# DCI 1986 Arkansas Suspension The Arkansas Securities Department suspended Development Corporation for Israel's broker-dealer registration on April 7, 1986 by Order 86-27-S, signed by Securities Commissioner Beverly Bassett. The suspension was vacated three and a half months later on July 22, 1986 by Order 86-27a-S after DCI cured the procedural deficiency. The 1986 suspension is the wiki's first documented Arkansas-state-level regulatory action against DCI. It is procedural-compliance in nature, not sanctions for substantive misconduct: DCI failed to designate a principal as required by Section 3(e) of the Arkansas Securities Act, was suspended for the deficiency, and was reinstated retroactive to the last approval date before April 7, 1986 once the principal designation was filed. The 1986 suspension predates the wiki's documented Arkansas Israel Bonds purchase chronology by 32 years (the first wiki-documented Arkansas Treasury Israel Bonds purchase is March 1, 2018 per [[state-treasurer-israel-bonds-holdings]]). It also predates DCI's Web CRD BD Conversion to the modern Central Registration Depository system on July 5, 1999 (per ASD-128 Organization Form Filing History) by approximately 13 years. The 1986 orders are NOT on DCI's four-occurrence FINRA Current Disclosure Summary record at [[dci-finra-disclosure-events]]; the AR procedural-compliance event apparently was not migrated as a disclosure event when DCI joined the Web CRD system. The 1986 AR action is documented only in the Arkansas Securities Department's own files preserved at ASD-120. ## Order 86-27-S (April 7, 1986): Summary suspension The verbatim Findings of Fact: > [!evidence] ASD-120_Orders-86-27-S,-86-27a-S-1986.pdf, page 1 > "On or before March 7, 1986, the staff of the Arkansas Securities Department mailed to Development Corporation For Israel a Memorandum advising said Broker-Dealer of the requirements of Section 3(e) of the Arkansas Securities Act (the 'Act') concerning designation of principals, and informing said Broker-Dealer that failure to so designate a principal by March 31, 1986, would result in suspension of the Broker-Dealer's registration. A copy of said Memorandum is attached hereto as Exhibit 'A' and incorporated herein. > > As of April 7, 1986, Development Corporation For Israel has failed to properly designate a principal as required by the Act." The verbatim Conclusions of Law: > [!evidence] ASD-120_Orders-86-27-S,-86-27a-S-1986.pdf, pages 1-2 > "Development Corporation For Israel is required under Section 3(e) of the Act to designate an officer or partner who shall have direct supervision over the purchase and sale of securities in Arkansas to be a principal. > > Failure to designate a principal as required by Section 3(e) of the Act results in an application for registration being incomplete in a material respect under Section 6(a)(2)(A). > > The Commissioner is empowered under Section 6(a) and Section 6(c) of the Act to summarily suspend the registration of Development Corporation For Israel due to said Broker-Dealer's failure to properly designate a principal. > > Suspension of the registration of Development Corporation For Israel is in the public interest." The verbatim Order: > [!evidence] ASD-120_Orders-86-27-S,-86-27a-S-1986.pdf, page 2 > "IT IS THEREFORE ORDERED by the Commissioner that the registration of Development Corporation For Israel be and hereby is suspended until such time as said Broker-Dealer shows compliance and properly designates as a principal an officer or partner who shall have direct supervision over the purchase and sale of securities in Arkansas, and at such time, said complying Broker-Dealer's registration shall be reinstated. > > IT IS SO ORDERED on this 7th day of April, 1986. > > BEVERLY BASSETT, Securities Commissioner" The Commissioner's finding that "Suspension of the registration of Development Corporation For Israel is in the public interest" is the only wiki-documented Arkansas regulatory finding of public-interest justification against DCI. The phrase is conventional statutory language under the Arkansas Securities Act's Section 6 standard, not a substantive finding of investor harm; the Section 6(a)(2)(A) predicate is registration incompleteness in a material respect, not investor injury. ## Order 86-27a-S (July 22, 1986): Vacating the suspension The verbatim Findings of Fact: > [!evidence] ASD-120_Orders-86-27-S,-86-27a-S-1986.pdf, page 3 > "By Order dated April 7, 1986, the broker-dealer registration of Development Corporation For Israel was summarily suspended for failure to designate a principal. > > On or about May 23, 1986, the Arkansas Securities Department received proper documentation from Development Corporation For Israel in which said broker-dealer designated a principal." The verbatim Order: > [!evidence] ASD-120_Orders-86-27-S,-86-27a-S-1986.pdf, page 3 > "IT IS THEREFORE BY THE COMMISSIONER ORDERED that the broker-dealer registration of Development Corporation For Israel is hereby reinstated and approved effective the last approval date prior to April 7, 1986, and that the Order Suspending Registration entered herein on April 7, 1986 be and hereby is vacated. > > IT IS SO ORDERED THIS 22ND DAY OF JULY, 1986." The vacating order's retroactive reinstatement ("effective the last approval date prior to April 7, 1986") operationally treats the suspension as if it had not occurred for registration-status purposes; from the perspective of DCI's continuous Arkansas registration record, the 86-day gap (April 7 to July 22, 1986) is closed by the retroactive reinstatement. This is consistent with the procedural-compliance nature of the deficiency (an administrative gap rather than a substantive violation that would warrant a forward-looking sanction). ## Timeline reconstruction The documented chronology of the 1986 episode: - **On or before March 7, 1986**: AR Securities Department staff mailed a Memorandum to DCI on Section 3(e) principal designation requirements with a March 31, 1986 compliance deadline. - **March 31, 1986**: DCI's compliance deadline expired without designation filed. - **April 7, 1986**: Commissioner Beverly Bassett issued Order 86-27-S summarily suspending DCI's registration. - **April 7 - May 22, 1986**: DCI's AR registration is suspended; the production captures no records of DCI activities or AR Securities Department communications during this 46-day window. - **On or about May 23, 1986**: AR Securities Department received DCI's principal-designation documentation. - **May 23 - July 21, 1986**: 60-day administrative window between DCI's documentation submission and the vacating order; no records of the intervening processing are in the production. - **July 22, 1986**: Commissioner Bassett issued Order 86-27a-S vacating the suspension with retroactive reinstatement. The Memorandum exhibits referenced in Order 86-27-S (Exhibit A, the March 7, 1986 Section 3(e) Memorandum) and the principal-designation documentation DCI submitted around May 23, 1986 are NOT in the production. The 1987 Acknowledgement Form at ASD-001 acknowledges receipt of a SEPARATE December 1, 1986 Memorandum on "Independent Contractors" — the December 1986 memo postdates the suspension episode by five months and is on a different topic. ## What the suspension shows about AR Securities Department oversight of DCI The 1986 suspension documents that the Arkansas Securities Department actively monitored DCI's compliance with state-specific broker-dealer registration requirements in the 1980s, including issuing summary-suspension orders for procedural deficiencies. The Section 3(e) principal-designation requirement is a state-level requirement on top of federal SEC and FINRA registration; the AR Securities Department enforced it through a documented administrative process that included: - Written Memorandum advising DCI of the requirement (March 7, 1986) - Compliance deadline with consequences spelled out (March 31, 1986) - Summary suspension upon non-compliance (April 7, 1986) - Reinstatement upon cure (July 22, 1986) The administrative process was procedurally rigorous but the underlying deficiency was administrative rather than substantive. DCI cured the deficiency within seven weeks of suspension. The episode did not produce sanctions, fines, restitution to Arkansas investors, or any documented investor harm. The structurally significant finding is that the AR Securities Department's documented oversight of DCI as of 1986 is concentrated in procedural-compliance maintenance. The production does not document any subsequent AR Securities Department engagement with DCI on substantive matters (sales practices, supervisory failures, customer suitability, institutional sales to Arkansas state government, pension-fund eligibility, or the post-2018 Israel Bonds purchase pattern). The 1986 suspension episode appears to be the AR Securities Department's deepest documented engagement with DCI; subsequent oversight, if any, is reduced to routine registration-status maintenance per [[dci-arkansas-limited-registration]]. ## What the suspension reveals about Section 3(e) The Arkansas Securities Act's Section 3(e) requires broker-dealers registered in Arkansas to designate "an officer or partner who shall have direct supervision over the purchase and sale of securities in Arkansas to be a principal." The Section 3(e) requirement is structurally significant for the wiki's investigation because: 1. The requirement establishes that an in-state principal must exist with direct supervisory authority over AR transactions. The wiki's [[development-corporation-for-israel]] entity page documents DCI's New York headquarters; the AR Section 3(e) principal designation is the mechanism by which a non-AR broker-dealer satisfies AR's in-state supervisory expectation. DCI has no documented AR branch office (ASD-006 and ASD-153 show no records found); the Section 3(e) principal designation operates as a substitute for physical AR presence. 2. The identity of DCI's designated Section 3(e) AR principal is not preserved in the production. The 1986 documentation cure resolved the deficiency; the principal-designation record itself is not surfaced in the 155 ASD files. The wiki's [[development-corporation-for-israel]] entity page documents Jordan Horvath as DCI's current Chief Legal Officer / Chief Compliance Officer / FINRA Executive Rep (CRD #4928984, effective 08/2009 per ASD-023); whether Horvath or another DCI officer is the current AR Section 3(e) designated principal is not knowable from the production. 3. The Section 3(e) requirement operationally requires DCI to maintain a supervisory chain of responsibility specifically for the Arkansas transactions in DCI's "Limited - BONDS FOR THE STATE OF ISRAEL" registration scope. The AR-registered DCI agents documented at ASD-151 (Berman, Young, Garawitz, Miron, Fisher, Libchaber) operate under that supervisory chain, with the designated principal having direct supervision over their AR transactions including the Israel Bonds sales to the Arkansas State Treasurer's office, ATRS, and APERS documented across the wiki's productions. ## Cross-references [[securities-foia-r1-4-20-26]] source page for the 1986 orders [[development-corporation-for-israel]] DCI entity page (1986 suspension cross-referenced in DCI regulatory profile) [[beverly-bassett]] Arkansas Securities Commissioner who signed both 1986 orders [[dci-arkansas-limited-registration]] companion concept page on the structural single-issuer AR-registration restriction [[dci-finra-disclosure-events]] companion concept page on DCI's 4 FINRA Current Disclosure Summary occurrences (which do NOT include the 1986 AR suspension) [[state-treasurer-israel-bonds-operations]] companion concept page on the 2018-2026 Arkansas Treasury Israel Bonds purchase pathway (which operates under DCI's AR-limited registration with Section 3(e) principal designation) ## Tensions This concept page surfaces one first-class tension tracked under the Hegelion layer of the wiki's methodology. - [[T032 - DCI 1986 Arkansas Suspension Substantive vs Pro Forma]] (`framing`, `status: open`) — Whether the 1986 Arkansas suspension reflects a substantive compliance failure that the wiki's "procedural-compliance, administrative rather than substantive" framing understates (Statement A: DCI received formal notice on March 7, missed the March 31 deadline, was suspended April 7 under a documented Section 6 public-interest finding, and did not cure until May 23 — a 78-day failure-to-comply window), or whether the episode is procedural-compliance in nature as the page characterizes it (Statement B: Section 6(a)(2)(A) registration-completeness predicate, retroactive reinstatement remedy, no monetary sanction, no documented investor harm, cure cadence within 1980s multi-state broker-dealer norms). The tension's confidence is `medium` rather than `high` because resolution turns substantially on documents not in the production: the March 7, 1986 Memorandum referenced as Exhibit A, DCI's May 23 cure submission, any intervening AR Securities Department staff records, and comparative records on other multi-state broker-dealers' Section 3(e) compliance episodes in the same period. See [[methodology]] § II for the dialectical workflow and schema.