increased regulation of so-called day-trading firms and the way they woo customers.

In a report issued following a seven-month study by the North American Securities Administrators Association, state regulators identified several concerns about these broker-dealers that allow retail investors to trade their account intra-day. The report raised concerns over issues such as deceptive and misleading advertising, customer suitability, trading on behalf of a third party without an investment advisory license, and loans between customers.

State regulators did not condemn day trading itself, but rather the hype that has surrounded the practice and the subsequent potential to mislead customers.

We're concerned about firms that "play up the upside and play down the downside," said Peter C. Hildreth, the president of the association, whose members include 65 regulators in the United States and Canada.

Mr. Hildreth, who is also New Hampshire's top securities regulator, called the report a "first step toward better understanding the issues, the problems, and the solutions." He urged day-trading firms to "stop the hype" and screen customers better and called on regulators to take a stronger enforcement stance against rogue firms.

He also urged the Securities and Exchange Commission to adopt a recent proposal by the National Association of Securities Dealers that would require day-trading firms to more rigorously screen customers and be more forthright about risks.

Day-trading firms have been thrust into the national spotlight in recent weeks following the shooting spree in Atlanta by a disgruntled day trader.

But state regulators have been concerned about the practice for several years. They are worried, for example, that firms are glamorizing an extremely risky practice through deceptive sales and marketing that makes it seem as though investors cannot lose money.

In fact, an analysis of day trading activity at All-Tech Investment Group of Montvale, N.J., found that 70% of customers lost money, said David E. Shellenberger, the chair of the North American Securities Administrators project group.

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