Levitt Faults Lawmaker’s Nasdaq Demands
Securities and Exchange Commission Chairman Arthur Levitt took the chairman of the House Commerce Committee to task for pressing for delays in major rule changes for the Nasdaq Stock Market, according to a letter released Monday.
The pressure from Rep. Thomas J. Bliley Jr. (R-Va.) threatened to interfere with a recently concluded SEC investigation of the Nasdaq market, Levitt complained in his July 30 letter to Bliley.
The letter was obtained by The Times through a Freedom of Information Act request.
Bliley had been demanding answers to a long list of questions about the impact of the proposed regulatory changes. Levitt contended that answering the questions would interfere with the agency’s attempt to remedy abuses its probe had found in Nasdaq practices. Levitt rebuffed a demand.
If Bliley insisted on answers, Levitt said in the letter, “I fear that the commission’s enforcement and deliberative processes could be compromised.”
Bliley has been supporting requests by Nasdaq dealer firms to tone down the proposed rules, which could reduce the firms’ profits. However, he has backed down on legislation that would have required the SEC to conduct a lengthy study of the rule changes’ impact before putting them into effect.
The SEC proposals are aimed at giving individual investors access to better prices on Nasdaq stocks. They were developed in conjunction with a 19-month SEC investigation that found dealers in the nation’s busiest stock market engaging in extensive wrongdoing. Many of the cited practices, the agency said, served to extract higher prices from customers and fatten the dealers’ own profits.
Nasdaq’s parent, the National Assn. of Securities Dealers, on Aug. 8 settled SEC charges that it had looked the other way while its member firms violated securities regulations. NASD neither admitted nor denied wrongdoing but agreed to spend $100 million to step up its enforcement of trading rules. SEC sources said the agency will continue investigating individual firms and Nasdaq traders.
Mike Collins, spokesman for the Commerce Committee, strongly denied that Bliley’s questions were motivated by an effort to thwart the investigation.
“We have not at all attempted to interfere with his enforcement action,” he said.
