SunTrust Capital Markets Fined $100,000 for Failing to Register Research Analysts Under New Rules
9 May 2005
NASD announced today that it has censured and fined SunTrust Capital Markets, Inc. -- the Atlanta, GA-based bank-affiliated broker-dealer and investment bank -- $100,000 for failing to register its 48 research analysts under new NASD rules that took effect last year. This is the first NASD enforcement action involving the new registration requirements.
As of March 30, 2004, NASD rules require research analysts to be registered with NASD after passing new research analyst examinations. Persons who were already functioning as research analysts were granted a one-year grace period for meeting the new registration requirements, provided their firm applied for the research analyst registration by May 31, 2004 -- 60 days following the effective date of the new requirement.
NASD found that SunTrust failed to apply for the research analyst designation for its 48 analysts by the May 31 deadline. As a result, the one- year grace period for passing the research analyst qualification examinations was not available to SunTrust's analysts. Nevertheless, during the period from June 1, 2004 to July 30, 2004, SunTrust's analysts continued to perform and publish research without taking and passing the research analyst qualification examinations.
NASD found that from June 1, 2004 through July 21, 2004, when SunTrust discovered its failure to submit the registration applications, SunTrust issued 438 research reports and/or updates. SunTrust issued another 202 research reports and/or updates between July 21, 2004 and July 30, 2004 -- after SunTrust realized that its research analysts had not been properly registered, and while it was seeking an extension of the filing deadline. Only on July 30, 2004, after its request for an exemption from the rule requirements was denied, did SunTrust cease issuing research reports.
"NASD's new analyst registration requirements are designed to protect investors, by helping to ensure that analysts are qualified to offer research opinions and understand their obligations under NASD rules," said NASD Vice Chairman Mary L. Schapiro.
By September 2004, 15 of SunTrust's analysts had qualified through examination. The remaining analysts were qualified by October 2004.
In settling this matter, SunTrust neither admitted nor denied the charges, but consented to the entry of NASD's findings.
Investors can obtain more information and the disciplinary record of any NASD-registered broker or brokerage firm through NASD's BrokerCheck. NASD makes BrokerCheck available at no charge to the public. In 2004, members of the public used this service to conduct nearly 3.8 million searches for existing brokers or firms and requested more than 190,000 reports in cases where disclosable information existed on a broker or firm. Investors can link directly to the program by going online to http://www.nasdbrokercheck.com/. Investors can also access this service by calling 1-800-289-9999.
NASD is the leading private-sector provider of financial regulatory services, dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. NASD touches virtually every aspect of the securities business-from registering and educating all industry participants, to examining securities firms, enforcing both NASD rules and the federal securities laws, and administering the largest dispute resolution forum for investors and registered firms. For more information, please visit our Web Site at http://www.nasd.com/.
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Source: NASD
Source: PR Newswire
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