[Federal Register Volume 67, Number 75 (Thursday, April 18, 2002)]
[Notices]
[Pages 19291-19292]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-9458]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45736; File No. SR-NASD-2002-11]


Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Order Granting Approval to Proposed Rule Change Relating 
to Amendments to NASD Rule 2260 To Require Members To Make Reasonable 
Efforts To Forward Issuer and Trustee Communications to Beneficial 
Holders of Non-Municipal Debt Securities

April 11, 2002.
    On January 17, 2002, 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 (``Commission''), pursuant to 
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ 
and Rule 19b-4 thereunder,\2\ a proposed rule change to amend Rule 2260 
of the rules of the NASD to require a member to make reasonable efforts 
to forward a

[[Page 19292]]

communication from an issuer or trustee regarding a debt security other 
than a municipal security to the beneficial owner of such security. The 
proposed rule change also clarifies IM-2260 (Suggested Rate of 
Reimbursement) to reflect that, in forwarding proxies and other 
materials, members may not charge for envelopes that are provided by 
the issuer or the trustee, as well as by persons soliciting proxies.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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    The proposed rule change was published for comment in the Federal 
Register on March 6, 2002.\3\ The Commission received no comments on 
the proposal.
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    \3\ See Securities Exchange Act Release No. 45483 (February 27, 
2002), 67 FR 10245.
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    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\ and, in 
particular, the requirements of Section 15A of the Act \5\ and the 
rules and regulations thereunder. The Commission finds specifically 
that the proposed rule change is consistent with Section 15A(b)(6) of 
the Act,\6\ which requires, among other things, that the rules of an 
association 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.\7\ The 
Commission believes that the proposed rule change is a reasonable 
customer protection measure for holders of non-municipal debt 
securities, as it clarifies that members have an affirmative obligation 
to make reasonable efforts to forward certain information regarding 
these debt securities to their beneficial owners.
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    \4\ In approving this proposed rule change, the Commission notes 
that it 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.
    \6\ 15 U.S.C. 78o-3 (b)(6).
    \7\ Id.
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    In addition, the Commission notes that this proposed rule change is 
consistent with a similar proposed rule change relating to municipal 
securities submitted by the Municipal Securities Rulemaking Board 
(``MSRB'') and recently approved by the Commission.\8\ In that filing, 
the MSRB amended its Rule G-15 to provide that brokers, dealers and 
municipal securities dealers that safekeep municipal securities must 
make reasonable efforts to retransmit official communications to their 
safekeeping clients.
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    \8\ See Securities Exchange Act Release No. 45562 (March 14, 
2002), 67 FR 13030 (March 20, 2002).
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\9\ that the proposed rule change (File No. SR-NASD-2002-11) be, 
and it hereby is, approved.
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    \9\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-9458 Filed 4-17-02; 8:45 am]
BILLING CODE 8010-01-P