==========================================START OF PAGE 1====== APPENDIX A STATUS OF LARGE FIRM PROJECT RECOMMENDATIONS AND OTHER INITIATIVES The Large Firm Report contained a number of recommendations to strengthen broker-dealer compliance systems, enhance SRO efforts in detecting sales practice abuses and enforcing compliance with their rules, and increase investor protection. In addition to these recommendations, the SEC's Divisions of Market Regulation and Enforcement requested other actions in an August 4, 1994 letter to all SROs ("August Letter"). Other initiatives have also been taken to address and curb sales practice abuses. A discussion of the status of the recommendations made in the Large Firm Report and subsequent initiatives taken follows. A. Large Firm Report Recommendations 1. Increased Examination Efforts and Sanctions in Sales Practice Matters Based on the results of the Large Firm Project, the Commission recognized that stepped-up examination efforts were necessary, existing systems designed to detect problem registered representatives needed improvement, and sanctions for sales practice violations at both the SRO and Commission levels needed to be severe. a. Examination Efforts The Commission has increased its examination efforts in detecting sales practice abuses. Since 1992, the Commission has increased the number of annual broker-dealer examinations by over 20%, each of which included a review of sales practices. Since 1994, Commission examination staff has been directed to increase the focus on sales practice activities during examinations. In addition, in April 1995 the Commission reorganized and consolidated its inspection and examination programs into one office, the Office of Compliance Inspections and Examinations ("OCIE"). OCIE streamlines the examination process by consolidating the management of the programs and improving coordination with the regional office examination staff and with other regulatory agencies. In addition, a new office was created within OCIE specifically dedicated to the broker-dealer examination program. The Office of Broker-Dealer Examinations and Oversight was created to give greater focus to, and expand the activities of, the broker-dealer examination program. Finally, the Commission staff is reviewing customer complaint information to focus examinations, which should aid in the earlier identification of problem registered representatives. ==========================================START OF PAGE 2====== The NASD has instructed its District staff to conduct examinations of broker-dealer main and branch offices, as well as individuals associated with those offices, where the broker- dealers or associated individuals pose a regulatory concern because of past conduct, and to view customer complaints collectively so that patterns or trends regarding a particular firm, individual, or product can be readily identified. Moreover, on October 1, 1995, the NASD Rules of Fair Practice incorporated Section 50 of Article III, which requires members to report to the NASD ten specified events, termed "disclosure events," and the quarterly reporting of summary statistics regarding customer complaints. The rule exempts any firm subject to a similar reporting requirement of another SRO. This rule is designed as an early warning mechanism for potential sales practice problems in which registered persons and members are engaged. In addition, the NASD initiated a comprehensive overhaul of the CRD system to expand the use of the CRD system as a tool for broker-dealer regulation. As a result of the NASD's efforts, the redesigned CRD system ultimately is expected to provide the Commission, the SROs, and state securities regulators with: (i) streamlined capture and display of data, (ii) better access to registration and disciplinary information through the use of standardized and specialized computer searches, (iii) electronic filing of Forms U-4 and U-5, and (iv) computerized ad hoc reports that provide various profiles and information for regulatory use.1/ The NASD also developed a program to identify PRRs for not only this Sweep, but also in conjunction with NASD sales practice examinations that focus on individuals that fit the PRR profile. Further, in 1996, as part of its newly adopted CornerStone examiner training and support system, the NASD introduced its Automated Examination Modules ("AEM") to all of its District examiners to replace its paper examination modules. Utilizing AEM, examiners have all of the NASD's examination modules and related procedures on a lap top computer for use in the field, which greatly facilitates the focusing, recording, and finalizing of examination reports. Finally, the NASD has developed a National Regulatory Plan that is designed to ensure that high risk firms, individuals, practices, and products are timely and effectively identified on a nationwide basis, and an appropriate regulatory response developed and implemented in a manner that cuts across individual District and departmental boundaries. In concept, the National Regulatory Plan is both a strategic and centralized planning initiative that draws on existing district and departmental ==========================================START OF PAGE 3====== manpower and expertise to inspect and investigate or otherwise consider identified areas of focus. The NYSE, over the last several years, has substantially increased the number of sales practice examiners and substantially increased the number of firms receiving a specialized sales practice examination. Currently, NYSE firms receive specialized sales practice examinations in addition to their annual financial and operations examinations. The sales practice program has been expanded so that the top 16 firms dealing with the public receive an annual specialized sales practice examination. In addition, the NYSE established a sales practice cycle for all other firms dealing with the public and as a result, these firms now receive a specialized sales practice examination at least once every four years. When NYSE examiners do not conduct specialized examinations, the member firms receive a sales practice review by the NYSE's financial and operations examiners during the annual examination. Accordingly, all NYSE firms dealing with the public receive an annual review for sales practices. Moreover, the NYSE has instituted a program to conduct risk analysis using NYSE Rule 351 data to identify problem registered representatives and, where appropriate, follow up with a special cause examination. The NYSE has also built a tracking system for registered individuals who receive five or more sales practice complaints. These individuals are targeted for review by NYSE examiners during routine sales practice examinations. Furthermore, in 1996, the NYSE plans to rewrite its sales practice program and manual. Also, with the advent of the new CRD system, the NYSE is looking forward to linking its system so that it can both track problem registered representatives, as well as build the NYSE's matrix to assist in examination planning. b. Sanctions In September 1994, in keeping with its commitment to review its policies regarding sanctions for sales practice violations, the Commission's staff sent a letter to the SROs clarifying the Commission's policy regarding the re-entry of individuals who have been barred by the Commission from the securities industry without any provision for re-application after the expiration of some period.2/ The letter stated that the imposition of an unqualified bar against an individual "evidences the Commission's conclusion that the public interest is served by permanently excluding the barred person from the securities industry."3/ Accordingly, absent extraordinary circumstances, a person subject to an unqualified bar will be unable to establish that it is in the public interest to permit a re-entry to the securities industry. ==========================================START OF PAGE 4====== In addition, the Commission has heightened its focus on broker-dealer misconduct and supervisory breakdowns in enforcement actions. Since 1992, the number of enforcement actions brought by the Commission against broker-dealers and/or their employees involving fraud against customers has increased (from at least 41 cases in 1992 to at least 66 cases in 1995), and the number of defendants in these cases has more than doubled (from at least 53 in 1992 to at least 108 in 1995). The number of failure to supervise cases brought by the Commission during the same period has also doubled (from at least 9 in 1992 to at least 19 in 1995). Further, as a result of the examinations completed as part of the Large Firm Project, a number of referrals were made to the Commission's enforcement staff for their review and consideration. While some of these matters are still under investigation, these referrals played a role in a number of enforcement actions, as described below. The Commission recently brought action against PaineWebber Inc. for violations of the antifraud and recordkeeping provisions of the federal securities laws in the marketing and sale of limited partnership interests and other "direct investments" from 1986 to 1992.4/ The firm was also charged with failing reasonably to supervise ten registered representatives (two of whom were branch managers) who engaged in fraudulent sales practices in connection with both direct investments and other securities. A number of the enforcement referrals played a role in this proceeding. Without admitting or denying the findings contained therein, the firm consented to the entry of a Commission order to comply with its representation that it has paid or will pay a total of $292.5 million to defrauded investors. In another case, an enforcement referral of a branch office examined during the Large Firm Project formed a part of the basis of a larger Commission action. Prudential Securities, Inc. ("Prudential") was charged with wide-ranging violations of law, including sales practice violations arising from the firm's sales of various investment vehicles from 1980 to 1990.5/ Without admitting or denying the allegations, Prudential consented to the entry of a final order of the federal district court requiring it to pay all valid claims presented through a court supervised claims resolution process. As a result of this case, Prudential has paid, as of March 1, 1996, $900 million to resolve approximately 140,000 claims. In another enforcement action based on a referral from the Large Firm Project, the Commission instituted an administrative proceeding against Daniel Zessinger, a registered representative ==========================================START OF PAGE 5====== employed by Prudential, for various violations of the antifraud provisions of the federal securities laws.6/ The registered representative is alleged to have engaged in, among other things, undisclosed margin trading, unsuitable transactions, and provided customers with fictitious account statements. Other enforcement referrals arising out of the Large Firm Project are under investigation. 2. Improved Broker-Dealer Compliance Systems for Identifying Problem Registered Representatives The Large Firm Report recommended that firms strengthen their procedures to identify registered representatives generating large numbers of sales practice-related customer complaints, arbitration awards, and settlements. To facilitate this, the Large Firm Report recommended that all SROs adopt a rule similar to NYSE Rule 351, which requires, among other things, that NYSE member firms submit to the NYSE (on a quarterly basis), summary information concerning all customer complaints the member firm received during that quarter. In response, the Commission approved an NASD rule proposal that requires its members to report to the NASD the occurrence of certain specified events, called disclosure events, and quarterly summary statistics concerning customer complaints, as discussed in Section A.1.a. above.7/ Firms now can and should use this information internally to identify and deal with problem registered representatives or branch offices. 3. Enhanced Compliance by Firms and Registered Representatives with All SRO Reporting Requirements The Large Firm Project found that a fruitful source for the identification of possible sales practice problems was the required reports that registered representatives file with SROs. In its August Letter, the Commission staff requested that the SROs closely monitor the timeliness of required filings, such as the Forms U-4 and U-5, through examinations and otherwise. The SROs also were asked to increase sanctions against both firms and individuals where instances of noncompliance with SRO requirements were discovered. In this regard, the NASD has indicated that it believes that late and deficient filing violations should be added to the NASD's minor rule violation plan; a proposed rule change to the NASD's minor rule violation plan is anticipated to be submitted to the Commission in the near future. In addition, the NASD's redesigned CRD will provide for greater detection of late, deficient, or missed filings; and thus, regulatory follow-up will be enhanced. In addition, during 1994 and 1995, the NYSE completed numerous enforcement actions against firms for late reporting of ==========================================START OF PAGE 6====== Forms U-4, Forms U-5, and/or NYSE Forms RE-3. Also during that same time period, the NYSE issued summary fines to ten firms for late Form U-4, Form U-5, and/or NYSE Form RE-3 reporting. These types of actions have resulted in a significant increase in reports and filings with the NYSE, from approximately 4,000 in 1988 to 11,200 in 1995. 4. Qualified Immunity for Firms on Form U-5 In the Large Firm Report, the SEC staff acknowledged that, because of perceived concerns about liability based on claims of defamation by terminated associated persons, firms may not be fully candid on Form U-5 about the reasons for terminations. To eliminate such concerns, and to ensure the continued integrity and value of the Form U-5 as a regulatory tool, the SEC staff recommended that a uniform policy of qualified immunity be established for statements made by firms and their personnel on Forms U-5. Judicial decisions have uniformly afforded firms at least qualified immunity for statements on Forms U-5. Since the issuance of the Large Firm Report, there have been several federal court decisions addressing the issue. In Baravati v. Josephthal, Lyon & Ross, Inc.,8/ the Seventh Circuit, applying Illinois law, concluded that qualified, but not absolute, privilege existed for statements made on Form U-5. In Culver v. Merrill Lynch & Co.,9/ a district court, applying New York law, held that such statements are absolutely privileged. Given these decisions, it is less clear that firms believe that Commission action to address concerns about potential liability is desirable at this time. The Working Group reiterates the importance of firms preparing complete and accurate Forms U-5, especially in light of its recommendation today regarding the need for more stringent hiring practices for registered representatives. The Commission intends to discuss the best course of action with securities industry representatives, as well as the principal end-users of Forms U-5 -- the NASD, the NYSE, and state securities regulators. 5. Enhanced Role for Legal and Compliance Departments The Large Firm Report specifically recommended that firms adopt procedures that enable legal and compliance personnel to have a role in decisions relating to hiring and retaining registered representatives, particularly when the registered representative meets criteria indicating a history of regulatory problems or customer complaints. (In the current Sweep, the Working Group found that nearly 25% of the firms examined had adopted such a practice.) In November 1995, the Board of Governors of the Securities Industry Association ("SIA"), a trade association that represents broker-dealers, endorsed a set of ==========================================START OF PAGE 7====== "Best Compliance Practices" for voluntary adoption by SIA member firms.10/ The SIA's Board of Directors made recommendations with regard to the role of compliance professionals, internal firm policies, and relationships with investors and regulators. The best compliance practices include, among others, that member firms: (a) involve compliance personnel in the decision-making process for the hiring and termination of employees and in the firms' internal disciplinary process; (b) require managers and supervisors to conduct reasonable inquiries and background reviews before finalizing hiring decisions; (c) have internal polices that provide that internal disciplinary actions may be taken against registered representatives for specified types of misconduct; (d) maintain written records of supervisory responsibility for each business unit in the organization; and (e) identify individuals who are the subject of special supervision and have the manager or supervisor acknowledge his or her understanding of the special supervisory procedures. 6. Additional Regulatory Action The Large Firm Report recommended that the Commission consider whether additional regulatory action is needed to address the problem of registered representatives with a history of regulatory problems. As discussed above, the Working Group recommends that firms should designate, above the branch office manager level, an individual or committee to approve the hiring of any registered representative with a history of compliance problems. The Working Group recommends that firms be required to place registered representatives with a disciplinary history under special supervision. In addition, since the Large Firm Report, SROs have reviewed their examination programs to ensure that firms and individuals who may pose regulatory concerns are identified and examined. Both the NASD and the NYSE, for example, have stated that the supervision of high risk brokers has been an increasing focus of sales practice examinations, and that it has improved its surveillance system to flag potential problem registered representatives. The NYSE has recently brought several enforcement cases against branch office managers who failed to supervise adequately a registered representative where the facts indicate that the branch office manager was on notice of past complaints or regulatory problems of the registered representative at previous employers. In addition, the American Stock Exchange, Inc. ("Amex") removed the ceiling for fines for sales practice related sanctions, and noted an increase in the severity of their sanctions over the past several years. 7. Continuing Education ==========================================START OF PAGE 8====== In May 1993, an industry task force was established to study the issue of continuing education for securities industry personnel. This task force issued a report calling for a formal two-part Securities Industry Continuing Education Program ("Program") for securities industry professionals that would require uniform periodic training in regulatory matters and on- going programs by firms to keep registered representatives up to date on job- and product-related subjects. The report also recommended the creation of a permanent Securities Industry/Regulatory Council on Continuing Education ("Council") to recommend to the SROs the specific content of the curriculum to improve practices in the industry. On February 8, 1995, the Commission approved the SROs' proposed uniform rules to implement the Program based on the Council's recommendation, which became effective July 1, 1995. As a result, thousands of securities industry professionals will receive ongoing training in their profession, enhancing their knowledge, abilities, and professionalism. Implementation of the continuing education program is a critical element in preventing sales practice abuses, protecting individual investors, and enhancing the professionalism of the industry. The Commission, the NASD, the NYSE, and certain state securities regulators conduct reviews for compliance with the new continuing education rules in their routine examination programs. 8. Development and Implementation of Tracking Systems for SRO Handling of Investigations Relating to Form U-4 and U-5 Filings The Large Firm Report recommended that the SROs continue to monitor the timeliness of required filings, such as Forms U-4 and U-5 and NYSE Form RE-3, through examinations and otherwise, and to sanction firms for failure to make filings promptly and accurately. In addition, the August Letter asked the SROs to review their existing coordination protocols and, if necessary, implement a tracking system for investigations relating to a registered representative's termination for cause or amendment to Forms U-4 and U-5, and for the current status of such investigations. As discussed above, the NASD has initiated a comprehensive overhaul of the CRD system that is expected to help in this regard. Once completed, NASD member firms will be required to file electronically file with the new CRD system all Forms U-4, U-5, and BD (and amendments thereto), and their corresponding Disclosure Reporting Pages ("DRPs"), and Form BDW (for broker-dealer withdrawals). As part of the CRD redesign, the NASD is developing a tracking program that will alert it to filing deficiencies and instances of failure to file required forms. ==========================================START OF PAGE 9====== While electronic filing of Forms U-4 and U-5 and other uniform registration forms promises to streamline and modernize broker-dealer filing procedures, electronic filing also raises various legal and regulatory issues. For instance, the implementation of electronic, "paperless" filing raises evidentiary issues, and may implicate existing broker-dealer recordkeeping requirements. The Commission staff currently is working with the SROs and the states on a proposal that would address concerns in these and other areas. With respect to regulatory concerns raised by electronic filing, broker-dealers should develop written supervisory procedures governing the electronic filing of uniform forms using the redesigned CRD to ensure that they are in compliance with their supervisory responsibilities. 9. Disclosures When Opening New Accounts In order to provide investors with information about their registered representatives before opening an account, the Large Firm Report recommended that the SROs adopt rules that require broker-dealers to disclose to investors opening new accounts the availability of information concerning the disciplinary history of registered representatives through the NASD's toll-free number (1-800-289-9999). In response, the NASD, the SEC, and other SROs have published and widely disseminated to the investing public the "Invest Wisely" brochure which discloses the availability of the NASD toll-free number. The NASD has also published "The NASD Customer Complaint Program," a brochure that describes how the NASD processes complaints received from investors and describes the availability of the NASD's toll-free number. As a result, the public is using the toll-free number more frequently.11/ The NASD will also promote its toll-free number on its home page on the Internet's World Wide Web, which should be on-line by mid- 1996. Investors may also obtain disciplinary history regarding registered representatives by contacting their local state securities agency. Like the NASD, many of these jurisdictions also have toll-free numbers that consumers may call. (See Appendix E for a list of these numbers.) 10. Public Disclosure by All SROs of Initiated Disciplinary Actions In the Large Firm Report, the SEC staff noted that investors need more information about formal regulatory actions taken against broker-dealers. While the NASD and the NYSE already have instituted procedures to disclose initiated disciplinary actions through the NASD hot-line, the August Letter asked the remaining SROs to report to the CRD (for disclosure to the public) SRO- initiated formal disciplinary actions, as well as completed ==========================================START OF PAGE 10====== disciplinary actions, against member firms and individuals. On August 4, 1994, the Commission approved a new Chicago Stock Exchange rule to disclose pending disciplinary proceedings to the CRD for dissemination to the public.12/ In addition, the Amex also instituted procedures to disclose pending Amex charges on the CRD system. Finally, the Commission approved a CBOE rule change which reports an investigation to CRD at the time that CBOE's Business Conduct Committee issues a Statement of Charges.13/ Despite these actions, the Sweep revealed that not all CRD reportable disciplinary actions (e.g., formal investigations) by SROs have been reported to CRD. Accordingly, SROs should ensure that disciplinary actions, pending and final, are promptly reported to CRD. B. Other Initiatives In addition to the recommendations noted in the Large Firm Report, the Commission, the SROs, and NASAA have taken several other steps to address and curb abusive sales practices and generally enhance the effectiveness of the examination process. 1. Compensation Practices In order to focus industry attention on compensation practices and the conflicts that certain practices might impose, Chairman Levitt convened the Committee on Compensation Practices ("Committee"), chaired by Daniel P. Tully, Chairman and Chief Executive Officer of Merrill Lynch Co., Inc. On April 10, 1995, the Committee issued its report, which examined the conflicts of interest between a broker and an investor presented by current compensation practices and highlighted the industry's best practices that eliminate, reduce, or mitigate those conflicts.14/ Since the issuance of the report, many retail firms have eliminated higher commissions for sales of proprietary products, eliminated product-specific sales contests, eliminated accelerated commissions for newly recruited brokers, and reduced the use of up-front money in recruiting brokers. 2. Cold-Calling Rules In August 1994, Congress passed and the President signed new cold-calling legislation, entitled the Telemarketing and Consumer Fraud and Abuse Prevention Act.15/ This Act required the FTC to enact cold-calling rules with respect to most telemarketers, except those regulated by the SEC, within a year of the legislation, and directed that the SEC adopt, or cause SROs to adopt, substantially similar rules for broker-dealers and other SEC-regulated entities within six months of the FTC rules if the Commission determines that such rules are necessary. To date, ==========================================START OF PAGE 11====== the Commission has approved NYSE, NASD, CBOE, and Amex rules that require members that engage in telephone solicitations to offer and sell securities to create and maintain a centralized do-not- call list.16/ 3. Investor Education and Assistance In 1994, the Commission's Office of Investor Education and Assistance, formerly the Office of Consumer Affairs,17/ was created. Since that time, the office has expanded its functions to include actively educating investors on the importance of investing wisely by avoiding securities fraud and abuse. To this end, it has instituted numerous public outreach and educational programs. In October 1994, the office established a toll-free investor information line that provides investors with the opportunity to order investor education materials and other documents. Since its inception, the SEC has received approximately 87,000 calls on this investor information line.18/ The office has also helped to develop the joint SEC/SRO Invest Wisely brochures designed to give investors the tools they need to protect themselves. To date, approximately 227,000 copies of the brochures have been distributed to the public. In addition, SEC staff has participated in or sponsored 12 investor meetings to educate investors and to hear what is on the minds of the investing public, and has conducted three pilot seminars on investors' rights and responsibilities. The office will be expanding the seminar program significantly in 1996. NASAA has also been active with proactive consumer education and awareness programs. Most notably, NASAA regularly issues "Investor Alerts" to the public that identifies new trends and issues. 4. Memorandum of Understanding On November 28, 1995, a Memorandum of Understanding ("MOU") was signed by officials of the Commission, the Amex, the CBOE, the NASD, the NYSE, and NASAA. The purpose of the MOU is to promote cooperation and coordination among the examining authorities as well as to eliminate unnecessary duplication in the examination process. The key provisions of the MOU include: (a) annual national and regional planning summits; (b) a coordinated computerized tracking system for all broker-dealer examinations conducted by the Commission and the SROs, to be maintained by the Commission; (c) coordination of broker-dealer examinations by the SROs through information sharing and, to the extent possible, simultaneous on-site examinations when requested by each broker-dealer; and (d) encouragement by NASAA to state examination authorities to utilize examination resources where they are most needed, particularly with respect to broker-dealer branch offices and smaller investment advisers. ==========================================START OF PAGE 12====== 5. Criminal Enforcement Actions On November 30, 1995, the Justice Department and the Commission announced the criminal indictment of eleven former registered representatives.19/ The registered representatives were charged with a range of illegal activity, including forgery of investor checks, unauthorized transfer of client funds, sale of non-existent securities, and providing false account statements. All these former registered representatives have been censured by the NASD and barred from the securities industry. The criminal charges are the result of a concerted federal government effort to criminally prosecute securities salespersons for engaging in fraudulent schemes involving their clients. The joint effort between the Commission and the Justice Department signals that such problem registered representatives will face not just fines and administrative sanctions, but possibly prison sentences, as well. In addition, the NASD has continued to work cooperatively with state and federal law enforcement agencies, including the Federal Bureau of Investigation, the Internal Revenue Service, and various U.S. Attorney Generals around the country, which have led to criminal prosecutions, convictions, and imprisonment for serious sales practice and fraudulent abuses. ==========================================START OF PAGE 13====== ENDNOTES 1/ The implementation of the redesigned CRD is expected to be conducted by the NASD in three phases. The NASD plans to conduct a two-month pilot of the redesigned CRD to test the software that will enable broker-dealers to file uniform forms electronically and to carry out other quality assurance testing. Following completion of the two-month pilot, the NASD plans to implement Phase I of the transition to the redesigned CRD. During Phase I, the NASD will convert existing registration information about broker- dealers and their associated persons now contained in the old CRD system to the redesigned CRD system. After the existing registration information has been converted to the redesigned CRD system, broker-dealers will be required to file electronically with the redesigned CRD all registration information. During Phase II of the implementation process, the Commission, the SROs, and state securities regulators will be provided direct access to broker-dealer registration information contained in the redesigned CRD system. The NASD anticipates that Phase III of the implementation process, will among other things, facilitate mass transactions relating to mergers and acquisitions of NASD member firms, and a new annual registration and renewal process for associated persons of member firms. 2/ See, e.g., Letter from Brandon Becker, Director of the SEC's Division of Market Regulation, and William McLucas, Director of the SEC's Division of Enforcement, to Joseph Hardiman, President of the NASD (Sept. 13, 1994). 3/ Id. 4/ SEC v. PaineWebber Inc., 96 Civ. 0331 (SHS), S.D.N.Y.,(Jan. 18, 1996); In the Matter of PaineWebber Incorporated, Sec. Act Rel. No. 7257, Exch. Act Rel. No. 36724, (Jan. 17, 1996). 5/ In the Matter of Prudential Securities, Inc., Exch. Act. Rel. No. 33082 (Oct. 21, 1993). 6/ In the Matter of Daniel L. Zessinger, Exch. Act. Rel. No. 36291 (Sept. 28, 1995). 7/ Exch. Act Rel. No. 36211 (Sept. 8, 1995). 8/ Baravati v. Josephthal, Lyon & Ross, Inc., 28 F.3d 704 (7th Cir. 1994), aff'g, 834 F. Supp. 1023 (N.D. Ill. 1993). ==========================================START OF PAGE 14====== 9/ Culver v. Merrill Lynch & Co. [Current Transfer Binder] Fed. Sec. Rep. (CCH) 98,811, at 92,885 (S.D.N.Y. July 17, 1995). 10/ See Legal Alert No. 95-10 (Nov. 10, 1995). 11/ When the NASD first introduced the toll-free number, it received approximately 140 calls per day. In January 1993, when the NASD announced that it was expanding the information disclosed through the toll-free service, the average daily call volume was approximately 200 calls per day. The NASD now receives approximately 300 to 400 such calls each day. 12/ Exch. Act Rel. No. 34516 (Aug. 10, 1994). 13/ Exch. Act Rel. No. 34984 (Nov. 18, 1994). 14/ Report of the Committee on Compensation Practices (April 10, 1995). 15/ See H.R. Rep. 686, 103rd Cong., 1st Sess. (1994). 16/ Exch. Act Rel. No. 35821 (June 7, 1995) (NYSE rule); Exch. Act Rel. No. 35831 (June 9, 1995) (NASD rule); Exch. Act Rel. No. 36588 (Dec. 13, 1995) (CBOE rule); and Exch. Act Rel. No. (36748) (Jan. 19, 1996). 17/ The Office of Consumer Affairs was established in 1976. 18/ SEC information is also available 24 hours a day on a computerized bulletin board subsystem located on the Fed World Electronic Marketplace and a new World Wide Web site at www.sec.gov. Investors can find on-line brochures, disclosure documents filed with the SEC, SEC rule proposals, the SEC News Digest, and speeches. 19/ Robert D. Hershey, Jr., U.S. Indicts 11 Brokers on Criminal Fraud With Investors, N. Y. Times, December 1, 1995, at D1.