Page:United States Statutes at Large Volume 89.djvu/166

 89 STAT. 106

Membership, limitation.

Post, p. 146.

Disciplinary actions.

PUBLIC LAW 9 4 - 2 9 — J U N E 4, 1975 " (3)(A) A national securities exchange may deny membership to, or condition the membership of, a registered broker or dealer if (i) snch broker or dealer does not meet such standards of financial responsibility or operational capability or such broker or dealer or any natural person association with such broker or dealer does not meet such standards of training, experience, and competence as are prescribed by the rules of the exchange or (ii) such broker or dealer or person associated with such broker or dealer has engaged and there is a reasonable likelihood he may again engage in acts or practices inconsistent with just and equitable principles of trade. A national securities exchange may examine and verify the qualifications of an applicant to become a member and the n a t u r a l persons associated with such an applicant in accordance with procedures established by the rules of the exchange. " (B) A national securities exchange may bar a n a t u r a l person from becoming a member or associated with a member, or condition the membership of a natural person or association of a natural person with a member, if such n a t u r a l person (i) does not meet such standards of training, experience, and competence as are prescribed by the rules of the exchange or (ii) has engaged and there is a reasonable likelihood he may again engage in acts or practices inconsistent with just and equitable principles of trade. A national securities exchange may examine and verify the qualifications of an applicant to become a person associated wnth a member in accordance with procedures established by the rules of the exchange and require any person associated with a member, or any class of such persons, to be registered with the exchange in accordance with procedures so established. " (C) A national securities exchange may bar any person from becoming associated wnth a member if such person does not agree (i) to supply the exchange with such information with respect to its relationship and dealings with the member as may be specified in the rules of the exchange and (ii) to permit the examination of its books and records to verify the accuracy of any information so supplied. "('4) A national securities exchange may (A) limit the number of members of the exchange and (B) the number of members and designated representatives of members permitted to effect transactions on the floor of the exchange without the services of another person acting as broker: Provided, however, That no national securities exchange shall have the authority to decrease the number of memberships in such exchange, or the number of members and designated representatives of members permitted to effect transactions on the floor of such exchange without the services of another person acting as broker, below such number in effect on May 1, 1975, or the date such exchange was registered with the Commission, whichever is l a t e r: And provided further, That the Commission, in accordance with the provisions of section 19(c) of this title, may amend the rules of any national securities exchange to increase (but not to decrease) or to remove any limitation on the number of memberships in such exchange or the number of members or designated representatives of members permitted to effect transactions on the floor of the exchange without the services of another person acting as broker, if the Commission finds that such limitation imposes a burden on competition not necessary or a p p r o p r i a t e in furtherance of the purposes of this title. " (d)(1) I n any proceeding by a national securities exchange to determine whether a member or person associated with a member should be disciplined (other than a summary proceeding pursuant to paragraph (3) of this subsection), the exchange shall bring specific charges, notify such member or person of, and give him an opportunity to defend against, such charges, and keep a record. A determination

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