A SECURITIES INDUSTRY task force is asking banks and other sellers of securities to adopt continuing-education standards for their investment representatives.
The task force, which issued its proposals late last month, includes members of the National Association of Securities Dealers, the New York Stock Exchange, the American Stock Exchange, and three other industry organizations.
For Broker-Dealers and Outside Marketers, Too
Their goal is to set "a continuous education standard" for firms that offer securities to the public, said Frank McAuliffe, a vice president with the trade group.
Mr. McAuliffe offered bankers a preview of the proposals at the Bank Securities Association's recent compliance and operations conference in Washington.
For banks, the proposals would cover their broker-dealers and salespeople. Also included are representatives of marketing firms that sell securities in bank branches.
Banks are hardly being singled out, Mr. McAuliffe said. "We're finding there's a need industrywide. This kind of thing isn't consistently being done."
The task force is taking a two-pronged approach with its proposals. A broad "regulatory" part covers compliance, ethics, and general sales practices for registered representatives.
Mandatory 10-Year Program
Representatives would receive this program at regular intervals, and graduate out after 10 years. Those who did not participate would face suspension, Mr. McAuliffe said.
The regulatory program would exclude representatives who have been licensed for at least 10 consecutive years and have not had a significant disciplinary action against them.
The second component, dubbed the "firm" element by the task force, would be given annually to employees, and focus on individual firms' products and services.
The task force stresses that the two programs would not be offered on a pass fail basis. Instead, they would be used to gauge knowledge and help educate personnel in areas where they may be lacking, Mr. McAuliffe said.
The proposals will go back to the NASD and other participating agencies for their endorsement. Mr. McAuliffe sees the programs being phased in, with full implementation by 1995.
Flexible Approach Envisioned
This will be done as painlessly as possible, he said. "We will look at ways not to create a paperwork headache for firms."
Right now, the task force envisions a flexible approach, with firms developing their own programs or using outside vendors, as long as they work within certain parameters. Firms might also use materials provided by the NASD.
Bankers at the compliance conference generally endorsed the programs.
One bank even saw it as a wake-up call. "Our education has focused on sales, not as much on the regulatory and suitability sides," said Shirley Eckenrode, compliance officer with Citizens Federal Savings, a Hammond, Ind., bank that began offering investment products a year ago.
"Whether they do something or not, this is something we should be doing."
