[Federal Register: June 30, 2004 (Volume 69, Number 125)]
[Notices]
[Page 39532-39534]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30jn04-129]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-49910; File No. SR-NASD-2004-087]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the National Association of
Securities Dealers, Inc. Relating to Technical Amendments to Section 4
of Schedule A to the NASD By-Laws and to Rule 10308(d) of the NASD Code
of Arbitration Procedure
June 24, 2004.
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 June 8, 2004, 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 and
II below, which Items have been prepared by NASD. NASD filed the
proposed rule change pursuant
[[Page 39533]]
to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6)
thereunder,\4\ which renders the proposal effective upon filing with
the Commission. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
NASD is filing with the Commission a proposed rule change to: (1)
amend Section 4 of Schedule A to the NASD By-Laws to re-label a
subparagraph that inadvertently was not correctly re-labeled as part of
a recent rule filing, and (2) amend Rule 10308(d) of the NASD Code of
Arbitration Procedure to provide a title for recently approved rule
language and to replace and re-label rule language that inadvertently
was omitted in a recent rule filing. Below is the text of the proposed
rule change. Proposed new language is italicized; proposed deletions
are [bracketed].\5\
---------------------------------------------------------------------------
\5\ The language between paragraph marks (]) in Rule 10308(d)(4)
(Vacancies Created by Disqualification or Resignation) is already
existing language. The language previously was approved by the
Commission, but inadvertently was not reflected in the publication
of a recent rule filing, as discussed below. The language is
designated in this manner in order to reflect its omission from the
previous rule filing.
---------------------------------------------------------------------------
* * * * *
Schedule A to NASD By-Laws
Assessments and fees pursuant to the provisions of Article VI of
the By-Laws of NASD shall be determined on the following basis.
Section 1 through 3--No Change.
Section 4--Fees
(a) through (l) No Change.
(m) There shall be a session fee of $65.00 assessed as to each
individual who is required to complete the Regulatory Element of the
Continuing Education Requirements pursuant to the provisions of Rule
1120.
(n) No Change.
[(m)] (o) NASD shall assess each member a fee of $10 per day, up to
a maximum of $300, for each day that a new disclosure event or a change
in the status of a previously reported disclosure event is not timely
filed as required by NASD on an initial Form U5, an amendment to a Form
U5, or an amendment to a Form U4, with such fee to be assessed starting
on the day following the last date on which the event was required to
be reported.
* * * * *
10300. UNIFORM CODE OF ARBITRATION
* * * * *
10308. Selection of Arbitrators
(a) through (c) No change.
(d) Disqualification and Removal of Arbitrator Due to Conflict of
Interest or Bias
(1)-(2) No change.
(3) Standards for Deciding Challenges for Cause
The Director will grant a party's request to disqualify an
arbitrator if it is reasonable to infer, based on information known at
the time of the request, that the arbitrator is biased, lacks
impartiality, or has an interest in the outcome of the arbitration. The
interest or bias must be direct, definite, and capable of reasonable
demonstration, rather than remote or speculative.
[(3)] (4) ] Vacancies Created by Disqualification or Resignation ]
] Prior to the commencement of the earlier of (A) the first pre-
hearing conference or (B) the first hearing, if an arbitrator appointed
to an arbitration panel is disqualified or is otherwise unable or
unwilling to serve, the Director shall appoint from the consolidated
list of arbitrators the arbitrator who is the most highly ranked
available arbitrator of the proper classification remaining on the
list. If there are no available arbitrators of the proper
classification on the consolidated list, the Director shall appoint an
arbitrator of the proper classification subject to the limitation set
forth in paragraph (c)(4)(B). The Director shall provide the parties
information about the arbitrator as provided in paragraph (b)(6), and
the parties shall have the right to object to the arbitrator as
provided in paragraph (d)(1).]
* * * * *
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. 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
1. Purpose
Technical Amendment to the NASD By-Laws
On December 22, 2003, NASD filed with the Commission for immediate
effectiveness a proposed rule change to amend Section 4 of Schedule A
to the NASD By-Laws to establish a late fee to be assessed against NASD
members that fail timely to pay their yearly renewal fees to the
Central Registration Depository. On January 29, 2004, NASD submitted
Amendment No. 1 to the proposed rule change. The Commission published
notice of the proposed rule change and Amendment No. 1 in the Federal
Register on February 19, 2004.\6\ The proposed rule change added
paragraph (m) to Section 4.
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 49224 (February 11,
2004), 69 FR 7833 (notice of filing and immediate effectiveness of
File No. SR-NASD-2003-192).
---------------------------------------------------------------------------
On March 19, 2004, NASD filed with the Commission for immediate
effectiveness a proposed rule change to amend Section 4 of Schedule A
to the NASD By-Laws to establish an examination fee for the new
Research Analyst Qualification Examination program.\7\ Among other
changes, NASD re-labeled the existing paragraph (k) in Section 4 as
paragraph (m), but it inadvertently did not correctly re-label the
existing paragraph (m). As a result, Section 4 has two provisions
identified as paragraph (m). NASD is filing this proposed rule change
to re-label the paragraph (m) that was added pursuant to SR-NASD-2003-
192 as paragraph (o).
---------------------------------------------------------------------------
\7\ See Securities Exchange Act Release No. 49527 (April 2,
2004), 69 FR 19255 (April 12, 2004) (notice of filing and immediate
effectiveness of File No. SR-NASD-2004-049).
---------------------------------------------------------------------------
Technical Amendment to the NASD Code of Arbitration Procedure
On June 12, 2003, NASD filed a notice of proposed rule change with
the Commission to amend Rules 10308 and 10312 of the NASD Code of
Arbitration Procedure (``Code'') to modify arbitrator classification.
The Commission published the notice in the Federal Register on August
21, 2003.\8\ The Commission approved the proposed rule change on April
16, 2004.\9\
---------------------------------------------------------------------------
\8\ See Securities Exchange Act Release No. 48347 (August 14,
2003), 68 FR 50563 (notice of filing of File No. SR-NASD-2003-95).
\9\ See Securities Exchange Act Release No. 49573, 69 FR 21871
(April 22, 2004).
---------------------------------------------------------------------------
The proposed rule change added, among other things, a provision to
Rule
[[Page 39534]]
10308(d) of the Code concerning a party's request to disqualify an
arbitrator. When this provision was inserted as new subparagraph (3) of
the rule, the existing subparagraph (3) was inadvertently omitted from
the notice that was published in the Federal Register. NASD is filing
this proposed rule change to reflect the omitted subparagraph, and to
provide a title for the new subparagraph (to maintain uniformity within
the rule). Thus, the title for the new language in subparagraph (3)
will be ``Standards for Deciding Challenges for Cause,'' and the
omitted subparagraph will be re-labeled as subparagraph (4).
2. Statutory Basis
NASD believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\10\ which requires, among
other things, that NASD'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. NASD believes that the technical changes are
consistent with the protection of investors and the public interest in
that they will avoid any confusion when reading the provisions of
Section 4 of Schedule A to the NASD By-Laws and Rule 10308(d) of the
Code.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------
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, 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
NASD has designated the proposed rule change as one that: (i) Does
not significantly affect the protection of investors or the public
interest; (ii) does not impose any significant burden on competition;
and (iii) does not become operative for 30 days from the date on which
it was filed, or such shorter time as the Commission may designate.
Therefore, the foregoing rule change has become effective pursuant to
Section 19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(6)
thereunder.\12\ At any time within 60 days of the filing of such
proposed 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.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
Pursuant to Rule 19b-4(f)(6)(iii) under the Act,\13\ the proposal
may not become operative for 30 days after the date of its filing, or
such shorter time as the Commission may designate if consistent with
the protection of investors and the public interest, and the self-
regulatory organization must file notice of its intent to file the
proposed rule change at least five business days beforehand. NASD has
requested that the Commission waive the five-day pre-filing requirement
and the 30-day operative delay so that the proposed rule change will
become immediately effective upon filing.
---------------------------------------------------------------------------
\13\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------
The Commission believes that waiving the five-day pre-filing
provision and the 30-day operative delay is consistent with the
protection of investors and the public interest.\14\ Waiving the pre-
filing requirement and accelerating the operative date will merely
permit the immediate implementation of changes that are technical in
nature. For these reasons, the Commission designates the proposed rule
change as effective and operative immediately.
---------------------------------------------------------------------------
\14\ For purposes only of accelerating the operative date of
this proposal, the Commission has considered the proposed rule's
impact on efficiency, competition, and capital formation. 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
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. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml.
); or Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NASD-2004-087 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW.,
Washington, DC 20549-0609.
All submissions should refer to File Number SR-NASD-2004-087. This
file number should be included on the subject line if e-mail is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml
). 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 Section, 450 Fifth
Street, NW., Washington, DC 20549. Copies of such filing also will be
available for inspection and copying at the principal office of the
NASD. All comments received will be posted without change; the
Commission does not edit personal identifying information from
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File Number SR-
NASD-2004-087 and should be submitted on or before July 21, 2004.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\15\
---------------------------------------------------------------------------
\15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-14814 Filed 6-29-04; 8:45 am]
BILLING CODE 8010-01-P