SEC and Securities Industry Say Y2K Will Be Business As Usual

(September 7, 1999) SEC Chairman Arthur Levitt and leaders of the U.S. securities industry stated on Tuesday, September 7, that the securities industry has tested and retested its computers and systems, and that trading would be conducted as usual on the first trading day of the Year 2000. The event was held to bolster investor confidence.

Arthur Levitt was joined by the heads of several entities at a morning press conference in the Washington DC headquarters of the Securities and Exchange Commission. The other speakers were:

• Frank Zarb, National Association of Securities Dealers.
• Dick Grasso, New York Stock Exchange.
• Matthew Fink, Investment Company Institute.
• Marc Lackritz, Securities Industry Association.
• John Koskinen, President's Council on Year 2000 Conversion.

	Arthur Levitt

Levitt stated that "as of August 31, 1999, all the Securities and Exchange Commission's mission critical and non-mission critical computer systems are remediated, tested and are now Year 2000 compliant. Investors, public companies, and many others can rest assured that the SEC is prepared for the new millennium."

Chairman Levitt also outlined what the SEC has done to assure that the securities industry is Y2K compliant.

"We have, among other things, conducted examinations, issued interpretive guidance, engaged in rulemaking, and brought enforcement actions. We have required extensive disclosure by broker-dealers, non-bank transfer agents, and investment advisers and mutual funds. We made these disclosures available to the public on the Commission's web site. For the small number of companies who have not met the disclosure requirements, we have initiated cases against them. And, the Commission will continue to conduct intensive examinations to validate these disclosures.

All the while, the industry has taken vigorous steps to address and solve the problem. The firms and exchanges have been actively testing their systems and have developed detailed plans to address unforeseen issues. And, I want to commend the industry for being resolute in its commitment to thoroughly prepare itself for the millennium date change."

	Frank Zarb

"A top priority over the past several years has been to educate the 5,000-plus member-firms of the National Association of Securities Dealers about the importance of Year 2000 readiness, and we have monitored our membership closely to ensure compliance," said Frank Zarb, NASD chairman and CEO. "We've also worked hard to make sure that the internal systems of the Nasdaq Stock Market and American Stock Exchange are up to the challenge of the Year 2000 transition. We feel confident that the integrity of our markets will be preserved and the investor will be protected."

"We will conduct one more industry wide test on Saturday, January first," said Zarb. "The state of readiness is there, and the American investor should be very very very secure in the knowledge that it will be business as usual."

Richard Grasso, of the NYSE, stated that "we are able as an industry to report to the investors and the (public) the first trading day of the new year will be business as usual."

"Please do not subscribe to the theories some have espoused," said Grasso.

"The NYSE, together with our technology partners at the Securities Industry Automation Corp., has worked diligently with the industry and with SEC and Congressional oversight
to ensure, from both an operational and regulatory perspective, that investors and issuers have reliable and continuous access to the marketplace during this transition," said Grasso.

Marc Lackritz, of the Securities Industry Association, stated that "we have checked and rechecked all of our computers, and we have tested and retested all of our systems." He stated that "we feel very confident as a result of our testing and retesting."

"We are confident that trading activity will continue uninterrupted in the New Year," said  Lackritz. "For investors, our message is simple: Your accounts will remain safe and
sound."

Matthew Fink, President of the Investment Company Institute, stated that "The mutual fund industry has devoted substantial effort to resolving Year 2000 issues in order to maintain investor confidence. The industry has been deeply involved in cross-industry compliance, testing, and information sharing. In addition, on January 1, 2000 and beyond, mutual fund investors and assets will continue to be protected by the unique and stringent regulatory requirements of the Investment Company Act of 1940." 

John Koskinen, the head of Bill Clinton's Y2K Council, stated that of the many areas addressed by the President's Council on Year 2000 Conversion," one of our highest priorities has been in the financial sector working group."

He stated that "the securities industry has generally been a leader in the United States in preparing for the Year 2000." 

"The industry has successfully tested and re-tested its systems for Y2K compliance so that it is well-positioned to continue to provide investors with reliable service into the new millennium."

The event was mainly a unanimous chorus of confidence in the securities industry remediation efforts. However, Matthew Fink did state that, "No one can guarantee that we will be completely problem free."

Also, while the industry assures investors that it will be "business as usual", the SEC distributed at the event copies of a "Year 2000 Investor Kit."

Finally, Chairman Levitt read a prepared statement which included the line, "the industry has taken vigorous steps to address and solve the problem." Yet, when he read the statement, he omitted the word "vigorous".