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  • 88-74 Amendment to Code of Procedure Re: Composition of Panels for DBCC and Market Surveillance Hearings


    Senior Management
    Legal & Compliance

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    At its July 1988 meeting, the NASD Board of Governors voted to amend the Code of Procedure so as to reduce, from three to two persons, the minimum number of persons required for hearing panels for cases before District Business Conduct Committees ("DBCC") and the Market Surveillance Committee.

    The Board also determined to reduce, from two to one, the number of persons on DBCC hearing panels required to be current DBCC members. These amendments have been filed with the SEC for approval. Members and other interested persons wishing to comment on the proposed changes should direct their comments to the SEC.


    Currently, under the NASD Code of Procedure, each case before a District Business Conduct Committee ("DBCC") may be heard by a subcommittee consisting of three or more persons, at least two of whom must be members of the DBCC. During the last several years, the Association's disciplinary cases have become more numerous and complex and have required significant time commitments on the part of DBCC members. As a result, the Association has experienced increasing difficulty in conducting DBCC hearings due to the unavailability of hearing subcommittee members, in order to alleviate this problem, the Board has determined to amend the Code of Procedure so as to permit two-person hearing panels and to require that only one person on the panel be a member of the DBCC.

    In the consideration of this matter, it was also noted that similar problems are being encountered in the conduct of Market Surveillance cases. Under the Code of Procedure, Market Surveillance Committee cases currently may be heard by a panel of three or more persons. The Board determined that, in order to facilitate the hearing process and reduce the demands made on Market Surveillance Committee members, the minimum number of persons required to hear a Market Surveillance case should similarly be reduced from three to two.

    In the interest of expediting the effectiveness of these amendments, the Board directed the Association staff to file the proposed rule changes with the SEC for approval. The SEC is required to solicit comment regarding the changes and expects to publish the changes for comment soon.

    The comment period will run 21 days from the date of publication in the Federal Register. Members and those who wish to comment on the proposed changes should send six copies of their written submissions to:

    Securities and Exchange Commission
    450 Fifth Street, N.W.
    Washington, D.C. 20549

    Submissions should refer to file No. SR-NASD-88-38.

    A copy of the submission also should be sent to:

    Mr. Lynn Nellius,
    National Association of Securities Dealers, Inc.
    1735 K Street, N.W.
    Washington, D.C. 20006-1506

    Questions regarding this notice can be directed to Therese Haberle, Special Counsel, NASD Office of General Counsel, at (202) 728-8287.