The NASD has come down on 29 broker/dealers for more than 8,000 instances when those firms failed to disclose reportable information about brokers to customers. The firms have neither admitted to nor denied allegations, but consented to the entry of the findings. Reportable information includes customer complaints, regulatory actions, criminal charges and convictions.

Most such events must be reported for inclusion on the Central Registration Depository (CRD) within 30 days, although more serious events must be reported within 10 days. The CRD is available to the public through the NASD’s BrokerCheck, and more than 2.8 million investors have looked into brokers’ histories through the service.

"Investors, regulators and others rely heavily on the integrity of the information in the CRD public reporting system – and, in turn, the integrity of that system depends on accurate and prompt reporting by firms," said Mary L. Schapiro, vice chairman of NASD. "The fact that so many firms failed in their obligation to report so much important information in a timely way is deeply troubling. These firms and others will understand from the severity of the fines and other sanctions in this case that timely reporting of broker information is a fundamental obligation that cannot be neglected or ignored."

Two of the firms, Merrill Lynch and Wachovia , are also not allowed to register new brokers for five business days. Merrill Lynch had 1,420 lapses and is paying a $1.6 million fine. Wachovia had 610 lapses and is paying a $650,000 fine. The two companies were singled out because of the number of violations and their previous filing histories.

All of the charged firms delayed in disclosing pertinent information at least 25% of the time between the beginning of 2002 and this past March. Some firms did so more than 70% of the time, namely ING Financial Partners (77%), Financial Network Investment Corp. (74%) and Linsco/Private Ledger Corp. (71%).

The NASD filed similar charges against Morgan Stanley in July, resulting in a fine of $2.2 million.

Firm Name

Fine

No. of
Late
Disclosures

Failure Rate
in Examined Areas

Merrill Lynch, Pierce, Fenner & Smith, Inc.

$1,600,000

1,420

30%

American Express Financial Advisors, Inc.

$700,000

770

44%

Wachovia Securities LLC

$650,000

610

32%

Prudential Equity Group, LLC

$550,000

490

27%

LINSCO/Private Ledger Corp.

$450,000

390

71%

PFS Investments, Inc.

$450,000

390

64%

Raymond James Financial Services, Inc.

$400,000

350

60%

Metropolitan Life Insurance Co.

$375,000

340

62%

NYLife Securities, Inc.

$350,000

350

45%

WM Financial Services, Inc.

$350,000

270

55%

Edward Jones & Co., LP

$300,000

280

27%

Chase Investment Services Corp.

$250,000

230

25%

AXA Advisors, LLC

$250,000

210

31%

MML Investor Services, Inc.

$250,000

220

69%

Banc of America Investment Services, Inc.

$200,000

170

56%

ING Financial Partners, Inc.

$200,000

160

77%

New England Securities

$200,000

180

57%

J.P. Turner & Company, L.L.C.

$185,000

140

62%

Financial Network Investment Corp.

$185,000

130

74%

Allstate Financial Services, LLC

$150,000

130

44%

RBC Dain Rauscher, Inc.

$150,000

140

35%

Wells Fargo Investments, LLC

$150,000

140

35%

World Group Securities, Inc.

$150,000

140

61%

Farmers Financial Solutions, LLC

$125,000

100

66%

InterSecurities, Inc.

$125,000

120

41%

Jefferson Pilot Securities Corporation

$125,000

110

48%

J.J.B. Hilliard, W.L. Lyons, Inc.

$125,000

120

62%

Quick & Reilly, Inc.

$125,000

120

51%

SunAmerica Securities, Inc.

$100,000

95

33%

Source: NASD

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.