Should the same suitability standards that apply to traditional full service brokers also apply to online brokerage firms?
Yes. Day/short-term trading at online brokerage firms threatens billions of dollars in the retirement and brokerage accounts of this nations small, inexperienced individual investors. In order to protect the least experienced investors, the NASD needs to clearly extend the suitability rules that full service brokerage firms face to the online firms. The growth of online trading is well documented. At the end of 1999 there were approximately 7.5 million online trading accounts nationwide. By the end of 2000, that number was expected to swell to 10.5 million according to Concord, Mass.-based Gomez Advisors. By 2002, the number is expected to reach 18 million. Online firms actively promote themselves as a substitute for full service brokerage firms. Yet they try to hide behind their standing as an online firm to claim they have no obligations for their investors actions. Since many online brokerage firms are positioning themselves as a type of less expensive, full service firm, they must
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