Over The Counter Revolutionaries

A DISSIDENT GROUP OF SMALL brokerages wants to secede from the National Association of Securities Dealers. Unhappy with perceived NASD favoritism toward big Wall Street members, the group--calling itself the Independent Broker-Dealer Assn.--is negotiating with several regional stock exchanges to establish a new market for small-cap stocks.

With 100 members in 17 states, it envisions setting up a new exchange-sponsored regulatory body to replace the NASD as an oversight organization. Alan Davidson, the group's president and head of tiny Zeus Securities of Jericho, N.Y., wants an exchange to put up a $10 million investment to get the new body going.

Small firms, says Davidson, are fed up with NASD rules that stymie their market-making abilities and increase their capital requirements--driving some out of business. Davidson says his group will send out invitations to all 5,500 NASD member firms to join. The NASD responds that it isn't biased against small outfits.

The small fry aren't the NASD's only critics. The Securities & Exchange Commission is investigating the association's purportedly lax oversight of its members. And the Justice Dept. is probing possible price fixing. On Nov. 17, the NASD board was expected to introduce plans for a sweeping reorganization to improve regulatory performance.

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