Risk & Compliance

SEC Case against Amex ex-CEO Thrown Out

An SEC administrative law judge rules that the Commission cannot censure Salvatore Sodano for alleged past failings.
Kate PlourdAugust 21, 2007

A Securities and Exchange Commission administrative law judge has decided that the SEC can’t censure former American Stock Exchange chairman and chief executive Salvatore Sodano for a past failure to enforce exchange rules.

In his ruling, Judge Robert Mahony dismissed the case brought against Sodano, saying that Congress intended for administrative disciplinary proceedings only to apply to “those who currently hold the position” of an officer or a director of a self-regulatory organization.

The SEC has 21 days to seek an appeal.

In the case brought in March, the SEC’s Division of Enforcement had sought to penalize Sodano with a censure. The Division said that Sodano’s failure to pay proper attention to regulation, to enact a sufficient oversight structure to monitor compliance, and to ensure the regulatory staff’s proper training were the main cause of Amex’s wrongdoing.

Sodano, who left the Amex in 2005 and currently serves as dean of the Frank G. Zarb School of Business at Hofstra University, had argued since being charged that the proceedings weren’t justified because he was no longer an officer. Sodano also denied that he was involved in any misconduct, and said that the charges were unjustifiable.

The commission charged him after it found that from at least 1999 through June 2004 the Amex had inadequately handled trading violations by members on its floor. At the same time the commission also issued a cease-and-desist order against the stock exchange, which was found to have failed to enforce compliance with federal securities laws and Exchange rules.