[Federal Register Volume 68, Number 33 (Wednesday, February 19, 2003)]
[Notices]
[Pages 8053-8054]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-3943]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47354; File No. SR-NASD-2002-180]


Self-Regulatory Organizations; Order Approving Proposed Rule 
Change by the National Association of Securities Dealers, Inc. 
Regarding the Prohibition Against Guarantees and Sharing in Customer 
Accounts

February 12, 2003.
    On December 18, 2002, the National Association of Securities 
Dealers, Inc. (``NASD'') filed with the Securities and Exchange 
Commission (``SEC'' or ``Commission'') a proposed rule change to amend 
NASD Rule 2330(e) to clarify that members and their associated persons 
are prohibited from guaranteeing any customer against loss in 
connection with any securities transaction or in any securities account 
of the customer. Additionally, the proposal would require that 
associated persons obtain written authorization from their employing 
member firm and the customer before sharing in a customer's account 
under Rule 2330(f). The proposal would delete the requirement that 
members and associated persons obtain the written authorization of the 
member carrying the account before sharing in a customer's account from 
Rule 2330(f). Notice of the proposed rule change was published for 
comment in the Federal Register on January 6, 2003.\1\ The Commission 
received no comments regarding the proposal.
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    \1\ See Securities Exchange Act Release No. 47103 (December 30, 
2002), 68 FR 595.
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    The Commission finds that the proposed rule change is consistent 
with the Act and the rules and regulations thereunder applicable to a 
national securities association.\2\ The Commission finds that the 
proposal is consistent with the requirements of section 15A(b)(6) of 
the Act,\3\ which requires, among other things, that the rules of a 
registered national securities 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. Specifically, the Commission believes that the 
proposal should facilitate compliance with Rule 2330(e) by clarifying 
that members and their associated persons are prohibited from making 
guarantees to any customer, not just those whose accounts are carried 
by the member or those for whom a member is effecting a securities 
transaction. The proposal should also strengthen the regulatory 
protections provided in Rule 2330(f) by requiring members and their 
associated persons to obtain the prior written authorization of the 
customer before sharing in any customer account. Finally, the 
Commission believes that requiring associated persons who wish to share 
in a customer account to obtain authorization from their employer is a 
more effective way to detect and deter misconduct than requiring such 
authorization from the member carrying the account.
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    \2\ In approving the proposal, the Commission has considered the 
rule's impact on efficiency, competition, and capital formation. 15 
U.S.C. 78c(f).
    \3\ 15 U.S.C. 78o(b)(6).
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    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\4\ that the

[[Page 8054]]

proposed rule change (SR-NASD-2002-180) is approved.
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    \4\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\5\
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    \5\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-3943 Filed 2-18-03; 8:45 am]
BILLING CODE 8010-01-P