[Federal Register Volume 64, Number 119 (Tuesday, June 22, 1999)]
[Notices]
[Pages 33335-33336]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-15843]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-41532; File No. SR-NASD-99-27]
Self-Regulatory Organizations; Notice of Filing and Order
Granting Accelerated Approval of Proposed Rule Change by the National
Association of Securities Dealers, Inc. Extending the Effectiveness of
the Pilot Injunctive Relief Rule
June 16, 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 May 31, 1999, the National Association of Securities Dealers, Inc.
(``NASD'' or ``Association'') filed with the Securities and Exchange
Commission (``Commission'' or ``SEC'') the proposed rule change as
described in Items I and II below, which Items have been prepared by
NASD Regulation, Inc. (``NASD Regulation''). The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons. For the reasons discussed below,the Commission
is granting accelerated approval of the proposed rule change.
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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 Rule 10335 of the Code of
Arbitration (``Code'') of the Association to extend the pilot
injunctive relief rule for six months. The text of the proposed rule
change is below. Proposed new language is in italics; proposed
deletions are in brackets.
10335. Injunctions
(i) Effective Date
This Rule shall apply to arbitration claims filed on or after
January 3, 1996. Except as otherwise provided in this Rule, the
remaining provisions of the Code shall apply to proceedings instituted
under this Rule. This Rule shall expire on [July 3, 1999] January 3,
2000, unless extended by the Association's Board of Governors.
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 III below. NASD Regulation has prepared summaries,
set forth in section 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
Rule 10335 took effect on January 3, 1996 for a one-year pilot
period. The Commission has periodically extended the initial pilot
period in order to permit NASD Regulation's Office of Dispute
Resolution to assess the effectiveness of the rule. The rule is
currently due to expire on July 3, 1999. In July 1998, the NASD filed a
rule filing proposing to amend Rule 10335 and to make it a permanent
part of the Code. The NASD
[[Page 33336]]
filed amendments and responses to comments received by the Commission
regarding the rule filing in December 1998. In response to additional
comments received regarding both the original rule filing and the
amendments, as well as comments from the Commission staff, the NASD is
preparing further amendments to the pending rule filing. These
amendments will be considered shortly by the National Arbitration and
Mediation Committee (``NAMC''). If approved, the amendments will then
be considered by the Board of NASD Regulation. NASD Regulation believes
that it is in the interest of members and associated persons that the
effectiveness of the rule remain uninterrupted pending the filing of
amendment to, and Commission action on, the permanent rule filing.
2. Statutory Basis
NASD Regulation believes that the proposed rule change is
consistent with the provisions of Section 15A(b)(6) of the Act, which
requires, among other things, that the Association's rules 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
current pilot rule serves the public interest by enhancing the
satisfaction with the arbitration process afforded by expeditious
resolution of certain disputes.\3\
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\3\ Telephone conversation between Laura Leedy Gansler, Office
of the General Counsel, NASD Regulation, and Daniel M. Gray, Special
Counsel, Division of Market Regulation, SEC, on June 14, 1999.
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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
Written comments were neither solicited or received.
III. 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 submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 460 Fifth Street, N.W., Washington, D.C. 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 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 also will be
available for inspection and copying at the principal office of the
NASD. All submissions should refer to File No. SR-NASD-99-27 and should
be submitted by July 13, 1999.
IV. Commission Findings and Order Granting Accelerated Approval of
Proposed Rule Change
NASD Regulation has requested that the Commission find good cause
pursuant to Section 19(b)(2) of the Act \4\ for approving the proposed
rule change prior to the 30th day after publication in the Federal
Register. The Commission finds that the proposed rule change is
consistent with the requirements of the Act and the rules and
regulations thereunder applicable to the NASD and, in particular, the
requirements of Section 15A of the Act.\5\ Rule 10335 is intended to
provide a pilot system within the NASD arbitration forum to process
requests for temporary injunctive relief. Rule 10335 is intended
primarily to facilitate the disposition of employment disputes and
other related disputes concerning members who file for injunctive
relief to prevent registered representatives from transferring their
client accounts to new firms. The Commission expects that, during the
pilot's extension, NASD Regulation will consider amendments to the
proposed rule change to permanently add Rule 10335 to the Code.\6\
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\4\ 15 U.S.C. 78s(b)(2).
\5\ 15 U.S.C. 78o-3. In reviewing the proposed rule change, the
Commission considered its potential impact on efficiency,
competition, and capital formation. 15 U.S.C. 78c(f).
\6\ See Securities Exchange Act Release No. 40441 (September 15,
1998), 63 FR 50611 (September 22, 1998) providing notice of File No.
SR-NASD-98-49.
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The Commission finds good cause for approving the proposed rule
change prior to the 30th day after the date of publication of notice of
filing thereof in the Federal Register. The Commission believes that
accelerated approval of the proposal is appropriate because members
will continue to have the benefit of injunctive relief in arbitration
pending filing of amendments to, and Commission action on, the rule
filing that would amend Rule 10335 and make it a permanent part of the
Code. The Commission finds, therefore, that granting accelerated
approval of the proposed rule change in consistent with Section 15A of
the Act.
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\7\ that the proposed rule change (SR-NASD-99-27) is approved on an
accelerated basis through January 3, 2000.
\7\ 15 U.S.C. 78s(b)(2).
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For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland
Deputy Secretary
[FR Doc. 99-15843 Filed 6-21-99; 8:45 am]
BILLING CODE 8010-01-M