Wall Street simplifies

Amy Scott Nov 28, 2006

BOB MOON: There was other action on the Street today: Word that things might get a bit simpler when it comes to the rules your stockbroker lives by. There are various levels of regulation. And Marketplace’s Amy Scott reports the two main private regulators are planning to merge.

AMY SCOTT: Let’s start with the acronyms. NASD, formerly the National Association of Securities Dealers, regulates all U.S. brokerage firms. Then there’s NYSE Regulation, which polices members of the New York Stock Exchange. Today they announced they’ll join to form a new, single watchdog. No word yet what the new acronym will be. NASD CEO Mary Shapiro says Wall Street firms have been asking for this for years.

MARY SHAPIRO: They’re subject to multiple levels of regulation, from the Securities and Exchange Commission, NASD, the New York Stock Exchange, state regulators, and anything that can sort of streamline their approach to regulation is something they view as being very beneficial to their businesses.

Shapiro says cutting out redundancy could save securities firms in the tens of millions of dollars in compliance costs. Some of those savings could be passed onto investors. But former NASD attorney Bill Singer says these regulators failed to root out fraudulent investment research, illicit mutual fund trading, and other recent scandals. He says merge two failed regulators and you get more failure.

BILL SINGER: It’s no longer enough to go into the morgue, pull the body out on the slab, and read the toe tag and proudly proclaim as a regulator that this is what killed you. We need more preventative regulation.

An NYSE official says the groups bring hundreds of disciplinary actions every year. But NASD’s Mary Shapiro says as the two combine their rulebooks, they will review the past several years to see what they might have done differently.

In New York, I’m Amy Scott for Marketplace.

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