[Federal Register Volume 69, Number 99 (Friday, May 21, 2004)]
[Notices]
[Pages 29342-29343]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-11519]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49716; File No. SR-NASD-2003-164]


Self-Regulatory Organizations; Order Approving Proposed Rule 
Change and Amendment Nos. 1 and 2 by the National Association of 
Securities Dealers, Inc. Relating to the Adjournment of an Arbitration 
Hearing Within Three Business Days of the First Scheduled Hearing 
Session

May 17, 2004.
    On November 4, 2003, the National Association of Securities 
Dealers, Inc. (``NASD'' or ``Association'') through its wholly owned 
subsidiary, NASD Dispute Resolution, Inc. (``NASD Dispute 
Resolution''), filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission''), pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 \2\ 
thereunder, a proposal to amend the rules relating to the adjournment 
of a scheduled arbitration hearing. On March 5, 2004, NASD filed 
Amendment No. 1 to the proposed rule change.\3\ On April 1, 2004, NASD 
filed Amendment No. 2 to the proposed rule change.\4\ Notice of the 
proposed rule change, as amended, was published for comment in the 
Federal Register on April 14, 2004.\5\ No comments were received on the 
proposed rule change. This order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See letter dated March 5, 2004 from Mignon McLemore, 
Counsel, NASD Dispute Resolution, to Katherine England, Assistant 
Director, Division of Market Regulation.
    \4\ See letter dated April 1, 2004 from Mignon McLemore, 
Counsel, NASD Dispute Resolution, to Katherine England, Assistant 
Director, Division of Market Regulation.
    \5\ See Securities Exchange Act Release No. 49545 (April 8, 
2004), 69 FR 19887 (April 14, 2004).
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    The proposed rule change will amend NASD IM-10104, Rule 10306, and 
Rule 10319 of the Code to impose a fee of $100 per arbitrator on 
parties and to compensate arbitrators in the event a hearing is 
adjourned within three business days before a scheduled hearing 
session.
    The Commission believes the proposed rule change is consistent with 
the Act and the rules and regulations thereunder applicable to a 
national securities association.\6\ Specifically, the Commission finds 
that the proposal is consistent with Section 15A(b)(6) of the Act,\7\ 
which requires, among other things, 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.
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    \6\ 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).
    \7\ 15 U.S.C. 78o-3(b)(6).
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    The Commission believes the proposed rule change will provide NASD 
Dispute Resolution with an effective means of addressing the problems 
associated with last minute adjournments. The rule change should 
discourage frivolous adjournment requests while promoting more 
efficient use of the arbitration process by encouraging parties, when 
appropriate, to settle their disputes earlier to avoid additional fees. 
In addition, the Commission believes the proposed rule change should 
help NASD Dispute Resolution maintain a deep pool of qualified 
arbitrators by assuring arbitrators of some compensation in the event a 
scheduled hearing is adjourned at the last minute. In sum, the 
Commission believes that, by providing a more efficient and effective 
forum for investors to address grievances involving NASD members, the 
proposed rule change will serve to protect investors and the public 
interest.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\8\ that the proposed rule change (File No. SR-NASD-2003-164) be, 
and it hereby is, approved.
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    \8\ 15 U.S.C. 78s(b)(2).


[[Page 29343]]


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    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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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 04-11519 Filed 5-20-04; 8:45 am]
BILLING CODE 8010-01-P