Sec Cites Firms For Y2K Problems

Securities regulators on Tuesday made their first crackdown on brokerage firms for allegedly failing to fully disclose their computer readiness for the year 2000. It was the government’s first major enforcement action related to the millennium computer problem.

The Securities and Exchange Commission charged 37 brokerage firms with failing to fully report on their computer systems’ preparedness for conversion to the year 2000.

The firms are relatively small and not widely known Wall Street names. But the cases mark the first time federal regulators have taken a major enforcement action related to the year 2000 disclosure requirement, SEC officials said.

The SEC’s action “is a wakeup call” for other brokerage firms as well as mutual funds and publicly traded companies, said Amy L. Goodman, a former SEC attorney now with the law firm Gibson, Dunn & Crutcher. “It demonstrates that the SEC takes year 2000 disclosure very, very seriously.”

The nation’s brokerage firms were required to file a year 2000 disclosure form with the market watchdog agency by Aug. 31. The firms charged failed to file all or part of the form, the SEC said.

Nineteen of the 37 firms have agreed to settle the charges by promising to refrain from such violations in the future, being censured and paying civil penalties ranging from $5,000 to $25,000. Fines from the settled cases total $235,000.