Washington (Aug. 29, 2003) -- The National Association of Securities Dealers has proposed to increase supervision of brokers who have a high number of client complaints.
The new mandates by the self-regulator would specifically target securities brokers who have faced three or more complaints, three or more regulatory actions, or at least two internal reviews over a five-year period.
In a statement, NASD chairman Robert Glauber said, "Investors face a higher risk dealing with a broker who has a long regulatory record. Securities firms must respond to that risk with enhanced controls."
The organization, based here, said a review of 663,000 registered brokers showed that over a five-year span, 2,751 had three or more customer complaints and arbitrations, some 216 had faced three or more investigations and regulatory actions, and 1,198 had been terminated at least twice by their firms.
The proposal, approved by the NASD Board and subsequently sent out for public comment, would require firms to investigate broker records for the last five years and identify repeat offenders. The firms would then have to develop heightened internal supervision plans.
-- WebCPA staff
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