The National Association of Securities Dealers yesterday issued a complaint against LH Ross & Co. Inc., Boca Raton, FL, alleging that the securities firm is in violation of the NASD’s telemarketing rules. NASD Regulation Inc., an arm of the NASD, said LH Ross has failed to comply with its Taping Rule requiring firms to record all sales calls if a certain percentage of their brokers previously had been employed by a firm that was expelled by the NASD for sales practice misconduct.
According to the NASD, it notified LH Ross last August that it was subject to the Taping Rule because some of its brokers previously had worked for Biltmore Securities Inc., which was expelled by the NASD earlier last year. LH Ross applied for an exemption and was denied, then appealed and was denied again. The firm recently informed the NASD that it did not intend to comply with the Taping Rule.
In a prepared statement, the firm said it was not subject to the Taping Rule because it did not have as many brokers from expelled firms as the NASD claimed. The company also said it has been investigating the purchase of a recording system “for the sole purpose that we recognize that this is a good business practice and not because we are subject to the rule.”
