SEC WARNS SECURITIES DEALERS ON HIGH MARK-UPS
The Securities and Exchange
Commission reminded securities dealers that its mark-up
disclosure requirements also applies to transactions on
zero-coupon securities.
    Dealers and brokers are required by U.S. securities law to
disclose their mark-ups if they are excessive, the SEC said in
a public notice.
    Further, excessive mark-ups on securities transactions,
whether disclosed or not, violate the rules of the national
Association of Securities Dealers Inc and Municipal Securities
Rulemaking Board, it said.
    In a separate action, the SEC filed a friend-of-the-court
brief in a private civil case involving a complaint against
Merrill Lynch over excessive mark-ups on zero-coupon bonds. The
case is being appealed to the U.S. Appeals Court.
    The lower court dismissed the complaint, finding antifraud
provisions of securities laws do not prohibit undisclosed
excessive mark-ups on securities transactions.
    The SEC is urging the appeals court to reverse the
decision, citing its nearly 50 year-old position that
undisclosed excessive mark-ups by securities dealers violate
the general antifraud provisions of securities laws.
 Reuter
