May 31, 2007

SEC Affirms Role of NASD Ombuds

On May 30, 2007, the Securities and Exchange Commission (SEC) reviewed an action by the National Association of Securities and Exchange Dealers (NASD) against a member firm. In the case, Sky Capital alleged that it had been harassed by the NASD and denied access to NASD's internal complaint process. Among other things, the firm said that its complaints to the NASD Ombuds "fell on deaf ears." In dismissing Sky Capital's application for review, the SEC said that the NASD Ombuds does not provide a "fundamentally important service" that is central to the function of the NASD and therefore alleged failure of the Ombuds to act does not invoke SEC jurisdiction. The SEC also noted that, under TOA standards, the NASD Ombuds had "the discretion in determining whether to act on a concern brought to its attention. " (Sky Capital LLC, Exchange Act Rel. 55828 (May 30, 2007); via SEC Tea Party.)

Note: In 2007 and after this decision, NASD and the member regulation, enforcement and arbitration functions of the New York Stock Exchange were then consolidated into the Financial Industry Regulatory Authority (FINRA). (SEC Release No. 34-56145.) 


  1. Seems like perhaps Sky Cap was unclear as to the informal role of the Ombuds office. -Reese Ramos

  2. It's great to see decisions (even from administrative hearings) acknowledging the standards and affirming the ombuds role as neutral and independent.