SEC Allows Hibbard Brown To Remain In Securities Business For Now
NEW YORK (AP) _ Federal regulators refused Tuesday to immediately expel Hibbard Brown & Co. Inc. from a securities industry association following a decision to remove the brokerage firm for allegedly overcharging customers.
But the preliminary decision by the Securities and Exchange Commission also sharply curtails the firm’s activities.
The SEC order partially upholds Hibbard Brown’s appeal of an earlier decision by the National Association of Securities Dealers, an industry self- regulatory group that is overseen by the SEC.
Last month the NASD expelled Hibbard Brown, a move that would have effectively put it out of business, and ordered it to pay more than $8.7 million in restitution. It also effectively barred from the securities industry Richard P. Brown, the company’s president, and Anthony Nadino, its head trader. Both men were also fined $150,000 each.
The NASD has said it does not intend to enforce these actions until a final SEC decision on the matter.
Pending a final decision, the SEC said it ordered the partial stay because the firm had raised ″potentially difficult and complex legal issues″ about the NASD’s charges.
The SEC, however, barred the firm and its two principals from trading on behalf of individual investors. They are limited to liquidating customer accounts and transferring accounts to other brokerages.
The NASD charged Hibbard Brown dominated and controlled the market for a company called Site-Based Media Inc. Specifically, the self-regulatory group accused Hibbard Brown and its two principals with overcharging customers about $8.7 million in 6,200 transactions involving the stock of the company.
The brokerage, in its appeal, denied that it had dominated the market for the securities and took issue with various NASD assertions, including calculations used by the NASD in reaching its conclusions.
Hibbard Brown, based in New York, said in a statement that it had halted retail sales activity after the group’s decision last month.
Brown, the firm’s president, said in a statement that the SEC’s decision ″is testament to the serious and egregious flaws that exist in the NASD administrative process.″
Jim Spellman, an NASD spokesman, said that ″while we’re disappointed that the SEC did not reinstate our expulsion, we also levied penalties against them.
″We are heartened by their stay to prevent Hibbard Brown and the two named principals from engaging in public customer transactions beyond simply liquidating or transferring accounts,″ Spellman said.