Upcoming Nasdaq Report to Make 'Dramatic' Recommendations
Sep. 14, 1995
WASHINGTON (AP) _ An intensive, 10-month analysis of the Nasdaq Stock Market will propose ``dramatic'' changes in how the market is governed, a source said.
Former Sen. Warren Rudman and six prominent Wall Street officials have been studying the Nasdaq and its parent, the National Association of Securities Dealers Inc., since November. The panel's report is scheduled to be turned over to the NASD Board of Governors this weekend and released publicly next Tuesday.
The Rudman report in part will focus on how the nation's second largest stock market is governed and will support greater public participation in the NASD, said the source, who is familiar with the report's contents but spoke on condition of anonymity.
``It will be fairly dramatic,'' the source said Wednesday. ``They've embraced a very creative approach to it.'' The source declined to provide further details.
The Rudman Committee was charged with reviewing the effectiveness of the operation and surveillance of Nasdaq and the NASD, the securities industry's largest self-policing group. Nasdaq is a computerized market that links 500 firms nationwide and is home to major technology stocks such as Microsoft Corp.
The panel was explicitly told not to review allegations that Nasdaq market makers engaged in a form of price fixing through their stock quotations. Those charges, which stemmed from a 1994 academic study, are being investigated by the Securities and Exchange Commission and the Department of Justice.
The source said the Rudman doesn't delve into the structural issues of the Nasdaq dealer market.
Nasdaq has produced several studies that refute charges of collusion and the market's major dealers strongly deny such allegations.
Rudman has declined to discuss specifics of the special committee's work. But in an interview earlier this summer, Rudman said the panel talked to a wide range of people who deal with the NASD and Nasdaq.
``This is going to be a very thorough, a very complete and a very detailed (report),'' Rudman said. ``This is not a `once over lightly' kind of report.''
Rudman said the process was a substantial challenge, since the NASD registers some 485,000 securities professionals at 5,400 member firms. The NASD employs a system of numerous local and standing committees, composed of stock brokers and other industry members, to police brokerage firms and their employees and set the group's policies.
The NASD has been sharply criticized by some of its own members as being unfairly dominated by large securities firms. Alan Davidson, president of Zeus Securities Inc. in Jerico, N.Y., has strongly criticized NASD policies as restricting growth of small brokerage firms.