[Federal Register Volume 70, Number 18 (Friday, January 28, 2005)]
[Notices]
[Pages 4169-4171]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-320]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51075; File No. SR-NASD-2004-179]


Self Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by National Association of 
Securities Dealers, Inc. Relating to Amendments to Section 13 of 
Schedule A to the NASD By-Laws (Review Charge for Advertisement, Sales 
Literature, and Other Such Material Filed With or Submitted to NASD)

January 24, 2005.
    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 December 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 ``establishing or 
changing a due, fee or other charge'' under section 19(b)(3)(A)(ii) of 
the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ which renders the 
proposal effective upon filing with 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)(3).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NASD is proposing to amend Section 13 of Schedule A to the NASD By-
Laws (``Section 13'') governing the review charges for advertisements, 
sales literature, and other such material filed with or submitted to 
NASD's Advertising Regulation Department (the ``Department''). Below is 
the text of the proposed rule change. Proposed new language is 
italicized; proposed deletions are in [brackets].
* * * * *
SCHEDULE A TO NASD BY-LAWS
* * * * *
Section 13--Review Charge for Advertisement, Sales Literature, and 
Other Such Material Filed or Submitted
    There shall be a review charge for each and every item of 
advertisement, sales literature, and other such material, whether in 
printed, video or other form, filed with or submitted to NASD, except 
for items that are filed or submitted in response to a written request 
from NASD's Advertising Regulation Department issued pursuant to the 
spot check procedures set forth in NASD's Rules as follows: (1) For 
printed material reviewed, [$75.00] $100.00, plus $10.00 for each page 
reviewed in excess of 10 pages; and (2) for video or audio media, 
[$75.00] $100.00, plus $10.00 per minute for each minute of tape 
reviewed in excess of 10 minutes.
    Where a member requests expedited review of material submitted to 
the Advertising Regulation Department there shall be a review charge of 
$500.00 per item plus $25 for each page reviewed in excess of 10 pages. 
Expedited review shall be completed within three business days, not

[[Page 4170]]

including the date the item is received by the Advertising Regulation 
Department, unless a shorter or longer period is agreed to by the 
Advertising Regulation Department. The Advertising Regulation 
Department may, in its sole discretion, refuse requests for expedited 
review.
* * * * *

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
    The Department is responsible for ensuring that all NASD member 
firms' communications with the public are fair, balanced, and not 
misleading. The mission of the Department, as provided in Rule 2210 and 
the Interpretations issued thereunder, is to ensure that all member 
communications with the public, including advertisements, sales 
literature, and correspondence, are based on principles of fair dealing 
and good faith, are fair and balanced, and provide a sound basis for 
evaluating the facts in regard to any particular security or type of 
security, industry, or service. Among other things, the Department 
reviews member communications with the public for false, exaggerated, 
unwarranted, misleading statements or claims, and exaggerated or 
unwarranted claims, opinions or forecasts.
    The purpose of the proposed rule change is to amend Section 13 to 
raise the fee that may be charged by the Department for reviewing each 
and every item of advertisement, sales literature, and other such 
material, whether in printed, video or other form, filed with or 
submitted to NASD (except for items that are filed or submitted in 
response to a written request from the Department issued pursuant to 
the spot check procedures set forth in NASD's Rules).
    Despite annual cost increases, NASD has not adjusted the charge to 
members for submitting advertisements, sales literature, and other such 
material to the Department since 1999. A recent analysis of the 
Department's operating and technology costs showed that NASD's costs 
have increased significantly due to increased responsibilities, 
economic conditions and the need for enhanced technology. Based on this 
review, NASD proposes to raise the fee charged for the review of 
printed material and video or audio media from $75.00 to $100.00 to 
offset these cost increases.
2. Statutory Basis
    NASD believes that the proposed rule change is consistent with the 
provisions of section 15A of the Act \5\ in general and with section 
15A(b)(5) of the Act \6\in particular, which requires, among other 
things, that NASD's rules provide for the equitable allocation of 
reasonable dues, fees and other charges among members and issuers and 
other persons using any facility or system that NASD operates or 
controls. NASD believes that the rule change is consistent with section 
15A(b)(5) of the Act in that the proposed review charge is reasonable 
based on NASD's costs and equitably allocated among all members that 
file or submit advertisements, sales literature, and other such 
material, whether in printed, video or other form.
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    \5\ 15 U.S.C. 78o-3.
    \6\ 15 U.S.C. 78o-3(b)(5).
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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

    The foregoing rule change has become effective upon filing with the 
Commission, pursuant to section 19(b)(3)(A)(ii) of the Act \7\ and 
paragraph (f)(2) of Rule 19b-4 thereunder,\8\ because it establishes or 
changes a due, fee, or other charge imposed by NASD. At any time within 
60 days of the filing of the 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.
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    \7\ 15 U.S.C. 78s(b)(3)(a)(ii).
    \8\ 17 CFR 240.19b-4(f)(2).
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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-2004-179 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-2004-179. 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 Room. Copies of the 
filing will also be available for inspection and copying at the 
principal office of 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 the File 
Number SR-NASD-2004-179 and should be submitted on or before February 
18, 2005.


[[Page 4171]]


    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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Margaret H. McFarland,
Deputy Secretary.
 [FR Doc. E5-320 Filed 1-27-05; 8:45 am]
BILLING CODE 8010-01-P