When the NASD and NYSE Regulation (the arm of the New York Stock Exchange that deals with regulatory issues) merge, the new organization will be known as the Securities Industry Regulatory Authority. NASD CEO and Chairman Mary Schapiro, who will head SIRA, announced the new name in a speech at the Exchequer Club in Washington, D.C., last month.
Schapiro said that the new regulatory body, with a combined staff of more than 3,000, “is committed to reducing regulatory costs for all firms while providing more effective protection for the tens of millions of people who invest for their future in the U.S. capital markets." SIRA, she noted, “gives us an historic opportunity to write the future of modern self-regulation on a nearly clean slate.”
What does this mean for financial services meetings? Schapiro said it was important that the new regulatory organization “get it right” and referred to a recent enforcement action involving Citigroup Global Markets Inc. to demonstrate what she believes is at stake.
In that enforcement action, NASD fined Citigroup more than $15 million after finding a group of financial advisors within the brokerage firm had misled BellSouth employees—during dozens of seminars and meetings—into cashing in their 401ks and reinvesting them. NASD said that Citigroup’s financial advisors downplayed the risk involved in these investments and failed to tell attendees they could actually lose money. The outcome of the misleading meeting content was that 400 BellSouth employees opened new accounts, and more than 200 of them saw their principal decline—for a total loss of $12.2 million. Click here for more information on the Citigroup case.
Schapiro said the two organizations are “working around the clock” to finish the merger, which was expected to go into effect as early as June but is still being finalized. When the consolidation is complete, SIRA will be the largest self-regulatory organization for securities brokers and dealers in the world.
NASD Vice Chairman Douglas Schulman, in a speech at NASD’s Spring Securities Conference in May, told attendees that once the merger goes into effect there will be no immediate, dramatic changes for firms as far as issues like exam cycles and rule books are concerned. Instead, those changes--including efforts to merge the NASD and NYSE rule books--will take place throughout 2007 and into 2008, Schulman said. In the meantime, existing NYSE and NASD rules and regulations continue to be in effect.