NASD Enforcement Actions Increase

The National Assn. of Securities Dealers brought 1,352 enforcement actions this year, 6% more than in 2002, and barred or suspended 830 people from the industry, a 2% increase.

In its annual report on its activities, the NASD said both the numbers of enforcement actions and individuals barred were records for the self-regulatory organization that oversees the practices of broker-dealers.

The NASD also said it lodged more than 60 enforcement cases this year against securities firms for violations in the sale of mutual funds, including improper arrangements between funds and brokers. The NASD said it was investigating several dozen firms for possible mutual-fund trading violations for frequent trades, known as “market timing,” and illegal late trading, or transactions after the market close of 4 p.m. Eastern time.

State and federal regulators are investigating allegations of improper trading at more than 20 companies in the $7.2-trillion mutual fund industry.

The NASD’s annual report said fines collected this year totaled $32.6 million, a drop of 52% from last year, because the NASD received half of a $100-million settlement with Credit Suisse First Boston Inc. in 2002, boosting that year’s total to $68.2 million, NASD spokesman Michael Shokouhi said.

The NASD’s total for this year’s fines also doesn’t include penalties imposed as part of the $1.4-billion settlement this year with 11 Wall Street securities firms accused of issuing biased stock research, Shokouhi said.

This year’s total also leaves out the $50 million in fines and disgorgement the NASD and federal regulators obtained from Morgan Stanley in November to settle allegations that it promoted some mutual funds in exchange for hidden payments.