[Federal Register Volume 59, Number 75 (Tuesday, April 19, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-9316]


[[Page Unknown]]

[Federal Register: April 19, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-33902; File No. SR-NASD-94-21]

 

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

April 13, 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 April 7, 
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 constituting a fee under 
Sec. 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 to the By-
Laws\1\ to increase the charges, as set forth in section 13 of Schedule 
A,\2\ for the review of certain advertisements and sales literature. 
Below is the text of the proposed rule change. Proposed new language is 
in italics; proposed deletions are in brackets.
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    \1\NASD Manual, Schedules to the By-Laws, Schedule A (CCH) 1751 
et seq.
    \2\NASD Manual, Schedules to the By-Laws, Schedule A, Sec. 13 
(CCH) 1764.
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Schedule A to the By-Laws

* * * * *

Section 13. Service Charge for Advertisement, Sales Literature, and 
Other Such Material Filed or Submitted

    There shall be a service charge for each and every item of 
advertisement, sales literature, and other material, whether in 
printed, video or other form, filed with or submitted to the 
Association, except for items that are filed or submitted in response 
to a written request from the Association's Advertising Regulation 
Department issued pursuant to the spot check procedures set forth in 
the Association's Rules of Fair Practice and Government Securities 
Rules, as follows: (1) For printed material reviewed, $50.00 [$25.00] 
plus $10.00 [$5.00] for each page reviewed in excess of 10 [5] pages; 
and (2) for video or audio media, $50.00 [$25.00] plus $10.00 [$5.00] 
per minute for each minute of tape reviewed in excess of 10 [5] 
minutes.
    [In addition, w]Where a member requests expedited review of 
material submitted to the Advertising Regulation Department there shall 
be a[n additional] service charge of $500.00 [$200] per item plus $25 
for each page reviewed in excess of 10 pages. Expedited review shall be 
completed within three business days, not including the date the item 
is received by the Advertising Regulation Department, unless a shorter 
or longer period is agreed to by the Advertising Regulation Department. 
The Advertising Regulation Department may, in its sole discretion, 
refuse requests for expedited review.
* * * * *

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

    The NASD's Advertising Regulation Department began offering an 
expedited review process in February, 1991 for those members who 
desired review and comment of advertising and sales literature that was 
faster than the normal review and comment process, which is ten 
business days. The expedited process is completed within three business 
days. Over the past three years, use of the expedited process has 
increased far beyond the NASD's expectation. The expedited filing 
process has become standard operating procedure for many of the 
program's most frequent users and many items filed are frequently more 
difficult to review because they contain new concepts and approaches 
requiring greater time for research and analysis. The increase in the 
number of expedited filings has led to a significant increase in the 
amount of administrative processing and has made it more difficult to 
provide service within the ten-day turnaround time for normal filings.
    The NASD is proposing an amendment to Section 13 of Schedule A to 
the NASD By-Laws which establishes a fee structure that will give 
members the ability to choose the level of service that best fits their 
needs, taking into consideration the costs related to that level. Each 
of the specific fees would be increased, including the service charge 
for expedited service. However, the service charge for expedited 
service would no longer be imposed in addition to the base service 
charge and the number of pages or minutes of video that triggers an 
additional fee would be increased, i.e., from 5 to 10 pages and from 5 
to 10 minutes. The text of the amendment identifies each of the changes 
to the fees. The NASD is requesting that the amendment be implemented 
on May 1, 1994.
    The NASD believes that the proposed rule change is consistent with 
the provisions of Section 15A(b)(5) of the Act,\3\ which require that 
the rules of the Association provide for the equitable allocation of 
dues, fees and other charges among members in that the proposed rule 
equitably adjusts the fees assessed for the review of advertising and 
sales literature to accurately reflect the time spent and level of 
analysis performed per item submitted for review.
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    \3\15 U.S.C. Sec. 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. The 
rule will be implemented on May 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 file number SR-NASD-94-21 and 
should be submitted by May 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. 94-9316 Filed 4-18-94; 8:45 am]
BILLING CODE 8010-01-M