[Federal Register Volume 60, Number 96 (Thursday, May 18, 1995)]
[Notices]
[Pages 26753-26754]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-12258]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35712; File No. SR-NASD-95-18]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by National Association of Securities Dealers, Inc., Relating to
Corporate Financing Underwriting Terms and Arrangements
May 12, 1995.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on May 3,
1995, the National Association of Securities Dealers, Inc. (``NASD'' or
``Association'') 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
NASD. The Commission is publishing this notice to solicit comments on
the proposed rule change from interested persons.
I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The NASD is herewith filing a proposed rule change to Article III,
Section 44 of the Rules of Fair Practice. Proposed new language is
italicized; proposed deletions are in brackets.
THE CORPORATE FINANCING RULE
Underwriting Terms and Arrangements
Sec. 44
* * * * *
(c) Underwriting Compensation and Arrangements
* * * * *
(6) Unreasonable Terms and Arrangements
* * * * *
(B) Without limiting the foregoing, the following terms and
arrangements, when proposed in connection with the distribution of a
public offering of securities, shall be unfair and unreasonable:
(i)-(x) (Unchanged)
(xi) for a member or person associated with a member to accept,
directly or indirectly, any non-cash sales incentive item including,
but not limited to, travel bonuses, prizes and awards, from an issuer
or affiliate thereof in excess of [$50] $100 per person per issuer
annually. Notwithstanding the foregoing, a member may provide non-cash
sales incentive items to its associated persons provided that no
issuer, or an affiliate thereof, including specifically an affiliate of
the member, directly or indirectly participates in or contributes to
providing such non-cash sales incentive; or
(xii) (Unchanged)
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 NASD 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 NASD 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
Subsection 44(c)(6)(B)(xi) of the Corporate Financing Rule (the
``Rule'') currently prohibits NASD members from receiving non-cash
sales incentives from an issuer or its affiliates valued in excess of
$50 per person per issuer annually. Such non-cash sales incentives are
typically de minimis in nature, such as small souvenir or gift items,
provided by issuers to a member or associated persons of a member. The
NASD is proposing an amendment to the Rule to raise the permissible
level of non-cash sales incentives to $100 per person, annually.
The NASD believes that a dollar amount of $100 is still relatively
low and will neither compromise the intent, nor reduce the ability, of
the rule to prevent fraudulent acts and practices that might arise in
connection with the giving of gifts or payments by issuers and their
affiliates as non-cash compensation to members or persons associated
with members.
Additionally, the amendment would make the value-limitation
provisions of the Rule consistent with similar provisions in Article
III, Sections 10 and 34 of the Rules of Fair Practice, with proposed
amendments to Sections 26 and 29 now pending SEC approval, and with
Rule 350(a) of the New York Stock Exchange (``NYSE''). The amendment to
the Rule would provide regulatory consistency and simplify compliance
for member firms that are also members of the NYSE.
The NASD believes that the proposed rule change is consistent with
the provisions of Section 15A(b)(6) of the Act,\1\ which require that
the rules of the association be designed to prevent fraudulent and
manipulative acts and promote just and equitable principles of trade in
that the proposed rule change allows for an increase in the dollar
limit to a level that is still reasonably de minimis and provides for
regulatory consistency with other rules of the NASD and the NYSE.
\1\ 15 U.S.C. 78o-3.
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(B) Self-Regulatory Organization's Statement on Burden on Competition
The NASD 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
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
A. by order approve such proposed rule change, or
B. institute proceedings to determine
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing. Persons making written submissions
should file six copies thereof with the Security, Securities and
Exchange Commission, 450 Fifth Street NW., Washington, D.C. 20549.
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
[[Page 26754]] 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 the file
number in the caption above and should be submitted by June 8, 1995.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority, 17 CFR 200.30-3(a)(12).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-12258 Filed 5-17-95; 8:45 am]
BILLING CODE 8010-01-M
