Move Against Arab Boycott

The National Association of Securities Dealers has notified its members that firms which comply with Arab League demands to boycott other NASD members are in violation of the Association’s rules of fair practice.

In a memorandum to all NASD members dated July 26 and marked “important,” Gordon S. Macklin, president, said that the Association’s board of governors had accepted the findings of a business conduct committee that “all boycott practices, including those involving substitutions,” were “inconsistent with high standards of commercial honor and just and equitable principles of trade.”

The American Jewish Congress hailed the action by the NASD and called on other trade associations to “follow its excellent example.” The AJCongress said that the Security and Exchange Commission had informed it that two leading investment banking houses, Blyth Eastman Dillon & Co. and Dillon, Read & Co., had cooperated in the boycott by denying business to stockbrokers on the Arab boycott list.

In a letter to Will Maslow, general counsel of the AJCongress, the SEC said that in five offering handled overseas between December 1974 and July 1975, a broker or an affiliate acted as co-manager along with an Arab investment banker.

Francis R, Snodgrass, associate director of the SEC’s division of market regulation, told the AJCongress in the letter that “In December, 1975, the NASD reported to the commission that it had found evidence indicating in some cases that foreign affiliates of NASD members and in one case an NASD member itself, had agreed, at the behest of an Arab firm, to exclude from the financing syndicate certain foreign investment banking firms, which were, presumably on the boycott list.”

Snodgrass noted that in each case it appeared that a United States affiliate of the boycotted firm was substituted in the financing syndicate.