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First, did this player psych? His 1 ♠ response was certainly deliberate - he said so himself. However, it is not, IMO, a gross misstatement of values - he has the appropriate strength, and is lacking only one card for the appropriate length. The bid is not a psych.
Second, whether bidding 1 ♠ on this hand is a good idea may be an interesting question for bidding theorists, but it is irrelevant to a legal ruling.
May a sponsoring organization ban psychs? No, not if the game is "duplicate contract bridge" according to the international laws thereof. It was suggested that TDs are free to make their own rules. They are not. Neither are sponsoring organizations, beyond the authority granted in the laws. The relevant laws are 80F, 81B2 and 82A.
What can you do if a sponsor sets rules that aren't in compliance with the laws of the game? Well, I agree with Jillybean. "Vote with your feet" - don't play in that sponsor's games. There seems little else that would be practical.
Regarding alerts. These are in the purview of sponsoring organizations - see the aforementioned 80F. IMO, though, it is incumbent on the SO to explicitly state what regulations are in force, particularly since whether this bid is alertable may depend on those regulations.
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I read through the ACBL LC minutes for the last several years - they're posted on the ACBL web site. I did not find any statement regarding what constitutes a gross misstatement. I would like to know where the ACBL LC said that.
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Echognome is right - when you have the player's own statement that he did not psych, you should probably believe him.
The answer to the original poster's "is there any law to support this ruling?" is "no."
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