Thursday, November 7, 2013

Lehl v. Securities and Exchange Commission case brief

Lehl v. Securities and Exchange Commission case brief summary
90 F.3d 1483 (1996)

The National Association of Securities Dealers (NASD) took disciplinary action against petitioner securities broker. Respondent Securities and Exchange Commission (SEC) entered a final order sustaining the NASD's disciplinary action. The securities broker filed a petition seeking review of the SEC's order.

The securities broker argued that the SEC found him liable for charging excessive and unfair prices when the complaint against him alleged he failed to disclose the prices were excessive and unfair. He also contended the SEC never formally approved the NASD markup policy, that the SEC's enforcement of the markup rules was improper, and that one markup was improperly calculated. Finally, he argued there was insufficient evidence in the record to demonstrate he should have been held personally responsible for any markup violation that may have occurred.


  • The court held that the securities broker was adjudged liable for the misconduct for which he was charged. 
  • The court determined that the NASD's markup policy did not set forth a new standard of conduct and therefore was not a rule change requiring formal SEC approval. 
  • The court held the best evidence of prevailing market price was the dealer's contemporaneous costs and that the SEC did not err in its markup calculations. 
  • The court also held that the evidence was sufficient to sustain a finding of the securities broker's liability.

The order of the SEC sustaining the NASD's disciplinary action taken against the securities broker was affirmed.

Suggested Study Aids For Securities Regulation Law
Securities Regulation in a Nutshell, 10th (Nutshell Series)
Securities Regulation: Examples & Explanations, 5th Edition
Securities Regulations: The Essentials

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