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Rating:NASD Begins Assessment Phase Not Rated 2.0 Email Routing List Email & Route  Print Print
Wednesday, March 19, 2003

NASD Begins Assessment Phase

by: Sean Hanna, Editor in Chief

The NASD is giving broker-dealers until May 15 to report on whether they are properly recognizing fund commission breakpoints. The deadline was circulated in a letter to industry executives (see letter here). The NASD recognized that firms may need to extend a substantial effort to complete the self-assessment by the deadline and encouracfed the to start the process as soon as possible.

The self-assessments will be used as part of the process of determing "the scope and nature of appropriate remedial and discliplinary actions," according to the letter. All told, NASD officials expect the amount of restitution that will be required to be less than $700,000.

Broker-dealers that handled fewer than 100 A share fund transactions during 2001 and 2002 will be able to follow a standard sampling methodology provided by the NASD to complete the self-assessment. Firms will be able to submit the results through the NASD Web site.

It also told firms that they must retain all of the documents that they prepare and collect in completing the assessment as well as evidence of the process they use during the assessment. The NASD will conduct audits of selected firms to enforce compliance with these requirements.

However, the NASD did not provide specific guidance on how fund shareholders who paid too high a commission are to be refunded. It instead said that it is likely that it will require the further actions to make investors whole.  

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