NASD Given New Authority to Discipline Former Brokers Who Fail to Pay Arbitration Awards, Settlements
Washington, D.C.—The Securities and Exchange Commission has approved amendments to NASD By-Laws that strengthen NASD's ability to prevent former brokers from re-entering the securities industry if they have failed to pay arbitration awards or settlements. NASD will implement its new authority beginning September 9, 2004.
NASD will now be able - for up to two years from the date of an arbitration award or settlement - to institute suspension proceedings against a former broker who fails to pay that award or settlement. In most cases, NASD retains jurisdiction over a broker for two years after termination of registration or association with a regulated firm, for conduct that occurred while he or she was still employed by or associated with a regulated firm. This rule change explicitly allows NASD to retain jurisdiction over former brokers for two years from the date of an award or settlement, regardless of how long that award or settlement is entered after the broker left the industry. A suspension of a former broker for non-payment of an award or settlement would not only prevent that individual from re-registering as a broker, but would prevent that individual from associating with a regulated firm in any capacity until the award or settlement is paid.
Details on NASD's new authority are available in Notice to Members 04-57, which can be accessed at http://www.nasdr.com/pdf-text/0457ntm.pdf.
NASD is the leading private-sector provider of financial regulatory services, dedicated to bringing integrity to the markets and confidence to investors 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 registered firms. For more information, please visit our Web site at www.nasd.com.