discussion concerning whether there were nine or ten positions on the Board to be filled at the forthcoming election.
31. At the February 17, 1971 Board meeting Cameron reported "that he felt that it was not in the best interests of the Exchange for Stanley [plaintiff] to serve as a Board member." [N.T. 84].
32. Various alternatives which could be used in the event it proved undesirable to have plaintiff as a member of the Board were discussed, including removal of a member of the Board for cause.
33. Yocum stated his opinion that only nine vacancies existed on the Board. He said that Dayton had been elected to the Board by a vote of the membership of PBW as a Governor of the class of 1972 and that the Board could not remove Dayton from an office to which the membership of PBW had elected him by designating him as Vice-Chairman of the Board. Yocum said that the only situation in which a person cannot serve both as Vice-Chairman of the Board and as one of the "twenty-four other" members of the Board simultaneously is when he is elected as Vice-Chairman by the membership of PBW. He further stated that he believed that Dayton was a Governor until he died, resigned, was removed for cause, his term expired, or was elected by the membership of PBW as Vice-Chairman.
34. Nonetheless, Yocum suggested that Dayton resign as Vice-Chairman in order to clarify the situation.
35. Dayton's letter of resignation was then presented and accepted by the Board. Dayton also withdrew as the nominee for Vice-Chairman of the Board.
36. The resignation of Dayton as Vice-Chairman at the February 17, 1971 meeting of the Board following his election to that office at the previous Board meeting on January 20, 1971, raised a strong inference that Dayton and other officers and members of the Board believed that Dayton's election as Vice-Chairman ousted him as a member of the Board, thereby creating a tenth vacancy on the Board to be filled at the March 1, 1971 annual meeting.
37. The aforesaid actions of Dayton, Wetherill, Cameron and Yocum and the acceptance of Dayton's resignation by the Board were designed solely to prevent the election of plaintiff to the Board.
38. By letter dated February 19, 1971 to Robert Y. Guarniery, chairman of the committee of elections to the Board, plaintiff requested an opportunity to appear before the committee to present "charges of wrong doing and violation of the Exchange constitution regarding the annual elections of the Exchange." [Pl. Ex. 11].
39. By letter dated February 19, 1971, Guarniery responded to plaintiff's request stating that the report of the committee had been presented to the Board and approved at its February 17, 1971 meeting. Guarniery suggested that plaintiff correspond with the Chairman of the Board concerning any questions he might have.
40. Plaintiff did not correspond with the Chairman of the Board nor did he request to appear before the Board at the meeting of February 17, 1971.
41. The annual election of PBW was held on March 1, 1971, and plaintiff received the least number of votes cast for the ten nominees whose names appeared on the ballot for membership on the Board. Plaintiff received 88 votes; the votes for the other nine nominees ranged from 116 votes to 159 votes.
42. Plaintiff was declared not to have been elected to the Board of PBW at the election on March 1, 1971 and has not been permitted to take office.
Jurisdiction in this action is based upon §§ 6 and 27 of the Act, 15 U.S.C. §§ 78f and 78aa. Section 27 provides that District Courts shall have exclusive jurisdiction of violations of any duty created by the Act. Section 6 imposes a duty upon an exchange to file the "rules of the exchange"
with the Securities Exchange Commission ("Commission") and abide by and enforce such rules.
Courts have consistently held that the Act imposes a duty upon an exchange to enforce its rules promulgated and filed with the Commission in compliance with section 6(a)(3). Silver v. New York Stock Exchange, 373 U.S. 341, 83 S. Ct. 1246, 10 L. Ed. 2d 389 (1963); O'Neill v. Maytag, 339 F.2d 764 (2 Cir. 1964) (dictum); Baird v. Franklin, 141 F.2d 238 (2 Cir. 1944), cert. den. 323 U.S. 737, 65 S. Ct. 38, 89 L. Ed. 591 (1944); Kroese v. New York Stock Exchange, 227 F. Supp. 519 (S.D.N.Y. 1964); Pettit v. American Stock Exchange, 217 F. Supp. 21 (S.D.N.Y. 1963); Butterman v. Walston & Co., Inc., 1967-69CCH Dec., P92,102 at 96,515-2 (N.D. Ill. September 9, 1963), aff'd 387 F.2d 822 (7 Cir. 1967), cert. den. 391 U.S. 913, 88 S. Ct. 1806, 20 L. Ed. 2d 652 (1968).
In Silver v. New York Stock Exchange, supra, Justice Goldberg discussed the policy considerations which led to the enactment of section 6 of the Act, saying at 351-352 of 373 U.S., 83 S. Ct. at 1253-1254:
"As exchanges became a more and more important element in our Nation's economic and financial system, however, the private-club analogy became increasingly inapposite and the ungoverned self-regulation became more and more obviously inadequate, with acceleratingly grave consequences. * * * It was, therefore, the combination of the enormous growth in power and impact of exchanges in our economy, and their inability and unwillingness to curb abuses which had increasingly grave implications because of this growth, that moved Congress to enact the Securities Exchange Act of 1934. * * *