The NYSE has caused a stir in clarifying that it expects oral customer complaints to be reported. In an April Information Memo (98-16), the Big Board states that any oral complaint is a complaint reportable under [NYSE] Rule 351(d).
The interpretation that oral complaints must be reported to the NYSE isnt new, says Steve Sneeringer, senior vice president and counsel, director of law at A.G. Edwards. Theyve said that before. But apparently there was confusion as to the NYSEs prior policy.
Bill Singer, a securities attorney at Singer Frumento in New York, says the issue first arose at a seminar sometime before the memo was issued. An NYSE official at the meeting was asked if oral complaints had to be reported. She said absolutely, and it caused an uproar, Singer says.
Since then, People have questioned that position, Sneeringer says. But the NYSE has held firm, now for the first time putting the requirement in writing. The NASD requires only that written complaints be reported.
Compliance experts anticipate some confusion among NYSE firms and brokers in trying to decipher a true complaint from general client grumbling. A customer complaint about a fill or back office problem isnt a complaint, its an inquiry, Singer says. Yet a broker could conceivably get in trouble for not reporting it.
You have to make a judgment and differentiate a headache call from a real complaint, says Howard Haykin, head of Compliance Solutions in New York.
Its more common sense than anything, Sneeringer says. He says verbal complaints alleging errors, negligence or wrongdoing by a firm or broker should be reported. Missing dividends or interest, a check that wasnt deposited or a late statement are operational problems and dont fall under the complaint category. Sneeringer says a timely trade correction would probably not need to be reported, either. But if its done three weeks later and you have to unwind positions and possibly take losses, thats an error and needs to be reported.
An NYSE member firm is supposed to put a customer complaint in writing and report it. But normally, firms ask clients to put it in writing, Sneeringer says, otherwise firms are in the awkward position of complaining for the customer. What if a customer doesnt follow up with a letter? Youre still supposed to report the complaint, Sneeringer says. But he admits even customers written complaints are difficult to interpret.
Haykin predicts reps might get into trouble when a customer tells the NYSE hes complained to the firm and yet theres no report of the complaint at the Big Board.
