[Federal Register Volume 69, Number 51 (Tuesday, March 16, 2004)]
[Notices]
[Pages 12386-12388]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-5840]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49380; File No. SR-NASD-2003-110]


Self-Regulatory Organizations; Order Approving Proposed Rule 
Change and Amendment Nos. 1 and 2, and Notice of Filing and Order 
Granting Accelerated Approval to Amendment No. 3 to the Proposed Rule 
Change by the National Association of Securities Dealers, Inc. Relating 
to Uniform Hearing Procedures for and Consolidation of Rules Applicable 
to Expedited Proceedings

March 9, 2004.

I. Introduction

    On July 15, 2003, the National Association of Securities Dealers, 
Inc. (``NASD'') 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 create a new rule series, the proposed NASD 
Rule 9550 Series, to consolidate, clarify and streamline those existing 
procedural rules that have an expedited proceeding

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component. On September 2, 2003, the NASD amended the proposed rule 
change.\3\ On November 18, 2003, the NASD again amended the proposed 
rule change.\4\ The proposed rule change, as amended, was published for 
comment in the Federal Register on December 16, 2003.\5\ The Commission 
received no comment letters with respect to the proposal.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See letter from Barbara Z. Sweeney, Senior Vice President 
and Corporate Secretary, NASD, to Katherine England, Assistant 
Director, Division of Market Regulation (``Division''), Commission 
dated August 29, 2003 (``Amendment No. 1''). Amendment No. 1 
replaced and superseded the proposed rule change in its entirety.
    \4\ See letter from Barbara Z. Sweeney, Senior Vice President 
and Corporate Secretary, NASD, to Katherine England, Assistant 
Director, Division, Commission dated November 17, 2003 (``Amendment 
No. 2''). Amendment No. 2 replaced and superseded the proposed rule 
change in its entirety.
    \5\ See Securities Exchange Act Release No. 48887 (December 5, 
2003), 68 FR 70066.
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    On February 4, 2004, the NASD amended the proposed rule change.\6\ 
This order approves the proposed rule change, as amended by Amendment 
Nos. 1 and 2; solicits comments on the proposed rule change from 
interested persons; and grants accelerated approval to Amendment No. 3 
to the proposed rule change.
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    \6\ See letter from James S. Wrona, Associate General Counsel, 
NASD, to Katherine England, Assistant Director, Division, Commission 
dated February 3, 2004 (``Amendment No. 3''). In Amendment No. 3, 
the NASD addressed staff comments relating to the service of notice 
on parties and the ability of hearing officers to promote sanctions. 
See Section II infra.
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II. Description of the Proposal and Amendment Nos. 1, 2 and 3 Thereto

    The NASD submitted the proposed rule change and Amendment Nos. 1 
and 2 thereto to create a new rule series, the proposed Rule 9550 
Series, to consolidate, clarify and streamline those existing 
procedural rules that have an expedited proceeding component.
    After the proposed rule change, as amended, was published for 
comment in the Federal Register, the NASD submitted Amendment No. 3 to 
the proposed rule change, in order to address comments from Division 
staff. Specifically, Amendment No. 3 provides that: (1) Notices will 
indicate that hearing officers can impose any appropriate sanctions; 
(2) certain timelines do not provide any substantive rights to parties; 
(3) if service of a notice is by fax and the NASD knows that the fax 
number on file with the NASD is incorrect, NASD staff shall serve the 
notice via overnight or personal delivery; (4) service is complete upon 
sending the notice by fax, mailing the notice by overnight courier, or 
delivering it in person, except that, where duplicate service is 
required, service is complete upon sending the duplicate service; (5) 
an immediately effective summary suspension or other limitation under 
the proposed summary proceedings rule will remain in effect unless the 
respondent shows good cause for a stay; and (6) where two consolidated 
matters contain different timelines under NASD Rule 9559, the Chief 
Hearing Officer assigned to the matter has discretion to determine 
which timeline is appropriate under the facts and circumstances of the 
case.\7\
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    \7\ Parties involved in a given case will be promptly notified 
of the appropriate timeline chosen by the Chief Hearing Officer. 
Telephone conversation between James S. Wrona, Associate General 
Counsel, NASD, Katherine England, Assistant Director, Division, 
Commission, Joseph Morra, Special Counsel, Division, Commission, and 
Ian Patel, Attorney, Division, Commission on January 14, 2004.
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III. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning Amendment No. 3 to the proposed rule change, 
including whether Amendment No. 3 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. Comments should be submitted electronically 
at the following e-mail address: [email protected]. All comment 
letters should refer to File No. SR-NASD-2003-110. This file number 
should be included on the subject line if email is used. To help the 
Commission process and review your comments more efficiently, comments 
should be sent in hard copy or by e-mail but not by both methods. 
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 
NASD. All submissions should refer to File No. SR-NASD-2003-110 and 
should be submitted by April 6, 2004.

IV. Discussion and Commission Findings

    After careful review, 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.\8\ In particular, the Commission believes that 
the proposed rule change is consistent with section 15A(b)(6) of the 
Act,\9\ which requires, among other things, that the 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. Specifically, the Commission 
believes that the consolidation of rules relating to expedited 
proceedings should make the expedited proceedings process clearer, and 
enable market participants to better understand the expedited 
proceedings process.
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    \8\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. 15 U.S.C. 78c(f).
    \9\ 15 U.S.C. 78o-3(b)(6).
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    The Commission finds good cause for approving Amendment No. 3 to 
the proposed rule change prior to the thirtieth day after the amendment 
is published for comment in the Federal Register pursuant to section 
19(b)(2) of the Act.\10\ In Amendment No. 3, the NASD further clarified 
the expedited proceeding process by addressing procedural concerns 
raised by Division staff. Granting accelerated approval will enable the 
NASD to implement these changes more expeditiously.
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    \10\ 15 U.S.C. 78s(b)(2).
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V. Conclusion

    For the foregoing reasons, the Commission finds that the proposed 
rule change, as amended, is consistent with the Act and the rules and 
regulations thereunder applicable to a national securities association, 
and, in particular, section 15A(b)(6) of the Act.\11\
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    \11\ 15 U.S.C. 78o-3(b)(6).
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    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\12\ that the proposed rule change (SR-NASD-2003-110) is approved, 
as amended, and that Amendment No. 3 is approved on an accelerated 
basis.
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    \12\ 15 U.S.C. 78s(b)(2).


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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-5840 Filed 3-15-04; 8:45 am]
BILLING CODE 8010-01-P