NASD Telephone Hotline: Enhancements Could Help Investors Be Better Informed About Brokers' Disciplinary Records
GGD-96-171
Published: Aug 19, 1996. Publicly Released: Aug 22, 1996.
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Highlights
Pursuant to a congressional request, GAO reviewed the effectiveness of the National Association of Securities Dealers (NASD) hotline, focusing on: (1) investors' accessibility to the hotline; and (2) whether the information provided by the hotline meets NASD disclosure policies.
Recommendations
Recommendations for Executive Action
Agency Affected | Recommendation | Status |
---|---|---|
United States Securities and Exchange Commission | To help ensure that all relevant information is made available to as many investors as possible, the Chairman, Securities and Exchange Commission (SEC), should encourage and support NASD Regulation efforts to explore other ways of publicizing the hotline number to a wider audience of investors, such as including the hotline number on account-opening documents or account statements, and making disciplinary related information directly available to investors through the Internet. |
Closed – Implemented
NASD submitted a rule change to SEC that would implement the intent of this recommendation. SEC has received comments and returned the rule submission to NASD for changes in response to the comments. After these changes are made, NASD will submit the rule to SEC for final approval.
|
United States Securities and Exchange Commission | To help ensure that all relevant information is made available to as many investors as possible, the Chairman, SEC, should encourage and support NASD Regulation efforts to provide hotline callers with all the relevant disciplinary-related information available in CRD, such as whether a broker is the subject of a customer complaint, a settled arbitration, or a settled civil case; if NASD Regulation does not disclose this additional information, it should at least inform callers that the information is available from most state regulators. |
Closed – Implemented
SEC has encouraged NASD Regulation efforts on this matter and NASD is taking steps ensure necessary data available to investors.
|
United States Securities and Exchange Commission | To help ensure that all relevant information is made available to as many investors as possible, the Chairman, SEC, should encourage and support NASD Regulation efforts to develop and implement cost-effective quality assurance checks, such as independent review and testing of information derived from CRD, to ensure that information provided to hotline callers is disclosable and complete. |
Closed – Implemented
NASD Regulation has implemented the recommendation.
|
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