Welcome to Burg Simpson Eldredge Hersh and Jardine's site, please upgrade your Flash Plugin and enable JavaScript.

Our Offices

COLORADO OFFICE
- Headquarters

40 Inverness Drive East
Denver, CO 80112
Phone: 303.792.5595
Fax: 303.708.0527

WYOMING OFFICE
Phone: 307.527.7891
Fax: 307.527.7897

OHIO OFFICE
Phone: 513.852.5600
Fax: 513.852.5611

DALLAS OFFICE
Phone: 972.934.1313
Fax: 972.231.3983

ARIZONA OFFICE
Phone: 602.508.6040

News Briefs

Why don't investors have the whole story?

Tuesday, May 2, 2006

By WILL DEENER and PAUL FOUTCH / The Dallas Morning News

Here are some ways that key information about brokers is kept from consumers:

• No agency publicly compares brokerage firms' regulatory violations, customer complaints or broker disclosures.
  "The NASD and states have been remiss in not taking the data they have and not making them available to investors, such as which firms have the best and worst compliance records," said Barbara Roper of the Consumer Federation of America.
  
  Indeed, the NASD actively opposes efforts to compare firms' regulatory records, said Ted Siedle, president of Benchmark Financial Services in Florida, which investigates broker wrongdoing for pension funds.
  
  The NASD won a legal challenge to prevent a major publisher from printing Mr. Siedle's book showing the number of disclosures carried by brokers at firms nationwide. The NASD argued that Mr. Siedle couldn't use its data for commercial purposes, and the court agreed.
  
  "There's no reason on earth that the NASD's public disclosure program couldn't be radically enhanced within months -- except for the fact that the brokerage firms don't want them to," he said.
  
  Critics see a fox-guarding-the-henhouse conflict because the NASD supervises the member firms that pay its dues.
  
  "The brokerage industry has been allowed to self-regulate, self-adjudicate and self-insure, and ultimately control public access to information," Mr! Siedle said.
  
  The NASD responds that firms are required by law to be members of the NASD and pay the fees, so the firms have no hold over how the NASD does its job.



• The online BrokerCheck system is difficult to navigate. To comply with rules set by the Securities and Exchange Commission, the system forces a user to know enough about a broker to ensure that only that broker's information is revealed.
  
  A user has to know the broker's first and last names and firm name, or the broker's CRD number, the identifier in the NASD's Central Registration Depository system.
  
  The NASD says that to ensure that a query returns accurate information, some BrokerCheck requests are reviewed by a specialist. The site is unavailable after 10 p.m. Dallas time Monday through Friday, and after 7 p.m. on weekends.
  
  If information is requested on a broker who has disclosures, the system responds that "maybe" he has disclosures. Then it promises an e-mail report on the disclosures within two business days. The e-mail may arri! ve immediately, or it may arrive two or three business days later. Among dozens of BrokerCheck inquiries made by The News over the last four months, in three cases no response at all was received.
  
  The information is preceded by several pages' worth of legal disclaimers, in addition to those agreed the ones you agree to in order to use BrokerCheck in the first place.
  
  If a broker has a customer complaint disclosure, the report will detail the customer's allegations; the date they were made; the firm the broker worked for; whether the case was litigated, arbitrated or settled; how much was paid; how much of that sum the broker had to pay individually; and, finally, the broker's response.
  
  But the report won't give tell you the customer's name or the arbitration case number, making it difficult for a consumer to follow up for more information.
  
  However, the customer's name and the case number are available in broker reports from the Texas State ! Securities Board, whose policies require release of more information than the NASD's.



• A broker may have any number of small-dollar customer complaints against him that aren't part of his BrokerCheck history. To protect brokers' reputations from frivolous complaints, the NASD "archives" complaints that are settled for less than $10,000 and are more than two years old.
  
  They are, however, available upon request from the Texas State Securities Board.
  
  "You can get everything from us that isn't made nonpublic under the law," Texas Securities Commissioner Denise Voigt Crawford said. "I think it's misleading to the public to call it BrokerCheck without giving you all the historical information."
  
  Dallas lawyer Richard Lewins represents customers in arbitration. "There are just a lot of complaints that are never disclosed," he said. "In addition to the $10,000 threshold, a lot of cases are settled and as part of the settlement the broker's name is expunged from the record and not disclosed."
  
  The NASD says it has tightened rules to make it rare for an investor complaint to be expunged from a broker's record. It says it constantly tries to strike a balance between what's fair for investors and what's fair to brokers in deciding, for example, what complaints warrant being archived.



• Customers themselves also promise not to take any grievances outside the system.
  
  Virtually every brokerage firm requires customers to agree to take any complaints to arbitration rather than into the public court system via a lawsuit.
  
  About two-thirds of customer complaints are settled, either before or during arbitration. When that happens, the customer almost invariably agrees as part of the settlement not to talk about the case.
  
  That dynamic can lead to a broker gaining a reputation for investing prowess that may not be deserved, since the broker's most unhappy customers have promised not to talk.

Reprinted with permission of the Dallas Morning News