NASD Pleased With Court Action

Washington, DC – The National Association of Securities Dealers (NASD®) said that it was pleased with the New York State Court denial of the effort to block its membership vote scheduled for Friday. The effort to block the vote was part of a suit filed today in New York State Supreme Court in Manhattan by Zeus Securities, Inc. of Jericho, NY, and the Independent Broker-Dealer Association. The suit had asked the judge to issue a temporary restraining order to halt an NASD member vote on the restructuring scheduled for Friday. The judge denied the request for delay and ordered the parties to appear before him on Monday.

"This lawsuit is baseless," said Edward S. Knight, executive vice president and chief legal officer of the NASD. "We are extremely gratified that the judge denied the request to halt the members’ vote. We are also very pleased that the judge set a schedule so that this suit can be decided expeditiously."

"This eleventh hour delay tactic sought to use the court to prohibit the membership from speaking and is counter to the democratic process. It would have been bad for not only the thousands of NASD members who have reviewed the plan and registered their vote, but for the US financial markets in general. Consequently, we will continue to take whatever steps are necessary to protect our thoughtful and responsible process." said Mr. Knight.

Several NASD members commented:

Frank E. Baxter, chairman and chief executive officer of the Jeffries Group (headquartered in Los Angeles) remarked, "The offering is good for every single member of the NASD. After an increase in the allocation to smaller members, Alan Davidson vociferously endorsed the plan. Then, with no apparent reason he is trying to trash it. The first Alan made more sense."

"As a small member, I can say that Davidson does not represent me or my firm’s interests," said Robert Clark, president of HC Wainwright & Co. in Boston. "Davidson’s organization has no known board of directors, a secret membership, and is not representative of the majority of NASD’s small member firms."

"We are baffled by this suit. Mr. Davidson publicly spoke in favor of the plan. Now, for unknown and inexplicable reasons, he has reversed his position," said Richard C. Romano, president and chief executive officer of Romano Brothers and Company, Evanston, Illinois. "If he were truly acting in the best interests of members, he would live up to his fiduciary responsibility and allow the members to fully choose."

"I was an IBDA member" said Benita Pierce, president of B. Pierce & Co. "Davidson did not represent my interests as a small firm when I was an IBDA member, and he certainly does not represent my firm’s interests now. I voted in favor of the transaction and I resent that Davidson is trying to squelch my vote."

Bernard L. Madoff, head of Madoff Investment Securities, said, "I support this transaction and believe that it is in the best interests of the members. The world’s securities markets are rapidly changing and Nasdaq must be free to address these competitive issues now. Anything that delays the Nasdaq transaction from going forward jeopardized Nasdaq long term value to the membership."

NASD chairman and chief executive officer, Frank Zarb, reaffirmed his commitment to the restructuring process, "Our vision for the restructuring of the NASD is clear and on schedule. Because the restructuring is a win-win-win for NASD members, issuers, and investors, support is broad and deep."

Davidson is also president of the Independent Broker-Dealer Association and is board member of the NASD.

The National Association of Securities Dealers, Inc., is the largest securities- industry, self-regulatory organization in the United States. It is the parent organization of The Nasdaq Stock Market® , The American Stock Exchange® ,and NASD Regulation, Inc. For more information about the NASD and its subsidiaries, please visit the following Web sites: www.nasd.com; www.nasdaq.com; www.amex.com; www.nasdr.com; or the Nasdaq NewsroomSM at www.nasdaqnews.com.