[Federal Register Volume 68, Number 57 (Tuesday, March 25, 2003)]
[Notices]
[Pages 14439-14444]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-6983]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 33-8207, File No. S7-05-03]


Securities Uniformity; Annual Conference on Uniformity of 
Securities Laws

AGENCY: Securities and Exchange Commission.

ACTION: Notice of conference; request for comments.

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SUMMARY: The Commission and the North American Securities 
Administrators Association, Inc. are requesting comments on the 
proposed agenda for their annual conference to be held on April 7, 
2003. The purpose of the conference is to further the objectives of 
section 19(d) of the Securities Act of 1933, principally to increase 
cooperation between the Commission and state securities regulatory 
authorities in order to maximize the efficiency and effectiveness of 
securities regulation.

DATES: The conference will be held on April 7, 2003. We must receive 
comments by April 3, 2003 in order to consider them for discussion at 
the conference.

ADDRESSES: To help us process and review your comments more 
efficiently, comments should be sent by one method only. Please send 
three copies of written comments to Jonathan G. Katz, Secretary, 
Securities and Exchange Commission, 450 5th Street, NW., Washington, DC 
20549-0609. Comments may also be sent electronically to the following 
e-mail address: [email protected]. Comment letters should refer to 
File No. S7-05-03; if e-mail is used, please include this file number 
on the subject line. Anyone can inspect and copy the comment letters in 
our Public Reference Room, 450 5th Street, NW., Washington, DC 20549-
0102. All electronic comment letters will be posted on the Commission's 
internet Web site (http://www.sec.gov).\1\
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    \1\ We do not edit personal identifying information, such as 
names and e-mail addresses, from electronic submissions. Therefore, 
you should submit only information you wish to make publicly 
available.

FOR FURTHER INFORMATION CONTACT: Marva Simpson, Office of Small 
Business Policy, Division of Corporation Finance, U.S. Securities and 
Exchange Commission, 450 5th Street, NW., Washington, DC 20549-0310, 
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(202) 942-2950.

SUPPLEMENTARY INFORMATION: 

I. Discussion

    The Federal government and the states have jointly regulated 
securities offerings and the securities industry in the United States 
since the adoption of the first federal securities statute, the 
Securities Act of 1933 (the ``Securities Act'').\2\ Companies trying to 
raise capital in our securities markets, as well as participants in the 
secondary trading markets, must comply with all applicable federal and 
state securities laws and regulations. Parties involved in the 
securities markets have long recognized the need to increase 
cooperation between the federal and state regulatory systems to 
facilitate capital formation while retaining necessary investor 
protections.
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    \2\ 15 U.S.C. 77a et seq.
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    Congress endorsed more uniformity in securities regulation with the 
enactment of section 19(d) of the Securities Act \3\ in the Small 
Business Investment Incentive Act of 1980.\4\ Section 19(d) authorizes 
the Commission to cooperate with an association of state securities 
regulators that can assist in achieving such uniformity. The North 
American Securities Administrators Association (``NASAA'') fulfills 
that function.\5\ Section 19(d) requires the Commission to cooperate 
with NASAA to:
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    \3\ 15 U.S.C. 77s(d). Section 19(d) was enacted originally as 
section 19(c) of the Securities Act but was renumbered by section 
108 of the Sarbanes-Oxley Act of 2002, Pub. L. 107-204, 116 Stat. 
745 (July 30, 2002).
    \4\ Pub. L. 96-477, 94 Stat. 2275 (Oct. 21, 1980).
    \5\ NASAA is an association of securities administrators from 
each of the 50 states, the District of Columbia, Puerto Rico, Mexico 
and 12 Canadian provinces and territories.
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    [sbull] maximize the effectiveness of regulation;
    [sbull] maximize uniformity in federal and state regulatory 
standards;
    [sbull] minimize interference with the capital formation;
    [sbull] reduce the cost and paperwork burdens of raising investment 
capital, particularly by small business; and
    [sbull] reduce administration costs of the government programs 
involved.
    The Commission is required under Section 19(d) to conduct an annual 
conference to establish ways to achieve these goals.

[[Page 14440]]

II. 2003 Conference

    The Commission and NASAA are planning the 2003 Conference on 
Federal-State Securities Regulation, scheduled be held on April 7, 2003 
in Washington, DC. The 2003 conference will be the twentieth such 
conference to be held pursuant to the directive in section 19(d) of the 
Securities Act. At the conference, Commission and NASAA representatives 
will divide into working groups in the areas of corporation finance, 
market regulation and oversight, investment management, investor 
education, and enforcement. Each group will discuss methods to enhance 
cooperation in securities matters and improve the efficiency and 
effectiveness of federal and state securities regulation. Generally, to 
encourage open and frank discussion, only Commission and NASAA 
representatives may attend the conference. Each working group, however, 
in its discretion may invite specific self-regulatory organizations 
(``SROs'') to attend and participate in certain sessions.
    The Commission and NASAA are preparing the conference agenda. We 
invite the public, securities associations, SROs, agencies, and private 
organizations to participate by submitting written comments on the 
issues set forth below. In addition, we request comment on other 
appropriate subjects. We will make the comments available to all 
conference attendees.

III. Tentative Agenda and Request for Comments

    The tentative agenda for the conference includes the topics 
discussed below in the areas of corporation finance, market regulation, 
investment management, investor education and assistance, and 
enforcement.

(1) Corporation Finance Issues

A. Commission Rules Implementing the Sarbanes-Oxley Act and other 
Recent Rulemaking; Impact on Smaller Companies
    In the wake of a series of corporate and accounting scandals, 
President George W. Bush signed into law the Sarbanes-Oxley Act of 2002 
(the ``Sarbanes-Oxley Act'') on July 30, 2002.\6\ Among other things, 
the Act directs the Commission to promulgate rules and regulations that 
will improve the quality of corporate disclosure and financial 
reporting, strengthen the independence of auditing firms, and increase 
the responsibility of management for corporate disclosures and 
financial statements.
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    \6\ Sarbanes-Oxley Act of 2002, Pub. L. 107-204, 116 Stat. 745 
(July 30, 2002).
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    The Sarbanes-Oxley Act specified that many of the new rules had to 
be effective within 180 days of enactment. We have already issued a 
number of final rules under the Sarbanes-Oxley Act and intend to issue 
the remaining final rules within the mandated time frames.
    The final rules relevant to the 19(d) conference include the 
following:\7\
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    \7\ The Commission also adopted rules that would accelerate the 
periodic reporting filing dates and require disclosure concerning 
Web site access to reports. Release No. 33-8128 (Sept. 5, 2002) [67 
FR 58480].
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    [sbull] Release 34-46421--August 27, 2002--Ownership Reports and 
Trading by Officers, Directors, and Principal Security Holders.
    [sbull] Release 33-8124--August 28, 2002--Certification of 
Disclosure in Companies' Quarterly and Annual Reports.
    [sbull] Release No. 33-8176--January 22, 2003--Conditions for Use 
of Non-GAAP Financial Measures.
    [sbull] Release No. 34-47225--January 22, 2003--Insider Trades 
During Pension Fund Blackout Periods.
    [sbull] Release No. 33-8177--January 23, 2003--Disclosure Required 
by Sections 406 and 407 of the Sarbanes-Oxley Act of 2002.
    [sbull] Release No. 33-8182--January 28, 2003--Disclosure in 
Management's Discussion and Analysis about Off-Balance Sheet 
Arrangements and Aggregate Contractual Obligations.
    [sbull] Release No. 33-8183--January 28, 2003--Strengthening the 
Commission's Requirements Regarding Auditor Independence.
    [sbull] Release 33-8185--January 28, 2003--Implementation of 
Standards of Professional Conduct for Attorneys.
    Smaller companies have expressed concerns with respect to several 
of the Commission's recent proposed and final rules, including:
    [sbull] The ability of smaller companies to meet the evaluation and 
reporting requirements for a company's internal controls and procedures 
for financial reporting and its disclosure controls and procedures with 
respect to annual and quarterly reports.
    [sbull] The requirement relating to including an audit committee 
financial expert on a company's audit committee, given the difficulty 
small companies have in finding qualified board members.
    [sbull] The increase in Form 8-K filings that would result from 
adoption of the Commission's proposed release on Form 8-K disclosure 
requirements, which would add 11 new items to the current list of items 
requiring the filing of a Form 8-K, accelerate the filing requirement 
to two days, move two disclosure items currently required to be 
included in companies' annual and quarterly reports to Form 8-K and 
amend several of the existing Form 8-K disclosure items.\8\
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    \8\ Release No. 33-8106 (June 17, 2002) [67 FR 42914].
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    [sbull] The additional audit costs that may result from adoption of 
the Commission's proposed rules on disclosure of critical accounting 
policies.\9\
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    \9\ Release No. 33-8098 (May 10, 2002) [67 FR 35620].
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    [sbull] The additional costs and obligations imposed under the 
Commission's new rule on auditor independence and proposed rule on 
standards relating to listed company audit committees.\10\
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    \10\ Release Nos. 34-47137 (January 8, 2003) [68 FR 2638], 33-
8183 (January 28, 2003) [68 FR 6006].
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    Since many of these concerns result from recent actions, their 
cumulative effects on smaller public companies are difficult to assess. 
We expect the agenda for the conference to include a discussion of the 
impact of the Sarbanes-Oxley Act and other recent corporate governance 
and disclosure reforms on smaller public companies and whether 
accommodations are necessary or desirable. Conferees are encouraged to 
discuss initiatives aimed at improving the financial reporting and 
disclosure system. The Division may take the information developed in 
these discussions into account in determining whether and how to 
consider the impact of the Sarbanes-Oxley Act on smaller companies.
B. Transactions Involving ``Qualified Purchasers''
    Under section 18 of the Securities Act, transactions involving 
``qualified purchasers'' are subject to registration under the federal 
securities laws only and not under state securities laws.\11\ The term 
``qualified purchaser'' is not defined in the statute and must be 
defined by the Commission. On December 19, 2001, we published a release 
proposing a definition for the term ``qualified purchaser.'' The 
release proposed to add the definition as an amendment to Rule 146 
under the Securities Act.\12\ As proposed, ``qualified purchaser'' 
would be defined to have the same meaning as the term ``accredited 
investor'' under Rule 501 of Regulation D.\13\ If adopted, securities

[[Page 14441]]

offered or sold to a qualified purchaser would not be subject to state 
registration requirements but only to federal requirements. The public 
comment period on the proposal closed on February 25, 2002. The 
Commission staff is in the process of reviewing all the comments. The 
agenda for the meeting will include a discussion of the proposal by the 
participants.
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    \11\ 15 U.S.C. 77r.
    \12\ Release No. 33-8041 (Dec. 19, 2001) [66 FR 66839].
    \13\ 17 CFR 230.501.
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C. Regulation A
    The agenda for the meeting will include consideration of possible 
revisions to the Commission's Regulation A exemption from the 
registration requirements of the Securities Act.\14\ As presently 
constituted, Regulation A permits the offer and sale of up to $5 
million worth of securities in a 12-month period. An offering circular 
must be prepared for delivery before sale. Offering materials are 
subject to Commission staff review. Regulation A permits the use of 
unaudited financial statements. However, because the offering must be 
registered in most cases under state laws, issuers may be required to 
provide audited financial statements. Further, the current limit on the 
amount of securities that may be offered may be too low to provide 
professional underwriting assistance in these offerings. The conferees 
will consider possible changes to make the Regulation A exemption more 
useful to small businesses, consistent with investor protection.
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    \14\ 17 CFR 230.251 through 263.
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    Regulation A also permits the offering of securities in the manner 
of ``testing the waters'' to see whether or not any potential offering 
of an issuer's securities would be favorably received by the investing 
public. The provision has not been widely used. The conferees will 
discuss the provision with a view to determining whether greater 
federal/state uniformity is an issue and can be achieved or whether 
other matters have caused the apparent lack of attractiveness in this 
provision.
D. Form D
    We adopted Regulation D in 1982 as the result of a cooperative 
effort between NASAA and the Commission. Regulation D was intended to 
facilitate uniformity for limited offering exemptions at the state and 
federal level. Form D was adopted in conjunction with Regulation D. 
Form D serves as a notice of sales for use in exempt offerings under 
Regulation D and section 4(6) of the Securities Act at the federal 
level. Rule 503 requires issuers seeking an exemption under Regulation 
D to file Form D with the Commission within 15 days after the first 
sale.\15\ Issuers must also file a Form D for sales of securities in 
states that have adopted the Uniform Limited Offering Exemption 
(``ULOE'') \16\ and Form D. Currently, the Commission and some states 
receive paper filings. With the advent of electronic filing and 
advances in technology, it may be more timely and cost-effective to 
file the Form D, at least at the federal level, using the Commission's 
EDGAR system. The conferees will discuss simplifying Form D and filing 
the form electronically.
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    \15\ 17 CFR 230.503.
    \16\ The ULOE provides a uniform exemption from state 
registration for offerings complying with Regulation D.
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E. Securities of Blank Check Companies
    A blank check company is a company in the development stage with no 
specific business plan or purpose, or a company that indicates that its 
plan is to engage in a merger or acquisition with an unidentified 
company or companies.\17\ In 1990, the U.S. Congress found that 
offerings by these kinds of companies were common vehicles for fraud 
and manipulation. We have adopted several rules, as Congress directed, 
to deter fraud in connection with these offerings.\18\ The group will 
discuss matters of mutual concern relating to the offerings of 
securities by blank check companies, including recent developments and 
possible new rules and revisions of existing rules.
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    \17\ Securities Act section 7(b)(3), 15 U.S.C. 77g(b)(3).
    \18\ 17 CFR 230.419 and 17 CFR 240.15g-8.
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(2) Market Regulation Issues

A. Description of Bank Dealer Exceptions After the Gramm-Leach-Bliley 
Act \19\
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    \19\ Pub. L. 106-102, 113 Stat. 1338 (1999).
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    The participants will discuss the Commission's rules pertaining to 
banks' dealer activities. We adopted amendments to the bank dealer 
rules on February 6, 2003.\20\ These rules provide banks with a new 
exemption for their securities lending transactions. They also 
implement the specific exceptions for banks from the definition of 
``dealer'' that were enacted as a part of the Gramm-Leach-Bliley Act 
(``GLBA'') in late 1999. Among other things, the GLBA provided for 
functional regulation of securities activities by eliminating the 
complete exception for banks from the definitions of ``broker'' and 
``dealer'' and replacing them with specific transaction and activity-
based exceptions.
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    \20\ Release No. 34-47364 (Feb. 13, 2003) [68 FR 8685].
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B. Possible Revisions to Form BD
    Under the regulatory scheme of the Securities Exchange Act of 
1934\21\ (the ``Exchange Act''), broker-dealers must register with the 
Commission, as well as with at least one statutory SRO. Broker-dealers 
apply for registration by filing Form BD (17 CFR 249.501), the uniform 
application for broker-dealer registration. The state securities 
regulators also use this form. Form BD requires the applicant filing 
the form to provide certain information concerning the nature of its 
business and the background of its principals, controlling persons, and 
employees. Form BD \22\ is designed to permit regulators to determine 
whether the applicant meets the statutory requirements to engage in the 
securities business.
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    \21\ 15 U.S.C. 78a et seq.
    \22\ 17 CFR 249.501.
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    We amended Form BD on July 2, 1999 to support electronic filing in 
the Internet-based Central Registration Depository system.\23\ Since 
the July 1999 amendments, the GLBA, the Commodity Futures Modernization 
Act of 2000, and, more recently, the Sarbanes-Oxley Act have all been 
enacted. Among other things, the Sarbanes-Oxley Act expands the 
definition of ``statutory disqualification'' under the Exchange 
Act.\24\ These and other developments may indicate the need for 
possible further amendments to Form BD.
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    \23\ Release No. 34-41594 (July 2, 1999) [64 FR 37586].
    \24\ 15 U.S.C. 78c(39).
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C. Research Analyst Conflicts of Interest
    We have taken a number of actions in the past year to address 
analyst conflicts of interest. On February 6, 2003, we adopted 
Regulation Analyst Certification, which requires that analysts certify 
that the views expressed in research reports accurately reflect their 
personal views and that research reports disclose whether analysts 
received compensation for their recommendations or views.\25\ On May 
10, 2002, we approved rule changes by the National Association of 
Securities Dealers (``NASD'') and the New York Stock Exchange 
(``NYSE'') that establish standards governing broker-dealer 
communications with the public to address analyst conflicts of 
interest.\26\ Late last year, we released for comment additional rule 
amendments filed by the

[[Page 14442]]

NYSE and NASD that would require a compensation committee to review and 
approve analyst compensation; prohibit firms from issuing reports by a 
research analyst who participated in solicitation meetings with 
prospective investment-banking clients; require notification to 
customers when a member or member organization terminates research 
coverage of a subject company and require that the final report include 
a final recommendation or rating; and amend the definition of ``public 
appearance'' to include research analysts' making a recommendation in a 
newspaper article or similar public medium.
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    \25\ Release No. 33-8193 (Feb. 20, 2003) [68 FR 9482].
    \26\ Release No. 34-45908 (May 10, 2002) [67 FR 34968].
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    We are working with NASAA and its members, as well as the NYSE, 
NASD, and New York State Attorney General, on a joint formal inquiry 
into market practices concerning research analysts and the conflicts 
that can arise from the relationships between research and investment 
banking. On December 20, 2002, the Commission announced an agreement in 
principle that, if approved by the Commission, would result in a 
settlement with the nation's largest investment banking firms to 
address issues of conflicts of interest with respect to their brokerage 
departments, and would conclude the joint inquiry.\27\
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    \27\ Securities and Exchange Commission, Press Release 2002-179, 
December 20, 2002.
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D. Shorter Settlement Cycles, Straight-Through Processing, and 
Immobilization and Dematerialization of Stock Certificates

    Over the past year, the securities industry has undertaken an 
initiative to achieve several straight-through processing goals. In 
order to reach these goals, the industry, through the Securities 
Industry Association (``SIA''), has proposed that we promulgate a 
number of regulatory changes. One of the more controversial of the 
proposed changes is adding rules to discourage the issuance and use of 
physical certificates. According to an SIA study, the costs of 
processing physical securities and the risks inherent with the use of 
physical securities are significant to the industry and ultimately 
their customers. Therefore, the industry is proposing that new 
securities be issued in book-entry form only. Although such a 
requirement could be imposed at the federal level, another possibility 
would be to implement a book-entry-only standard through exchange 
listing standards and issuer action. One issue is that several states' 
corporate laws still require that an issuer make physical securities 
available to shareholders who request them. The Commission staff hopes 
to explore with NASAA ways in which to discourage the issuance and use 
of physical certificates, restrictions imposed by certain state 
corporate laws, and exchange listing standards regarding the issuance 
of physical certificates.
E. IPO Underwriting and Allocation Process
    The initial public offering underwriting process has come under a 
lot of scrutiny lately--especially with regard to perceived abuses in 
the pricing and allocation of IPO shares. We are currently reviewing 
industry practices regarding the roles of issuers and underwriters in 
the price setting and the allocation of IPO shares as well as the 
offering process in general. Moreover, the NYSE and NASD have convened 
a panel of business and academic leaders to conduct a broad review of 
the IPO process and to recommend ways to address the problems so as to 
improve the underwriting process and restore investor confidence. The 
panel hopes to report by the end of March. The Commission has also 
brought at least one enforcement action, the Robertson Stephens case, 
relating to underwriting activities in connection with a number of 
IPOs.\28\ In addition, the NASD recently sought comment from its 
members on proposed new rules regarding the regulation of IPO 
allocations and distributions.\29\ According to the NASD, the rules 
will better ensure that members avoid unacceptable conduct when they 
engage in the allocation and distribution of IPOs.
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    \28\ Litigation Release No. 17923 (Jan. 9, 2003).
    \29\ NASD Notice 02-55, ``NASD Requests Comments on Proposed New 
Rule 2712 and Amendments to Rule 2710,'' August 2002.
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F. Possible Changes to SRO Rules
    1. Branch Office Definition. The NYSE recently filed a proposed 
rule change, SR-NYSE-2002-34, which proposes to amend NYSE Rule 342, 
Offices--Approval, Supervision, and Control, to provide for a new 
definition of the term ``branch office.'' The proposed amendment to the 
rule would limit the requirement to register certain business locations 
as ``branch offices--to account for advances in technology used to 
conduct and monitor business and changes in the structure of broker-
dealers and in the lifestyles and work habits of broker-dealers. On 
December 4, 2002, the Commission published the proposed rule change for 
public comment.\30\
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    \30\ Release No. 34-46888 (Dec. 4, 2002) [67 FR 72257].
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    2. CRD--Expungement. The NASD recently filed a proposed rule 
change, SR-NASD-2002-168, which proposes to establish procedures for 
expunging customer dispute information from the Central Registration 
Depository system. The proposed rule would require all arbitral 
directives to expunge customer dispute information from the CRD system 
to be confirmed or ordered by a court of competent jurisdiction. The 
proposed rule also would require member firms and associated persons 
seeking expungement to name the NASD as an additional party in any 
judicial proceeding seeking expungement relief or confirming an 
arbitration award containing expungement relief. The proposed rule 
would state that the NASD will participate in such judicial proceedings 
and will oppose expunging dispute information in the proceedings unless 
specific findings have been made that the subject matter of the claim 
or the information in the CRD system: (1) Is without factual basis 
(i.e., is factually impossible or clearly erroneous); (2) fails to 
state a claim upon which relief can be granted; (3) is frivolous; or 
(4) is defamatory in nature. The proposed rule would also permit member 
firms and associated persons to ask the NASD to waive the requirement 
to name the NASD as a party on the basis that the expungement order 
meets at least one of the standards for expungement articulated in the 
proposed rule. The Division of Market Regulation is preparing to 
recommend release of the proposal for public comment and anticipates 
extensive public commentary.
    3. NYSE and NASD Proposals to Amend Rules Relating to Supervisory 
Control Over Customer Accounts. Adequate supervisory systems are 
integral to investor protection and to the integrity of the securities 
market. Operational and sales practice abuses can stem from ineffective 
supervisory control procedures. The recent Gruttadauria case,\31\ which 
involved the alleged misappropriation of customer funds, highlighted 
the ongoing problem of operational and sales practice abuses at firms 
and the importance of firms effectively monitoring their employees.
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    \31\ Litigation Release No. 17590 (June 27, 2002).
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    The NYSE and NASD have submitted proposals to amend their rules 
relating to supervisory control over customer accounts.\32\ 
Specifically, the proposed rules would: (1) Require members to develop 
general and specific

[[Page 14443]]

supervisory control procedures that independently test, verify, and 
modify, where necessary, the members' supervisory procedures; (2) 
require that office inspections be conducted by independent persons and 
include, at a minimum, the testing and verification of certain 
supervisory procedures; (3) expand upon a member's supervisory and 
recordkeeping requirements with respect to changes in customer account 
name or designation in connection with order executions; and (4) 
clarify the time limit on time-and-price discretionary authority. The 
comment period expired on January 17, 2003. We have received numerous 
comment letters, which Commission staff and SRO staff are currently 
reviewing.
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    \32\ NYSE 2002-36, Release No. 34-46858 (Nov. 20, 2002) [67 FR 
72661]; NASD 2002-162, Release No. 34-46859 (Nov. 20, 2002) [67 FR 
70990].
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G. Amendments to Broker-Dealer Recordkeeping Rules
    The participants will discuss the Commission's recent amendments to 
its broker-dealer recordkeeping rules, Exchange Act Rules 17a-3 and 
17a-4, in light of certain interpretive questions regarding the 
amendments.\33\
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    \33\ 17 CFR 240.17a-3, and 240.17a-4.
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H. Examination Issues
    State and federal regulators also will discuss various examination-
related issues of mutual interest, including examination priorities, 
summits and examinations.

(3) Investment Management Issues

A. Electronic Filing and the Investment Adviser Registration Depository 
(``IARD'')
    Investment advisers applying for registration, or already 
registered, with the Commission file their registration statements and 
amendments electronically through the IARD. Most states also permit 
investment advisers and investment adviser representatives to register 
by filing through the IARD. The agenda for the conference is expected 
to include a discussion of the operations and finances of the IARD 
during 2002. The participants also are expected to discuss issues 
related to future plans for the IARD and for the public disclosure 
website for investment adviser information, the IAPD.
B. Current Issues and Rulemaking Initiatives
    The participants are expected to discuss recent rulemaking 
initiatives under the Investment Advisers Act of 1940 \34\ that deal 
with enhanced public disclosure of proxy votes, compliance issues, 
updated custody requirements, and advisers giving investment advice 
over the Internet. Developments in the model state law area and 
competency tests for investment adviser representatives also may be 
discussed. The participants may consider the continuing education needs 
of investment advisers and discuss approaches for enhancing an 
adviser's understanding of relevant state and federal regulatory 
responsibilities.
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    \34\ 15 U.S.C. 80b-1 et seq.
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C. Examination of Advisers
    The agenda for the meeting will include a discussion of examination 
protocols used by states and the Commission as well as the sharing of 
information among regulators. Recent enforcement matters of particular 
relevance also may be discussed.

(4) Investor Education and Assistance Issues

    The Commission and NASAA currently sponsor a number of programs to 
educate investors on how to invest wisely and to protect themselves 
from fraud and abuse. The states and NASAA have a long-standing 
commitment to investor education, and we intend to complement those 
efforts to the greatest extent possible. During the investor education 
working group session, participants at the conference are expected to 
discuss the following investor education initiatives and potential 
joint projects:
A. Facts on Saving and Investing Campaign
    Five years ago, in the spring of 1998, the Commission and NASAA in 
conjunction with the Council of Securities Regulators of the Americas 
(``COSRA'') launched the Facts on Saving and Investing Campaign. Led 
primarily by individual states and Canadian provincial securities 
regulators, the campaign is an ongoing, grassroots effort to educate 
individuals about saving, investing, and avoiding financial fraud. 
During the working group session, participants will discuss this year's 
campaign.
B. Youth Initiatives
    During the working group session, NASAA will brief the Commission 
staff on the progress of ``Financial Literacy 2010,'' an unprecedented 
financial literacy program launched in the spring of 1998 by NASAA, the 
NASD, and the Investor Protection Trust. FL2010 aims to encourage--and 
make it easier for--teachers in every state to teach the basics on 
saving and investing to high school students. Representatives from 
individual states and the Commission also will share information 
concerning other financial literacy efforts targeted toward youth.
C. Education on Troubling Trends and ``Top 10'' Scams
    From time to time, NASAA publishes a list of the top 10 investment 
scams that state securities regulators have been combating. This list 
not only raises public awareness about potential investment scams, but 
also helps to shape investor education initiatives.
    Representatives from NASAA and the Commission will discuss 
troubling trends they have noted recently and will explore ways in 
which NASAA and the Commission can work together to warn the investing 
public about problematic products.
D. Online Investor Protection
    NASAA will discuss ongoing state initiatives to enhance investor 
protection online, including the status of the Investing Online 
Resource Center. Similarly, the Commission staff will discuss its 
continuing efforts to educate investors on how to use the Internet to 
invest wisely.
E. Senior Educational Outreach Efforts
    NASAA members and the Commission staff will discuss ongoing 
educational programs aimed at educating seniors. Since seniors are a 
large segment of the population that are targeted for scams, many 
individual states have set up educational outreach programs aimed 
toward seniors. Representatives from individual states will share 
information concerning these outreach programs.
F. New Programs on Investor Education
    Participants in the working group session will brainstorm ideas for 
new investor education programs, including joint NASAA and Commission 
initiatives.
G. Investor Education Resources
    Participants will discuss the most efficient and effective ways to 
provide educational resources to individuals at both a national and a 
grassroots level.

(5) Enforcement Issues

    In addition to the above topics, state and federal regulators will 
talk about various enforcement-related issues of mutual interest. As in 
the past, it is anticipated that representatives of the SROs and the 
Justice Department will participate in this meeting. Included on the 
agenda for their session will be identification of the current 
enforcement priorities of the organizations present and a discussion of 
the more important investment scams

[[Page 14444]]

being uncovered in different parts of the country. Ways to further 
enhance the level of communication and coordination in the enforcement 
context will also be covered. State and federal regulators may discuss 
various other enforcement-related issues of mutual interest.

(6) General

    The participants may also discuss matters that are applicable to 
all, or to a number, of the areas noted above. These include EDGAR (the 
Commission's electronic disclosure system), rulemaking procedures, 
training and education of staff examiners and analysts, and information 
sharing.
    Discussions may also cover the new 2002 version of the Uniform 
Securities Act (``USA 2002''), which recently has been finalized by a 
committee of the National Conference of Commissioners on Uniform State 
Laws. The USA 2002 is a model uniform state securities law statute. The 
new version modernizes the Uniform Securities Act of 1956 and the 
Revised Uniform Securities Act of 1985. The USA 2002 updates the law to 
reflect many changes including, for example, the National Securities 
Market Improvement Act of 1996\35\, technology advances, and 
internationalization of securities trading. In January, 2003, NASAA 
endorsed the USA 2002.
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    \35\ Pub. L. 104-290, 110 Stat. 3416 (Oct. 11, 1996).
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    The Commission and NASAA request specific public comments and 
recommendations on the above-mentioned topics. Commenters should focus 
on the agenda but may also discuss or comment on other proposals that 
would enhance uniformity in the existing scheme of state and federal 
securities regulation, while helping to maintain high standards of 
investor protection.

    By the Commission.

    Dated: March 17, 2003.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-6983 Filed 3-24-03; 8:45 am]
BILLING CODE 8010-01-P