NYSE censures, fines Ferris for merger problems


NEW YORK -- Ferris, Baker Watts Inc. has been censured and fined $20,000 by the New York Stock Exchange for problems stemming from the 1988 merger of Baltimore-based Baker, Watts & Co.and Washington-based Ferris & Co. Inc.

The settlement, announced yesterday, comes after extended negotiations between Ferris and the exchange.

The company, which neither admitted nor denied guilt, agreed to the terms only reluctantly, said Theodore Urban, general counsel for Ferris.

"It took a great deal of thought, but it became such an ongoing time-consuming problem with the exchange's enforcement division that we just felt, from purely a business standpoint, it was worthwhile to settle," Mr. Urban said.

The problem arose following the merger when 18 brokers departed, mostly from the Baltimore branch, leading to requests by customers for the transfer of 1,600 accounts.

NYSE rules require such transfers to be concluded within 10 days after the requests are received and within five days of their being validated.

The exchange said it examined selected account transfers in 1988 and 1989 and determined that because of "inadequate procedures, systems problems and other circumstances," 92 transfers were notcompleted within the requiredtime.

"Obviously," said Mr. Urban, "when you handle that number of accounts, you will have a few that get messed up. No one has 100 percent accuracy processing that amount of paper.

"By any reasonable standard, it's a ridiculously arbitrary number," he said.

"No customers were harmed in any case. Where delays occurred, the firm voluntarily made sure customers earned interest and were fairly dealt with."

Mr. Urban characterized the investigation as "a gross abuse of disciplinary authority by the New York Stock Exchange."

A spokesman at the exchange said, "The case is not among the larger cases we pursued. However, it is important to those investors who did not have their accounts transferred in a timely manner."

Copyright © 2020, The Baltimore Sun, a Baltimore Sun Media Group publication | Place an Ad