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Brokers nabbed in exam scam
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January 8, 1997: 6:55 p.m. ET
Authorities indict 50 reps. for paying others to take their licensing tests
From Correspondent Irv Chapman
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NEW YORK (CNNfn) - Fifty stockbrokers were indicted Wednesday for paying others to take their licensing exams.
The brokers were indicted for paying between $2,000 and $5,000 to two men to take their tests in what Manhattan's district attorney calls the largest test-taker-for-hire scheme he's ever seen. One of the men took 28 exams, the other took 20. Of the 50 brokers indicted, some had been in the business up to three years.
The scam was uncovered by regulators at the National Association of Securities Dealers. Regulators started looking into the issue after receiving an anonymous tip. That led to the indictment of the test takers, the brokers and a go-between.
"It is certainly a crime with a victim when people who have the right to expect that they are doing business with honorable and reputable people who will be duly licensed find out that they are not," said Mary Schapiro, president of the NASD's regulation unit.
Manhattan District Attorney Robert Morgenthau said citizens have a right to expect reputable service from brokers just as they do from policemen and other public officials.
"The public should be reassured that there is a policeman on the block, that they're effective and if anything like this happens, it's going to be reported and investigated," Morgenthau said.
The brokers' firms were required to turn over their commissions to the NASD. Customers who think trades made by those brokers lost money would have to arbitrate or sue.
To make sure this kind of cheating doesn't happen again, the NASD has started to fingerprint test takers and plans to videotape them at test sites.
Investors who want to check out a broker's test and employment record can phone the NASD.
Assistant New York Attorney General William Mohr said a variety of other information, including customer complaints, is on file with state regulators. (161K WAV) or (161K AIFF)
The rogue brokers appeared in court for arraignment Wednesday afternoon. One of those accused has already pleaded guilty.
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