GENERAL SECURITIES CORP. and Edward J. Lovellette, Petitioners, v. SECURITIES AND EXCHANGE COMMISSION, Respondent

Petitioner Lovellette is the registered principal and vice president of petitioner General Securities Corp., a broker-dealer registered with the Securities and Exchange Commission and a member of the National Association of Securities Dealers, Inc. (“NASD”), a national association of securities brokers and dealers. It is registered with the SEC under § 15A of the Securities Exchange Act, 15 U.S.C. § 78o -3, which provides for self-regulation of the over-the-counter securities market. Under this statute the NASD is authorized to supervise the conduct of its members and to discipline members for violations of its rules. 15 U.S.C. § 78o -3(b)(7).

The NASD brought disciplinary actions against petitioners alleging that appellants had: (1) failed to maintain sufficient net capital, (2) failed to send notice of net capital deficiencies, (3) failed to conduct quarterly securities box counts, and (4) failed to keep current certain records, all required by rules of the SEC. The Conduct Committee of the NASD conducted a hearing and found that petitioners had violated the SEC rules and the NASD rules and expelled General Securities from membership and barred Lovellette from associating with…