ATLANTA (May 15, 2000) – Sutherland Asbill & Brennan LLP attorneys Sarah B. Estes and Peter J. Anderson won a rare Securities Exchange Commission (SEC) reversal for client Jeffrey Hayden, a former senior vice president and 21-year veteran broker with Dean Witter Reynolds, Inc. The SEC's order (issued May 11, 2000) dismissed all of the New York Stock Exchange's (NYSE) charges against Hayden, relying on the fact that the charges were based on transactions which occurred from six to 14 years prior to the filing of the charges against him in November 1996. As the ruling was based solely on the undue delay in the filing of the charges, this decision is likely to impact future cases involving the obligations of other self-regulatory organizations (SRO's).
"This ruling is very important because it is the first time that the SEC has set aside disciplinary proceedings based solely on the length of time between underlying conduct and the filing of the charges," remarked Estes. "The ruling seems to suggest that a six-year delay is per se unfair and contrary to a self-regulatory organizations' obligations."
The case was closely watched because Hayden had argued for an extension of the case of Patricia Johnson v. SEC, in which the US Court of Appeals ruled that a five-year statute of limitations applies to enforcement proceedings brought by the SEC. So far, no court has ruled on the question of whether the statute applies to SRO's. Hayden argued that the five-year statute applies because SRO's such as the NYSE perform judicial-like, governmental functions and exercise delegated governmental powers when they are acting in their enforcement capacity.
Although the SEC did not address the issue directly, the practical effect of this ruling could be to impose a de facto statute of limitations on enforcement proceedings brought by self-regulatory organizations, which might be reluctant to bring stale proceedings that are likely to be set aside.
Sutherland Asbill & Brennan LLP is a national law firm with offices in Atlanta, Austin, New York, Tallahassee and Washington, D.C.
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