NASD Error Altered Files on Brokers

From Associated Press

A blunder by the National Assn. of Securities Dealers has raised doubts about the accuracy of a widely used source of information on the disciplinary history of stockbrokers and their firms.

The Wall Street Journal reported in Friday’s editions that as many as 20,000 pieces of information on brokers was purged from the computer system that stores the information.

State securities regulators said the deleted information had to do with disciplinary histories of stockbrokers and their firms and was widely used by investors and regulators across the nation.

The error could cause problems for investors, who may have to depend on incomplete records when checking out the nation’s 535,000 brokers.


“If we can’t rely on this information, the public isn’t being served,” Denise Crawford, the Texas securities commissioner, told the Journal. “The significance is profound.”

The NASD, which acts as the brokerage industry’s self-regulatory organization and runs the Nasdaq Stock Market, said only about 3,000 files were purged. State regulators say the number was more like 20,000.

Linda Feinberg, an executive vice president of the NASD’s regulatory arm, said the organization is “in the process of putting back” the data and will be finished within 60 days.

A senior official with the Securities and Exchange Commission, which oversees the NASD’s activities, said the agency is actively monitoring the situation.