[Federal Register Volume 63, Number 35 (Monday, February 23, 1998)]
[Notices]
[Pages 9032-9033]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-4404]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-39665; File No. SR-NASD-98-10]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the National Association of
Securities Dealers, Inc. To Postpone the Effective Date of Recently-
Approved Amendments to Rules 3010 and 3110
February 13, 1998.
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 February 10, 1998, the NASD Regulation, Inc. (``NASDR'') filed with
the Securities and Exchange Commission (``SEC'' or ``Commission'') the
proposed rule change as described in Items I, II, and III below, which
Items have been prepared by the NASDR. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The NASDR proposes to indefinitely postpone the effective date of
recently-approved amendments to the National Association of Securities
Dealers, Inc. (``NASD'' or ``Association'') Rules 3010,
``Supervision,'' and 3110, ``Books and Records,'' to allow the NASDR an
opportunity to consider comment letters received from the public.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the NASDR 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 IV below. The NASDR has 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
On April 11, 1997, a proposed rule change to amend NASD Rules 3010
and 3110 was filed with the SEC.\3\ The purpose of the amendments was
to allow firms to develop flexible procedures for the review of
correspondence with the public. In that filing, the NASD stated that it
would make the proposed rule change effective within 45 days of
Commission approval. Amendment No. 1, containing a draft Notice to
Members to be issued following approval of the proposed rule change,
was filed with the SEC on December 4, 1997.\4\ The Notice to Members
described the new rules and provided guidance to NASD members on the
implementation of the new rules. The SEC approved the proposed rule
change and Amendment No. 1 to the proposed rule change on December 31,
1997.\5\ Notice to Members 98-11 announced approval of the proposed
rule change and stated that the amendments to Rules 3010 and 3110 would
be effective on February 15, 1998.
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\3\ The proposed rule change (SR-NASD-97-24) was published for
comment in the Federal Register on May 2, 1997. See Securities
Exchange Act Release No. 38548 (April 25, 1997), 62 FR 24147.
\4\ See Letter from Mary N. Revell, Associate General Counsel,
NASDR, to Katherine A. England, Assistant Director, Division of
Market Regulation, Commission, dated December 1, 1997 (``Amendment
No. 1'').
\5\ See Securities Exchange Act Release No. 39510 (December 31,
1997) 63 FR 1131 (January 8, 1998) (order approving File No. SR-
NASD-97-24) (``Release No. 39510'').
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Subsequent to approval of the proposed rule change by the SEC,
several commenters filed letters with the SEC raising issues regarding
Amendment No. 1 to the proposed rule change and its accompanying Notice
to Members.\6\ NASDR believes that their letters raise important issues
that should be fully addressed before the rule change becomes
effective.
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\6\ See letters from Carl B. Wilkerson, American Council of Life
Insurance, to Jonathan G. Katz, Secretary, SEC, dated January 9,
1998; Richard V. Silver, The Equitable Life Assurance Society of the
United States, to Jonathan G. Katz, Secretary, SEC, dated January
29, 1998; and Michael L. Kerley, MML Investors Services, Inc. to
Secretary, SEC, dated January 26, 1998.
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The proposed rule change indefinitely postpones the effective date
of the amendments to Rules 3010 and 3110 approved in Release No. 39510.
An extension of the effective date will allow NASDR an opportunity to
consider comments on these and other issues raised by the rule and the
accompanying Notice to Members. NASDR will submit a further proposed
rule change to the SEC announcing the new effective date. Because this
rule proposal has been made in conjunction with a similar proposal by
the New York Stock Exchange (``NYSE''), which has been approved by the
SEC \7\ and immediately became effective,\8\ and is designed to
complement that proposal, joint members of the NYSE and NASD would be
permitted to rely on the procedures provided by NYSE Rules 342, 440,
and 472 and NYSE Interpretation 342.16/01 pending the effective date of
the proposed rule change.
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\7\ See Securities Exchange Act Release No. 39511 (December 31,
1997) 63 FR 1135 (January 8, 1998) (order approving File No. SR-
NYSE-96-26).
\8\ See NYSE Information Memo 98-3 (January 14, 1998).
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2. Statutory Basis
The NASDR believes the proposed rule change is consistent with
Section 15A(b)(6) of the Act,\9\ which requires, among other things,
that the Association's rules must be designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest. The NASDR believes that delaying the effective date of
the new rules to allow for consideration of member views will not be
inconsistent with these requirements.
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\9\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition
NASDR does not believe that the proposed rule change will impose a
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. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change constitutes a stated policy, practice, or
interpretation with respect to the
[[Page 9033]]
meaning, administration or enforcement of an existing rule of the
Association and, therefore, has become effective pursuant to Section
19(b)(3)(A) of the Act \10\ and subparagraph (e) of Rule 19b-4
thereunder.\11\
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 19b-4(e).
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At any time within 60 days of the filing of such rule change, the
Commission may summarily abrogate such rule change if it appears to the
Commission that such action is necessary or appropriate in the public
interest, for the protection of investors, or otherwise in furtherance
of the purposes of the Act.
IV. 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. Persons making written submission
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, N.W., Washington D.C. 20549.
Copies of the submissions, 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, 450 Fifth Street, N.W., Washington
D.C. Copies of such filing also will be available for inspection and
copying at the NASD. All submissions should refer to File No. SR-NASD-
98-10 and should be submitted by March 16, 1998.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-4404 Filed 2-20-98; 8:45 am]
BILLING CODE 8010-01-M
