For registered rep reservists serving in one of the nation’s armed forces, coming home and returning to the job is soon to get a lot easier. Of course, the NASD says there is nothing it can do to prevent colleagues from stealing a GI advisor’s book.
The NASD issued a release that says it will file rule amendments with the SEC “in the near future” in order to improve its policies that cover active-duty reps, further facilitating their return to the their desks. (To view the release, go to: the NASD Web site.)
Among the important changes to be made:
- Broker/dealers will be able to designate active-duty reps’ licenses “inactive” until they return to civilian life, thus preventing the license from expiring, costing the reps valuable time and money upon return.
- Reps that choose not to return to their firm can ask the NASD to stop the clock on their registration so they will be eligible for another job when they return.
- Registered principals—not just reps—will also be eligible for relief.
- Active-duty reps with “inactive” licenses will be allowed to enter into an arrangement whereby they can share commissions with the rep servicing their accounts.
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“The problem before was that the rules were not clear regarding licensing, continuing education or continued commission arrangements, and a lot of reps were left scrambling to get back on their feet,” says Bill Singer, a securities lawyer with Gusrae Kaplan & Bruno, and contributor to Registered Rep. magazine.
In general, protections for reservists that are called up to active duty are covered in the Uniformed Services Employment and Reemployment Rights Act (USERRA) that was passed in 1994. The Act provides reemployment protection and other benefits to veterans and other employees who perform military service—making sure troops can return to their jobs with the same seniority status and benefits as when they left. But while reps and lawyers like Singer praise the changes, the problems reps face when returning from a long tour of duty are not completely solved. One reservist rep, a broker with a small regional firm who has not been called up and who wished not to be identified, says he’s afraid of leaving for two reasons: War is hell, and his book might be totally gone when he returns, despite rules changes like these. “It’s up to the firm, and I haven’t hashed it out completely, but I know a lot of guys who will tear my book to bits if I get called up,” he says. “All the firm really has to do is give me my desk back,” he says.
Herb Perone, an NASD spokesperson, says it can do only so much, and it is up to the firms to sort out their own policies regarding the book of a returning reservist rep. Quantifying how many brokers are reservists is difficult. Perone says the NASD does not have that kind of information. This fact angered one veteran: “That’s exactly the type of thing the NASD could find out, if they wanted to,” says the rep who owns his own small b/d in California and was a Marine captain in Vietnam.
By press time, the wirehouses had not yet commented on the numbers of reservist reps among their ranks or their policies regarding returning reps. (Wachovia Corporation, the parent company of Wachovia Securities, was one of 15 recipients of the 2005 Secretary of Defense Freedom Award for its military leave benefits program. The policy includes full pay for active-duty employees up to 52 weeks or 365 calendar days, and 10 days of paid leave each year for training.)
Despite the difficulties that remain for reps who get called up, and the firms that try to deal with their departure, the NASD’s rule amendments are a very positive step for brokers, says Singer, who has been a leader in calling for the self-regulator to improve its policies. “Without these changes and clarifications, you’d have a large number of brokers whose families and professional lives would have suffered."
