Twenty-nine investment firms, including some of Wall Street’s biggest names, have been fined a total $9.2 million by securities regulators who said they were late in reporting disciplinary history and other data about their brokers. The investment arms of Merrill Lynch & Co. and Wachovia Corp. were barred from registering new brokers for five business days.
The National Association of Securities Dealers, the brokerage industry’s self-policing organization, on Tuesday announced the civil fines and censures against the firms – which also include the brokerage arms of Allstate Corp., American Express Co., Bank of America Corp., Prudential Financial Inc. and Wells Fargo & Co.
The 29 firms together made more than 8,000 late disclosures of broker information including customer complaints, disciplinary actions and criminal charges and convictions, the NASD said.
The fines range from $100,000 for SunAmerica Securities to $1.6 million for Merrill Lynch, which was the only one exceeding $1 million.
The additional prohibition was imposed on Merrill Lynch and Wachovia because of the number of their reporting violations and their previous regulatory filing histories, the NASD said.
The 29 investment firms neither admitted nor denied the allegations in agreeing to the fines and censures. They also agreed to conduct internal audits to evaluate the effectiveness of their systems for ensuring compliance with broker reporting obligations.
From January 2002 through March 2004, all the firms failed to report on a timely basis at least 25 percent of the required broker disclosures in areas reviewed by the NASD; some firms failed to report more than 70 percent in time, the organization said. It said its examiners also found that all 29 firms lacked adequate supervisory systems and procedures.
Under NASD rules, securities firms must ensure that information on brokers’ application for registration is kept current in the organization’s Central Registration Depository of broker data. Firms must file updates to the information whenever significant events occur such as customer complaints against a broker, disciplinary actions and criminal charges and convictions. Most updates must be filed within 30 days, and in some instances, within 10 days.