SEC levies Y2K fines
In its latest round of year 2000-related disciplinary actions, the Securities and Exchange Commission has fined four brokerages a total of $170,000 for failing to file full year 2000 disclosure reports on time.
The firms were among 37 brokerages charged by the SEC last October for failing to file all or part of their year 2000 status reports. A lawyer who represents two of the brokerages -- New York-based J.W. Barclay & Co. and Stonegate Securities in Dallas -- said he believes the $50,000 fines assessed against his clients for filing their disclosure reports late were "excessive, arbitrary and wrongful.''
Under SEC requirements, brokerages with more than $100,000 of net capital were required to file two year 2000 disclosure forms (a 'fill-in-the-blanks' form and a narrative form) by Aug. 31, 1998. According to a document of the SEC's administrative proceedings obtained by Computerworld, the SEC didn't receive Part II of Stonegate's disclosure until Oct. 5. Another firm that was fined -- V.B.C. Securities in Clifton, N.J. -- didn't get Part II of its disclosure form to the NASD until 'on or after October 7,' according to the proceedings.
A fourth firm, William Scott & Co. in Union, N.J., was fined $20,000 for failing to file the required forms. According to the proceedings, Joseph W. Glodek, the president of William Scott, claimed to have faxed the disclosures to the NASD.
Executives for the four firms blamed the late filings on a number of factors, ranging from miscommunication with colleagues to problematic fax machines. SEC Judge Brenda Murray ruled that the brokerages violated the rules "for no good reason.''
Paul Bazil, the attorney at Washington-based Pickard & Djinis LLP, who represents Barclay and Stonegate, feels the fines assessed against his clients were excessive, pointing to dozens of other brokerages that were fined a maximum of $3,200 by the National Association of Securities Dealers, Inc.'s regulatory arm last October. Bazil said both of his clients are year 2000-ready and will likely appeal the SEC's actions. The firms must file an appeal before the end of August.
"We're still not sure yet'' whether we'll appeal the SEC's actions, said Edwin Buchanan 'Bucky' Lyon IV, a principal at Stonegate.
A spokesman said the SEC's actions are in line with the agency's charter to protect investors' interests. The SEC, which was once heavily criticized for what some cynics viewed as lax year 2000 disclosure requirements before a July 1998 revision, "seems to be more proactive than ever before," said Stephanie Moore, an analyst at Giga Information Group in Cambridge, Mass.