NASD Telephone Hotline: Enhancements Could Help Investors Be Better InformedAbout Brokers' Disciplinary Records

摘要

The report responds to your request that the authors review the effectiveness ofthe National Association of Securities Dealer's (NASD) toll-free telephone information service, called the NASD hotline. You were concerned about investors' access to the hotline and to the available disciplinary information on their broker-dealer firms or individual brokers. You were particularly concerned that NASD does not disclose information through the hotline on two types of actions: (1) arbitration cases that are settled before a decision is reached and (2) civil lawsuits that allege sales practice violations by brokers. When investors do not have access to relevant information about a broker's background, they may risk placing funds in the hands of an unscrupulous broker. This report addresses (1) the accessibility of the NASD Regulation hotline to investors, including how investors are informed about the hotline; (2) users' perceptions about the usefulness and appropriateness of the types of information provided by the hotline; and (3) whether the information provided meets NASD Regulation's disclosure policies.