The NASD has censured and fined 29 securities firms a total of $9.22 million for failing to properly disclose disciplinary and other information about their brokers more than 8,300 times. The $9.2 million in fines is the most the regulator has ever imposed for reporting violations.
The NASD also suspended two of the firms, Merrill Lynch and Wachovia, from registering new brokers for five business days because of their repeated violations and regulatory filing problems.
Merrill Lynch was fined $1.6 million. American Express Financial Advisors $700,000, Wachovia Securities $650,000 and Prudential Equity Group $550,000.
The NASD says each of the 29 firms failed to make at least 25 percent of required disclosures on time between January 2002 and March 2004. ING Group affiliate ING Financial Partners, which was fined $200,000, had the biggest failure rate (77 per cent).
Brokerage firms are expected to update NASD records within 30 days for regulatory actions, customer complaints, settlements and criminal charges and convictions involving brokers. The NASD is investigating other brokerages for similar violations.
Morgan Stanley was fined $2.2 million last July, and banned from registering brokers for five days in a settlement stemming from the same investigation.
Late disclosures make it difficult for investors to review the backgrounds of the 665,000 registered brokers scattered across 5,300 firms through the NASDS BrokerCheck. Investors used the service more than 2.8 million times in 2003.
Merrill was responsible for 1,420 late disclosures, while American Express had 770, Wachovia 610 and Prudential 490, the NASD said. ING had 160 late disclosures. Morgan Stanley was responsible for more than 1,800 at the time it settled.
Merrill was fined a combined $315,000 by the NASD and New York Stock Exchange in 2000 and 2002 for other late filings, while Wachovia was fined $250,000 this year by the NYSE.