In a Sept. 15 address to the California Association of Independent Broker Dealers (CAIBD) in Marina del Rey, NASD head Frank Zarb said that the SEC is not inclined to let the NASD remove some felony records from brokers CRD records. In response to questions, Zarb said, The SEC has already said theyre not inclined to agree with us on this issue of removing certain felonies.
The NASD is taking comment on what types of noninvestment-related felony convictions might be removed from the CRD in order to protect the privacy of registered reps (see OddLots, September 98 RR, Page 40). The full CRD will likely go on-line sometime next year. Other professions dont have such disclosure, but RRs dont have the same kind of rights, Zarb said, adding that state regulators are also against removal of any information from the CRD.
NASD U. Zarb told the group the NASD plans to begin an NASD University program for examiners at New York University by the middle of next year. In response to a question about turnover of NASDR examiners, an NASD district director in attendance at the meeting said nationwide turnover at the organization ran 26% a year. Zarb added that examiners have a tough job, and that better training at the NASD University might improve retention. Zarb floated the idea of the university last year, which reportedly would also train compliance staff from firms.
RIA Oversight Attendees at the meeting asked about what could be done to regulate stock promoters, and Zarb answered that Ive had discussions with [SEC Chairman Arthur] Levitt about where we can be delegated authority over [investment advisers]. ... We need some supervisory responsibility. The NASD has been looking at what further regulations might be needed to ensure that problem brokers dont escape regulation by setting up non-NASD registered investment advisory firms. Stock promoters often operate as investment advisers, or as unregulated consultants. The securities industry has argued that RIA firms have less oversight and that the playing field should be leveled.
