Four small brokerages fined for failing to fully report on Year

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WASHINGTON (AP) - Four small brokerage firms have been slapped with fines of $20,000 or $50,000 for allegedly failing to meet deadlines for fully disclosingtheir computer systems' readiness for the Year 2000.

Some of the brokerages, however, contend that the fines are overly severe because they are completely prepared for the date change and, in at least two cases, they eventually submitted the required reports. An attorney for two of the firms said Friday they planned an appeal to the full Securities and Exchange Commission of the ruling Monday by an administrative law judge at the SEC.

``It's outrageous and excessive,'' said Paul Bazil, who represents J.W. Barclay & Co. Inc. of New York City and Stonegate Securities Inc. of Dallas. ``There's no substantive violation here and nobody is at risk.''

He said the two firms have completed Year 2000 testing of their computer systems, which were found to be ready. In addition, he said, ``they have filed all their necessary forms with the SEC.''

The judge's action came a week after the SEC said it would go to court starting Dec. 1 to shut down brokerage firms that aren't ready for the date change.

The judge, Brenda P. Murray, also censured the four brokerages - J.W. Barclay, Stonegate Securities, VBC Securities of Clifton, N.J., and William Scott & Co. of Union, N.J. - and ordered them to refrain from such violations in the future.

She imposed civil fines of $50,000 each on J.W. Barclay, Stonegate Securities and VBC Securities, and a $20,000 fine on William Scott, which has fewer assets than the others.

In her decision, Ms. Murray said the firms failed to submit Year 2000 readiness reports to the SEC ``for no good reason.'' She said they had received ample notice of the filing deadlines late last year from the market watchdog agency and the National Association of Securities Dealers, a self-policing industry group.

``Such behavior will destroy effective regulation if left unchallenged and untreated,'' Ms. Murray wrote.

The four firms were among 37 relatively small brokerages charged by the SEC in October with failing to full report on their Year 2000 preparedness, in the federal government's first major enforcement action related to the millennial date change.

Of the 37 firms, 29 eventually agreed to settlements with the SEC and four had their cases dismissed because they went out of business, leaving the four brokerage firms fined on Monday.

Officials of VBC Securities and William Scott did not immediately return telephone calls seeking comment Friday.

The Year 2000 problem - also called Y2K and the millennium bug - occurs because some computer programs, especially older ones, might fail when the date changes to 2000. Because the programs were written to recognize only the last two digits of a year, such programs could read the digits ``00'' as 1900 instead of 2000.

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Ray

-- Ray (ray@totacc.com), August 06, 1999

Answers

Why is it that four small brokerage firms are worthy to be posted here (and presumably used as examples of Y2K "failures"), and yet when the FAA has already shown itself to be Y2000 ready, Doomlits like Andy can only focus on the OTHER 189 MAJOR INDUSTRIES THAT ARE NOT COMPLIANT!!

If TEOTW world calls for a glass that is half empty then the Doomers focus on the part that isn't filled, but if TEOTW calles for a glass that is half full then the Doomers magically redirect their attention to what is in the glass already.

I don't what the terminology of this behavior is but I bet it's in some psychiatric books somewhere.

-- Doomers... heads up! (The sky is falling@ aha. Gotcha!), August 06, 1999.

Ray, I caught this too...and the interesting part of it is the SEC's decision to wait until DEC 1 to shut down anyone who is not compliant...

Apologies to everyone for double posting this one (above) before scanning twice to make certain it wasn't already up.

-- Shelia (Shelia@active-stream.com), August 06, 1999.