In a report sent to Congress last November, the U.S. General Accounting Office (GAO) found that the NASD collected just 24% of the total amount of fines it imposed between January 1992 and December 1996. Although most smaller fines are paid in full, the worst offenders with the largest fines and bans often dont pay.
Speaking at a January conference in New York, SEC Commissioner Laura Unger agreed that regulators fines are often empty because individuals and firms are able to hide or liquidate assets before fines can be collected.
The SECs New York office has someone devoted exclusively to collecting on these penalties, Unger told Registered Representative after she gave a luncheon address at the event. But collection has been a problem. At one point we turned it over to the Treasury Department, but they didnt have any better luck than we did, unfortunately.
According to the GAO report, Violators may leave the industry either to avoid the fine or because they are suspended or barred as part of their sanctions. The amounts are often not collectible except as a re-entry fee.
