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FINRA

 

 

FOR RELEASE:
CONTACTS:
Thursday, April 21, 2005
Nancy Condon 202-728-8379
Herb Perone 202-728-8464

 


NASD Proposes Banning Most Cash Sales Contests

Washington, D.C. NASD announced today that it is proposing to broaden its ban on sales contests to all contests that award brokers cash for selling a particular security or type of security in preference to another. The proposal would remove any cash or non-cash incentive to sell specific securities or a particular type of securities. It would not affect compensation based on a broker's total production across all types of securities.

 

Previously NASD prohibited contests that awarded non-cash prizes (cruises, concert tickets) to encourage the sale of one kind of mutual fund, variable annuity, or certain other securities in preference to others. The new rule extends the prohibition to cash as well as non-cash prizes and to all forms of securities.

 

"A broker's first responsibility is to recommend securities that are right for the investor. Sales contests, whether they pay off in cash or cruises, that favor particular securities can interfere with that responsibility," said Robert Glauber, chairman and CEO of NASD. "This rule proposal would eliminate, in a clear and complete way, this potential conflict of interest."

 

NASD will publish the proposal for comment on its web site in the near future. After responding to public comments, the NASD staff will then file the proposal with the Securities and Exchange Commission for further review and public comment.

 

Investors can obtain more information about, and the disciplinary record of, any NASD-registered broker or brokerage firm by using NASD's BrokerCheck. NASD makes BrokerCheck available at no charge to the public. In 2004, members of the public used this service to conduct more than 3.8 million searches for existing brokers or firms and requested almost 190,000 reports in cases where disclosable information existed on a broker or firm.  Investors can link directly to BrokerCheck at www.nasdbrokercheck.com. Investors can also access this service by calling 1-800-289-9999.

 

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 our Web Site at www.nasd.com.