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Page 151
Unfortunately, advancing the interest of its members many times flies in the face of protecting the public.
Nasdaq Market Operations
Last, the NASD operates the Nasdaq market, which is a major entrepreneurial phenomenon seeking to be the "market for the next one hundred years." Thus, the NASD had a conflict of interest in the way it should have run Nasdaq. For example, was Nasdaq run in a way that deliberately permitted the abuses found by the Department of Justice and the SEC? Should the NASD have allowed Nasdaq to become the plaything of its market-making members? Some could say that the NASD slanted Nasdaq regulations for the benefit of its powerful market-making constituency at the expense of the public and to the detriment of its electronic order entry firm members. Others intimate that the NASD officials should have used their gatekeeper authority in a more just and equitable fashion. Many of these NASD officials have since retired or found alternative positions, but a few still remain.
As part of the NASD's procedures, all disputes between members and the NASD itself are adjudicated in proceedings run by the NASD. In effect, the NASD is the police, accuser, judge, and jury when it decides to take an action against a member. One might call the adjudication structure unfair. I, for one, am doing so. Appearance before a disciplinary committee used to be all too serious, but also senseless because the hearing officers were often your competitionand in the case of electronic trading they were your worst enemies. They would never even think of excusing themselves from their position of power; this was exactly the position they wanted to be in because there was no downside to them for the outcomes they ordered.
Class-Action Update
The SEC consent agreement was like throwing soft rocks at the NASD, because no public fines were levied against the

 
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