NASD Chief Takes Blame on SEC Probe

Joseph R. Hardiman, chief executive of the National Assn. of Securities Dealers, accepted some blame Wednesday for failings that led to a scathing disciplinary report on the NASD last month by the Securities and Exchange Commission.

In an interview with Bloomberg Business News, Hardiman, 58, was asked about the SEC’s charges that the NASD had failed to adequately police the Nasdaq Stock Market, its subsidiary.

“I’m not proud of the events of the last several years.” Hardiman said. “They happened on my watch, and I have to take responsibility.”

But he also said that “on balance, the accomplishments have exceeded the problems. The organization is in much better shape than when I arrived.”

Hardiman, who has held the CEO post for nine years, has said he will retire in November.

In a lengthy report filed Aug. 8 along with administrative charges against the NASD, the SEC accused the organization of ignoring rampant violations of basic trading rules on Nasdaq and failing to act on evidence that Nasdaq dealer firms colluded to boost their profit margins on the buying and selling of stocks.

Although the SEC report didn’t single out any individuals for blame, it said that top NASD executives had evidence of the collusion for at least two years before the SEC investigation was launched in 1994.

Under pressure from the SEC and Justice Department, the NASD has undergone a major reorganization and is required to spend an additional $100 million to step up enforcement.

Bloomberg said terms of the SEC settlement precluded Hardiman from responding in the interview to the SEC’s specific allegations.

Hardiman also said that because of the SEC’s criticisms and adverse publicity, he expects a modest upswing in coming months of big companies defecting from Nasdaq to list their stocks on the New York Stock Exchange or other exchanges.

He said the annual rate of defections might briefly rise to 2% from 1% to 1.5% in recent years.

An NYSE spokesman said the Big Board expects a small increase this year from the record 62 companies that moved to the NYSE from Nasdaq in 1995.