Your Money : GAO to Study Effectiveness of NASD Hot Line

The investigative arm of Congress is evaluating the effectiveness of the National Assn. of Securities Dealers’ investor hot line.

The toll-free telephone hot line--(800) 289-9999--was implemented more than three years ago and is intended to give consumers information about the nation’s approximately 500,000 licensed brokers and 5,400 brokerage firms.

But critics, including politicians and state securities regulators, say the hot line does not go far enough in disclosing information that can help protect investors from brokers with serious disciplinary problems.

The General Accounting Office has sent a “Customer Satisfaction Survey” to 500 individuals nationwide who recently contacted the line. After analyzing responses to the 10-page questionnaire, the GAO will prepare a report--which may include recommendations for improvements--and submit it to Rep. Edward Markey (D-Mass.).

Markey introduced the legislation that provided for the establishment of the hot line following the Penny Stock Act of 1990. The former chairman of the House Commerce Committee’s subcommittee on telecommunications and finance also requested the current examination.

Among other things, the GAO survey asks respondents whether the information they obtained was helpful in evaluating brokers and whether investors could benefit from knowing more about a broker’s disciplinary background.

Highlighting an area that has been controversial, it asks respondents to compare the accuracy, scope and usefulness of the information they received from the NASD with that of information obtained from state securities agencies. The questionnaire cites material--such as pending arbitration cases--that the NASD withholds and asks whether investors would want to know this.

“As far as we know, nobody has made an organized effort to find out exactly what information investors would like to have,” said John Carrera, project director for the study.

NASD officials were not available for comment.