The Securities and Exchange Commission censured the American Stock Exchange last week, along with the exchange’s former chairman and chief executive, for failing to enforce securities laws and maintain proper records.
The SEC issued a cease-and-desist order against the exchange, saying that it failed to properly watch for violations of order-handling rules by its members, along with failing to keep and provide surveillance and other records from 1999 through mid-2004.
The commission also filed administrative proceedings against former Amex executive Salvatore F. Sodano for failing to enforce compliance with federal securities laws and exchange rules. In a statement, the SEC said that Sodano "improperly abdicated his oversight responsibilities and ignored repeated red flags regarding the Amex's regulatory deficiencies."
In a related proceeding, the SEC issued a cease-and-desist order against Amex vice president Richard Robinson, who was in charge of the exchange's regulatory-surveillance programs for the derivatives and options markets. The SEC said that Robinson failed to properly oversee the program and maintain investigative files.
In its order against the exchange, the SEC said the Amex was put on notice from at least 1999 that it had inadequate surveillance, investigatory and enforcement programs -- and that it couldn't detect certain violations, including customer priority and trade reporting. Even when they were detected, the SEC said that violations were not appropriately investigated, or were excused improperly.
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