Lawsuit charges NASD misled members in NYSE merger
NEW YORK, Dec 23 (Reuters) - The predecessor of the Financial Industry Regulatory Authority (FINRA) deceived its members when it pushed for a by-law amendment that allowed it to consolidate with the New York Stock Exchange Group Inc, alleges a suit filed in a Delaware court late on Tuesday.
FINRA, which oversees all securities firms operating in the United States, was created early last year with the consolidation of the National Association of Securities Dealers (NASD) and the NYSE Group.
The suit, launched by Benchmark Financial Services, names among the defendants FINRA and its chief executive Mary Schapiro, who was named this month by President-elect Barack Obama to head the U.S. Securities and Exchange Commission.
The suit alleges that NASD unlawfully gained members' consent for the consolidation because it misstated material facts, including its assertion that members would be eligible for a payment of no more than $35,000.
The suit also alleges that NASD has never denied the charges repeatedly brought forth by NASD members.
FINRA spokesman Herb Perone said: "We would withhold any comment until we've had a chance to see the lawsuit."
Florida-based Benchmark Financial Services, a FINRA member, said it is seeking damages representing the difference between what NASD paid members, and what it could have paid members.
It said in the legal filing that the suit was brought on behalf of all NASD members -- excluding concurrent NYSE members -- who were entitled to vote Jan. 19, 2007 on the by-law amendment. (Reporting by Jonathan Spicer; editing by Richard Chang)
