[Federal Register Volume 65, Number 5 (Friday, January 7, 2000)]
[Notices]
[Pages 1211-1212]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-392]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-42280; File No. SR-NASD-99-72]
Self-Regulatory Organizations; Notice of Filing and Order
Granting Accelerated Approval of a Proposed Rule Change by the National
Association of Securities Dealers, Inc. To Extend the Effectiveness of
the Pilot Injunctive Relief Rule
December 28, 1999.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on December 15, 1999, the National Association of Securities Dealers,
Inc. (``NASD'' or ``Association''), through its wholly owned subsidiary
NASD Regulation, Inc. (``NASD Regulation'') filed with the Securities
and Exchange Commission (``SEC'' or ``Commission'') a proposed rule
change as described in Items I and II below, which Items have been
prepared by NASD Regulation. On December 28, 1999, NASD Regulation
submitted Amendment No. 1 to the proposed rule change.\3\ For the
reasons discussed below, the Commission is granting accelerated
approval of the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See letter to Katherine A. England, Assistant Director,
Division of Market Regulation, Commission, from Joan C. Conely,
Senior Vice President and Corporate Secretary, NASD Regulation,
dated December 23, 1999 (``Amendment No. 1'').
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
NASD Regulation is proposing to amend Rule 10335 of the Code of
Arbitration (``Code'') of the NASD, to extend the pilot injunctive
relief rule for one year, pending Commission action on a rule filing to
amend Rule 10335 and make it a permanent part of the Code. Below is the
text of the proposed rule change. Proposed new language is in italics;
proposed deletions are in brackets.
10335. Injunctions
(i) Effective Date
This Rule shall apply to arbitration claims filed on or after
January 3, 1996. Except as otherwise provided in this Rule, the
remaining provisions of the Code shall apply to proceedings instituted
under this Rule. This Rule shall expire on [January 3, 2000] January 5,
2001, unless extended by the Association's Board of Governors.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, NASD Regulation included
statements concerning the purpose of and basis for the proposed rule
change and discussed any comments it received on the proposed rule
change. The text of these statements may be examined at the places
specified in Item III below. NASD Regulation prepared summaries, set
forth in Sections A, B, and C below, of the most significant aspects of
such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Rule 10335 took effect on January 3, 1996 for a one-year pilot
period. The Commission has periodically extended the initial pilot
period in order to permit NASD Regulation's Office of Dispute
Resolution to assess the effectiveness of the rule. The rule is
currently due to expire on January 3, 2000. In July 1998, the NASD
filed a rule filing proposing to amend Rule 10335 and to make it a
permanent part of the Code. The NASD filed amendments and responses to
comments received by the Commission regarding the rule filing in
December 1998.
After considering additional comments received by the Commission
regarding both the original rule filing and the amendments, as well as
comments from the Commission staff, the Injunctive Relief Rule
Subcommittee of NASD Regulation, Inc.'s National Arbitration and
Mediation Committee (``NAMC'') reconsidered every aspect of the
proposed rule change.
After careful consideration of the comments received, the
Subcommittee unanimously approved new amendments to the rule filing.
The amendments were approved by the Board of NASD Regulation, Inc. at
its meeting on December 8, 1999 and will be filed with the Commission
shortly.
2. Statutory Basis
NASD Regulation believes that the proposed rule change is
consistent with the provisions of Section 15A(b)(6) of the Act,\4\
which requires, among other things, that the Association rules be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, and, in general, to
protect
[[Page 1212]]
investors and the public interest.\5\ NASD Regulation believes that it
is in the interest of members and associated persons that the rule
remain in effect pending the filing of amendments to, and Commission
action on, the permanent rule filing.\6\ Therefore, the staff
recommends that the pilot rule be extended to January 5, 2001. However,
the permanent rule filing will make clear that, once approved, the
permanent rule change would supersede the pilot in its entirety.
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\4\ 15 U.S.C. 78o-3(b)(6).
\5\ See Amendment No. 1, supra note 3.
\6\ See Securities Exchange Act Release No. 40441 (September 15,
1998), 63 FR 50611 (September 22, 1998).
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B. Self-Regulatory Organization's Statement on Burden on Competition
NASD Regulation does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as amended.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received from Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act.\7\ Persons making written submission
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609.
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for inspection and copying in the
Commission's Public Reference Room. Copies of such filing will also be
available for inspection and copying at the principal office of the
NASD. All submissions should refer to File No. SR-NASD-99-72 and should
be submitted by January 28, 2000.
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\7\ In reviewing this proposal, the Commission has considered
its impact on efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
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IV. Commission Findings and Order Granting Accelerated Approval of
Proposed Rule Change
NASD Regulation has requested that the Commission find good cause
pursuant to Section 19(b)(2) \8\ for approving the proposed rule change
prior to the 30th day after publication in the Federal Register. The
commission finds that the proposed rule change is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to the NASD and, in particular, the requirements of Section
15A of the Act and the rules regulations thereunder.\9\ Rule 10335 is
intended to provide a pilot system within the NASD arbitration forum to
process requests for temporary injunctive relief. Rule 10335 is
intended principally to facilitate the disposition of employment
disputes, and related disputes, concerning members who file for
injunctive relief to prevent registered representatives from
transferring their client accounts to their new firms.
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\8\ 15 U.S.C. 78s(b)(2).
\9\ 15 U.S.C. 78o-3.
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The Commission finds good cause for approving the proposed rule
change prior to the 30th day after the date of publication of notice of
filing thereof in that accelerated approval will permit members to have
the benefit of injunctive relief in arbitration pending filing of
amendments to, and Commission action on, the permanent rule filing that
would amend Rule 10335 and make it a permanent part of the Code. The
Commission expects that during the extension of the pilot NASD
Regulation will amend the proposal to permanently add Rule 10335 to the
Code.\10\ The Commission believes, therefore, that granting accelerated
approval of the proposed rule change is consistent with Section 15A of
the Act.\11\
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\10\ See supra note 6.
\11\ 17 U.S.C. 78o-3.
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It is Therefore Ordered, pursuant to Section 19(b)(2) of the Act,
\12\ that the proposed rule change (SR-NASD-99-72) is approved on an
accelerated basis through January 5, 2001.
\12\ 15 U.S.C. 78s(b)(2).
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For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-392 Filed 1-6-00; 8:45 am]
BILLING CODE 8010-01-M
