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July 31, 2002

NASD, SEC Ripped by Long Island Group

By Gregory Bresiger

The National Association of Securities Dealers, with its onerous regulatory mandates, is destroying smaller brokerages, says Alan Davidson, president of the Independent Broker Dealer Association (IBDA).

"They're really hurting ma and pop brokerages or less, brokerages where the guy who is responsible for the compliance is also taking out the garbage," he charged. Davidson said he has sent his comments to the self-regulatory organization.

Industry Oversight

However, the NASD, through a spokesman, said, "it rejects outright Mr. Davidson's premise that the industry - or any segment of it - should have less oversight."

Davidson, an industry gadfly who's a longtime advocate of the smaller firms, claims the NASD merely carries out the wishes of the SEC without questioning the effects of its rules. He says the recently passed Patriot Act, which contains various anti-money laundering provisions, has imposed ridiculous costs on small firms.

"Small NASD member firms are losing their ability to compete, grow and survive because of overreacting legislation," according to a statement from the Long Island- based IBDA, which has some 250 members.

The NASD said it understands the unique burdens of smaller firms. Still, in its statement, it said, "We have taken numerous steps to ease such burdens, consistent with investor protection and anti-money laundering regulations required by the USA Patriot Act, but the fight against terrorism cannot be compromised and must be the responsibility of all member firms."

Davidson, who runs his own small firm in Hauppauge, New York, adds that small firms should have been exempted from many of the provisions of the act.