Disciplinary Proceeding - finra

This Decision has been published by the NASD Office of Hearing Officers and should be cited asOHO Redacted Decision CAF030014.those areas reserved exclusively for the Panel’s determination. For example, several expertstestified directly or tangentially on conclusions of law. The Panel did not give weight to suchtestimony in reaching its decision. 7Following the hearing, the Parties submitted post-hearing briefs. Enforcement filed itsbrief on May 16, 2005, and the Firm filed its brief on June 27, 2005. The Panel then heardclosing arguments in Washington, DC, on July 27, 2005.In summary, the Panel concluded that Enforcement failed to prove that the Firm shared inthe profits of its customers’ accounts or engaged in other conduct that contravened highstandards of commercial honor or just and equitable principles of trade. Accordingly, the Paneldismissed the primary charges in the Complaint. In addition, the Panel dismissed the remainingcharges. To the extent that the remaining charges were not dependent on a finding that the Firmhad engaged in profit sharing in violation of Conduct Rule 2330(f), the Panel concluded thatEnforcement had not proven them by a preponderance of the evidence.III.FACTSA. BackgroundA considerable amount of testimony centered on two issues: (1) the customary level ofcommission rates institutional customers paid on agency trades of listed securities; and (2) the7 See, e.g., Snap-Drape, Inc. v. Commissioner, 98 F.3d 194, 198 (5th Cir. 1996) (Tax Court properly declined toadmit expert witness reports offered by taxpayer that “improperly contain[ed] legal conclusions and statements ofmere advocacy”); United States v. Scop, 846 F.2d 135, 138–40 (2d Cir. 1988), modified, 856 F.2d 5 (2d Cir. 1988)(“repeated statements [by expert] embodying legal conclusions exceeded the permissible scope of opiniontestimony”); In the Matter of Potts, 53 S.E.C. 187, 1997 SEC LEXIS 2005, at *45 (1997) (ALJ properly excludedtestimony of law professor and former SEC commissioner that would have consisted of “mere opinion of law” and“would not [have] provide[d] evidence”); Department of Enforcement v. Fiero, No. CAF980002, 2002 NASDDiscip. LEXIS 16, at *91 (N.A.C. Oct. 28, 2002) (“the lawyers for the parties, not expert witnesses, ha[ve] the taskof arguing to the Hearing Panel what the applicable legal standards [are]”).8