[Federal Register: June 7, 2006 (Volume 71, Number 109)]
[Notices]
[Page 33007-33008]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07jn06-137]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-53908]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Declaration of Effectiveness of the Fingerprint Plan of the NASDAQ
Stock Market LLC
May 31, 2006.
On May 30, 2006, the NASDAQ Stock Market LLC (``Nasdaq'') filed
with the Securities and Exchange Commission (``Commission'' or ``SEC'')
a fingerprint plan (``Plan'') pursuant to Rule 17f-2(c) \1\ under the
Securities Exchange Act of 1934 (``Act'').\2\
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\1\ 17 CFR 240.17f-2(c).
\2\ 15 U.S.C. 78a et seq.
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Nasdaq believes that the Plan will facilitate compliance by Nasdaq
members and Nasdaq member applicants (together, ``participants'') with
section 17(f)(2) of the Exchange Act and Rule 17f-2 thereunder, by
providing a facility for participants to have the fingerprints of their
partners, directors, officers, and employees processed by the Attorney
General of the United States or his designee (``Attorney General'').
The Plan will be administered for Nasdaq by NASD Regulation, Inc.
(``NASDR'') and the National Association of Securities Dealers, Inc.
(``NASD''), the parent corporation of NASDR, pursuant to a regulatory
services agreement between NASDR and Nasdaq (the ``Regulatory
Contract''). The Commission notes that, notwithstanding the fact that
Nasdaq has entered into the Regulatory Contract to have NASDR perform
some of Nasdaq's functions, Nasdaq shall retain ultimate legal
responsibility for, and control of, such functions.
Under the Plan, participants submit fingerprints and identifying
information, on paper or electronically, to the NASD, which then
forwards the cards to the Federal Bureau of Investigation (``FBI'')
(the fingerprint processing arm of the Attorney General). The FBI
identifies submitted fingerprints, retrieves relevant criminal history
information, and returns fingerprint reports (including the original
paper fingerprint cards, if any)
[[Page 33008]]
to authorized recipients (i.e., to a participant that submitted the
fingerprints and to regulators for licensing, registration and other
regulatory purposes). Under the terms of the Plan, participants will be
able to view the status and results of fingerprints, including any
relevant criminal history information, through the NASD's Central
Registration Depository (CRD[supreg]) system after submission to the
Attorney General.
The Commission has reviewed the procedures detailed in the Plan and
believes that the Plan is consistent with the public interest and the
protection of investors. Thus, the Commission declares the Plan to be
effective.
The Commission notes that securities industry fingerprinting
procedures are in a state of flux due to rapidly advancing technology.
In the event that an industry-wide standard is adopted or becomes
prevalent and in the event that this Plan substantially differs
therefrom, the Commission would expect Nasdaq to revise its fingerprint
plan to incorporate the industry-wide standard.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\3\
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\3\ 17 CFR 200.30-3(a)(17)(iii).
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J. Lynn Taylor,
Assistant Secretary.
Exhibit A--The NASDAQ Stock Market LLC; Fingerprint Plan
The NASDAQ Stock Market LLC (``Nasdaq'') submits this Fingerprint
Plan (``Plan'') pursuant to Rule 17f-2(c) under the Securities Exchange
Act of 1934 (``Exchange Act'').
The purpose of this Plan is to facilitate compliance by Nasdaq
members and Nasdaq member applicants with section 17(f)(2) of the
Exchange Act and Rule 17f-2 thereunder, by providing a mechanism for
Nasdaq members and Nasdaq member applicants to have the fingerprints of
their partners, directors, officers, and employees processed by the
Attorney General of the United States or his designee (hereinafter
``Attorney General'') as required by section 17(f)(2) of the Exchange
Act and Rule 17f-2 thereunder. The Plan will be administered for Nasdaq
by NASD Regulation, Inc. (``NASDR'') and the National Association of
Securities Dealers, Inc. (``NASD''), the parent corporation of NASDR,
pursuant to a regulatory services agreement between NASDR and Nasdaq
(the ``Regulatory Contract''). In the event that Nasdaq enters into a
contract to administer the Plan with a regulatory service provider
other than NASDR or decides to administer the Plan itself, Nasdaq shall
file an amendment to the Plan with the Securities and Exchange
Commission (the ``Commission''). Notwithstanding the fact that Nasdaq
has entered into the Regulatory Contract to have NASDR perform some of
Nasdaq's functions, Nasdaq shall retain ultimate legal responsibility
for, and control of, such functions.
NASD, pursuant to a Plan filed with and declared effective by the
Commission,\4\ processes fingerprint records of securities industry
participants as described herein consistent with section 17(f)(2) of
the Exchange Act and Rule 17f-2 thereunder.
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\4\ Securities Exchange Act Release No. 53751 (May 2, 2006), 71
FR 27299 (May 10, 2006).
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NASD accepts fingerprints and identifying information from
associated persons of Nasdaq members and Nasdaq member applicants
required to be fingerprinted pursuant to Rule 17f-2. Nasdaq members and
Nasdaq member applicants may submit fingerprints and identifying
information on paper or electronically, provided such submissions are
consistent with protocols and requirements established by the Attorney
General.
NASD transmits fingerprints and identifying information, on paper
or electronically, to the Attorney General for identification and
processing, consistent with protocols and requirements established by
the Attorney General.
NASD receives processed results from the Attorney General (on paper
or electronically) and transmits those results via paper or electronic
means to authorized recipients (i.e., to a Nasdaq member or Nasdaq
member applicant that submitted the fingerprints and to regulators for
licensing, registration and other regulatory purposes), consistent with
protocols and requirements established by the Attorney General. In
cases where the Attorney General's search on the fingerprints submitted
fails to disclose prior arrest data, NASD transmits that result to the
Nasdaq member or Nasdaq member applicant that submitted the
fingerprints. In cases where the Attorney General's search yields
Criminal History Record Information (CHRI), NASD transmits that
information to the Nasdaq member or Nasdaq member applicant that
submitted the fingerprints. With respect to Nasdaq members, NASD also
reviews any CHRI returned by the Attorney General to identify persons
who may be subject to statutory disqualification under the Exchange Act
and notifies NASD and Nasdaq staff to take action, as appropriate, with
respect to such persons.
Nasdaq advises its members and member applicants of the
availability of fingerprint services and any fees charged in connection
with those services and the processing of fingerprints pursuant to this
Plan. Nasdaq will file any such Nasdaq member fees with the Commission
pursuant to section 19(b) of the Exchange Act.
NASD maintains copies of fingerprint processing results received
from the Attorney General with respect to fingerprints submitted by
NASD pursuant to this Plan, in accordance with Nasdaq's record
retention obligations under the Act. Any maintenance of fingerprint
records by NASD shall be for NASD's and Nasdaq's own administrative
purposes, and NASD is not undertaking to maintain fingerprint records
on behalf of Nasdaq members pursuant to Rule 17f-2(d)(2). NASD records
in the Central Registration Depository (CRD() the status of
fingerprints submitted to the Attorney General. Through the CRD system,
NASD makes available to a Nasdaq member that has submitted fingerprints
the status and results of such fingerprints after submission to the
Attorney General.
Neither NASD nor Nasdaq shall be liable for losses or damages of
any kind in connection with fingerprinting services, as a result of a
failure to follow, or properly to follow, the procedures described
above, or as a result of lost or delayed fingerprint cards, electronic
fingerprint records, or fingerprint reports, or as a result of any
action by NASD or Nasdaq or NASD's or Nasdaq's failure to take action
in connection with this Plan.
[FR Doc. E6-8808 Filed 6-6-06; 8:45 am]
BILLING CODE 8010-01-P