WASHINGTON -- Rep. Edward Markey has asked Treasury Secretary Lloyd Bentsen whether legislation is needed to ensure that unscrupulous brokers do not migrate from securities firms to banks.
In a Nov. 1 letter, the Massachusetts Democrat told Bentsen he was alarmed by a recent General Accounting Office report that found that brokers who are disciplined for sales practice abuses in the securities industry can simply migrate to other financial services sectors such as the banking industry.
While the Securities and Exchange Commission has the tools it needs to track and take action against such brokers, "it is unclear whether the current focus of bank examination and enforcement efforts includes the detection and punishment of unscrupulous securities salespeople," Markey said.
Markey, who chairs the House Energy and Commerce subcommittee on telecommunications and finance, said he has found in the securities industry that "unscrupulous individuals or entities tend to gravitate toward the least regulated segment of the business."
He asked Bentsen if legislation or reciprocal agreements between the SEC and bank regulators are needed to combat the problem.
Markey also asked Bentsen to respond to a series of questions on the issue, including whether there is evidence of unscrupulous brokers moving between the securities and banking industries.
He asked Bentsen if the Treasury has made good on its promise to the GAO to find out whether disciplinary information on brokers can be made available to banking and other financial services industries.
Markey asked how bank regulators uncover and punish abusive securities-related activities in the banking industry.
"Can individuals be employed by banks to sell securities products if they have a disciplinary history so long as they have not been convicted of a crime," Markey wanted to know. The Treasury should respond to the subcommittee by Dec. 2, Markey said.
