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At InterSecurities Inc. in St. Petersburg, Fla., brokers have been grumbling about a new requirement to take eight hours of continuing education courses annually.
"They are saying, I know this guy in my town who works for Merrill Lynch, and he doesn't have to do what I have to do,' " says Dionne Fajardo, director of continuing education at the independent brokerage, which employs about 25 in-house brokers and 1,225 independent contractors. "But the truth is that Merrill reps have continuing education, too. They just do it in a different way from our brokers."
She's right. A new regulatory push aimed at keeping brokers aware of their responsibilities in selling securities requires all broker/dealers to analyze their continuing education needs, prepare written plans and implement annual training programs focusing on their specific business lines. The NASD suggests reviews of areas such as new products, sales practices and risk disclosure.
This "firm element" of continuing education requirements, issued by the National Association of Securities Dealers in 1995, supplements the better-publicized "regulatory element." The regulatory element requires all registered representatives as of this past July to take periodic NASD-administered, computerized tests on a range of rules and regulations (see sidebar for specific requirements).
The firm element is of greatest concern to brokerages because the NASD issued no hard-and-fast rules on how to implement the requirements. Moreover, firms are required to gear their courses to brokers' specific business niches, so there is no uniform curriculum to be adopted. Some firm officials also say they are hard-pressed to structure education requirements without disturbing their brokers' already tight schedules.
Rather than cross regulators, however, firms are imposing some stiff penalties on...