WASHINGTON - A banking trade group is mounting an aggressive campaign to block further regulation of bank-affiliated retail brokerages.
The Bank Securities Association, at a closed-door meeting here Tuesday, formulated a detailed rebuttal to the National Association of Securities Dealers' recently proposed blueprint for regulating bank brokerages.
The California-based association urged bankers and mutual fund service suppliers to oppose the proposal in its entirety, and also to criticize specific provisions.
The NASD is soliciting public comment on the proposed regulation through Feb. 15. NASD officials have said the plan could be adopted by fall, pending approval from the Securities and Exchange Commission.
The hastily called session was in response to proposed mandates that would curb the use of referral fees and customer lists, among other practices that banking regulators currently allow. About 50 of the association's 300 members turned out for the two-hour meeting at a hotel near Washington's National Airport.
"We believe the proposed NASD rule is unnecessary," said Robert M. Kurucza, general counsel for the Bank Securities Association and a partner at Morrison & Foerster, Washington.
While the association puts the finishing touches on its own response, it is also distributing two pages of guidelines to help bankers formulate theirs.
The guidelines urge bankers to question the NASD's authority to "impose requirements on banks."
The NASD, a Washington-based group that sets professional standards for the brokerage industry, has objected to the claim that it is seeking to regulate banks. Officials have said they are simply fulfilling their mandate to regulate brokerages that are members of NASD - including members that are owned by banks or operate in bank branches.
The Bank Securities Association proposal also asserts that the proposal would hamper banks' ability to cross-market products and to offer consumers conveniences such as consolidated statements.
Bank investment sales activities "have grown because they meet a customer need," Peter Succoso, the association's president, told reporters at a press conference after the meeting.
Mr. Succoso, who is also a senior vice president at Wilmington Trust, Wilmington, Del., was one of several association officials who maintained that existing banking and securities rules are sufficient to police bank brokerage activities.
Banks have reason to hope that their lobbying may prompt revisions in the proposal to make it more acceptable to banks, said Rainey Gray, the association's vice president, and president of Ameristar Capital Markets, the brokerage arm of First American Corp., Nashville.
"The NASD has a long history of proposing rules and truly listening during the comment period," Mr. Gray said.
But others who attended said the meeting there was some mistrust of the NASD's proposal.
Some bankers were openly hostile to the proposed rules, insisting that large brokerage firms were behind the NASD's push, said one participant, who did not want to be named.
The Bank Securities Association is not the only banking trade group to oppose the NASD proposals. The American Bankers Association also plans to submit its own comments and has been urging members to do so as well, ABA executives say.
"We are suggesting that bulk will make a difference," said Sarah Miller, senior government relations counsel with the ABA.