[Federal Register Volume 66, Number 231 (Friday, November 30, 2001)]
[Notices]
[Pages 59827-59830]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-29714]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45101; File No. SR-NASD-2001-76]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendment No. 1 Thereto by the National Association of 
Securities Dealers, Inc. Amending NASD Rules 4510, 4520 and 4530 
Relating to Issuer Entry and Annual Fee Schedules

November 23, 2001.
    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 October 31, 2001, the National Association of Securities Dealers, 
Inc. (``NASD'' or ``Association'') through its subsidiary The Nasdaq 
Stock Market, Inc. (``Nasdaq'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by the NASD. 
Amendment No. 1 was filed on November 21, 2001.\3\ 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 Sara Nelson Bloom, Associate General 
Counsel, Nasdaq, to Katherine A. England, Assistant Director, 
Division of Market Regulation (``Division''), Commission, dated 
November 21, 2001 (``Amendment No. 1''). In Amendment No. 1, the 
NASD made clarifying changes to the rule text, provided greater 
detail as to the basis for the proposed rule change, deleted all 
references to its request for accelerated approval, and requested 
that the proposed fees apply as of January 1, 2002.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The NASD has filed with the Commission a proposed rule change to 
amend Association Rules 4510, 4520 and 4530 pertaining to Issuer Entry 
and Annual Fee Schedules for the National and SmallCap Markets for both 
domestic and non-U.S. listings and make conforming changes.
    The text of the proposed rule change appears below. New text is in 
italics. Deletions are in brackets.
* * * * *

4510. The Nasdaq National Market

(a) Entry Fee

    [(1) When an Issuer submits an application for inclusion of any 
class of its securities in the Nasdaq National Market, it shall pay to 
The Nasdaq Stock Market, Inc.:
    (A) a one-time company listing fee of $5,000 (which shall include a 
$1,000 non-refundable processing fee); and (B) a fee calculated on 
total shares outstanding according to the following schedule:
    Up to 1 million shares  $29,525
    1+ to 2 million shares  $33,750
    2+ to 3 million shares  $43,750
    3+ to 4 million shares  $48,750
    4+ to 5 million shares  $55,000
    5+ to 6 million shares  $58,725
    6+ to 7 million shares  $61,875
    7+ to 8 million shares  $64,375
    8+ to 9 million shares  $67,875
    9+ to 10 million shares  $70,625
    10+ to 11 million shares  $73,875
    11+ to 13 million shares  $76,625
    12+ to 13 million shares  $79,875
    13+ to 14 million shares  $82,000
    14+ to 15 million shares  $83,500
    15+ to 16 million shares  $85,500
    Over 16 million shares  $90,000]
    (1) When a domestic Issuer, or foreign Issuer raising capital in 
conjunction with its Nasdaq listing, submits an application for 
inclusion of any class of its securities in The Nasdaq National Market, 
it shall pay to The Nasdaq Stock Market, Inc. a fee calculated on total 
shares outstanding, which includes a one-time company listing fee of 
$5,000 ($1,000 of which is a non-refundable processing fee), according 
to the following schedule:
    Up to 30 million shares  $100,000
    30+ to 50 million shares  $125,000
    Over 50 million shares  $150,000
    (2) When a foreign Issuer not raising capital in conjunction with 
its Nasdaq listing, including American Depositary Receipts (ADRs), 
submits an application for inclusion of any class of its securities in 
The Nasdaq National market, it shall pay to The Nasdaq Stock Market, 
Inc. a fee calculated on total shares outstanding, which includes a 
one-time company listing fee of $5,000 ($1.000 of which is a non-
refundable processing fee), according to the following schedule:
    Up to 3 million shares  $50,000
    3+ to 5 million shares  $75,000
    5+ to 30 million shares  $100,000
    30+ to 50 million shares  $125,000
    Over 50 million shares  $150,000
    [(2)](3) Total shares outstanding means the aggregate of all 
classes of equity securities to be included in [t]The Nasdaq National 
Market as shown in the Issuer's most recent periodic report or in more 
recent information held by Nasdaq or, in the case of new issues, as 
shown in the offering circular, required to be filed with the Issuer's 
appropriate regulatory authority. In the case of foreign Issuers, total 
shares outstanding shall include only those shares issued and 
outstanding in the United States.
    [(3)] (4) The Board of Directors of The Nasdaq Stock Market, Inc. 
or its designee may, in its discretion, defer or waive all or any part 
of the Entry fee prescribed herein.
    [(4)] (5) If the application is withdrawn or is not approved, the 
Entry fee (less the non-refundable processing fee) shall be refunded.

(b) Additional Shares

    (1)-(4) No Change

(c) Annual Fee--Domestic and Foreign Issues

    (1) [As of January 1, 1998, t]The Issuer of each class of 
securities, other than an ADR, that is a domestic or foreign issue 
listed in [t]The Nasdaq National Market shall pay to The Nasdaq Stock 
Market, Inc. an Annual fee calculated on total shares outstanding 
according to the following schedule:
    [Up to 1 million shares  $10,710
    1+ to 2 million shares  $10,960
    2+ to 3 million shares  $11,210
    3+ to 4 million shares  $11,460
    4+ to 5 million shares  $11,710
    5+ to 6 million shares  $11,960
    6+ to 7 million shares  $12,210
    7+ to 8 million shares  $12,460
    8+ to 9 million shares  $12,710
    9+ to 10 million shares  $12,960
    10+ to 11 million shares  $17,255
    11+ to 12 million shares  $17,505
    12+ to 13 million shares  $17,755
    13+ to 14 million shares  $18,005
    14+ to 15 million shares  $18,255
    15+ to 16 million shares  $18,505
    16+ to 20 million shares  $18,755
    20+ to 25 million shares  $22,795
    25+ to 50 million shares  $26,625
    50+ to 75 million shares  $32,625
    75+ to 100 million shares  $43,125
    Over 100 million shares  $50,000]
    Up to 10 million shares  $21,225
    10+ to 25 million shares  $26,500
    25+ to 50 million shares  $29,820
    50+ to 75 million shares  $39,150
    75+ to 100 million shares  $51,750
    Over 100 million shares  $60,000
    (2)-(3) No Change
    (4) [The Annual fee shall be based on the total shares outstanding 
of the class] Total shares outstanding means the aggregate of all 
classes of equity securities included in [t]The Nasdaq National Market 
as shown in the Issuer's most recent periodic report required to be 
filed with the Issuer's appropriate

[[Page 59828]]

regulatory authority or in more recent information held by Nasdaq. In 
the case of foreign Issuers, total shares outstanding shall include 
only those shares issued and outstanding in the United States.

(d) Annual Fee--American Depositary Receipts (ADRs)

    (1) The Issuer of each class of securities that is an ADR listed in 
[t]The Nasdaq National Market shall pay to The Nasdaq Stock Market, 
Inc. an Annual fee [to be computed as follows with a maximum Annual fee 
of $8,000 per Issuer] calculated on ADRs outstanding according to the 
following schedule not to exceed $30,000 per Issuer:
    Up to 10 million ADRs  $10,000
    10+ to 25 million ADRs  $15,000
    25+ to 50 million ADRs  $20,000
    50+ to 75 million ADRs  $22,500
    75+ to 100 million ADRs  $25,000
    Over 100 million ADRs  $30,000
    [(A) a $2,000 Nasdaq National Market participation fee; and (B) the 
sum of $500 or $.0005 per share outstanding, whichever is higher, up to 
a maximum of $6,000 for class of securities listed in the Nasdaq 
National Market.]
    (2) [The Annual fee shall be based on the total shares outstanding 
of the class] ADRs outstanding means the aggregate of all classes of 
ADRs included in [t]The Nasdaq National Market as shown in the Issuer's 
most recent periodic report required to be filed with the Issuer's 
appropriate regulatory authority or in more recent information held by 
Nasdaq.
    (3)-(4) No change

4520. The Nasdaq SmallCap Market

(a) Entry Fee

    (1) When an Issuer submits an application for inclusion of any 
class of its securities, other than convertible debentures, in the 
Nasdaq SmallCap Market, it shall pay to The Nasdaq Stock Market, 
Inc.[:] a fee calculated on total shares outstanding, which includes a 
one-time company listing fee of $5,000 ($1,000 of which is a non-
refundable processing fee), according to the following schedule:
    Up to 1 million shares  $9,500
    1+ to 5 million shares  $19,000
    5+ to 10 million shares  $30,875
    10+ to 15 million shares  $40,375
    Over 15 million shares  $47,500
    [(A) a one-time company listing fee of $5,000 (which shall include 
a $1,000 non-refundable processing fee); and (B) for each class of 
securities listed, a fee to be computed as follows, with a maximum 
Entry fee for all classes of securities listed, regardless of the dates 
those securities are listed, of $10,000 per Issuer (inclusive of the 
$5,000 company listing fee)
(i) Equity Securities
    $1,000 or $.001 per share outstanding, whichever is higher. For 
purposes of this subparagraph, the term ``equity securities'' includes 
all securities eligible for inclusion in The Nasdaq SmallCap Market not 
covered by subparagraph (ii) hereof.*
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    [* The term ``shares'' shall include common and preferred stock, 
American Depositary Receipts (ADRs), warrants, partnership 
interests, or any other security listed on the Nasdaq SmallCap 
Market. In the case of units, each component, but not the unit 
itself, shall be considered separately as an ``equity security'' for 
fee purposes.]
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(ii) Convertible Debentures
    $1,000 or $50 per million dollars face amount of debentures 
outstanding, whichever is higher.]
    (2) When an Issuer submits an application for inclusion of any 
class of convertible debentures in The Nasdaq SmallCap Market, it shall 
pay to The Nasdaq Stock Market, Inc. a one-time company listing fee of 
$5,000 (which shall include a $1,000 non-refundable processing fee) and 
a fee of $1,000 or $50 per million dollars face amount of debentures 
outstanding, whichever is higher.
    [(2)] (3) The Board of Directors of The Nasdaq Stock Market, Inc. 
or its designee may, in its discretion, defer or waive all or any part 
of the Entry fee prescribed herein.
    [(3) The Entry fee shall be based on the total shares outstanding 
of the class] (4) Total shares outstanding means the aggregate of all 
classes of equity securities to be included in The Nasdaq SmallCap 
Market as shown in the Issuer's most recent periodic report or in more 
recent information held by Nasdaq or, in the case of new issues, as 
shown in the offering circular, required to be filed with the Issuer's 
appropriate regulatory authority.
    [(4)] (5) If the application is withdrawn or is not approved, the 
Entry fee (less the non-refundable processing fee) shall be refunded.

(b) Additional Shares

    (1)-(4) No Change

(c) Annual Fee[--Domestic and Foreign Issues]

    (1) [As of January 1, 1993, t]The Issuer of a class of securities 
that is a domestic or foreign issue, including American Depositary 
Receipts (ADRs), listed in The Nasdaq SmallCap Market shall pay to The 
Nasdaq Stock Market, Inc. an Annual fee to be computed as follows:
    (A) [$4,000] $8,000 for the first issue; plus
    (B) [$1,000] $2,000 for each additional issue.
    (2) Notwithstanding paragraph (1), the Issuer of each class of 
convertible debentures listed in The Nasdaq SmallCap Market shall pay 
to The Nasdaq Stock Market, Inc. an Annual fee of $500 or $25 per 
million dollars face amount of debentures outstanding, whichever is 
higher.
    [(2)] (3) The Board of Directors of The Nasdaq Stock Market, Inc. 
or its designee may, in its discretion, defer or waive all or any part 
of the Annual fee prescribed herein.
    [(3)] (4) If a class of securities is removed from The Nasdaq 
SmallCap Market, that portion of the Annual fees for such class of 
securities attributable to the months following the date of removal 
shall not be refunded, except such portion shall be applied to Nasdaq 
National Market fees for that calendar year.

[(d) Annual Fee--American Depositary Receipts (ADRs)

    (1) The Issuer of each class of securities that is an ADR listed in 
The Nasdaq SmallCap Market shall pay to The Nasdaq Stock Market, Inc. 
an Annual fee to be computed as follows with a maximum Annual fee of 
$6,000 per Issuer
(A) Equity Securities
    $500 or $.0005 per share outstanding, whichever is higher. For 
purposes of this subparagraph, the term ``equity securities'' includes 
all securities eligible for inclusion in the Nasdaq SmallCap Market not 
covered by subparagraph (B) of this paragraph.\**\
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    \\ [** See notes to Rule 4520(a)(1)(B)(i), above.]
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(B) Convertible Debentures
    $500 or $25 per million dollars face amount of debentures 
outstanding, whichever is higher.
    (2) The Annual fee shall be based on the total amount of 
outstanding securities of the class included in The Nasdaq SmallCap 
Market as shown in the Issuer's most recent periodic report required to 
be filed with the Issuer's appropriate regulatory authority and 
received by The Nasdaq Stock Market, Inc.
    (3) The Board of Governors of the Association, or its designee may, 
in its discretion, defer or waive all or any part of the Annual fee 
prescribed herein.
    (4) If a class of securities is removed from The Nasdaq SmallCap 
Market, that portion of the Annual fees for such class of securities 
attributable to the months

[[Page 59829]]

following the date of removal shall not be refunded, except such 
portion shall be applied to Nasdaq National Market fees for that 
calendar year.]

4530. Other Securities

(a) Entry Fee

    (1) When an Issuer submits an application for inclusion of any 
Other Security in The Nasdaq National Market qualified for listing 
under Rule 4420(f) it shall pay a fee ($1,000 of which is a non-
refundable processing fee) calculated on total shares outstanding 
according to the following schedule:
    Up to 1 million shares  $5,000
    1+ to 2 million shares  $10,000
    2+ to 3 million shares  $15,000
    3+ to 4 million shares  $17,500
    4+ to 5 million shares  $20,000
    5+ to 6 million shares  $22,500
    6+ to 7 million shares  $25,000
    7+ to 8 million shares  $27,500
    8+ to 9 million shares  $30,000
    9+ to 10 million shares  $32,500
    10+ to 15 million shares  $37,500
    Over 15 million shares  $45,000
    (2) Total shares outstanding means the aggregate of all classes of 
Other Securities to be included in The Nasdaq National Market as shown 
in the Issuer's most recent periodic report or in more recent 
information held by Nasdaq or, in the case of new issues, as shown in 
the offering circular, required to be filed with the Issuer's 
appropriate regulatory authority.
    (3) The Board of Directors of The Nasdaq Stock Market, Inc. or its 
designee may, in its discretion, defer or waive all or any part of the 
Entry fee prescribed herein.
    (4) If the application is withdrawn or is not approved, the Entry 
fee (less the non-refundable processing fee) shall be refunded.

(b) Annual Fee

    (1) The Issuer of Other Securities qualified under Rule 4420(f) for 
listing on The Nasdaq National Market shall pay to The Nasdaq Stock 
Market, Inc. an Annual fee calculated on total shares outstanding 
according to the following schedule:
    Up to 1 million shares  $6,500
    1+ to 2 million shares  $7,000
    2+ to 3 million shares  $7,500
    3+ to 4 million shares  $8,000
    4+ to 5 million shares  $8,500
    5+ to 6 million shares  $9,000
    6+ to 7 million shares  $9,500
    7+ to 8 million shares  $10,000
    8+ to 9 million shares  $10,500
    9+ to 10 million shares  $11,000
    10+ to 11 million shares  $11,500
    11+ to 12 million shares  $12,000
    12+ to 13 million shares  $12,500
    13+ to 14 million shares  $13,000
    14+ to 15 million shares  $13,500
    15+ to 16 million shares  $14,000
    Over 16 million shares  $14,500
    (2) The Board of Directors of The Nasdaq Stock Market, Inc. or its 
designee may, in its discretion, defer or waive all or any part of the 
Annual fee prescribed herein.
    (3) Total shares outstanding means the aggregate of all classes of 
Other Securities as shown in the Issuer's most recent periodic report 
required to be filed with the Issuer's appropriate regulatory authority 
or in more recent information held by Nasdaq.

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 NASD 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 NASD 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
    The NASD \4\ proposes to amend the Association Rules 4510, 4520 and 
4530 pertaining to Issuer Entry and Annual fees on The Nasdaq National 
Market and SmallCap Market for both domestic and foreign listings. It 
has been approximately ten years since the NASD amended the Entry and 
Annual fees for SmallCap\5\ and ADR listings,\6\ and four years since 
it amended the National Market Entry and Annual fees.\7\ During that 
extended period, the NASD has committed increased resources to provide 
regulatory oversight, client coverage, and professional services to 
listed companies. For example, additional resources were committed to 
fund regulatory costs associated with the institution of corporate 
governance requirements on The SmallCap Market in 1997. Additionally, 
Nasdaq has invested in many market improvements such as Nasdaq Online, 
the Nasdaq Marketsite, and enhancements to Nasdaq.com, as well as 
market quality improvements such as decimalization, SuperSoes, and the 
development of SuperMontage. Nasdaq also plans to commit further 
resources to fund service enhancements requested by Nasdaq companies. 
In particular, Nasdaq proposes to create a telephone and technology 
based corporate-client information center to provide Nasdaq companies 
with a range of integrated products and services in a more centralized 
and timely manner.\8\
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    \4\ The proposed rule change and Amendment No. 1 thereto was 
submitted by the NASD on behalf of its subsidiary, Nasdaq. Telephone 
conversation between John Nachmann, Senior Attorney, Nasdaq, and 
Terri Evans, Assistant Director, Division, Commission, on November 
21, 2001.
    \5\ Telephone conversation between John Nachmann, Senior 
Attorney, Nasdaq, and Christopher Solgan, Law Clerk, Division, 
Commission, on November 23, 2001 (clarifying the date of last 
change). See Securities Exchange Act Release No. 30143 (January 2, 
1992), 57 FR 726 (January 8, 1992).
    \6\ Telephone conversation between John Nachmann, Senior 
Attorney, Nasdaq, and Christopher Solgan, Law Clerk, Division, 
Commission, on November 23, 2001 (clarifying the date of last 
change). See Securities Exchange Act Release No. 28731 (January 2, 
1991), 59 FR 906 (January 9, 1991).
    \7\ See Securities Exchange Act Release No. 39613 (February 2, 
1998), 63 FR 6789 (February 10, 1998).
    \8\ See Amendment No. 1, supra note 3.
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    The NASD proposes to increase Entry and Annual fees for The Nasdaq 
National Market, including American depositary Receipts (``ADRs''). 
Nasdaq National Market Entry fees would be split into two fee 
schedules; one schedule for all U.S. Issuers and foreign Issuers 
raising capital in conjunction with their listing on Nasdaq; and 
another schedule for foreign Issuers that are not raising capital in 
connection with their listing. This second schedule has somewhat lower 
fees for foreign listings under 5 million shares, in recognition of the 
fact that these listings are non-capital raising and generally 
represent secondary market listings. The NASD will also increase its 
existing National Market Annual fee structure.
    The NASD proposes to increase Entry and Annual fees for The Nasdaq 
SmallCap Market as well. ADRs on the SmallCap Market will follow the 
same fee schedule as domestic and foreign issues. Finally, the NASD 
intends to add a new fee schedule to the NASD Rule 4500 Series for 
Other Securities qualified under NASD Rule 4420(f). Finally, the NASD 
has requested that the new fees apply as of January 1, 2002 in order to 
be consistent with the expectations of Nasdaq listed companies and to 
ease administration of the fees.\9\
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    \9\ See Amendment No. 1, supra note 3.
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(2) Statutory Basis
    The NASD believes that the proposed rule change is consistent with 
the provisions of sections 15A(b)(5) \10\ and

[[Page 59830]]

(6) \11\ of the Act. The proposed rule change is consistent with 
section 15A(b)(5) \12\ in that it provides for the equitable allocation 
of reasonable dues, fees, and other charges among Issuers using the 
Nasdaq system. The proposed rule change is also consistent with section 
15A(b)(6) \13\ in that it is designed to promote just and equitable 
principles of trade and does not permit unfair discrimination between 
customers, Issuers, brokers or dealers. As noted above, the fee 
increase reflects additional costs that Nasdaq incurs for services 
provided to Issuers.
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    \10\ 15 U.S.C. 78o-3(b)(5).
    \11\ 15 U.S.C. 78o-3(b)(6).
    \12\ 15 U.S.C. 78o-3(b)(5).
    \13\ 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.

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

    The NASD neither solicited nor received written comments.

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 Exchange 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 
change, as amended, 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 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 
filings will also be available for inspection and copying at the 
principal office of the Association. All submissions should refer to 
File No. SR-NASD-2001-76 and should be submitted by December 21, 2001.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-29714 Filed 11-29-01; 8:45 am]
BILLING CODE 8010-01-M