I would like to bring to your attention several initiatives to combat firms and brokers that employ the nefarious schemes mentioned in your excellent special report "Investors beware: Chop stocks are on the rise" (Cover Story, Dec. 15).
On May 29, 1997, the North American Securities Administrators Assn. announced a crackdown on micro-cap brokers in the New York City area: the "Northeast sweep." Twenty state securities agencies took part in the sweep, which uncovered the use of numerous abusive sales practices and other violations of securities laws by the targeted firms, many of which you discuss in your story.
As a result of the sweep, a large number of states instituted actions against the targeted firms, including Investors Associates Inc. and Meyers Pollock Robbins Inc., which you prominently mention. At least 17 states have terminated Investors Associates' right to do business by revoking or suspending its license or barring them from the state. The cumulative effect of all these state actions was to put the firm out of business.
Future plans include another cooperative multistate sweep of micro-cap brokerage firms, state task forces to focus on individual problem firms, and additional criminal prosecutions of firm principals and brokers. State initiatives, along with the Securities & Exchange Commission, self-regulatory organizations, and other enforcement authorities, can and do make a difference.
The more publicity shined on the problematic areas in the securities business, the better educated the public will be. We congratulate you on bringing...the chop-shop issue to the attention of the American public.
Denise Voigt Crawford
North American Securities