[Federal Register Volume 63, Number 231 (Wednesday, December 2, 1998)]
[Notices]
[Pages 66618-66619]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-32039]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-40706; File No. SR-NASD-98-87]


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

November 24, 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 November 23, 1998, the National Association of Securities Dealers, 
Inc. (``NASD''), through its wholly owned subsidiary, NASD Regulation, 
Inc. (``NASD Regulation'') 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 NASD Regulation. 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

    NASD Regulation is proposing to amend Section 6 of Schedule A to 
the NASD By-laws and NASD Conduct Rule 2710, to delete the provisions 
mandating that Corporate Financing filing fees be paid in the form of a 
check or money order. Below is the text of the proposed rule change. 
Proposed new language is in italics; proposed deletions are in 
brackets.

Schedule A to the NASD By-Laws

    Assessments and fees pursuant to the provisions of Article VI of 
the By-Laws of the Corporation, shall be determined on the following 
basis.

Section 1-Section 5  No Change

Section 6--Fees for Filing Documents Pursuant to the Corporate 
Financing Rule

    (a) No change.
    (b) No change.
    [(c) Filing fees shall be paid only in the form of check or 
money order payable to the National Association of Securities 
Dealers, Inc.]
    [(d)](c) The provisions of Rule 457 adopted under the Securities 
Act of 1933, as amended, shall govern the computation of filing fees 
for all offerings filed pursuant to this Section, including 
intrastate offerings, to the extent the terms of Rule 457 are not 
inconsistent with this Section.

Section 7-Section 15  No change

* * * * *

2710. Corporate Financing Rule--Underwriting Terms and Arrangements

    (a) Definitions  No change
    (b) Filing Requirements.
    (1)-(9)  No change.
    (1) Filing Fees.
    (A) No change.
    (B) No change.
    [(C) Filing fees shall be paid only in the form of a check or 
money order payable to the National Association of Securities 
Dealers, Inc.]
    [(D)](C) The provisions of SEC Rule 457 adopted under the 
Securities Act of 1933, as amended, shall govern the computation of 
filing fees for all offerings filed pursuant to this Rule, including 
intrastate offerings, to the extent the terms of Rule 457 are not 
inconsistent with subparagraph (a)[,] or (B) [or (C)] above.
    (11)-(13) renumbered (10)-(12). (c)  No change.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, NASD Regulation 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. NASD Regulation 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
    NASD Conduct Rule 2710 (the ``Corporate Financing Rule'') requires 
that members file most proposed public offerings with the Corporate 
Financing Department (``Department'') of NASD Regulation. The Corporate 
Financing Department reviews these filings in order to determine 
whether the underwriting terms and arranagements are fair and 
reasonable pursuant to standards set forth in Rules 2710, 2720, and 
2810 prior to the commencement of the offering. Section 6 of Schedule A 
to the NASD By-Laws (``Schedule A'') and Paragraph (b)(10) of Conduct 
Rule 2710 include identical provisions that impose a fee on each 
filing, in the amount of $500 plus .01% of the value of securities, 
with a maximum filing fee

[[Page 66619]]

limit of $30,500 (the ``Corporate Financing filing fee'').
    Section 6(c) of Schedule A and Paragraph (b)(10)(C) of Conduct Rule 
2710 currently require that all Corporate Financing filing fees be paid 
by check or money order. Such a specific provision was originally 
adopted in order to prevent the payment of filing fees in cash. Since 
that time, new methodologies have arisen that facilitate the transfer 
of money. In order to ensure that NASD Regulation has the necessary 
flexibility to implement newer forms of payment, NASD Regulation 
proposes to eliminate Section 6(c) of Schedule A and Paragraph 
(b)(10)(C) of Conduct Rule 2710. Further a conforming change is made to 
Paragraph (b)(10)(D) of Conduct Rule 2710 to delete the reference to 
Paragraph (C) of the same section.
    Based on this proposal, members may continue to submit Corporate 
Financing filing fees in the form of a check or money order to the 
Corporate Financing Department at the same time that the related 
documents are filed. Cash payment will still not be accepted in 
accordance with the standard business practice of the Association. The 
Association will, however, also implement payment of the Corporate 
Financing filing fee by wire transfer, and intends to inform filers and 
members generally of this option. In the case where such a wire 
transfer is used, the payment of the fee on a timely basis will be 
considered to ``accompany'' the filing of the original offering 
documents or amended offering documents to which it relates, as 
required by Sections 6(a) and (b) of Schedule A and by 
Paragraphs(b)(10)(A) and (B) of Conduct Rule 2710.
2. Purpose
    NASD Regulation believes that the proposed rule change is 
consistent with the provisions of Section 15A(b)(5) \3\ of the Act, 
which requires that the rules of the Association provide for the 
equitable allocation of reasonable dues, fee, and other charges among 
members. The Association believes that the proposed rule change 
provides for the equitable allocation of the fees paid by members in 
connection with the submission of proposed public offerings with the 
Corporate Financing Department for review.
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    \3\ 15 U.S.C. 78o-3.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    NASD Regulation 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 pursuant to Section 
19(b)(3)(A)(iii) \4\ of the Act and subparagraph (e) of Rule 19b-4 \5\ 
thereunder in that it is concerned solely with the administration of a 
self-regulatory organization.
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    \4\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \5\ 17 CFR 240.19b-4(e)(1).
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    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 including whether the proposal is 
consistent with the Act. Persons making written submissions should file 
six copies thereof with the Secretary, Securities and Exchange 
Commission, 450 Fifth Street, N.W., Washington, D.C. 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 No. SR-NASD-98-87 and should be 
submitted by December 23, 1998.
    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-32039 Filed 12-1-98; 8:45 am]
BILLING CODE 8010-01-M