|  | | 2004 News and Press Releases | | |
HEADLINE NEWS:
NYSE Probes Wall St. Prospectus Failures
Staff Writer
General Financial/ Business News. November 30, 2004
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EXCERPT: The New York Stock Exchange's top enforcement officer said a number of Wall Street brokerage firms have admitted they did not send customers prospectuses on new stock offerings before they invested their money. A similar problem already cost Morgan Stanley $19 million in fines, and more fines of top companies are possible. At least one other firm the size of Morgan Stanley stepped forward to admit failures in sending out prospectuses, and other top firms face similar problems, Susan Merrill, executive vice president and chief of enforcement at the NYSE, said Tuesday. The admissions, which have shown a more widespread issue than first thought, came after Merrill sent letters earlier this month to the chief executive officers or chief operating officers of the top 25 brokerages on Wall Street. The firms had until Nov. 19 to respond, and a number came forward with problems they had discovered. Merrill would not say how many firms came forward or whether all would face penalties. Firms that were found to have sold new stock offerings to investors who did not receive a prospectus could also be forced give customers their money back as well. "Sending out a prospectus to investors is Securities 101," Merrill told The Associated Press. "It's not rocket science. But a lot of firms simply assumed that it was being done properly and weren't taking the time to see if they were actually getting (prospectuses) out." According to Securities and Exchange Commission and NYSE regulations, brokerages must send prospectuses to potential investors before initial public stock offerings or secondary offerings are made_ or must at least make an effort to get the information in investors' hands around the same time a deal is struck and money changes hands. |
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