A statement by NASAA President Peter C. Hildreth (May 4, 1999):
We applaud Chairman Levitt for the online trading initiatives announced today and we share his concerns.
Like the SEC and the NASD, state securities regulators are concerned about some of the advertising done by online brokerage firms, which implies that if you’re not trading online you’re missing out or that online trading is an easy, low-risk road to riches.
The truth is the vast majority of Americans shouldn’t be trading—period, online or offline. Instead, they should be saving and investing regularly for the long term.
We endorse Chairman Levitt’s idea of additional warnings for online investors. Given the times—with the stock market going up 1,000 points or 10 percent in six weeks—a few speed bumps or yellow lights are probably a good thing.
As previously announced, NASAA has formed a high-level task force to examine online trading issues—including advertising, suitability and order execution.
However, the real challenge for all regulators is to educate investors, to drive home the point that when it comes to investing there is no trick, no software, no fool-proof formula that leads to success. On Wall Street people still make money the old-fashioned way—through hard work, discipline and patience.