NASD Tells Regional Offices to Investigate All Complaints

Stung by criticism that it is not doing enough to protect small investors, the National Assn. of Securities Dealers has ordered its 11 regional offices to investigate every complaint they get from investors about their brokers.

NASD officials in Washington issued the directive after a report last week showed only 2% of the complaints made to the NASD last year resulted in disciplinary action against brokers or securities firms.

The NASD, which was chartered by Congress to regulate stockbrokers nationwide, has a staff of 26 attorneys and 365 examiners in its regional branches to handle complaints involving more than half a million people who work in 57,000 brokerage offices nationwide, according to the report by an investigating committee headed by former Sen. Warren Rudman.

Because they are understaffed, some NASD regional offices do not even make a follow-up phone call to some investors who file complaints accusing brokers of violating stock market rules or federal securities laws, the panel found.

Rudman called the failure to respond to investor complaints “a significant and unhealthy departure from an important national policy,” which requires that every complaint be investigated.

NASD spokesman Marc Beauchamp said top officials did not know until they received the Rudman report that consumer complaints were not being investigated and that they moved immediately to correct the problem.

Investors can call NASD headquarters at (202) 973-7000.