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  Plan for Y2K Errors In Trading, Group Says

By Ianthe Jeanne Dugan
Washington Post Staff Writer
Wednesday, May 26, 1999; Page E1

NEW YORK, May 25—Investors and securities firms should prepare for possible trading and paperwork disruptions caused by the year 2000 computer problem, even though officials have said a glitch is unlikely, according to a major industry trade group.

The Securities Industry Association today released a report advising brokerage firms to take a series of steps, including curbing trading around Jan. 1, in case computers outside the industry have not been properly updated to interpret "00" as 2000 rather than 1900. And next month, officials disclosed, the group intends to mail "investor kits," likely to be endorsed by the Securities and Exchange Commission, advising small investors how to avoid a range of possible problems, from unrecorded bank deposits to inaccurate credit reporting.

"We are very well positioned to deal with the century date change," said E. Gerald Corrigan, a Goldman Sachs Group Inc. managing director and former president of the New York Federal Reserve Bank, who was chairman of the SIA's year 2000 contingency planning. "Still, you simply can't ignore the possibilities."

Among those possibilities: failures at utilities, banks, vendors such as telephone networks and electrical power suppliers, and companies that settle financial transactions, known as clearing firms.

Most vulnerable to outside software problems, according to the 80-page report, are high-value transactions involving the transfer of cash and securities and time-zone differences. The report recommended that firms could avoid problems by developing lists of these types of transactions.

The report also suggested that firms move year-end portfolio restructurings to early or mid-December; limit trading to only that which is "commercially essential"; and avoid structuring new financings that would have to be settled in early January.

Meanwhile, officials said that next month, the SIA plans to mail individuals a packet of information on what they can do to avoid problems at banks, mortgage companies, investment firms and credit-card issuers -- all of which rely on computer systems to perform a variety of date-sensitive functions.

Processes that could be affected include calculations of interest, dividends and charges. "Disruptions or errors in these computer functions could create temporary and isolated administrative glitches with your personal finances," the report said. These could include delays in clearing checks, direct-deposit and billing errors, inaccurate crediting or debiting of transactions, and incorrect calculations of dividends or interest.

The package will advise investors to keep copies of personal records, at least for the last three months of 1999 and the first three months of 2000, including bank statements, bill-payment records, Social Security records, medical records, ATM deposit and withdrawal confirmations, and investment account statements.

The package will also suggest that investors get a copy of their credit reports now, and another after Jan. 1 to make sure it does not contain computer-generated errors. The report also discourages people from giving personal information to salespeople guaranteeing to fix a Y2K problem.

A spokesperson for the SIA said brokers have reported a flood of requests from customers about obtaining stock certificates. The report will dissuade investors from getting these physical stocks, saying that records at home and at the firm will provide a sufficient paper trail.

The group also discourages investors from selling stocks in fear of Y2K problems.

© Copyright 1999 The Washington Post Company

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