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Y O R K

S T O C K

E X C H A N G E, I N C.

MICHAEL ALAN SALSMAN A FORMER REGISTERED REPRESENTATIVE WITH MERRILL LYNCH, PIERCE, FENNER & SMITH, INC., ENGAGED IN CONDUCT INCONSISTENT WITH JUST AND EQUITABLE PRINCIPLES OF TRADE IN THAT HE EFFECTED AN EXCESSIVE AMOUNT OF TRADING IN THE ACCOUNT OF A CUSTOMER -- CENSURE AND A THREE WEEK BAR.

EXCHANGE HEARING PANEL DECISION 89-117

December 14, 1989 An Exchange Hearing Panel met to consider a Stipulation of Facts and Consent to Penalty entered into between the Exchange's Division of Enforcement and Michael Alan Salsman. Without admitting or denying guilt, Salsman consents to a finding by the Hearing Panel that he engaged in conduct inconsistent with just and equitable principles of trade in that he effected an excessive amount of trading in the account of a customer. For the sole purpose of settling this disciplinary proceeding, the Division of Enforcement and Salsman stipulate to certain facts, the substance of which follows: 1. Salsman was born on March 1, 1954. He entered the securities industry on April 4, 1981 with Merrill Lynch, Pierce, Fenner & Smith, Inc. (the firm) and was approved as a registered representative with the firm effective August 21, 1981. Salsman was continuously employed by the firm until his resignation on July 25, 1989. The instant complaint is the only one filed against Salsman as a registered representative. This investigation was commenced after a referral of a customer complaint from the Securities and Exchange Commission, Atlanta Regional Office. On or about May 28, 1983, Salsman opened an account for Customer A ("the Account"). The Account was a margin account which was maintained for 13 months, from May 1983 through June 1984. The new account form completed by Salsman for the Account reported that Customer A was a sixty-two year old retired apartment manager with an annual yearly income of $20,000 and net worth of $175,000. The form further described Customer A's investment objectives as long term and intermediate price appreciation. The risk factors indicated were investment grade and speculative.

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On June 10, 1983, a $3,169.73 debit balance, as well as shares with a market value of $23,925 were transferred to the Account from a joint account previously maintained by customer A and her daughter. The purchases during the 13 month life of the Account total led $230,050.13. The average monthly equity (AME) was $11,573.62. During the 13 month life of the Account the AME was turned over 19.88 times or 18.35 times on an annual basis. The total production credits paid to the firm based upon the activity in the Account during its 13 month life were $9,326. Of this amount, $7,007 arose from the 1983 transactions and $2,319 arose from the 1984 transactions. Prior to the opening of a related family account in late November 1982, Customer A had no investment experience. Her investment objective was the preservation of capital for retirement. The transactions which occurred in the Account were, for the most part, based upon recommendations made by Salsman. The losses in the Account both realized and unrealized totalled approximately $11,700. The firm settled Customer A's claim for $8,000.

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DECISION

The Hearing Panel, in accepting the Stipulation of Facts and Consent to Penalty, found Salsman guilty as set forth above by unanimous vote.

PENALTY In view of the above findings, the Hearing Panel, by unanimous vote, imposed the penalty consented to by Salsman of a censure and a bar from membership, allied membership, or approved person status, and from employment or association with a member or member organization for three weeks. For the Hearing Panel

James F. Swartz, Jr. Hearing Officer