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90-21 Collection of Fines and Costs in Disciplinary Proceedings

SUGGESTED ROUTING*

Senior Management
Legal & Compliance
Operations
Training

*These are suggested departments only. Others may be appropriate for your firm.

EXECUTIVE SUMMARY

The NASD Board of Governors has decided to clarify its policy concerning the collection of fines and costs assessed in disciplinary cases. In brief, the NASD intends, in disciplinary decisions issued by its District Committees, Market Surveillance Committee, or Board of Governors decisions on or after July 1, 1990, to take steps to collect assessed fines and costs at the conclusion of appellate or review proceedings. The NASD will not pursue direct collection of fines and costs in cases concluded prior to July 1, 1990, pursuant to Offers of Settlement, Letters of Acceptance, Waiver, and Consent (AWC), or, in cases resulting from decisions of District Committees, the Market Surveillance Committee, or the Board of Governors issued prior to July 1, 1990.

In addition, in instances where a respondent has entered into a settlement pursuant to an Offer of Settlement or AWC in which the remedial sanctions include both a bar and a fine, the NASD may suspend efforts to collect the fine until such time as the respondent attempts to re-enter the securities industry.

At its January 1990 meeting, the NASD Board of Governors decided to clarify its policy concerning the collection of fines and costs resulting from decision in disciplinary proceedings and the Association's acceptance of Offers of Settlement and Letters of Acceptance, Waiver, and Consent (AWCs).

Article V, Section 2 of the NASD Rules of Fair Practice authorizes the NASD to suspend or revoke the registration of a member or a person associated with a member if such member or person fails promptly to pay a fine or costs assessed pursuant to Article V, Section 1, or Article V, Section 3, respectively, of the NASD Rules of Fair Practice. Article V, Section 2 of the NASD Rules of Fair Practice also authorizes the NASD to suspend or expel from membership any member who fails to immediately terminate its association with any person who fails promptly to pay a fine or costs assessed pursuant to Article V, Section 1, or Article V, Section 3, respectively, of the NASD Rules of Fair Practice.

It is the intention of the Board of Governors to notify the membership that, in addition to the procedures relating to payment of monetary sanctions and suspensions or revocation of membership or registration for failure to make such payment set forth in Article V, Section 2 of the Rules of Fair Practice, the NASD intends to pursue other available means for collection of fines and costs imposed by its District Committees, the Market Surveillance Committee, and Board of Governors in disciplinary decisions issued on or after July 1, 1990, at the conclusion of appellate or review proceedings. Thus, the NASD will pursue collection of a fine imposed pursuant to a District Committee, the Market Surveillance Committee, or Board of Governors decision issued on or after July 1, 1990, once such decision becomes final.

The NASD will not pursue the collection of fines and costs assessed in cases concluded prior to July 1, 1990, by means of Offers of Settlement or AWCs, or in cases resulting from decisions of District Committees, the Market Surveillance Commit-tee, or the Board of Governors issued prior to July 1, 1990, in light of the fact that respondents might have entered into settlements or elected not to pursue appellate remedies believing that direct efforts would not be made to collect fines in their cases.

In instances where a respondent has entered into a settlement pursuant to an Offer of Settlement or AWC in which the remedial sanctions include both a bar and a fine, the NASD may suspend efforts to collect the fine until such time as the respondent attempts to re-enter the securities industry. The NASD will continue to require all such respondents to demonstrate full compliance with all remedial sanctions before an application for membership or for association with a member in any capacity will be entertained.

Questions concerning this notice may be directed to Norman Sue, Jr., Assistant General Counsel, Office of General Counsel, at (202) 728-8117.


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