Mary L. Schapiro, chief executive officer and president of the National Association of Securities Dealers, warned broker-dealers Friday not to be complacent about suitability for the customer when selling securities on-line.
Ms. Schapiro issued her caution at the association's annual fall securities conference here. The NASD has not decided whether its suitability rule covers on-line trades, but Ms. Schapiro said it could apply in certain situations.
For example, she said, a firm could be considered to be making a recommendation if it selectively sent notices on product offerings to customers on the basis of client profiles. And just because it is an on-line account does not mean the suitability rule does not apply. "The line is just not that clear," she said.
Meanwhile, the NASD and the New York Stock Exchange are "looking very closely" at margin practices at day-trading firms, an issue that has come under increased scrutiny in recent months, Ms. Schapiro said. "We'll have more to say on these issues very soon," she said.
The NASD also plans to start an educational Web site for on-line investors that would offer basic information about issues such as trade execution and market access, she said. -- Cheryl Winokur