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December 1, 1998

Approval for NASD-AMEX Merger Is Challenged : Was NASD Member Vote Overwhelming?'

By John A. Byrne

If you thought there was overwhelming support among the National Association of Securities Dealers' rank and file for the NASD's merger with the American Stock Exchange, think again.

That's the conclusion reached in a press release sent to reporters covering Wall Street in the wake of the historic creation of the so-called Nasdaq-AMEX Market Group.

The release, headed "Why NASD Hid Its Member's Vote On The Merger: Only 46% Approved!!!" was issued by Bill Singer, a securities-law attorney with the firm of Singer Frumento, and a former staffer at the NASD and at the AMEX.

Active Interest

Singer, who is also a securities-industry activist seeking election this year to the NASD board of governors, has taken an active interest in the merger, firing off a public comment letter to the Securities and Exchange commission earlier this year.

That letter incorporated some criticism of the merger raised by another activist, Alan Davidson, president of the upstart Long Island-based Independent Broker Dealer Association.

Davidison's name is also on the ballot for the NASD board of governors.

The Singer release, dated November 9, stated: "On October 30, the SEC issued an order granting the approval of the merger.

"The SEC noted that the approval of two-thirds of the 864 AMEX regular members, and options principal members representing 576 votes, was required for the deal to pass."

"The SEC further noted that in regards to the NASD's member vote, [a]ccording to the NASD, the members overwhelmingly approved the merger with a vote of 2,565 for and 82 against the addition of the new seats.

"Given that the NASD's present membership is 5,570, the final vote resulted in the approval' of the merger by 46 percent of the NASD's members.

The release concluded: "Consequently, if the AMEX's two-third's stand were applicable, 3,732 votes would have been necessary for approval.

"Further, the NASD's concept of overwhelming appears to arise from less than half its members."


In a telephone interview, Singer said what was "annoying was that the NASD was at great pains to say the merger was overwhelmingly approved by its members."

The NASD did not return a telephone call for comment at press time.