Computer database, available to the public, contains work, disciplinary records on 600,000 stockbrokers
WASHINGTON (June 24, 1999)– One phone call to state securities regulators about Martin R. Frankel, the missing Connecticut money manager, could’ve saved investors their money, a leading state securities regulator said today.
Bradley Skolnik, Indiana Securities Commissioner and incoming president of the North American Securities Administrators Association (NASAA), said, “Had investors checked the Central Registration Depository they would’ve discovered Frankel had been barred from the securities industry by the Securities & Exchange Commission in late 1992 for defrauding investors of more than $1 million through limited partnership interests in his Frankel Fund.
The database, known as the CRD, accessible to the public by means of a phone call or a computer and a modem, contains the employment and disciplinary histories on the industry’s nearly 600,000 stockbrokers and 5,600 securities firms.
State regulators encourage all investors to contact them to check out brokers and firms before making investments. “It’s even a good idea to check out your existing broker,” said Skolnik. “You’re entrusting your financial future with this person, so you should know as much about them as possible.”
Disciplinary information in the CRD includes customer complaints, arbitrations and actions by state, industry and federal regulators and law enforcement agencies.
“There’s a bull market in securities fraud and investors need to be very careful out there,” said Skolnik. He sited pyramid and Ponzi schemes, Internet fraud, affinity fraud, stock manipulation schemes, highly risky viatical products, bogus prime bank and promissory notes. “The crooks are clever and too many investors are gullible,” said Skolnik. “Don’t trust somebody just because they look like you, talk like you, go to your church or have a big house and some fancy cars,” he added.
Frankel vanished in early May from his mansion-office in Connecticut. Millions and perhaps billions of dollars of investors money are unaccounted for, say regulators.
To check the CRD record of a broker or firm, call your state securities regulator (look in the white pages of the phone book under state government) or visit the NASAA website (www.nasaa.org) or call the National Association of Securities Dealer’s (NASD) toll-free hotline (800-289-9999) or visit the self-regulatory organization’s website (www.nasdr.com).
The CRD is owned jointly by state regulators and the NASD. In mid August, the nearly 20-year-old database will get a much-needed multimillion-dollar upgrade that will make it easier for both regulators and investors to use. The new system, known as “Web CRD,” will allow regulators to proactively search the database and generate reports of bad brokers and troubling trends.
NASAA’s Skolnik said getting more investors to check the CRD will be a goal of his year-long tenure as NASAA president, which begins this fall. He urged investors to ask potential brokers for their CRD numbers as well as their full name and the name of their firm.