WealthManagement Magazine

Industry Fears NASD E-Mail Proposal

Dear Client:"Good Morning." * ** **** The above statement neither implies nor guarantees that the firm has subjected either the morning, afternoon, evening or any other time of the day, to quality review.** Current and past Good Mornings are no guarantees of future days.*** Statement not intended to apply to mornings within any state or jurisdiction in which neither the firm nor broker are licensed.For

Dear Client:

"Good Morning." * ** ***

* The above statement neither implies nor guarantees that the firm has subjected either the morning, afternoon, evening or any other time of the day, to quality review.

** Current and past Good Mornings are no guarantees of future days.

*** Statement not intended to apply to mornings within any state or jurisdiction in which neither the firm nor broker are licensed.

For technology that is supposed to simplify communications, E-mail could turn out to be a pretty cluttered affair if the NASD makes proposed amendments to Conduct Rule 2210. That's the message sent to the regulator in recent weeks by three key industry trade groups--the Securities Industry Association (SIA), the Public Securities Association (PSA) and the Investment Company Institute (ICI).

The proposed revision to the conduct rule, first floated by an NASD executive at an industry meeting earlier in the year, would essentially require firms to treat individual broker/client communications along the same lines as mass communications materials such as advertising and marketing brochures.

The problem, said the trade groups in their comment letters, is that the attachment of boiler plates, disclaimers and clarifications to simple broker/client correspondence would likely result in communication so cluttered as to be absurd and unreadable.

"Instead of receiving clear, timely and succinct information from NASD member firms," wrote the PSA in August, "Customers would have to wade through a variety of disclaimers, extraneous references and irrelevant, duplicative information they never asked for nor care to receive."

In mid-August, the SIA wrote to the NASD saying that it feared the amendment would make individual communications unwieldy by subjecting them to "inappropriate and unworkable standards."

According to those who have been working with the SEC and the NYSE to create workable rules that would facilitate the use of broker/client E-mail, the NASD proposal, although no secret, still came as a bit of a shock--particularly since the SEC is considering industry proposals on how to treat E-mail.

"This is not only a bad idea," said one member of the SIA Technology Regulatory Committee. "But the timing's pretty lousy, too."

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