[Federal Register Volume 67, Number 100 (Thursday, May 23, 2002)]
[Notices]
[Page 36281]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-12986]



[[Page 36281]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45954; File No. SR-NASD-2002-12]


Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Order Granting Approval to a Proposed Rule Change and 
Amendment No. 1 Thereto Relating to the Establishment of a 
Subordination Agreement Investor Disclosure Document

May 17, 2002.
    On January 17, 2002, the National Association of Securities 
Dealers, Inc. (``NASD''), 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 require, as part of a 
subordination agreement, the execution of a Subordination Agreement 
Investor Disclosure Document (``Disclosure Document''). On March 21, 
2002, NASD Regulation filed Amendment No. 1 to the proposed rule change 
with the Commission.\3\ The proposed rule change, as amended by 
Amendment No. 1, was published for comment in the Federal Register on 
April 16, 2002.\4\ The Commission received no comment letters on the 
proposal. This order approves the proposed rule change, as amended.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, NASD Regulation made certain 
clarifications to the Disclosure Document (``Amendment No. 1''). 
Letter from Patrice M. Gliniecki, Vice President and Acting General 
Counsel, NASD Regulation, to Katherine A. England, Assistant 
Director, Division of Market Regulation, Commission, dated March 21, 
2002.
    \4\ Securities Exchange Act Release No. 45721 (April 10, 2002), 
67 FR 18661.
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    The Commission finds that the proposed rule change, as amended, is 
consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities association 
and, in particular, the requirements of section 15A of the Act \5\ and 
the rules and regulations thereunder. Specifically, the Commission 
believes that the proposed rule change is consistent with section 
15A(b)(6) of the Act,\6\ which, among other things, requires that 
NASD'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. The 
Commission believes that the Disclosure Document should provide 
investors with an understanding of the key risks associated with 
loaning money or securities to a broker-dealer under a subordination 
agreements.\7\
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    \5\ 15 U.S.C. 78o-3.
    \6\ 15 U.S.C. 78o-3(b)(6).
    \7\ In approving this proposal, the Commission has considered 
the proposed rule's impact on efficiency, competition, and capital 
formation. 15 U.S.C. 78c(f).
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    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\8\ that the proposed rule change and Amendment No. 1 thereto (File 
No. SR-NASD-2002-12) are approved.
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    \8\ 15 U.S.C. 78s(b)(2).

    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. 02-12986 Filed 5-22-02; 8:45 am]
BILLING CODE 8010-01-P