The head of the NASD called Thursday for greater transparency and a commitment to compliance to help restore investors’ confidence.

Speaking at the Securities Industry Association annual conference in Boca Raton, Fla., NASD chairman and CEO Robert Glauber said that historically market crashes and scandals have always been followed by a regulatory backlash.

“I travel around the country fairly often to meet with investors in a town hall format, Glauber said. “And what a lot of them tell me is that they think the deck is stacked against them. Not just the mutual fund scandals, but also the corporate governance debacles at Enron and WorldCom, the Martha Stewart saga and all the other financial abuses that have made for sensational headlines over the past few years have led investors to think that the securities industry exists more for the benefit of those who work in it than for those invest in it.”

“NASD’s mission is to protect investors. So this unfortunate state of affairs has left us with no choice but to ramp up our regulatory and enforcement efforts,” he noted. This is nothing new, it has often happened in market history, he noted.

“As for how long this intensified regulatory climate persists, the ball is in the industry’s court. And the solution is not simply technical; it is cultural. Industry professionals need not only to comply with our rules and the federal securities laws — they need to develop and adhere to a culture of compliance. I’m talking about a culture in which staying on the right side of the rules is at the top of the industry’s priority list. Not the bottom, not the middle. The top.”

“And a culture that places a high premium on transparency, full disclosure, and fair dealing. Investors are better off if they are never short-changed in the first place, rather than waiting for regulators to get restitution to them. And obviously, fair-dealing is in the interests of your firms as well,” Glauber said.

As part of this effort, the NASD has started a series of industry compliance conferences to help brokers understand their compliance obligations, he reported. Another way to ease compliance is to simplify the rules, he suggested.

“But again, the burden of rebuilding the investing public’s confidence and trust in the markets rests primarily on those who operate and work in those markets. And I believe the most important value they can adopt is transparency. Brokers are salespeople, but they are also intermediaries. And as such, they have a responsibility to provide their clients with information about their securities transactions – particularly information the clients might not easily get from other sources,” he noted.