[Federal Register Volume 64, Number 83 (Friday, April 30, 1999)]
[Notices]
[Pages 23366-23370]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-10807]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-41326; File No. SR-NASD-98-96]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by NASD, Inc. Relating to Amendments to Forms U-4 and U-5

April 22, 1999.
    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 December 18, 1998, the National Association of Securities Dealers, 
Inc. (``NASD'' or ``Association''), through its wholly owned subsidiary 
NASD Regulation, Inc. (``NASD Regulation'' or ``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 NASD Regulation. On March 30, 1999, NASD 
Regulation submitted Amendment No. 1 to the proposed rule change.\3\ 
NASD Regulation submitted Amendment No. 2 to the proposed rule change 
on April 7, 1999.\4\ On April 15, 1999, NASD Regulation submitted 
Amendment No. 3 to the proposed rule change.\5\ The Commission is 
publishing this notice to solicit comments on the proposed rule change, 
as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See letter from John M. Ramsay, Vice President and Deputy 
General Counsel, NASD Regulation, to Katherine A. England, Assistant 
Director, Division of Market Regulation, Commission, dated March 30, 
1999. In Amendment No. 1, NASD Regulation amended the rule filing by 
adding information about changes to four disclosure questions on 
Forms U-4 and U-5 (``Amendment No. 1'').
    \4\ See letter from John M. Ramsay, Vice President and Deputy 
General Counsel, NASD Regulation, to Katherine A. England, Assistant 
Director, Division of Market Regulation, Commission, dated April 7, 
1999. In Amendment No. 2, NASD Regulation added information about 
the implementation and effective dates of the WEB CRD system and 
made minor changes to clarify some of the text (``Amendment No. 
2'').
    \5\ See letter from John M. Ramsay, Vice President and Deputy 
General Counsel, NASD Regulation, to Katherine A. England, Assistant 
Director, Division of Market Regulation, Commission, dated April 15, 
1999. In Amendment No. 3, NASD Regulation made a minor textual 
change (``Amendment No. 3'').
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    NASDR is proposing to amend the Form U-4, the Uniform Application 
for Securities Industry Registration or Transfer, and the Form U-5, the 
Uniform Termination Notice for Securities Industry Termination

[[Page 23367]]

(collectively ``Proposed Forms'').\6\ Proposed changes to disclosure 
questions on the Proposed Forms are set forth below.\7\ Additions are 
italicized; deletions are bracketed.
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    \6\ Copies of the Proposed Forms are attached as Exhibit 4 to 
Amendment No. 1 and are available in the Commission's Public 
Reference Room and from NASDR by calling 301-590-6142.
    \7\ The proposed disclosure questions reflect changes to the 
questions on the Forms U-4 and U-5 that were approved by the 
Commission on July 5, 1996. In addition, conforming changes were 
made to the Disclosure Reporting Pages (``DRPs'') for these 
questions.
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1996 Form U-4 Question 22I(2)

    Have you ever been the subject of an investment-related, consumer-
initiated [written] complaint, not otherwise reported under question 
22I(1) above, which alleged that you were involved in one or more sales 
practice violations, and which complaint was settled for an amount of 
$10,000 or more?

1996 Form U-5 Question 14

    While employed by or associated with your firm, or in connection 
with events that occurred while the individual was employed by or 
associated with your firm, was the individual:
    A. convicted of or did the individual plead guilty or nolo 
contendere (``no contest'') in a domestic, or foreign or military court 
to any felony?
    B. charged with any felony?
    C. convicted of or did the individual plead guilty or nolo 
contendere (``no contest'') in a domestic, foreign or military court to 
a misdemeanor involving: investments or an investment-related business, 
or any fraud, false statements or omissions, wrongful taking of 
property, bribery, perjury, forgery, counterfeiting, extortion, or a 
conspiracy to commit any of these offenses?
    D. charged with a misdemeanor specified in 14(C)?

1996 Form U-5 Question 15

    While employed by or associated with your firm, or in connection 
with events that occurred while the individual was employed by or 
associated with your firm, was the individual involved in any 
disciplinary action by a domestic or foreign governmental body or self-
regulatory organization (other than those designated as a ``minor rule 
violation'' under a plan approved by the U.S. Securities and Exchange 
Commission) with jurisdiction over the investment-related businesses?

1996 Form U-5 Question 17

    A: In connection with events that occurred while the individual was 
employed by or associated with your firm, was the individual:
    (1) named as a respondent/defendant in an investment-related, 
consumer-initiated arbitration or civil litigation which alleged that 
the individual was involved in one or more sales practice violations 
and which:
    (a) is still pending, or;
    (b) resulted in an arbitration award or civil judgment against the 
individual, regardless of amount, or,
    (c) was settled for an amount of $10,000 or more?[, or;]
    (2) the subject of an investment-related, consumer-initiated 
[written] complaint, not otherwise reported under question 17(A)(1) 
above, which alleged that the individual was involved in one or more 
sales practice violations, and which complaint was settled for an 
amount of $10,000 or more?
    B. In connection with events that occurred while the individual was 
employed by or associated with your firm, [but for a period not to 
exceed the most recent twenty-four (24) months of employment,] was the 
individual the subject of an investment-related, consumer-initiated 
written complaint, not otherwise reported under question 17(A) above, 
which:
    [(1) alleged that the individual was involved in one or more sales 
practice violations and contained a claim for compensatory damages of 
$5,000 or more (if no damage amount is alleged, the complaint must be 
reported unless the firm has made a good faith determination that the 
damages from the alleged conduct would be less than $5,000), or];
    (1) would be reportable under question 22I(3)(a) on Form U-4, if 
the individual were still employed by your firm, but which has not 
previously been reported on the individual's Form U-4 by your firm; or
    [(2) alleged that the individual was involved in forgery, theft, 
misappropriation or conversion of funds or securities?]
    (2) would be reportable under question 22I(3)(b) on Form U-4, if 
the individual were still employed by your firm, but which has not 
previously been reported on the individual's Form U-4 by your firm.
* * * * *

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

    In its filing with the Commission, 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. NASDR has prepared summaries, set forth in Sections A, 
B, 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 July 5, 1996, the Commission approved amendments to Forms U-4 
and U-5 (``1996 Forms'').\8\ These amendments were developed by a task 
force of representatives from the NASD the Commission, the North 
American Securities Administrators Association (``NASAA''), the 
securities industry, and other self-regulatory organizations 
(``SROs''). The 1996 Forms were to become effective with the 
implementation of a redesigned CRD system that used a network-based 
architecture and proprietary software developed by the NASD; members 
would submit the 1996 Forms electronically.\9\ The 1996 Forms included 
both technical and formatting changes to accommodate the CRD redesign 
and substantive changes to the instructions and disclosure questions.
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    \8\ Securities Exchange Act Release No. 37407 (July 5, 1996), 61 
FR 36595 (July 11, 1996) (File No. SR-NASD-96-19).
    \9\ Id.
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    In 1997, NASDR determined to proceed with a Web-based approach to 
the CRD system rather than using a network-based architecture and 
proprietary software. This ``Web CRD'' system, which will permit 
members to submit the Proposed Forms electronically via NASD 
Regulation's World Wide Web site, is currently in development. In 1997, 
NASDR and NASAA also determined that it was possible to implement the 
changes to the disclosure questions and some of the new instructions 
while Web CRD was being developed. Therefore, NASDR submitted Interim 
Forms U-4 and U-5 to the Commission in October 1997.\10\ The Interim 
Forms included all of the substantive changes to the disclosure 
questions and some of the changes to the instructions that were 
approved in 1996 and reformatted them in a manner that is compatible 
with the current CRD system. In January 1998, the Commission approved 
the Interim

[[Page 23368]]

Forms for use until Web CRD is completed.\11\
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    \10\ Securities Exchange Act Release No 39322 (Nov. 13, 1997), 
62 FR 62391 (Nov. 21, 1997)(File No SR-NASD-97-78).
    \11\ Securities Exchange Act Release No 39562 (Jan. 20, 1998), 
63 FR 3942 (Jan. 27, 1998)(File No. SR-NASD-97-78).
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    Due to the differences between the network-based and Web-based 
approaches to the CRD system, NASDR proposes additional formatting and 
technical changes to the 1996 Forms. These changes are needed to fully 
implement the Web CRD system. NASDR believes that the Proposed Forms 
will be simpler for member firms to complete than the 1996 Forms. NASAA 
approved all of the proposed changes described below at its October 4, 
1998, membership meeting.\12\
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    \12\ At this meeting, NASAA also approved changes to certain 
disclosure questions on the Proposed Forms. The NASD submitted the 
proposed disclosure question changes to its membership for comment. 
See Notice To Members 98-101.
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    NASDR has reformatted several sections of the 1996 Forms to 
simplify data entry and minimize errors in completing the Forms. First, 
the DRPs for the Proposed Forms have been simplified. The 1996 DRPs 
elicited more detailed information about reportable events than 
previously elicited on DRPs. Regulators had indicated that they needed 
this additional detail to make informed licensing and registration 
decisions and that the revised DRPs would reduce regulatory requests 
for additional information, which invariably prolonged the registration 
review and licensing process. However, the 1996 DRPs required that the 
additional detail be entered into numerous discrete fields.
    While this approach was intended to provide all CRD users with the 
additional benefits of maximum flexibility in making queries to and 
deriving customized reports from the system, it resulted in 
unanticipated practical drawbacks. The most significant drawback was 
that the more complex data structure required to support the 1996 DRPs 
would cause the system to operate too slowly to meet users' needs. 
Theoretically, the 1996 DRP data structure provided the ability to sort 
on and create reports using all of the discrete data fields; as a 
practical matter, however, the time required to process those queries 
and produce those reports was unacceptable. The demands placed on the 
system by the generation of routine reports, ad hoc reports containing 
numerous discrete data fields, and routine user queries would not allow 
for acceptable response times for users. Therefore, following 
discussions with NASAA, industry representative, and other regulators, 
NASDR reformatted the DRPs by reducing the number of discrete fields 
and adding text blocks to simplify the data structure and the data 
relationships.
    NASDR believes that all of the information necessary for regulators 
to make informed registration and licensing decisions will be available 
through this revised format. In this regard, the reformatted DRPs 
request all of the information requested on the 1996 DRPs. In addition, 
this revised format will significantly enhance regulators' ability to 
use the Web CRD for regulatory purposes and allow for more efficient 
processing of registration-related filings.
    Second, the ``other business activities'' DRP on the 1996 Form U-4 
is replaced with a separate attachment sheet, which also can be used to 
provide additional information about residential history or employment 
and personal history. The other business activity section of Question 
20B on the 1996 Form U-4 is renumbered as Question 21. (All subsequent 
questions are likewise renumbered.) The instructions to Question 21 on 
the Proposed Form U-4 list the types of information that must be 
provided on the attachment sheet, and includes all of the information 
that would have been reported through the DRP.
    Third, Sections 11 and 12 on the 1996 Form U-4 and Section 11 on 
the 1996 Form U-5 have been reformatted to ensure more accurate 
selection of registration categories. The Proposed Forms use matrices 
that link SROs and their related registration categories, which will 
reduce erroneous requests for registrations that are not available for 
a particular SRO. In addition, the instructions on the Proposed Forms 
clarify that CRD does not process Investment Adviser Representative and 
Agent of the Issuer registrations, although the paper Proposed Forms 
contain boxes for such registration. When an individual views the 
electronic version of the Proposed Forms on the Web CRD system, the 
boxes for these registrations will be shaded and the individual will 
not be allowed to select these options. The boxes for these 
registrations are included on the paper Proposed Forms solely for the 
convenience of states that wish to use the paper Proposed Forms for 
these registrations.
    The General Instructions regarding the submission of documents on 
the 1996 Forms provide that documents are not required to be submitted, 
but that the applicant may submit them because documents may be 
requested as part of the review process. The Proposed Forms amend this 
instruction slightly to conform to the current practice of the states 
and SROs by stating that, although documents are not generally required 
to be filed with the Forms, it may be necessary to provide them to 
clarify or support responses on the Forms.
    Finally, the Proposed Forms retain the definitions of 
``investigation'' and ``sales practice violations'' that were adopted 
with the Interim Forms, with slight changes to punctuation. These 
definitions are more precise than the corresponding definitions used in 
the 1996 Forms and generally have worked well in practice. In addition, 
other technical and conforming amendments are listed in the rule 
filing.\13\
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    \13\ The technical and conforming amendments are listed in 
Exhibit 2 of the proposed rule change.
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    The rule filing also contains the DRP ``pick lists'' that will 
appear for users making electronic filings of the Proposed Forms.\14\ 
The pick lists will appear for certain discrete fields on the DRPs so 
that there will be more consistency in the data entered in those 
fields. For example, on the Customer Complaint DRP, when the firm 
clicks on the field for ``Litigation Disposition'' the following 
choices will appear on the screen: Decision for Applicant, Decision for 
Customer, Denied, Dismissed, Judgment (other than monetary), Monetary 
Judgment to Applicant, Monetary Judgment to Customer, No Action, Other, 
Settled, Withdrawn. The individual submitting the electronic form will 
click on one of these choices to fill in the field, rather than having 
to manually type in a description of the disposition. Pick lists will 
also appear for other fields on the electronic Proposed Forms. In all 
pick lists (except states of residence and types of judgments/liens), a 
firm may select ``Other'' if none of the choices presented in the pick 
list is applicable. The pick lists were developed by NASDR, NASAA, the 
Commission, and others. NASDR expects that refinements to the pick 
lists will occur in the future, but will not file every change with the 
Commission because of the inclusion of the ``Other'' option.
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    \14\ The DRP ``Pick Lists'' are contained in Exhibit 3 of the 
proposed rule change.
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    Four disclosure questions on the Proposed Forms also are amended. 
These substantive amendments involve: (1) an expansion of the Form U-4 
question eliciting information on settled customer complaints to 
include those oral complaints involving sales practice allegations that 
are settled for $10,000 or more; (2) a modification of the Form U-5 
question eliciting information on

[[Page 23369]]

customer complaints to make that reporting requirement consistent with 
the parallel question on the Form U-4 (effectively eliminating the 
reporting requirement for and permitting the archiving of customer 
complaints that are over 24 months old and are not otherwise 
reportable); and (3) an expansion of the reporting requirement on the 
Form U-5 to include criminal or regulatory actions initiated on the 
basis of events that occurred while an individual was employed by the 
firm, even if the actions were initiated after the individual had been 
terminated.
    As NASDR transitions from the current CRD system to Web CRD, there 
will be a two week period beginning July 31 and ending August 15, 1999 
(the ``System Transition Period''), when neither system will be 
available to process Forms.\15\ The System Transition Period is 
necessary to complete the final data conversions from current CRD to 
Web CRD and to make final preparations for the deployment of Web CRD. 
NASDR will not accept the Interim Forms U-4 or U-5 after July 30, 1999.
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    \15\ The Commission is in the process of amending the Forms BD 
and BDW so that these forms will be compatible with the Web CRD 
system. The Forms BD and BDW will be subject to the same transition 
period as the Forms U-4 and U-5.
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    Although Web CRD will not be operational until August 16, 1999, 
NASDR is requesting an effective date of August 1, 1999, for Proposed 
Forms U-4 and U-5. NASDR is requesting this date principally because it 
will accept paper Proposed Forms U-5 submitted during the two week 
period beginning August 1, and ending August 15, 1999, provided those 
Forms U-5 are submitted to report full terminations (i.e., a 
termination of an individual's registration with all SROs and 
jurisdictions). In addition, NASDR wants broker-dealers and their 
associated persons to have an opportunity to familiarize themselves 
with the new forms prior to the deployment of Web CRD on August 16, 
1999. NASDR will review all paper Forms U-5 reporting full terminations 
that are submitted during the System Transition Period and will provide 
notice to appropriate regulators/jurisdictions of any such Forms U-5 
that contains disclosure information. This interim measure is necessary 
to protect investors (e.g., to help prevent persons who have been 
terminated from continuing to engage in securities business) and 
provide necessary information to regulators.\16\
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    \16\ NASDR's Public Disclosure Program, which provides 
disciplinary and other information about NASD members and their 
associated persons, will continue to be available to the public and 
regulators during the System Transition Period. Regulators also will 
continue to have query access (i.e., read only access) to the 
current CRD system during the System Transition Period.
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    NASDR will not accept Proposed Form U-4 applications requesting 
registration/licensing until Web CRD becomes operational on August 16, 
1999 (even though they will be ``effective'' August 1, 1999). Firms 
already have been informed that they must submit new applications for 
registration before July 30, 1999, or hold them until August 16, 
1999.\17\ Beginning August 16, 1999, all Forms U-4 and U-5 must be 
submitted electronically. NASD Regulation has developed a plan to allow 
registered persons to transfer their registrations during the System 
Transition Period that is based upon the current Temporary Agent 
Transfer (``TAT'') program. NASDR has discussed this plan with firms 
and with the NASAA and expects to issue a Notice To Members on the 
specifics of the program and on other issues relating to the System 
Transition Period not later than June 1, 1999.
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    \17\ For more information concerning the CRD Modernization 
Update, System Transition Period and electronic filing, use the 
NASDR's web site at www.nasdr.com and review the CRD/PD Bulletin, 
March 1999, Vol. 6, No. 5.
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2. Statutory Basis
    NASD Regulation believes that the Proposed Forms are consistent 
with the provisions of Section 15A(b)(6) \18\ of the Act, 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. NASD Regulation believes 
that the Proposed Forms are consistent with the NASD's authority to 
adopt appropriate qualifications and registration requirements for 
persons associated with NASD members or applicants for NASD membership. 
Article V, Section 2 of the NASD By-Laws authorizes the Board to 
prescribe the form used by any person who wishes to make application 
for registration with the NASD. NASD Regulation believes that the 
Proposed Forms will make the filing of information with CRD easier and 
more efficient while continuing to provide complete information for use 
by regulators, SROs, and firms conducting pre-hire checks.
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    \18\ 15 U.S.C. 78o-3(b)(6).
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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.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    NASD Regulation solicited member comment on the substantive changes 
to Form U-4 and U-5 disclosure questions in Notice To Members 98-
101.\19\ NASD Regulation received 15 comments in response to the 
Notice.\20\
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    \19\ A copy of the Notice is attached at Exhibit 5 to Amendment 
No. 1.
    \20\ The commenters are American Express Financial Advisors, 
Inc.; AmSouth Investment Services, Inc.; Daniel Barba; Charles 
Schwab & Co., Inc.; Martin L. Feinberg; William E. Graeff; John G. 
Kinnard & Co.; Ted S. Meilke; Merrill Lynch; Metropolitan Life 
Insurance Company; National Association of Investment Professionals; 
Paine Webber; Raymond James Financial Services, Inc.; Regional 
Investment Bankers Association; Securities Industry Association 
Self-Regulation and Supervisory Practices Committee. The comments 
from persons associated with the John G. Kinnard & Co. are treated 
as one comment because they are identical. Copies of the letters are 
attached as Exhibit 6 to Amendment No. 1.
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    Five commenters were in favor of or had no objection to the 
proposed rule change requiring the reporting of settlements of oral 
sales practice complaints and eight were opposed. The Securities 
Industry Association's (``SIA'') Self-Regulations and Supervisory 
Practices Committee was among the eight commenters opposing the 
proposed change. The SIA expressed concern about the proposed change on 
the basis that: (1) it is inconsistent with the Commission's revised 
proposed books and records rules, which only require the reporting of 
customer-initiated complaints that are written; (2) a firm may be more 
vulnerable to a defamation claim brought by a former employee if there 
is no writing to substantiate the oral customer complaint that resulted 
in the settlement of $10,000 or more; and (3) it is currently unclear 
which types of disputes would give rise to a reportable offense and 
therefore, some execution adjustments might unintentionally be 
characterized as a sales practice matter.
    While NASDR appreciates the SIA's concern, it disagrees with the 
SIA's argument that the proposed change requires reporting of oral 
complaints. On the contrary, the proposed change would require the 
reporting of settlements of $10,000 or more of a customer complaint 
(written or oral) alleging a sales practice violation. NASDR believes 
that this proposed change is consistent with the Commission's proposed 
books and

[[Page 23370]]

records rules \21\ because the question addresses the reporting of the 
settlement and not the oral complaint. Moreover, the NASD staff 
believes that settlements of such amounts may be indicative of 
potential sales practice abuses (regardless of whether the complaint is 
made orally or in writing) and is therefore consistent with one of the 
purposes underlying the Commission's proposed rules, which is to assist 
regulators in determining whether an associated person has engaged or 
is continuing to engage in securities violations such as abusive sales 
practices. In addition, as the SIA acknowledges, firms are unlikely to 
settle a customer sales practice complaint for $10,000 or more without 
something in writing. Finally, NASDR staff and representatives of NASAA 
are prepared to issue interpretive guidance that would provide greater 
clarity in the area of what constitutes a sales practice violation (as 
opposed, for example, to a disagreement over an execution that does not 
involve an alleged rule violation) and to provide guidance to firms on 
procedures they should follow to support the reporting of these items.
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    \21\ Securities Exchange Act Release No. 40518 (Oct. 2, 1998), 
63 FR 54404 (Oct 9, 1998).
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    Eight commenters addressed the proposed changes to the Form U-5 
questions regarding the expanded reporting of regulatory and criminal 
actions. Under the revised question, firms would be required to report 
regulatory and criminal actions that were initiated after a registered 
person has left the firm, if the firm receives actual notice of such 
actions. The current question requires the reporting of these matters 
only while the registered person is employed by the firm. Commenters 
generally expressed concern about having to continually monitor former 
employees to meet this reporting requirement. Comments therefore 
requested that ``actual notice'' of the initiation of a criminal or 
regulatory event be defined through interpretive guidance before or in 
conjunction with the question change. Three commenters also requested 
that the proposed change be limited to criminal or regulatory events 
that are directly related to the former employee's employment with the 
member and that actual notice be defined as written notice to a 
principal responsible for making regulatory filings or other 
appropriate person in the legal or compliance department. Two 
commenters stated that reporting under these questions should be time 
limited, e.g., to two years after termination.
    NASDR agrees that the issuance of interpretive guidance is 
appropriate. NASDR staff has discussed such interpretive guidance with 
NASAA and has reached an agreement in principle regarding an 
interpretation. This interpretation will state that firms are not 
obligated to report events unless they receive actual notice. In this 
context, actual notice would mean express notice--That is, a 
communication by the responsible agency/authority regarding the 
initiation of a criminal or regulatory action directly to a 
representative of the firm who is aware of the Form U-5 reporting 
requirement or should be aware of such requirement because such person 
has official responsibility for receiving such notice. This 
interpretation would address a majority of commenters' concerns; 
however, it does not address the time limit on Form U-5 reporting that 
was suggested by some commenters. Nevertheless, NASDR staff agrees that 
the establishment of an outside time limit for reporting on Form U-5 
should be explored and has begun discussions with NASAA on this issue.

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) by order approve such proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing including whether the proposed rule 
is consistent with the Act. Persons making written submissions should 
file six copies thereof with the Secretary, Securities and Exchange 
Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. 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 elating 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 No. SR-NASD-98-96 and should be 
submitted by May 17, 1999.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\22\
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    \22\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-10807 Filed 4-29-99; 8:45 am]
BILLING CODE 8010-01-M