Expanding the National Association of Securities Dealers Inc.'s "suitability" rule to cover on-line trading could open a Pandora's box, some bank brokerage chiefs said.

Though the rule revision, which will be addressed at next month's roundtable hosted by state securities regulators, got some support from brokerage executives, most expressed unease because of the potential for liability. Brokerage chiefs also said they had doubts about the practicality of enforcing such a rule.

"For them to hold us accountable for a consumer's own decision-making process is an untenable decision," said William K. Curtis, executive vice president and chief operating officer of M&I Brokerage Services Inc., a unit of Marshall & Ilsley Corp. of Milwaukee. "The consumer needs to bear all the risk."

The NASD's suitability rule requires brokers to take into account factors such as the client's age, income, goals, and risk tolerance when recommending investments. But broker-dealers who merely execute trades on an unsolicited basis, like those who offer on-line trading, are not bound by this rule.

With an estimated 7.5 million active on-line brokerage accounts in the United States, state and federal securities regulators have become increasingly concerned that many investors are not financially savvy enough to manage their own risk.

"Suitability may have meant one thing in 1969, when nearly all investors were getting stock recommendations from their brokers," Bradley Skolnik, president of the North American Securities Administrators Association Inc., said at the group's annual conference last week. "Thirty years later, however, millions of investors never meet, let alone receive recommendations from, their brokers."

Mr. Skolnik said in an interview that state regulators are not necessarily advocating a change. Indeed, an NASD spokeswoman said the regulator does not have a rule change in the works. However, Mr. Skolnik said that the issue should be aired because of the "rapid changes occurring in the marketplace."

Some observers suggested that the NASD could treat the issue as it has day trading.

In August, the NASD submitted a proposal to the Securities and Exchange Commission that would require day-trading firms to "have reasonable grounds for believing that the day-trading strategy is appropriate for the customer" before opening an account. The proposal would require firms to consider a client's finances, tax status, experience, and investment objectives.

Thomas M. McDonald, senior managing director of McDonald Investments Inc., the brokerage arm of Cleveland-based KeyCorp, said it would be "reasonable" to require firms to determine a customer's suitability before opening an on-line account. However, it would be hard to enforce, he said. "How do you tell someone they can't commit financial suicide?"

Ed Hipp, president of the brokerage unit at Centura Banks Inc. of Rocky Mount, N.C., agreed. "In theory, it is reasonable to say we should protect people against themselves, but practically, how do you do that?"

Those issues aside, Becky C. Shelton, head of wealth management at Sanwa Bank California said a suitability rule for on-line trading would provide a "helpful" check and balance system.

"If something goes awry," she said, "there's at least some way the brokerage firm can show it gathered enough information."

But other brokerage executives flatly dismissed the idea of extending the suitability rule to on-line trading.

Joseph Cooney, president and chief executive of First Security Corp.'s Salt Lake City brokerage arm, said such a rule "would destroy the concept of discount brokerage -- not giving advice and not being responsible for what the customer does."

Instead, Mr. Curtis of M&I Brokerage Services said, the NASD should require firms to disclose the risks of on-line trading.

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