[Federal Register Volume 63, Number 35 (Monday, February 23, 1998)]
[Notices]
[Pages 9032-9033]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-4404]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-39665; File No. SR-NASD-98-10]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the National Association of 
Securities Dealers, Inc. To Postpone the Effective Date of Recently-
Approved Amendments to Rules 3010 and 3110

February 13, 1998.
    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 February 10, 1998, the NASD Regulation, Inc. (``NASDR'') 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 NASDR. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The NASDR proposes to indefinitely postpone the effective date of 
recently-approved amendments to the National Association of Securities 
Dealers, Inc. (``NASD'' or ``Association'') Rules 3010, 
``Supervision,'' and 3110, ``Books and Records,'' to allow the NASDR an 
opportunity to consider comment letters received from the public.

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 NASDR 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 NASDR 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
    On April 11, 1997, a proposed rule change to amend NASD Rules 3010 
and 3110 was filed with the SEC.\3\ The purpose of the amendments was 
to allow firms to develop flexible procedures for the review of 
correspondence with the public. In that filing, the NASD stated that it 
would make the proposed rule change effective within 45 days of 
Commission approval. Amendment No. 1, containing a draft Notice to 
Members to be issued following approval of the proposed rule change, 
was filed with the SEC on December 4, 1997.\4\ The Notice to Members 
described the new rules and provided guidance to NASD members on the 
implementation of the new rules. The SEC approved the proposed rule 
change and Amendment No. 1 to the proposed rule change on December 31, 
1997.\5\ Notice to Members 98-11 announced approval of the proposed 
rule change and stated that the amendments to Rules 3010 and 3110 would 
be effective on February 15, 1998.
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    \3\ The proposed rule change (SR-NASD-97-24) was published for 
comment in the Federal Register on May 2, 1997. See Securities 
Exchange Act Release No. 38548 (April 25, 1997), 62 FR 24147.
    \4\ See Letter from Mary N. Revell, Associate General Counsel, 
NASDR, to Katherine A. England, Assistant Director, Division of 
Market Regulation, Commission, dated December 1, 1997 (``Amendment 
No. 1'').
    \5\ See Securities Exchange Act Release No. 39510 (December 31, 
1997) 63 FR 1131 (January 8, 1998) (order approving File No. SR-
NASD-97-24) (``Release No. 39510'').
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    Subsequent to approval of the proposed rule change by the SEC, 
several commenters filed letters with the SEC raising issues regarding 
Amendment No. 1 to the proposed rule change and its accompanying Notice 
to Members.\6\ NASDR believes that their letters raise important issues 
that should be fully addressed before the rule change becomes 
effective.
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    \6\ See letters from Carl B. Wilkerson, American Council of Life 
Insurance, to Jonathan G. Katz, Secretary, SEC, dated January 9, 
1998; Richard V. Silver, The Equitable Life Assurance Society of the 
United States, to Jonathan G. Katz, Secretary, SEC, dated January 
29, 1998; and Michael L. Kerley, MML Investors Services, Inc. to 
Secretary, SEC, dated January 26, 1998.
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    The proposed rule change indefinitely postpones the effective date 
of the amendments to Rules 3010 and 3110 approved in Release No. 39510. 
An extension of the effective date will allow NASDR an opportunity to 
consider comments on these and other issues raised by the rule and the 
accompanying Notice to Members. NASDR will submit a further proposed 
rule change to the SEC announcing the new effective date. Because this 
rule proposal has been made in conjunction with a similar proposal by 
the New York Stock Exchange (``NYSE''), which has been approved by the 
SEC \7\ and immediately became effective,\8\ and is designed to 
complement that proposal, joint members of the NYSE and NASD would be 
permitted to rely on the procedures provided by NYSE Rules 342, 440, 
and 472 and NYSE Interpretation 342.16/01 pending the effective date of 
the proposed rule change.
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    \7\ See Securities Exchange Act Release No. 39511 (December 31, 
1997) 63 FR 1135 (January 8, 1998) (order approving File No. SR-
NYSE-96-26).
    \8\ See NYSE Information Memo 98-3 (January 14, 1998).
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2. Statutory Basis
    The NASDR believes the proposed rule change is consistent with 
Section 15A(b)(6) of the Act,\9\ which requires, among other things, 
that the Association'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. The NASDR believes that delaying the effective date of 
the new rules to allow for consideration of member views will not be 
inconsistent with these requirements.
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    \9\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    NASDR does not believe that the proposed rule change will impose a 
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

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change constitutes a stated policy, practice, or 
interpretation with respect to the

[[Page 9033]]

meaning, administration or enforcement of an existing rule of the 
Association and, therefore, has become effective pursuant to Section 
19(b)(3)(A) of the Act \10\ and subparagraph (e) of Rule 19b-4 
thereunder.\11\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 19b-4(e).
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    At any time within 60 days of the filing of such 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.

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. Persons making written submission 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, N.W., Washington D.C. 20549. 
Copies of the submissions, 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, 450 Fifth Street, N.W., Washington 
D.C. Copies of such filing also will be available for inspection and 
copying at the NASD. All submissions should refer to File No. SR-NASD-
98-10 and should be submitted by March 16, 1998.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-4404 Filed 2-20-98; 8:45 am]
BILLING CODE 8010-01-M