NASD Files Rule to Increase Disclosure of Information About Firms and Their Employees; Initiates Web-Based Reports
Washington, DC – NASD today announced two proposals to improve the content and delivery of information to the public about the professional background and conduct of securities brokers and firms through “NASD BrokerCheck,” formerly known as the NASD Public Disclosure Program.
The proposed changes come after a review of this program by NASD. The goal of the review was to determine if investors were getting the information needed to make decisions about individuals and firms with whom they do business. NASD BrokerCheck includes background and regulatory information on more than 850,000 current and former registered individuals and more than 5,300 NASD-registered firms.
The first proposal, recently filed with the Securities and Exchange Commission (SEC), would broaden the customer complaint and settlement information made public through NASD BrokerCheck. In addition to the currently disclosed customer civil actions, arbitrations and settlements of $10,000 or more and complaints from the previous 24 months, all other customer complaints and settlements from the database will be made public if a broker has three or more of these incidents or regulatory actions and at least one of these incidents occurred within the last ten years.
The second proposal, recently published for comment in NASD Notice to Members 03-76, would enhance the existing electronic delivery of NASD BrokerCheck reports by allowing the public to access a report via a private, secure Internet site. Currently, NASD makes written reports available by U.S. Mail in printed form and by e-mail upon receipt of a request via email or the NASD BrokerCheck toll-free number.
The proposed delivery system would provide investors with a unique access code and a link to a secure server, where the recipient could view and print the requested report through a secure Internet connection. The access code would only be valid for a specified report. Investors also would be able to view materials that would aid them in understanding the written report. The secure server would be accessible only to individuals who received the link and access code from NASD. NASD plans to implement security features and access controls to minimize the risk of unauthorized use.
“A key component of clean financial markets is having information available for investors to make informed decisions,” said Doug Shulman, President of NASD RSO. “This proposal insures that investors will have more relevant information about a particular broker or firm and that information will be easier and quicker to access.”
NASD makes BrokerCheck available at no charge to the public. In 2002, members of the public used this service to conduct more than 2.5 million searches for existing brokers or firms and requested almost 200,000 reports in cases where disclosable information existed on a broker or firm. Investors can also continue to access this service by calling (800) 289-9999.
NASD is the leading private-sector provider of financial regulatory services, dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. NASD touches virtually every aspect of the securities business - from registering and educating all industry participants, to examining securities firms, enforcing both NASD rules and the federal securities laws, and administering the largest dispute resolution forum for investors and member firms. For more information please visit www.nasd.com.