[Federal Register Volume 64, Number 191 (Monday, October 4, 1999)]
[Notices]
[Pages 53761-53762]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-25667]
[[Page 53761]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-41920; File No. SR-NASD-99-36]
Self-Regulatory Organizations; Notice of Filing and Order
Granting Accelerated Approval of Proposed Rule Change by the National
Association of Securities Dealers, Inc. Relating to the Selection of
Chairs and Vice Chairs of the National Adjudicatory Council
September 27, 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 August 4, 1999, the National Association of Securities Dealers, Inc.
(``NASD'' or ``Association''), 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 and II 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. 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 its by-laws to clarify that
the outgoing members of the National Adjudicatory Council (``NAC'')
will select a Chair and Vice Chair from among the members who will be
serving on the NAC the following year. Currently, the new Board selects
the Chair and Vice Chair. Below is the text of the proposed rule
change. Proposed new language is in italics; proposed deletions are in
brackets.
By-Laws of NASD Regulation, Inc.
Article V
National Adjudicatory Council
Appointment and Authority
Sec. 5.1 No change.
Number of Members and Qualifications
Sec. 5.2(a) No change.
(b) [As soon as practicable following the appointment of members,
the] The incumbent National Adjudicatory Council shall elect a Chair
and a Vice Chair from among [its] the members serving during the
following term. The Chair and Vice Chair shall have such powers and
duties as may be determined from time to time by the National
Adjudicatory Council. The Chair also shall serve as a Director of the
NASD Regulation Board and a Governor of the NASD Board for a one-year
term as provided in the by-laws and Restated Certificate of
Incorporation of the NASD and these by-laws. The Board, by resolution
adopted by a majority of Directors then in office and after notice to
the NASD Board, may remove the Chair or Vice Chair from such position
at any time for refusal, failure, neglect, or inability to discharge
his or her duties.
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 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 January 15, 1998, the adjudicatory functions of the National
Business Conduct Committee (``NBCC'') were transferred to the NAC.
Presently, the Association believes that the NASD Regulation By-Laws
are unclear as to whether the outgoing or newly appointed NAC select
the Chair and Vice Chair. Since the formation of the NAC, there has
been only one selection and the Chair and Vice Chair were selected from
the newly appointed NAC. The NASD proposes to direct the outgoing NAC
to select either a returning or a new member of the NAC to serve in
these positions for the following year. The NASD believes that the
outgoing NAC members are particularly well suited to select the Chair
and Vice Chair for the following year, and will prevent delay in the
selection of the Chair, who is also a member of the NASD Board of
Governors, and Vice Chair. The Association represents that this
proposal is also consistent with the practice that was used by the
NBCC, the predecessor of the NAC, in selecting its Chair and Vice
Chair.
(2) Statutory Basis
The NASD believes that the proposed rule change is consistent with
the provisions of Section 15A(b)(6) of the Act,\3\ 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 NASD believes that permitting
the outgoing NAC to select the Chair and Vice Chair for the following
year will prevent delay and result in the selection of the most highly
qualified candidates, who will serve important roles in reviewing
disciplinary, membership and other matters for the Association.
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\3\ 15 U.S.C. 78o-3(b)(6).
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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. 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, 450 Fifth Street, NW., Washington, DC 20549-0609.
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. Sec. 552, will be available for inspection and copying at
the Commission's Public Reference Room. Copies of such filing will also
be available for inspection and copying at the principal office of the
Exchange. All submissions should refer to File No.
[[Page 53762]]
SR-NASD-99-36 and should be submitted by October 25, 1999.
IV. Commission's Findings and Order Granting Accelerated Approval
of Proposed Rule Change
Upon review, the Commission finds that the proposed rule change is
consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities
association.\4\ In particular, the Commission believes the proposal is
consistent with Section 15A(b)(6) of the Act which requires, amongst
other things, that the rules of an association be designed to promote
just and equitable principles of trade, to prevent fraudulent and
manipulative acts, and, in general, to protect investors and the
public.\5\ The Association believes that the NASD Regulation By-Laws
are unclear on how the Chair and Vice-Chair for the incoming NAC are
chosen. While neither agreeing or disagreeing with this interpretation
of the current NASD Regulation By-Laws, the Commission believes that
the proposed rule change, which permits the incumbent NAC to select the
Chair and Vice Chair of the incoming NAC, will facilitate selection of
these important positions and prevent delays ion the exercise of the
NAC's delegated self-regulatory responsibilities.\6\ Additionally, the
Commission notes that the proposal is consistent with the practice
utilized by the NBCC, the NAC's predecessor.
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\4\ In approving this rule change, the Commission has considered
the proposed rule's impact on efficiency, competition, and capital
formation. 15 U.S.C. 78c(f).
\5\ 15 U.S.C. 78o-3(b)(6).
\6\ The NASD will generally attempt to provide the incumbent NAC
with a two week period during which the names of the newly appointed
NAC members can be reviewed. Telephone conversation between Eric
Moss, Assistant General Counsel, Office of General Counsel, NASD
Regulation and Marc McKayle, Attorney, Division of Market
Regulation, Commission, dated August 24, 1999.
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Finally, the Commission finds good cause pursuant to Section
19(b)(2) \7\ for approving the proposed rule change prior to the 30th
day after its publication in the Federal Register. Accelerated approval
of the proposed rule change should insure that the proposed selection
procedures for the NAC Chair and Vice Chair can be used for the
scheduled November 1999, appointment of the new NAC.
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\7\ 15 U.S.C. 78s(b)(2).
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It Is Therefore Ordered, pursuant to Section 19(b)(2) of the
Act,\8\ that the proposed rule change (SR-NASD-99-36) be, and hereby
is, approved on an accelerated basis.
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\8\ Id.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-25667 Filed 10-1-99; 8:45 am]
BILLING CODE 8010-01-M