ast summer's probe by the NASD
and the SEC
into whether brokerage firms are fully recognizing breakpoints has now caught the attention of Washington lawmakers. Two Republican Congressmen -- Rep. Michael Oxley
(R-Ohio) and Rep. Richard Baker
(R-Louisiana) -- penned a letter to SEC chairman Harvey Pitt and NASD chairman Robert Glauber yesterday.
Oxley is the chairman of the House Financial Services Committee. The letter, which is on the committee stationary, urged that "swift and severe penalties" and full restitution be paid to fund investors by any brokerages that have committed misconduct with regard to recognizing mutual fund breakpoints. The Congressmen said that "rooting out this type of wrongdoing is essential to restoring public faith in the integrity of the markets."
The Congressman also called for the NASD and SEC to report to Congress on their findings. Among the information sought by the committee is: a) how many brokerages have engaged in this misconduct; b)how many investors have been overcharged, and to what extent; c) to what extent this problem reflects willful misconduct, or is the result of inadequate systems design and/or oversight; and d) whether the current regulatory regime is adequate to protect investors.
The committee is seeking an answer to these questions in the next 30 days, according to the letter.
The full text of the letter is available in .pdf format on the House Financial Services Committee Web site (
follow this link
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