FIRST REQUEST

By letter dated October 14, 2002, NASD staff notified Lee Gura that they had received several significant complaints alleging that while he was a registered representative at First Union Securities, he had violated the federal securities laws by engaging in unauthorized trading, churning customers' accounts, and making unsuitable recommendations. The letter requested that Gura provide a written statement addressing these allegations by October 28, 2002. 

Gura did not provide the requested information. Instead, at the request of NASD, Gura submitted a signed document, dated November 20, 2002, stating that he would not respond to NASD's request for information.

SECOND REQUEST

On April 29, 2003, NASD staff sent a second letter to Gura again requesting a written response, by May 7, 2003, to the allegations against him. This letter referenced "several correspondences and conversations" between NASD staff and Gura regarding the information request and warned Gura that failure to comply with the request would subject him to disciplinary action. 

Gura did not respond to the April letter.

THIRD REQUEST

On May 8, 2003, NASD staff sent a third letter to Gura and stated that it was "imperative" that NASD receive the information requested on or before May 19, 2003. Again, staff noted that failure to comply with the request would subject him to disciplinary action. 

Gura did not respond to the May letter.

PRE-SUSPENSION NOTICE

On July 16, 2003, NASD staff sent Gura a "Pre-Suspension Notice" warning Gura that, pursuant to NASD Rule 9541(b) (note, this rule was renumbered in June 2004 to Rule 9552), NASD planned to suspend Gura from associating with any member firm in any capacity if he did not provide the information NASD had repeatedly requested within twenty days. Although,the Pre-Suspension Notice informed Gura that he could stay his pending suspension by requesting a hearing within five days of receipt of the notice, Gura did not so request  or otherwise respond.

On August 11, 2003, NASD staff notified Gura that, because he failed to provide requested information or take corrective action, he was suspended. The letter stated that Gura could file a Motion for Reinstatement, but if he failed to file such a motion, he automatically would be barred. Gura failed to so file.

On January 22, 2004, NASD advised Gura that effective immediately he was barred. On February 24, 2004, Gura appealed the NASD action to the Commission.

GURA's EXCUSES AND EXPLANATIONS

On procedural terms, the SEC noted that it will not consider an application for review if the applicant failed to follow NASD procedures. Gary A. Fox, Securities Exchange Act Rel. No. 46511 (Sept. 18, 2002), 78 SEC Docket 1533, 1536, (the SEC was precluded from considering an application for review where applicant failed to respond to NASD requests for information, failed to respond to Pre-Suspension and Suspension Notices, and failed to move for reinstatement within the prescribed time limits); See also, David I. Cassuto, Exchange Act Rel. No. 48087 (Jun. 25, 2003), 80 SEC Docket 1775, 1780.  As such, the SEC found that the NASD's rules set forth procedures for suspending and ultimately barring individuals who fail to supply requested information or take corrective action, but that Gura chose not to avail himself of these procedures. Moreover, he failed to respond to NASD's requests for information, failed to respond to the Pre-Suspension and Suspension Notices, and failed to file a Motion for Reinstatement. As a result, Gura's bar was imposed "automatically."

In his appeal, Gura contended that he was suffering from severe depression, caused by "divorce, the death of [his] father, the loss of various jobs and two careers, bankruptcy and the constant court battles regarding visitation with [his] children" and was advised, by "therapists and friends," that he should not respond to NASD's inquiries to avoid further emotional stress and depression.  The SEC noted that Gura had not provided any evidence substantiating his claims of depression so severe that he could not respond in any manner to NASD's multiple requests for information. Notwithstanding, the SEC had previously found that unsubstantiated personal and medical problems do not excuse an applicant's failure to respond. John A. Malach, 51 S.E.C. 618, 620 (1993) (finding unsubstantiated "personal problems" do not excuse respondent's failure to furnish information to NASD over the course of a two-year period).

SEC's DECISION

The SEC dismissed Gura's application for review.

NASD Procedural Rule 8210:
 Provision of Information and Testimony and 
Inspection and Copying of Books

(a) Authority of Adjudicator and Association Staff. For the purpose of an investigation, complaint, examination, or proceeding . . . staff shall have the right to:

(1) require a member, person associated with a member, or person subject to the Association's jurisdiction to provide information . . . and to testify at a location to be specified by Association staff, under oath . . . with respect to any matter involved in the investigation, complaint, examination, or proceeding . . .

(c) Requirement to Comply. No member or person shall fail to provide information or testimony or to permit an inspection and copying of books, records, or accounts pursuant to this Rule.

(d) Notice. A notice under this Rule shall be deemed received by the member or person to whom it is directed by mailing or otherwise transmitting the notice to the last known business address of the member or the last known residential address of the person as reflected in the Central Registration Depository. If [staff] has actual knowledge that the [CRD] address . . . is out of date or inaccurate, then a copy of the notice shall be mailed or otherwise transmitted to: (1) the last known business address of the member or the last known residential address of the person as reflected in the Central Registration Depository, and (2) any other more current address of the member or the person . . .

NASD Procedural Rule 9552. 
Failure to Provide Information or Keep Information Current

(a) Notice of Suspension of Member, Person Associated with a Member or Person Subject to NASD's Jurisdiction if Corrective Action is Not Taken. If a member, person associated with a member or person subject to NASD's jurisdiction fails to provide any information, report, material, data, or testimony requested . . . NASD staff may provide written notice to such member or person specifying the nature of the failure and stating that the failure to take corrective action within 21 days after service of the notice will result in suspension . . .

(b) Service of Notice of Suspension. [I]n accordance with Rule 9134. . . A copy of a notice under this Rule that is served on a person associated with a member also shall be served on such member.

(c) Contents of Notice. [S]tate the specific grounds and include the factual basis for the NASD action.  . . [w]hen the NASD action will take effect and explain what the respondent must do to avoid such action. The notice shall state that the respondent may file a written request for a hearing with the Office of Hearing Officers pursuant to Rule 9559. . . .[P]ursuant to Rules 8310(a) and 9559(n), a Hearing Officer or, if applicable, Hearing Panel, may approve, modify or withdraw any and all sanctions or limitations imposed by the notice, and may impose any other fitting sanction.

(d) Effective Date of Suspension. [E]ffective 21 days after service of the notice, unless stayed by a request for a hearing pursuant to Rule 9559.

(e) Request for Hearing. A member or person served with a notice under this Rule may file with the Office of Hearing Officers a written request for a hearing pursuant to Rule 9559. A request for a hearing shall be made before the effective date of the notice, as indicated in paragraph (d) of this Rule. A request for a hearing must set forth with specificity any and all defenses to the NASD action.

(f) Request for Termination of the Suspension. A member or person subject to a suspension pursuant to this Rule may file a written request for termination of the suspension on the ground of full compliance with the notice or decision.  . .

(g) Settlement Procedure. Uncontested offers of settlement shall be permitted under this Rule and shall conform to the requirements of Rule 9270, except that, if an uncontested offer of settlement, made under Rule 9270(e) after a hearing on the merits has begun, is accepted by the Hearing Officer, the Hearing Officer shall issue the order of acceptance, which shall constitute final NASD action. Contested offers of settlement shall not be considered in proceedings initiated under this Rule.

(h) Defaults. A member or person who is suspended under this Rule and fails to request termination of the suspension within six months of issuance of the original notice of suspension will automatically be expelled or barred.

(i) Notice to Membership. NASD shall provide notice of any final NASD action taken under this Rule in the next Notice to Members Disciplinary and Other NASD Action Section.