NASD, SEC Discussing Settlement Terms : Securities: Agreement would relate to expected charges that Nasdaq’s parent failed to enforce trading rules.


The National Assn. of Securities Dealers has been in talks with the Securities and Exchange Commission about a settlement of expected charges from the SEC’s yearlong investigation of allegations of wrongdoing on the Nasdaq Stock Market, sources confirmed Wednesday.

The SEC for some months has been working toward filing charges against the NASD, Nasdaq’s parent organization, alleging that it has failed to enforce basic trading rules for the exchange. The sources said the talks are continuing and that an official agreement is still at least several weeks away.

The sources said a settlement would include an agreement by the NASD to toughen its disciplinary procedures and to make the NASD’s disciplinary panels more independent. Panels are currently dominated by representatives of large Wall Street brokerage firms.

The SEC has been looking into allegations that the NASD seldom enforced basic rules, such as the requirement that Nasdaq dealers honor their publicly quoted prices for Nasdaq stocks and that trades be reported within 90 seconds after they occur. A Times series in 1994 reported that violations of these rules were rampant.


SEC spokeswoman Jennifer Scardino declined to comment Wednesday and would neither confirm nor deny that settlement talks are under way. NASD spokesman Marc Beauchamp also declined to comment.

The Justice Department is continuing to conduct a separate antitrust investigation of Nasdaq. It has pressed dealers to begin settlement talks, but dealers have resisted.