • April 14, 2011
    ...the Brady rule to a civil proceeding for determining the amount of one's tax liability.”); Mister Discount Stockbrokers, Inc. v. S.E.C., 768 F.2d 875, 878 (7th Cir.1985) ( Brady does not apply to a securities administrative disciplinary proceeding, which involves monetary sanctions and Brad......
  • Request a trial to view additional results
26 cases
  • Mohilef v. Janovici, No. B096420
    • United States
    • California Court of Appeals
    • November 27, 1996
    ...a refusal to do so would so prejudice a party as to deny him due process.' " (Mister Discount Stockbrokers, Inc. v. S.E.C. (7th Cir.1985) 768 F.2d 875, As our Supreme Court has observed: "The Legislature's silence with respect to prehearing discovery in administrative proceedings does not m......
  • Perez v. Wallis, No. 11 C 3019
    • United States
    • United States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)
    • December 30, 2014
    ...1172, 1175 n. † (7th Cir.1991) (“There is so far no parallel to Brady in civil litigation.”); Mister Disc. Stockbrokers, Inc. v. S.E.C., 768 F.2d 875, 878 (7th Cir.1985) (rejecting Brady argument in civil case, because “Brady v. Maryland ... involved a criminal prosecution, while the petiti......
  • Fiero v. Fin. Indus. Regulatory Auth., Inc., Docket Nos. 09–1556–cv(L)
    • United States
    • U.S. Court of Appeals — Second Circuit
    • October 5, 2011
    ...United States Court of Appeals, pursuant to 15 U.S.C. § 78y. 15 U.S.C. §§ 78s(d), 78y(a); see also Mister Discount Stockbrokers v. SEC, 768 F.2d 875, 876 (7th Cir.1985).b) The Disciplinary Action Against the Fieros Fiero Brothers, a New York corporation, was a FINRA member firm and broker-d......
  • U.S. v. Edwards, No. 5:08–HC–02095–BO.
    • United States
    • United States District Courts. 4th Circuit. Eastern District of North Carolina
    • April 14, 2011
    ...the Brady rule to a civil proceeding for determining the amount of one's tax liability.”); Mister Discount Stockbrokers, Inc. v. S.E.C., 768 F.2d 875, 878 (7th Cir.1985) ( Brady does not apply to a securities administrative disciplinary proceeding, which involves monetary sanctions and Brad......
  • Request a trial to view additional results

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