BROKERS SHOULD DO TIME FOR THE CRIME: LEVITT

Rogue brokers may soon find themselves wearing horizontal stripes instead of pinstripes. As Arthur Levitt began his second five-year term as chairman of the Securities and Exchange Commission, he announced that his top focus would be to put bad brokers in jail.

Because the SEC can only bring civil cases, Levitt wants the regulator to work more closely with the Justice Department so it can prosecute bad brokers criminally. He started his campaign this year by meeting with U.S. attorneys’ offices nationwide to encourage coordination between the two agencies.

As part of his crusade against wrongdoers, Mr. Levitt also set up a 125-member team to keep an eye on the Internet. The Office of Internet Enforcement made its first nationwide sweep against Internet fraud when it took 23 actions against 44 people and companies for touting stocks without disclosing that they received payments for the service.

The National Association of Securities Dealers also continued to do its part to push for better practices in the industry, most notably in proposing to prohibit mutual fund and insurance companies from offering perks to brokers such as all-expenses-paid vacations to push their products. The regulation went into effect Jan. 1.