[Federal Register: July 31, 2003 (Volume 68, Number 147)]
[Notices]
[Page 44980-44984]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr31jy03-112]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-48227; File No. SR-NASD-2003-74]
Self-Regulatory Organizations; Notice of Filing of a Proposed
Rule Change and Amendment Nos. 1 and 2 Thereto by the National
Association of Securities Dealers, Inc. Regarding the Regulation of
Activities of Members Experiencing Financial and/or Operational
Difficulties
July 25, 2003.
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 16, 2003, the National Association of Securities Dealers, Inc.
(``NASD'') 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. On June 17,
2003, NASD submitted Amendment No. 1 to the proposed rule change.\3\ On
July 9, 2003, NASD submitted Amendment No. 2 to the proposed rule
change.\4\ The Commission is publishing this notice to solicit comments
on the proposed rule change, as amended, from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See letter from Shirley H. Weiss, Associate General Counsel,
Office of General Counsel, Regulatory Policy and Oversight, NASD, to
Katherine A. England, Assistant Director, Division of Market
Regulation (``Division''), Commission, dated June 17, 2003
(``Amendment No. 1''). In Amendment No. 1, NASD proposed the
following changes: (i) to revise NASD Rules 3130(e) and 3131(e) to
state that the Department of Member Regulation may issue a notice to
members that are not in compliance with applicable net capital
requirements set forth in SEC Rule 15c3-1 or Section 402.2 of the
rules of the Treasury Department, as applicable, directing such
member to suspend all business operations, but that the obligation
to suspend all business operations arises from the SEC Rule 15c3-1
or Section 402.2 of the rules of the Treasury Department, as
applicable, and not from the notice issued by the Department of
Member Regulation; (ii) to add new Rules 3130(f) and 3131(f) to
provide that any notice directing a member to limit or suspend its
business operations will be issued by the Department of Member
Regulation pursuant to Rule 9412; and (iii) to make certain non-
substantive technical changes to correct the rule language and the
markings indicating changes thereto.
\4\ See letter from Shirley H. Weiss, Associate General Counsel,
Office of General Counsel, Regulatory Policy and Oversight, NASD, to
Katherine A. England, Assistant Director, Division, Commission,
dated July 8, 2003 (``Amendment No. 2''). In Amendment No. 2, NASD
proposed the following changes: (i) to revise NASD Rule 9412 to
delete a reference to the Department of Member Regulation; (ii) to
change a reference in NASD Rule 9415(d); and (iii) to delete
subparagraph (g) of NASD Rule 9160. The Commission notes that
Amendment No. 2 contains a typographical error with regards to the
reference to NASD Rule 9515(k)(2) in the letter. The reference
should be to NASD Rule 9413(k)(2), as set forth in the proposed rule
text. The Commission notes further that in Amendment No. 2, NASD
incorrectly states that it is amending NASD Rule 9412. Amendment No.
2 makes no additional changes to NASD Rule 9412. Telephone
conversation between Shirley H. Weiss, Associate General Counsel,
Office of General Counsel, Regulatory Policy and Oversight, NASD,
and Ann E. Leddy, Attorney, Division, Commission (July 21, 2003).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
NASD is proposing to amend NASD Rules 3130, 3131 and the Rule 9410
Series to expand NASD's authority to take expedited action against all
member firms with capital deficiencies and to permit NASD to suspend a
member that operates for any period of time with inadequate net
capital. In addition, NASD proposes to delete subparagraph (g) of NASD
Rule 9160 because the Department of Member Regulation staff does not
participate as an adjudicator in a Rule 9410 decision.
The text of the proposed rule change is set forth below. Proposed
new language is in italics; proposed deletions are in [brackets].\5\
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\5\ The Commission has included proposed rule language set forth
in the original filing that NASD inadvertently omitted from
Amendment No. 2. Telephone conversation between Shirley H. Weiss,
Associate General Counsel, Office of General Counsel, Regulatory
Policy and Oversight, NASD, and Ann E. Leddy, Attorney, Division,
Commission (July 17, 2003).
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* * * * *
3130. Regulation of Activities of Members Experiencing Financial and/or
Operational Difficulties
(a) Application--For the purposes of this Rule, the term ``member''
shall be limited to any NASD member [of the Association who] that is
not designated to another self-regulatory organization by the
Commission for financial responsibility pursuant to Section 17 of the
Act and SEC Rule 17d-1 thereunder. Further, the term shall not be
applicable to any member [who] that is [subject to paragraphs
(a)(2)(iv), (a)(2)(v) or (a)(2)(vi) of SEC Rule 15c3-1, or is otherwise
exempt from the provisions of said rule or is] subject to Rule 3131.
(b) Each member subject to SEC Rule 15c3-1 shall comply with the
net capital requirements prescribed therein and with the provisions of
this Rule.
[(b)](c) A member, when so directed by [the Association] NASD,
shall not expand its business during any period in which:
(1) Any of the following conditions continue to exist, or have
existed, for more than 15 consecutive business days:
[[Page 44981]]
(A) A firm's net capital is less than 150 percent of its net
capital minimum requirement or such greater percentage thereof as may
from time to time be prescribed by [the Association] NASD;
(B) If subject to the aggregate indebtedness requirement under SEC
Rule 15c3-1, a firm's aggregate indebtedness is more than 1,000 per
centum of its net capital;
(C) If, in lieu of paragraph [(b)](c)(1)(B) above, the specified
percentage of the aggregate debit items in the Formula for
Determination of Reserve Requirements for Brokers and Dealers under SEC
Rule 15c3-3 (the alternative net capital requirement) is applicable, a
firm's net capital is less than 5 percent of the aggregate debit items
thereunder; or
(D) The deduction of capital withdrawals including maturities of
subordinated debt scheduled during the next six months would result in
any one of the conditions described in subparagraph (A), (B) or (C).
(2) [The Association] NASD restricts the member for any other
financial or operational reason.
[(c)](d) A member, when so directed by [the Association] NASD,
shall forthwith reduce its business:
(1) to a point [enabling its available capital to comply with the
standards] at which the member would not be subject to a prohibition
against expansion of its business as set forth in paragraph
[(b)](c)(1)(A), (B) or (C) of this Rule if any of the following
conditions continue to exist, or have existed, for more than [fifteen
(15)] 15 consecutive business days:
(A) A firm's net capital is less than 125 percent of its net
capital minimum requirement or such greater percentage thereof as may
from time to time be prescribed by [the Association] NASD;
(B) No Change.
(C) If, in lieu of paragraph [(c)](d)(1)(B) above, the specified
percentage of the aggregate debit items in the Formula for
Determination of Reserve Requirements for Brokers and Dealers, under
SEC Rule 15c3-3 (the alternative net capital requirement) is
applicable, a firm's net capital is less than 4 percent of the
aggregate debit items thereunder; or
(D) If the deduction of capital withdrawals including maturities of
subordinated debt scheduled during the next six months would result in
any one of the conditions described in paragraph [(c)](d)(1)(A), (B) or
(C) of this Rule.
(2) As required by [the Association] NASD when it restricts a
member for any other financial or operational reason.
(e) A member shall suspend all business operations during any
period of time when the member is not in compliance with applicable net
capital requirements as set forth in SEC Rule 15c3-1. The Department of
Member Regulation may issue a notice to such member directing it to
suspend all business operations; however, the member's obligation to
suspend all business operations arises from its obligations under SEC
Rule 15c3-1 and is not dependent on any notice that may be issued by
the Department of Member Regulation.
(f) Any notice directing a member to limit or suspend its business
operations shall be issued by the Department of Member Regulation
pursuant to Rule 9412.
* * * * *
3131. Regulation of Activities of Section 15C Members Experiencing
Financial and/or Operational Difficulties
(a) Application--For the purposes of this Rule, the term ``member''
shall be limited to any member of [the Association] NASD registered
with the Commission pursuant to Section 15C of the Act that is not
designated to another self-regulatory organization by the Commission
for financial responsibility pursuant to Section 17 of the Act and Rule
17d-1 thereunder. [Further, the term shall not be applicable to any
member that is subject to Section 402.2(c) of the rules of the Treasury
Department, or is otherwise exempt from the provisions of said rule].
(b) Each member subject to Section 402.2 of the rules of the
Treasury Department shall comply with the capital requirements
prescribed therein and with the provisions of this Rule.
[(b)](c) A member, when so directed by [the Association] NASD,
shall not expand its business during any period in which:
(1) Any of the following conditions continue to exist, or have
existed, for more than [fifteen (15)] 15 consecutive business days:
(A) A firm's liquid capital is less than 150 percent of the total
haircuts or such greater percentage thereof as may from time to time be
prescribed by [the Association] NASD.
(B) through (C) No Change.
(2) [The Association] NASD restricts the member for any other
financial or operational reason.
[(c)] (d) A member, when so directed by [the Association] NASD,
shall forthwith reduce its business:
(1) To a point [enabling its available capital to comply with the
standards] at which the member would not be subject to a prohibition
against expansion of its business as set forth in subparagraphs
[(b)](c)(1)(A), (B), or (C) of this Rule if any of the following
conditions continue to exist, or have existed, for more than [fifteen
(15)] 15 consecutive business days:
(A) A firm's liquid capital is less than 125 percent of total
haircuts or such greater percentage thereof as may from time to time be
prescribed by [the Association] NASD.
(B) through (C) No Change.
(2) As required by [the Association] NASD when it restricts a
member for any other financial or operational reason.
(e) A member shall suspend all business operations during any
period of time when the member is not in compliance with applicable net
capital requirements as set forth in Section 402.2 of the rules of the
Treasury Department. The Department of Member Regulation may issue a
notice to such member directing it to suspend all business operations;
however, the member's obligation to suspend all business operations
arises from its obligations under Section 402.2 of the rules of the
Treasury Department and is not dependent on any notice that may be
issued by the Department of Member Regulation.
(f) Any notice directing a member to limit or suspend its business
operations shall be issued by the Department of Member Regulation
pursuant to Rule 9412.
* * * * *
9160. Recusal or Disqualification
No person shall participate as an Adjudicator in a matter governed
by the Code as to which he or she has a conflict of interest or bias,
or circumstances otherwise exist where his or her fairness might
reasonably be questioned. In any such case the person shall recuse
himself or herself, or shall be disqualified as follows:
(a) through (f) No change.
[(g) NASD Regulation Staff as Adjudicator]
[The President of NASD Regulation shall have authority to order the
disqualification of a member of the staff of the Department of Member
Regulation participating in a Rule 9410 Series decision.]
* * * * *
9400. [LIMITATION] PROCEDURES FOR ACTIONS TAKEN UNDER RULES 3130 AND
3131
* * * * *
Rule 9412. Notice [of Limitations]
The Department of Member Regulation may issue a notice directing
[[Page 44982]]
a member to [limit] restrict its business activities, either by
limiting or ceasing to conduct those activities, if the Department of
Member Regulation has reason to believe that [any] a condition
specified in Rule 3130 or Rule 3131 exists. The notice shall specify
the grounds on which such [action is being taken] restrictions are
being imposed, the nature of the [limitations] restrictions to be
imposed, the effective date of the restrictions [limitations], a
fitting sanction that will be imposed if the member fails to comply
with any [the] restrictions [limitations] set forth in the notice, and
the conditions for terminating such [limitations] restrictions. The
effective date of the [limitations] restrictions shall be at least
seven days after the date of service of the notice. The notice also
shall inform the member that it may request a hearing before the
[Department of Member Regulation] Office of Hearing Officers under Rule
9413. The Department of Member Regulation shall serve the notice by
facsimile or overnight courier.
9413. Hearing Panel Review
(a) Request for a Hearing
A member subject to a notice issued under Rule 9412 may file a
written request for hearing before a Hearing Panel with the Office of
Hearing Officers. The request shall state the specific grounds for
withdrawing or modifying any of the [limitations] restrictions
specified in the notice. The request shall be filed pursuant to Rules
9135, 9136, and 9137 within five days after service of the notice under
Rule 9412. The member may withdraw its request at any time by filing a
written notice with the Office of Hearing Officers pursuant to Rules
9135, 9136, and 9137. The time limits set forth herein are to be
strictly construed and cannot be modified except for good cause shown.
(b) No Change
(c) Stay
Unless otherwise ordered by the NASD Board Executive Committee, the
[initiation of a review under this paragraph shall stay the decision of
the Department of Member Regulation or an uncontested notice until a
decision constituting final action of the Association is issued]
request for a hearing shall stay the effective date of the notice.
(d) through (h) No Change
(i) Evidence Not Admitted
Evidence that is proffered but not admitted during the hearing
shall not be part of the record, but shall be retained by the custodian
of the record until the date when [the Association's] NASD's decision
becomes final or, if applicable, upon the conclusion of any review by
the Commission or the federal courts.
(j) Failure to Request Hearing
If a member does not request a hearing under paragraph (a), the
[limitations] restrictions specified in the notice shall become
effective on the date specified in the notice. Unless the Executive
Committee calls the notice for review under Rule 9415, the
[limitations] restrictions specified in the notice shall remain in
effect until the Department of Member Regulation reduces or removes the
[limitations] restrictions pursuant to Rule 9417(b).
(k) Decision
(1) Within seven days after the hearing, the Hearing Panel shall
issue a written decision approving, modifying, or withdrawing the
[limitations] restrictions specified in the notice. If the decision
imposes [limitations] restrictions, the decision shall state the
grounds for the [limitations] restrictions, the conditions for
terminating such [limitations] restrictions, and provide for a fitting
sanction to be imposed under Rule 9416 if the member fails to comply
with the [limitations] restrictions. The Office of Hearing Officers
shall promptly serve the decision by facsimile or overnight courier
pursuant to Rules 9132 and 9134. The [limitations] restrictions imposed
shall become effective upon service of the decision.
(2) Contents of Decision
The decision shall include:
(A) a description of the Department of Member Regulation's
[decision] notice, including its rationale;
(B) a description of the principal issues regarding the imposition
of [limitations] restrictions raised in the review and a statement
supporting the disposition of such issues;
(C) No Change
(D) a statement of whether the Department of Member Regulation's
[decision] notice is affirmed, modified, or reversed, and a rationale
therefor; and
(E) if any restrictions [limitations] are imposed:
(i) a description of the [limitations] restrictions and a statement
describing a fitting sanction that will be imposed under Rule 9416 if
the member fails to comply with any of the [limitations] restrictions;
and
(ii) the conditions for terminating the [limitations] restrictions.
(l) Issuance of Decision After Expiration of Call for Review Period
The Hearing Panel shall provide its proposed written decision to
the NASD Board Executive Committee. The NASD Board Executive Committee
may call the proceeding for review pursuant to Rule 9415. If the NASD
Board Executive Committee does not call the proceeding for review, the
proposed written decision of the Hearing Panel shall constitute the
final action of [the Association] NASD.
(m) Ex Parte Communications
The prohibitions against ex parte communications in Rule 9143 shall
become effective under the Rule 9410 Series when [Association] NASD
staff has knowledge the NASD Board Executive Committee intends to
review a decision on its own motion under this Rule.
9414. No change
9415. Discretionary Review by the NASD Board Executive Committee
(a) through (c) No Change
(d) Decision of NASD Board Executive Committee, Including Remand
After review, the NASD Board Executive Committee may affirm,
modify, or reverse the proposed written decision of the Hearing Panel.
Alternatively, the NASD Board Executive Committee may remand the
proceeding with instructions. The NASD Board Executive Committee shall
prepare a written decision that includes all of the elements described
in Rule [9414(k)(2)] 9413(k)(2).
(e) Issuance of Decision
The NASD Board Executive Committee shall issue and serve its
written decision on the member and the Department of Member Regulation
pursuant to Rules 9132 and 9134. The decision shall be effective upon
service. The decision shall constitute the final action of [the
Association] NASD, unless the NASD Board Executive Committee remands
the proceeding.
9416. Enforcement of Sanctions
(a) Order
If the Department of Member Regulation determines that a member has
failed to comply with any [limitations] restrictions imposed by a
decision or an effective notice under the Rule 9410 Series that has not
been stayed, the Department of Member Regulation shall issue an order
imposing the sanctions set forth in the decision or notice and
specifying the effective date and time of such
[[Page 44983]]
sanctions. The Department of Member Regulation shall serve the order on
the member by facsimile or overnight courier.
(b) through (c) No Change
(d) Decision
Within four days after the hearing, the Hearing Panel shall affirm,
modify, or reverse the order issued under paragraph (a). The Office of
Hearing Officers shall serve the decision on the member pursuant to
Rules 9132 and 9134. The decision shall become effective upon service
and shall constitute final action of [the Association] NASD.
9417. Additional [Limitations] Restrictions; Reduction or Removal of
[Limitations] Restrictions
(a) Additional [Limitations] Restrictions
If a member continues to experience financial or operational
difficulty specified in Rule 3130 or 3131, notwithstanding an effective
notice or decision under the Rule 9410 Series, the Department of Member
Regulation may impose additional [limitations] restrictions by issuing
a notice under Rule 9412. The notice shall state that the member may
apply for relief from the additional [limitations] restrictions by
filing a written application for a hearing under Rule 9413 and that the
procedures in Rules 9413 through 9416 shall be applicable. An
application for a hearing also shall include a detailed statement of
the member's objections to the additional [limitations] restrictions.
(b) Reduction or Removal of [Limitations] Restrictions
If the Department of Member Regulation determines that any
[limitations] restrictions previously imposed under the Rule 9410
Series should be reduced or removed, the Department of Member
Regulation shall serve a written notice on the member pursuant to Rules
9132 and 9134.
9418. Application to Commission for Review
The right to have any action taken by [the Association] NASD
pursuant to this Rule Series reviewed by the Commission is governed by
Section 19 of the Act. The filing of an application for review shall
not stay the effectiveness of the action taken by [the Association]
NASD, unless the Commission otherwise orders.
9419. Other Action Not Foreclosed
Action by [the Association] NASD under the Rule 9410 Series shall
not foreclose action by [the Association] NASD under any other Rule.
* * * * *
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 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. 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
1. Purpose
Background
Currently, NASD can take expedited action against a member when its
Department of Member Regulation has reason to believe that the member
maintains inadequate capital levels given the scope and nature of the
firm's business. However, NASD is currently limited to taking action
with respect to only those firms that must maintain a minimum net
capital of greater than $50,000 and can only issue notices (and
institute an expedited proceeding when these notices are contested)
requiring that such firms either limit their business or not expand
their business in order to maintain appropriate net capital levels.
Further, NASD's current rules do not address the capacity of NASD to
suspend a firm from business on an expedited basis when it fails to
maintain minimum net capital.\6\
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\6\ NASD Rule 9512 (``Summary Proceedings'') is available to
address severe financial or operational difficulties. However,
because this procedure allows NASD to suspend a member before a
hearing is held, and requires authorization from the Board of
Governors, NASD represents that it is reserved for the most serious
of circumstances and generally would be inappropriate to address
most instances of net capital deficiencies.
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NASD believes that enhanced tools are required to enable it to
better address any situation where a member is not satisfying
applicable capital requirements. Accordingly, NASD proposes amendments
to Rules 3130, 3131 and the Rule 9410 Series as described below. These
amendments would (i) expand NASD's authority to take expedited action
against all member firms with capital deficiencies, (ii) permit NASD to
suspend a member that operates for any period of time with inadequate
net capital, and (iii) make non-substantive clarifications to the
language of the rules. In addition, NASD proposes to delete
subparagraph (g) of NASD Rule 9160 because the Department of Member
Regulation staff does not participate as an adjudicator in a Rule 9410
decision.
Current NASD Rules Regarding Members Experiencing Financial
Difficulties
NASD Rules 3130 and 3131 regulate the activities of members that
are (1) required to maintain net capital in excess of $50,000; and (2)
experiencing certain financial and/or operational deficiencies.\7\
These rules provide that NASD may prescribe certain remedial courses of
action for members experiencing financial or operational deficiencies,
such as requiring them to limit their activities. NASD's Rule 9410
Series provides a procedural framework for actions taken under these
provisions. Pursuant to the Rule 9410 Series, a member experiencing
financial and operational difficulties as described in Rules 3130 and
3131 receives a notice of limitations describing the grounds for the
notice, the effective date of the limitations described in the notice,
and a fitting sanction that will be imposed if the member fails to
comply with the limitations set forth in the notice. The member then
has five days from the date of service of the notice to request a
hearing. If a hearing is not requested, the limitations prescribed in
the notice become effective at least seven days after the date of
service of the notice. Following the hearing, if one is requested, any
remedial action ordered by the Hearing Panel becomes effective. If a
member does not comply with the limitations described in any effective
notice or remedial action imposed by the Hearing Panel, NASD staff may
order the sanction set forth in the notice or specified in the Hearing
Panel decision against the member. The member has the opportunity to
request a second hearing if such sanctions are ordered.
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\7\ Rule 15c3-1 under the Act requires that firms maintain
certain specified levels of net capital. 17 CFR 240.15c3-1. Section
402.2 of the Treasury Department rules contains liquid capital
requirements for government securities broker/dealers. 17 CFR 402.2.
NASD represents that it does not set net capital requirements, but
enforces these provisions as part of its regulatory function.
However, NASD Rules 3130 and 3131 effectively allow NASD to require
net capital and liquid capital requirements in excess of those
respective capital requirements stated above.
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[[Page 44984]]
Application of Rules to All Member Firms
NASD Rules 3130 and 3131 generally provide that NASD may direct a
member not to expand its business or to reduce its business if certain
conditions are present for a period of 15 consecutive business days or
more. NASD Rule 3130 exempts member firms with net capital requirements
of $50,000 or less; NASD Rule 3131 exempts government securities member
firms with liquid capital requirements of $50,000 or less.
NASD believes that these provisions should apply to all member
firms regardless of their minimum capital requirements. NASD believes
that, because capital compliance is fundamental to operating a broker-
dealer, every firm that operates with inadequate capital poses a risk
to other members and the investing public, and NASD believes that it
should be able to take prompt action against any member that operates
with inadequate capital. Accordingly, NASD proposes amendments to
expand the scope of Rules 3130 and 3131 to include members with capital
requirements of $50,000 or less.
Suspension of Members for Net Capital Violations
As described above, NASD Rules 3130 and 3131 allow NASD to require
a member to take certain remedial actions if it is experiencing certain
financial and/or operational deficiencies. The remedial actions could
impose limitations on a member's business operations such that the
member complies with net capital requirements applicable to the
member's reduced business operations. However, in certain instances,
NASD notes that a member may be operating with capital that is so
inadequate that no limitation on its business activities could be
imposed that would bring the firm into capital compliance.
Alternatively, a member firm that is not in compliance with capital
requirements may have such minimal operations that NASD could impose no
meaningful limitation on the member's operations. As a result, NASD is
proposing to expand the remedies available to it to address capital
violations. Specifically, NASD proposes amendments that would require a
member to suspend its business operations for any period of time during
which it is not in compliance with applicable net capital requirements.
2. Statutory Basis
NASD believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\8\ which requires, among
other things, that NASD rules 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. Specifically, NASD believes that the proposed rule
change is intended to ensure that investors, the securities industry
and the general public are not put at risk by members operating
securities businesses without appropriate levels of capital.
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\8\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition
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.
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 whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change, as amended, 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 office of NASD. All submissions should refer to File No. SR-
NASD-2003-74 and should be submitted by August 21, 2003.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 03-19494 Filed 7-30-03; 8:45 am]
BILLING CODE 8010-01-P