Nasd

The National Association of Securities Dealers and the American Stock Exchange have agreed to merge in a deal intended to improve their competitiveness against the huge New York Stock Exchange, according to regulators familiar with the accord.The boards of Amex and NASD met yesterday to discuss the agreement, which they hope to announce Monday. The merger of Amex and NASD's electronic Nasdaq market would give NASD control over a growing trade in options and derivatives that has long buoyed the smaller Amex.

Frank G. Zarb, chairman and chief executive of the National Association of Securities Dealers Inc., told brokers here yesterday that they must pull together to rid the industry of the "bad guys.""They hurt the rest of us," said Zarb, in an off-the-cuff speech to members of the Bond Club of Baltimore at the Omni Inner Harbor Hotel.Zarb said the NASD will not tolerate brokers who break the law. Over the past year it has toughened oversight of the more than 500,000 brokers who trade securities on the Nasdaq stock market, a subsidiary of the Washington organization.

AS THE stock market rises, so does the amount of fraud. If Willie Sutton were alive today, he wouldn't rob banks, he'd set up a thieving stockbrokerage house.The bad guys generally tout "penny stocks" -- stocks priced under $5 a share or perhaps just a little bit more.These stocks are often listed on the OTC Bulletin Board or Nasdaq SmallCap Market. Both are overseen by the National Association of Securities Dealers (NASD), so many investors take the listing as a seal of approval.Not so. The Bulletin Board will list any stock that comes along, even empty shells.

WASHINGTON -- The National Association of Securities Dealers approved a rule yesterday that will force up to 3,400 small companies off the Nasdaq stock market's over-the-counter listing service, which has been troubled by a rash of stock-manipulation frauds in recent years.Most of these thinly traded stocks will have to move from Nasdaq's OTC-Bulletin Board, a loosely regulated electronic-quote service, to the Pink Sheets, which post less timely quotes than those on the bulletin board.NASD executives said they want to improve OTC-Bulletin Board standards to help protect the reputation of Nasdaq, the nation's second largest stock market, and rid the bulletin board of fraud.

The National Association of Securities Dealers barred a Towson broker from the industry and slapped a second broker with a $10,000 fine, according to association documents released yesterday.Robert L. Swick, who was reached yesterday at the Towson Insurance Agency in Baltimore, was barred from the brokerage industry for allegedly forging customers' signatures on documents, according to the NASD. He is subject to a $50,000 fine if he joins another brokerage, the NASD said.NASD officials also fined Towson-based Chesapeake Securities Research Corp.

WASHINGTON -- The National Association of Securities Dealers' board voted yesterday to end mandatory arbitration of brokers' age, sex and race discrimination claims against their employers.The action, if approved by the Securities and Exchange Commission, would let individual brokerages decide whether to require employees to submit job discrimination claims to arbitration. Many firms, including Smith Barney Inc., have said they will impose their own arbitration requirements, rather than allow brokers to sue them in court.

WASHINGTON -- The National Association of Securities Dealers may get a recommendation to eliminate the boards of directors of its two subsidiaries in an attempt to streamline decision-making at the industry body, NASD's new top executive, Frank G. Zarb, said yesterday.That is a reversal for Zarb, who has repeatedly denied he might propose removal of the Nasdaq stock market and broker-regulatory boards.Yesterday Zarb, a former aide to Presidents Richard M. Nixon and Gerald R. Ford who has headed NASD for two months, said elimination of these boards is the most dramatic of three options he might recommend to the parent body's board June 26."

How much should investors know about how risky their bond funds are or will be? And who should tell them?Standard & Poor's, the bond ratings company, has been trying to get the regulatory division of the National Association of Securities Dealers to let fund companies publicize S&P's ratings of bond-fund risks in their sales literature.S&P, of course, already rates the risks of individual bonds, and that information finds its way into bond sales materials.The NASD has turned S&P down twice, saying the ratings would be "predictive," meaning they would appear to predict future bond-fund risks, which the NASD does not allow funds to do. The ratings would be used in supplemental sales literature such as company-produced brochures, and not in advertising.

The National Association of Securities Dealers Inc. yesterday tapped Frank G. Zarb, former chairman and chief executive of Alexander & Alexander Services Inc., as its president and chief executive.The NASD's board approved Zarb's nomination Monday evening at a meeting in Pebble Beach, Calif."This appointment represents a new era for the NASD," said Daniel P. Tully, chairman and chief executive of Merrill Lynch & Co., who headed the NASD search committee.Zarb replaces Joseph R. Hardiman, a former top executive at Baltimore-based Alex.

Frank G. Zarb, former president and chairman of Alexander & Alexander Services Inc., is a leading candidate to run the National Association of Securities Dealers, according to a source close to the negotiations."