Misdeeds of Nation's Stockbrokerages Under-reported Says New Reference Guide
Lighthouse Point, Florida (July 29, 2002) The findings of the first edition of The Siedle Directory of Securities Dealers, a reference guide providing information regarding the integrity of the nation's stockbrokerages, were released today indicating widespread under-reporting of disciplinary actions involving stockbrokerages. Edward Siedle, a former SEC attorney who authored the study said, "The brokerage industry is unique. It has been permitted to self-regulate, self-insure, self-adjudicate and even control the information the public receives about brokerages. The conflict of interest inherent in self-regulation may well explain the massive under-reporting we uncovered."
To summarize The Directory's findings:
Data regarding millions of nationwide brokerage firm customer complaints is not disclosed to the public, despite the fact that state securities regulators, the SEC and National Association of Securities Dealers, each keep such records.
Only information regarding arbitration cases filed with the NASD is disclosed to the public. Arbitration cases filed elsewhere, an additional 10-15% are not disclosed-- although information regarding these cases is available. Cases ending short of a final decision by arbitrators are not disclosed. Cases decided by arbitrators that are subsequently "expunged" from firm records as a condition of settling claims are not disclosed. Arbitrations between brokerages and their employees and between firms are not disclosed. Only 15% of all NASD arbitration cases filed are disclosed -less than two arbitrations per firm over a 15-year period.
Only one-half to a third of regulatory actions are disclosed to the public. Only two criminal actions and no bankruptcies are disclosed for the entire industry. Data regarding firms that become insolvent, are expelled or otherwise cease business operations is removed from public disclosure within two years. "This removal policy ensures the disclosure system is purged of its most damning statistics," said Siedle.
"These findings indicate the industry's efforts to educate investors regarding the risks of doing business with brokerage firms are woefully inadequate."
The National Association of Securities Dealers, Inc. is attempting in litigation in Florida to thwart publication of The Siedle Directory which details the disciplinary histories of its members.
"The very fact the publication of this book has been so strongly opposed by the industry's so-called "self-regulator" should be enough to convince even the most skeptical of the need for change," said Siedle.
The 1600-page Directory provides data regarding criminal, regulatory, civil, and financial actions involving brokerages and sells for $850. For more information go to benchmarkalert.com.
Contact: Edward Siedle, Esq. The Siedle Directory of Securities Dealers, Inc. (954) 784-6282
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