Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, September 15, 1994 TAG: 9409150053
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
``Direct and uncensored public access to ... disciplinary files would mean speedier access to critical information for investors and also would dramatically turn up the heat on problem brokers,'' John R. Perkins, chief state securities regulator for Missouri, told a congressional panel.
Perkins heads a task force of the North American Securities Administrators Association studying how to weed out rogue brokers.
Consumer activists hailed the proposal, saying it would greatly help consumers seeking to get a fair shake in the securities markets.
All enforcement records against the nation's 460,000 registered brokers and traders, as well as 5,500 securities firms are contained in a vast database called the Central Registration Depository. The records, some dating to the early 1950s, provide details of specific securities law violations, arbitration settlements, fines and lawsuits.
The CRD is run by the National Association of Securities Dealers, the industry's main self-regulatory body. The nation's stock and commodities exchanges, as well as state regulators, contribute to the system.
The public has only limited access to the records via a toll-free telephone number run by the NASD. The NASD says the service receives about 1,750 calls a week.
Also speaking at Wednesday's hearing before a House telecommunications and finance subcommittee was the chairman of the Securities and Exchange Commission, Arthur Levitt Jr., who said the agency plans a coordinated sweep with other regulators of brokerage firms later this year to rid the industry of problem brokers.
He also said the SEC also is examining reforms of how brokers are paid, with an eye at eliminating practices that pose a conflict of interest.
The head of the securities industry's largest trade group, Marc E. Lackritz of the Securities Industry Association, said the overwhelming number of the nation's brokers are reputable. Recent studies by the SEC and General Accounting Office illustrate the problem with a small number of brokers, and these surveys disprove the ``myth of the rogue broker, the large producer run amok,'' Lackritz said.
Much of regulators' energy in detecting brokers with repeat disciplinary problems focuses on the CRD computer system.
Perkins said the state regulators envision a day in which investors could use computers in their homes or in public libraries to download both the corporate filings and the disciplinary files to check on a firm or a broker's reputation.
Jamie Love of the public interest group Taxpayer Assets Project said the idea sounded ``extremely useful'' for consumers.
by CNB