[Federal Register Volume 59, Number 33 (Thursday, February 17, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-3626]


[[Page Unknown]]

[Federal Register: February 17, 1994]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-33614; File No. SR-NASD-94-6]

 

Self-Regulatory Organizations; Filing and Immediate Effectiveness 
of Proposed Rule Change by National Association of Securities Dealers, 
Inc. Relating to Assessments and Fees on Members

February 10, 1994.
    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 February 
9, 1994, 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 NASD has designated this proposal as one establishing or changing a 
fee under section 19(b)(3)(A)(ii) of the Act, which renders the rule 
effective upon the Commission's receipt of this filing. 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 proposing a rule change to amend Schedule A, Section 
2(b) to the By-Laws\1\ to add the provision that any initial or 
transfer application for registration as a registered representative or 
registered principal with the NASD which requires a special 
registration review shall be assessed a surcharge of $85.
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    \1\NASD Manual, By-Laws, Schedule A, Section 2(b), (CCH) 1753.
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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

    Any initial or transfer application to register as a representative 
or principal with the Association requires the submission of Form U-4, 
the Uniform Application for Securities Industry Registration or 
Transfer (``Form U-4''). Item 22 on page three of Form U-4 requires 
disclosure of violations of certain criminal and securities laws, rules 
and regulations. Any ``yes'' answer to item 22 requires additional 
detailed disclosure on the disclosure reporting page of Form U-4, which 
in turn requires a special registration review of such information by 
the Association.
    Pursuant to Article VI of the By-Laws of the Association, the NASD 
requires its members to pay a $65 fee for each application submitted to 
the Association for the registration or transfer of registration of a 
registered representative or registered principal, as set forth in 
Schedule A, Section 2(b) to the By-Laws. The NASD is proposing to amend 
Schedule A, Section 2(b) to the By-Laws to add the provision that any 
initial or transfer application which requires a special registration 
review shall be assessed a surcharge of $85.
    There are additional costs associated with performing a special 
registration review of information disclosed in the Form U-4 and 
maintaining such information in the NASD's Central Registration 
Depository disciplinary database (``CRD database''). These costs relate 
to conducting research on all criminal actions, disciplinary actions 
taken by the states, SROs and the SEC disclosed in the U-4 and 
including information on such actions on the CRD database. A special 
registration review will also require CRD to provide information on any 
criminal, disciplinary, or SEC action.
    Based on data for 1991, the Association estimates the extra costs 
attributable to U-4s in 1994 for which a special registration review is 
required will be approximately $85 per U-4 filing. The NASD, therefore, 
in accordance with its objective to align revenues with the cost of 
providing particular services to members and, specifically, its 
objective to focus fee increases on actions that impact the 
disciplinary process, is proposing to amend Schedule A, Section 2(b) to 
the By-Laws to add the provision that any initial or transfer 
application which requires a special registration review shall be 
assessed a surcharge of $85. The surcharge will take effect on March 1, 
1994 for all initial and transfer filings either that have a ``yes'' 
answer to item 22 on Form U-4 or for which information exists in the 
CRD database that would require a ``yes'' answer to item 22 regardless 
of how it is answered.
    The NASD believes that the proposed rule change is consistent with 
the provisions of section 15A(b)(5) of the Act,\2\ which require that 
the rules of the Association provide for the equitable allocation of 
reasonable dues, fees, and other charges among members in that the 
proposed rule change equitably allocates the extra costs associated 
with U-4s for which a special registration review is required to the 
member firms incurring such costs.
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    \2\15 U.S.C. 78o-3 (1988).
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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

    The foregoing rule change has become effective upon filing pursuant 
to section 19(b)(3)(A)(ii) of the Act and section (e) of Rule 19b-4 
promulgated thereunder in that it constitutes a due, fee or other 
charge. However, the NASD will implement the fee change on March 1, 
1994.
    At any time within 60 days of the filing of a rule change pursuant 
to section 19(b)(3)(A) of the Act, the Commission may summarily 
abrogate the 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.

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 Secretary, Securities and 
Exchange Commission, 450 Fifth Street NW., Washington, DC 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 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 March 10, 1994.

    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. 94-3626 Filed 2-16-94; 8:45 am]
BILLING CODE 8010-01-M