[Federal Register Volume 69, Number 179 (Thursday, September 16, 2004)]
[Notices]
[Pages 55855-55856]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-2203]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50335; File No. SR-NASD-2004-136]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the National Association of 
Securities Dealers, Inc. Relating to the Implementation Date of Notice 
to Members 04-50 (Treatment of Commodity Pool Trail Commissions Under 
Rule 2810)

September 9, 2004.
    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 September 8, 2004, the National Association of Securities Dealers, 
Inc. (``NASD''), filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by NASD. 
NASD has designated the proposed rule change as constituting a stated 
policy, practice, or interpretation with respect to the meaning, 
administration, or enforcement of an existing rule of NASD under 
Section 19(b)(3)(A)(i) of the Act\3\ and Rule 19b-4(f)(1) 
thereunder,\4\ which renders the proposal effective upon receipt of 
this filing by 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)(i).
    \4\ 17 CFR 240.19b-4(f)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NASD is filing with the Commission a proposed rule change to delay 
the implementation date of Notice to Members 04-50 (``NtM 04-50'') 
until October 12, 2004.
    No changes to the text of NASD rules are required by this proposed 
rule change.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, NASD included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. NASD 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
    On July 13, 2004, NASD filed NtM 04-50 with the SEC. In NtM 04-50, 
NASD announced that it was no longer going to exclude the payment of 
any trail commissions for commodity pool direct participation programs 
(``DPPs'') from the underwriting compensation limits of Rule 2810 
(``Direct Participation Programs'' or ``DPP Rule''). NtM 04-50 
announced that, ``effective immediately, in determining whether to 
issue a `no objections' opinion in connection with a commodity pool DPP 
filed with the [NASD Corporate Financing] Department under Rule 2810, 
NASD staff will consider, among other things, whether the level of 
underwriting compensation, including the types of trail commission 
previously excluded, exceeds the 10% limitation in the DPP Rule.'' On 
July 22, 2004, the SEC published the Notice of Filing and Immediate 
Effectiveness of the NtM 04-50.\5\
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    \5\ Release No. 34-50065 (July 22, 2004), 69 FR 45870 (July 30, 
2004) [File No. SR-NASD-2004-108] (``SR-NASD-2004-108'').
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    In view of certain comments submitted to the SEC in response to SR-
NASD-2004-108,\6\ NASD is delaying the implementation date of NtM 04-50 
until October 12, 2004. Thus, the policy announced in NtM 04-50 will 
not apply to commodity pool DPPs filed with the NASD Corporate 
Financing Department before October 12, 2004.
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    \6\ Eight comment letters were submitted to the Commission 
during the comment period. The NASD responded to these comment 
letters on August 31, 2004. These comment letters, the NASD response 
to these comment letters, and comment letters received after the end 
of the comment period may be examined at the places specified in 
Item IV below.
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2. Statutory Basis
    NASD believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\7\ which requires, among 
other things, that NASD's rules must 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. NASD believes that the proposed rule change is in the 
public interest and will benefit investors in commodity pool DPPs by 
limiting the compensation that can be paid to members for selling 
commodity pool DPPs, and servicing the accounts that hold such 
investments, to the same amounts that apply to all other DPP 
investments. At the same time, the proposed rule change also provides 
additional time for commodity pool DPPs to adjust to the policy of NtM 
04-50.
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    \7\ 15 U.S.C. 78o-3(b)(6).
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    NASD does not believe that the proposed rule change will result in 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, as amended.

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received from Members, Participants, or Others

    Written comments were neither solicited nor received.

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

    NASD has designated the proposed rule change as constituting a 
stated policy, practice, or interpretation with

[[Page 55856]]

respect to the meaning, administration, or enforcement of an existing 
rule of NASD under Section 19(b)(3)(A)(i) of the Act\8\ and Rule 19b-
4(f)(1) thereunder,\9\ which renders the proposal effective upon 
receipt of this filing by the Commission.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(i).
    \9\ 17 CFR 240.19b-4(f)(1).
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    At any time within 60 days of the filing of such 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.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File Number SR-NASD-2004-136 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609.
    All submissions should refer to File Number SR-NASD-2004-136. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). 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 Section, 450 Fifth 
Street, NW., Washington, DC 20549. Copies of such filing also will be 
available for inspection and copying at the principal office of the 
NASD. All comments received will be posted without change; the 
Commission does not edit personal identifying information from 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
NASD-2004-136 and should be submitted on or before October 7, 2004.

For the Commission, by the Division of Market Regulation, pursuant 
to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
 [FR Doc. E4-2203 Filed 9-15-04; 8:45 am]
BILLING CODE 8010-01-P