House Panel to Weigh Stock Broker Rules : Investigation: Two federal agencies are asked to assist in a review of ethics. The action follows a Times' series that described lax discipline and hiring practices in the securities industry.

House Panel to Weigh Stock Broker Rules : Investigation: Two federal agencies are asked to assist in a review of ethics. The action follows a Times’ series that described lax discipline and hiring practices in the securities industry.

By SCOT J. PALTROW

May 8, 1993 12 AM PT

TIMES STAFF WRITER

NEW YORK —

A powerful House subcommittee disclosed Friday that it is investigating whether the securities industry adequately disciplines dishonest stock brokers, and it asked two federal agencies to act on the matter.

In a letter Friday to Richard C. Breeden, chairman of the Securities and Exchange Commission, Rep. Edward J. Markey (D-Mass) asked the SEC to report on the status of a wide-ranging inquiry, begun last year, into the hiring and disciplinary practices of a dozen leading Wall Street firms.

The letter from Markey, chairman of the House subcommittee on telecommunications and finance, cited The Times’ investigation last year that touched off the SEC inquiry. The series of articles reported that a number of leading firms knowingly hired brokers with long records of cheating customers and that industry discipline was not weeding them out.

The SEC subsequently made broad requests for information from the firms and was said to be contemplating a number of rules changes and enforcement actions. The agency has made no public comment in recent months on any plan for action.

Markey said the subcommittee will conduct hearings on the problem this year.

Markey also asked the General Accounting Office, the investigative arm of Congress, to conduct a full-scale probe into whether the SEC and the securities industry’s self-regulatory organizations are living up to their responsibility to protect small investors.

These include the stock exchanges and the National Assn. of Securities Dealers--all of which have units charged with disciplining brokers and firms.

“The SEC has been looking into this matter for nearly 10 months now,” Markey said. “We want the GAO overseeing this so we know the SEC is doing the right thing.” He also asked the GAO to assess the NASD computer database that keeps track of brokers and their records.