[Federal Register Volume 59, Number 66 (Wednesday, April 6, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-8192]
[[Page Unknown]]
[Federal Register: April 6, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-33842; File No. SR-NASD-94-16]
Self-Regulatory Organizations; Filing and Immediate Effectiveness
of Proposed Rule Change by National Association of Securities Dealers,
Inc. Relating to Arbitration Surcharge on Members
March 31, 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 March
22, 1994, the National Association of Securities Dealers, Inc.
(``NASD'' or ``Association'') filed with the Securities and Exchange
Commission (``SEC'' or ``Commission''), and amended on March 31,
1994\1\ 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,
as amended, from interested persons.
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\1\See Letter from Suzanne E. Rothwell, Associate General
Counsel, NASD, to Ethan Corey, Staff Attorney, Over-the-Counter
Branch, SEC, dated March 31, 1994.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The NASD is proposing to amend section 45 of the Code of
Arbitration Procedure to clarify that the member surcharge of $200 is
not subject to reimbursement under Subsections 43(c) and 44(c) of the
Code. Below is the text of the proposed rule change. Proposed new
language is italicized.
PART III. UNIFORM CODE OF ARBITRATION
* * * * *
Member Surcharge
Sec. 45.
(a) Each member who is named as a party to an arbitration
proceeding, whether in a Claim, Counterclaim, Crossclaim or Third-Party
claim, shall be assessed a $200 non-refundable surcharge when the
Arbitration Department perfects service of the claim naming the member
on any party to the proceeding. For each associated person who is
named, the surcharge shall be assessed against the member or members
which employed the associated person at the time of the events which
gave rise to the dispute, claim or controversy. No member shall be
assessed more than a single surcharge in any arbitration proceeding.
The surcharge shall not be subject to reimbursement under Subsections
43(c) or 44(c) of the Code.
(b) For the purposes of this Section, service is perfected when the
Director of Arbitration properly serves the Respondents to such
proceeding under Subsection 25(a) of the Code.
* * * * *
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
On February 25, 1994, the NASD filed SR-NASD-94-11 adopting section
45 to the Code of Arbitration Procedure (``Code'') to impose a $200
non-refundable surcharge on any member named as a party to an
arbitration proceeding. The last line of section 45(a) stated that the
surcharge would not be subject to reimbursement under Subsection 43(c)
of the Code, which references customer disputes.\3\
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\3\See Securities Exchange Act Release No. 33731 (March 8,
1994), 59 FR 11817 (March 14, 1994).
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Subsequently, the NASD determined that it had inadvertently omitted
reference in the last sentence of new section 45(a) to Subsection
44(c), which provision relates to industry and clearing controversies.
The NASD is, therefore, proposing to amend Subsection 45(a) to the Code
of Arbitration Procedure to clarify that the member surcharge is not
subject to reimbursement under Subsections 43(c) and 44(c) of the Code.
Thus, the provision of Subsection 45(a) that the member surcharge is
not subject to reimbursement shall apply in cases involving customer
disputes as well as industry and clearing controversies.
The NASD believes that the proposed rule change is consistent with
the provisions of section 15A(b)(5) of the Act,\4\ 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 clarifies that the member surcharge will be assessed
equitably on each member who is named and for whom service is perfected
in an arbitration proceeding.
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\4\15 U.S.C. 78o-3.
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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 subparagraph (e) of rule 19b-
4 thereunder in that it constitutes a due, fee or other charge.
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 April 27, 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. 94-8192 Filed 4-5-94; 8:45 am]
BILLING CODE 8010-01-M