By Kimberly Chin
Salvatore Sodano, dean of the Frank G. Zarb School of Business was charged by the Securities Exchange Commission last week for failing to enforce supervision of federal trading laws during his time as the chairman and chief executive of the American Stock Exchange from 1999 to 2005. The charges were finalized after a four-year investigation that began on Nov. 12, 2003.
Sodano fully disclosed the matter to the University during his application process. Through a competitive pool of University administration, including University President Stuart Rabinowitz, Sodano took office in May 2006. However, “he did not expect any action to be taken.”
The matter began with an employee six levels below him, who failed to file daily trading prices for a period of time. When this was recognized, Sodano claimed he took immediate action on the matter. “The very day that I found out about the problem, I complied with all the SEC regulations and it was self-identified, self-reported, and self-corrected.” The employee was also fired.
Yet, the SEC associate director, Scott Friestad, said Sodano “improperly abdicated his oversight responsibilities and ignored repeated red flags regarding the Amex’s regulatory deficiencies.” Friestad also said it was Sodano’s “apparent lack of interest in regulation” that caused securities laws and rules to be inefficiently enforced.
Sodano said this came in the midst of having to pick up Amex from the ground. The National Association of Securities Dealers (NASD) bought Amex in 1999 and Sodano voluntarily undertook the project of getting it on its feet. That included the possibility of selling Amex, firing half of the staff, and then hiring the staff after NASD decided not to sell it.
According to Sodano Sept. 11 had taken a toll on the Amex when parts of the towers crashed into the roof of the building and the stock exchange lost nine lives. They had to relocate for a time, finding space in the New York Stock Exchange and the Philadelphia Stock Exchange before they recuperated. The Amex was the only building with people still working in it at the Ground Zero site closely after the attacks.
The actions are administrative charges as opposed to a lawsuit, which means the charges are not criminal or civil. “The only penalty available is censure,” Bill Baker, Sodano’s attorney, said. Censure is a procedure for publicly reprimanding a public official for inappropriate behavior.
The office of University Relations released a statement that said “[Sodano] has an unblemished record and outstanding reputation and we are supportive of his efforts to defend himself. When asked if there will be any repercussion is he is charged with the allegations, University Relations responded, “It’s premature to say what happens down the road. He is basically fighting for his good name.”
Sodano said he will fight these charges, and said he believes he did everything he “should have done and could have done.”
Melissa Connolly, vice president of University Relations added, “This speaks strongly to his character that he is defending himself.”
Dean Salvatore Sodano of the Frank G. Zarb School of Business was the C.E.O. of Amex.