The Commission has held that a Certificate of Relief is a “factor to be considered”
in a statutory disqualification proceeding. Jonathan Scott Saluk, Exchange Act Rel. No. 35623, 1995 SEC LEXIS 923, at *2 (Apr. 19, 1995).
See Frank Kufrovich, Exchange Act Rel. No. 45437, 2002 SEC LEXIS 357, at *16 (Feb. 13, 2002) (upholding NASD’s denial of a statutory disqualification applicant who had committed non-securities related felonies "based upon the totality of the circumstances" and NASD’s explanation of the bases for its conclusion that the applicant would present an unreasonable risk of harm to the market or investors).
The term "convicted" is not defined in either the Securities Exchange Act of 1934 ("the Exchange Act") or NASD’s By-Laws. The Commission has advised NASD to look first to federal securities laws for guidance on this issue and instructed NASD to turn to Section 2(a)(10) of the Investment Company Act of 1940 and Section 202(a)(6) of the Investment Advisers Act of 1940, which define "convicted" to include: "a verdict, judgment or plea of guilty, or a finding of guilt on a plea of nolo contendere, if such verdict, judgment, plea or finding has not been reversed, set aside, or withdrawn, whether or not sentence has been imposed." Interpretative letter dated February 21, 1992, from Joseph M. Furey, Assistant Director, Division of Market Regulation, SEC, to Bruno Lederer, Associate General Counsel, NYSE. Commission staff have concluded that "[w]hen a court accepts a plea of guilty . . . [the] conviction remains in effect until reversed, set aside or withdrawn irrespective of whether a sentence has been imposed."
The Commission has also stated that a state’s interpretation of its laws may provide guidance concerning the question of when a defendant has been convicted of a felony. The parties agree that in December 2004, X was arrested and charged with felony DWI. The record also shows that in April 2005, X entered a guilty plea to the felony DWI. State 1 Consolidated Law Service, Criminal Procedure Law, section 1.20(13) defines "conviction" as "the entry of a plea of guilty." This provision became effective on September 1, 1971, and the term "conviction" was to clarify a previously uncertain meaning and "accord formal recognition to the word ‘conviction’ as a verdict or plea of guilty (without a sentence)." See N.Y. Crim. Proc. Law Sec. 1.20 staff notes (consd.).
A guilty plea nonetheless constitutes a conviction from the time it is entered, until the court has agreed to withdraw or vacate the plea. See New York v. D’Amico, 556 N.Y.S. 2d 456, 458 (Sup. Ct. 1990), appeal denied, 594 N.E.2d 947 (N.Y. 1992); see also New York v. Alexander, 769 N.E.2d 802, 804 (N.Y. 2002).
The Commission has described the Form U4 as a "vital screening device" that is relied on by "all the self-regulatory organizations, including the NASD, state regulators, and broker-dealers to monitor and determine the fitness of securities professionals." Rosario R. Ruggiero, 52 S.E.C. 725, 728 (1996) (stating that "[t]he candor and forthrightness of [individuals making these filings] is critical to the effectiveness of this screening process"); see also Daniel Richard Howard, Exchange Act Rel. No. 46269, 2002 SEC LEXIS 1909, at *9-10 (July 26, 2002).