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U.S. Securities and Exchange Commission

SEC Staff Report Summarizes Findings from
Recent Examinations of Broker-Dealers Offering Online Trading



Washington, DC, January 25, 2001 – The staff of the Commission's Office of Compliance Inspections and Examinations today issued a report entitled "Examinations of Broker-Dealers Offering Online Trading: Summary of Findings and Recommendations." Text of the report is available on the Commission's website at http://www.sec.gov/news/studies/online.htm.

The staff undertook the review of broker-dealers offering online trading in light of the phenomenal increase in online trading in recent years. The report describes the general findings and observations from the examinations in areas such as disclosure and investor education, advertising, best execution, operational capability, security measures, and employee supervision. The examinations revealed examples of sound practices as well as areas where some broker-dealers can enhance their practices. The staff is making the report public in order to highlight issues in this area and to assist broker-dealers in evaluating their own online trading programs.

In releasing the report, Lori Richards, Director of the Office of Compliance Inspections and Examinations, said, "As more investors trade online, it becomes ever more important for broker-dealers to ensure that their online systems are meeting the needs and expectations of investors. In highlighting issues we have seen in our examinations, I hope that this report will be helpful to all firms offering online trading."

Additional Materials Available on This Topic

Special Study: Examinations of Broker-Dealers Offering Online Trading: Summary of Findings and Recommendations