A federal judge has dismissed a suit against NASD and NYSE Group Inc. challenging the proposed merger of the two self-regulators.
Judge Shirley Wohl Kram of the U.S. District Court for the Southern District of New York ruled yesterday that the plaintiff in the case, Standard Investment Chartered Inc., a Costa Mesa, Calif. brokerage firm, had not exhausted its administrative remedies.
The order was officially entered into the court record today.
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Ms. Kram said Standard must take its claims to the Securities and Exchange Commission.
She said the SEC must “assure a fair representation” of member firms under the Securities Exchange Act of 1934.
Standard claimed that the proposed NASD bylaw changes were unfair and that a proxy soliciting members' votes was misleading.
Standard has 30 days to appeal.
The bylaw changes are pending approval at the SEC.
A comment period closed last month.
Earlier this week, another judge ordered NASD officials to give depositions in the case.
The latest action appears to make that order moot.
In an e-mail, Standard's attorney, Richard Greenfield, of Greenfield & Goodman LLC in Easton, Md., said the firm would appeal.
Mr. Greenfield noted that the court doubted the SEC would approve the bylaw changes if the proxy, as Standard alleged, could not pass muster under the securities laws.
“Obviously, we are pleased with the court's action,” said NASD spokesman Herb Perone.
