Analysts are used to be blasted for being too lazy in collecting their corporate data, but a couple of analysts are being sanctioned by the NASD for being too aggressive.

The NASD announced that it has fined and suspended David Risk, a research analyst, and his brother, Doug Risk, a research associate, both formerly employed by Sterling Financial Investment Group of Boca Raton, Fla. It says that the Risk brothers violated NASD rules in connection with their gathering and use of confidential information in a research report relating to ongoing clinical trials for a new sleep medication.

David Risk was suspended for eight months and fined US$35,000. Doug Risk was suspended for five months and fined US$5,000. Sterling was fined US$40,000 and was ordered to retain an outside consultant to review the firm’s policies and procedures concerning its research department.

The NASD found that the Risks violated NASD rules in obtaining information about Neurocrine Biosciences. In early Feb. 2002, David Risk made an appointment at a clinic performing clinical trials of a medication to treat insomnia being developed by Neurocrine. On the day of the appointment, David Risk directed his brother to go to the clinic and portray himself as David Risk. He did, signed documents in the name of his brother, and completed a physical examination in the name of David Risk. He also signed a confidentialty agreement and then obtained confidential information, about the medication being studied and the clinical trials. This information was then used in a research report.

Sterling was fined for having inadequate training and written supervisory procedures for its research department. Sterling was sanctioned for failure to supervise the activities of the firm’s research department and research analysts. In settling this case, the respondents neither admitted nor denied the findings made by NASD.