01-11208. Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the National Association of Securities Dealers, Inc. Relating to a Qualification Examination for a New Limited Registration Category: ...

April 27, 2001.

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 April 3, 2001, 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”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by NASD Regulation. NASD Regulation has designated the proposed rule change as constituting a “non-controversial” rule change under paragraph (f)(6) of Rule 19b-4 under the Act,^[3] which renders the proposal effective upon receipt of this filing by the Commission.^[4] 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

NASD Regulation is filing with the Commission the examination specifications and study outline for the Limited Representative-Private Securities Offerings (Series 82) examination program. The Series 82 examination program is proposed in connection with a proposed change to NASD Rule 1032 ^[5] to implement section 203 of the Gramm-Leach-Bliley Act of 1999 (“GLBA”),^[6] which requires the NASD, as a registered securities association, to create a new limited registration category for any associated person of a member whose investment banking and securities business is limited solely to affecting sales of private securities offerings. NASD Regulation is not proposing any textual changes to the By-Laws, Schedules to the By-Laws, or Rules of NASD Regulation or the NASD.

A description of the Series 82 examination is included in a study outline prepared by NASD Regulation. Confidential information on the examination is included in the examination specifications, which have been omitted from this filing and are being submitted under separate cover to the Secretary of the SEC pursuant to Rule 24b-2 under the Act.

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 an 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. NASD Regulation has prepared summaries, set forth in Sections (A), (B), and (C) bleow, 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

The GLBA requires the creation of a new limited registration category for private securities offerings. More specifically, Title II of the GLBA, which becomes effective on May 12, 2001 (or such later date on which Title II of GLBA becomes effective), requires the NASD, as a registered securities association, to create a limited registration category for any associated person of a member whose investment banking and securities business is limited solely to effecting sales of private securities offerings. Therefore, pursuant to Section 15(A)(g)(3) of the Act, which requires the NASD to prescribe standards of training, experience, and competence for persons associated with NASD members, the NASD has developed the proposed Series 82 examination program to establish that persons associated with NASD members who are seeking to register under the new limited registration category for private securities offerings have attained specified levels of competence and knowledge.

The proposed Series 82 Limited Representative-Private Securities Offerings examination will be an NASD examination that qualifies an associated person of a member, whose investment banking and securities business is limited solely to effecting sales of private securities offerings, to effect such sales. This examination tests a candidate's knowledge of securities industry rules and regulations pertinent to such products. The Series 82 will not qualify a registered representative in this category to effect sales of municipal or government securities, equity interests in or the debt of direct participation programs (DPP securities), or resales of or secondary market transactions in private placement securities. Persons seeking to effect the aforementioned sales must register in one or more of the other NASD limited representative categories or as a General Securities Registered Representative and pass the appropriate qualification examination(s).

A committee of industry representatives, in conjunction with NASD Regulation staff, developed the series 82 study outline and specifications. The examination will be divided into four topical sections. The topical sections and the number of questions designated to each such section are: Characteristics of Corporate Securities (14); Regulation of the The Market for Registered and Unregistered Securities (45); Analyzing Corporate Securities (15); and Handling Customer Accounts and Industry Regulations (26). The specifications for the Series 82 examination, which have been omitted from this filing and are being submitted under separate cover to the Secretary of the SEC pursuant to Rule 24b-2 under the Act, describe additional confidential information regarding the examination.

The examination will be a 150 minutes, 100 multiple choice question examination with 70% as the passing score.

(2) Statutory Basis

NASD Regulation believes that the proposed Series 82 examination program is consistent with the provisions of sections 15A(b)(6) and 15A(g)(3) of the Act, which authorize the NASD to prescribe standards of training, experience, and competence for persons associated with NASD members. The proposed Series 82 examination program also is necessary to implement section 203 of the GLBA.

(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

Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action

The proposed rule change has been filed by the Association as a “non-controversial” rule change under Rule 19b-4(f)(6) under the Act.^[7] Consequently, because the foregoing proposed rule change: (1) Does not significantly affect the protection of investors or the public interest; (2) does not impose any significant burden on competition; and (3) does not become operative until May 12, 2001 (or such later date on which Title II of the GLBA becomes effective), more than 30 days after the date on which it was filed, and NASD Regulation provided the Commission with written notice of its intent to file the proposed rule change at least five days prior to the filing date, it has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-4(f)(6) thereunder.

At any time within 60 days of this filing, the Commission may summarily abrogate this proposal 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 submissions 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 of the NASD. All submissions should refer to the file number in the caption above and should be submitted by May 25, 2001.

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.^[8]

Margaret H. McFarland,

Deputy Secretary.

Footnotes

1.  15 U.S.C. 78s(b)(1).

2.  17 CFR 240.19b-4.

3.  17 CFR 240.19b-4(f)(6).

4.  See Letter to Alden S. Adkins, Senior Vice President and General Counsel, NASD Regulation, Inc. from Belinda Blaine, Associate Director, Division of Market Regulation, SEC, dated July 24, 2000.

5.  On November 28, 2000, the NASD, through its wholly-owned subsidiary, NASD Regulation, filed with the Commission SR-NASD-00-69, proposing amendments to NASD Rule 1032 to create a new limited registration category for private securities offerings. NASD Regulation filed Amendment No. 1 to the proposed rule change on February 28, 2001. Amendment No. 1 replaced the filing in its entirety. See Release No. 34-44091 (March 21, 2001), 66 FR 16964 (March 28, 2001).

6.  Gramm-Leach-Bliley Act of 1999, Pub. L. No. 106-102, 113 Stat. 1338 (1999).

7.  17 CFR 240.19b-4(f)(6).

8.  17 CFR 200.30-3(a)(12).