eTrade 2001 Annual Report Download - page 95
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Regulatory review of our advertising practices could hinder our ability to operate our business and result in fines and other
penalties
All marketing activities by E*TRADE Securities are regulated by the NASDR, and all marketing materials must be reviewed by an
E*TRADE Securities Series 24 licensed principal prior to release. The NASDR has in the past asked us to revise certain marketing
materials. In June 2001, we settled a formal NASDR investigation into our advertising practices and were fined by the NASDR in
connection with three advertisements that were placed in 1999. The NASDR can impose certain penalties for violations of its
advertising regulations, including:
•
censures or fines,
•
suspension of all advertising,
•
the issuance of cease-and-desist orders, or
•
the suspension or expulsion of a broker-dealer or any of its officers or employees.
In addition, the federal banking agencies impose restrictions on bank advertising of non-deposit investment products to minimize the
likelihood of customer confusion.
82
Table of Contents
If we were deemed to solicit orders from our customers or make investment recommendations, we would become subject to
additional regulations that could be burdensome and subject us to fines and other penalties
If we were deemed to solicit orders from our customers or make investment recommendations, we would become subject to additional
rules and regulations governing, among other things, sales practices and the suitability of recommendations to customers. Compliance
with these regulations could be burdensome, and, if we fail to comply, we could be subject to fines and other penalties.
Due to the increasing popularity of the Internet, laws and regulations may be passed dealing with issues such as user privacy,
pricing, content and quality of products and services, and those regulations could adversely affect the growth of the online
financial services industry
As required by the Gramm-Leach-Bliley Act, the SEC and OTS have recently adopted regulations on financial privacy which took
effect in July 2001 that will require E*TRADE Securities and the Bank to notify consumers about the circumstances in which they may
share consumers’ personal information with unaffiliated third parties and to give consumers the right to prohibit such information
2002. EDGAR Online, Inc.