The Street needs to clean up its act if it wants to maintain the accounts and serve the best interests of its smaller asset based clientele, now handled in many cases by impersonal phone call centers rather than by neighborhood branches. A few years ago most of the major brokerage firms decreed that their registered representatives were spending too much time on accounts with relatively low assets. Some firms even refused to pay its brokers commissions on accounts that traded with less than $50,000 or $100,000. The media duly chronicled the problems inherent in this shift in attitude at the expense of the smaller investor: “Wall Street Snubs Small Accounts,” the Wall Street Journal, February 17, 2005; “NASD probes Merrill Lynch ‘Call Centers,’” Wall Street Journal, October 18, 2005; and “Even Small Brokerages Shun Average Investors,” Crains New York Business, February 27, 2006. Read the rest of this entry »

Today, according to its press release, the NASD fined Merrill Lynch, Pierce Fenner & Smith Inc. $5 million for “supervisory failures, registration violations, impermissible sales contests and other violations” stemming from abuses at its New Jersey and Florida so-called “Financial Advisory Centers”(FAC). The NASD also prohibited Merrill Lynch from staging FAC personnel sales contests for three years, and ordered the firm “to retain, at its own expense, an independent consultant to recommend corrective measures to firm policies and supervisory and compliance procedures and systems for the FAC. Until those corrective measures are implemented, Merrill Lynch must impose special supervisory procedures, including monitoring calls between FAC personnel and its customers.” Read the rest of this entry »