PSE responds to harassment charges.

SAN FRANCISCO--(BUSINESS WIRE)--July 27, 1995--The Pacific Stock Exchange (PSE) issued the following statement today regarding charges of sexual harassment and discrimination at the Exchange:

The Pacific Stock Exchange is deeply concerned by the allegations of sexual harassment and discrimination raised by a former employee, Ms. Amy Marshall, and her attorneys Pinnock & Schectman. When these charges were first brought to our attention on November 3, 1994, we immediately opened a full regulatory investigation to assess their validity. That investigation was completed, under the direction of PSE President and Chief Operating Officer Robert M. Greber and Senior Vice President and General Counsel John C. Katovich.

As a federally chartered self-regulatory organization, the PSE is empowered to establish and enforce standards of professional conduct for its broker-dealers and their employees. We have full authority to compel broker-dealer firms to cooperate in any regulatory investigation involving requirements of the Securities Exchange Acts, the regulations of the Securities and Exchange Commission (SEC), and the constitution, rules, and policies of the PSE.

Unfortunately, we did not benefit from the cooperation of Ms. Marshall or her attorneys in our investigation of their allegations. We requested, both verbally and in writing, additional opportunities to interview Ms. Marshall regarding some of her statements to PSE compliance attorneys. We also requested the names of purported "witnesses" to the alleged instances, as well as the "documents" and other "material evidence" Pinnock & Schectman claims to hold to substantiate their charges.

To date, neither party has provided the additional information requested and necessary for our investigation. Indeed, although Ms. Marshall was given a medical leave shortly after making her allegations, she even refused to provide the information needed for the PSE's workers' compensation insurance carrier to process her claim for disability benefits. Because of the wholesale failure of Ms. Marshall and Pinnock & Schectman to cooperate with our regulatory staff, we were unable to determine whether Ms. Marshall's allegations have any basis in fact. In addition, neither Ms. Marshall nor Pinnock & Schectman appeared at a hearing convened by the PSE into some of their allegations. Without their testimony, the PSE hearing panel had no grounds to bring any disciplinary action against any Exchange broker-dealers or their employees.

Furthermore, in a January 10, 1995, letter to the Exchange and several broker-dealers, Pinnock & Schectman raised additional charges against unnamed parties, charges that were never presented to the PSE at the time this investigation was initiated. Instead, that letter demanded the payment of a substantial settlement to Ms. Marshall, threatening to make their allegations known, "not only to the business community but to the general public and media as well...in the most public manner the law allows" if that payment was not made by February 2, 1995. The PSE refused this demand for hush money, and will not be a party to any attempt at extortion. In addition, Pinnock & Schectman's July 27 press release raises new allegations not made previously, which leads to the PSE to question the accuracy of, and the motivation behind, all allegations contained in this suit.

The PSE is extremely sensitive to issues of harassment and discrimination in any form. The Exchange constitution, rules, and policies in that regard are clear and specific: Sexual harassment and/or discrimination will not be tolerated -- on our trading floors or in our offices -- at any time, under any circumstances. (Copies of the PSE's most recent policy statements on discrimination and harassment are attached.) The PSE's Board of Governors, its management, and its staff are committed to maintaining standards of professional conduct of the highest order.

As a securities exchange, and as a self-regulatory organization, the PSE is a unique institution with a unique role in the corporate world. The Exchange is empowered by the SEC and by Federal law to conduct regulatory investigations, gather evidence, and compel testimony when it is not willingly proffered. These responsibilities are our paramount obligation, and our jurisdiction includes the authority to investigate, evaluate, and discipline any case involving sexual harassment or discrimination. We pursue these responsibilities aggressively, and have built a reputation for strong, tough regulation that is unsurpassed.

In its regulatory capacity, the Exchange has had to address the problem of workplace harassment and discrimination. It has established a progressive record of not only severely disciplining violators of its policies, but of sponsoring programs to prevent such violations altogether.

In 1986, for example, the findings of a PSE regulatory investigation were brought before an Exchange disciplinary panel for review. The panel found that a PSE member had directed inappropriate, outrageous comments to a female employee, ultimately fining him $10,000, and suspending him from the trading floor for three months, effectively depriving him of his livelihood. On appeal, this sanction was unanimously upheld by both the PSE Board of Governors and the SEC. Since that time, the PSE has received few complaints of harassment or discrimination. Every complaint has been treated seriously, each has been investigated, and, where appropriate, meaningful disciplinary action has been taken.

But the Exchange is as equally interested in prevention as it is in enforcement. To ensure full compliance with its rules and policies, and to ensure sensitivity to issues of diversity in the workplace, the PSE sponsored mandatory training programs in 1993 for all staff and all broker-dealers and their employees. All new employees and Exchange broker-dealers receive similar training. In addition, PSE President and COO Robert Greber meets individually with new broker-dealers to reinforce the message that the Exchange is committed to maintaining a non-discriminatory, hostile-free environment. PSE staff are instructed to come forward with any complaint of harassment or discrimination, and are assured they will have management's full protection from any form of retaliation when they do so.

Ms. Marshall received that information and training when she joined the Exchange staff, months prior to the investigation. Our human resources department briefed her fully on how to file a complaint should she at any time feel herself to be the victim of harassment or discrimination. Despite this -- despite knowing our policy, our investigatory procedures, and our ability to protect her from recriminatory acts -- Ms. Marshall never brought her allegations to the Exchange.

Rather, Ms. Marshall told another PSE clerk -- in confidence -- that she was no longer comfortable with her work environment. That clerk informed a PSE trading operations manager of Ms. Marshall's situation, and, after further inquiries, he notified our compliance staff of the problem. Both the clerk and the manager acted in accordance with established PSE policies, despite Ms. Marshall's insistence that they not do so. Our compliance attorneys then contacted Ms. Marshall and opened an investigation. In other words, she did not come to us; we had to go to her to learn about these allegations.

Our interest in this matter is to determine the truth, to ascertain the validity of all of the charges levied against the PSE and the broker-dealers. We're not afraid of the truth, we're not going to hide from the truth, we're not going to cover up the truth, regardless of its potentially humiliating consequences. The Exchange will not buy the silence of victims or material witnesses. If there are violations of our rules and policies, we want to know about them, so that we can take appropriate disciplinary action.

The Marshall/Pinnock & Schectman allegations are numerous, lurid, explicit, and sensational. They are deeply disturbing. We believe Ms. Marshall, as a former Exchange employee, was obligated to assist in our investigation, but did not fulfill her professional responsibilities. Regrettably, Pinnock & Schectman evidence a wholesale lack of understanding and appreciation for the unique structure and regulatory responsibilities of the Pacific Stock Exchange. -0- The following are attachments:

To: All Employees Date: February 27, 1995 From: Lee Korins, Chairman and

Chief Executive Officer Subject: Exchange Policy Statement on Discrimination and

Harassment

Each year it is important to reaffirm the Exchange's long-standing commitment to maintaining a work environment that is free of discrimination, including harassment. This is especially true for discrimination or harassment on the basis of any legally protected status, such as race, color, creed, sex, ancestry, religion, national origin, sexual orientation, marital status, age or disability.

I want to take this opportunity to reemphasize that the Exchange will not tolerate any form of discrimination or harassment against its employees by anyone, including other Exchange employees, vendors, or members. All Exchange employees should avoid any conduct that could reasonably be interpreted as discrimination or harassment. All Exchange employees also are urged to make it known promptly, through avenues identified below, if they experience or witness discriminatory or offensive conduct affecting the workplace.

The conduct prohibited by this policy includes all employment discrimination and unwelcome conduct, whether verbal, physical or visual conduct that denigrates or shows hostility or aversion towards an individual because of his or her protected status.

Sexual harassment deserves special mention. Sexual harassment consists of unwelcome conduct on the basis of gender, including unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature. This covers situations not only when the conduct is made a condition of employment, but also when the conduct creates an intimidating, hostile or offensive working environment. Sex harassment can take many forms such as: (1) unwelcome verbal remarks of a sexual nature, including verbal teasing or jokes; (2) repeated offensive sexual flirtations, advances or propositions; (3) unwelcome physical touching of any kind, such as patting, hugging, pinching or brushing against another's body; (4) display of offensive objects or pictures; (5) graphic or degrading comments about a person or his or her appearance; and (6) subtle pressure for sexual activity. Sexual harassment, if sufficiently severe and pervasive, is unlawful under California and federal law.

If you experience or witness any conduct you believe constitutes discrimination or harassment or otherwise is inconsistent with this policy, the Exchange encourages and expects you to notify immediately your supervisor, Department head or the Human Resources Department. Please take every step you can to make sure that your concern is known to management. All reports that you make will be investigated fully and, if found to have merit, will result in whatever disciplinary action against the offender may be warranted, up to and including dismissal from employment.

Any employee who reports discrimination or harassment or who cooperates in an investigation will be protected against retaliatory action. The Exchange will preserve the confidentiality of employees to the extent the needs of the investigation permit.

Employees who are found guilty of discriminating against, harassing or retaliating against another employee in violation of this policy will be subject to discipline, up to and including termination. In investigating reports of discrimination or harassment under this policy, the Exchange may impose discipline for inappropriate conduct even if there is no violation of law or even a violation of this policy. The Exchange desires to maintain a discrimination and harassment free environment in which the standards of conduct may be even more exacting than the specific letter of the law.

If you have questions concerning what behavior is unacceptable, what to do about possible discrimination or harassment, or concerning this policy, please contact a member of management, or the Human Resources Department (ext. 4111).

To: All Floor Members and Date: November 2, 1994

Member Personnel

From: Lee Korins, Chairman and

Chief Executive Officer

Subject: Exchange Policy Statement on Discrimination and Harassment

The following is a revised Exchange Policy Statement on Discrimination and Harassment.

As you are probably aware, discrimination based on race, color, religion, gender, national origin, age, disability, or sexual orientation is a a violation of Federal and State employment discrimination laws. Sexual harassment is also considered unlawful discrimination and a violation of Federal and State employment discrimination laws. In addition, unlawful discrimination or harassment is a violation of the PSE Constitution and the Rules of the Board of Governors. I want to take this opportunity to re-emphasize that unlawful discrimination or harassment will not be tolerated in any way at the Pacific Stock Exchange.

The Exchange will take disciplinary action against any Member whose conduct on the Exchange premises constitutes unlawful discrimination or harassment. If such conduct is found, both the individual and the member firm may be held liable.

I also want this letter to serve as a reminder that the Operations Floor Staff has been requested to report to the Compliance Attorneys any conduct on the Floor which may constitute unlawful discrimination or harassment. This would include any words or actions which create, or contribute to, a hostile work environment. An expedited investigation and disciplinary process will follow and substantial penalties may be levied where appropriate.

Any individual working on the trading floor who believes that he or she has been the victim of unlawful discrimination or harassment should contact either (1) a Floor Official, (2) a senior member of the PSE Floor Staff, or (3) a Compliance Attorney.

If an individual has previously participated in conduct, including the sharing of jokes or comments of a nature described above, and no longer welcomes such behavior, that individual should take both of the following steps: (1) give notice to the other participants that such conduct is no longer welcome and (2) notify senior Floor Staff or Legal Staff that such a position has been taken. Thereafter, if such conduct does not cease, the individual is encouraged to report the behavior for possible disciplinary action.

Members should be aware that, in addition to any disciplinary action imposed by the Exchange, a complainant may take legal action against the offender in either Federal or State court. Recent court decisions have awarded victims of discrimination and harassment damages in excess of $1 million. Moreover, liability has been extended to include the individual offender's supervisor and firm. All Members are encouraged to consult their legal departments or independent counsel to determine their duties and liabilities in this area.

CONTACT: Pacific Stock Exchange, San Francisco 

Genie W. Williams, 415/393-4253