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98-74 SEC Approves Rule Amendment Relating To Hearings On Suspensions And Cancellations For Failure To Comply With Arbitration Awards
On May 26, 1998, the Securities and Exchange Commission (SEC) approved an amendment to National Association of Securities Dealers, Inc. (NASD®) Rule 9514 authorizing hearing officers from the NASD Regulation, Inc. (NASD RegulationSM) Office of Hearing Officers to presideover non-summary proceedingsinvolving cancellations and suspensionsrelated to failure to comply withan NASD-imposed arbitration award or settlement agreement. The amendment became effective on May 26, 1998.
Questions regarding this Notice may be directed to Joseph Furey, Vice President, Office of Hearing Officers, NASD Regulation, at (202) 728- 8008, or Mary Dunbar, Assistant General Counsel, Office of General Counsel, NASD Regulation, at (202) 728-8252.
Background And Description Of Amendment
This amendment changes the composition of the hearing panels used for non-summary proceedings in which the NASD seeks to suspend or cancel the membership of amember firm or the registration of an associated person for failure to comply with an arbitration award or a settlement agreement related to an NASD arbitration or mediation. Previously, a hearing panel composed of one current NASD Regulation director plus at least one other current or former NASD or NASD Regulation board member heard these non-summary suspension proceedings. Pursuant to the amendment, a single member of the Office of Hearing Officers,appointed by the Chief Hearing Officer, will preside over these nonsummary proceedings.
The Office of Hearing Officers is an independent office within NASD Regulation whose purpose is to provide a group of independent and professional hearing officers (comprised of attorneys with appropriate experience and training) to preside over formal NASD disciplinary proceedings under the NASD Rule 9200 Series.
NASD Regulation determined that board members were not required for these non-summary proceedings because the issues involved are narrow and largely administrative. Designating a single hearing officer to preside over these non-summary proceedings also providesadministrative efficiencies in conducting the hearings and rendering decisions. The amendment does not alter the ability of memberfirms and their associated persons to request a hearing concerning a failure to pay an arbitration award; it merely alters the composition of the hearing panel. The members of the Office of Hearing Officers are wellsuited to resolve the issues presented in these types of hearings due to the training and experience gained in oversight of the NASD's disciplinary proceedings.
Text Of Amendment
(Note: New text is underlined; deletions are bracketed.)
Rule 9514. Hearing and Decision