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FINRA

 

 

FOR RELEASE:
CONTACTS:
Thursday, July 8, 2004
Nancy Condon 202-728-8379
Herb Perone 202-728-8464

 



NASD Bars Scott W. Ryan, Expels Ryan & Company for Failure to Cooperate in Short Sale Probe

Washington, D.C.—An NASD Hearing Panel has barred Scott W. Ryan of Bryn Mawr, PA, and has expelled Ryan & Company, LP (RYCO) of West Conshohoken, PA, for failure to cooperate in an ongoing investigation into whether Ryan and the firm engaged in a widespread scheme of impermissible short selling activity on behalf of three hedge fund clients.

 

As part of the investigation, NASD requested that Ryan and RYCO produce certain documents and information pertaining to short-selling and options transactions under review. NASD also requested copies of Ryan's and RYCO's tax returns and RYCO's certified financial statements for fiscal years 1999 through 2003. Ryan and RYCO refused to provide all but a small portion of the requested documents and information, claiming NASD's requests were burdensome and irrelevant.

 

The Hearing Panel found that Ryan's and RYCO's objections were without merit and were not raised "in a good faith attempt to resolve their concerns in a timely and complete manner."

 

Instead, the Hearing Panel said, Ryan and RYCO "made no effort to comply with portions of the document requests… assumed a hostile stand, challenging the (NASD) staff's motives… (and) obdurately stalled the staff's efforts to complete the investigation by repeatedly raising meritless objections."

 

The Hearing Panel's decision will become final on Aug. 4, 2004, unless it is appealed to NASD's National Adjudicatory Council (NAC), or called for review by the NAC. If the decision is appealed or called for review, the sanctions may be increased, decreased, modified or reversed.

 

A Hearing Panel consists of an NASD Hearing Officer, along with two members of the securities industry. The NAC is a 14-person committee composed of seven industry and seven non-industry members that decides appeals from disciplinary, membership and exemption decisions; rules on statutory disqualification applications; and advises on other policy matters.

NASD's investigation into the suspected short selling scheme by Ryan and RYCO is continuing.

 

Investors can obtain more information and the disciplinary record of any NASD-registered broker or brokerage firm by calling NASD's BrokerCheck. NASD makes available BrokerCheck at no charge to the public. In 2003, members of the public used this service to conduct more than 2.9 million searches for existing brokers or firms and requested almost 180,000 reports in cases where disclosable information existed on a broker or firm. Investors can link directly to the program by going online to www.nasdbrokercheck.com. Investors can also continue to access this service by calling 1-800-289-9999.

 

NASD is the leading private-sector provider of financial regulatory services, dedicated to bringing integrity to the markets and confidence to investors through effective and efficient regulation and complementary compliance and technology-based services. NASD touches virtually every aspect of the securities business — from registering and educating all industry participants, to examining securities firms, enforcing both NASD rules and the federal securities laws, and administering the largest dispute resolution forum for investors and registered firms. For more information, please visit our Web site at www.nasd.com.