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05-44 SEC Approves Amendments Relating to Annual Compliance Meetings
Annual Compliance Meetings
Effective Date: July 25, 2005
Annual Compliance Meetings
On April 25, 2005, the Securities and Exchange Commission (SEC) approved amendments to Rule 3010(a)(7) to require that registered principals, in addition to registered representatives, attend an annual compliance meeting. The SEC also approved amendments to Rules 3010(a), 3010(a)(3), and 3010(b)(1) to clarify that the scope of these rules specifically extends to registered representatives, registered principals, and other associated persons.1
The rules, as amended, are set forth in Attachment A. The amendments become effective on July 25, 2005.
Questions concerning this Notice may be directed to Afshin Atabaki, Counsel, Office of General Counsel, Regulatory Policy and Oversight, at (202) 728-8902.
Background and Discussion
Prior to the rule amendments discussed in this Notice, Rule 3010(a)(7) required the attendance of registered representatives at annual compliance meetings, but it did not require the attendance of registered principals. Given the supervisory and compliance-related functions that principals perform and that the primary purpose of annual compliance meetings is to discuss compliance issues and keep registered persons current on changing compliance requirements or changes in the firm, NASD has amended Rule 3010(a)(7) to require that all registered principals, in addition to registered representatives, attend an annual compliance meeting in accordance with the Rule.
As amended, Rule 3010(a)(7) now requires that each registered representative and registered principal participate, at least once each year, in an interview or meeting at which compliance matters relevant to the activities of the particular representative and principal are discussed. These interviews or meetings can be held individually or with a group and can be held at a central or regional location or at the representative's or principal's place of business. As discussed in Notice to Members (NTM) 99-45 (June 1999), members are provided with substantial flexibility in implementing the annual compliance meeting. For instance, as further detailed in NTM 99-45, the interview or meeting may be conducted by video conference, interactive classroom setting, telephone, or other electronic means (including webcast), provided that certain safeguards are in place.
NASD also has made technical amendments to Rules 3010(a), 3010(a)(3), and 3010(b)(1) to clarify that the scope of these rules specifically extends to registered representatives, registered principals, and all other associated persons.
1 See Securities Exchange Act Release No. 51605 (April 25, 2005), 70 FR 22732 (May 2, 2005) (Order Approving Proposed Rule Change and Amendment Nos. 1 and 2 Thereto Relating to Annual Compliance Meetings; File No. SR–NASD–2005–004).
New language is underlined; deleted language is in brackets.