Q
UNITED
STATES
SECURITIES
AND
EXCHANGE
COMMISSION
WASHINGTON,
D.C.20519
OFFICE
OP COMPLIANCE
INBPIICTIONdl
AND
December 20, 2000
Via Facsimile and Mail
Ms. Shana Madoff
Skoller
Director of Compliance
Bernard
L. MadoffInvestment
Securities
885 Third Avenue
New York, NY 10022
Dear Ms. Skoller:
On October 29, 1999, the Staff requested information from Bernard L. Madoff
Investment Securities
("MADF")
regarding
its compliance with SEC Rule 11Acl-4 (the
"Display Rule"). As part of this request,
the staff asked MADF to provide a printout of all
customer
limit orders received or held by the firm on October 11-12, 1999 in ten actively
traded
listed securities.' In a follow-up request, the Staff requested information regarding customer
limit orders received or held by MADE on October 25, 1999 in ten over-the-counter
securities.2
The staff randomly selected 643 eligible customer limit orders to determine whether
MADF handled the orders in compliance with the Display Rule. The Staff found that 1 19 of the
orders, or approximately 18%, failed to be displayed for a duration of30 seconds or longer when
the orders were required
to be displayed by the Display Rule. In some instances, MADE failed
to display the full size of eligible customer
limit orders, and in other,
instances, MADE failed to
display both the price and size of eligible customer limit orders.
The violations described above are brought to your attention for immediate corrective
action, without regard to any other action the Commission may take or i·equire
to be taken as a
result of this examination.
Notwithstanding
any'actions
taken by the Commission
with regard
to
The Staff
requested
customer
limit orders
in the following
ten listed
securities:
America
Online Corp.
("AOL"), Pfizer Inc. C'PFE"), Honeywell,
Inc. C'HON"), Micron Technology
Inc. C'MU"), Wachovia
Corp.
("WB"),
AT&T Corp.
("T"), CSX Corp.
("CSX"),
LSI Logic Corp.
("LSI"),
Exxon Corp. C'XON"),
and Time Warner Inc. ("TWX").
2
T