SIA to NASD: Try Again

The Securities Industry Association has weighed in negatively on the NASD's proposed changes to the handling of Central Registration Depository (CRD) complaints. The SIA's main point of contention is that, under the proposal, minor complaints, even those without substance, could be removed from a rep's CRD record only through expensive and hard-to-obtain court orders. It is our understanding that

The Securities Industry Association has weighed in — negatively — on the NASD's proposed changes to the handling of Central Registration Depository (CRD) complaints.

The SIA's main point of contention is that, under the proposal, minor complaints, even those without substance, could be removed from a rep's CRD record only through expensive and hard-to-obtain court orders.

“It is our understanding that neither doctors, lawyers, nor any other body of professionals is subject to a national system of public disclosure that reports even the flimsiest unproven allegation,” says a letter from SIA senior vice president Stuart Kaswell to Jonathan Katz, secretary at the SEC.

The NASD proposal, which is in its comment stage, aims to give brokerage clients and other interested parties easy access to CRD data, including test grades and complaint information. Brokers' worry that unfounded or minor complaints would get more play than they deserve.

Kaswell's letter says the proposal fails to strike “a fair balance between the important disclosure interests and fundamental fairness.” It also warns of damaging the CRD with “inaccuracies and potentially misleading information.”

These comments echo the concerns voiced by brokers when the proposals first came to light (RR reported on this issue last month).

The general feeling, brokers say is that the NASD is placing its need to look tough on corruption ahead of the brokerage community's concerns about fairness.

The NASD had no comment at press time.

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