On Monday, a federal judge dismissed two cases alleging misrepresentations to brokers in the NASD merger with the regulatory arm of the NYSE that formed Finra. The Wall Street Journal reports that the main issue in the case involves the adequacy of a $35,000 payout to NASD members when it merged to form Finra. NASD allegedly claimed that it was precluded by the IRS from paying members a higher amount.
The cases alleged that Mary Shapiro, then the commissioner and CEO of the NASD, misled brokers about the transaction, according to the Wall Street Journal. Shapiro is now the chairman of the SEC.
U.S. District Judge Jed S. Rakoff ruled that the defendants in the cases, including the NASD, were entitled to absolute immunity from damages because they were acting within the scope of their regulatory function.
