Is NASD Corrupt?
We have long wondered if the NASD might be asleep. But now we wonder far worse. Not because we relish the thought of corruption at NASD. But because investors just can't afford to avoid the question any more. The evidence demands that it be asked.
As longtime readers know, we believe the overarching question about Manuel Asensio has two parts. First, how did he retain his stockbroker license in 1989 after a jury returned a quarter-million dollar verdict against him for defrauding a client? And second, how did he move up to broker-dealer status four years later with the judgment still in force and apparently unpaid?
It's pretty clear that Asensio did it by duping regulators—saying nothing about the verdict, then misleading them about it on key documents. But NASD's by-laws prohibit it from continuing the membership of anyone who has made a false or misleading statement on a membership application or similar report. Which makes it difficult to understand why NASD hasn't announced any such disqualification of Asensio now that the facts have come to light.
Could it be that NASD has additional facts that make the situation different than it appears? Or that there are intricacies of the law that we, as amateur readers of it, simply don't understand? Surely if there is something more to this story that gets Asensio off the hook, NASD should be able to put it into words.
Now for the shocking news.
From a Reader
When the New York attorney general (NYAG) licensed Asensio as a broker-dealer in 1993, it did so because NASD had given his application the thumbs up. So in February 2003, when a reader of this site filed a complaint with the NYAG alleging that Asensio had fraudulently obtained that broker-dealer license, his office naturally forwarded the complaint to the NASD for comment.
The complaint was sent to District
10—the office that covers the five boroughs of New York and Long
Island.
In a a letter
to our reader, Diane Gatewood, the Assistant Attorney General in charge of
professional licensing, explained:
Your complaint regarding Mr. Asensio has been forwarded to the NASD for review. This office will contact you when a response is received from NASD.
But our reader was never contacted about NASD's response. Because there wasn't one. As he confirmed through repeated phone inquiries, District 10 never responded to the inquiry from the NYAG.
Might this be the first official indication that there really is a
problem with Asensio's broker-dealer application? If all were well, wouldn't District
10 have sent a letter saying
it had examined his application with regard to the quarter-million dollar jury verdict that Asensio claimed did not
exist and found no problem?
But the reaction from District 10 was simply silence. Why? Isn't this strange behavior for an
organization whose chairman, Robert Glauber, in the wake of the Enron scandal, assured Congress that
NASD is a "tough cop patrolling the beat"?
What kind of "tough cop" refuses to talk to Eliot
Spitzer's office?
The kind of "tough cop" that talks a good line
about investor protection but sees protecting Asensio's income as its
real job? Read on—this story has just begun.
Page created 05/03/04