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Panel Proposals on Shareholder-Broker Relations Throwback to Pre-SEC Era, Securities Expert Says

March 1995

blue ribbon panel on brokers' compensation practices is proposing that it is the responsibility of shareholders to ask brokers sophisticated questions.

This is shocking to a securities law expert at The Catholic University of America.

"I find it stunning that the burden is being placed on investors to investigate brokers' competencies and knowledge," says David A. Lipton, a professor at Catholic University's Columbus School of Law.

"This is precisely the job that the Securities and Exchange Commission and the industry were supposed to perform for the investor," Lipton says.

The recommendations confirm information about how the industry works that was common knowledge before the SEC was created in 1934 and recall the atmosphere of caveat emptor that led to its founding, he adds.

The panel, headed by the Merrill Lynch & Co. CEO, was formed at the request of Arthur Levitt, SEC chairman.

Lipton is available for interviews at 202-319-5452 (office), 202-966-6037 (home) or lipton@cua.edu (e-mail). He teaches numerous securities regulation courses and is an arbitrator for the American Arbitration Association and the New York Stock Exchange. Lipton is author of the annually revised Broker Dealer Regulation .


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Revised: 27 October 1997

All contents copyright 1997.
The Catholic University of America,
Office of Public Affairs.