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News November 21, 2005 Issue

NASD to Score Registered Reps

In a recent speech, NASD executive vice president Elisse Walter noted that NASD examiners will be scoring each registered representative of a broker-dealer for risk. "One of the new scenarios we are working on," said Walter, "assigns to every registered rep a risk score based on customer complaints, arbitrations, civil and criminal litigations, regulatory actions, and a history of employment at problem firms."

Walter’s speech covered a range of NASD examination developments. Among other things, she described NASD’s "Next Generation" examination program, which will be based on risk-based reviews, regulation from a distance, and electronic filing. Regulation from a distance, she explained, means that "as much regulation will be accomplished using automated surveillance tools and offsite virtual examinations where possible and prudent." While NASD will still visit firms on-site, she said, those inspections will be more targeted.