NASD Board Member Calls on Zarb to Quit
National Assn. of Securities Dealers board member Alan Davidson called Tuesday for the industry group’s chairman, Frank Zarb, to resign, citing a $10-million jury award last year in a lawsuit alleging that Zarb lied.
“We should have in that position a person of the highest integrity,” Davidson, president of the 200-member Independent Broker-Dealers Assn., said in an interview. “This creates a very serious appearance of impropriety.”
Davidson, a small-brokerage activist who is campaigning against Nasdaq’s plan to become a private company, said he will submit a resolution to the NASD board this week urging Zarb’s resignation. He said that if the board rejects his request, as Davidson expects, he will ask the Securities and Exchange Commission to intervene.
A spokesman for the NASD, which owns Nasdaq and polices all U.S. brokerages, called Davidson’s request for Zarb’s resignation “rubbish.”
“It’s a transparent and desperate attempt to serve Davidson’s own purposes, and no serious person who’s familiar with the facts would be misled by it,” NASD spokesman Andrew MacMillan said.
Zarb is spearheading the Nasdaq stock-sale plan that Davidson opposes. A vote on the plan by the NASD’s 5,500 member brokerages is scheduled for Friday. Davidson, who was elected to the board last year in the first contested election in the NASD’s history, has been a thorn in Zarb’s side on many issues involving small firms.
The lawsuit that accused Zarb of lying was filed by former New York Giants football player Phil McConkey. McConkey contended that Zarb lied to him in 1996 when Zarb was chairman of Alexander & Alexander Services Inc., an insurance and risk-management company.
McConkey alleged he took a job selling insurance for Alexander & Alexander after Zarb assured him that talk about possible sale of the company wasn’t true. The company later was sold to Aon Corp., which fired McConkey to cut costs, the suit claimed.
In December, a New Jersey state jury awarded McConkey $5 million for lost wages and emotional harm and another $5 million in punitive damages. The damages, assessed against Aon, were the largest in state history for an employment-law case filed by an individual, employment lawyers told the Newark Star Ledger. Zarb, who was dropped as a defendant, testified at the trial that he had not deceived McConkey.
