NASD to Begin Disclosing Brokers’ Work Histories to Investors Online

The National Assn. of Securities Dealers will put brokers’ employment histories online starting March 26, as the first step of a $50-million project to make it easier for investors to check on the backgrounds and disciplinary histories of U.S. brokers.

Initially, the expanded NASD public disclosure system will offer access through the Internet to basic information such as a broker’s work and registration history, said NASD Regulation spokeswoman Nancy Condon.

By October, the NASD expects to begin making disciplinary histories--such as information about fines, suspensions or other actions against a broker or firm--available over the Internet. Until then, investors will be able to request information from the NASD through an electronic message, fax or mail.

NASD hopes to make all disciplinary data available on its Web site by mid-1999. The system will give investors, state regulators and other users more convenient access to brokers’ disciplinary files.

Investors now must call an 800 number or send e-mail to request records of fines, suspensions and arbitration awards against brokers.

The NASD, which polices U.S. brokers and runs the Nasdaq stock market, operates a 17-year-old disciplinary database called the Central Registration Depository. Officials have said that revamping the depository will cost at least $50 million.

State regulators sometimes use NASD’s database to decide whether to grant a license to a broker transferring from another state. Some problem brokers move from state to state in an attempt to elude sanctions.

The states had complained that the NASD was too slow in updating the archaic system, which has become overburdened as the number of brokers it has to keep track of has more than doubled to about 560,000 since 1981.

Securities and Exchange Commission Chairman Arthur Levitt last month told a meeting of investors to use the NASD system to decide whom to avoid doing business with.

“This service will give every one of you the power to be the first line of defense against fraud and abuse,” Levitt said.