Magazine article Insight on the News

Waste & Abuse

Magazine article Insight on the News

Waste & Abuse

Article excerpt

Broker Bitten by Y2K Bureaucratic Bug

To prevent a potential nationwide computer meltdown, the Securities and Exchange Commission, or SEC, is fining brokers and firms to ensure that their computers will accurately read the "00" date Jan. 1,2000. Ralph Hinzman, an 87-year-old broker who has spent 50 years in the investment business, was fined $5,000 for not being Y2K-compliant, as it is called.

"Of course I'm not Y2K [-compliant]," Hinzman tells waste & abuse. "I don't have a computer." When Hinzman received Form BD-Y2K from the SEC, he marked on the 17-page packet in big letters, "I don't have a computer. I don't know how to fill out these forms."

His operation is so small he doesn't actually sell the mutual funds, just the advice. That hasn't stopped the SEC from demanding a yearly audit of his firm, which cost Hinzman another $5,000. He wonders why the audit is necessary. "We never touch any money at all," Hinzman says.

Hinzman, who makes about $25,000 a year selling mutual funds, doesn't even own a fax machine, so he mailed the form back to the SEC.

A few months later his firm, Allegheny Financial Programs, received the fine for missing the SEC deadline. Without the time and money to fight the bureaucracy, Hinzman agreed to pay. "It's harassment, arrogance and intimidation," he complains.

Apparently, writing on the form in that manner was unacceptable, according to SEC bureaucrat Dan Gregus. Proper procedure would have been to write on a separate piece of paper accompanying the form, which still should be read and filled out as much as possible.

"There are reasons behind the SEC rules that are not readily apparent to you, sitting in your office without a computer," declares Gregus.

"There's a lot of people with intelligence but not much common sense," Hinzman says.

Hinzman's days without a computer are limited, however. New SEC regulations insist that all brokers have a computer so they can receive e-mail notices from the agency. Hinzman sent his new computer to his daughter's house.

As for Hinzman, he's still selling financial advice and letting fellow citizens know about the SEC bungling through interviews with the Wall Street Journal, the Paul Harvey Show and waste & abuse.

Hinzman concludes, "I think it should be changed from the SEC to the KGB. Wouldn't that be more appropriate? …

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