[Federal Register Volume 67, Number 127 (Tuesday, July 2, 2002)]
[Notices]
[Pages 44492-44494]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-16544]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46103; File No. SR-NYSE-2002-21]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the New York Stock Exchange, 
Inc. To Allow the Use of Revised Forms U-4 and U-5

June 21, 2002.
    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 June 5, 2002, the New York Stock Exchange, Inc. (``NYSE'' or 
``Exchange'') 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 Exchange. The 
Exchange filed the proposal pursuant to Section 19(b)(3)(A) of the 
Act,\3\ and Rule 19b-4(f)(6) thereunder,\4\ which renders the proposal 
effective upon filing with the Commission. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6). The NYSE provided the Commission 
with written notice of its intention to file this proposed rule 
change on May 28, 2002. The Exchange has asked the Commission to 
waive the 30-day operative delay.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange hereby submits revised Uniform Application for 
Securities Industry Registration or Transfer (``Form U-4'') and the 
revised Uniform Termination Notice for Securities Industry Registration 
(``U-5'') for Commission review.

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 NYSE included statements 
concerning the purpose of and basis for its proposal and discussed any 
comments it received regarding the proposal. The text of these 
statements may be examined at the places specified in Item IV below. 
The Exchange 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 purpose of this proposed rule change is to allow the NYSE to 
use revised Uniform Application for Securities Industry Registration or 
Transfer (``Form U-4'') and Uniform Termination Notice for Securities 
Industry Registration (``Form U-5'') (together, the ``Forms''). The 
NYSE uses these Forms as part of its registration and oversight of 
persons associated with members and member organizations. In addition, 
these Forms are used in connection with the National Association of 
Securities Dealers, Inc.'s (``NASD'') Central Registration Depository 
(``CRD'') system, in which the Exchange participates. The CRD is an 
industry-wide automated system, which allows for the efficient review 
and tracking of registered persons in the securities industry, as well 
as changes in their work and disciplinary histories.
    The Forms were filed by NASD Regulation, Inc. (``NASDR'') with the 
Commission, and approved by the Commission on March 11, 2002.\5\ The 
NYSE included in its filing copies of the Forms (marked as Exhibits A 
and B). SR-NASD-2002-05 was based on NASDR's efforts to enhance the CRD 
and the registration and termination process of individuals in the 
securities industry. The Forms were amended to provide additional 
enhancements and information for more meaningful and detailed 
disclosure. The Forms are to be submitted electronically through the 
Internet.
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    \5\ See Securities Exchange Act Release No. 45531 (March 11, 
2002 ), 67 FR 11735 (March 15, 2002) (SR-NASD-2002-05).
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    The technical changes to the Forms will (1) update the Form U-4 to 
add examination and registration categories that were not previously 
included; (2) make certain formatting and technical changes to the 
Forms that would complete the transition from a paper-based filing 
model to an electronic-filing model; (3) clarify certain items that 
have been a source of confusion for Web CRD users; (4) provide separate 
paper filing instructions for those filers that do not use the CRD or 
Investment Adviser Registration Depository (``IARD'') systems; (5) 
accommodate the electronic submission of investment adviser filings in 
the IARD system; and (6) establish procedures that will enable broker/
dealer firms and investment adviser firms employing dually registered 
persons to concur with information contained in the Forms.
    Specific revisions that affect NYSE members and member 
organizations include the addition of new registration categories. The 
revised Forms add new registration categories for the NYSE Trading 
Assistant (``TA'') and Specialist Clerk (``SC'') positions.\6\
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    \6\ See Securities Exchange Act Release Nos. 40943 (January 13, 
1999), 64 FR 3330 (January 21, 1999) (SR-NYSE-98-36) and 41701 
(August 3, 1999), 64 FR 43804 (August 11, 1999) (SR-NYSE-99-20) in 
which the Commission approved the TA and SC positions, respectively.
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    The revised Forms also add: (1) a Series 7A examination that 
corresponds with the Floor Member Conducting Public Business (``PM'') 
and Floor Clerk Conducting Business (``PC'') registration category;\7\ 
(2) a NYSE Branch Manager Series 12 examination that corresponds with 
the Securities Manager (``SM'') registration category;\8\ (3) a Series 
21 examination that corresponds with the

[[Page 44493]]

NYSE SC registration category; and (4) a Series 25 examination that 
corresponds with the NYSE TA registration category.
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    \7\ See Securities Exchange Act Release No. 32698 (July 29, 
1993), 58 FR 41539 (August 4, 1993)(SR-NYSE-93-10) in which the 
Commission approved the NYSE proposed rule change to adopt the 
Series 7A examination as a module of the Series 7 examination for 
floor members who only accept orders from professional customers, 
and to establish a new registration category. See also Securities 
Exchange Act Release No. 42092 (November 2, 1999), 64 FR 61375 
(November 10, 1999) (SR-NYSE-99-36) in which the Commission approved 
the NYSE proposal to eliminate the Series 7B examination and adopt a 
new interpretation of Rule 345 to establish the Series 7A 
examination as the qualifying examination for floor clerks who only 
accept orders from professional customers.
    \8\ See Securities Exchange Act Release No. 39712 (March 3, 
1998), 63 FR 11939 (March 11, 1998)(SR-NYSE-97-33), in which the 
Commission approved a Continuing Education Program for supervisors 
that included Series 12 examination-qualified securities managers.
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    Another change affecting NYSE members and member organizations is 
the Signature and Acknowledgment sections on Form U-4. To accommodate 
electronic filing, revised Section 15, the ``Signatures'' section, 
defines a ``signature'' as either ``a manual signature or an 
electronically transmitted equivalent.'' This section permits 
individuals and appropriate signatories to go directly to designated 
signature fields to execute the electronic signatures required by the 
Form U-4. Revised Sections 15A and 15B address the individual/
applicant's acknowledgment and consent and the firm/appropriate 
signatory's representations, both of which must be completed on all 
initial or temporary registration Form U-4 filings. Section 15C 
addresses the Temporary Registration Acknowledgment, which must be 
completed for all initial or temporary registrations. Section 15D has 
been added to address an individual/applicant's acknowledgment and 
consent to amendments to the disclosure questions or the Disclosure 
Reporting Pages (``DRPs''). Firms and appropriate signatories must 
complete Section 15E for all amended Form U-4 filings. In addition, the 
signature section includes the Firm/Appropriate Signatory Concurrence 
(15F), which is a new signature section that enables one firm to concur 
with a filing made by another firm with which an individual is also 
registered (i.e., the individual is registered with more than one 
broker/dealer and/or investment adviser firm).
    The changes to Form U-5 combine the signatures into Section 8, 
which includes the firm acknowledgment in Section 8A and the individual 
acknowledgment and consent in Section 8B. Only appropriate signatories 
of firms are required to sign the Form U-5; however, if the terminating 
firm reports on the Form U-5 that an individual is under internal 
review, that individual may file a Part II to the Internal Review DRP 
to provide a response.
    In addition, unregistered individuals are obligated to report to 
CRD any address changes for two years following the termination of 
registration. The individual acknowledgment and consent is included in 
the proposed changes to the Form U-5 to require individuals submitting 
an address change or an Internal Review DRP-Part II to attest that the 
information is accurate and complete. With the exception of Part II of 
the Form U-5 Internal Review DRP, there is currently no mechanism for a 
former associated person or member to submit information to amend or 
update a disclosure record through the use of the Forms. Part II of the 
Form U-5 Internal Review DRP provides a current or former registered 
representative an opportunity to provide a summary of the circumstances 
relating to an internal review reported on a Form U-5 by a former 
employer.
    The revised technical and formatting amendments do not alter the 
reporting or disclosure requirements applicable to broker/dealers or 
their registered persons. Therefore, members and member organizations 
are not required to ``re-file'' disclosure or administrative 
information for their associated persons.
    The amendments will enhance the utility of Forms U-4 and U-5 as 
part of the Exchange's registration and oversight function by providing 
more detailed reporting concerning persons associated with members and 
member organizations as well as enhancements to electronic filing 
through the Internet.
2. Statutory Basis
    The NYSE believes the proposed rule change is consistent with 
Section 6(b)(5) of the Act,\9\ in that use of the Forms should foster 
cooperation and coordination with persons engaged in regulating 
transactions in securities. Additionally, the NYSE believes the 
information reported on the Forms assists the Exchange in its 
responsibilities under Section 6(c) of the Act \10\ in denying 
membership to those subject to a statutory disqualification or who 
cannot meet such standards of training, experience and competence as 
are prescribed by the rules of the Exchange or those who have engaged 
in acts or practices inconsistent with just and equitable principles of 
trade.
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    \9\ 15 U.S.C. 78f(b)(5).
    \10\ 15 U.S.C. 78f(c).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose 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 Exchange has neither solicited nor received written comments on 
the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The proposed rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \11\ and subparagraph (f)(6) of Rule 19b-4 \12\ 
thereunder. At any time within 60 days of the filing of the proposed 
rule change, the Commission may summarily abrogate such rule change if 
it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).
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    The Exchange has requested that the Commission waive the 30-day 
operative delay. The Commission believes waiving the 30-day operative 
delay is consistent with the protection of investors and the public 
interest. Acceleration of the operative date will allow immediate use 
of the Forms. For these reasons, the Commission designates the proposal 
to be effective and operative upon filing with the Commission.\13\
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    \13\ For purposes only of accelerating the operative date of 
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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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposal 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 filing will also be available for 
inspection and copying at the principal office of the NYSE. All 
submissions should refer to file number SR-NYSE-2002-21 and should be 
submitted by July 23, 2002.


[[Page 44494]]


    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. 02-16544 Filed 7-1-02; 8:45 am]
BILLING CODE 8010-01-P