Record Fines For NASD Research-Analyst Rule Violations

The NASD has fined investment firm Sanford C. Bernstein & Co. $350,000 and its analyst Charles (Brad) Hintz $200,000 for violating agency conflict of interest rules.

The NASD has fined investment firm Sanford C. Bernstein & Co. $350,000 and its analyst Charles (Brad) Hintz $200,000 for violating agency conflict of interest rules. The NASD says the fines are the largest imposed since violations of the research-analyst rules went into effect nearly four years ago.

Under NASD rules, Hintz was not permitted to sell stock he held in Lehman Brothers and options to purchase stock in Morgan Stanley, two companies where he had worked before joining Sanford Bernstein because he was still issuing analyst reports on those firms. The NASD says Sanford C. Bernstein devised a plan that would allow him to terminate coverage of the firms, sell his stock and then resume coverage of Lehman Brother and Morgan Stanley – a scheme that the agency says violated the rules because the termination wasn’t truly the end.

The NASD also found Hintz violated agency rules through numerous stock transactions in a discretionary brokerage account maintained at an unnamed domestic trust company.