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Nasd Faces Revolt By Brokers Small Companies Threatening To Form A New Organization

Sat., Nov. 18, 1995

The National Association of Securities Dealers is facing a rebellion from a group of small brokerage firms.

The Independent BrokerDealer Association, which has 100 member firms in 17 states, said Thursday it’s negotiating with several stock exchanges to form a new self-policing group that will be more responsive to the needs of small firms.

If successful, the new organization, to be called the United Association of Securities Dealers Inc., would provide a national alternative to the NASD that hasn’t existed in years, Securities and Exchange Commission officials say.

Virtually every stock broker in the country belongs to the NASD, a powerful self-policing group that drafts rules on issues such as broker sales practices.

Alan Davidson, president of the Independent Broker-Dealer Association, said the new organization would be an alternative to the NASD, which he called overly restrictive to small brokerage firms, particularly their expansion plans and new membership applications.

Davidson said the new association would create a new “Emerging Companies Stock Market” to help the nation’s 20 million small businesses more easily gain access to the financial markets.

Davidson, a persistent critic of the NASD, was a member of the association’s business conduct committee for the New York region before he lost a bitter election in 1993. He and several other small firms say the NASD is dominated by large firms to the detriment of smaller brokerages.

These allegations are being examined by the Securities and Exchange Commission as part of its broad investigation into alleged price fixing by dealers on the Nasdaq Stock Market.

NASD spokesman Marc Beauchamp, asked about a potential rebellion by some small firms, pointed to a recent study by former Sen. Warren Rudman, R-N.H., that he said concluded “the NASD treats its members, big and small, with an even hand.”


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