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7/27/99 -- 12:07 PM SEC votes to shut down unprepared brokerage firms

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WASHINGTON (AP) - Federal securities regulators will go to court starting Dec. 1 to shut down brokerage firms that are not ready for the Year 2000, under new rules adopted today. The Securities and Exchange Commission voted, 5-0, to approve the rules. They set a target date of Aug. 31 for brokerage firms to complete their Year 2000 compliance efforts but allow additional time for unprepared firms to show that they will be ready no later than Nov. 15.

``Any firm that cannot achieve Y2K compliance in a timely fashion will be required to cease doing business by Dec. 1,'' SEC Chairman Arthur Levitt said before the vote.

``A few firms' lack of readiness could have adverse consequences for countless others,'' Levitt said. ``We simply cannot allow firms to continue to operate if they threaten the integrity of the system, or if they are not able to assure customers' access to their funds and securities.''

Richard Walker, the agency's enforcement director, said the regulators would go into federal courts starting Dec. 1 seeking injunctions forcing the unprepared brokerage firms to cease operations and notify their customers.

He said the regulators expect they will only have to go after ``a few'' problem firms.

The SEC estimates that only 1 percent or so of the 3,900 brokerage firms covered by the new rules will be unprepared for the millennial date change.

Concerns about the Jan. 1, 2000, date stem from the fact that some computer systems may read only the last two digits of a four-digit year and interpret the year 2000 as 1900, potentially wreaking havoc on financial transactions.

The new rules also apply to transfer agents that are not banks. Transfer agents are responsible for keeping records of shareholders of corporations and for issuing or canceling stock certificates when shares are bought and sold.

The SEC has said failure of transfer agents to anticipate and fix Year 2000 computer problems could seriously disrupt corporations' dividend payments and other transactions with their shareholders.

The market watchdog agency also requires mutual fund companies and publicly traded corporations to disclose their readiness.

Copyright 1999 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

-- CygnusXI (noburnt@toast.net), July 27, 1999

Answers

I wonder if there is any way that we can get a list of the 1% in advance? I'm thinking that if we cannot pull out our 401k's, at least if our companies were with that 1%, we could force them to change the firm which handles our accounts for us.

Bet that'll wake up a few people when they start shutting down the firms. I also wonder how many brokers shorts are around their knees at this point.

-- (cannot-say@this.time), July 27, 1999.

This is, in effect, a sick joke that the SEC is perpetuating, much like the FDIC has done with a few banks. Picking on the few that are blatantly non-Y2K compliant, and ignoring the vast majority that are non-blatantly non-Y2K compliant. It gives Joe Sixpack the impression that there are only a few problems, and that these are being dealt with responsibly.

-- King of Spain (madrid@aol.com), July 27, 1999.

Let's see, zero-percent fully compliant today, but 99% will be fully compliant by Jan. 1. Hmm . . . anyone ever hear of the Bell Curve? You'd think there'd be a lot more done by now if all but a few are gonna be done in 5 months.

-- rick blaine (y2kazoo@hotmail.com), July 27, 1999.

Net result:

happy face happy face happy face

I guess it's to be expected, but it's still pretty lame.

-- nothere nothere (notherethere@hotmail.com), July 27, 1999.

Rick, you're right...it should be a bell curve. Looks like it might be more of a 'bell cliff', however. God help us all...the lemmings are driving the train.

-- Ninh Hoa (tech@univ.now), July 27, 1999.

No agency is shutting down anyone. Money talks remember? Remember how nuclear power plants were going to be shut down if they weren't compliant by a certain date this year? And, that date has come and gone. The feds didn't shut them down because we needed the power! Don't believe anything you hear and only half of what you see.

-- don't believe it (don'tbelieveit@don'tbelieveit.com), July 27, 1999.

don't:

What you remember about nuclear plants was NEVER true. Rick Cowles has worn out his fingers debunking this myth, and it continues to pop up because the Bozo Brigade lacks an update function. You should also notice that your conclusion about the SEC is based on extrapolation from this total falsehood. I know facts cannot change your mind, but others might not be aware of them.

-- Flint (flintc@mindspring.com), July 27, 1999.