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  • 1996

    • NASD Rule Filing Status

      Rule Filing Status As Of December 3, 1996

      NASD Rule Filing Status

      Following is a list of rule filings by the NASD regarding broker/dealer regulation that are pending at the Securities and Exchange Commission (SEC) or recently approved. The information set forth below is current as of December 3, 1996. Copies of rule filings (and any amendments thereto), the SEC release publishing the rule proposal for comment, and the SEC release approving the rule change are available from the SEC Public Reference Room at (202) 942- 8090 or, call Kristine Gwilliam, NASD® Office of General Counsel, at (202) 728-8821 (in certain cases a fee may be required). NASD rule changes are not effective until the date approved by the SEC.

      Rule Filings That Have Not Been Published For Comment

      96-42

      Amend Uniform Practice Code Rule 11580 to grant authority to staff to provide exemptions from the requirement to use Standardized Transfer Forms when transferring limited partnership securities.

      96-34

      Amend Uniform Code of Arbitration Rule 10335 (formerly Section 47 of the Code of Arbitration Procedure) to clarify that parties are required to expedite any proceeding where a court has issued temporary injunctive relief and that failure to expedite a proceeding under the Rule will constitute a failure to arbitrate in violation of NASD rules.

      Rule Filings That Have Been Published For Comment But Have Not Been Approved By The SEC

      96-40

      Amend Rule 6800 to permit smaller mutual funds to disseminate their prices via Mutual Fund Quotation Service. Published for comment by the SEC in Rel. No. 34-37922 (11/5/96); 61 FR 58271 (11/13/96).

      96-39

      Amend IM-2210-3 to allow for the use in advertisements and sales literature of investment company rankings that represent short-, medium-, and long-term performance. Published for comment by the SEC in Rel. No. 34-37987 (11/25/96); 61 FR 64185 (12/3/96).

      96-38

      Amend IM-8310-2 to expand the categories for the release of information contained in the Central Registration Depository (CRD) regarding disciplinary history. Published for comment by the SEC in Rel. No. 34-37994 (12/2/96); 61 FR 64549 (12/5/96).

      96-28

      Add new Rule 2211 and amend Rule 3110 (formerly Article IV, Section 21 of the NASD Rules of Fair Practice) to impose time restriction and disclosure requirements on telemarketing calls. Published for comment by the SEC in Rel. No. 34-37475 (7/24/96); 61 FR 39686 (7/30/96).

      95-63

      Amend the NASD rules to adopt a new section to regulate the conduct of a broker/dealer on the premises of a financial institution. Published for comment by the SEC in Rel. No. 34- 36980 (3/15/96); 61 FR 11913 (3/22/96).

      95-61

      Amend Rules 2830 and 2820 (formerly Article III, Sections 26 and 29 of the NASD Rules of Fair Practice) to regulate the receipt by members and their associated persons of cash and non-cash compensation for the sale of investment company and variable contract securities. Published for comment by the SEC in Rel. No. 34- 37374 (6/26/96); 61 FR 35822 (7/8/96). Comment period extended by the SEC in Rel. No. 34-37528 (8/5/96); 61 FR 41816 (08/12/96).

      Rule Filings Recently Approved By The SEC

      96-36

      Amend Schedule A to the NASD By-Laws to adopt CRD fees. Immediate effectiveness granted by the SEC in Rel. No. 34- 37826 (10/22/96); 61 FR 54830 (10/22/96).

      96-32

      Amend Rule IM-8310-2 to permit the NASD to provide a copy of any disciplinary complaint or decision upon request and require that such copy be accompanied by a disclosure statement in certain circumstances. Accelerated approval granted by the SEC in SEC Rel. No. 34-37797 (10/9/96); 61 FR 53984 (10/16/96).

      96-29

      Permanent approval requested for the Plan of Allocation and Delegation setting forth the purpose, function, governance, procedures, and responsibilities of the NASD, NASD Regulation, and Nasdaq. Temporary accelerated approval granted by the SEC and publication for comment in Rel. No. 34-37425 (7/11/96); 61 FR 37518 (7/18/96). Temporary accelerated approval granted by the SEC in Rel. No. 34-37957 (11/15/96; 61 FR 59267 (11/21/96) through 5/15/97.

      96-20

      Amend the NASD By-Laws to make them consistent with the Delegation Plan. Published for comment by the SEC in Rel. No. 34-37282 (6/6/96); 61 FR 29777 (06/12/96). Temporary accelerated approval granted by the SEC in Rel. No. 34-37424 (7/11/96); 61 FR 37515 (7/18/96). Temporary accelerated approval granted by the SEC in Rel. No. 34-37956 (11/15/96; 61 FR 59265 (11/21/96) through 5/15/97.

    • 96-91 Fixed Income Pricing System Additions, Changes, And Deletions As Of November 29, 1996

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      SUGGESTED ROUTING

      Senior Management
      Corporate Finance
      Institutional
      Legal & Compliance
      Municipal
      Operations
      Systems
      Trading

      As of November 29, 1996, the following bonds were added to the Fixed Income Pricing System (FIPS).

      Symbol Name Coupon Maturity
      UIS.GG Unisys Corp 11.750 10/15/04
      TLLP.GC Toll Corp 8.750 11/15/06
      MCCC.GA McCrory Corp 7.770 7/15/94
      TALR.GA Total Renal Care 12.000 8/15/04
      ROGC.GB Rogers Cable Systems Ltd 11.000 12/1/15
      ROGC.GA Rogers Cable Systems Ltd 10.000 12/1/07
      KOPI.GA Koppers Industries 8.500 2/1/04
      ISPT.GA ISP Chem/ISP Tech 9.000 3/1/99
      DEEP.GA Deep Tech Intl 12.000 12/15/00
      WBB.GC Webb (Del) Corp 9.000 2/15/06
      LD.GA Louis Dreyfus Nat Gas 9.250 6/15/04
      CNP.GA Crown Central Petroleum 10.875 2/1/05
      GSTE.GB GS Technologies Oper 12.000 9/1/04
      CONG.GA Congoleum Corp 9.000 2/1/01
      MUZC.GA Muzak LP/Capital 10.000 10/1/03
      FGAS.GA Forcenergy Inc 9.500 11/1/06
      VTS.GA Veritas DGC Inc 9.750 10/15/03
      AGY.GB Argosy Gaming 12.000 6/1/01
      LAMR.GB Lamar Advertising 9.625 12/1/06
      BYD.GB Boyd Gaming Corp 9.250 10/1/03
      STO.GL Stone Container Corp 11.875 8/1/16
      KBH.GC Kaufman & Broad Home Corp 9.625 11/15/06
      HOA.GA Showboat Marina CP/Finl Corp 13.500 3/15/03
      MIKE.GA Michaels Stores Inc 10.875 6/15/06

      As of November 29, 1996, the following bonds were deleted from FIPS.

      Symbol Name Coupon Maturity
      UIS.GC Unisys Corp 8.875 7/15/97
      PIR.GA Pier 1 Imports Inc 11.500 7/15/03
      TDY.GA Teledyne Inc 10.000 6/1/04
      VISC.GA Vis Cap Corp 12.375 7/1/98
      WOA.GA Worldcorp Inc 13.875 8/15/97
      NMK.GA Niagara Mohawk Power Corp 5.875 11/1/96
      PLS.GA Paracelsus Healthcare Corp 9.875 10/15/03

      As of November 29, 1996, changes were made to the symbols of the following FIPSSM bonds:

      New Symbol Old Symbol Name Coupon Maturity
      PLS.GB PHCR.GB Paracelsus Healthcare Corp 10.000 8/15/06
      ENQ.GB AMMO.GA American Media Operations Inc 11.626 11/15/04

      All bonds listed above are subject to trade-reporting requirements. Questions pertaining to FIPS trade-reporting rules should be directed to James C. Dolan, NASD® Market Regulation, at (301) 590-6460.

      Any questions regarding the FIPS master file should be directed to Cheryl Glowacki, Nasdaq Market Operations, at (203) 385-6310.

    • 96-90 Trade Date — Settlement Date Schedule For 1997

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      SUGGESTED ROUTING

      Internal Audit
      Legal & Compliance
      Municipal
      Operations
      Syndicate
      Systems
      Trading

      Martin Luther King, Jr., Day: Trade Date-Settlement Date Schedule

      The schedule of trade dates-settlement dates below reflects the observance by the financial community of Martin Luther King, Jr., Day, Monday, January 20, 1997. On January 20, 1997, The Nasdaq Stock Market and the securities exchanges will be open for trading. However, it will not be a settlement date because many of the nation's banking institutions will be closed.

      Trade Date Settlement Date Reg. T Date*
      Jan. 13 Jan. 16 Jan. 20
      14 17 21
      15 21 22
      16 22 23
      17 23 24
      20 23 27
      21 24 28

      Note: January 20, 1997, is considered a business day for receiving customers' payments under Regulation T of the Federal Reserve Board.

      Transactions made on January 20 will be combined with transactions made on the previous business day, January 17, for settlement on January 23. Securities will not be quoted ex-dividend, and settlements, marks to the market, reclamations, and buy-ins and sell-outs, as provided in the Uniform Practice Code, will not be made and/or exercised on January 20.

      *Pursuant to Sections 220.8(b)(1) and (4) of Regulation T of the Federal Reserve Board, a broker/dealer must promptly cancel or otherwise liquidate a customer purchase transaction in a cash account if full payment is not received within five business days of the date of purchase or, pursuant to Section 220.8(d)(1), make application to extend the time period specified. The date by which members must take such action is shown in the column titled "Reg. T Date."

      Presidents' Day: Trade Date-Settlement Date Schedule

      The Nasdaq Stock Market and the securities exchanges will be closed on Monday, February 17, 1997, in observance of Presidents' Day, "Regular way" transactions made on the business days noted below will be subject to the following schedule:

      Trade Date Settlement Date Reg. T Date*
      Feb. 11 Feb. 14 Feb. 19
      12 18 20
      13 19 21
      14 20 24
      17 Markets Closed
      18 21 25

      Good Friday: Trade Date-Settlement Date Schedule

      The Nasdaq Stock Market and the securities exchanges will be closed on Good Friday, March 28, 1997. "Regular way" transactions made on the business days noted below will be subject to the following schedule:

      Trade Date Settlement Date Reg. T Date*
      March 24 March 27 April 1
      25 31 2
      26 April 1 3
      27 2 4
      28 Markets Closed
      31 3 7

      Memorial Day: Trade Date-Settlement Date Schedule

      The Nasdaq Stock Market and the securities exchanges will be closed on Monday, May 26, 1997, in observance of Memorial Day. "Regular way" transactions made on the business days noted below will be subject to the following schedule:

      Trade Date Settlement Date Reg. T Date*
      May 20 May 23 May 28
      21 27 29
      22 28 30
      23 29 June 2
      26 Markets Closed
      27 30 3

      Independence Day: Trade Date-Settlement Date Schedule

      The Nasdaq Stock Market and the securities exchanges will be closed on Friday, July 4, 1997, in observance of Independence Day. "Regular way" transactions made on the business days noted below will be subject to the following schedule:

      Trade Date Settlement Date Reg. T Date*
      June 30 July 3 July 8
      July 1 7 9
      2 8 10
      3 9 11
      4 Markets Closed
      7 10 14

      Labor Day: Trade Date-Settlement Date Schedule

      The Nasdaq Stock Market and the securities exchanges will be closed on Monday, September 1, 1997, in observance of Labor Day. "Regular way" transactions made on the business days noted below will be subject to the following schedule:

      Trade Date Settlement Date Reg. T Date*
      Aug. 26 Aug. 29 Sept. 3
      27 Sept. 2 4
      28 3 5
      29 4 8
      Sept. 1 Markets Closed
      2 5 9

      Columbus Day: Trade Date-Settlement Date Schedule

      The schedule of trade dates-settlement dates below reflects the observance by the financial community of Columbus Day, Monday, October 13, 1997. On this day, The Nasdaq Stock Market and the securities exchanges will be open for trading. However, it will not be a settlement date because many of the nation's banking institutions will be closed.

      Trade Date Settlement Date Reg. T Date*
      Oct. 6 Oct. 9 Oct. 13
      7 10 14
      8 14 15
      9 15 16
      10 16 17
      13 16 20
      14 17 21

      Note: October 13, 1997, is considered a business day for receiving customers' payments under Regulation T of the Federal Reserve Board.

      Transactions made on Monday, October 13, will be combined with transactions made on the previous business day, October 10, for settlement on October 16. Securities will not be quoted ex-dividend, and settlements, marks to the market, reclamations, and buy-ins and sell-outs, as provided in the Uniform Practice Code, will not be made and/or exercised on October 13.

      Veterans' Day And Thanksgiving Day: Trade Date-Settlement Date Schedule

      The schedule of trade dates-settlement dates below reflects the observance by the financial community of Veterans' Day, Tuesday, November 11, 1997, and Thanksgiving Day, Thursday, November 27, 1997. On Tuesday, November 11, The Nasdaq Stock Market and the securities exchanges will be open for trading. However, it will not be a settlement date because many of the nation's banking institutions will be closed in observance of Veterans' Day. All securities markets will be closed on Thursday, November 27, in observance of Thanksgiving Day.

      Trade Date Settlement Date Reg. T Date*
      Nov. 4 Nov. 7 Nov. 11
      5 10 12
      6 12 13
      7 13 14
      10 14 17
      11 14 18
      21 26 Dec. 1
      24 28 2
      25 Dec. 1 3
      26 2 4
      27 Markets Closed
      28 3 5

      Note: November 11, 1997, is considered a business day for receiving customers' payments under Regulation T of the Federal Reserve Board.

      Transactions made on November 11 will be combined with transactions made on the previous business day, November 10, for settlement on November 14. Securities will not be quoted ex-dividend, and settlements, marks to the market, reclamations, and buy-ins and sell-outs, as provided in the Uniform Practice Code, will not be made and/or exercised on November 11.

      Christmas Day And New Year's Day: Trade Date-Settlement Date Schedule

      The Nasdaq Stock Market and the securities exchanges will be closed on Thursday, December 25, 1997, in observance of Christmas Day, and Thursday, January 1, 1998, in observance of New Year's Day. "Regular way" transactions made on the business days noted below will be subject to the following schedule:

      Trade Date Settlement Date Reg. T Date*
      Dec. 19 Dec. 24 Dec. 29
      22 26 30
      23 29 31
      24 30 Jan. 2, 1998
      25 Markets Closed
      26 31 5
      29 Jan. 2, 1998 6
      30 5 7
      31 6 8
      Jan. 1, 1998 Markets Closed
      2 7 9

      Brokers, dealers, and municipal securities dealers should use the foregoing settlement dates for purposes of clearing and settling transactions pursuant to the NASD Uniform Practice Code and Municipal Securities Rulemaking Board Rule G-12 on Uniform Practice.

      Questions regarding the application of those settlement dates to a particular situation may be directed to the NASD Uniform Practice Department at (203) 375-9609.

    • 96-89 NASD 1997 Holiday Schedule

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      SUGGESTED ROUTING

      Internal Audit
      Legal & Compliance
      Operations
      Systems
      Trading

      The NASD will observe the following holiday schedule for 1997:

      January 1 New Year's Day
      February 17 Presidents' Day
      March 28 Good Friday
      May 26 Memorial Day
      July 4 Independence Day
      September 1 Labor Day
      November 27 Thanksgiving Day
      December 25 Christmas Day

      Questions regarding this holiday schedule may be directed to NASD Human Resources, at (301) 590-6821.

    • 96-88 SOES Tier Levels Set To Change January 2, 1997

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      SUGGESTED ROUTING

      Legal & Compliance
      Operations
      Systems
      Trading

      Executive Summary

      Effective January 2, 1997, tier sizes for 762 Nasdaq National Market® securities will be revised in accordance with NASD Rule 4710(g).

      For more information, please contact Nasdaq Market Operations at (203) 378-0284.

      Description

      Under Rule 4710, the maximum Small Order Execution System (SOES) order size for a Nasdaq National Market security is 1,000, 500, or 200 shares depending on the trading characteristics of the security. The maximum SOESSM order size for a Nasdaq National Market security also corresponds to the minimum quote size requirement for Nasdaq® market makers in that security [NASD Rule 4613(a)(2)]. The Nasdaq Workstation IIindicates the minimum quote size requirement for each Nasdaq National Market security in its bid/offer quotation display. The indicator "NM10," "NM5," or "NM2" is displayed to the right of the security name, corresponding to a minimum-size display of 1,000, 500, or 200 shares, respectively.

      The criteria for establishing SOES tier sizes are as follows:

      • A 1,000-share tier size was applied to those Nasdaq National Market securities that had an average daily non-block volume of 3,000 shares or more a day, a bid price that was less than or equal to $100, and three or more market makers.

      • A 500-share tier size was applied to those Nasdaq National Market securities that had an average daily nonblock volume of 1,000 shares or more a day, a bid price that was less than or equal to $150, and two or more market makers.

      • A 200-share tier size was applied to those Nasdaq National Market securities that had an average daily nonblock volume of less than 1,000 shares a day, a bid price that was less than or equal to $250, and less than two market makers.

      In accordance with Rule 4710, Nasdaq periodically reviews the SOES tier size applicable to each Nasdaq National Market security to determine if the trading characteristics of the issue have changed so as to warrant a tier size adjustment. Such a review was conducted using data as of September 30, 1996, pursuant to the aforementioned standards. The SOES tier-size changes called for by this review are being implemented with three exceptions.

      • First, issues were not permitted to move more than one tier-size level. For example, if an issue was previously categorized in the 1,000-share tier, it would not be permitted to move to the 200-share tier, even if the formula calculated that such a move was warranted. The issue could move only one level to the 500-share tier as a result of any single review. In adopting this policy, the NASD was attempting to maintain adequate public investor access to the market for issues in which the tier-size level decreased and to help ensure the ongoing participation of market makers in SOES for issues in which the tier-size level increased.
      • Second, for securities priced below $1 where the reranking called for a reduction in tier size, the tier size was not reduced.
      • Third, for the top 50 Nasdaq securities based on market capitalization, the SOES tier sizes were not reduced regardless of whether the reranking called for a tier-size reduction.

      In addition, with respect to initial public offerings (IPOs), the SOES tier-size reranking procedures provide that a security must first be traded on Nasdaq for at least 45 days before it is eligible to be reclassified.

      Thus, IPOs listed on Nasdaq within the 45 days prior to September 30, 1996, were not subjected to the SOES tier-size review.

      Following is a listing of the 762 Nasdaq National Market issues that will require a SOES tier-level change on January 2, 1997.



      Nasdaq National Market SOES Tier-Size Changes

      All Issues In Alphabetical Order By Security Name

      (Effective January 2, 1997)

      Symbol Company Name Old Tier Level New Tier Level
      HHHH 4HEALTH INC 200 500
      HHHHW 4HEALTH INC WT 200 500
      A      
      ABCB ABC BANCORP 1,000 500
      ACMTA ACMAT CP CL A 500 200
      ALZAW ALZA CP WTS 200 500
      ANSS AN SYS INC 200 500
      ASTSF ASE TEST LTD ORD 200 500
      AANB ABIGAIL ADAMS NATL 200 500
      ABRI ABRAMS INDS INC 500 200
      ACRI ACACIA RESEARCH CORP 200 500
      ACCI ACC CONSUMER FIN CP 200 500
      ACMI ACCUMED INTL INC 500 1,000
      ACMIW ACCUMED INTL INC WTS 500 1,000
      ACEC ACE*COMM CORP 200 500
      AAGP ACTIVE APPAREL GROUP 500 1,000
      ACRT ACTRADE INTL LTD 500 1,000
      ADECY ADECCO SA ADR 500 200
      ADTK ADEPT TECH INC 500 1,000
      AERL AERIAL COMM INC 500 1,000
      AFFI AFFINITY TECH GROUP 500 1,000
      AFFX AFFYMETRIX INC 200 500
      ATSS AIR-CURE TECH INC 500 1,000
      ANSY AIRNET SYSTEMS INC 200 500
      ASII AIRPORT SYS INTL INC 1,000 500
      AKSY AKSYS LTD 200 500
      ALXN ALEXION PHARM INC 500 1,000
      ALLE ALLEGIANT BNCP INC 500 200
      AORGB ALLEN ORGAN CO B 500 200
      ALLIF ALLIANCE COMMUN CP B 200 500
      ALLYP ALLIANCE GMNG PFD B 200 500
      ALFC ALLIED LIFE FINL CP 1,000 500
      ASFN ALLSTATE FINL CP 1,000 500
      ALPH ALPHANET SOLUTIONS 500 1,000
      AMIE AMBASSADORS INTL INC 1,000 500
      ABIGP AMER BNKR INS GR PFD 200 500
      AHEPZ AMER HEALTH DEP SHRS 1,000 500
      AIFC AMER INDEMNITY FIN 500 200
      ALGI AMER LOCKER GROUP 500 200
      AMGD AMER VANGUARD CP 1,000 500
      BETM AMER WAGERING INC 500 1,000
      ADSI AMERICAN DISPOSAL 200 500
      ANLG ANALOGY INC 500 1,000
      ANLY ANALYSTS INTL CP 500 1,000
      ANDE ANDERSONS INC (THE) 500 1,000
      ADRX ANDRX CP 500 1,000
      ANST ANSOFT CP 500 1,000
      AMSI APACHE MEDICAL SYS 200 500
      ARDM ARADIGM CP 200 500
      ARGL ARGYLE TELEVISION A 1,000 500
      ARKR ARK RESTAURANTS CP 1,000 500
      ARRO ARROW INTL INC 500 1,000
      ARTW ART S WAY MFG CO INC 200 500
      AVEI ARTERIAL VASCULAR 500 1,000
      ARTNA ARTESIAN RES CP A 200 500
      ASAM ASAHI/AMERICA INC 500 1,000
      ASDV ASPECT DEVELOPMT 200 500
      ASBK ASPEN BANCSHARES INC 500 1,000
      ATEA ASTEA INTL INC 500 1,000
      ATPC ATHEY PRODUCTS CP 1,000 500
      ATLB ATLANTIC BK & TR(MA) 500 1,000
      AULT AULT INC 500 1,000
      ACAM AUTOCAM CP 1,000 500
      APCO AUTOMOBILE PROTEC 500 1,000
      ATCI AUTONOMOUS TECH CP 500 1,000
      AVGN AVIGEN INC 200 500
      AWRE AWARE INC 200 500
      AXNT AXENT TECH INC 500 1,000
      B      
      BCBF BCB FIN SVCS CP 500 200
      BFSI BFS BANKORP INC 200 500
      BHAG BHA GROUP INC S2 1,000 500
      PAPA BACK BAY RESTAURANT 1,000 500
      BACU BACOU USA INC 500 1,000
      BPMI BADGER PAPER MILLS 500 200
      BWINB BALDWIN LYONS CL B 1,000 500
      BPAO BALDWIN PIANO ORGAN 1,000 500
      BGLV BALLY'S GRAND INC 500 200
      BGLVW BALLY'S GRAND INC WT 500 200
      BTEK BALTEK CP 500 200
      BFOH BANCFIRST OHIO CP 500 1,000
      BOMS BANCORPSOUTH INC 500 1,000
      BMCCP BANDO MCGLOC PFD A 500 200
      BCGA BANK CORP OF GEORGIA 200 500
      BCOM BANK OF COMMERCE(CA) 1,000 500
      BKLA BANK OF LOS ANGELES 200 500
      BOYL BANK OF YORBA LINDA 200 500
      BPLS BANK PLUS CP 500 1,000
      BNKU BANK UNITED CORP 200 500
      BANCA BANKATLANTIC BNCP A 500 1,000
      BKUNO BANKUNITED FIN PFD 500 200
      VSLF BANYAN STRAT FUND II 1,000 500
      BBHF BARBERS HAIRSTYLING 500 200
      BNTT BARNETT INC 500 1,000
      BARR BARRINGER TECH INC 500 1,000
      BATSW BATTERIES BATT WTS 500 1,000
      BATS BATTERIES BATTERIES 500 1,000
      BILL BILLING INFO CONCEPT 200 500
      BZET BIOFIELD CP 500 1,000
      BTRN BIOTRANSPLANT INC 500 1,000
      BLYDY BLYVOOR ADR NEW 200 500
      BOLD BOLDER TECH CP 500 1,000
      BMTR BONDED MOTORS INC 500 1,000
      BCGI BOSTON COMMUN GROUP 200 500
      BOXXA BOX ENERGY CP CL A 500 200
      BOYD BOYD BROS TRANS INC 500 200
      BRBK BRENTON BANKS INC 1,000 500
      BRID BRIDGFORD FOODS CP 1,000 500
      BVSN BROADVISION INC 200 500
      BFPT BROOKS FIBER PPTYS 500 1,000
      BMTC BRYN MAWR BK CP 500 200
      C      
      CBBI CB BANCSHARES INC 500 200
      CBHI C BREWER HOMES INC A 1,000 500
      CNIT CENIT BNCP INC 500 1,000
      CERB CERBCO INC 500 200
      CFCI CFC INTL INC 500 1,000
      CNBF CNB FINANCIAL CP 500 200
      CNWK C NET INC 200 500
      CHRI COHR INC 500 1,000
      CRAU CR ANTHONY COMPANY 200 500
      CSGS CSG SYS INTL INC 500 1,000
      CSPI CSP INC 500 200
      KDUS CADUS PHARM CORP 200 500
      CSTB CALIFORNIA STATE BK 1,000 500
      CAMH CAMBRIDGE HEART INC 200 500
      CLZRW CANDELA CP WTS 500 200
      CANX CANNON EXPRESS INC 500 200
      CANNY CANON INC ADR 500 1,000
      CNTBY CANTAB PHARM PLC ADR 500 200
      CNTL CANTEL INDS INC 1,000 500
      CAPF CAPITAL FACTORS HLDG 200 500
      CAPS CAPITAL SAV BNCP INC 500 1,000
      CPWY CARDIAC PATHWAYS CP 200 500
      CGCP CARDIOGENESIS CP 200 500
      CTSI CARDIOTHORACIC SYS 500 1,000
      CCVD CARDIOVASCULAR DYNMC 200 500
      CBNJW CARNEGIE BANCORP WTS 500 1,000
      CRSV CARRIAGE SERVICES 200 500
      CATB CATSKILL FIN CP 500 1,000
      CCCG CCC INFO SVCS GRP 200 500
      FLWR CELEBRITY INC 1,000 500
      CTBK CENTER BANKS INC 500 200
      CFAC CENTRAL FIN ACCEPT 200 500
      CNSP CENTRAL SPRINKLER CP 500 1,000
      CVBK CENTRAL VA BKSHS INC 500 200
      CENX CENTURY ALUMINUM CO 500 1,000
      CYFN CENTURY FINANCIAL CP 200 500
      CEON CERION TECH INC 200 500
      CFMT CFM TECHNOLOGIES INC 200 500
      CHLN CHALONE WINE GP LTD 1,000 500
      CHANF CHANDLER INS CO LTD 1,000 500
      CHNL CHANNELL COML CORP 200 500
      CHKPF CHECK POINT SFTWARE 500 1,000
      CHERA CHERRY CP CL A 1,000 500
      CHERB CHERRY CP CL B 1,000 500
      CHRX CHIREX INC 500 1,000
      CIMTF CIMATRON ORD SHS 500 1,000
      CNMWW CINCINNATI MICRO WTS 1,000 500
      CNRMF CINRAM LIMITED 500 200
      CICS CITIZENS BKSH INC 1,000 500
      CLMT CLAREMONT TECH GP 200 500
      TOUR COACH USA INC 500 1,000
      CBSAP COASTAL BANC PFD A 500 200
      COGNF COGNOS INC 500 1,000
      COHR COHERENT INC 500 1,000
      WDRY COINMACH LAUNDRY 200 500
      CCLR COLLABORATIVE CLIN 200 500
      CGPI COLLAGENEX PHARM INC 200 500
      CMCO COLUMBUS MCKINNON CP 500 1,000
      CFBXZ COMM FIRST DEP SH 500 200
      CBNY COMMERCIAL BK OF N Y 500 1,000
      CCLWF COMMODORE HLDG WTS 200 500
      CCLNF COMMODORE HLDGS LTD 200 500
      CFTP COMMUNITY FED BNCP 500 1,000
      CSRV COMPUSERV CP 500 1,000
      CPLNY CONCORDIA PAPER ADS 500 200
      CTWS CONN WATER SVCS INC 500 1,000
      CNKT CONNECT INC 200 500
      CFIN CONSUMERS FIN CP 500 200
      COOP COOPERATIVE BKSHS 1,000 500
      DLVRY CORTECS INTL SPO ADR 500 1,000
      CRVL CORVEL CP 1,000 500
      CPWM COST PLUS INC 500 1,000
      CSLI COTTON STATES LIFE 1,000 500
      CAFEP COUNTRY STAR PFD A 1,000 500
      CREG CRAIG CONSUMER ELECT 200 500
      CYCH CYBERCASH INC 500 1,000
      CYLK CYLINK CP 500 1,000
      CYTC CYTYC CP 500 1,000
      D      
      SEEDB DEKALB GENET B 500 1,000
      DALY DAILEY PETROLEUM 200 500
      DASTY DASSAULT SYSTEME ADR 200 500
      DDIM DATA DIMENSIONS INC 500 1,000
      DMAR DATAMARINE INTL INC 1,000 500
      DPSI DAWSON PROD SVCS INC 500 1,000
      DOCI DECISIONONE HLDGS CP 500 1,000
      DGTC DEL GLOBAL TECH CP 200 500
      DLCH DELCHAMPS INC 500 1,000
      DGAS DELTA NATURAL GAS 500 1,000
      DCBK DESERT COMMUNITY BK 500 200
      DTRX DETREX CP 1,000 500
      DEVC DEVCON INTL CP 1,000 500
      DCRN DIACRIN INC 200 500
      DCRNW DIACRIN INC WT 200 500
      DHMS DIAMOND HOME SVCS 200 500
      DITI DIATIDE INC 200 500
      DIGE DIGENE CP 200 500
      DVID DIGITAL VIDEO SYSTEM 500 1,000
      DVIDW DIGITAL VIDEO WTS A 500 1,000
      DVIDZ DIGITAL VIDEO WTS B 500 1,000
      DIME DIME COMMUNITY BNCP 200 500
      DCTM DOCUMENTUM INC 500 1,000
      DRYR DREYERS GRAND ICE 1,000 500
      DRLX DRILEX INTL INC 200 500
      DPMI DUPONT PHOTOMASKS 200 500
      DRRA DURA AUTO SYSTEMS 200 500
      DYMX DYNAMEX INC 200 500
      DHTI DYNAMIC HEALTHCARE 500 1,000
      E      
      ELXS ELXSI CP 1,000 500
      EMCI EMC INSURANCE GP 1,000 500
      EDSE ESELCO INC 500 200
      ESSF ESSEF CP 1,000 500
      EGRP E*TRADE GROUP INC 200 500
      EGLB EAGLE BANCGROUP INC 200 500
      ERIV EAGLE RIVER INTERACT 500 1,000
      ESTI ECLIPSE SURGICAL TEC 200 500
      EDFY EDIFY CP 500 1,000
      EMSI EFFECTIVE MGMT SYS 500 1,000
      ENBX EINSTEIN/NOAH BAGEL 200 500
      ELAMF ELAMEX SA DE CV CL 1 500 1,000
      ELSE ELECTRO SENSORS INC 500 200
      EHST ELECTRONIC HAIR STYL 200 500
      ETCIA ELECTRONIC TELECOM A 500 1,000
      ESCP ELECTROSCOPE INC 200 500
      ENPT EN POINTE TECH INC 500 1,000
      ENEX ENEX RESOURCE CP 1,000 500
      ENSY ENSYS ENVIR PROD INC 500 1,000
      ENMD ENTREMED INC 200 500
      EPMD EP MEDSYSTEMS INC 200 500
      EPIC EPIC DESIGN TECH INC 500 1,000
      ERGO ERGO SCIENCE CP 500 1,000
      ESCA ESCALADE INC 500 1,000
      EMED EUROMED INC 500 1,000
      EVAN EVANS INC 1,000 500
      EXAC EXACTECH INC 200 500
      XCIT EXCITE INC 500 1,000
      F      
      FMBN F & M BANCORP (MD) 1,000 500
      FCNB FCNB CP 1,000 500
      FDPC FDPCP 1,000 500
      FMCO FMS FINANCIAL CP 500 200
      FRPP FRP PROPERTIES INC 500 200
      FRLN FARALLON COMMUN INC 200 500
      FARM FARMER BROTHERS CO 500 200
      FOBC FED ONE BANCORP INC 500 1,000
      FFFL FIDELITY FED SAV(FL) 500 1,000
      FFOH FIDELITY FIN OF OHIO 500 1,000
      LION FIDELITY NATL CP 500 200
      FINE FINE HOST CP 200 500
      FACO FIRST ALLIANCE CP 200 500
      FBNC FIRST BANCP TROY NC 200 500
      FBCG FIRST BKG CO SE GA 500 200
      FCNCA FIRST CITIZENS CL A 1,000 500
      FENT FIRST ENTERPRISE FIN 200 500
      FFBH FIRST FED BCSHS ARK 500 1,000
      FFBG FIRST FED SVGS BK GA 500 200
      FGHC FIRST GEORG HLDGS 500 200
      FSPG FIRST HOME BNCP INC 500 200
      CASH FIRST MIDWST FIN INC 500 200
      FMOR FIRST MTGE CP 200 500
      FMSB FIRST MUTUAL SAV BK 500 200
      FPBK FIRST PATRIOT BKSR 500 1,000
      FRBK FIRST REPUBLIC BNCP 500 1,000
      FSNJ FIRST SAV BK OF NJ 500 200
      FSTH FIRST SO BCSHS INC 1,000 500
      UNTD FIRST UNITED BCSHS 500 200
      FLML FLAMEL TECH SA ADR 200 500
      FAME FLAMEMASTER CP THE 500 200
      FLDR FLANDERS CORP 500 1,000
      FSOLF FORASOL-FORAMER N V 500 1,000
      FTIC FORENSIC TECH INTL 500 1,000
      FRTE FORTE SOFTWARE INC 500 1,000
      FRTG FORTRESS GROUP INC 200 500
      FUSA FOTOBALL USA INC 500 1,000
      FUSAW FOTOBALL USA INC WTS 500 1,000
      FPIC FPIC INSURANCE GROUP 200 500
      FELE FRANKLIN ELEC INC 500 1,000
      FSON FUSION MEDICAL TECH 200 500
      FXEN FX ENERGY INC 500 1,000
      G      
      GKNS G K N HOLDING CP 200 500
      GSES G S E SYSTEMS INC 1,000 500
      GGEN GALAGEN INC 500 1,000
      GBOT GARDEN BOTANIKA INC 200 500
      GDSC GATEWAY DATA SCI CP 500 1,000
      GCABY GEN CABLE PLC ADR 500 1,000
      GMCC GEN MAGNAPLATE CP 500 200
      GSII GEN SURGICAL INN 500 1,000
      GNWR GENESEE & WYOMING A 200 500
      GENBB GENESEE CP B 500 200
      GENXY GENSET ADR 200 500
      GGIT GEOGRAPHICS INC 500 1,000
      BOTX GEORGIA BONDED FIBER 500 200
      GSCI GEOSCIENCE CP 200 500
      GERN GERON CORP 200 500
      GETTY GETTY COMMUN ADR 200 500
      JACK GOLDEN BEAR GOLF 200 500
      GPLB GRAND PRIX ASSOC LB 200 500
      GTPS GREAT AMER BNCP INC 500 1,000
      GSFC GREEN STREET FIN CP 500 1,000
      GASIB GREENWICH AIR SVCS B 500 1,000
      GBCOA GREIF BROS CP CL A 500 1,000
      GSOF GROUP I SOFTWARE INC 200 500
      GUMM GUMTECH INTL INC 500 1,000
      H      
      HFFC H F FINANCIAL CP 1,000 500
      HMII H M I INDUSTRIES INC 500 1,000
      HMTT H M T TECHNOLOGY CP 500 1,000
      HPSC H P S C INC 1,000 500
      HDVS H. D. VEST INC 500 1,000
      HAMP HAMPSHIRE GROUP LTD 1,000 500
      HWKN HAWKINS CHEMICAL INC 500 1,000
      HAYS HAYES WHEELS INTL 200 500
      HCOR HEALTHCOR HLDGS INC 200 500
      HDIE HEALTHDYNE INFO ENTR 500 1,000
      HPRT HEARTPORT INC 500 1,000
      HECHB HECHINGER CO CL B 1,000 500
      HELI HELISYS INC 500 1,000
      HBCI HERITAGE BANCORP INC 500 200
      HERS HERITAGE FINL SVC IL 500 1,000
      HTCO HICKORY TECH CP 500 200
      HBNK HIGHLAND FEDERAL BK 1,000 500
      HIFS HINGHAM INSTI SAVING 500 200
      HPRKZ HOLLYWOOD PK DEP SHS 1,000 500
      HLMS HOLMES PROTECTION GP 500 1,000
      HOLO HOLOPAK TECHS INC 500 1,000
      HBENB HOME BENEFICIAL CP B 500 1,000
      HOMF HOME FEDERAL BANCORP 500 1,000
      HPBC HOME PORT BNCP INC 500 1,000
      HMCI HOMECORP INC 500 200
      HMHM HORIZON MENTAL HLTH 500 1,000
      HPIP HOUGHTEN PHARM INC 500 1,000
      HFAB HOUSE OF FABRICS 200 500
      HSCL HOUSECALL MED RES 500 1,000
      HUBG HUB GROUP INC A 500 1,000
      HMAR HVIDE MARINE INC 500 1,000
      I      
      ICOCZ ICO INC DEP SHR 500 200
      ICTG ICT GROUP INC 200 500
      ICTSF ICTS INTL NV 200 500
      IDTC IDT CORP 500 1,000
      IPSCF IPSCO INC 500 200
      ICOR ISOCOR 500 1,000
      ITWO I2 TECHNLOGIES 500 1,000
      IGYN IMAGYN MEDICAL INC 200 500
      IMCC IMC MORTGAGE CO 200 500
      IMPH IMPATH INC 500 1,000
      IGPFF IMPERIAL GINSENG PRO 1,000 500
      ISTR INCSTAR CP 200 500
      IBNJ NDEPENDENCE BNCP NJ 500 1,000
      INHO INDEPENDENCE HLDG CO 1,000 500
      INDV INDIVIDUAL INC 500 1,000
      INFO INFONAUTICS INC A 500 1,000
      SEEK INFOSEEK CP 200 500
      INLD INLAND CASINO CP 200 500
      ISER INNOSERV TECH INC 1,000 500
      IIII INNOTECH INC 500 1,000
      IDEA INNOVASIVE DEVICES 200 500
      INSL INSILCO CP 1,000 500
      NTEG INTEG INC 200 500
      IPAC INTEGRATED PACKAGING 500 1,000
      ISCG INTEGRATED SYS CONSL 500 1,000
      IMII INTELLIGENT MED IMAG 500 1,000
      ITRC INTERCARDIA INC 500 1,000
      INLK INTERLINK COM SCIENC 200 500
      IVBK INTERVISUAL BOOKS 1,000 500
      INDQB INTL DAIRY QUEEN B 500 200
      IPCRF IPC HOLDINGS LTD 500 1,000
      IRIX IRIDEX CP 500 1,000
      ISKO ISCO INC 1,000 500
      IIXC IXC COMMUNICATION 200 500
      J      
      JPMC JPM CO (THE) 500 1,000
      JXVL JACKSONVILLE BANCORP 500 1,000
      JANNF JANNOCK LIMITED 200 500
      JDAS JDA SOFTWARE GRP INC 500 1,000
      JSBA JEFFERSON SAV BNCP 1,000 500
      K      
      KLLM KLLM TRANSPORT SV 1,000 500
      KVHI KVH INDS INC 500 1,000
      KTEL K-TEL INTL INC 1,000 500
      KARR KARRINGTON HEALTH 200 500
      KASH KASH N KARRY FOOD ST 500 1,000
      KATC KATZ DIGITAL TECH 500 1,000
      KAYE KAYE GROUP INC 500 200
      KTCO KENAN TRANSPORT CO 500 200
      KWIC KENNEDY-WILSON INTL 500 200
      KNTK KENTEK INFO SYS INC 500 1,000
      KERA KERAVISION INC 1,000 500
      KEQU KEWAUNEE SCIENTIFIC 500 1,000
      KEYS KEYSTONE AUTOMTV IND 200 500
      KLRT KLEINERTS INC 500 200
      KRON KRONOS INC 500 1,000
      KRUG KRUG INTL CP 1,000 500
      KLIC KULICKE AND SOFFA 500 1,000
      KLOCZ KUSHNER-LOCK WT C 200 500
      L      
      LATS LAT SPORTSWEAR INC 1,000 500
      KNICW LL KNICKBKR CO WTS 500 200
      LXBK LSB BANCSHARES NC 500 200
      LXEI LXE INC 1,000 500
      LBOR LABOR READY INC 200 500
      LAMR LAMAR ADVERTISING A 200 500
      LNDC LANDEC CP 500 1,000
      LANV LANVISION SYS INC 500 1,000
      LASRF LASER INDUSTRIES LTD 200 500
      LVCI LASER VISION CTRS 500 1,000
      LASE LASERSIGHT INC 500 1,000
      CHAIZ LIFE MED SCI WTS B 500 1,000
      LNDL LINDAL CEDAR HOMES 1,000 500
      MALT LION BREWERY INC THE 500 1,000
      LFUSW LITTELFUSE INC WTS 500 200
      LIVE LIVE ENTERTAIN INC 500 1,000
      LOEH LOEHMANN'S INC 500 1,000
      LOFSY LONDON & OVERSEA ADR 500 200
      LONDY LONDON INTL PLC ADR 500 200
      LSBI LSB FINANCIAL CP 500 200
      LCOS LYCOS INC 500 1,000
      M      
      MARC MARC INC 1,000 500
      MBLF MBLA FINL CORP 500 200
      MCICP MCI CAP 1 A QUIPS 200 500
      MFSTP MFS COMMUN DEP SHS 1,000 500
      MIMS MIM CORPORATION 200 500
      FLSHF M-SYS FLASH DISK LTD 500 1,000
      MWAV M-WAVE INC 1,000 500
      MACD MACDERMID INC 500 200
      MXICY MACRONIX INTL CO ADR 500 1,000
      MTCC MAGNETIC TECH CP 500 200
      MCSX MANAGED CARE SOLU 500 1,000
      MAKL MARKEL CP 500 1,000
      MRKR MARKER INTERNATIONAL 500 1,000
      MFAC MARKET FACTS INC 500 200
      MFCX MARSHALLTOWN FIN CP 200 500
      MRTN MARTEN TRANSPORT LTD 500 200
      MATR MATRIA HEALTHCARE 500 1,000
      MTSN MATTSON TECH INC 200 500
      SPEH MAY & SPEH INC 500 1,000
      MOIL MAYNARD OIL CO 1,000 500
      MCLD CLEOD INC CL A 200 500
      MBRK MEADOWBROOK REHAB A 500 200
      MECH MECHANICS SAV BK 200 500
      TAXI MEDALLION FIN CP 200 500
      MGCC MEDICAL GRAPHICS CP 1,000 500
      MDKI MEDICORE INC 200 500
      MECS MEDICUS SYSTEMS CP 500 1,000
      MEDQ MEDQUIST INC 200 500
      MTEC MERIDIAN MED TECH 1,000 500
      MRET MERIT HOLDING CP 500 1,000
      MTWKF METROWERKS CORP 200 500
      MINT MICRO-INTEGRATION CP 1,000 500
      MCDE MICROCIDE PHARM INC 500 1,000
      MWAR MICROWARE SYS CP 500 1,000
      MIAMP MID AM CUM CNV PFD A 500 200
      MCBS MID CONT BCSHS INC 1,000 500
      MSADY MID-STATES ADR 500 200
      MLNM MILLENNIUM PHARM INC 500 1,000
      MFFC MILTON FED FINL CP 1,000 500
      MSPG MINDSPRING ENTER INC 500 1,000
      MNES MINE SAFETY APPLS CO 1,000 500
      MMAN MINUTEMAN INTL INC 500 200
      MIZR MIZAR INC 500 1,000
      MCRI MONARCH CASINO 500 1,000
      MOYC MOYCO TECH INC 1,000 500
      MUEL MUELLER PAUL CO 500 200
      LABL MULTI COLOR CP 1,000 500
      MZON MULTIPLE ZONES INTL 200 500
      N      
      NSCC N S C CORPORATION 1,000 500
      NPRO NAPRO BIOTHERAPEUTIC 500 1,000
      NCBE NATL CITY BANCSHARES 500 1,000
      NCBM NATL CITY BNCP 1,000 500
      NAIG NATL INSURANCE GP 1,000 500
      NPBC NATL PENN BSCHS INC 1,000 500
      NTEC NEOSE TECH INC 500 1,000
      NTAP NETWORK APPLIANCE CP 500 1,000
      NBIX NEUROCRINE BIOSCI 200 500
      NHTB NEW HAMPSHIRE THRIFT 500 1,000
      NFSL NEWNAN HOLDINGS INC 200 500
      NEDI NOBEL EDUCA DYN INC 500 1,000
      NRTI NOONEY REALTY TRUST 200 500
      NRLD NORLAND MED SYS INC 500 1,000
      NSYS NORTECH SYSTEMS INC 1,000 500
      TNFI NORTH FACE INC (THE) 200 500
      NSRU NORTH STAR UNIVERSAL 1,000 500
      NEIB NORTHEAST IND BNCP 500 1,000
      NMTXW NOVAMETRIX MED WTS A 500 1,000
      NOVT NOVOSTE CP 200 500
      NUCM NUCLEAR METALS INC 500 200
      NUKO NUKO INFO SYS INC 200 500
      O      
      OSBF O S B FINANCIAL CP 500 200
      OCIS OACIS HLTHCR HLDG 200 500
      OAKF OAK HILL FIN INC 1,000 500
      ODIS OBJECT DESIGN INC 200 500
      OCAL OCAL INC 500 1,000
      OCFC OCEAN FINANCIAL CORP 200 500
      ODETB ODETICS INC CL B 500 200
      ODFL OLD DOMINION FREIGHT 1,000 500
      ONBKP ONBANCORP SER B PFD 1,000 500
      OWAV ONEWAVE INC 200 500
      ONYX ONYX ACCEPTANCE CP 500 1,000
      ONXX ONYX PHARM INC 500 1,000
      OMKT OPEN MARKET INC 200 500
      PLAN OPEN PLAN SYS INC 200 500
      OPVN OPENVISION TECH INC 500 1,000
      OPTT OPTEK TECHNOLOGY INC 500 1,000
      OPTK OPTIKA IMAGING SYS 200 500
      OCAD ORCAD INC 500 1,000
      OROA OROAMERICA INC 1,000 500
      OSIA OUTDOOR SYSTEMS INC 500 1,000
      OXGN OXIGENE INC 500 1,000
      OXGNW OXIGENE INC WTS 500 1,000
      OZEMY OZEMAIL LTD ADR 1,000 500
      P      
      PCDI PCD INC 500 1,000
      PCTHW PCT HLDGS WTS 500 1,000
      PCTH PCT HOLDINGS 500 1,000
      PDSF PDS FINANCIAL CP 500 1,000
      PFFB PFF BANCORP INC 500 1,000
      PFINA PF INDS INC A 1,000 500
      PSNRY P T PASIFIK SATL ADR 500 1,000
      PCCI PACIFIC CREST CAP 1,000 500
      PGEX PACIFIC GATEWAY EXCH 200 500
      PAMM PACIFICAMERICA MONEY 200 500
      PMWI PAGEMART WIRELESS A 200 500
      PALM PALFED INC 500 1,000
      PVAT PARAVANT COMP SYS 200 500
      PVATW PARAVANT COMP WTS 200 500
      PBFI PARIS CORP 1,000 500
      PFED PARK BANCORP INC 200 500
      PVSA PARKVALE FINL CP 1,000 500
      PCTY PARTY CITY CP 500 1,000
      DOCSF PC DOCS GROUP INTL 500 1,000
      PMFG PEERLESS MFG CO 500 1,000
      PEGA PEGASYSTEMS INC 200 500
      PNNW PENNICHUCK CP 500 200
      SPWY PENSKE MOTORSPORTS 500 1,000
      PPLS PEOPLES BK CP OF IND 1,000 500
      PBNB PEOPLES SAV FINL CP 500 1,000
      TPMI PERSONNEL MGMT INC 1,000 500
      PSALY PETROLEUM SEC ADR 500 1,000
      PMORW PHAR-MOR INC WTS 500 200
      PPRT PHARMAPRINT INC 200 500
      PHXX PHOENIX INTL LTD 200 500
      PHOC PHOTO CONTROL CP 500 200
      PTRN PHOTRAN CP 200 500
      PHSS PHYSICIAN SUPPORT SY 500 1,000
      PHYX PHYSIOMETRIX INC 500 1,000
      PIAM PIA MERCH SVCS INC 500 1,000
      PCTL PICTURETEL CP 500 1,000
      PIFI PIEMONTE FOODS INC 500 200
      PNFI PINNACLE FINL SVCS 500 1,000
      PHFC PITTSBURGH HOME FIN 500 1,000
      PHII PLANET HOLLYWOOD A 500 1,000
      PLNSY PLANNING SCIENCE ADR 500 1,000
      PTET PLATINUM ENTERTAIN 500 1,000
      PBYP PLAY BY PLAY TOYS 1,000 500
      POBR POE & BROWN INC 1,000 500
      PLCM POLYCOM INC 500 1,000
      PCRV POWERCERV CP 500 1,000
      PGTZ PRAEGITZER INDS INC 500 1,000
      PRRC PRECISION RESPONSE 200 500
      PFNT PREFERRED NETWORKS 500 1,000
      PBKC PREMIER BKSHS 500 200
      PFBI PREMIER FIN BNCP INC 200 500
      PARK PREMIER PARKS INC 200 500
      PRNI PREMIERE RADIO NETWK 500 1,000
      PTEK PREMIERE TECH INC 500 1,000
      PRST PRESSTEK INC 500 1,000
      PRBC PRESTIGE BNCP INC 200 500
      PETE PRIMARY BANK 500 1,000
      PMSI PRIME MEDICAL INC 500 1,000
      PRMEP PRIME RETAIL PFD B 500 1,000
      PNBC PRINCETON NATL BNCP 500 200
      AFIS PRINTRAK INTL INC 200 500
      PRTW PRINTWARE INC 200 500
      PRZM PRISM SOLUTIONS 500 1,000
      PFACP PRO-FAC COOP PFD A 1,000 500
      PSTFY PROFESSIONL STAF ADR 200 500
      PRGX PROFIT RECOVERY GRP 500 1,000
      PAMC PROVIDENT AMER CP 500 1,000
      PROV PROVIDENT FIN HLD 200 500
      PILL PROXYMED INC 500 1,000
      PCNA PUBLISHING CO OF NA 200 500
      PULS PULSE BANCORP INC 1,000 500
      PASW PURE ATRIA CP 500 1,000
      R      
      RHPS R H PHILLIPS INC 500 1,000
      RAGS RAG SHOPS INC 1,000 500
      RARB RARITAN BANCORP INC 500 200
      RGFX RASTER GRAPHICS INC 200 500
      RLCO REALCO INC 1,000 500
      RECY RECYCLING INDS INC 500 1,000
      RWTIP REDWOOD TR PFD B 200 500
      REED REEDS JEWELERS INC 500 200
      REGI REGISTRY INC (THE) 200 500
      REMX REMEDYTEMP INC 200 500
      RENN RENAISSANCE CAP GRWT 500 1,000
      REPB REPUBLIC BCSHS INC 1,000 500
      RENG RESEARCH ENGINEERS 200 500
      RESR RESEARCH INC 500 200
      RESM RESMED INC 1,000 500
      REXI RESOURCE AMER CL A 500 1,000
      RBKV RESOURCE BANK 200 500
      RTRK RESTRAC INC 200 500
      RZYM RIBOZYME PHARM INC 500 1,000
      RELL RICHARDSON ELECT LTD 1,000 500
      RISC RISCORP INC A 500 1,000
      RSGI RIVERSIDE GP INC 200 500
      RBDS ROBERDS INC 500 1,000
      RUSH RUSH ENTERPRISES INC 200 500
      RMOC RUTHERFORD-MORAN OIL 200 500
      S      
      SDNB SDNB FINANCIAL CP 500 1,000
      SITL SITEL CP 500 1,000
      SRSL SRS LABS INC 200 500
      SSNC SS & C TECH INC 200 500
      SBTK SABRATEK CP 200 500
      SHCID SALICK HLTH NEW SPL 1,000 500
      SAMC SAMSONITE CP 500 1,000
      SABB SANTA BARBARA BNCP 500 1,000
      SAWS SAWTEK INC 500 1,000
      SCHR SCHERER HEALTHCARE 500 200
      SEWY SEAWAY FOOD TOWN INC 500 200
      SECD SECOND BANCORP INC 500 1,000
      SFNB SECURITY FIRST NTWK 200 500
      SNFCA SECURITY NATL FINL A 500 200
      SEGU SEGUE SOFTWARE INC 500 1,000
      SLFX SELFIX INC 1,000 500
      SEMX SEMICONDUCTOR PACKG 500 1,000
      SENEA SENECA FOODS CP A 500 200
      SENEB SENECA FOODS CP B 500 200
      SERX SERVICE EXPERTS INC 200 500
      SEVN SEVENSON ENVIRONMENT 1,000 500
      SMED SHARED MEDICAL SYS 500 1,000
      SLFC SHORELINE FIN CP 500 200
      SIBI SIBIA NEUROSCIENCES 500 1,000
      SEBL SIEBEL SYSTEMS INC 200 500
      SIGR SIGNATURE RESORTS 200 500
      SGIC SILICON GAMING INC 200 500
      SLVR SILVER DINER INC 500 1,000
      SIPX SIPEX CP 500 1,000
      SMXC SMITHWAY MOTOR XPRES 200 500
      SOLR SOLAR-MATES INC 500 1,000
      SOLRW SOLAR-MATES INC WTS 500 1,000
      SOMR SOMERSET GP INC THE 500 200
      SIMAW SONICS & MATERIAL WT 500 1,000
      SIMA SONICS & MATERIALS 500 1,000
      SRSV SOURCE SERVICES CP 200 500
      SFFB SOUTHERN FIN BNCP 500 200
      SWPA SOUTHWEST NATL CP 500 200
      SIMC SPACETEC IMC CP 500 1,000
      SPAN SPAN AMERICA MED SYS 500 1,000
      SPEK SPEC S MUSIC INC 1,000 500
      SLNK SPECTRALINK CP 500 1,000
      SPCH SPORT CHALET INC 1,000 500
      SQAI SQUARE INDUSTRIES 500 1,000
      STHC STAT HEALTHCARE NEW 500 1,000
      STHCW STAT HLTHCR WTS NEW 500 1,000
      STEK STECK-VAUGHN PUBLISH 1,000 500
      STRC STERILE RECOVERIES 200 500
      STMD STORMEDIA INC CL A 500 1,000
      SSYS STRATASYS INC 500 1,000
      STRA STRAYER EDUCATION 200 500
      SLAM SUBURBAN LODGES AMER 200 500
      SUBI SUN BANCORP INC 500 200
      SUNH SUNDANCE HOMES INC 500 1,000
      SUNQ SUNQUEST INFO SYS 200 500
      SNRZ SUNRISE ASSISTED LIV 200 500
      SUPG SUPERGEN INC 500 1,000
      SUPGW SUPERGEN INC WTS 500 1,000
      SNTL SUPERIOR NATL INS GP 500 1,000
      SUPR SUPERIOR SVCS INC 500 1,000
      SPPR SUPERTEL HOSPITALITY 1,000 500
      SWMAY SWEDISH MATCH AB ADR 500 1,000
      SYKE SYKES ENTERPRISES 500 1,000
      NZYM SYNTHETECH INC 500 1,000
      T      
      TSRI T S R INC 1,000 500
      TPNZ TAPPAN ZEE FIN INC 500 1,000
      TPACP TCI PAC COM EXCH PFD 200 500
      TCDN TECHDYNE INC 500 1,000
      TCDNW TECHDYNE INC WTS 500 1,000
      TSGIW TECHNOLOGY SVC GP WT 500 1,000
      TSGI TECHNOLOGY SVC GRP 500 1,000
      TCGX TELCO COMMUN GROUP 200 500
      TCOMP TELE COMMUN PFD B 200 500
      TCGI TELEPORT COMMUN GR A 200 500
      TLSP TELESPECTRUM WRLDWDE 200 500
      TTEC TELETECH HLDGS INC 200 500
      TDCA THERAPEUTIC DISC A 200 500
      TDHC THERMADYNE HLDGS CP 1,000 500
      TMXI THERMATRIX INC 200 500
      TMSTA THOMASTON MILLS A 500 200
      THOR THORATEC LABS CORP 500 1,000
      TIMT TITANIUM METALS CP 200 500
      TBDI TMBR/SHARP DRILL INC 500 1,000
      TKIOY TOKIO MARINE ADR 1,000 500
      TCTC TOMPKINS COUNTY TRCO 500 200
      TELU TOTAL-TEL USA COMMUN 500 1,000
      TRNI TRANS INDS INC 1,000 500
      TRCW TRANSCOR WASTE SERV 1,000 500
      TSIX TRANSITION SYSTEMS 500 1,000
      TRNS TRANSMATION INC 1,000 500
      TNZRY TRANZ RAIL HLDGS ADR 200 500
      TRVS TRAVIS BOATS & MOTOR 200 500
      TMAR TRICO MARINE SVCS 200 500
      TRDT TRIDENT INTL INC 500 1,000
      TEAL TRITEAL CORPORATION 200 500
      THBC TROY HILL BNCP INC 500 1,000
      TFCO TUFCO TECHS INC 1,000 500
      PYTV TV FILME INC 200 500
      U      
      UFPT U F P TECH INC 500 1,000
      UMBF UMB FIN CP 500 1,000
      USNA USA NA INC 500 1,000
      USCS USCS INTL INC 200 500
      UGLY UGLY DUCKLING CP 200 500
      ULTD ULTRADATA CP 500 1,000
      UFEM ULTRAFEM INC 500 1,000
      UNFY UNIFY CP 200 500
      UBSC UNION BKSHS LTD 1,000 500
      UPCPO UNION PLANTERS PFD E 500 1,000
      UASI UNITED AIR SPEC INC 500 1,000
      UBMT UNITED FINANCIAL CP 500 200
      UPUP UNITED PAY & UN PROV 200 500
      UTVI UNITED TELEVISION 1,000 500
      UOUT UNIVERSAL OUTDOOR 200 500
      UCOR UROCOR INC 200 500
      ULGX UROLOGIX INC 200 500
      V      
      VDRY VACU DRY CO 500 200
      VNTV VANTIVE CP (THE) 500 1,000
      VMSI VENTANA MED SYSTEMS 200 500
      VRLK VERILINK CP 200 500
      VRSA VERSA TECH INC 1,000 500
      VSNT VERSANT OBJECT TECH 200 500
      VCAM VINCAM GROUP INC THE 500 1,000
      VRII VIRUS RESEARCH INST 200 500
      VGINF VISIBLE GENETICS 500 1,000
      VSGN VISIGENIC SOFTWARE 200 500
      W      
      WVFC WVS FINANCIAL CP 500 200
      WAIN WAINWRIGHT BK TR CO 1,000 500
      WSHI WALSH INTL INC 500 1,000
      WALS WALSHIRE ASSURANCE 1,000 500
      WRNB WARREN BANCP INC 1,000 500
      WASH WASHINGTON TRUST 200 500
      WATFZ WATERFORD PLC ADR UT 500 200
      WYNE WAYNE BANCORP INC 200 500
      WCSTF WESCAST INDS INC A 500 1,000
      WCBO WEST COAST BNCP ORE 500 1,000
      WCEC WEST COAST ENTERTAIN 500 1,000
      WOFC WESTERN OHIO FIN 500 1,000
      WSTF WESTERN STAFF SVCS 500 1,000
      WWCA WESTERN WIRELESS A 200 500
      WEYS WEYCO GP INC 500 200
      WFRAF WHARF RESOURCES LTD 500 200
      WHIT WHITTMAN-HART INC 500 1,000
      WKGP WORKGROUP TECH CP 500 1,000
      WTLK WORLDTALK COMMUN CP 500 1,000
      X      
      XVRC XAVIER CORP 200 500
      XEIKY XEIKON N V ADR 500 1,000
      XYLN XYLAN CP 500 1,000
      Y      
      YHOO YAHOO INC 500 1,000
      YFCB YONKERS FINANCIAL CP 500 1,000
      YRKG YORK GRP INC (THE) 500 1,000
      YSII YOUTH SVCS INTL INC 500 1,000
      Z      
      ZSEV Z SEVEN FUND INC THE 500 200
      ZHOM ZARING HOMES INC 1,000 500

    • 96-87 NASD Regulation PROCTOR Transition To Sylvan Continues

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      Executive Summary

      NASD Regulation, Inc. (NASD Regulation) as previously announced, has contracted with Sylvan Learning Systems, Inc., for the management and operation of its test center network. The current goal is to begin delivery in select Sylvan locations in January 1997. Candidates wanting to schedule appointments should continue to call the current PROCTOR® Certification and Training Centers. Candidates will be instructed by their local center on the details of the transition as it relates to their requested appointment date. Questions regarding locations available for computerized delivery of Qualification Examinations and the Continuing Education Program should be directed to the Quality & Service Teams.

      Quality & Service Team 1 (301) 921-9499

      Quality & Service Team 2 (301) 921-9444

      Quality & Service Team 3 (301) 921-9445

      Quality & Service Team 4 (301) 921-6664

      Quality & Service Team 5 (301) 921-6665

      Status Of The Transition

      NASD Regulation and Sylvan are in the final stages of testing and approving the software that will be used to administer securities examinations and continuing education in Sylvan locations. The current plan calls for a limited number of PROCTOR Certification and Training Centers to be replaced by authorized Sylvan Technology Centers in the same geographic area beginning in January 1997. As these sites become available, the PROCTOR Certification and Training Centers affected will give details of the site's transition to candidates who have or need appointments. The transition schedule varies by site and has numerous dependencies making it difficult to publish a schedule for all changes. For this reason, candidates should continue to contact their local PROCTOR Certification and Training Center to obtain the most current information regarding appointment scheduling.

      Due to the delay in implementing delivery in the Sylvan network, we will continue to offer paper and pencil examinations in the domestic U.S. locations at least through March 1997.

      Our current goal is to begin adding authorized Sylvan Technology Centers in geographic areas not currently serviced by a PROCTOR Certification and Training Center in January 1997. Please watch for further communications regarding additional sites in future Notices to Members and on NASD Regulation's Web page at www.nasdr.com.

    • 96-86 NASD Regulation Reminds Members And Associated Persons That Sales Of Variable Contracts Are Subject To NASD Suitability Requirements

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      Executive Summary

      NASD Regulation, Inc. (NASD Regulation) reminds NASD® members and their associated persons who sell variable life insurance contracts and variable annuity contracts (Variable Contracts) of their obligations with respect to the suitability requirements of the NASD Conduct Rules. Variable Contracts are regulated as securities under federal securities laws and NASD rules. Members and their associated persons are reminded that the suitability requirements of NASD Conduct Rule 2310 (formerly Article III, Section 2 of the NASD Rules of Fair Practice) apply to the recommendation of any security, including a Variable Contract. Thus, a member and its associated persons must have reasonable grounds for believing that a Variable Contract recommended to a customer is suitable for that customer.

      Questions concerning this Notice may be directed to Robert J. Smith, Office of General Counsel, NASD Regulation, at (202) 728-8176.

      Discussion

      Variable Contracts are issued by insurance companies and are insurance contracts subject to regulation under state law. Because owners of Variable Contracts assume certain investment risks, the contracts are also considered securities and are registered as such under the Securities Act of 1933. The contracts are funded by a separate account of a life insurance company registered as an investment company under the Investment Company Act of 1940. The distributor of the contracts is a broker/dealer under the Securities Exchange Act of 1934. Thus, an individual who sells a Variable Contract registered with the Securities and Exchange Commission (SEC) must not only be licensed under the applicable state jurisdictions to sell insurance, but must also be appropriately affiliated with a member and registered as a securities representative with the NASD.

      NASD Regulation recently took a disciplinary action against a registered representative for making unsuitable recommendations of variable life insurance contracts to public customers. The registered representative submitted an Offer of Settlement and, without admitting or denying the alleged violations, consented to NASD Regulation's findings that he did not have reasonable grounds for believing that his recommendations to certain public customers to purchase variable life insurance contracts were suitable for the customers based on the facts disclosed to him by the customers relating to their investment objectives, financial situation, and needs. Pursuant to the Offer, NASD Regulation fined the registered representative $75,000, suspended him for 90 days from the securities industry, required him to return commissions to eight public customers, and required him to requalify before re-entering the securities industry by taking and passing an appropriate qualifying examination. In taking this action, NASD Regulation applied the existing suitability standards enunciated in Rule 2310 to the recommendation of variable life insurance policies.

      As securities, the sales and distribution of Variable Contracts are fully subject to the NASD's sales practice rules. The issue of suitability under Rule 2310 arises when a Variable Contract is recommended and sold to a public customer. Rule 2310 requires that, in recommending to a customer the purchase, sale, or exchange of any security, a member shall have reasonable grounds for believing that the recommendation is suitable for such customer upon the basis of the facts, if any, disclosed by the customer regarding his or her other securities holdings and financial situation and needs.

      In making such recommendations, the member and its registered representatives are required to make reasonable efforts to obtain information concerning the customer's financial and tax status, the customer's financial objectives, and such other information used or considered to be reasonable by the member or registered representative in making recommendations to the customer. Thus, for example, specific factors regarding a recommendation to purchase Variable Products that could be considered under the NASD's suitability rule include: (i) a representation by a customer that his or her life insurance needs were already adequately met; (ii) the customer's express preference for an investment other than an insurance product; (iii) the customer's inability to fully appreciate how much of the purchase payment or premium is allocated to cover insurance or other costs, and a customer's ability to understand the complexity of Variable Products generally; (iv) the customer's willingness to invest a set amount on a yearly basis; (v) the customer's need for liquidity and short-term investment; (vi) the customer's immediate need for retirement income; and (vii) the customer's investment sophistication and whether he or she is able to monitor the investment experience of the separate account.

      Further, as articulated in NASD Conduct Rule IM-2310.2, members and registered representatives have a fundamental responsibility for dealing fairly with their customers. Subparagraph (a)(2) to Rule IM-2310.2 requires, in relevant part, that "...sales efforts must be judged on the basis of whether they can be reasonably said to represent fair treatment for the persons to whom the sales efforts are directed, rather than …[whether] they result in profits to customers." One of the practices that has resulted in disciplinary action, and that clearly violates the responsibility for fair dealing, is recommending the purchase of securities in amounts that are inconsistent with the reasonable expectation that the customer has the financial ability to meet such a commitment.

      Finally, NASD Regulation is aware of the practice whereby a registered representative replaces a customer's existing variable contract with a new variable contract that doesn't improve the customer's existing position, but generates a new sales commission for the registered representative. Such a replacement practice designed merely to generate new sales commissions for the registered representative would be prohibited by NASD Conduct Rules requiring that members and registered representatives deal fairly with customers. In other securities contexts, for example, excessive trading designed solely to generate commissions has resulted in disciplinary action against members for violating their responsibility for fair dealing under Subparagraph (b)(2) to Rule IM-2310.2. "Excessive Trading Activity" is identified as "[e]xcessive activity in a customer's account, often referred to as ‘churning’ or ‘overtrading.’ There are no specific standards to measure excessiveness of activity in customer accounts because this must be related to the objectives and financial situation of the customer involved."

    • 96-85 Customer Complaint Reporting Rule Update

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      Executive Summary

      On September 8, 1995, the Securities and Exchange Commission (SEC) approved NASD® Rule 3070 (formerly Article III, Section 50 of the NASD Rules of Fair Practice) (the Rule) for reporting customer complaint information and other specified events to NASD Regulation, Inc. (NASD Regulation). The Rule, which became effective on October 15, 1995, requires members to report to NASD Regulation the occurrence of 10 specified events, as well as quarterly summary statistical information regarding written customer complaints. Quarterly statistical electronic submissions were first due to NASD Regulation on January 15, 1996. (See Special Notice to Members 95-81.)

      This Notice responds to the most common questions that members have raised relative to the Rule. Questions regarding this Notice may be directed to Daniel M. Sibears, District Oversight, NASD Regulation, at (202) 728-6911, or David A. Spotts, Office of General Counsel, NASD Regulation, at (202) 728-8014.

      Background

      NASD Regulation has established as a focus of its regulatory programs intense sales-practice examinations of member firms that employ registered persons who may pose heightened risks to public investors due to past misconduct related to abusive sales and trading practices (profiled registered representatives). To assist the NASD in the identification of profiled registered representatives, NASD Regulation has developed an automated system that draws on the Central Registration Depository (CRD) and NASD RegulationSM internal regulatory systems to analyze the current registered representative population. When this system is integrated with other sources of information relating to examinations, disciplinary actions, customer complaints, and terminations for cause, NASD Regulation has the capacity to more precisely identify registered representatives who may pose risks to public investors, and thus, should be subject to closer than normal regulatory scrutiny.

      In further support of these efforts, on October 1, 1995, the NASD adopted, with SEC approval, a customer complaint reporting rule. The Rule significantly strengthens NASD Regulation's regulatory and surveillance efforts by requiring member firms to report to NASD Regulation the occurrence of certain specified events, within 10 business days, and to file quarterly statistical information regarding written customer complaints.

      The information reported by members provides NASD Regulation with important regulatory information that assists with the timely identification of problem members, branch offices, and registered representatives to detect and investigate potential sales practice violations. The Rule significantly parallels comparable provisions of New York Stock Exchange (NYSE) Rule 351 and it exempts members that are currently subject to NYSE 351 from the requirements of the Rule to ensure that there is no regulatory duplication for dual NASD/NYSE members.

      To assist members in their compliance efforts, NASD Regulation is publishing this Notice to provide answers to frequently asked questions regarding the customer complaint reporting system and the Rule. The questions and answers have been organized into two sections; the first discusses system implementation issues and the second provides answers to interpretive questions regarding the application of the Rule.

      Questions And Answers

      I. Systems Implementation Questions And Answers

      Question #1: What information is required to be provided when the firm's ID/CRD and SEC numbers are requested by the computer prompt?

      Answer: The communications software, NASDnet, requires the member to provide six and five characters for the ID/CRD and SEC numbers, respectively. For example, if the firm's ID and SEC numbers are 12 and 8-99, respectively, provide 000012 for the firm's ID and 8-00099 for the SEC number.

      Question #2: Under the customer complaint reporting section of the Customer Complaint System User Manual (Chapter Four, Page 29), what date should be provided when the software prompt asks for the date of the complaint letter? Should the member report the receipt date or the date of the written customer complaint letter?

      Answer: To assist in a more efficient quarterly cutoff of customer complaint information, the complaint date should be the date the complaint letter is first received by the member. The member should maintain a systematic method (e.g., date stamping) for recording the dates that customer complaints are first received by the member. As a result of using the receipt date, the member may receive customer complaint letters during the current calendar quarter that are dated by the customer before the current calendar quarter.

      Question #3: Once a customer complaint quarterly filing or specified event filing is submitted to NASD Regulation within the required time frames, is the member under any obligation to update or amend the earlier filing? For example, the member may subsequently learn through an internal investigation that, in the member's opinion, the earlier submitted customer complaint is without merit.

      Answer: No. A member should not update or modify an earlier submission to NASD Regulation unless the member learns that there was an error in the information previously submitted. Even if the member learns that the information in a customer complaint is later filed without action, a member is not permitted to delete or modify this earlier customer complaint submission.

      Question #4: If a member receives a customer complaint letter regarding an associated person's conduct that includes more than one allegation, security, or damage amount, what information is the member required to submit to NASD Regulation?

      Answer: The member is obligated to send one report for each customer complaint letter received. Even though the complaint may include more than one allegation, security, or damage amount, the member should report the most egregious problem code alleged (e.g., fraud, misrepresentation, unauthorized transaction), the security associated with the most egregious problem code, and the highest alleged damage amount.

      Question #5: If more than one associated person is named in a customer complaint (i.e., an associated person and a branch manager or two associated persons), what information is the member required to submit to NASD Regulation?

      Answer: A member is obligated to report a customer complaint filing for each person named in a customer complaint. Thus, if two associated persons are named by the complaint, the member should report two separate customer complaint filings to NASD Regulation.

      II. Interpretive Questions And Answers

      Question #1: Must all customer complaints received by a member, including non-sales practice complaints, be submitted to NASD Regulation through the electronic customer complaint reporting system?

      Answer. Yes. All written customer complaints received on or after October 1, 1995, by a member are subject to the Rule and are required to be submitted to NASD Regulation. The term complaint would include all customer-initiated documents that involve a "written grievance."

      Question #2: If a member receives a customer complaint on October 1, 1995, and receives a second written complaint from the same customer after October 1, 1995, regarding the same matter that includes new allegations regarding the member or an associated person, must the member consider the second letter a new customer complaint under the Rule?

      Answer: Yes. Both letters would be subject to the Rule and should be submitted to NASD Regulation in the member's quarterly filing. The second letter involves a new grievance by the customer against an associated person or member, and the substance of the new allegations must be reported.

      Question #3: Specified event number 10 [section (a)(10) of the Rule] requires a member to report to NASD Regulation the existence of any disciplinary action initiated by the member, including suspension, against an associated person. In this regard, is a member required to submit a filing under specified event item number 10 for each associated person who fails to meet his or her mandatory continuing education requirements under the Regulatory Element?

      Answer: No. Associated persons who fail to satisfy their Regulatory Element continuing education requirements will have their registrations placed in an "inactive" status, and therefore, are not considered suspended under the specified event item. Of course, an associated person who is placed in an inactive status would be prohibited from functioning in any capacity that would require registration during this period of time.

      Question #4: If a member and associated person(s) are defendants or respondents, or are subject to any claim for damages by a customer and, as a result of a judgement, award, or settlement, the parties have "joint and several" liability of over $25,000, are two disclosure reports required to be submitted to NASD Regulation?

      Answer: Yes. Both are involved in the claim for damages by the customer, and pursuant to the joint and several order, reports for each event must be made under the Rule. Under specified event items number 7 and 8 [Sections (a)(7) and (a)(8)] of the Rule, any judgment, award, or settlement in an amount over $15,000 for an associated person and over $25,000 for a firm, respectively, must be submitted to NASD Regulation. Since the liability is joint and several, the amount for each named party must be aggregated and reported as if the member and associated person(s) are separately liable for the specified amount. Since the amount in the above example is in excess of $25,000, reports for the member firm and the associated person(s) must be filed.

      Question #5: If a member receives a claim for damages by a customer in an amount that exceeds the $15,000 or $25,000 reporting thresholds referenced in Question #4, and the member decides to rescind the transaction that was the subject of the claim, must the member submit a filing with NASD Regulation based on a specified event item?

      Answer: Yes. Although a member may believe that the customer's actual damages were negligible (i.e., less than the reportable amount) in light of the rescission, the written complaint nevertheless involved amounts that triggered the reporting thresholds. It is the total amount claimed by the customer or the amount of the rescinded transaction that is taken into consideration in determining whether to file under the Rule.

      Question #6: Are insurance affiliated broker/dealers (IABD), or broker/ dealers who also maintain insurance operations in the same corporate entity, required to include in their quarterly customer complaint statistical reports customer complaints involving persons who are both registered representatives and insurance agents who receive customer complaints regarding the sale of insurance-related nonsecurities products (e.g., fixed insurance products)?

      Answer: No. Subsection (c) of the Rule defines "customer" as any person other than a broker/dealer with whom the member has engaged, or has sought to engage, in securities activities, therefore, it was intended to exclude non-securities products.

      All affected members must report all customer complaints involving securities products that involve persons who are both registered representatives and insurance agents, but should not report complaints that relate to non-securities activities (such as fixed insurance products) from the member's quarterly customer complaint submission.

      Question #7: As a follow-up to Question #6, are there any circumstances under which a member must report a customer complaint involving the sale of an insurance-related non-securities product?

      Answer: Yes. Sub-section (a)(2) of the Rule requires a member to report to NASD Regulation a specified event filing within 10 business days when a member or associated person "is the subject of any written customer complaint involving allegations of theft or misappropriation of funds or securities or of forgery." Therefore, affected members must report certain customer complaint information, including information relating to the sale of insurance related non-securities products.

      Question #8: If a member settles an arbitration or civil litigation on or after October 1, 1995, in excess of the threshold amounts for a matter commenced prior to October 1, 1995, is the member required to submit a filing based on a specified event item?

      Answer: Yes. In determining whether to submit a filing based on specified event item number 7 [section (a)(7)], a member should submit a filing based on the date of the judgment, award, or settlement and not the date of the original matter.

      Question #9: If a mutual fund distributor broker/dealer receives a customer complaint regarding an alleged sales practice problem of another selling broker/dealer (or associated person of such other broker/dealer), is the mutual fund distributor broker/ dealer required to file the complaint with NASD Regulation?

      Answer: No. Since the customer complaint involves the sales practices of another member broker/dealer, the mutual fund broker dealer is not obligated to file the report for the other member firm. The mutual fund broker/dealer should promptly provide the customer complaint to the selling broker/dealer and retain a copy of the original customer complaint in its records. While not required by the Rule, the distributor broker/dealer is encouraged to provide a copy of the complaint to the local NASD Regulation District Office.

      Question #10: If a member terminates a registered person as a result of an internal investigation or inquiry by the member and then properly files a Form U-5 with CRD, must the member also submit a specified event item with NASD Regulation under the Rule?

      Answer: Yes. Although the member has submitted a timely Form U-5 through the CRD system, the member must also submit a specified event item number 10 [section (a)(10)] filing through the customer complaint reporting system.

      Question #11: When NASD Regulation receives a customer complaint directly from a customer and the member firm has not received the complaint or a copy, upon notification and receipt of the complaint by the member from NASD Regulation, is the member obligated to report the complaint through the customer complaint reporting system?

      Answer: Yes. Although NASD Regulation is already investigating the customer complaint, the member is still required to report the complaint in its quarterly filing or specified event filing.

      Question #12: If a member receives a customer complaint alleging theft, misappropriation of funds or securities, or forgery and files the appropriate specified event filing under section (a)(2) with NASD Regulation within 10 business days, is the member also required to submit a quarterly customer complaint filing with NASD Regulation regarding the same event?

      Answer: Yes. Although a member timely files its specified event filing number 2, the member is also obligated to submit a separate report of the customer complaint in its next quarterly statistical filing.

      Question #13: If a member receives notification that it or an associated person was named in an arbitration or civil litigation regarding a customer dispute, is the member obligated to file either a specified event filing or a customer complaint filing with NASD Regulation?

      Answer: No. Under the Rule, a member is obligated to report only settled or completed arbitrations or civil litigation matters and only where the award, judgment, or settlement exceeds a certain specified dollar amount. The member may, however, have a separate obligation to report these matters to the NASD through the CRD system on Forms U-4, U-5, and BD.

    • 96-84 NASD Regulation Solicits Comment On The Use Of Bond Mutual Fund Risk Ratings In Supplemental Sales Literature

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      Comment Period Expires: February 24, 1997

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      Executive Summary

      NASD Regulation, Inc. (NASD Regulation) requests comment on the use by NASD® members (securities broker/dealer firms) and their associated persons of bond mutual fund risk ratings in sales literature given to customers. In particular, NASD Regulation is seeking comment on whether it should continue to prohibit the use of bond mutual fund risk ratings by members and their associated persons. In addressing this issue, commenters are asked to consider whether, with certain required disclosures or other adjustments, such ratings would in fact provide useful information to investors. NASD Regulation requests that NASD members, investors, and others, in considering their responses and comments, focus in particular on the need on the one hand to provide investors with as much useful information as possible to make informed investment decisions, and the concern on the other hand that certain information, depending on its availability or how it is produced or presented, may have the potential of being misleading or deceptive or otherwise lend itself to abuse.

      Questions concerning this Request for Comment may be directed to R. Clark Hooper, Senior Vice President, Office of Disclosure and Investor Protection, NASD Regulation, at (202) 728-8325; and Robert J. Smith, Senior Attorney, Office of General Counsel, NASD Regulation, at (202) 728-8176.

      Background

      Bond mutual fund risk ratings are produced by rating agencies and information vendors, none of which is an NASD member firm. The ratings generally represent opinions regarding a fund's "market risk," or a judgment of the probability that prices of bonds, and the bond funds that hold them, will react in a given way to changes in market conditions and the general economy, such as a sudden move up or down in interest rates. Such opinions may be based on an evaluation of a broad range of information, including, among other things, an evaluation of specific risks (such as interest rate risk, prepayment risk, currency risk), the credit quality of the fund's individual portfolio holdings, the market price volatility of the portfolio, the investment philosophy of the fund's management and its track record, and the historical reaction of the fund to various market conditions. There is no specified or uniform range of information used by all rating entities, and different kinds of ratings are produced using different criteria. Some rating entities represent their opinions by a word, symbol, or number that attempts to be a single, allencompassing measure of fund risk.

      Within the past two years the NASD has received several requests from bond fund rating entities to allow bond mutual fund risk ratings to be used in members' supplemental sales literature.1 In the past, staff of NASD Regulation has taken the position that a rating that represents a judgment of how a bond fund will react to changes in various market conditions would be predictive of fund performance or misleading and, therefore, prohibited for use by members and associated persons in sales literature. This position has been endorsed by NASD Regulation's Investment Company Committee, which opposes a change from the current position. The staff's position was based on an interpretation of specific provisions in the NASD Conduct Rules regarding communications with the public.2 The NASD Regulation Board of Directors has not yet adopted a position regarding this issue. More recently, the staff has considered whether such ratings could be used if they were accompanied by disclosure designed to limit the potential that the information could be misunderstood and if the symbols used for such ratings were altered to clarify their meaning or eliminate confusion with similar symbols used for credit ratings.

      Discussion

      Concerns Regarding The Use Of Bond Mutual Fund Risk Ratings

      Predictions And Projections Of Investment Results

      One objection that has been made to the use of bond mutual fund risk ratings is that a rating that represents a judgment of the probability that a bond fund's net asset value will react in a given way to changes in interest rates or other market conditions would, by implication, tend to predict fund performance.

      The fundamental objection to future fact claims of performance for an individual security is that such claims rest upon a large number of assumptions and speculations about general economic conditions in the future and an equally large number of forward-looking assumptions about the individual security, including company solvency, management style, business strategy, investment policy, portfolio changes, future dividend streams, and rates of return. Thus, according to this reasoning, performance predictions and projections based on such assumptions are seldom reliable, and would necessarily tend to be misleading.3

      Selective Availability

      The use of bond mutual fund risk ratings also raises issues relating to selective availability and use of the ratings. Bond fund risk information generally is provided only to those funds that pay for the service. If a fund disagrees with a rating or does not wish to make a rating known publicly, it may opt not to obtain or reveal the rating. Therefore, the universe of funds for which investors can obtain risk ratings is limited to the number of funds that have paid for a rating and have determined to make them publicly known. This differs, for example, from the practice of certain mutual fund ranking entities that provide mutual fund ranking information for all publicly issued mutual funds, regardless of whether the mutual fund pays for the ranking service. Such information is always publicly accessible by investors, regardless of whether the mutual fund disagrees with the rating or chooses not to advertise it. Thus, one issue raised is whether this selective availability of bond fund risk information would create an unfair builtin marketing bias in favor of funds that purchase a rating.

      Methodologies And Symbols

      Some bond mutual fund risk ratings are based on methodologies that are not fully described or explained in the risk rating material. Thus, it may be difficult to understand how the final assignment of a risk measurement to a particular bond fund is derived. In some instances, the final assignment of a rating is in the form of a single word, symbol, or number. The use of a word, symbol, or number that attempts to be a single, allencompassing measure of fund risk, without a clear explanation of how the word, symbol, or number was derived, may provide little useful information to investors. Further, investors may tend to rely too heavily on such a single measurement of risk without careful regard to their own particular investment goals.

      Moreover, some rating entities use symbols for risk that closely resemble, and could easily be confused with, symbols used for bond fund credit ratings. Finally, some rating entities provide relative or comparative ratings using a relatively small universe of all possible ratable bond funds, which may provide skewed or misleading information.

      Sales Practices

      Objections have been raised that bond mutual fund risk ratings may be misinterpreted or otherwise misused by securities salespersons who provide bond fund risk rating materials to prospective investors in their sales presentations. Brokers may focus an investor's attention inappropriately on a risk rating as the key factor in the decision-making process, or use a given rating to suggest that the fund is predicted to perform a certain way under certain market conditions.

      Arguments In Favor Of The Use Of Bond Mutual Fund Risk Ratings

      Predictions And Projections Of Investment Results

      Investors need information to make informed and reasoned decisions about investments. A basic goal of the securities laws thus is full and fair disclosure of material information upon which investors can make informed judgments about how a security might perform.

      The investment decision-making process is one in which investors seek to make educated guesses about future performance. Since the primary objection to risk ratings is the potential to confuse and to predict, with proper disclosure investors should be able to evaluate their usefulness. The Securities and Exchange Commission (SEC) encourages and sanctions forward-looking information in SEC filings. SEC Rule 175 under the Securities Act of 19334 and SEC Rule 3b-6 under the Securities Exchange Act of 19345 provide a limited "safe harbor" for projections made or reiterated in a document filed with the SEC or in a report to shareholders filed with the SEC by a public company or in a registration statement. The substantive provisions of the safe harbor relieve the company of liability under the antifraud provisions of the securities laws for the forward-looking statement or projection, provided the projection was made with a reasonable basis and in good faith.

      In addition, under the Management Discussion and Analysis (MD&A) section of SEC Regulation S-K,6 the SEC requires the management of a company to assess the past performance of the business and to provide its view of which operations, trends, and forces will affect future operations. The MD&A section imposes on management a duty to disclose trends that are likely to affect performance, liquidity, or capital resources as well as the effects of inflation on operations. Inevitably, such disclosures involve many subjective judgments and predictive information.

      Recently, the Private Securities Litigation Reform Act of 1995 (Act) established a two-part statutory safe harbor that provides certain protection from liability from private lawsuits where certain forward-looking information is used. The safe harbor protects forward-looking statements when accompanied by meaningful cautionary statements identifying factors that could cause actual results to differ materially from those projected in the statement. The Act also protects a person or business entity from liability in a private lawsuit for a forward-looking statement unless the false or misleading forward-looking statement was made with actual knowledge that it was false or misleading. However, the safe harbor does not protect a forward-looking statement contained in a registration statement of a mutual fund.

      Under SEC rules, a mutual fund is required to discuss in its prospectus the principal risk factors associated with investing in a fund, including those risks that apply generally to funds with similar investment policies and objectives.7 Through a Concept Release issued in 1995, the SEC solicited comment on how to improve risk disclosure for investment companies, or include ways to disclose the comparative risks of funds.8 Many commenters supported enhanced mutual fund risk disclosure of some kind. Nonetheless, some commenters opposed any requirement that funds calculate and disclose a single, standardized, numerical assessment of risk on the basis that a single measurement would not be accurate and would be relied upon too heavily by investors. In particular, the Investment Company Institute commented that it opposed such a single measurement and that risk disclosure could be improved by, among other things, including narrative risk disclosure that focuses on the overall risks of the fund.9 Other commenters critical of current risk disclosure requirements and practices in fund literature stated that, because of portfolio turnover, the concept of risk cannot be calculated numerically and that any risk measurement may be static and obsolete once it reaches investors.

      Historical data concerning the performance of any particular investment or its behavior under certain market conditions generally carry implications about future performance. That is why investors seek such information—so they can make educated guesses about future performance and behavior.

      Finally, the predictive element of bond mutual fund risk ratings is not dissimilar to the predictive element that accompanies bond fund credit ratings currently permitted to be used by members in supplemental sales literature. Volatility ratings for collateralized mortgage obligations are also currently permitted under the advertising and sales literature rules, with proper disclosure.

      Selective Availability

      Selectivity or selective availability has never been, by itself, a bar to disclosure of information that otherwise comports with NASD rules governing communications with the public. Although some bond mutual fund risk ratings are selectively given on the basis of whether a fund pays for a rating and whether it chooses to reveal its rating, the use in supplemental sales literature of bond fund credit ratings that are also selectively available is currently permitted. The practice of selectivity, broadly speaking, is generally true of all advertising and sales literature. In deciding to promote one product over another, member firms selectively screen for a given attribute as a matter of course and, therefore, it is inescapable that selectivity will be involved when a firm advertises its performance. The use of mutual fund rankings, for example, is intended to emphasize the best performing fund in a given category or sub-category over selected time periods. In addition, using non-performance criteria, a particular member may wish to promote the fact that a certain fund group is a noload group, allows switching between funds at no extra charge, or adheres to a certain investment philosophy.

      Methodologies And Symbols

      Institutional and individual investors are presented with voluminous and complicated information sources in making investment decisions. It is difficult for issuers, broker/dealers, various information vendors, and the financial press to present complicated financial information in a simplified way that is comprehensible without being inaccurate. Conveying complicated information accurately through advertising and sales literature is particularly difficult. NASD advertising and sales literature rules require, among other things, that all communications with the public provide a sound basis for evaluating the facts in regard to a particular security or type of security or service offered. All supplemental sales literature is reviewed by the NASD RegulationSM staff for compliance with NASD rules within 10 days of first use, and NASD Regulation may require any changes to the content of such information or the manner in which it is presented as may be necessary to bring it into compliance with NASD rules.

      Sales Practices

      If the primary objection to the use of bond mutual fund risk ratings is that the ratings may be misinterpreted or otherwise misused by securities salespersons, it may be more appropriate for NASD Regulation to adopt any rules or interpretations to its sales supervision rules that are necessary to prevent such abusive sales practices or to address this issue through the examination process rather than prohibit the dissemination of the ratings information.

      Solicitation Of Comments

      NASD Regulation supports efforts to disclose the risks of investing in bond mutual funds in a way that is understandable and helpful to investors. At the same time, NASD Regulation needs to weigh the utility of any disclosure against the danger that it may be predictive, misleading, or otherwise inappropriate. NASD Regulation is requesting comment on whether, and to what extent, the use by members and associated persons of bond mutual find risk ratings in supplemental sales literature ought to be permitted under current NASD rules or new NASD rules. NASD Regulation asks members and other interested persons in commenting to consider the following specific questions and to provide any general comments they feel are appropriate.

      1. In general, are bond mutual fund risk ratings represented by a single word, symbol, or number that attempts to be an all-encompassing measure of fund risk useful to investors?
      2. Do bond mutual fund risk ratings, as described in this Request for Comment, constitute a projection or prediction of investment results in a way that could be considered misleading to an investor, or should risk ratings be viewed as forward-looking information that would be appropriate to provide to an investor? What additional disclosures, if any, would be appropriate to mitigate the concern that risk ratings could be considered predictive?
      3. Should selectivity or selective availability for bond mutual fund risk ratings, as described in this Request for Comment, have any bearing on whether it is appropriate to provide bond mutual fund risk ratings to investors? Does the fact that ratings may only be provided to funds who pay for the rating and choose to make the rating available undermine the usefulness of the information? Is it appropriate or accurate for rating entities that provide ratings on a comparative basis to provide such ratings for a relatively small sample of the entire universe of bond funds that could be rated?
      4. If disclosure of bond mutual fund risk ratings is permitted, how important is it for an investor also to understand the process (methodologies and calculations) by which the rating is derived? Will investors tend to rely too heavily on an opinion of bond mutual fund risk represented by a word, symbol, or number that attempts to be a single, all-encompassing measure of fund risk? Can the potential for confusion be mitigated by disclosure?
      5. Do current NASD rules for communications with the public provide a sufficient regulatory framework within which the characteristics and dangers of bond mutual fund risk ratings can be addressed? Would it be more appropriate to amend or revise the current NASD rules? Or, instead, would it be more appropriate to develop additional rules or guidelines for bond mutual fund risk ratings?
      6. A decision to allow the use of bond mutual fund risk ratings would permit ratings from different rating entities using distinct analytical methods and approaches. What level and type of scrutiny should NASD Regulation staff provide in reviewing the use of ratings?
      7. As mentioned above, bond mutual fund credit ratings are currently permitted to be used by members in supplemental sales literature, and volatility ratings for collateralized mortgage obligations are also currently permitted under the advertising and sales literature rules, with proper disclosure. Is there a reasonable basis for distinguishing between the use of bond fund credit ratings and collateralized mortgage obligation volatility ratings on the one hand and bond mutual fund risk ratings on the other hand?
      8. Is it more appropriate to address the concerns related to inappropriate use of bond mutual fund risk ratings through heightened sales supervisory practices rather than disclosure or an outright prohibition? If so, what sort of additional supervisory practices would you recommend be implemented?

      Comments can be mailed to:

      Joan Conley
      Office of the Corporate Secretary
      NASD Regulation, Inc.
      1735 K Street, NW
      Washington, DC 20006-1500

      or e-mailed to:
      pubcom@nasd.com.

      Comments should be received by February 24, 1997.


      Endnotes

      1 "Supplemental sales literature" is not defined in federal securities statutes or the NASD rules. It is used in the investment company industry to refer to sales literature that is given to customers or prospective customers when, or after, a prospectus is given to them and supplements, but does not replace, the prospectus.

      2 The NASD rules authorize the staff to prohibit the use by members and associated persons of information that predicts or projects future performance. Subparagraph (d)(1)(A) to NASD Conduct Rule 2210 states that "[a]ll member communications with the public should provide a sound basis for evaluating the facts in regard to any particular security.... No material fact or qualification may be omitted if the omission...would cause the advertising or sales literature to be misleading." Subparagraph (d)(1)(B) to Rule 2210 states in addition that "[e]xaggerated, unwarranted or misleading statements or claims are prohibited in all public communications of members." Moreover, subparagraph (d)(2)(N) to Rule 2210 provides that "[i]nvestment results cannot be predicted or projected."

      3 See, Note 2, above.

      4 See, Rule 175 under the Securities Act of 1933, Liability For Certain Statements by Issuers, 17 CFR 230.175.

      5 See, Rule 3b-6 under the Securities Exchange Act of 1934, Liability for Certain Statements by Issuers, 17 CFR 240.3b-6.

      6 See, Item 303 of Regulation S-K, Management's Discussion and Analysis of Financial Condition and Results of Operations, 17 CFR 229.303.

      7 See, Item 4(c), Form N-1A, and Guide 21, Disclosure of Risk Factors, Guidelines for Form N-1A, 17 CFR 239.15A, and 274.11A.

      8 See, Investment Company Act Rel. No. 20974 (March 29, 1995); 60 FR 17172 (April 4, 1995).

      9 See, letter from Paul Schott Stevens, General Counsel, Investment Company Institute, to Jonathan G. Katz, Secretary, SEC, dated July 28, 1995.

    • 96-83 NASD Regulation Solicits Comment On Proposed Rule Relating To Prohibition On Members Receiving Any Payment To Publish A Quotation, Make A Market In An Issuer's Securities, Or Submit An Application In Connection Therewith

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      Executive Summary

      NASD Regulation, Inc. (NASD Regulation) requests comment on a new proposed rule, NASD® Rule 2460 (Rule), that would prohibit any payment by an issuer or the issuer's affiliates and promoters, directly or indirectly, to a member for publishing a quotation, acting as a market maker, or submitting an application in connection therewith. This new proposed Rule is designed, among other things, to assure that members act in an independent capacity when publishing a quotation or making a market in an issuer's securities.

      Questions concerning this Request For Comment should be directed to Suzanne E. Rothwell or David A. Spotts, Office of General Counsel, NASD Regulation, at (202) 728-8247 and (202) 728-8014, respectively.

      Background

      It has been a longstanding policy and position of the NASD that a broker/dealer is prohibited from receiving compensation or other payments from an issuer for listing, quoting, or making a market in an issuer's securities or for covering the member's out-of-pocket expenses for making a market, or for submitting an application to make a market in an issuer's securities.1 As stated in Notice to Members 75-16, such payments may be viewed as a conflict of interest since they may influence the member's decision as to whether to quote or make a market in a security and, thereafter, the prices that the member would quote.

      In the past, certain broker/dealers have entered into arrangements with issuers to accept payments from an issuer, affiliate, or promoter of the issuer to make a market in the issuer's securities; or for covering out-of-pocket expenses of the member incurred in the course of market making; or for submitting an application to act as a market maker. As stated above, the NASD believes that such conduct may be viewed as a conflict of interest. The NASD believes that a market maker should have considerable latitude and freedom to make or terminate marketmaking activities in an issuer's securities. The decision by a firm to make a market in a given security and the question of price generally are dependent on a number of factors, including, among others, supply and demand, the firm's expectations toward the market, its current inventory position, and exposure to risk and competition. This decision should not be influenced by payments from issuers or promoters to the member.

      On October 27, 1994, the United States Court of Appeals, Tenth Circuit, reversed, in part, a Securities and Exchange Commission (SEC) decision in the matter of General Bond & Share Co. (General Bond).2 The NASD had held that General Bond had, among other things, violated Article III, Section 1 of the NASD Rules of Fair Practice (currently NASD Rule 2110) by accepting payments from issuers in return for listing itself as a market maker for the securities in the National Quotation Bureau, Inc. (NQB) Pink Sheets (Pink Sheets). The NASD position was based on NASD policy as articulated to the members in Notice to Members 75-16. The SEC, in affirming the NASD decision, agreed with the NASD that this conduct was inappropriate and in violation of NASD rules.

      The Tenth Circuit decision held that the NASD rules at the time did not prohibit a member firm from accepting issuer-paid compensation for making a market in a security.3 Although the NASD had previously stated that such specific conduct was prohibited, the Court held that the NASD was required by statute to submit a filing with the SEC amending NASD rules in this respect. The NASD is publishing this proposed Rule for comment to clarify the application of NASD rules to situations involving the acceptance of compensation for market-making activities.

      The proposed Rule is intended to apply a fair practice standard to a particular course of conduct of a member as described below. In addition, however, the action of a member in charging an issuer a fee for making a market, or accepting an unsolicited payment from an issuer where the member makes a market in the issuer's securities, could also subject the member to violations of the antifraud provisions of federal securities laws and NASD Rule 2120 (formerly Article III, Section 18 of the NASD Rules of Fair Practice). Further, the payment by an issuer to a market maker to facilitate marketmaking activities also may cause the member to contribute to violations of Section 5 of the Securities Act of 1933.4

      Description Of Proposed Rule

      The proposed Rule would prohibit receipt by a broker/dealer of "any payment or other consideration" from a prohibited party and is intended to cover any form of payment in cash, non-cash items, or securities. The concept of "consideration" would include, for example, the granting of options in the securities in which a member makes a market, where the options are exercisable at a price that is discounted from the prevailing market price. The Rule also would cover the purchase of securities by a member from a prohibited party at a discount from the prevailing market. Such payments are intended to be prohibited because they may, as discussed in Notice to Members 75-16, create a conflict of interest that would influence the member to enter a quotation or make a market in a security.

      The proposed Rule prohibits payments that are made "for publishing a quotation, acting as a market maker in a security, or submitting an application in connection therewith." This language would apply the prohibitions of the Rule to the entry of a quotation in a security, making a market in a security, and the entry of a quotation or the quotation of a security at a particular price.5 The definition of "quotation" is drawn from SEC Rule 15c2-11 and includes indications of interest. The proposed Rule also specifies that a member may not impose a fee or accept a payment for submitting an application to enter quotations or make a market in an issuer's securities, e.g., an NASD Form 211 application to enter a quotation in the OTC Bulletin Board® or NQB Pink Sheets.

      The proposed Rule would apply to payments by an issuer, an affiliate of the issuer, or a promoter, whether received directly or indirectly through another party. Whether a person is considered an affiliate would be determined under the provisions of NASD Rule 2720 (formerly Schedule E to the NASD By-Laws) that relate to the existence of a control relationship between an issuer and a member. The concept of "promoter" is broadly defined to encompass all persons other than the issuer and its affiliates who would have an interest in influencing a member to make a market in a security. Thus, the definition includes not only the organizer of the issuer's business, but also any director, employee, consultant, accountant, or attorney of the issuer. In addition, certain categories of securityholders are also within the definition, since these persons are considered to have an interest greater than that of the average securityholder in ensuring the existence of an active market. The categories in the definition, however, are intended to be illustrative only, and the proposed Rule would prohibit payments by any similar person with an interest in promoting the entry of quotations or market making in the issuer's securities.

      The proposed Rule also is intended to prohibit indirect payments by the issuers, affiliates, or promoters through other members. The proposed Rule language does not prohibit payments by other members, unless they would otherwise qualify as affiliates or promoters of the issuer. The NASD specifically solicits comment on whether payments by other members should be specifically prohibited, and what impact such a prohibition would have on existing payment arrangements between broker/dealers.

      In addition, the proposed Rule contains a general exception that permits payments to a member by prohibited persons for "other bona fide services." Other bona fide services are intended to include, but not be limited to, investment banking services, including traditional underwriting compensation and fees. The proposed Rule contains a further exemption for reimbursement of fees imposed by the SEC and states, and listing fees imposed by self-regulatory organizations. Such fees have been generally considered costs of the issuer, even when paid by the broker/dealer.

      A third exception is intended to encourage members to conduct an initial SEC Rule 15c2-11 review of the issuer and the security by permitting reimbursement of the member's reasonable out-of-pocket expenses related to this review.6 This exception is limited to the member's initial review required under that Rule and is not intended to apply to expenses incurred in the course of making a market in an issuer's securities. Further, this exception would not relieve a member of its obligation to comply with other provisions of the federal and state securities laws that may apply when a member is reimbursed for certain expenses from an issuer and the member publishes a quotation for the issuer's securities in an interdealer quotation medium (e.g., Section 17(b) of the Securities Act of 1933).7

      The third exception requires that out-of-pocket expenses paid to the member must be handled on an accountable basis, i.e., the member must provide a detailed bill for reimbursement (thereby permitting review by NASD RegulationSM examination staff), and retain such documentation as a record of the broker/dealer.8 A member must be prepared to provide this information to a customer if requested.9 Moreover, such out-of-pocket expenses cannot include the member's overhead, which is defined to include salaries, rent, utilities, insurance, depreciation, supplies, or similar expenses the member incurred in the normal conduct of business. The provision requires that the amount of the member's expenses must be "reasonable." This exception would not, however, permit a member to charge an issuer or receive a payment in connection with the preparation of a Form 211 or other similar application for the listing or quotation of a security. Furthermore, the proposed Rule would not permit an arrangement with an issuer for reimbursement of expenses that is conditioned on the agreement of the member to act as a market maker or publish a quotation for the issuer's securities.

      Comment is specifically requested on the merits of the third exception described above.

      Request For Comment

      The NASD encourages all members and other interested parties to comment on the new proposed Rule 2460. Comments can be mailed to:

      Joan Conley
      Office of the Corporate Secretary
      NASD Regulation, Inc.
      1735 K Street, NW
      Washington, DC 20006-1500

      or e-mailed to:
      pubcom@nasd.com.

      Comments must be received by February 3, 1997.

      Before becoming effective, any rule change developed as a result of the comments received must be adopted by the NASD Regulation Board of Directors, is subject to review by the NASD Board of Governors, and must be approved by the SEC.



      Text Of New Proposed Rule

      (All rule language is new.)

      Rule 2460. Payments for Publishing Quotations

      (a) No member or person associated with a member shall accept any payment or other consideration, directly or indirectly, from an issuer of a security, or any affiliate or promoter thereof, for publishing a quotation, acting as market maker in a security, or submitting an application in connection therewith.
      (b) The provisions of paragraph (a) shall not preclude a member from accepting:
      (1) payment for other bona fide services, including, but not limited to, investment banking services (including underwriting compensation and fees);
      (2) reimbursement of any payment for registration imposed by the Securities and Exchange Commission and/or state regulatory authorities and for listing of an issue of securities imposed by a self-regulatory organization; and
      (3) reimbursement of reasonable out-of-pocket expenses on an accountable basis, not including the member's overhead, in connection with the member's initial review process in determining whether to agree to publish a quotation or to act as a market maker in a particular security.
      (c) For purposes of this rule, the following terms shall have the stated meanings:
      (1) "affiliate" shall have the same definition as used in Rule 2720 of the Business Conduct Rules of the Association;
      (2) "overhead" shall mean payment for rent, utilities, insurance, salaries, supplies, depreciation, and similar expenses of the member incurred in the normal conduct of business;
      (3) "promoter" means any person who founded or organized the business or enterprise of the issuer, is a director or employee of the issuer, acts or has acted as a consultant, advisor, accountant or attorney to the issuer, is the beneficial owner of any of the issuer's securities that are considered "restricted securities" under Rule 144, or is the beneficial owner of five percent (5%) or more of the public float of any class of the issuer's securities, and any other person with a similar interest in promoting the entry of quotations or market making in the issuer's securities; and
      (4) "quotation" shall mean any bid or offer at a specified price with respect to a security, or any indication of interest by a member in receiving bids or offers from others for a security, or an indication by a member that he wishes to advertise his general interest in buying or selling a particular security.


      Endnotes

      1 See, Notices to Members 75-16 and 92-50.

      2 General Bond & Share Co. v. Securities and Exchange Commission, 39 F. 3d 1451 (10th Cir.).

      3 The court reversed the SEC's finding of violation that related to the firm's acceptance of issuer-paid compensation, but sustained all of the SEC's other findings of violation by General Bond.

      4 The insertion of quotations for a security in an interdealer quotation system in exchange for a payment by an issuer may result in a violation of Section 5 of the Securities Act of 1933 based on the issuer's interest in facilitating the subsequent sale. This "second sale" theory was articulated by the SEC and upheld by the court in SEC v. Harwyn Industries, Inc., 326 F. Supp. 943 (S.D.N.Y. 1971). See Monroe Securities, Inc. No-Action Letter, May 4, 1973.

      5 Notice to Members 75-16 states that questionable payments to a market marker have the potential to influence the member's ". . . decision to make a market and thereafter, perhaps, the prices it would quote."

      6 Rule 15c2-11 imposes an "affirmative review" obligation on a broker/dealer to form a reasonable belief that the information submitted in connection with an application to enter a quotation is accurate in all material respects and that the sources of the information are reliable. See SEC Rel. No. 34-29094 (April 17, 1991).

      7 Section 17(b) of the Securities Act of 1933 explicitly makes it unlawful for any person receiving consideration, directly or indirectly from an issuer, to publish or circulate any material which describes such issuer's securities without fully disclosing the receipt of such consideration, whether past or prospective, and the amount thereof.

      8 See SEC Rule 15c2-11(b)(1) and (c).

      9 See SEC Rule 15c2-11(a)(xvi).

    • 96-82 NASD Regulation Solicits Comment On Proposed Rules Governing Supervision, Review, And Record Retention Of Correspondence

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      Executive Summary

      NASD Regulation, Inc. (NASD Regulation) requests comment on proposed amendments to NASD® Conduct Rules 3010 (Supervision) and 3110 (Books and Records) (formerly Article III, Sections 27 and 21 of the NASD Rules of Fair Practice). The amendments would require firms to establish reasonable procedures for the supervision of correspondence relating to their business but would not require endorsement of each item of correspondence. Where such procedures do not require pre-use approval of correspondence, members would be required to provide education and training about the firm's procedures for the review of correspondence, document such education and training, and monitor to ensure compliance with such procedures. The amendments also clarify that retention of correspondence records must comply with Securities and Exchange Commission (SEC) rules.

      Questions concerning this Notice should be directed to R. Clark Hooper, Senior Vice President, Office of Disclosure and Investor Protection, NASD Regulation, at (202) 728-8325 or Mary N. Revell, Assistant General Counsel, Office of General Counsel, NASD Regulation, at (202) 728-8203.

      Background

      In May 1996, the SEC issued an "Interpretive Release on the Use of Electronic Media by Broker-Dealers, Transfer Agents, and Investment Advisers for Delivery of Information." 1 That release expressed the views of the SEC with respect to the delivery of information through electronic media in satisfaction of requirements in the federal securities laws and did not address the applicability of any self-regulatory organization (SRO) rules. In the release the SEC did, however, strongly encourage the SROs to work with broker/dealer firms to adapt SRO supervisory review requirements governing communications with customers to accommodate the use of electronic communications.2

      On September 12, 1996, the New York Stock Exchange (NYSE) filed a proposal with the SEC to update NYSE rules governing supervision of member firms' communications with the public.3 According to a press release issued by the NYSE, the proposal is designed to recognize the growing use of electronic communications such as "e-mail" while still providing for appropriate supervision.

      The NYSE's current rules require firms to review all communications with the public relating to their business. For example, a registered representative's correspondence to a customer must be reviewed prior to being sent, and all incoming correspondence must be reviewed by the firm before it is given to the representative. Under the NYSE proposal, prior review of all outgoing correspondence and review of all incoming correspondence would no longer be required. Instead, firms would be allowed flexibility in developing procedures for review of such correspondence tailored to the nature and size of a firm's business and customers. Other communications with the public, such as advertisements, sales literature, and research reports, would continue to be subject to prior approval.

      The NYSE proposal would require firms to develop written procedures for review of communications with the public that are designed to provide reasonable supervision of each registered representative. In addition, any firm that does not conduct pre-use review of correspondence (whether electronic or manual) would be required to regularly educate and train employees about the organization's policies and procedures governing review of communications, document such education and training, and conduct surveillance to ensure compliance with the procedures.

      The proposed rule change filed by the NYSE directly responds to the SEC's request to adapt supervision rules to accommodate the use of electronic communications. The proposed amendments to NASD rules governing review of correspondence would similarly respond to this request and would provide firms with flexibility in developing reasonable procedures for the review of correspondence. The proposed approach is designed to be consistent with the one adopted by the NYSE and thereby help to ensure a coordinated regulatory framework for supervision of manual and electronic correspondence.

      Description

      Amended Rule 3010(d)(1) would provide that a firm must establish written procedures for review of outgoing and incoming manual and electronic correspondence of its registered representatives relating to the business of the member. The procedures must be designed to provide reasonable supervision of each registered representative, and implementation and execution of these procedures must be clearly evidenced.

      In developing procedures for the review of correspondence, NASD Regulation, Inc. (NASD Regulation) agrees with the views expressed in the draft NYSE Information Memorandum submitted to the SEC to explain the proposed changes to NYSE rules governing supervision and review of communications with the public (NYSE Information Memo).4 In the NYSE Information Memo, the NYSE notes that the supervisory procedures should specify, among other things, what is to be pre- or post-reviewed, the level and qualifications of persons who will conduct the reviews, the frequency of review, and how the review will be evidenced. NASD Regulation agrees with these suggestions.

      Consistent with the NYSE proposal, members will be required to review correspondence relating to the firm's business, rather than just correspondence pertaining to the solicitation or execution of a securities transaction. However, firms would no longer be required to review each item of correspondence. Instead, firms could use reasonable sampling techniques, such as random spot-checking of e-mail logs. NASD Regulation expects that making this method effective would require review of some portion of the electronic mail sent by each registered representative, with special emphasis on messages delivered to customers of the members.

      In addition, while written approval of correspondence no longer would be mandated, firms should specify the means for evidencing review. For example, firms could electronically record evidence of supervisory review of e-mail correspondence relating to the firm's business.

      Amended Rule 3010(d)(2) would require each member to develop written procedures for review of incoming and outgoing correspondence tailored to its structure and the nature and size of its business and customer base. Any member that does not conduct prior review of correspondence will be required to: regularly educate and train registered representatives as to the firm's procedures governing review of communications; document such education and training; and monitor to ensure implementation and compliance with the procedures.

      In developing supervisory procedures for the review of correspondence, NASD Regulation notes, in accordance with similar views expressed in the NYSE Information Memo,5 that members should consider whether it is more appropriate to implement uniform procedures or procedures tailored to specific functions, offices or locations, individuals, groups of persons, or specific registration categories. In this regard, the NYSE Information Memo states that members may consider such factors as "the number, size and location of offices, the volume of communications overall and in specific areas of the organization, the activities conducted by registered representatives and other applicable persons, the nature and extent of training provided, the complaint and overall disciplinary record, if any, of registered representatives and other applicable persons (with particular emphasis on complaints regarding written or oral communications with clients) and the overall experience levels of applicable persons using communications media."6 NASD Regulation agrees with these views and notes in addition that reasonable procedures in some cases might require review of all correspondence of particular individuals.

      With regard to procedures for the review of outgoing and incoming correspondence, NASD Regulation agrees with the views expressed in the NYSE Information Memo. In particular, NASD believes that members' supervisory systems should provide specific processes for the receipt and handling of incoming checks and customer complaints as well as standards for correspondence indicating permitted and prohibited activities and any restrictions imposed by the member upon such correspondence.7

      Under amended Rule 3010(d)(3), each member must retain correspondence in accordance with amended Rule 3110. Rule 3010(d)(3) also requires that the names of the persons who prepared and reviewed correspondence must be ascertainable from the retained records and the records must be made available to the NASD upon request.

      Rule 3110(a) has been amended to recognize that retention of records must be made and preserved as prescribed by Rule 17a-3 under the Securities Exchange Act of 1934 (Exchange Act). The recordkeeping format, medium, and retention period must comply with Rule 17a-4 under the Exchange Act.8

      Request For Comment

      The NASD encourages all interested parties to comment on the proposed amendments to Rules 3010 and 3110. Comments can be mailed to:

      Joan Conley
      Office of the Corporate Secretary
      NASD Regulation, Inc.
      1735 K Street, NW
      Washington, DC 20006-1500

      or e-mailed to:
      pubcom@nasd.com.

      Comments must be received by January 30, 1997. Before becoming effective, the Rule amendments must be adopted by the NASD Regulation Board of Directors, reviewed by the NASD Board of Governors, and approved by the SEC.


      Text Of Proposed Amendments

      (Note: Proposed new language is underlined; deletions are bracketed.)

      Rule 3010. Supervision

      (a) through (c) No change
      (d) [Written Approval] Review of Transactions and Correspondence
      (1) Supervision of Registered Representatives. Each member shall establish procedures for the review and endorsement by a registered principal in writing, on an internal record, of all transactions and for the review by a registered principal of [all] written and electronic correspondence of its registered representatives relating to the business of such member [pertaining to the solicitation or execution of any securities transactions]. Such procedures should be in writing and be designed to reasonably supervise each registered representative. Evidence that these supervisory procedures have been implemented and carried out must be maintained and made available to the Association upon request.
      (2) Review of correspondence. Each member shall develop written procedures that are appropriate for its business, size, structure, and customers for the review of written and electronic correspondence relating to its business. Where such procedures for the review of correspondence do not require pre-use review, they must include provision for the education and training of registered representatives as to the firm's procedures; documentation of such education and training; and surveillance and followup to ensure that such procedures are implemented and adhered to.
      (3) Retention of correspondence. Each member shall retain correspondence of registered representatives relating to its business in accordance with Rule 3110 ("Books and Records"). The names of the persons who prepared and who reviewed the correspondence shall be ascertainable from the retained records and the retained records shall be readily available to the Association, upon request.
      (e) through (g) No change

      Rule 3110. Books and Records

      (a) Requirements
      Each member shall make [keep] and preserve books, accounts, records, memoranda, and correspondence in conformity with [all applicable laws, rules, regulations, and statements of policy promulgated thereunder and with] the Rules of this Association and as prescribed by Rule 17a-3 under the Securities Exchange Act of 1934 (Exchange Act). The recordkeeping format, medium, and retention period shall comply with Rule 17a-4 under the Exchange Act.
      (b) through (g) No change

      Endnotes

      1 Release No. 33-7288; 34-37182; IC-21945; IA-1562 (May 9, 1996); 61 FR 24644 (May 15, 1996) (File No. S7-13-96).

      2 Id., note 5.

      3 See Release No. 34-37941 (November 13, 1996); 61 FR 58919 (November 19, 1996) (File No. SR-NYSE-96-26) (soliciting comment on the NYSE's proposed rule change).

      4 Id., notes 1 and 2.

      5 Id., notes 1 and 3.

      6 Id., note 3.

      7 Id., notes 1 and 4.

      8 With regard to record retention requirements, it should be noted that the SEC recently proposed for comment amendments to its broker/dealer books and records rules. The SEC's proposal responds to concerns raised by members of the North American Securities Administrators Association. See Special Notice to Members 96-80 and Release No. 34-37850 (October 22, 1996); 61 FR 55593 (October 28, 1996) (File No. S7-27-96) for a discussion of the proposed amendments to SEC Rules 17a-3 and 17a-4.

      One of the SEC's proposed amendments to Rule 17a-4 would require broker/dealers to preserve books and records indicating that all outgoing communications have been approved by a principal of the broker/dealer (emphasis added). If approved, this amendment would have the effect of indirectly imposing a more stringent correspondence approval requirement than the approval requirement that would be imposed under the proposed amendments to NASD Conduct Rule 3010 discussed in this Notice. The comment period on the SEC's proposed rule amendments expires on December 27, 1996.

    • 96-81 SEC Transaction Fees Begin January 1, 1997, On Nasdaq And Other Prompt Last Sale Reported Non-Debt Transactions

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      Executive Summary

      In the October Notices to Members, the National Association of Securities Dealers, Inc. (NASD) published an FYI alerting members to legislation recently enacted by Congress that authorizes the Securities and Exchange Commission (SEC) to collect a fee (SEC fee) of 1/300th of one percent on the aggregate dollar amount of sales transacted by or through any member other than on a securities exchange for securities subject to prompt last-sale reporting. Effective January 1, 1997, the SEC fee will apply to transactions in securities listed on The Nasdaq Stock MarketSM as well as other non-Nasdaq® OTC Equity Securities. This Special Notice provides additional information explaining how the new SEC fee will be administered.

      Questions regarding this Notice should be directed to T. Grant Callery, General Counsel, NASD, at (202) 728-8285; Anne H. Wright, Associate General Counsel, NASD, at (202) 728-8815; Andrew S. Margolin, Senior Attorney, The Nasdaq Stock Market, Inc., at (202) 728-8869; James Shelton, Billing Manager, NASD, at (301) 590-6757.

      Effective Date

      It is important to note that the SEC fee is effective as of January 1, 1997. This is because the January 1 effective date is established in the Omnibus Consolidated Appropriations Act for Fiscal Year 1997. The fees will then continue through fiscal year 2006 by the National Securities Market Improvement Act of 1996. In fiscal year 2007, the fees decline to 1/800th of one percent.

      Covered Securities

      Because the SEC fee applies to all non-debt securities subject to prompt last-sale reporting, it will apply to all domestic and foreign securities listed on The Nasdaq Stock Market, with the exception of convertible debt.

      In addition, because NASD® rules require prompt last-sale reporting for virtually all non-Nasdaq OTC Equity Securities,1 the SEC fee will also apply to many securities quoted in the OTC Bulletin Board® or in NQB's "Pink Sheets®." Specifically, all domestic OTC Equity Securities, ADRs, and Canadian securities traded by or through a member will be subject to the SEC fee. However, it will not apply to transactions in non-Canadian foreign securities because those securities are not currently subject to similar last-sale reporting requirements.2

      The SEC fee will not apply to securities in FIPSSM or PORTALSM.

      Covered Transactions

      The SEC fee applies generally to all sales in covered securities by or through any member otherwise than on a securities exchange, regardless of the capacity in which the member is trading.3 For transactions between two NASD members, the charge will apply to the member on the sell side. For transactions between a member and a customer, the charge will apply to the member.

      Collection Mechanism

      The SEC fee will be collected in a manner similar to the current fee on Cleared Transactions,4 thus payment will be the responsibility of NASD Member Clearing Firms. The NASD will calculate the SEC fee for each NASD Member Clearing Firm based on transaction data submitted into the Automated Confirmation Transaction ServiceSM (ACTSM). NASD Member Clearing Firms with primary clearing relationships with the National Securities Clearing Corporation (NSCC) or the Stock Clearing Corporation of Philadelphia (SCCP) will have the SEC fees deducted from their respective NSCC or SCCP account on a monthly basis. An NASD generated invoice will be forwarded to the firm as a confirmation of the deduction from their NSCC or SCCP account. The NASD expects payments for the month of January to be deducted during the first week of February, with invoices to follow immediately thereafter. NASD Member Clearing Firms that are considered self clearing (i.e., that have no relationship with NSCC or SCCP) will be billed directly with payment due upon receipt.

      The NASD recognizes that NASD Member Clearing Firms will need to have necessary systems changes in place prior to the effective date of January 1. The NASD will make every effort to cooperate with these firms to ensure that the SEC fees are being calculated and administered in a consistent manner.

      Notice To Customers

      The NASD believes that members should provide notice of the SEC fee to its customers to the extent members determine to pass the SEC fee on to them. Given the effective date of January 1, the NASD believes that with respect to timing, the provision of such notice would not be inconsistent with NASD rules or policies requiring adequate prior notice of the SEC fee, provided members give such notice as soon as practicable.

      Off-Exchange Transactions In Exchange-Registered Securities

      As previously indicated, the National Securities Market Improvement Act provides that off-exchange transactions in exchange-registered securities (third-market transactions), currently paid directly to the SEC, will be paid through the NASD beginning October 1, 1997.

      Rulemaking

      It is expected that further rulemaking to implement the SEC fees will be forthcoming from both the SEC and the NASD.


      1 NASD Rule 6600 contains the requirements for reporting transactions in OTC Equity Securities for which real-time trade reporting is not otherwise required.

      2 Generally, transactions in these securities are reported on T+1.

      3 Rule 31-1 under the Securities and Exchange Act of 1934 (Exchange Act) exempts from the SEC fee: (a) transactions in securities offered pursuant to an effective registration statement under the Securities Act of 1933 (Securities Act) or offered in accordance with an exemption from registration; (b) transactions by an issuer not involving any public offering within the meaning of Section 4(2) of the Securities Act; (c) the purchase or sale of securities pursuant to and in consummation of a tender or exchange offer; (d) the purchase or sale of securities upon the exercise of a warrant or right (except a put or call), or upon the conversion of a convertible security; and (e) transactions which are executed outside the United States and are not reported, or required to be reported, to a transaction reporting association as defined in Rule 11Aa3-1 under the Exchange Act, and any approved plan filed thereunder.

      4 Section 8 of Schedule A to the NASD By-Laws.

    • For Your Information For December

      For Your Information

      SEC Limit Order Handling Rules Effective January 10, 1997

      Nasdaq will be implementing the new SEC Limit Order Handling Rules on January 10, 1997. This will affect all Advanced Computerized Execution System (ACES®) market makers because ACES limit orders will not be linked to the inside market calculation and will not automatically update your quotes.

      Specifically, the Limit Order Display Rule requires a market maker that receives a customer limit order priced at or better than its current quote and does not immediately execute the order, to display the order to the entire marketplace. If the order is priced better than the market maker's quote, whether or not the quote is at the inside market price, the market maker is obligated to display the order's price and size.

      To ensure compliance with these rules as well as the existing limit order protection rules, ACES market makers that accept limit orders may choose to receive ACES orders by means of a "pass-thru" arrangement under which orders are sent via a Computer-to-Computer Interface (CTCI) into their inhouse systems. The alternative for firms not using the CTCI approach is to manually check their limit orders in ACES against their quotes and replace their quotes with the limit order price and size when appropriate. Based on each firm's business volume and the momentum of the market, this may not be a feasible solution.

      For ACES market makers with CTCI that elect to receive ACES orders into their in-house systems:

      • Market makers will be responsible for reporting the trades to Automated Confirmation Transaction service (ACTSM). ACES will no longer lockin trades or report trades to ACT automatically for trades executed in the market makers' systems;


      • Order-entry firms will be responsible for reporting the order-entry side of the trade to ACT (except in the case of a QSR relationship).

      This ACES "pass-thru" is currently available to all ACES market makers. Please direct any questions you may have to Jack Donlon, Director, Product Development, The Nasdaq Stock Market, Inc., at (212) 858-4327.

      Correction To Disciplinary Actions For October

      Jerry Manning (Registered Principal, Englewood, Colorado) was suspended from association with any NASD® member in any principal capacity. The October Notices to Members erroneously stated that Manning was suspended from association with any NASD member in any capacity.

      SEC Approves New Telemarketing Rules

      On December 2, 1996, The Securities and Exchange Commission (SEC) approved new NASD® Conduct Rule 2211 to impose time restrictions and disclosure requirements regarding telephone calls to customers by members and their associated persons. In the same release, the SEC also approved amendments to NASD Conduct Rule 3110 to require members and their associated persons to follow certain procedures regarding customer authorization of a demand draft [Securities Exchange Act Rel. No. 34-38009 (December 2, 1996)]. The new rules are effective immediately.

      Rule 2211 prohibits members and their associated persons from calling an individual's residence to solicit the purchase of securities or related services at any time other than between 8 a.m. and 9 p.m. local time, without the prior consent of the person. Rule 2211 also requires members and their associated persons to promptly and clearly disclose to the called person the caller's identity, firm, telephone number or address at which the caller may be contacted, and that the purpose of the call is to solicit the purchase of securities or related services.

      Exemptions from the time-of-day and disclosure requirements of Rule 2211 are available for telephone calls by an associated person (or another associated person acting at his or her direction) to a broker or dealer, or to the associated person's existing customers who maintain an active account. An "existing customer" is a customer for whom the broker or dealer, or a clearing broker or dealer on behalf of such customer, carries an account. An account is active for purposes of the new Rule if an existing customer: (i) has, within the preceding 12 months, effected a securities transaction in or made a deposit of funds or securities into the account, or (ii) has, at any time, effected a securities transaction in or made a deposit of funds or securities into the account, and the account has earned interest or dividend during the preceding 12 months. Also, in order to use this exemption, the customer account must have been under the control of the associated person making the telephone call at the time of the securities transaction or deposit of funds or securities.

      Rule 3110 currently requires that members make and maintain a centralized do-not-call list of persons who do not wish to receive telephone solicitations. Rule 3110 was amended to prohibit members and associated persons from obtaining from a customer or submitting for payment a check, draft, or other form of negotiable paper drawn on a customer's checking, savings, share, or similar account (demand draft), without that person's express written authorization, and to require the retention of such authorization for three years.

      A Notice to Members containing a complete discussion of these new rules will be published in the January 1997 Notices to Members. However, the Notice is currently available on NASD Regulation's Web site at www.nasdr.com/2610.htm.

    • 96-80 SEC Requests Comments On Proposed Amendments To SEC Rules 17a-3 And 17a-4

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      Suggested Routing

      Senior Management
      Internal Audit
      Legal & Compliance
      Operations
      Registration

      Executive Summary

      The Securities and Exchange Commission (SEC) is requesting comments on proposed amendments to the broker/dealer books and records rules. The proposed amendments clarify, modify, and expand recordkeeping requirements with respect to purchase and sale documents, customer records, associated person records, customer complaints, and certain other matters. In addition, the proposed amendments specify certain types of books and records that broker/dealers must make available in their local offices.

      The SEC is proposing these amendments in response to concerns raised by members of the North American Securities Administrators Association (NASAA). The proposed amendments are intended to obligate broker/dealers to make and retain additional records that would be valuable to state regulators during examination and enforcement proceedings.

      Comments regarding this Notice should be submitted by December 27, 1996, in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Stop 6-9, Washington, DC 20549. Comments may also be submitted electronically to the following e-mail address: rule-comments@sec.gov. All comment letters should refer to File No. S7-27-96.

      Questions regarding this Notice may be directed to Samuel Luque, Jr., Compliance Department, NASD Regulation, Inc., at (202) 728-8472, or Susan DeMando, NASD Regulation, Inc., Compliance Department, at (202) 728-8411.

      Explanation Of Changes

      Following is an explanation of the proposed books and records rule amendments. A more detailed discussion of these changes can be found in the October 28, 1996, Federal Register which follows this Notice.

      The proposed amendments to Rule 17a-3 will require broker/dealers to generate local office blotters, to record supplemental information on brokerage order memoranda, to create customer account forms, and to maintain additional records concerning associated persons, customer complaints, and exceptional numerical occurrences.

      The proposed amendments to Rule 17a-4 will require broker/dealers to preserve additional types of records, including advertising and marketing materials, registrations and licenses, audit and examination reports, records concerning recommended securities, and manuals relating to compliance, supervision, and procedures.

      In addition, Rule 17a-4 will be amended to clarify and modify the SEC's existing requirements concerning preservation of certain correspondence and contracts. Finally, the proposed amendments to Rule 17a-4 will supplement the existing standards concerning the organization of books and records, will require broker/dealers to designate a principal to be responsible for books and records compliance, and will require broker/dealers to make certain records available in each of their local offices.

      Blotters And Memoranda

      Rule 17a-3(a)(1) presently specifies the SEC's requirements concerning records of purchases and sales of securities, receipts and deliveries of securities, and receipts and disbursements of cash. The proposed amendment to Rule 17a-3(a)(1) will add a requirement that records of purchases and sales of securities for customer accounts be accessible with respect to the activities of each local office.

      Existing requirements of Rule 17a-3(a)(6) specify that brokerage memoranda include information concerning the terms and conditions of the order, the account for which the order is entered, the times of entry and execution, and the execution price. The proposed amendment to Rule 17a-3(a)(6) adds a requirement that each memorandum indicate which associated person entered the order and also indicate whether the order was solicited or unsolicited.

      Additional Records Concerning Associated Persons

      Rule 17a-3(a)(12) currently specifies the types of records that a broker/dealer must maintain with respect to each of its associated persons. In addition to basic background information, the existing rule requires a broker/dealer to maintain records of each associated person's employment and disciplinary history.

      The proposed amendments will add new Rule 17a-3(a)(20) which designates several supplementary types of associated person records that a broker/dealer must maintain. These new records include registration and licensing materials, contracts or agreements between associated persons and the broker/dealer, compensation arrangements, customer complaint information, and client trading records for each associated person.

      In addition, proposed Rule 17a-3(a)(21) will add a requirement that broker/dealers maintain a list identifying each of their associated persons and designating the local office where each associated person conducts the greatest portion of his or her business. Proposed Rule 17a-3(a)(21), in conjunction with proposed Rule 17a-4(l)(1), will require all records concerning each associated person to be stored where such associated person conducts most of his or her business.

      Account Forms

      Proposed Rule 17a-3(a)(16) creates a new requirement that broker/dealers maintain an account form for each customer account. The required account form will include basic identification and background information about a customer, as well as a designation of the customer's investment objective(s) from a list of defined objectives and a specification of the approximate percentage of investment capital that the customer would like to allocate to speculative investments. (As the proposed amendments do not include a definition of the term speculation, the SEC is expressly requesting comments concerning whether a definition should be provided, and suggestions on possible definitions.) In addition, the associated person responsible for each account and a principal of the broker/dealer must sign or initial each account form to indicate approval of the contents.

      Proposed Rule 17a-3(a)(16) will apply to both new and existing customer accounts. The SEC recognizes that it will be difficult for broker/dealers to prepare the required account forms for existing customers immediately upon adoption of the new Rule. Accordingly, the SEC initially proposes a one-year period from the date of adoption of the proposed Rule as an appropriate time frame for broker/dealers to comply with respect to existing customer accounts. The SEC is expressly soliciting comments concerning the feasibility of this phase-in period.

      Proposed Rule 17a-3(a)(16) also will require that the material contents of a new or changed customer account form be sent to the customer for confirmation. To minimize burdens and allow maximum flexibility for broker/dealers who send communications to their customers from a central location, the proposed Rule will permit a broker/dealer to send a customer an alternate document which contains the material contents of the account form, rather than a copy of the account form itself. The signatures or initials of the associated person and principal of the broker/dealer do not have to be included on any alternate document sent to a customer for confirmation.

      As a customer's financial situation and investment preferences will vary over time, proposed Rule 17a-3(a)(16) includes a one-year updating requirement with respect to the investment objectives designated on each customer's account form. The SEC is aware of the potential burdens presented by the annual updating requirement. Accordingly, the SEC is expressly soliciting suggestions of less burdensome alternatives that would nevertheless provide broker/dealers and regulators with a reasonably current indication of each customer's investment objectives.

      Finally, the SEC recognizes that the nature of the businesses of certain types of broker/dealers may render unnecessary the account form requirements of proposed Rule 17a-3(a)(16). Therefore, the SEC is expressly soliciting suggested standards for the exemption of categories of broker/dealers from the proposed account form requirements.

      Complaints

      Rules 17a-3 and 17a-4 do not currently contain any express requirements concerning oral or written customer complaints that are delivered to a broker/dealer. The proposed amendments add a new Rule 17a-3(a)(17), which will require broker/dealers to maintain files of written materials relating to customer complaints. Note that this is already required by NASD Rule 3110 (formerly Article III, Section 21 of the NASD Rules of Fair Practice). In addition, proposed Rule 17a-3(a)(17) will require broker/dealers to make and keep written memoranda of oral customer complaints alleging certain types of fraud and theft.1

      In addition, proposed Rule 17a-3(a)(17) requires broker/dealers to provide routine notification in account statements that customers should set their complaints in writing in order to establish an independent record of the complaint.

      Proposed Rule 17a-3(a)(18) would require records of all commissions, overrides, and other compensation (including any bonus) identified by each transaction. Information includes the person or persons receiving the compensation, the customer account number, the date the transaction occurred, the amount of compensation, and the name of the security involved. To the extent that compensation is based on factors other than remuneration per trade, such as a total production system or bonus system, the member must be able to demonstrate and to document, upon request, the method by which the compensation paid was earned.

      Proposed Rule 17a-3(a)(19) would require activity reports to identify exceptional numerical occurrences, such as frequent trading in customer accounts, unusually high commissions, or an unusually high number of trade corrections or canceled transactions, for management's attention and information. The systems and criteria used to generate such activity reports shall be determined by each member, broker or dealer, as long as the system and its parameters are reasonably designed to monitor levels of activity in accounts that may warrant further review and analysis by management.2

      The proposed amendments will also add several new items to the record-preservation requirements of Rule 17a-4. The new types of records include copies of advertisements and marketing materials, information relating to underwritten or recommended securities, registrations and licenses, audit and examination reports, and manuals relating to compliance, supervision, and procedures.

      Rules 17a-4(a) and 17a-4(b) currently require broker/dealers to preserve specified types of records for six and three years, respectively. Records pertaining to proposed Rules 17a-3(a)(17), (19), and (21) would be retained for six years pursuant to 17a-4(a) and records pertaining to proposed Rule 17a-3(a)(18) would be retained for three years pursuant to Rule 17a-4(b). Changes to 17a-4 would require retention of records under (1) proposed Rule 17a-3(a)(16) for not less than six years after the close of a customer's account, while clarifying language regarding information relating to a recommendation of a security by a member, and (2) proposed Rules 17a-3(a)(12) and (a)(20) for at least three years after the "associated person" has terminated his employment and any other connection with the member. Finally, a revision to Rule 17a-4 would require preservation by the member of all Forms BD, BDW, amendments to these forms, licenses and other documentation showing registrations, and organizational documents for the life of the enterprise.

      Amendments to Rule 17a-4(j) will require that requested records must be produced immediately when the records are located in the office where the request is made and within three business days if the requested records are located offsite.

      Proposed Rule 17a-4(k) will require each broker/dealer to designate a principal for purposes of the books and records rules. The designated principal's responsibilities include indicating approval of records such as outgoing correspondence and marketing materials.

      Proposed Rule 17a-4(l) will adopt a new requirement that broker/dealers make available certain records in each of their local offices. Required records include certain blotters of the local office's activities, memoranda of brokerage orders, complaint and correspondence files, associated person records, and customer account forms.

      In order to accommodate centralized electronic record storage systems used by some broker/dealers and to minimize the overall burden of the local office requirements, proposed Rule 17a-4(l) specifies that the ability to display the necessary records electronically in a local office and immediately produce printed copies will satisfy the Rule. The Rule also limits the local office record availability period to three years, and single agent offices may comply if the required local office records are made available in certain other offices of the broker/dealer.

      The last section of the Federal Register, included with this Notice, contains an Exhibit A, Model State Regulation Governing Access To Records Required To Be Kept By Broker/Dealers. This model was prepared by NASAA.


      1 Proposed Rule 17a-3(a)(17) expressly specifies that the requirement to prepare a written memorandum concerning certain oral complaints does not convert the complaint into a reportable event for purposes of Form U-4 or other reporting requirements.

      2 Actual copies of activity reports need not be retained by a member if the member electronically stores the data necessary to promptly create or recreate the required activity reports upon request by representatives of a securities regulatory authority.

    • 96-79 Fixed Income Pricing System Additions, Changes, and Deletions as of October 28, 1996

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      Suggested Routing

      Senior Management
      Corporate Finance
      Institutional
      Legal & Compliance
      Municipal
      Operations
      Systems
      Trading

      As of October 28, 1996, the following bonds were added to the Fixed Income Pricing System (FIPS).

      Symbol Name Coupon Maturity
      VOUT.GB Universal Outdoor Inc 9.750 10/15/06
      GGSY.GA Gross Graphic System Inc 12.000 10/15/06
      AGY.GA Argosy Gaming Co 13.250 6/1/04
      OSIA.GA Outdoor Systems Inc 9.375 10/15/06
      SYGN.GA Sygnet Wireless 11.500 10/1/06
      FROV.GA Frontier Vision 11.000 10/15/06
      GCS.GA Gray Communications 10.625 10/1/06

      As of October 28, 1996, the following bonds were deleted from FIPS.

      Symbol Name Coupon Maturity
      EAGI.GB Eagle Inds Inc Del 10.500 7/15/03

      As of October 28, 1996, changes were made to the symbols of the following FIPS bonds.

      New Symbol Old Symbol Name Coupon Maturity
      PLS.GA PHCR.GA Paracelsus Healthcare Corp 9.875 10/15/03

      All bonds listed above are subject to trade-reporting requirements. Questions pertaining to FIPS trade-reporting rules should be directed to James C. Dolan, Market Regulation, NASD Regulation, at (301) 590-6460.

      Any questions regarding the FIPS master file should be directed to Cheryl Glowacki, Nasdaq Market Operations, at (203) 385-6310.

    • 96-78 Christmas Day And New Year's Day: Trade Date—Settlement Date Schedule

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      Suggested Routing

      Internal Audit
      Legal & Compliance
      Municipal
      Operations
      Syndicate
      Systems
      Trading

      Christmas Day And New Year's Day: Trade Date-Settlement Date Schedule

      The Nasdaq Stock Market and the securities exchanges will be closed on Wednesday, December 25, 1996, in observance of Christmas Day, and Wednesday, January 1, 1997, in observance of New Year's Day. "Regular way" transactions made on the business days noted below will be subject to the following schedule:

      Trade Date Settlement Date Reg. T Date*
      Dec. 19 Dec. 24 Dec. 27
      20 26 30
      23 27 31
      24 30 Jan. 2, 1997
      25 Markets Closed
      26 31 3
      27 Jan. 2, 1997 6
      30 3 7
      31 6 8
      Jan. 1, 1997 Markets Closed
      2 7 9

      Brokers, dealers, and municipal securities dealers should use the foregoing settlement dates for purposes of clearing and settling transactions pursuant to the NASD® Uniform Practice Code and Municipal Securities Rulemaking Board Rule G-12 on Uniform Practice.

      Questions regarding the application of those settlement dates to a particular situation may be directed to the NASD Uniform Practice Department at (203) 375-9609.


      *Pursuant to Sections 220.8(b)(1) and (4) of Regulation T of the Federal Reserve Board, a broker/dealer must promptly cancel or otherwise liquidate a customer purchase transaction in a cash account if full payment is not received within five (5) business days of the date of purchase or, pursuant to Section 220.8(d)(1), make application to extend the time period specified. The date by which members must take such action is shown in the column titled "Reg. T Date."

    • 96-77 CRD Will Provide Firms With Advisory Messages When Significant Disciplinary Actions Require Reentry Of Individuals Into The Regulatory Element Of The Continuing Education Program

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      Suggested Routing

      Senior Management
      Legal & Compliance
      Registration

      Executive Summary

      Effective December 1, 1996, the Central Registration Depository (CRD) will send an individual Continuing Education Program Advisory Message for both Regulatory Element Directed Sequences (see Exhibit 1) and Regulatory Element Directed Sessions (see Exhibit 2) to notify member firms of Continuing Education Regulatory Element requirements for their registered employees who have become the subject of a significant disciplinary action as defined in Rule 1120 of the NASD® Membership and Registration Rules (formerly Schedule C, Part XII of the NASD By-Laws). Previously, firms were notified of this information only by the monthly Requirement Summary report.

      Questions about this Notice may be directed to John Linnehan, Director, Continuing Education, NASD Regulation, at (301) 208-2932 or to your CRD Quality & Service Team.

      Quality & Service Team 1
      (301) 921-9499

      Quality & Service Team 2
      (301) 921-9444

      Quality & Service Team 3
      (301) 921-9445

      Quality & Service Team 4
      (301) 921-6664

      Quality & Service Team 5
      (301) 921-6665.

      Background

      A registered person must reenter the Regulatory Element of the Securities Industry Continuing Education Program and satisfy all of its requirements if he or she becomes the subject of a significant disciplinary action. A significant disciplinary action occurs when a registered person:

      • becomes subject to a statutory disqualification pursuant to the Securities Exchange Act of 1934. Such disqualifications include bars, suspensions, and civil injunctions involving securities matters, any felony convictions, or a misdemeanor conviction that involves investments or an investment-related business, any fraud, false statements or omissions, wrongful taking of property, bribery, perjury, forgery, counterfeiting, extortion, or a conspiracy to commit any of these offenses;


      • becomes subject to suspension or is solely or jointly and severally subject to the imposition of a fine of $5,000 or more for violating any provision of any securities law or regulation, or any agreement with, or rule or standard of conduct of, any securities self-regulatory organization (SRO), or as imposed by any such regulatory or SRO in connection with a disciplinary proceeding; or


      • is ordered to reenter the Regulatory Element as a sanction in a disciplinary action by any securities governmental agency or securities SRO.

      A significant disciplinary action "resets the clock" for an individual who is already covered by or who has previously met the requirements of the Regulatory Element. Reentry into the Regulatory Element is initiated when certain disciplinary information is posted to CRD creating a Regulatory Element Directed Sequence or Directed Session.

      Directed Sequences

      A Directed Sequence is a series of four Regulatory Element computer based training sessions. The first session is required within 120 days beginning from the Directed Sequence Effective Date. The three subsequent sessions are required within 120 days beginning from the second, fifth, and tenth anniversaries of the Directed Sequence Effective Date. The Directed Sequence Effective Date is the 45th day after the Date of Action specified in the official disciplinary decision document. Reentry applies regardless of whether a registered person has fulfilled all or part of an existing Regulatory Element requirement.

      Directed Sequence Example

      Michael S. is fined $5,000 by an SRO in a disciplinary proceeding dated March 1, 1997.

      Michael S. receives a Regulatory Element Directed Sequence because of the fine. The effective date of his Directed Sequence is April 15, 1997 (45 days after the Date of Action of the disciplinary ruling). Michael's Directed Sequence requires him to take four sessions of the Regulatory Element computer-based training. The initial requirement is within 120 days beginning April 15, 1997, and then within 120 days beginning April 15, 1999, April 15, 2002, and April 15, 2007.

      Directed Sessions

      A securities regulator may require a single Regulatory Element Directed Session as part of a disciplinary action. When information about the disciplinary action is entered into CRD, the Directed Session is recorded with an effective date which is 45 days from the Date of Action. The individual will have 120 days beginning from the Directed Session Effective Date to satisfy the Regulatory Element requirement.

      Directed Session Example

      Sarah M. is required by a state securities regulator to complete one Regulatory Element computer-based training session. The date of the state's action is March 1, 1997. The effective date of this Directed Session is April 15, 1997, 45 days after the Date of Action of the disciplinary ruling. Sarah must complete the Directed Session within 120 days beginning April 15, 1997.

      Continuing Education Advisory Messages

      Beginning December 1, 1996, CRD will produce Continuing Education Program Advisory Messages in the form of individual notifications about Directed Sequences or Directed Sessions and send them to every firm where CRD shows the person to have an active registration. The firm must notify its employee of the Regulatory Element requirement and monitor compliance. Failure to complete a required Regulatory Element computer-based training session during the prescribed time period will result in a person's registration becoming inactive. A person with an inactive registration cannot conduct a securities business, perform any of the functions of a registered person, or receive compensation for activities that require registration until the requirements of the Regulatory Element are met.

      The individual notification will contain the individual's name, CRDSM number and social security number, the regulatory authority initiating the disciplinary action, the action date of the action, the effective date of the action, and the begin and end dates of the directed sequence windows or directed session window. See Exhibits 1 and 2 of this Notice.

      A firm's monthly Continuing Education Program Summary Report also shows all of the firm's registered persons who are in open 120-day Regulatory Element windows for any reason.

      For More Information

      Questions about this Notice may be directed to John Linnehan, Director, Continuing Education, NASD Regulation, at (301) 208-2932 or to your Quality & Service Team.

      Firms should direct their questions for clarification about a Directed Sequence or Directed Session to their Quality & Service Team.

      If you are uncertain as to your Quality & Service Team, please contact the NASD at (301) 590-6500.

      EXHIBIT 1
      Advisory Message For A Directed Sequence
      CENTRAL REGISTRATION DEPOSITORY
      P.O. BOX 9401 * GAITHERSBURG, MARYLAND 20898-9401 * (301) 590-6500
      CONTINUING EDUCATION PROGRAM ADVISORY MESSAGE
      REGISTERED REPRESENTATIVE NAME   REPORT DATE 11/01/97
      RR CRD# RR SS#  
      DIRECTED SEQUENCE DISCIPLINARY NOTICE
      The individual listed above is subject to the Continuing Education Program due to a DISCIPLINARY ACTION. This action has been initiated by <regulatory authority> on 9/6/97. The individual is required to comply with the following schedule, starting from 10/21/97.
      REQUIREMENT BEGIN DATE END DATE
      Initial Requirement 10/21/97 2/17/98
      2-year Anniversary 10/21/99 2/17/00
      5-year Anniversary 10/21/02 2/17/03
      10-year Anniversary 10/21/07 2/17/08
      *** Avoid surprises! Always determine a new-hire's CE status ***
        BD NUMBER
       
        BD NAME
        BD STREET ADDRESS
        BD CITY, STATE AND ZIP
       
        ATTN: BD CONTACT

      EXHIBIT 2
      Advisory Message For A Directed Session
      CENTRAL REGISTRATION DEPOSITORY
      P.O. BOX 9401 * GAITHERSBURG, MARYLAND 20898-9401 * (301) 590-6500
      CONTINUING EDUCATION PROGRAM ADVISORY MESSAGE
      REGISTERED REPRESENTATIVE NAME   REPORT DATE 11/01/97
      RR CRD# RR SS#  
      DIRECTED SESSION DISCIPLINARY NOTICE
      The individual listed above is subject to the Continuing Education Program due to a DISCIPLINARY ACTION. This action has been initiated by <regulatory authority> on 9/6/97. The individual will be required to complete the following requirement, starting from 10/21/97.
      REQUIREMENT BEGIN DATE END DATE
      Directed Session 10/21/97 2/17/98
      *** Avoid surprises! Always determine a new-hire's CE status ***
        BD NUMBER
       
        BD NAME
        BD STREET ADDRESS
        BD CITY, STATE AND ZIP
       
        ATTN: BD CONTACT

    • 96-76 SEC Approves Amendment To IM-8310-2 Regarding The Availability Of Disciplinary Complaints And Disciplinary Decisions Upon Request

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      Suggested Routing

      Senior Management
      Legal & Compliance
      Registration

      Executive Summary

      On October 9, 1996, the Securities and Exchange Commission (SEC) approved an amendment to IM-8310-2 regarding the availability of disciplinary complaints and disciplinary decisions upon request. The amendment permits the NASD to provide copies of NASD® disciplinary complaints and disciplinary decisions upon request and requires that such copies be accompanied by a disclosure statement in certain circumstances. The full text of the amendment, which became effective on an accelerated basis on October 9, 1996, follows the discussion below.1

      Questions regarding this Notice may be directed to Suzanne E. Rothwell, Associate General Counsel, NASD Regulation, at (202) 728-8247.

      Background And Discussion

      Under the Interpretation on the Release of Disciplinary Information (Rule), IM-8310-2,2 NASD Regulation, Inc. (NASD Regulation) provides notification to the membership and the press of significant disciplinary decisions when time for appeal and call for review has expired, but the Rule does not specifically authorize NASD Regulation to provide copies of any disciplinary complaint or disciplinary decision, in its entirety, upon request. As a matter of practice, the staff has not provided copies of disciplinary complaints in response to requests. However, the NASD has maintained a policy since 1994 of providing complete copies of disciplinary decisions upon request, pursuant to an interpretation of paragraph (a) of the Rule, which permits the NASD to release information upon request regarding "all pending disciplinary actions ...."

      The NASD is amending the Rule to adopt new paragraph (b) to clarify that the NASD shall in response to a request, release to the requesting party a copy of any NASD disciplinary complaint or disciplinary decision issued by the NASD or any of its subsidiaries or committees.3 In making a request for a disciplinary complaint or decision, the new rule requires that the requesting party identify the disciplinary complaint or decision that is being requested. This requirement is satisfied where the requesting party identifies a particular broker/dealer or associated person that is a respondent in an NASD disciplinary action (although the date of the complaint or decision may not be known) or identifies an issue or rule that is the subject of one or more complaints or decisions (where the identity of the respondent or respondents is not known). It is also permissible for a request to encompass all disciplinary complaints and decisions related to an identified respondent without reference to a particular time period.

      The new provision also requires that copies of disciplinary complaints and decisions be accompanied by certain disclosures, in certain circumstances, that are set forth in subparagraphs (b)(1)-(4). The new provision requires that any copy of a disciplinary complaint be accompanied by a statement that the issuance of a complaint represents the initiation of a formal proceeding by the NASD in which findings as to the allegations in the complaint have not been made and does not represent a decision as to any of the allegations contained in the complaint.

      In addition, any copy of a disciplinary decision issued by a District Business Conduct Committee or the Market Surveillance Committee that is released prior to the expiration of the time for appeal to or call for review by the National Business Conduct Committee, NASD Regulation Board of Directors, or NASD Board of Governors, or while such an appeal or review is pending, is required to be accompanied by a statement that the findings and sanctions imposed in the decision may be increased, decreased, modified, or reversed if the matter is appealed or called for review.

      Any copy of a final decision of the NASD released prior to the expiration of the time period for the filing of an appeal to the SEC or while such an appeal is pending is required to be accompanied by a statement that the findings and sanctions of the NASD are subject to review with the SEC if the decision is appealed. Finally, any copy of a final decision of the NASD released after the decision is appealed to the SEC is required to be accompanied by a statement that the effectiveness of the decision has or has not been stayed pending the outcome of proceedings before the SEC.

      The NASD is also amending paragraph (a) of the Rule. Currently, the provision appears to prevent information from being provided through the Public Information Program (Program), i.e., the Central Registration Depository, if it has not been reported on Forms BD or U-4, even though Forms BD or U-4 would require the reporting of such information. This was not the intent of the current rule language. The NASD is, therefore, amending the provision to clarify that information provided through the Program is the same information that is required to be reported on Forms BD or U-4.

      NASD Regulation believes these changes will further protect investors and the public interest by providing more complete information with respect to the issuance of disciplinary complaints and decisions to persons requesting such documents. In addition, providing complete copies of complaints and decisions permits more complete disclosure of the surrounding facts and circumstances, in contrast to the abbreviated descriptions that are available through the Program.

      Questions regarding this Notice may be directed to Suzanne E. Rothwell, Associate General Counsel, NASD Regulation, at (202) 728-8247.


      Text Of Amendment

      (Note: New text is underlined; deletions are bracketed.)

      IM-8310-2. Release of Disciplinary Information

      (a) The Association shall, in response to a written inquiry or telephonic inquiry via a toll-free telephone listing, release certain information as contained in its files regarding the employment and disciplinary history of members and their associated persons, including information regarding past and present employment history with Association members; all final disciplinary actions taken by federal or state or foreign securities agencies or self-regulatory organizations that relate to securities or commodities transactions; all pending disciplinary actions that have been taken by federal or state securities agencies or self-regulatory organizations that relate to securities and commodities transactions and [have been] are required to be reported on Form BD or U-4 and all foreign government or self-regulatory organization disciplinary actions that are securities or commodities related and are required to be reported on Form BD or U-4; and all criminal indictments, informations or convictions that are required to be reported on Form BD or Form U-4. The Association will also release information concerning civil judgments and arbitration decisions in securities and commodities disputes involving public customers.
      (b) The Association shall, in response to a request, release to the requesting party a copy of any identified disciplinary complaint or disciplinary decision issued by the Association or any subsidiary or Committee thereof; provided, however, that each copy of:
      (1) a disciplinary complaint shall be accompanied by a statement that the issuance of a disciplinary complaint represents the initiation of a formal proceeding by the Association in which findings as to the allegations in the complaint have not been made and does not represent a decision as to any of the allegations contained in the complaint;
      (2) a disciplinary decision that is released prior to the expiration of the time period provided under the Code of Procedure for appeal or call for review within the Association or while such an appeal or call for review is pending, shall be accompanied by a statement that the findings and sanctions imposed in the decision may be increased, decreased, modified, or reversed by the Association;
      (3) a final decision of the Association that is released prior to the time period provided under the Securities Exchange Act of 1934 for appeal to the Commission or while such an appeal is pending, shall be accompanied by a statement that the findings and sanctions of the Association are subject to review and modification by the Commission; and
      (4) a final decision of the Association that is released after the decision is appealed to the Commission shall be accompanied by a statement as to whether the effectiveness of the sanctions has been stayed pending the outcome of proceedings before the Commission.

      Current paragraphs (b) through (k) are redesignated (c) through (l).


      1 Securities and Exchange Act Release No. 34-37797 (October 9, 1996); 61 FR 53984 (October 16, 1996).

      2 The Interpretation was previously cited as "Resolution of the Board of Governors— Notice to Membership and Press of Suspensions, Expulsions, Revocations, and Monetary Sanctions and Release of Certain Information Regarding Disciplinary History of Members and Their Associated Persons" and appeared after paragraph 2301 of the NASD Manual, following Article V, Section 1 of the Rules of Fair Practice.

      3 This amendment addresses only "disciplinary complaints," not "customer complaints."

    • 96-75 Fixed Income Pricing System Additions, Changes, and Deletions as of October 3, 1996

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      Suggested Routing

      Senior Management
      Corporate Finance
      Institutional
      Legal & Compliance
      Municipal
      Operations
      Systems
      Trading

      As of October 3, 1996, the following bonds were added to the Fixed Income Pricing System (FIPS).

      Symbol Name Coupon Maturity
      AMD.GA Advanced Micro Devices Inc 11.000 8/1/03
      WRSL.GC Weirton Steel 10.750 6/1/05
      IV.GBC Mark IV 7.750 4/1/06
      RAZR.GA Amer Safety Razor 9.875 8/1/05
      AMG.GA AMF Group Inc 12.250 3/15/06
      AMG.GB AMF Group Inc 10.875 3/15/06
      CLDR.GA Cliffs Drilling Co 10.250 5/15/05
      IMD.GC IMO Indus Inc 11.750 5/1/06
      SFXB.GB SFX Broadcasting Inc 10.750 5/15/06
      GBTV.GA Granite Broadcasting Corp 10.375 5/15/05
      GBTV.GB Granite Broadcasting Corp 9.375 12/1/05
      HOME.GA HomeSide Inc 11.250 5/15/03
      AETC.GA Applied Extrusion Tech Inc 11.500 4/1/02
      IFSI.GA Interface Inc 9.500 11/15/05
      RHC.GA Rio Hotel & Casino Inc 10.625 7/15/05
      FNRI.GB Flores & Rucks Inc 9.750 10/1/06
      IMTN.GA Iron Mountain Inc Del 10.125 10/1/06

      As of October 3, 1996, the following bonds were deleted from FIPS.

      Symbol Name Coupon Maturity
      DTLI.GA Dal-Tile Int'l Inc 00.000 7/15/98
      AGRP.GA Compact Video Inc 12.750 7/1/96
      OSYS.GA Outdoor Systems Inc 10.750 8/15/03
      PENT.GA Penn Traffic Company 10.250 2/15/02
      FFCH.GA First Fin'l Hldgs Inc 9.375 9/1/02
      TRNR.GB Trans-Res Inc 14.500 9/1/96
      UIS.GG Unisys Corp 9.750 9/15/96
      TRNL.GA Total Renal Care Inc 12.000 8/15/04
      AMS.GA American Shared Hospital Svcs 16.500 10/15/96

      All bonds listed above are subject to trade-reporting requirements. Questions pertaining to FIPS trade-reporting rules should be directed to James C. Dolan, NASD® Market Regulation, at (301) 590-6460. Any questions regarding the FIPS master file should be directed to Cheryl Glowacki, Nasdaq® Market Operations, at (203) 385-6310.

    • 96-74 Veterans' Day And Thanksgiving Day: Trade Date—Settlement Date Schedule

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      Suggested Routing

      Internal Audit
      Legal & Compliance
      Municipal
      Operations
      Syndicate
      Systems
      Trading

      Veterans' Day And Thanksgiving Day: Trade Date-Settlement Date Schedule

      The schedule of trade dates-settlement dates below reflects the observance by the financial community of Veterans' Day, Monday, November 11, 1996, and Thanksgiving Day, Thursday, November 28, 1996. On Monday, November 11, The Nasdaq Stock Market and the securities exchanges will be open for trading. However, it will not be a settlement date because many of the nation's banking institutions will be closed in observance of Veterans' Day. All securities markets will be closed on Thursday, November 28, in observance of Thanksgiving Day.

      Trade Date Settlement Date Reg. T Date*
      Nov. 5 Nov. 8 Nov. 12
      6 12 13
      7 13 14
      8 14 15
      11 14 18
      12 15 19
      22 27 Dec. 2
      25 29 3
      26 Dec. 2 4
      27 3 5
      28 Markets Closed
      29 4 6

      Note: November 11, 1996, is considered a business day for receiving customers' payments under Regulation T of the Federal Reserve Board.

      Transactions made on November 11 will be combined with transactions made on the previous business day, November 8, for settlement on November 14. Securities will not be quoted ex-dividend, and settlements, marks to the market, reclamations, and buy-ins and sell-outs, as provided in the Uniform Practice Code, will not be made and/or exercised on November 11.


      *Pursuant to Sections 220.8(b)(1) and (4) of Regulation T of the Federal Reserve Board, a broker/dealer must promptly cancel or otherwise liquidate a customer purchase transaction in a cash account if full payment is not received within five (5) business days of the date of purchase or, pursuant to Section 220.8(d)(1), make application to extend the time period specified. The date by which members must take such action is shown in the column entitled "Reg. T Date."

    • 96-73 Members Reminded To Report Executive Representative And Address Changes

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      SUGGESTED ROUTING

      Senior Management
      Legal & Compliance
      Registration

      Executive Summary

      The Office of the Corporate Secretary would like to remind members of the importance of keeping the names of Executive Representatives, as well as mailing addresses for branch offices, up-to-date. Making certain that the Central Registration Depository (CRD) is kept informed of changes in address and contact people, ensures that regular Notices and special mailings will be directed properly. It is especially important at this time because we are approaching the period for Fall elections.

      Article III, Section 3 of the NASD® By-Laws requires each member to appoint and certify to the NASD one "executive representative." The Executive Representative of your firm must be a registered principal and a senior manager within the firm. The individual designated will represent, vote, and act in all NASD affairs, and will receive NASD mailings, including Notices to Members, Regulatory & Compliance Alert, and updates to the NASD Manual.

      To change the address for mailings sent to branch offices, or to update the contact name, a properly executed Schedule E of Form BD must be sent to CRD. Notifications submitted on U.S. Post Office address change cards cannot be processed.

      To change the Executive Representative of your firm, you must submit written notification to the NASD Corporate Secretary. The form to use for this purpose is included with this Notice. You may submit the original or a photocopy to:

      Joan Conley
      Corporate Secretary
      National Association of Securities Dealers, Inc.
      c/o Membership Department
      9513 Key West Avenue
      Rockville, MD 20850-3389.




      EXECUTIVE REPRESENTATIVE FORM


      Date:_______________________________________________________________________________

      NASD Member Firm:__________________________________________________________________

      Firm CRD #:_________________________________________________________________________


      The NASD Member Firm referenced above designates (name)________________________________,
      Social Security #______________________________ , CRD #______________________________, as
      Executive Representative to the NASD of (date)_____________________. This person is a member of
      the firm's senior management and is a registered principal with the firm.


      Name of person preparing this form:______________________________________________________

      Telephone number:____________________________________________________________________




      Return this form to:

      Joan Conley, Corporate Secretary
      Executive Representative Program
      c/o Membership Department
      National Association of Securities Dealers, Inc.
      1390 Piccard Drive
      Rockville, MD 20850


    • 96-72 NASD Regulation Computerized Delivery Site Transition To Sylvan Continues

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      SUGGESTED ROUTING

      Senior Management
      Legal & Compliance
      Registration
      Training

      Executive Summary

      NASD Regulation, Inc. (NASD Regulation) as previously announced, has contracted with Sylvan Learning Systems, Inc., for the management and operation of its test center network. As the transition to the Sylvan Network proceeds, a limited number of current PROCTOR® Certification and Training Centers will be replaced by authorized Sylvan Technology Centers beginning in November 1996. The goal is to make the transition to the replacement locations as seamless to the candidates as possible. To prevent misinformation, candidates wanting appointments should continue to call the current PROCTOR Certification and Training Centers to schedule appointments. Candidates will be instructed by their local center on the details of the transition as it relates to their requested appointment date.

      Questions regarding locations available for computerized delivery of Qualification Examinations and the Continuing Education Program's computer-based training (CBT) should be directed to the Quality & Service Teams.

      Quality & Service Team 1
      (301) 921-9499

      Quality & Service Team 2
      (301) 921-9444

      Quality & Service Team 3
      (301) 921-9445

      Quality & Service Team 4
      (301) 921-6664

      Quality & Service Team 5
      (301) 921-6665

      Status Of The Transition

      A limited number of PROCTOR Certification and Training Centers will be replaced by at least one authorized Sylvan Technology Center in the same geographic area beginning in November 1996. As these sites become available, the PROCTOR Certification and Training Centers affected by the transition will be instructing candidates to call for details on the transition of each site. The transition schedule varies by site and has numerous dependencies making it difficult to publish a schedule for all sites that will not change. For this reason candidates should continue to contact their local PROCTOR Certification and Training Center to obtain the most current information regarding appointment scheduling.

      In December 1996, additional authorized Sylvan Technology Centers in different geographic areas will be available for delivery. Scheduling appointments at any of the authorized Sylvan Technology Centers will be available through an 800 number using Sylvan's National Registration Center. Once the transition to the Sylvan Technology Centers is complete, a list of locations with addresses and phone numbers will be published. Please watch for further communications regarding additional sites in future Notices to Members.

    • 96-71 Broker/Dealer And Agent Renewals For 1997

      Executive Summary

      The 1996-97 NASD broker/dealer and agent registration renewal cycle begins in early November. This program simplifies the registration renewal process through the payment of one invoiced amount that will include fees for NASD® personnel assessments, NASD branch-office fees, and American Stock Exchange (ASE), Chicago Board Options Exchange (CBOE), New York Stock Exchange (NYSE), Pacific Stock Exchange (PSE), and Philadelphia Stock Exchange (PHLX) maintenance fees. The invoice also includes state agent renewal fees and state broker/dealer renewal fees.

      Members should read this Notice and the instruction materials that will be sent with the November invoice package to ensure continued eligibility to do business in their respective states effective January 1, 1997.

      Questions concerning this Notice may be directed to the firm's assigned Quality & Service Team.

      Quality & Service Team 1
      (301) 921-9499

      Quality & Service Team 2
      (301) 921-9444

      Quality & Service Team 3
      (301) 921-9445

      Quality & Service Team 4
      (301) 921-6664

      Quality & Service Team 5
      (301) 921-6665

    • 96-70 NASD Reminds Members Of Prohibition Against Commercial Use Of Information Filed Under The Federal Election Campaign Act

      Executive Summary

      The Federal Election Campaign Act requires federal candidates and political committees that influence federal elections to file various reports and statements with the Federal Election Commission (FEC) and state governments, including lists of individual contributors. These reports and statements may be inspected and copied by anyone, but the names and addresses of individual contributors may not be sold or used for commercial purposes, such as for cold calling by a brokerage firm. Members are reminded that such practices or other commercial use of information derived from FEC reports is illegal and also would constitute a violation of NASD® Rule 2110 (formerly Article III, Section 1 of the NASD Rules of Fair Practice).

      Questions regarding this Notice should be directed to Mary Dunbar in the Office of the General Counsel, NASD Regulation, (202) 728-8252.

    • 96-69 Industry/Regulatory Council On Continuing Education Issues Update On The Status Of The Securities Industry Continuing Education Program

      Executive Summary

      On February 8, 1995, the Securities and Exchange Commission (SEC) approved Rule 1120 (formerly Schedule C, Part XII of the NASD® By-Laws) of the NASD Membership and Registration Rules which prescribes requirements for the Securities Industry Continuing Education Program (Program). The Program has two elements-a Regulatory Element and a Firm Element, and became effective July 1, 1995.

      The Securities Industry/Regulatory Council on Continuing Education (Council) includes 13 members representing a cross-section of securities firms and six self-regulatory organizations. Both the SEC and the North American Securities Administrators Association have appointed liaisons to the Council.

      The Council facilitates industry/regulatory coordination of the administration and future development of the Program. Council duties include recommending and helping to develop specific content and questions for the Regulatory Element, and minimum core curricula for the Firm Element. The Council also periodically reports on the Program's progress, and issues guidelines to help broker/dealers comply with the requirements of the Firm Element. The first Status Report and Guidelines were issued by the Council in March 1995 (See Special Notice to Members 95-13). Following this Notice is a revised Status Report, a revised question-and-answer section on the Regulatory and Firm Elements, and a revised Guidelines For Firm Element Training. These documents address questions about the Program that have been raised by firms. Although there are no changes to the content of the Regulatory Element computer-based training, the Content Outline For The Regulatory Element has also been included.

      Questions about this Notice may be directed to any of the following NASD RegulationSM staff: John Linnehan, Director, Continuing Education, at (301) 208-2932; Frank J. McAuliffe, Vice President, Qualifications, Examinations, and Continuing Education, at (301) 590-6694; or Daniel M. Sibears, Vice President, District Oversight, at (202) 728-6911.

    • 96-68 NASD Solicits Member Comment On Proposed Rules Relating To Prospectus Disclosure Of Cash And Non-Cash Compensation For The Sale Of Investment Company Securities

      Executive Summary

      The NASD requests member comment on proposed amendments to Rule 2830 (formerly Article III, Section 26 of the NASD® Rules of Fair Practice) of the NASD's Conduct Rules (Investment Company Rule) that would: (1) expand the current definitions of cash compensation and non-cash compensation, (2) revise the current prospectus disclosure provisions to prohibit a member from participating in the sale of investment company securities or providing services to an offeror of such securities unless the cash or non-cash compensation that is or may be received by the member or its associated persons is described in a current prospectus of the investment company, and (3) provide specific guidance regarding what must be disclosed and where in the prospectus the disclosure must be located.

      Questions concerning this Notice should be directed to R. Clark Hooper, Senior Vice President, Office of Disclosure and Investor Protection, NASD Regulation, at (202) 728-8325; or Robert J. Smith, Senior Attorney, Office of General Counsel, NASD Regulation, at (202) 728-8176.

    • 96-67 Bank Secrecy Act Recordkeeping Rule For Funds Transfers And Transmittals Of Funds

      Executive Summary

      The Department of the Treasury's (Treasury) amendments to the Bank Secrecy Act (BSA), which facilitate tracing funds through the funds-transmittal process, became effective May 28, 1996. For transmittals of funds of $3,000 or more, broker/ dealers are required to obtain and keep certain specified information concerning the transmitter and the recipient of those funds. In addition, broker/dealers must include this information on the actual transmittal order.

      Questions regarding this Notice may be directed to Samuel Luque, Jr., Associate Director, Compliance, NASD Regulation, at (202) 728-8472 or Susan DeMando, District Coordinator, Compliance, NASD Regulation, at (202) 728-8411.

    • 96-66 SEC Expands Scope Of Conduct Rules And Other NASD Rules To Government Securities; Approves New Suitability Interpretation

      Executive Summary

      The Government Securities Act Amendments of 1993 (GSAA) eliminated the statutory limitations on NASD® authority to apply sales-practice rules to transactions in exempted securities, including government securities, other than municipals. On August 20, 1996, the Securities and Exchange Commission (SEC) approved amendments implementing the expanded sales-practice authority granted to the NASD pursuant to the GSAA.

      General Provisions Rule 0114 is retitled "Effect on Transactions in Municipal Securities" and amended to apply the NASD Conduct Rules and other Rules to transactions in exempted securities, including government securities, other than municipals. Rule 0115 "Applicability" is amended to apply the NASD Conduct Rules and other Rules to members registered with the SEC solely under the provisions of Section 15(C) of the Securities Exchange Act of 1934 (Act), and to persons associated with such members.

      The application of the Conduct Rules to government securities transactions is provided in Table 1 of this Notice. Amendments to the text of certain Conduct Rules are amended to further clarify their application to exempted securities, including government securities, other than municipals. As indicated in Table 1, certain Conduct Rules will not immediately apply to transactions in government securities. These are IM-2110-2 "Trading Ahead of Customer Limit Order"; IM-2110-3 "Front-Running Policy"; IM-2110-4 "Trading Ahead of Research Reports"; Rule 2440 "Fair Prices and Commissions"; IM-2440 "Mark-Up Policy"; and Rule 2760 "Offerings At the Market." The NASD intends to review the specific application of these rules to the government securities market. In the interim, NASD members are reminded that actions for conduct generally encompassed by these Rules occurring in the government securities market may be brought under Rule 2110 "Standards of Commercial Honor and Principles of Trade."

      Rule 1060 "Persons Exempt from Registration" is amended to eliminate the registration exemption for persons associated with a member whose functions are related solely and exclusively to transactions in exempted securities. Rule 1060, however, continues to exempt persons associated with a member whose functions are related solely and exclusively to transactions in municipal securities.

      As indicated in Table 2, the NASD's Government Securities Rules are merged, where applicable, into the NASD's Conduct Rules and other Rules. Conforming amendments also are made throughout the NASD Manual to delete references to the Government Securities Rules and to replace the term exempted securities with the term municipal securities.

      The SEC also approved the NASD Board of Governors interpretation regarding Suitability Obligations to Institutional Customers. The interpretation further clarifies how the NASD's Suitability Rule 2310 "Recommendations to Customers" is applicable to institutional customers. The new interpretation applies to all debt and equity securities, except municipals. Changes regarding Rule 2340 "Customer Account Statements," Rule 3010 "Supervision," Rule 3020 "Fidelity Bonds," and Rule 3110 "Books & Records" will be effective on November 18, 1996. All other changes were effective on August 20, 1996.

      Please refer to your NASD Manual Conversion chart for references to the old Rule language if necessary.

      Questions regarding this Notice may be directed to any of the following NASD RegulationSM staff: Robert M. Broughton, Compliance, at (202) 728-8361, Samuel Luque, Jr., Associate Director, Compliance, at (202) 728-8472, and Thomas R. Cassella, Vice President, Compliance, at (202) 728-8237.

    • 96-65 New SEC Rules On Order Handling And Execution Of Customer Orders

      Executive Summary

      On August 29, 1996, the Securities and Exchange Commission (SEC) adopted significant market structure rules under the Securities Exchange Act of 1934 (Act) involving the handling and execution of customer limit orders. This Notice to Members is being issued to alert members to these important changes by providing a general description of the new rules and a complete copy of the SEC release as published in the Federal Register. Members are urged to review the SEC release to determine exactly how the rules affect them, paying specific attention to the SEC discussion on best execution, which is summarized at the end of this Notice.

      The changes include a new rule, SEC Rule 11Ac1-4 (Display Rule), governing the display of limit orders that will require market makers to display in their quote, the price and full size of customer limit orders, and several amendments to SEC Rule 11Ac1-1 (Quote Rule), including: (1) the requirement that market makers display in their quote any better priced orders that the market maker places into an electronic communications network (ECN) such as SelectNet or Instinet, unless an alternative provided by the rule is available; (2) mandatory market-maker registration in exchange-listed securities for market makers that account for one percent or more of the trading volume in any such security; and (3) an expanded definition of the term OTC Market Maker to include broker/dealers that internalize order flow or hold themselves out only to particular firms.

      The Quote Rule amendmentswill become effective January 10, 1997. The Display Rule requirements will be phased-inbeginning January 10, 1997, according to the implementation schedule included at the endof this Notice.

      Questions about this Notice may be directed to the Office of General Counsel, The Nasdaq Stock Market, at (202) 728-8294.

    • 96-64 Fixed Income Pricing System Additions, Changes, and Deletions as of August 28, 1996

      As of August 28, 1996, the following bonds were added to the Fixed Income Pricing System (FIPS).

      Symbol Name Coupon Maturity
      CQB.GH Chiquita Brands Intl 10.25 11/01/06
      KR.GJ Kroger Co 8.15 7/15/06
      SCR.GD Sea Containers Ltd 10.5 7/1/03
      GBPI.GA Golden Books Publishing Inc 7.65 9/15/02
      ORX.GI Oryx Energy 8.375 7/15/04
      CSNO.GB Casino America Inc 12.5 8/1/03
      PIOS.GA Pioneer Std Electric Inc 8.5 8/1/03
      PHCR.GB Paracelsus Healthcare 10 8/15/06
      GRHD.GA Greyhound Dial Corp 10.5 5/15/06
      CFN.GA ContiFinancial Corp 8.375 8/15/03
      HAYN.GA Haynes Int'l Inc 11.625 9/1/04
      ENQ.GA Amer Media Operations Inc 0 5/15/97

      As of August 28, 1996, the following bonds were deleted from FIPS.

      Symbol Name Coupon Maturity
      CYH.GA Community Health Systems Inc 10.250 11/30/03
      CVC.GH Cablevision Systems NA NA
      USTR.GA US Trails Inc 12.000 7/15/98
      NWAI.GA NWA Inc 8.625 8/1/96

      As of August 28, 1996, changes were made to the names and symbols of the following FIPS bonds:

      New Symbol New Name Old Symbol Old Name
      VICN.GD Viacomm Int'l Inc PARA.GA Paramount Comm
      VINC.GE Viacomm Int'l Inc PARA.GB Paramount Comm

      As of August 28, 1996, changes were made to the symbols of the following FIPS bonds:

      New Symbol Old Symbol Name Coupon Maturity
      ENU.GA ENQ.GA Enquirer/Star Inc 10.375 5/15/02
      ENU.GB ENQ.GB Enquirer/Star Inc 0.000 5/15/97

      All bonds listed above are subject to trade-reporting requirements. Questions pertaining to FIPS trade-reporting rules should be directed to James C. Dolan, NASD Market Surveillance, at (301) 590-6460.

    • 96-63 Columbus Day: Trade Date — Settlement Date Schedule

      Executive Summary

      The schedule of trade dates-settlement dates below reflects the observance by the financial community of Columbus Day, Monday, October 14, 1996. On this day, The Nasdaq Stock Market, Inc., and the securities exchanges will be open for trading. However, it will not be a settlement date because many of the nation's banking institutions will be closed.

      Trade Date Settlement Date Reg. T Date *
      Oct. 7 Oct. 10 Oct. 14
      8 11 15
      9 15 16
      10 16 17
      11 17 18
      14 17 21
      15 18 22
       
      * Pursuant to Sections 220.8(b)(1) and (4) of Regulation T of the Federal Reserve Board, a broker/dealer must promptly cancel or otherwise liquidate a customer purchase transaction in a cash account if full payment is not received within five (5) business days of the date of purchase or, pursuant to Section 220.8(d)(1), make application to extend the time period specified. The date by which members must take such action is shown in the column entitled "Reg. T Date."

      Brokers, dealers, and municipal securities dealers should use the foregoing settlement dates for purposes of clearing and settling transactions pursuant to the NASD Uniform Practice Code and Municipal Securities Rulemaking Board Rule G-12 on Uniform Practice.

      Questions regarding the application of those settlement dates to a particular situation may be directed to the NASD Uniform Practice Department at (203) 375-9609.

    • 96-62 SOES Tier Levels Set To Change October 1, 1996

      Executive Summary

      Effective October 1, 1996, tier sizes for 591 Nasdaq National Market® securities will be revised in accordance with NASD Rule 4710(g) [formerly ¶ 2451a7 of the Rules of Practice and Procedure for the Small Order Execution System (SOES)].

      For more information, please contact Nasdaq Market Operations at (203) 378-0284.

    • 96-61 NASD Regulation Computerized Delivery Site Transition Continues

      Executive Summary

      The transition of the current NASD PROCTOR® Certification and Training Centers into the Sylvan Network is on schedule. Authorized Sylvan Technology Centers will begin computerized delivery of Qualifications Examinations and the Continuing Education Program's computer-based training (CBT) in mid-November 1996. Questions regarding locations available for computerized delivery of Qualification Examinations and CBT should be directed to the Quality & Service Teams.

    • 96-60 Clarification Of Members' Suitability Responsibilities Under NASD Rules With Special Emphasis On Member Activities In Speculative And Low-Priced Securities

      View PDF File

      SUGGESTED ROUTING

      Senior Management
      Registered Representatives
      Advertising
      Corporate Finance
      Government Securities
      Institutional
      Internal Audit
      Legal & Compliance
      Municipal
      Mutual Fund
      Operations
      Options
      Registration
      Research
      Syndicate
      Systems
      Trading
      Training

      Executive Summary

      In Notice to Members 96-32, NASD Regulation, Inc. (NASD Regulation) informed the membership of its concerns over unusual and increased trading in speculative or low-priced securities. The Notice was intended, among other things, to remind members of their fair dealing and suitability responsibilities to customers under NASD® rules. NASD Regulation is publishing this Notice to supplement Notice to Members 96-32 and to clarify certain issues addressed in that Notice.

      Questions regarding this Notice may be directed to Daniel M. Sibears, Member Regulation, NASD Regulation, at (202) 728-6911; or David Spotts, Office of General Counsel, NASD Regulation, at (202) 728-8014.

      Discussion

      Notice to Members 96-32, published May 9, 1996, urged members to focus particular attention on certain rules, regulations, and best practices when dealing with customers in speculative or low-priced securities. It focused on NASD Regulation's concern for potential abusive conduct in connection with the sale of such securities, including market manipulation, misrepresentations, high pressure sales tactics, and fraudulent markups. In particular, NASD Regulation emphasized suitability, disclosure, valuations, supervision, and cold calling as areas in which members must take special care in discharging obligations to customers, especially when dealing in speculative or low-priced securities.

      The purpose of this Notice is to supplement Notice to Members 96-32, and to clarify members' suitability obligations to customers under NASD rules.

      Suitability Obligation

      NASD Rule 2310 (formerly Article III, Section 2 of the NASD Rules of Fair Practice) provides that in recommending to a customer the purchase, sale, or exchange of any security, a member shall have reasonable grounds for believing that the recommendation is suitable for such customer upon the basis of facts available, including other security holdings, financial situation, and needs.

      The suitability rule was amended in 1990 to require that, for all accounts opened and recommendations made after January 1, 1991, members make reasonable efforts to obtain certain information from each non-institutional customer before executing a recommended transaction (excluding transactions in money market mutual funds) including the customer's financial status, tax status, investment objectives, and other information considered to be reasonable in making recommendations to customers.

      In discussing suitability determinations, Notice to Members 96-32 included a statement that the NASD Rules of Fair Practice "requires a careful review of the appropriateness of transactions in low-priced, speculative securities, whether solicited or unsolicited." It is the reference to unsolicited transactions that NASD Regulation wishes to clarify.

      A member's suitability obligation under Rule 2310 applies only to securities that have been recommended by the member. It would not apply, therefore, to situations in which a member acts solely as an order-taker for persons who, on their own initiative, effect transactions without a recommendation from the member (See SEC Release No. 34-27160, August 22, 1989). However, a broad range of circumstances may cause a transaction to be considered recommended, and this determination does not depend on the classification of the transaction by a particular member as "solicited" or "unsolicited." In particular, a transaction will be considered to be recommended when the member or its associated person brings a specific security to the attention of the customer through any means, including, but not limited to, direct telephone communication, the delivery of promotional material through the mail, or the transmission of electronic messages.

    • 96-59 NASD Solicits Member Comment On Proposed Rule Governing Tape Recording Of Telephone Conversations

      Comment Period Expires: October 31, 1996

      Executive Summary

      The NASD requests comment on proposed amendments to NASD® Rule 3010 (formerly NASD Rules of Fair Practice, Article III, Section 27) to adopt a rule requiring each member firm whose work force is comprised of a specified number of persons that have been associated with a disciplined firm, or each member firm that is itself a disciplined firm, to tape-record telephone conversations of all of its associated persons. The proposed Rule responds to concerns expressed in the SEC/SRO/NASAA Joint Regulatory Sales Practice Sweep Report regarding the need for heightened supervision of certain registered representatives with troubled regulatory and compliance records. The text of the proposed Rule follows the Notice.

      Questions concerning this Notice may be directed to Mary Revell, Assistant General Counsel, NASD Regulation, Inc., at (202) 728-8203.

    • 96-58 Approval Of Amendments That Require Members To Provide Information To Other Regulators For Regulatory Purposes

      Executive Summary

      The Securities and Exchange Commission (SEC) has approved amendments to NASD® Rule 8210 (formerly Article IV, Section 5 of the NASD Rules of Fair Practice) to require members and their associated persons to provide information in connection with investigations being conducted by other regulatory organizations and to NASD Rules 8210 and 8220 (formerly Article IV, Section 5 of the NASD Rules of Fair Practice) to conform the language in the Rules to definitions and relevant titles of the Code of Procedure. The amendments are effective immediately.

      Questions regarding this Notice should be directed to Joseph Alotto, Market Surveillance, NASD Regulation, Inc., at (301) 590-6845.

    • 96-57 Fixed Income Pricing System Additions, Changes, and Deletions as of July 30, 1996

      View PDF File

      Suggested Routing

      Senior Management
      Corporate Finance
      Institutional
      Legal & Compliance
      Municipal
      Operations
      Systems
      Trading

      As of July 30, 1996, the following bonds were added to the Fixed Income Pricing System (FIPSSM).

      Symbol Name Coupon Maturity
      MEOP.GA Mesa Operating Company 10.625 7/1/06
      MEOP.GB Mesa Operating Company 11.625 7/1/06
      LEAC.GA Lear Corp 9.500 7/15/06
      TCGI.GA Teleport Communications Group Inc 9.875 7/1/06
      TCGI.GB Teleport Communications Group Inc 11.125 7/1/07
      EX.GB Exide Corp 12.250 12/15/04
      RYL.GC Ryland Group Inc 10.500 7/1/06
      ICIX.GA Intermedia Communications Inc 12.500 5/15/06
      HAY.GB Hayes Wheels Intl 11.000 7/15/06
      NDCO.GB Noble Drilling Corp 9.125 7/1/06
      RENC.GA Renco Metals Inc 11.500 7/1/03

      All bonds listed above are subject to trade-reporting requirements. Questions pertaining to trade-reporting rules should be directed to James C. Dolan, NASD Market Surveillance, at (301) 590-6460.

    • 96-56 Labor Day: Trade Date — Settlement Date Schedule

      View PDF File

      Suggested Routing

      Internal Audit
      Legal & Compliance
      Municipal
      Operations
      Syndicate
      Systems
      Trading

      Labor Day: Trade Date — Settlement Date Schedule

      The Nasdaq Stock MarketSM and the securities exchanges will be closed on Monday, September 2, 1996, in observance of Labor Day. "Regular way" transactions made on the business days noted below will be subject to the following schedule:

      Trade Date Settlement Date Reg. T Date*
      Aug. 27 Aug. 30 Sept. 4
      28 Sept. 3 5
      29 4 6
      30 5 9
      Sept. 2 Markets Closed
      3 6 10

      Brokers, dealers, and municipal securities dealers should use the foregoing settlement dates for purposes of clearing and settling transactions pursuant to the NASD Uniform Practice Code and Municipal Securities Rulemaking Board Rule G-12 on Uniform Practice.

      Questions regarding the application of those settlement dates to a particular situation may be directed to the NASD Uniform Practice Department at (203) 375-9609.


      * Pursuant to Sections 220.8(b)(1) and (4) of Regulation T of the Federal Reserve Board, a broker/dealer must promptly cancel or otherwise liquidate a customer purchase transaction in a cash account if full payment is not received within five (5) business days of the date of purchase or, pursuant to Section 220.8(d)(1), make application to extend the time period specified. The date by which members must take such action is shown in the column entitled "Reg. T Date."

    • 96-55 NASD Regulation Offers Software To Help Members Comply With Continuing Education Requirements

      Executive Summary

      Release 2.0 is the new, improved version of the Training Analysis and Planning Tool designed to help NASD® members comply with the Firm Element of the securities industry Continuing Education Program. The Firm Element applies to registered persons or their supervisors who deal directly with customers in conducting sales, trading, and investment banking activities for member firms. Industry rules require members to complete a training needs analysis and also to develop and implement a written training plan. Release 2.0, which comes in a user-friendly, picture-puzzle format, makes that easy.

      Release 2.0 is fully compatible with and builds significantly on the capabilities and functionality of Release 1.0. Fueled by information provided by industry members, this upgraded version includes significant new features that help member firms prepare training schedules, track the progress of covered persons, and comply with the recordkeeping requirements of the Continuing Education Program. It also offers an indexed listing of more than 700 training resources from 50 vendors, enabling member firms to match their own training needs with the individual training needs of covered persons. While this unique software can help members meet their Continuing Education requirements, it should not be viewed as a "safe harbor."

      For more information, contact NASD Regulation, Inc., Regulatory Systems hotline at (800) 321-NASD.

    • 96-54 NASD Regulation Reminds Members Of Reporting Obligations Of MSRB Rules G-37 And G-38, And Announces Sanction Guidelines For Failure To Report Form G-37/G-38

      Executive Summary

      NASD Regulation, Inc. (NASD RegulationSM) again reminds members of their reporting obligations under Municipal Securities Rulemaking Board (MSRB) Rules G-37 and G-38. Members are required to submit Form G-37/G-38 to the MSRB within 30 calendar days after the end of each calendar quarter if any one of the following occurred during the reporting period: reportable political contributions to issuer officials or payments to political parties were made; the dealer engaged in municipal securities business; or the dealer used consultants to obtain or retain municipal securities business (i.e., new or continuing relationships with consultants). Failure to timely report information required by Rules G-37 and G-38 and patterns of filing deficiencies could result in a monetary sanction, suspension, and/or bar. On July 18, 1996, the NASD Regulation National Business Conduct Committee (NBCC) approved Sanction Guidelines for G-37/G-38 reporting violations. These guidelines are effective immediately and are provided at the end of this Notice.

      Questions regarding this Notice may be directed to Thomas R. Cassella, Vice President, NASD Regulation Compliance Department, at (202) 728-8237, or Samuel Luque, Jr., Associate Director, NASD Regulation Compliance, at (202) 728-8472.

    • 96-53 Approval Of Amendments To The Definitions Of Bona Fide Independent Market And Bona Fide Independent Market Maker

      Executive Summary

      The Securities and Exchange Commission (SEC) has approved amendments to the definitions of "Bona Fide Independent Market" and "Bona Fide Independent Market Maker" in Rule 2720 of the NASD's Conduct Rules (Rule) (formerly Schedule E to the NASD's By-Laws). The approved amendments revise the definitions to determine eligibility for an exception from the qualified independent underwriter requirement in Rule 2720 for an equity offering of a member's own securities or securities of its parent, an affiliate, or an issuer with whom the member has a conflict of interest. The amendments are effective immediately and will apply to offerings filed after the publication of this Notice to Members.

      Questions regarding this Notice should be directed to Richard J. Fortwengler, Associate Director, or Paul Mathews, Supervisor, Corporate Financing Department, both at (301) 208-2700; and Robert J. Smith, Senior Attorney, Office of General Counsel, NASD Regulation, Inc., at (202) 728-8176.

    • 96-52 NASD Solicits Member Comments On Proposed Rules Relating To The Sale Of Variable Life Insurance Contracts And Variable Annuity Contracts

      Executive Summary

      The NASD® requests member comments on proposed amendments that would revise existing rules applicable to the sale of variable life insurance contracts and establish new rules applicable to the sale of variable annuity contracts. The proposed amendments incorporate definitions and provisions from the current rules for variable contracts and investment company securities and the proposed rules pending with the Securities and Exchange Commission (SEC) to regulate the receipt of cash and non-cash compensation. The key provisions are a prohibition from favoring or disfavoring the sale of a variable life insurance or variable annuity contract on the basis of brokerage commissions received by a member and a requirement that categories of cash and non-cash compensation that may be received by a member or its associated persons in connection with the sale and distribution of variable life insurance or variable annuity contracts be disclosed in the prospectus.

      Questions concerning this Notice should be directed to Clark Hooper, Senior Vice-President, Office of Disclosure and Investor Protection, NASD Regulation, Inc., at (202) 728-8325; and Robert J. Smith, Senior Attorney, Office of General Counsel, NASD Regulation, Inc., at (202) 728-8176.

    • 96-51 Fixed Income Pricing System Additions, Changes, and Deletions as of June 28, 1996

      View PDF File

      Suggested Routing

      Senior Management
      Corporate Finance
      Institutional
      Legal & Compliance
      Municipal
      Operations
      Systems
      Training

      As of June 28, 1996, the following bonds were added to the Fixed Income Pricing System (FIPSSM).

      Symbol Name Coupon Maturity
      APSO.GA Apple South Inc 9.750 6/1/06
      CNC.GB Conseco Inc 10.500 12/15/04
      PENT.GA Penn Traffic Company 10.250 2/15/02
      TOS.GD Tosco Corp 7.625 5/15/06
      WWCA.GA Western Wireless Corp 10.500 6/1/06
      PNF.GH Penn Traffic Co New 10.650 11/1/04
      HVY.GA Harveys Casino Resorts 10.625 6/1/06
      PNET.GA Pronet Inc 10.875 9/15/06
      DMN.GA Dimon Inc 8.875 6/1/06
      OS.GA Oregon Steel Mills Inc 11.000 6/15/03
      ALLY.GA Alliance Gaming Corp 12.875 6/30/03
      GASI.GA Greenwich Air Services 10.500 6/1/06
      JCAC.GA JCAC Inc 10.125 6/15/06
      FMO.GA Federal Mogul Corp 7.500 1/15/98
      WYN.GA Wyndham Hotel Corp 10.500 5/15/06
      COLA.GA Collins & Aikman Products Co 11.500 4/15/06

      All bonds listed above are subject to trade-reporting requirements. Questions pertaining to trade-reporting rules should be directed to James C. Dolan, NASD Market Surveillance, at (301) 590-6460.

    • 96-50 Supervisory And Other Obligations Related To Use Of Electronic Media

      Executive Summary

      NASD Regulation, Inc. (NASD Regulation) recently has observed a correlation between sharp increases in the volume of electronic messages relating to certain low-priced securities and dramatic increases in the price, volatility, and volume of these securities. Often, these messages are sent without attribution to a large, undifferentiated universe of Internet or on-line subscribers and contain unverified or unverifiable information concerning the merits of particular securities. This development, along with the potential that associated persons may use the Internet or other electronic media to communicate messages concerning particular securities to the investing public, raises important regulatory issues.

      While NASD Regulation is not concerned about member use of the Internet or other electronic media for legitimate purposes, we are issuing this Notice to Members to emphasize to members their supervisory and regulatory responsibilities, as well as their obligations to customers, when dealing with stocks promoted on the Internet or other electronic media, and their supervisory obligations with respect to the use of such media by their associated persons. In addition, this Notice to Members solicits comment on current practices in the use of electronic media to communicate with customers and the investing public generally concerning the merits of particular securities, with a view to determining the need for further specific guidance concerning supervisory responsibilities or regulatory action.

      Questions or comments concerning this Notice may be directed to Mary Revell, Assistant General Counsel, NASD Regulation, at (202) 728-8203.

    • 96-49 Members Reminded To Report Address, Contact Changes To NASD

      Executive Summary

      The Membership Department would like to remind members of the importance of keeping the names of executive representatives, as well as mailing addresses for branch offices, up-to-date. Making certain that the Central Registration Depository (CRDSM) is kept informed of changes in address and contact people, ensures that regular Notices and special mailings will be directed properly.

      Article III, Section 3 of the NASD By-Laws requires each member to appoint and certify to the NASD one "executive representative." The executive representative of your firm must be a registered principal and a senior manager within the firm. The individual designated will represent, vote, and act in all NASD affairs, and will receive NASD mailings, including Notices to Members, Regulatory & Compliance Alert, and updates to the NASD Manual.

      To change the address for mailings sent to branch offices, or to update the contact name, a properly executed Schedule E of Form BD must be sent to CRD. Notifications submitted on U.S. Post Office address change cards cannot be processed.

      To change the executive representative of your firm, you must submit written notification to the NASD Corporate Secretary by filling out an Executive Representative Form. You may submit the original or a photocopy to:

      Joan Conley
      Corporate Secretary
      National Association of Securities Dealers, Inc.
      c/o Membership Department
      9513 Key West Avenue
      Rockville, MD 20850-3389. 

    • 96-48 New London Training Center; Registered Representatives In England, Scotland, And Wales Must Comply With Continuing Education Requirements

      Executive Summary

      Effective July 1, 1996, NASD Regulation, Inc. (NASD Regulation) will begin accepting appointments at the Certification and Training Center in London, England, at which registered representatives can complete the computer-based training required under the Regulatory Element of the securities industry Continuing Education Program (CEP). Also effective July 1, NASD Regulation will no longer grant deferrals of Continuing Education Regulatory Element windows to registered representatives who reside in England, Scotland, or Wales.

      Questions concerning this Notice may be directed to John Linnehan, Director, Continuing Education, at (301) 208-2932, or to your Quality & Service Team.

    • 96-47 NASD Regulation, Inc., Expanding Computerized Delivery Sites

      Executive Summary

      NASD Regulation, Inc., as part of its continuing efforts to provide additional locations for computerized delivery of Qualification Examinations and the Regulatory Element of the Continuing Education Program (CEP), has contracted with Sylvan Learning Systems, Inc. (Sylvan), for the management and operation of its test center network. The transition of the current NASD PROCTOR Certification and Training Centers into the Sylvan Network will begin mid-November 1996 and continue into 1997.

      Questions regarding locations available for computerized delivery of Qualification Examinations and CEP should be directed to your Quality & Service Team.

    • 96-46 CRD Disclosure Conversion

      Executive Summary

      The Central Registration Depository (CRDSM), a computerized database containing information on all licensed registered representatives and broker/dealers, is undergoing a technological upgrade. As part of this project, the NASD has converted disclosure information from its current state (free text) into a new format (Windows-based, with discrete fields and pick lists). This Notice explains the disclosure conversion process, alerts members to the disclosure roster mailings that will begin shortly, and covers the procedures members should follow in reviewing these disclosure rosters. Because the converted disclosure data will form the basis of information released to the public pursuant to the NASD Regulation Public Disclosure Program, members are urged to review this data at their earliest opportunity.

      Questions about this Notice may be directed to the NASD Regulation Disclosure Conversion Team at (703) 227-2700.

    • 96-45 NASD Appoints Ombudsman

      Executive Summary

      The NASD today appointed Bernard Thompson as Ombudsman for the NASD and its subsidiaries, The Nasdaq Stock Market, Inc., and NASD Regulation, Inc. The Ombudsman position has been created within the NASD's Department of Internal Review. The Ombudsman will serve as an alternative dispute resolution practitioner. His primary objective is to find an acceptable solution to problems and concerns that meet the needs of both the individual and the NASD. The Ombudsman will act in an objective and confidential manner to resolve matters that fall outside established forums and to ensure that existing structural operations are functioning equitably.

      The Ombudsman's role will not displace the NASD's existing procedures for handling customer complaints, members' disciplinary grievances, arbitration matters, or issuer concerns.

      Questions regarding this Notice should be directed to the Department of Internal Review at (202) 728-8973 or (202) 728-8442.

    • 96-44 NASD Interprets NASD Rule 2110 And Files Telemarketing Rule Changes With SEC

      Executive Summary

      As members are aware, abusive communications between members and their associated persons with customers or associated persons of other members is considered conduct that is inconsistent with the requirement that members shall observe high standards of commercial honor and just and equitable principles of trade as contained in NASD's fundamental rule of ethical practice--NASD Rule 2110 (formerly Article III, Section 1 of the NASD Rules of Fair Practice). The Federal Trade Commission (FTC) has issued regulations prescribing deceptive and abusive acts and practices in connection with telephone solicitation to market products and services (telemarketing).

      Although the FTC Rules are not applicable to broker/dealers, under the Telemarketing and Consumer Fraud Prevention Act (Prevention Act), the Securities and Exchange Commission (SEC) or the self-regulatory organizations (SROs) must either have rules similar to the FTC Rules or adopt such rules. Consistent with the rules adopted by the FTC and prior NASD interpretation and policy, the NASD is advising its membership that it is inherent in and implied by the provisions of Rule 2110 that members and their associated persons shall not engage in communications with customers that constitute threats, intimidation, the use of profane or obscene language, or calling a person repeatedly on the telephone to annoy, abuse, or harass the called party.

      Members and their associated persons that engage in such abusive activity shall be subject to disciplinary action by the NASD. Moreover, the NASD has filed with the SEC on June 28, 1996, proposed amendments to its rules that would implement certain parts of the regulations adopted by the Federal Communications Commission (FCC) and FTC. The rule amendments will not be effective until approved by the SEC.

      Questions regarding this Notice may be directed to Suzanne E. Rothwell, at (202) 728-8247, or Robert J. Smith, at (202) 728-8176.

    • 96-43 SEC Approves NASD By-Laws Amendments Regarding Gross Revenue

      Executive Summary

      On June 13, 1996, the Securities and Exchange Commission approved amendments to Section 5 of Schedule A to the NASD By-Laws (Schedule A). The amendments delete the interest and dividend exclusion from gross revenue for member assessment purposes. The amendments, however, allow a member to deduct from its gross revenue all interest and dividend expenses but not in excess of related interest and dividend revenue or, alternatively, to deduct 40 percent of interest earned by the member on customer securities accounts. The amendments also allow a member to deduct the first $50,000 of net interest and dividend revenue from gross revenue.

      Questions regarding this Notice may be directed to James E. Shelton, NASD Finance, at (301) 590-6757.

    • 96-42 Fixed Income Pricing System Additions, Changes, and Deletions as of May 30, 1996

      View PDF File

      Suggested Routing

      Senior Management
      Corporate Finance
      Institutional
      Legal & Compliance
      Operations
      Systems
      Trading

      As of May 30, 1996, the following bonds were added to the Fixed Income Pricing System (FIPSSM).

      Symbol Name Coupon Maturity
      FDB.GA Foodbrands American Inc 10.750 5/15/06
      LOEH.GA Loehmanns Inc New 11.875 5/15/03
      CRBR.GB Chancellor Radio Broadcasting Co 12.500 10/1/04
      CVC.GF Cablevision Systems Corp 10.500 5/15/16
      CVC.GG Cablevision Systems Corp 9.875 5/15/06
      FD.GC Federated Dept Stores Inc Del 8.500 6/15/03
      RGRO.GD Ralphs Grocery Company New 11.000 6/15/05
      RGRO.GE Ralphs Grocery Company New 13.750 6/15/05
      CYAP.GA Conn Yankee Atomic Pwr Co 12.000 6/1/00
      GBFE.GA Golden Books Family Entmt Inc 7.650 9/15/02
      NU.GA Northeast Utilities 8.500 12/1/06
      OMI.GA Owens & Minor Inc New 10.875 6/1/06

      As of May 30, 1996, the following bonds were deleted from FIPS.

      Symbol Name Coupon Maturity
      WEBC.GA Webcraft Technologies Inc 9.375 2/15/02
      PLX.GA Plains Resources Inc 12.000 10/8/92
      AUR.GA Aurora Electronics Inc 9.250 11/15/96
      AUR.GB Aurora Electronics Inc 9.250 11/15/96
      DAL.GA Delta Airlines Inc Del 8.250 5/15/96
      ORX.GD Oryx Energy Company 9.300 5/1/96
      PNH.GA Public Service Company N.H. 8.875 5/15/96
      WPGI.GA Western Publishing Group Inc 7.650 9/15/02

      All bonds listed above are subject to trade-reporting requirements. Questions pertaining to trade-reporting rules should be directed to James C. Dolan, NASD Market Surveillance, at (301) 590-6460.

    • 96-41 Independence Day: Trade Date — Settlement Date Schedule

      View PDF File

      Suggested Routing

      Internal Audit
      Legal & Compliance
      Municipal
      Operations
      Syndicate
      Systems
      Trading

      Independence Day: Trade Date — Settlement Date Schedule

      The Nasdaq Stock MarketSM and the securities exchanges will be closed on Thursday, July 4, 1996, in observance of Independence Day. "Regular way" transactions made on the business days noted below will be subject to the following schedule:

      Trade Date Settlement Date Reg. T Date*
      June 28 July 3 July 8
      July 1 5 9
      2 8 10
      3 9 11
      4 Markets Closed
      5 10 12

      Brokers, dealers, and municipal securities dealers should use these settlement dates for purposes of clearing and settling transactions pursuant to NASD Rule 11000 (formerly NASD Uniform Practice Code) and Municipal Securities Rulemaking Board Rule G-12 on Uniform Practice.

      Questions regarding the application of these settlement dates to a particular situation may be directed to the NASD Uniform Practice Department at (203) 375-9609.


      * Pursuant to Sections 220.8(b)(1) and (4) of Regulation T of the Federal Reserve Board, a broker/dealer must promptly cancel or otherwise liquidate a customer purchase transaction in a cash account if full payment is not received within five business days of the date of purchase or, pursuant to Section 220.8(d)(1), make application to extend the time period specified. The date by which members must take such action is shown in the column entitled "Reg. T Date."

    • 96-40 SOES Tier Levels Set To Change July 1, 1996

      Executive Summary

      Effective July 1, 1996, tier sizes for 728 Nasdaq National Market securities will be revised in accordance with NASD Rule 4710(g) (formerly Paragraph 2451a7 of the Rules of Practice) and Procedure for the Small Order Execution System.

      For more information, please contact Nasdaq Market Operations at (203) 378-0284.

    • 96-39 Request For Comments On Proposed Changes To Regulations G, T, And U

      Executive Summary

      In conjunction with the amendments to Regulation T (Reg. T) which are described in Notice to Members 96-37, the Board of Governors of the Federal Reserve System (Fed) is also requesting comments on proposed changes to Regulations G, T, and U. Reg. T covers extensions of credit by and to broker/dealers; Reg. U covers extensions of credit by banks; and Reg. G covers extensions of credit by all other U.S. lenders.

      The Fed is proposing to allow a broker/dealer to extend "good faith" credit on any non-equity security rather than only those currently permitted by Fed rules; allow lending on non-equity securities to occur in a new "non-equity" account, absent the restrictions currently imposed in the margin account; remove restrictions on the ability of broker/dealers to calculate required margin for non-equity securities on a "portfolio" basis; ease or eliminate the Fed's collateral requirements for the borrowing and lending of securities; exempt lending to foreign persons on foreign securities by foreign branches of U.S. broker/dealers; remove a Fed interpretation that prevents options from serving as cover in lieu of margin for a short sale; and allow banks to lend against exchange-traded options to the extent permitted by the exchange listing the option. The Fed also is seeking comment on whether it should expand the number of equity securities eligible for loan value under Reg. T, and on whether it should amend Regs. G and U to modify their method for determining which equity securities are eligible for loan value. Comments are due on or before July 1, 1996.

      Questions concerning this Notice may be directed to Anne Harpster, Compliance Department, at (202) 728-8092.

    • 96-38 Treasury Issues Letter Clarifying Recordkeeping Requirements For Forward Settling Repurchase Agreement Transactions

      Executive Summary

      With the concurrence of the Securities and Exchange Commission (SEC), the Department of the Treasury (Treasury) recently issued a letter clarifying that the recordkeeping requirements of SEC Rule 17a-3 and Rule 17a-4 apply to forward settling repurchase and reverse repurchase agreement transactions (forward repos). In addition, the letter indicates that broker/dealers should issue confirmations of forward repo transactions on trade date.

      Questions concerning this Notice may be directed to Treasury's Government Securities Regulations staff at (202) 219-3632 or to Susan DeMando, NASD Regulation Compliance Department, at (202) 728-8411.

    • 96-37 Fed Approves Amendments To Regulation T

      Executive Summary

      The Board of Governors of the Federal Reserve System (Fed) is adopting several amendments to Regulation T (Reg. T), the regulation that covers extensions of credit by and to brokers and dealers. These amendments reflect consideration of the comments submitted in response to the proposed rule issued by the Board for public comment on June 29, 1995, and reprinted in Notice to Members 95-68. The amendments address a number of topics, including eliminating restrictions on arranging for credit, the loan value of securities, options transactions, and international transactions, and place increased reliance on the rules of the Securities and Exchange Commission (SEC) and self-regulatory organizations (SROs). Some of the approved changes relating to options have a delayed effective date of June 1, 1997; however, the majority of the changes will be effective July 1, 1996.

      The Fed has also solicited comment on proposed significant additional amendments to Reg. T. Notice to Members 96-39 addresses these proposals.

      Questions regarding this Notice may be directed to Anne Harpster, Compliance Department, at (202) 728-8092, or Robert Broughton, Compliance Department, at (202) 728-8472.

    • 96-36 SEC Approves Amendment To The Primary Market-Maker Standards

      Executive Summary

      On May 9, 1996, the Securities and Exchange Commission (SEC) approved an amendment to NASD Rule 4612 (formerly Section 49 of the NASD Rules of Fair Practice), the NASD's Primary Market-Maker (PMM) Standards Rule. The approved amendment deletes a provision from Rule 4612 that allows a market maker to qualify as a PMM in a security by registering in the issue and refraining from quoting the security for five days. The Rule change is effective immediately.

      Questions regarding this Notice should be directed to Nasdaq Market Operations, at (800) 540-4818, or Thomas R. Gira, Associate General Counsel, at (202) 728-8957.

    • 96-35 Mail Vote — NASD Solicits Member Vote On Amendments To The NASD By-Laws To Make By-Laws Consistent With The "Plan Of Allocation And Delegation Of Functions By NASD To Subsidiaries"

      Last Voting Date: June 22, 1996

      Executive Summary

      The National Association of Securities Dealers, Inc. (NASD) invites members to vote to approve amendments to the NASD By-Laws that continue the restructuring necessary to implement the principles articulated in the September 1995 Report of the Select Committee on Structure and Governance (Select Committee) and make the By-Laws consistent with the "Plan of Allocation and Delegation of Functions by NASD to Subsidiaries" (Delegation Plan). The last voting date is June 22, 1996. The text of the proposed amendments follows this Notice.

      Questions about this Notice may be directed to Phillip A. Rosen, Associate General Counsel, NASD, at (202) 728-8446.

    • 96-34 Fixed Income Pricing System Additions, Changes, and Deletions as of April 30, 1996

      As of April 30, 1996, the following bonds were added to the Fixed Income Pricing System (FIPSSM).

      Symbol Name Coupon Maturity
      DOMT Dominion Textile USA Inc 9.25 4/01/2006
      BORN.GA Borden Inc 8.375 4/15/16
      BORN.GB Borden Inc 9.875 11/01/1997
      BORN.GC Borden Inc 9.25 6/15/19
      BORN.GD Borden Inc 9.2 3/15/21
      BORN.GE Borden Inc 7.875 2/15/23
      LFI.GC Levitz Furniture Corp 13.375 10/15/98
      STCI.GC Station Casinos Inc 10.125 3/15/06
      CHK.GA Chesapeake Energy Corp 9.125 4/15/06
      FLCN.GA Falcon Drilling Inc 8.875 3/15/03
      KHEF.GA XHE Finance Inc 11.25 4/15/02
      VCEL.GA Vanguard Cellular Sys Inc 9.375 4/15/06
      AMIC.GD Amercold Corp 12.875 5/01/2008
      CON.GB Continental Homes Hdlg Corp 10 4/15/06
      JEFF.GA JeffBanks Inc 8.75 4/01/2006
      SLCM.GB Southland Corp 4 6/15/04
      SLCM.GC Southland Corp 4.5 6/15/04
      SLCM.GD Southland Corp 12 6/15/09
      TACA.GA Trump A.C. Assoc/Trump A.C. Fdg Inc 11.25 5/01/2006
      PNF.GG Penn Traffic Co New 11.5 4/15/06
      CLUR.GA Cellular Inc 11.75 9/01/2003
      PNDC.GA Penda Corp 10.75 3/01/2004
      PCCO.GA Penn Central Corp 9.75 8/01/1999
      PCCO.GB Penn Central Corp 10.625 4/15/00
      PCCO.GC Penn Central Corp 10.875 5/01/2011
      ICEL.GA InterCel Inc 12 5/01/2006

      As of April 30, 1996, the following bonds were deleted from FIPS.

      Symbol Name Coupon Maturity
      BORW.GA Borg Weimer Corp 8.000 4/1/96
      PMWI.GA Pace Membership WHSE Inc 13.000 4/15/96
      WX.GA Westinghouse Electric Corp 7.750 4/15/96

      All bonds listed above are subject to trade-reporting requirements. Questions pertaining to trade-reporting rules should be directed to James C. Dolan, NASD Market Surveillance, at (301) 590-6460.

    • NASD Rule Filing Status (As of April 29, 1996)

      To help members track the status of NASD®Rule filings submitted to the Securities and Exchange Commission (SEC), the NASD will publish this information bimonthly in Notices to Members.

      Following is a list of Rule filings by the NASD regarding broker/dealer regulation that are pending at the SEC or recently approved. Copies of Rule filings (and any amendments), the SEC release publishing the Rule proposal for comment, and the SEC release approving the Rule change are available from the SEC Public Reference Room at (202) 942-8090 or Kristine Gwilliam, NASD Office of General Counsel, at (202) 728-8821 (in certain cases a fee may be required). NASD Rule changes are not effective until the date approved by the SEC.


      Rule Filings That Have Not Been Published For Comment By The SEC

      96-15
      Amend Schedule A to the By-Laws to modify the exception for interest and dividend income from gross revenue for assessment purposes.

      96-14
      Amend Article IV, Section 5 of the Rules of Fair Practice (Rule 8210) to require members to provide information in response to requests by other regulators for regulatory information.

      95-61
      Amend Article III, Sections 26 and 29 of the Rules of Fair Practice (Rules 2830 and 2820) to regulate the receipt by members and their associated persons of cash and non-cash compensation for the sale of investment company and variable contract securities.

      95-40
      Amend The PORTAL Rules, Schedule I to the NASD By-Laws (Rule 5300) to adopt a pilot program for reporting transactions in PORTAL securities.


      Rule Filings Published For Comment But Not Yet Approved By The SEC

      96-9
      Amend Schedule D, Part II (Rules 4310 and 4320) to recommend that issuers distribute interim reports and consider technological methods to communicate other information to registered and beneficial shareholders. Published for comment in SEC Rel. No. 34-37010 (03/21/96); 61 F.R. 13909 (03/28/96).

      95-63
      Amend the Rules of Fair Practice to adopt a new section to regulate the conduct of a broker/dealer on the premises of a financial institution. Published for comment in Rel. No. 34-36980 (03/15/96); 61 F.R. 11913 (03/22/96).

      95-39
      Amend Rules of Fair Practice to apply the Rules of Fair Practice to exempted securities (except municipal securities), including government securities, and amend Article III, Section 2 of the Rules of Fair Practice to adopt a new Interpretation of the Board of Governors-Suitability Obligations to Institutional Customers. Published for comment in Rel. No. 34-36383 (10/17/95); 60 F.R. 54530 (10/24/95). Republished for comment in Rel. No. 34-36973 (03/14/96); 61 F.R. 11655 (03/21/96).


      Rule Filings Recently Approved By the SEC

      96-16
      Plan of Allocation and Delegation setting forth the purpose, function, governance, procedures and responsibilities of the NASD and its subsidiaries. Accelerated approval granted by the SEC in Rel. No. 34-37107 (4/11/96); 61 F.R.?(4/?/96).

      96-4
      Amend Schedule C, Part III to allow persons in good standing with the Canadian securities regulators to qualify as general securities representatives by exam. Accelerated approval granted by the SEC in Rel. No. 34-36825 (02/09/96); 61 F.R. 6052 (02/15/96).

      96-3
      Modify the NASD's FOCUS Filing Plan to standardize the requirements with those of the other SROs. Accelerated approval granted by the SEC in Rel. No. 34-36780 (01/26/96); 61 F.R. 3743 (02/01/96).

      96-2
      Delete Article V and Amend Articles VII and X of the By-Laws to reconfigure the Board of Governors and establish a national Nominating Committee. Temporary accelerated approval granted by the SEC in Rel. No. 34-37106 (4/11/96); 61 F.R.?(4/?/96).

      95-62
      Amend Interpretation of the Board of GovernorsPrompt Receipt and Delivery of Securities, Article III, Section 1 of the Rules of Fair Practice, to provide that "blanket assurances of availability" may be used to satisfy affirmative determination requirements. Published for comment by the SEC in Rel. No. 34-36717 (01/16/96); 61 F.R. 1805 (01/23/96). Accelerated approval granted by the SEC in Rel. No. 34-36859 (02/20/96); 61 F.R. 7127 (02/26/96).

      95-59
      Amend Section 65 of the Uniform Practice Code Rule (11870) to require that a registered clearing agency use electronic facilities for account transfers. Published for comment by the SEC in Rel. No. 34-36638 (12/26/95); 61 F.R. 206 (01/03/96). Approved by the SEC in Rel. No. 34-36955 (03/11/96); 61 F.R. 11070 (03/18/96).

      95-53
      Amend Section 1 (Rule 11100) and add new Section 73 of the Uniform Practice Code to require the use of standardized limited partnership transfer forms. Published for comment by the SEC in Rel. No. 34-36611 (12/20/95); 60 F.R.67146 (12/28/95). Approved by the SEC in Rel. No. 34-36783 (01/29/96); 61 F.R. 3955 (02/02/96).

    • 96-33 NASD Clarifies Rules Governing RR/IAs

      View PDF File

      NASD Clarifies Rules Governing RR/IAs

      Suggested Routing
      Senior Management
      Internal Audit
      Legal & Compliance
      Registration
      Training

      Executive Summary

      On May 15, 1994, the NASD® issued Special Notice to Members 94-44, , which clarified the applicability of Article III, Section 40 of the NASD Rules of Fair Practice to investment advisory activities of registered representatives (RRs) who also are investment advisers (RR/IAs). In particular, the Notice addressed the supervision of securities transactions conducted by RR/IAs away from the NASD members with which they are associated. Since the issuance of Notice to Members 94-44, , the NASD has responded to questions concerning the types of records that may be used and recordkeeping systems that may be established by an NASD member to ensure that investment advisory transactions subject to Article III, Section 40 are properly recorded and the RR/IA adequately supervised. The NASD also has responded to other general compliance and interpretive questions relating to Article III, Section 40. To further facilitate member firm compliance with Article III, Section 40, this Notice discusses recordkeeping approaches and presents the answers to some of the most frequently asked questions regarding Section 40 since the release of Notice to Members 94-44, .



      Questions regarding this Notice may be directed to Daniel M. Sibears, Director, Regulation, at (202) 728- 6911; or Mary Revell, Senior Attorney, Regulation, at (202) 728-8203.

      Background

      As reviewed in Notice to Members 94-44, , Article III, Section 40 requires that any person associated with an NASD member who participates in a private securities transaction must, before participating in the transaction, provide written notice to the member with which he or she is associated. The written notice must describe the transaction, the associated person's role, and disclose whether the associated person will or may receive selling compensation. Thereafter, the NASD member must advise the individual in writing whether it approves or disapproves the associated person's participation in a private securities transaction. If the member approves the transaction, the transaction must be recorded on the member's books and records, and the member must supervise the associated person's participation as if the transaction were executed on behalf of the member.



      Most notably, Notice to Members 94-44, clarifies the analysis that members must follow to determine whether the activity of an RR/IA falls within the parameters of Section 40. Fundamental to this analysis is whether the RR/IA participates in the execution of a securities transaction such that his or her actions go beyond a mere recommendation, thereby triggering the recordkeeping and supervision requirements of Section 40.

      Where the RR/IA does not participate in the execution of securities transactions, Notice to Members 94-44, reminds members and their RR/IAs that while Section 40 may not apply, the activity, nonetheless, may be subject to the notification provisions of Article III, Section 43. That section requires an RR to provide written notice to the NASD member with which he or she is associated of any proposed employment or outside business activity pursuant to which he or she will receive compensation from others. The form and content of an Article III, Section 43 notice is to be determined by the NASD member.

      Article III, Section 40 Books And Records Relating To Investment Advisory Transactions

      Where a member has approved an RR/IA's participation in private securities transactions for which he or she will or may receive selling compensation, the member must develop and maintain a recordkeeping system that, among other things, captures the transactions executed by the RR/IA in its books and records and facilitates supervision over that activity. Recordkeeping systems that simply record all transactions will not result in adequate supervision under Article III, Section 27 of the Rules of Fair Practice. Rather, the records created and recordkeeping system used, together with relevant supervisory procedures, must enable the member to properly supervise the RR/IA by aiding the member's understanding of the nature of the service provided by an RR/IA, the scope of the RR/IA's authority, and the suitability of the transactions.

      Since the transactions subject to Section 40 by definition occur at and through another member or directly with a product sponsor, the NASD member licensing the RR/IA is not required to record the activity in the same manner it records transactions executed on behalf of its own firm (i.e., on its purchase and sales blotter). Rather, members may develop and use alternative approaches that meet their specific needs and business practices, such as special blotters, separate Section 40 recordation forms and files, and unit systems, for capturing the RR/IA activity that occurs through other firms. In this regard, Section 40 recordkeeping systems may involve many of the following books and records:

      • dated notifications from the RR/IA detailing the services to be performed by the RR/IA and the identity of each RR/IA customer serviced at another firm in a private securities transaction;
      • dated responses from the NASD member to the RR/IA acknowledging and approving or disapproving the RR/IA's intended activities;
      • a list of RRs who also are IAs;
      • a list of RR/IAs approved to engage in private securities transactions;
      • a list of RR/IA customers, including those that are customers of both the member firm and the RR/IA, with a cross reference to the RR/IA;
      • copies of customer account opening cards to determine, among other things, suitability;
      • copies of discretionary account agreements;
      • duplicate confirmation statements;
      • duplicate customer account statements;
      • a correspondence file for RR/IA customers;
      • investment advisory agreements between the RR/IA and each advisory client;
      • advertising materials and sales literature used by the RR/IA to promote investment advisory services wherein the RR/IA holds himself or herself out as a broker/dealer, complemented by a process that shows whether proper filings have been made at the NASD and whether the RR/IA is using any electronic means, such as the Internet, to advertise services or correspond with customers;
      • exception reports, where feasible, based on various occurrences or patterns of specified activity, such as frequency of trading, high compensation arrangements, large numbers of trade corrections, and cancelled trades; and
      • supervisory procedures fully responsive to Article III, Section 27 requirements and designed to address Section 40 compliance. The procedures may include such items as the identity of persons responsible for Section 40 compliance, the recordkeeping system to be used and followed, and memoranda or compliance manuals that notify RR/IAs of the member's procedural requirements for Section 40 compliance.

      Neither the federal securities laws nor the NASD Rules of Fair Practice mandate the supervisory system or structure that a member must use. Rather, each member can develop and implement its own supervisory system that is reasonably designed to detect and prevent violations. In this regard, no single document or combination of the referenced documents is specifically required or necessarily adequate to comply with Section 40 requirements. Rather, each member that determines to permit its associated persons to transact securities business through another broker/dealer must decide which tailored combination of records is necessary to develop an adequate supervisory system that addresses the allowable activities of RR/IAs. For example, obtaining duplicate confirmation statements directly from the RR/IA alone would permit a member to fulfill recordation requirements for the trades represented by confirmations received, but would not necessarily permit a member to reasonably ensure that it is capturing all trades. However, an arrangement under which the member obtains duplicate confirmation statements directly from the firm (or firms) that executes transactions for the RR/IA should be sufficient to ensure that the member captures all trades.

      Member firms have tremendous flexibility to develop and implement recordkeeping and supervisory systems that meet the unique nature and scope of their own operations, and the permitted activities and services provided by their dually registered persons. In all circumstances, however, recordkeeping and supervision must be adequate to ensure that full and complete transaction information is captured, and be reasonably designed to detect and/or prevent misconduct that could violate the federal securities laws and NASD Rules.

      Answers To Frequently Asked Questions Concerning The Application Of Article III, Section 40 To Investment Advisory Activities

      Question #1: Does Article III, Section 40 require prior approval of each transaction executed by an RR/IA away from his or her NASD member firm if the compensation received by the RR/IA is not transaction based?

      Answer: An RR/IA may be involved in numerous transactions on a daily basis for which he or she receives asset-based or performance-based fees. Requiring prior notice of each trade effected under these conditions may hinder investors from properly receiving the investment advisory services provided by RR/IAs. Accordingly, the Board of Governors, acting on the recommendation of a special Ad Hoc Committee, has interpreted Article III, Section 40 to require prior notice of the investment advisory services that will be provided by the RR/IA for an asset-based or a performance-based fee, rather than prior notice of each trade effected by an RR/IA for a particular customer. This interpretation is intended to vigorously apply the investor protection concepts of Article III, Section 40 to investment advisory activities in a practical manner.

      A member must receive prior written notice from an RR/IA requesting approval to conduct investment advisory activities for an asset-based or performance-based fee on behalf of each of his or her advisory clients. This notice must include details such as:

      • a declaration that the individual is involved in investment advisory activities;
      • the identity of each customer to whom the notice would apply;
      • the types of securities activities that may be executed away from the firm;
      • a detailed description of the role of the RR/IA in the investment advisory activities and services to be conducted on behalf of each identified customer;
      • information regarding the RR/IA's discretionary trading authority, if any;
      • compensation arrangements;
      • the identity of broker/dealers through which trades away will be executed; and
      • customer financial information.

      Only after written approval from the NASD member may the RR/IA engage in the disclosed activities. If there is a change in the RR/IA's proposed role or activities for any customer from what the member initially approved, the RR/IA must provide the member with a subsequent written notice that details the changes and requests the member's further approval to conduct advisory activities on behalf of the customer. The employer member must thereafter record subsequent transactions on its books and records and supervise activity in the affected accounts as if it were its own.

      Members are reminded, however, that if the RR/IA receives transaction-based compensation, the member's prior approval of each trade is required.

      Question #2: Does Article III, Section 40 apply to persons employed by or associated with registered investment advisory firms if such persons are not registered in an individual capacity with the Securities and Exchange Commission (SEC) or various states?

      Answer: Yes. Article III, Section 40 of the Rules of Fair Practice applies to all of an associated person's private securities transactions, regardless of whether or not such associated persons are also registered with other regulatory authorities such as the SEC or the states. The reference to registered investment advisers in Notice to Members 94-44, does not limit the applicability of Article III, Section 40 to only those persons individually registered as such with other regulatory entities. In addition, if the advisory service is not registered with any regulatory agency, a member should ensure that such registration is not required.

      Question #3: Is it appropriate for a limited principal (i.e., a Series 26 Investment Company Principal) to supervise Article III, Section 40 transactions in products such as equity securities that are not covered by that registration category?

      Answer: Limited principals may not supervise Article III, Section 40 transactions in products not covered by their registration category. Therefore, if a firm only has principals registered in a limited capacity, associated persons engaging in Article III, Section 40 transactions may do so only in products covered by the licenses of the firm's principals.

      Question #4: Is it appropriate for a limited representative (i.e., a Series 6 Investment Company Representative) to execute Article III, Section 40 transactions in products such as equity securities that are not covered by that registration category?

      Answer: A limited RR who is otherwise in compliance with applicable federal and state registration requirements, such as the SEC's investment adviser registration requirements, may not execute transactions in securities not covered by his or her NASD registration. Registration with the NASD as a representative subjects an individual to all NASD rules, regulations, and requirements, including qualification requirements. Those rules preclude a limited representative from acting as a representative in any area not covered by his or her registration category. A limited representative who wishes to execute transactions in securities not covered by his or her registration category is required to pass an appropriate qualification exam.

      Question #5: If an RR/IA is registered with more than one NASD member, must all members approve, supervise, and record the Article III, Section 40 transactions?

      Answer: All members with whom a person is registered are responsible for the registered representative's involvement in Section 40 transactions. Members may develop a detailed, formal allocation arrangement whereby at least one member agrees and is able to provide the supervision and recordkeeping required by Article III, Section 40. However, the other members would be required to take the reasonable steps necessary to ensure that Section 40's recordkeeping and supervisory requirements are being carried out since members cannot delegate, by contract or otherwise, their ultimate responsibility for compliance with regulatory requirements.

      Question #6: What is a member's responsibility with regard to supervising Section 40 securities transactions where an advisory client of an RR/IA refuses to provide information to the member, citing the confidentiality of client information provisions of an investment advisory agreement?

      Answer: Article III, Section 40, which was adopted in 1985, and its predecessor Interpretation of the Board of Governors have always stipulated that a member that allows an associated person to participate in a Section 40 transaction is responsible for supervising that transaction as if it were its own. If a member determines that in order to meet its supervisory obligations under Section 40, it must have certain information from the customer and if the customer refuses to provide the information, the member should deny the associated person's request who would then be precluded from participating in the Section 40 activity.

      Question #7: Are there circumstances under which income received as salary payments may be deemed selling compensation as defined by Article III, Section 40?

      Answer: As explained in Notice to Members 94-44, , selling compensation is broadly defined to include any compensation paid directly or indirectly from whatever source in connection with or as a result of the purchase or sale of a security. If salary payments are direct or indirect compensation for an RR/IA's participation in the execution of securities transactions away from his or her member firm, the salary payments would be deemed "selling compensation," and the activities would be subject to Article III, Section 40.

      Question #8: Where investment seminars are conducted by RR/IAs away from their employing NASD member and seminar participants are charged a fee for attendance, would any income derived from the seminar for this investment advisory activity be governed by Article III, Section 40 or Section 43 of the Rules of Fair Practice?

      Answer: If an investment seminar itself does not result in the execution of securities transactions, Article III, Section 43 would govern the investment advisory activity. In determining whether Article III, Section 40 applies, the NASD has focused primarily upon the RR/IA's participation in the execution of securities transactions and whether the participation goes beyond a mere recommendation. If after an investment seminar, however, participants decide to engage in securities transactions with the participation of the RR/IA, that subsequent activity and any compensation received in connection therewith would be subject to Section 40.

      Question #9: Must a member review performance reports produced by RR/IAs to properly discharge its supervisory responsibilities under Article III, Section 40?

      Answer: It has come to the NASD's attention that some RR/IAs use information supplied by the broker/dealer through which they conduct private securities transactions or by the investment advisory service corporations with which they are associated to create performance reports for their advisory clients. These reports may be individualized performance reports that provide customized information for a specific client or standardized performance reports that provide general information to multiple clients. With regard to this practice, members and RR/IAs are cautioned that in creating or recreating performance reports, a risk is taken that calculations for securities transactions may be inaccurate, incomplete, or misleading, thus resulting in material misrepresentations being made or material facts being omitted. NASD member supervisory responsibilities should include a determination as to whether to permit associated persons to develop performance reports for securities transactions. If this activity is permitted, the member firm must review the performance reports. Standardized reports sent to multiple clients are considered sales literature and must be reviewed by a registered principal at the member firm before distribution by the RR/IA to clients. If the RR/IA uses the same standardized format for different clients, principal approval before use is required only on the performance report prototype. This review must ensure that the reports are accurate, not misleading, or otherwise in violation of NASD or SEC Rules. In particular, members should review the standards set forth in Article III, Section 35 of the NASD Rules governing member communications with the public, as well as applicable SEC regulations.

      Individualized performance reports are considered correspondence. As such, review by the member firm before RR/IA distribution to clients is not required. However, the firm must have appropriate procedures in place, as required by Article III, Section 27 of the NASD Rules of Fair Practice, for review and retention of individualized performance reports and other correspondence.

      Question #10: Must NASD members that employ RR/IAs provide training to this segment of their associated persons under the Firm Element of the Continuing Education requirements?

      Answer: The Firm Element of the Continuing Education requirements (see Schedule C of the NASD By- Laws) is designed to be flexible and to permit firms to develop tailored educational programs based on their business practices and needs. In this regard, each member that permits its associated persons to conduct securities transactions through another firm should assess the need to provide specific Firm Element training with regard to Section 40 requirements. Where the assessment establishes a need for educational initiatives for all or some portion of the covered persons conducting business away from the member, the firm's written training plan should include defined and scheduled Section 40 training for specified individuals.

      Although this Notice and previously issued Notices to Members 91-32 and 94-44 clarify the application of Article III, Section 40 to investment advisory activities, Section 40 has been in effect since November 12, 1985 (see Notice to Members 85-84). Accordingly, members and their RR/IAs are expected to be in compliance with Article III, Section 40.

    • Fixed Income Pricing System Additions, Changes, and Deletions as of February 28, 1996

      [Please note: There is currently no text to accompany this notice]

    • 96-32 Members Reminded To Use Best Practices When Dealing In Speculative Securities

      View PDF File

      SUGGESTED ROUTING

      Senior Management
      Legal & Compliance
      Trading

      Executive Summary

      In recent months, NASD Regulation, Inc., has observed instances of sharp price changes and increases in trading activity in stocks of low-priced companies. In response, NASD Regulation is issuing this Special Notice to Members to emphasize to its members their obligations to customers, particularly when dealing in speculative securities.

      Questions or comments concerning this Notice may be directed to Daniel M. Sibears, Director, Regulation, at (202) 728-6911.

      Discussion

      NASD Regulation has undertaken a sales practice initiative in response to concerns related to trading in lowpriced, speculative securities, including review for market manipulation, misrepresentations, high pressure sales tactics and fraudulent markups. Members are urged strongly to consider the following subjects that will be aggressively reviewed by NASD Regulation examination and enforcement staffs.

      Suitability

      Members are cautioned to take special care with respect to their suitability analyses where the securities involved are low-priced or speculative in nature. The NASD's suitability requirement under Article III, Section 2 of the Rules of Fair Practice is fundamental to fair dealings and is intended to promote ethical sales practices and high standards of professional conduct. Members' responsibilities include having a reasonable basis for recommending a particular security or strategy. In addition, the know-your-customer requirement embedded in Article III, Section 1 of the Rules of Fair Practice requires a careful review of the appropriateness of transactions in low-priced, speculative securities, whether solicited or unsolicited.

      Disclosure Of Material Adverse Facts And Interests To Customers

      When a registered representative recommends the purchase or sale of a stock to a customer, he or she must not only avoid affirmative misstatements, but must also disclose material adverse facts about which the salesperson is, or should be, aware. Particular care should be taken with respect to the accuracy and completeness of information concerning low-priced, speculative securities. In this connection, members should focus on the completeness of disclosure concerning securities issued by companies whose ability to operate as a going concern is subject to question or contingent on gaining additional financing. This includes disclosure of any conflicts of interest that could influence the salesperson's recommendation or the customer's decision to purchase or sell the security.

      Valuations

      Firms should also be very careful with respect to the value given to speculative, low-priced securities, not only with regard to proprietary inventory positions, but also to valuation as collateral underlying customer balances. Substantial additional margin must be required where the securities carried are subject to unusually rapid or violent changes in value.

      Supervision

      Supervision is the cornerstone of securities industry self-regulation and depends on members establishing and implementing supervisory procedures and systems designed to achieve compliance with the NASD Rules of Fair Practice and federal securities laws. Consequently, it is especially important that members consider the adequacy, reasonableness, and scope of their supervisory procedures in light of the recent volatility of some low-priced securities. When reviewing existing procedures, and determining the need for new or enhanced supervisory initiatives, members are reminded that they have final responsibility for ensuring that they comply fully with the requirements of Article III, Section 27 by establishing and maintaining a system to adequately supervise the activities of each registered representative and associated person. We note that Article III, Section 27 may be violated by a firm, an individual, or both, without the occurrence of separate underlying violations.

      Heightened Supervisory Responsibility

      Members assume a higher level of supervisory responsibility when they hire a representative with a significant regulatory history. Routine supervision is not sufficient when a member hires a representative who, for example, has a pattern of serious customer complaints or a disciplinary history, or for an existing representative who becomes the subject of such problems. In these instances, members must develop and impose special supervisory practices designed to address the particular areas of concern presented by the individual representative.

      Cold Call Requirements

      Members must supervise the cold calling activities of their sales force and ensure that all applicable telemarketing rules are complied with fully. This includes compliance with Article III, Section 21(g) of the Rules of Fair Practice, which requires each member to make and maintain a centralized "do not call" list of persons who do not wish to receive telephonesolicitations from members or members' associated persons.

      Members must be the effective first line of defense in our shared investor protection mission by ensuring that the rules, regulations, and best practices addressed in this Notice are actively and effectively implemented.

    • 96-31 Fixed Income Pricing System Additions, Changes, and Deletions as of March 29, 1996

      As of March 29, 1996, the following bonds were added to the Fixed Income Pricing System (FIPSSM).

      Symbol Name Coupon Maturity
      TLMD.GB Telemundo Group Inc 7 2/15/96
      DOPD.GA Doane Products Company 10.625 3/1/06
      JJSA.GA Jitney-Jungle Stores Amer Inc 12 3/1/06
      CRBR.GA Chancellor Radio Broadcasting Co 9.375 10/1/04
      RVW.GF Riverwood Intl Corp 10.25 4/1/06
      RVW.GG Riverwood Intl Corp 10.875 4/1/08
      TPLP.GA Tanger Properties LP 8.75 3/11/01
      PDC.GA Presley Cos Del 12.5 7/1/01
      EX.GA Exide Corp 10.75 12/15/02
      ULAB.GA Unilab Corp New 11 4/1/06
      NMEP.GA Nat'l Medical Enterprises Corp 7.375 9/1/97
      PVH.GA Phillips Van Heusen Corp 7.75 11/15/23
      MORT.GA Marriott Corp 8.125 12/1/96
      MORT.GB Marriott Corp 8.875 5/1/97
      MORT.GC Marriott Corp 9.375 6/15/07
      MORT.GD Marriott Corp 9.875 11/1/97
      MORT.GE Marriott Corp 10.25 7/18/01
      MORT.GF Marriott Corp 10 5/1/12
      MORT.GG Marriott Corp 9.5 5/1/02

      As of March 29, 1996, the following bonds were deleted from FIPS.

      Symbol Name Coupon Maturity
      MOIL.GD Marathon Oil Company 9.75 3/1/99
      AFIN.GA American Finl Corp 10 10/20/99
      BS.GB Bethlehem Steel Corp 9 5/15/00
      AMI.GF American Medical Intl Inc 15 11/26/05
      CVN.GA Computer Vision Corp 10.875 8/15/97
      ELPA.GA El Paso Electric Company 6.75 5/1/98
      ELPA.GB El Paso Electric Company 7.75 4/1/01
      ELPA.GC El Paso Electric Company 9 11/1/04
      ELPA.GD El Paso Electric Company 10.5 11/1/05
      ELPA.GE El Paso Electric Company 8.5 4/1/07
      FENA.GA Fairchild Industries Inc 9.75 4/1/98
      AMAI.GB American Airlines Inc 6.25 3/1/96
      FA.GA Fairchild Corp 12.25 3/15/96
      CNM.GA Continental Medical Sys 10.875 8/15/02
      CNM.GC Continental Medical Sys 10.375 4/1/03

      As of March 29, 1996, changes were made to the symbols of the following FIPS bonds:

      New Symbol Old Symbol Name
      MSEA.GA METB.GA Metropolitan Bancorp
      PNT.GA PENT.GA Penna Enterprises
      YBTV.GA YGBR.GC Young Broadcasting
      BHW.GA BEHW.GA Bell & Howell Inc
      EE.GA ELPA.GF El Paso Electric Company
      EE.GB ELPA.GG El Paso Electric Company
      EE.GC ELPA.GH El Paso Electric Company
      EE.GD ELPA.GI El Paso Electric Company
      EE.GE ELPA.GJ El Paso Electric Company
      DUAL.GA DUDR.GA Dual Drilling Company
      HDS.GA HLST.GA Hills Stores Company
      INF.GA INFT.GA Infinity Broadcasting Co.

      As of March 29, 1996, a change was made to the name and symbol of the following FIPS bond:

      New Symbol New Name Old Symbol Old Name
      SLBC.GA Inc Sullivan Broadcasting Inc ACTB.GA Act III Broadcasting

      All bonds listed above are subject to trade-reporting requirements. Questions pertaining to trade-reporting rules should be directed to James C. Dolan, NASD Market Surveillance, at (301) 590-6460.

    • 96-30 Nasdaq National Market Additions, Changes, and Deletions as of March 22, 1996

      As of March 22, 1996, the following 77 issues joined the Nasdaq National Market®, bringing the total number of issues to 4,051:

      Symbol Company Entry Date SOES Execution Level
      CMCO Columbus McKinnon Corp. 2/23/96 200
      CYAN Cyanotech Corporation 2/27/96 500
      MLAB Mesa Laboratories, Inc. 2/27/96 200
      PFNT Preferred Networks, Inc. 2/27/96 200
      SIMA Sonics & Materials, Inc. 2/27/96 200
      SIMAW Sonics & Materials, Inc. (Wts 2/27/01) 2/27/96 200
      TRDT Trident International, Inc. 2/27/96 200
      ALXN Alexion Pharmaceuticals, Inc. 2/28/96 200
      BNTNW Benton Oil & Gas Company (Wts 1/4/99) 2/28/96 200
      CSGS CSG Systems International, Inc. 2/28/96 500
      IPAC Integrated Packaging Assembly Corporation 2/28/96 200
      AAHS Children's Broadcasting Corp. 2/29/96 500
      EAII Engineering Animation, Inc. 2/29/96 500
      IGRP Indus Group, Inc. (The) 2/29/96 200
      RISC RISCORP, Inc. (Cl A) 2/29/96 200
      MCSX Managed Care Solutions, Inc. 3/1/96 200
      MECSD Medicus Systems Corporation (New) 3/1/96 200
      OCAD OrCAD, Inc. 3/1/96 200
      PIAM PIA Merchandising Services, Inc. 3/1/96 200
      PCRV Powercerv Corporation 3/1/96 200
      FFOH Fidelity Financial of Ohio, Inc. 3/4/96 200
      KASH Kash n' Karry Food Stores, Inc. 3/4/96 200
      GBCOB Greif Bros. Corporation (Cl B) 3/5/96 200
      HSDC Health Systems Design Corporation 3/5/96 200
      PTEK Premiere Technologies, Inc. 3/5/96 200
      SNTL Superior National Insurance Group, Inc. 3/5/96 200
      CHRX ChiRex Inc. 3/6/96 200
      DPRC Data Processing Resources Corporation 3/6/96 200
      GBCOA Greif Bros. Corporation (Cl A) 3/6/96 200
      HELI Helisys, Inc. 3/7/96 200
      CYTC CYTYC Corporation 3/8/96 200
      GGIT Geographics, Inc. 3/8/96 200
      IPCRF IPC Holdings, Limited 3/8/96 200
      SUPR Superior Services, Inc. 3/8/96 200
      MATR Matria Healthcare, Inc. 3/11/96 200
      MLOG Microlog Corporation 3/11/96 500
      BANCA BankAtlantic Bancorp, Inc. (Cl A) 3/12/96 200
      FRTE Forte Software, Inc. 3/12/96 200
      PTET Platinum Entertainment, Inc. 3/12/96 200
      RTSTR Right Start, Inc. (The) (Rts 4/8/96) 3/12/96 200
      XYLN Xylan Corporation 3/12/96 200
      ATSS Air-Cure Technologies, Inc. 3/13/96 200
      HMTT HMT Technology Corporation 3/13/96 200
      HUBG Hub Group, Inc. (Cl A) 3/13/96 200
      OCAL Ocal, Inc. 3/13/96 200
      PENC Penn Interconnect, Inc. 3/13/96 500
      PENCW Penn Interconnect, Inc. (Wts 11/17/00) 3/13/96 500
      SUPG SuperGen, Inc. 3/13/96 200
      SUPGW SuperGen, Inc. (Wts 3/13/01) 3/13/96 200
      CCBC California Community Bancshares Corporation 3/14/96 200
      DPAC Dense-Pac Microsystems, Inc. 3/14/96 500
      FIDF Fidelity Federal Bank (Cl A) 3/14/96 200
      ICOR ISOCOR 3/14/96 200
      MSPG MindSpring Enterprises, Inc. 3/14/96 200
      IDTC IDT Corporation 3/15/96 200
      INDV Individual, Inc. 3/15/96 200
      IIII Innotech, Inc. 3/15/96 200
      JDAS JDA Software Group, Inc. 3/15/96 200
      PRZM Prism Solutions, Inc. 3/15/96 200
      CMDA CAM Designs Inc. 3/18/96 500
      CMDAW CAM Designs Inc. (Wts 7/24/00) 3/18/96 500
      IAAPF Iona Appliances, Inc. 3/18/96 200
      PTLX Patlex Corporation 3/18/96 500
      BZET Biofield Corporation 3/19/96 200
      EMED EuroMed, Inc. 3/19/96 200
      XEIKY Xeikon, N.V. (ADR) 3/19/96 200
      ELAMF Elamex S.A. de C.V 3/20/96 200
      GDSC Gateway Data Sciences Corporation 3/20/96 200
      LOGLF Logal Educational Software & Systems, Ltd 3/20/96 1000
      ALPH AlphaNet Solutions, Inc. 3/21/96 200
      CIMTF Cimatron, Limited (Ord Shrs) 3/21/96 200
      DPSI Dawson Production Services, Inc. 3/21/96 200
      ERIV Eagle River Interactive, Inc. 3/21/96 200
      WKGP Workgroup Technology Corporation 3/21/96 200
      ANLG Analogy, Inc. 3/22/96 200
      IQST IntelliQuest Information Group, Inc. 3/22/96 200
      IMII Intelligent Medical Imaging, Inc. 3/22/96 200

      Nasdaq National Market Symbol And/Or Name Changes

      The following changes to the list of Nasdaq National Market securities occurred since February 23, 1996:

      New/Old Symbol New/Old Security Date of Change
      AIPNW/AIPNW American Int'l Petroleum (Wts A 3/1/97) /American Int'l Petroleum (Wts A 3/1/96) 2/28/96
      FAUL/PURE Faulding, Inc./Purepac, Inc. 3/1/96
      BWAY/BWAY BWAY Corporation/Brockway Standard Holdings Corporation 3/4/96
      AVRTW/AVRTW Avert, Inc. (Wts 4/30/97)/Avert, Inc. (Wts 4/30/96) 3/11/96
      BANC/BANC BankAtlantic Bancorp, Inc. (Cl B) /BankAtlantic Bancorp, Inc. 3/12/96
      STCH/STCH Shared Technologies Fairchild, Inc. /Shared Technologies, Inc 3/14/96
      FFFD/FFFD North Central Bancshares, Inc./First Federal Savings Bank of Fort Dodge 3/21/96
      KLOCW/KLOCW Kushner-Locke Company (The) (Wts 3/20/97)/Kushner-Locke Company (The) (Wts 3/20/96) 3/22/96
      REPB/REPB Republic Bancshares, Inc./Republic Bank Florida 3/22/96

      Nasdaq National Market Deletions

      Symbol Security Date
      AELNA AEL Industries, Inc. (Cl A) 2/23/96
      PPSI Pacific Physician Services, Inc. 2/23/96
      ALTC ALANTEC Corporation 2/26/96
      CIMC CIMCO, Inc. 2/26/96
      CMAX CableMaxx Holdings, Inc. 2/26/96
      CORD Cordis Corporation 2/26/96
      SIHLF Sun International Hotels Ltd (Ser A) 2/27/96
      SIHBF Sun International Hotels Ltd (Ser B) 2/27/96
      BNET Bay Networks, Inc. 2/29/96
      CYTOR Cytogen Corporation (Rts 1/31/97) 2/29/96
      WRTEQ WRT Energy Corporation 2/29/96
      WRTPQ WRT Energy Corporation (9% CV Pfd) 2/29/96
      BRKB Brooklyn Bancorp, Inc. 3/1/96
      HAVAP Harvard Industries, Inc. (14 1/4% PIK Exch Pfd) 3/1/96
      INDHK Independent Insurance Group, Inc. (Non-Voting) 3/1/96
      MECS Medicus Systems Corporation 3/1/96
      MIDS Mid-South Insurance Company 3/1/96
      SUBN Summit Bancorporation (The) 3/1/96
      FBAC First National Bancorp 3/4/96
      PNTA Pentair, Inc. 3/4/96
      HBGI Holson Burnes Group, Inc. 3/5/96
      TIVS Tivoli Systems Inc. 3/5/96
      CHGR Concord Health Group, Inc. 3/7/96
      CHGRW Concord Health Group, Inc. (Wts 4/19/00) 3/7/96
      CABL Communication Cable, Inc. 3/8/96
      KVLM Kevlin Corporation 3/8/96
      HDYN Healthdyne, Inc. 3/11/96
      MRTA Marietta Corporation 3/11/96
      TKOS Tokos Medical Corporation 3/11/96
      ANGNW Angeion Corp. (Wts 3/12/96) 3/13/96
      FLCO FelCor Suite Hotels, Inc. 3/13/96
      ABSIE ABS Industries, Inc. 3/14/96
      HOSS Hornbeck Offshore Services, Inc. 3/14/96
      TPIFY Tri Polyta Indonesia (ADR) 3/14/96
      PTCCZ PerSeptive Technologies II (Uts) 3/14/96
      ADHC Advantage Health Corporation 3/15/96
      COND Condor Services, Inc. 3/15/96
      JEFG Jefferies Group, Inc. 3/15/96
      NABC NAB Asset Corporation 3/15/96
      NYCOP NYCOR, Inc. (Conv. Exch Pfd) 3/15/96
      WCCX Wackenhut Corrections Corporation 3/15/96
      AGRI AgriDyne Technologies Inc. 3/18/96
      BNKF Bankers First Corp. 3/18/96
      GAMBY Gambro Incorporated (ADR) 3/18/96
      HOGN Hogan Systems, Inc. 3/18/96
      IPICZ Interneuron Pharmaceuticals, Inc. (Wts B 3/15/96) 3/18/96
      KEBI Kentucky Enterprise Bancorp, Inc. 3/18/96
      ARRW Arrow Transportation Company 3/19/96
      DUCR Duracraft Corporation 3/22/96

      Questions regarding this Notice should be directed to Mark A. Esposito, Nasdaq Market Services Director, Issuer Services, at (202) 496-2536. Questions pertaining to trade-reporting rules should be directed to Bernard Thompson, Assistant Director, NASD Market Surveillance, at (301) 590-6436.

    • 96-29 Memorial Day: Trade Date — Settlement Date Schedule

      The Nasdaq Stock MarketSM and the securities exchanges will be closed on Monday, May 27, 1996, in observance of Memorial Day. "Regular way" transactions made on the business days noted below will be subject to the following schedule:

      Trade Date Settlement Date Reg. T Date *
      May 21 May 24 May 29
      22 28 30
      23 29 31
      24 30 June 3
      27 Markets Closed
      28 31 4
      * Pursuant to Sections 220.8(b)(1) and (4) of Regulation T of the Federal Reserve Board, a broker/dealer must promptly cancel or otherwise liquidate a customer purchase transaction in a cash account if full payment is not received within five business days of the date of purchase or, pursuant to Section 220.8(d)(1), make application to extend the time period specified. The date by which members must take such action is shown in the column entitled "Reg. T Date."

      Brokers, dealers, and municipal securities dealers should use the foregoing settlement dates for purposes of clearing and settling transactions pursuant to the NASD Uniform Practice Code and Municipal Securities Rulemaking Board Rule G-12 on Uniform Practice.

      Questions regarding the application of those settlement dates to a particular situation may be directed to the NASD Uniform Practice Department at (203) 375-9609.

    • 96-28 NASD Revises Sanction Guidelines

      Executive Summary

      The NASD announces revisions to the NASD Sanction Guidelines (Guidelines). The Guidelines were published for the first time in May 1993 so that members could become more familiar with the more typical securities industry violations that occur and the disciplinary sanctions that may result. The revisions to the Guidelines reflect recent developments in disciplinary sanctions and include Guidelines for a variety of matters not addressed in the initial publication.

      For more information on the Guidelines, call Norman Sue, Jr., Associate General Counsel, at (202) 728-8117, or Carla J. Carloni, Assistant General Counsel, at (202) 728-8019.

      Copies of the Guidelines are available for purchase at $35 each ($10 each for employees of NASD member firms) by contacting NASD MediaSourceSM at (240) 386-4200 for credit card orders or by writing to: NASD MediaSource, P.O. Box 9403, Gaithersburg, MD 20898-9403. Please make checks payable to the National Association of Securities Dealers, Inc.

    • 96-27 Significant Disciplinary Actions Prompt Reentry Into The Regulatory Element Of The Continuing Education Program

      Executive Summary

      The purposes of this Notice are to remind members that significant disciplinary actions prompt reentry into the Regulatory Element of the Continuing Education Program; to advise members that, in late April 1996, the NASD will initiate reentry into the Regulatory Element for those members who were the subject of significant disciplinary actions between July 1, 1985, and June 30, 1995; and to illustrate how reentry into the Regulatory Element works.

      Questions about this Notice may be directed to John Linnehan, Director, Continuing Education, at (301)-208-2932 or to your CRD Quality and Service Team.

    • 96-26 SEC Approves Schedule C Changes Regarding Use Of The Modified Series 7 To Qualify Canadian Registrants

      Effective Date: April 15, 1996

      Executive Summary

      The Securities and Exchange Commission (SEC) approved, effective February 9, 1996, an amendment to Schedule C of the NASD By-Laws that allows persons registered with Canadian securities regulatory organizations to qualify as general securities representatives by passing a modified General Securities Representative Examination (Series 7). The NASD has filed with the SEC a similar amendment to Schedule C for persons registered with the Japan Securities Dealers Association.

      Study outlines for the Series 37, 38, and 47 are available from the NASD MediaSourceSM at (240) 386-4200.

      Questions relating to the content of the Series 37, 38, 47, and registration and examination scheduling should be referred to the NASD Qualifications Department, at (240) 386-4679.

    • 96-25 SEC Approves NASD Manual Revisions; Publication Scheduled For May

      View PDF File

      Executive Summary

      In mid-January, the Securities and Exchange Commission (SEC) approved a revised NASD Manual. To facilitate your adjustment to this new Manual, which is scheduled for publication and dissemination this May, we have included a Guide to the Manual: New-to-Old Conversion Chart and Old-to-New Conversion Chart. This material outlines the reorganized Manual and indicates where the relocated material appeared in the old Manual.

      Please direct your questions or concerns about these changes to T. Grant Callery, Vice President and General Counsel, Office of the General Counsel, at (202) 728-8285, or Joan C. Conley, Corporate Secretary, at (202) 728-8381.

          March 4, 1996
        GUIDE TO THE MANUAL (OLD-TO-NEW CONVERSION CHART)  
      Existing Provision   Proposed Rule No.
        SCHEDULES TO THE BY-LAWS  
      Schedule A   Unchanged
      Schedule B   Unchanged
      Schedule C   1000
      I. Applications for Membership 1010
      II. Registration of Principals 1020
      Registration on Registered Options Principals IM-1022-1
      Explanation on Limited Principal - General Securities Sales Supervisor IM-1022-2
      III. Registration of Representatives 1030
      IV. Registration of Assistant Representatives-Order Processing 1040
      V. [Reserved]  
      VI. Persons Exempt from Registration 1060
      VII. Qualification Examinations and Waiver of Requirements 1070
      VIII. Confidentiality of Examinations 1080
      IX. Foreign Members 1090
      X. Foreign Associates 1100
      Resolution on Filing of Misleading Information as to Membership or Registration IM-1000-1
      Resolution on Status of Sole Proprietors and Registered Representatives Serving in the Armed Forces IM-1000-2
      Resolution on Failure to Register Personnel IM-1000-3
      Explanation on Appointment of Executive Representatives IM-1000-4
      XI. Registration of Government Securities Principals and Representatives 1100
      XII. Continuing Education Requirements 1120
      Schedule D    
      Part I  
      Definitions 4200
      Part II  
      Qualification Requirements for Nasdaq Stock Market Securities 4300
      1. Domestic and Canadian Securities 4310
      2. Non-Canadian Foreign Securities and ADRS 4320
      3. Suspension or Termination of Inclusion of a Security and Exceptions to Inclusion Criteria 4330
      4. Use of The Nasdaq Stock Market on a Test Basis 4110
      5. Trading Halts 4120
      Policy on Voting Rights IM-4310
      Disclosure of Material Information IM-4120
      Part III  
      Designation of Nasdaq National Market Securities 4400
      Introduction 4400
      1. Applications for Designation 4410
      2. Quantitative Designation Criteria 4420
      3. Limited Partnership Rollup Designation Criteria 4430
      4. Registration Standard 4440
      5. Quantitative Maintenance Criteria 4450
      6. Non-Quantitative Designation Criteria for Issuers Excepting Limited Partnerships 4460
      7. Non-Quantitative Designation Criteria for Issuers that are Limited Partnerships 4470
      8. Termination Procedures 4480
      Policy on Voting Rights IM-4120
      Part IV  
      Listing Fees 4500
      A. Nasdaq National Market - Entry Fee 4510(a)
      B. Additional Shares 4510(b)
      C. Annual Fee - Domestic and Foreign Issues 4510(c)
      D. Annual Fee - American Depository Receipts (ADRs) 4510(d)
      E. The Nasdaq Smallcap Market - Entry Fee 4520(a)
      F. The Nasdaq Smallcap Market - Additional Shares 4520(b)
      G. Annual Fee - Domestic and Foreign Issues 4520(c)
      H. Annual Fee - American Depository Receipts (ADRs) 4520(d)
      I. Issuer Hearing Fee - Hearing Fee 4530
      Part V  
      Requirements Applicable to Nasdaq Market Makers 4600
      1. Registration as a Nasdaq Market Maker 4611
      2. Character of Quotations 4613
      Nasd Autoquote Policy IM-4613
      3. Stabilizing Bids 4614
      4. Automated Submission of Trading Data 4615
      5. Reports 4616
      6. Normal Business Hours 4617
      7. Clearance and Settlement 4618
      8. Withdrawal of Quotations and Passive Market Making 4619
      9. Voluntary Termination of Registration 4620
      10. Suspension and Termination of Quotations by Association Action 4621
      11. Termination of Service 4622
      Part VI  
      Consolidated Quotations Service (CQS) 6300
      1. Registration as a CQS Market Maker 6320
      2. Obligations of CQS Market Maker 6330
      NASD Autoquote Policy IM-4613
      3. Normal Business Hours 6340
      4. Withdrawal of Quotations 6350
      5. Voluntary Termination of Registration 6360
      6. Suspension and Termination of Quotations by Association Action 6370
      Part VII  
      Nasdaq Index Options 2870
      1. Definitions 2871
      2. Nasdaq Index Options Services Available 2872
      3. Registration, Qualification and Other General Requirements Applicable to All Nasdaq Index Options Market Makers 2873
      4. Character of Index Options Quotations Entered into the Nasdaq Index Options Service by All Nasdaq Index Options Market Makers 2874
      5. Commitment Rules Applicable to Options Market Makers in Nasdaq Index Options 2875
      6. Sanctions Applicable to Nasdaq Index Options Market Makers 2876
      7. Requirements Applicable to Nasdaq Index Options Order Entry Firms 2877
      8. Transaction Reporting and Other Reporting Requirements 2878
      9. Authorization of Nasdaq Index Option Market Making 2879
      10. Nasdaq Index Options Contracts Authorized for Trading 2880
      11. Series of Nasdaq Index Options for Trading 2881
      12. Unit of Trading 2882
      13. Suspension of Authorization of Nasdaq Index Option Contracts 2883
      14. Trade Comparison Procedures for nasdaq Index Options 2884
      15. Clearance and Settlement Procedures for Nasdaq Index Options 2885
      16. Rules of General Applicability [Deleted]
      Part VIII  
      Schedule of NASD Charges for Services and Equipment 7000
      A. System Services 7010
      B. Equipment Related Charges 7020
      C. Special Options 7030
      D. Installation, Removal or Relocation 7040
      E. Other Services 7050
      F. Partial Month Charges 7060
      G. Subscriber Deposits 7070
      H. Late Fees 7080
      I. Mutual Fund Quotation Program 7090
      J. Minor Modifications in Charges 7100
      Part IX [Rescinded]
      Part X  
      Reporting Transactions in Nasdaq National Market Securities 4630
      1. Definitions 4631
      2. Transaction Reporting 4632
      Interpretation on Transaction Reporting IM-4632
      Part XI  
      Reporting Transactions in Nasdaq Smallcap Market Securities 4640
      1. Definitions 4641
      2. Transaction Reporting 4642
      Interpretation on Transaction Reporting IM-4632
      3. Customer Confirmations 4643
      Part XII  
      Reporting Transactions in Over-the-Counter Equity Securities 6600
      1. Definitions 6610
      2. Transaction Reporting 6620
      Interpretation on Transaction Reporting IM-4632
      Part XIII  
      Reporting Transactions in Convertible Debt Securities Traded On the Nasdaq Stock Market 4650
      1. Definitions 4651
      2. Transaction Reporting 4652
      Interpretation on Transaction Reporting IM-4632
      Part XIV  
      Mutual Fund Quotation Program 6800
      A. Description  
      B. Eligibility Requirements  
      C. News Media Lists  
      D. Supplemental List  
      E. Determination of Number of Shareholders  
      Schedule E  
      Distribution of Securities of Members and Affiliates - Conflicts of Interest 2720
      1. General 2720(a)
      2. Definitions 2720(b)
      3. Participation in Distribution of Securities of Member or Affiliate 2720(c)
      4. Disclosure 2720(d)
      5. Escrow of Proceeds, Net Capital Computation 2720(e)
      6. Audit Committee 2720(f)
      7. Public Director 2720(g)
      8. Period Reports 2720(h)
      9. Offerings Resulting in Affiliation or Public Ownership of Member 2720(i)
      10. Registration Statements for Intrastate Offerings 2720(a)
      11. Suitability 2720(k)
      12. Discretionary Accounts 2720(l)
      13. Sales to Employees-No Limitations 2720(m)
      14. Filing Requirements; Coordination with Corporate Financing Interpretation 2720(n)
      15. Predominance of Schedule E 2720(o)
      16. Requests for Exemption from Schedule E 2720(p)
      17. Violation of Schedule E 2720(q)
      Schedule F [Rescinded]
      Schedule G  
      Reporting Transactions in Listed Securities 6400
      1. Definitions 6410
      2. Transaction Reporting 6420
      Interpretation on Transaction Reporting IM-4632
      3. Suspension of Trading 6430
      4. Trading Practices 6440
      5. Eligible Securities 6450
      Resolution on Interpretations and Explanations By-Laws, Art. XI, Sec. 4
      Resolution on Limitations upon Use of Association Name By-Laws, Art. XVI, Sec. 2
      Schedule H 6700
      1. Definitions 6710
      2. Price and Volume Reporting 6720
      3. Automated Submission of Trade Data 6730
      4. Submission of Rule 15c2-11 Information on Non-Nasdaq Securities 6740
      5. Minimum Quotation Size Requirements for OTC Equity Securities 6750
      Schedule I  
      PORTAL Market Rules 5300
      Part I  
      1. Definitions 5310
      Part II  
      Requirements Applicable to PORTAL Securities 5320
      1. Application for Designation 5321
      2. Qualification Requirements for PORTAL Securities 5322
      3. Suspension or Termination of a PORTAL Security Designation 5323
      Part III  
      Requirements Applicable to Members of the Association 5330
      1. Limitations on Transactions in PORTAL Securities 5331
      2. Reporting Debt and Equity Transactions in PORTAL Securities 5332
      3. PORTAL Settlement 5333
      4. PORTAL Transaction Reports 5334
      5. PORTAL Non-Participant Report 5335
      6. PORTAL Surveillance Report 5336
      7. Comparison of PORTAL Transaction Reports Entered in the PORTAL Market System 5337
      8. Registration Requirements for PORTAL Dealers 5338
      9. Registration Requirements for PORTAL Brokers 5339
      10. Continuing Requirements for PORTAL Dealers and PORTAL Brokers 5340
      Part IV  
      Requirements Applicable to PORTAL Qualified Investors 5350
      1. Registration Requirements for PORTAL Qualified Investors 5351
      2. Continuing Requirements for PORTAL Qualified Investors 5352
      3. Suspension or Termination of the Registration of a PORTAL Qualified Investor 5353
      Part V  
      Denial, Suspension or Termination Procedures 5360
      Part VI  
      PORTAL Market Transactions 5370
      1. Normal PORTAL Market Hours of Operation 5371
      2. PORTAL Quotations 5372
      3. PORTAL Contracts 5373
      4. PORTAL Fees 5374
      5. "When, as and If Issued" Trading 5375
      6. "Short" Sales 5376
      7. Stabilizing Bids 5377
      8. Partial Delivery 5378
      9. Close-Out Procedures-"Buying-In" 5379
      10. Close-Out Procedures-"Selling-Out" 5380
      Part VII  
      Rules of Fair Practice 5392
      Part VIII  
      Arbitration 5391
      Part IX  
      PORTAL Fees 5324
      Schedule J  
      Trading in Index Warrants, Currency Index Warrants, and Currency Warrants 2840
      1. General 2841
      2. Definitions 2842
      3. Account Approval 2843
      4. Suitability 2844
      5. Discretionary Accounts 2845
      6. Supervision of Accounts 2846
      7. Customer Complaints 2847
      8. Communications with the Public and Customers Concerning Index Warrants, Currency Index Warrants, and Currency Warrants 2848
      9. Maintenance of Records 2849
      10. Position Limits 2850
      11. Exercise Limits 2851
      12. Reporting Requirements 2852
      13. Liquidation of Index Warrant Positions 2853
      14. Trading Halts or Suspensions 2854
        RULES OF FAIR PRACTICE  
      Article I  
      Adoption and Application 0110
      1. Adoption of Rules 0111
      2. Effective Date 0112
      3. Interpretation 0113
      4. Effect on Transactions in Exempted Securities 0114
      5. Applicability 0115
      Article II  
      Definitions  
      1. Definitions in Rules 0120
      2. Definitions in By-Laws 0121
      Article III  
      Rules of Fair Practice  
      1. Business Conduct of Members 2110
      Interpretation on Execution of Retail Transactions in the Over-the-Counter Market 2320
      Interpretaion on Prompt Receipt and Delivery of Securities 3370
      Interpretation on Forwarding of Proxy and Other Materials 2260
      Interpretation on "Free-Riding and Withholding" IM-2110-1
      Interpretation on Trading Ahead of Customer Limit Orders IM-2110-2
      Interpretation on Front Running Policy IM-2110-3
      Interpretation on Trading Ahead of Research Reports IM-2110-4
      2. Recommendations to Customers 2310
      Policy on Fair Dealing with Customers IM-2310-2
      3. Charges for Services Performed 2430
      4. Fair Prices and Commissions 2440
      Interpretation on NASD Mark-Up Policy IM-2440
      5. Publication of Transactions and Quotations 3310
      Interpretation on Manipulative and Deceptive Quotations IM-3310
      6. Offers at Stated Prices 3320
      Policy with Respect to Firmness of Quotations IM-3320
      7. Disclosure of Price in Selling Agreements 2770
      8. Securities Taken in Trade 2730
      Interpretation on Safe Harbor and Presumption of Compliance IM-2730
      9. Use of Information Obtained in Fiduciary Capacity 3120
      10. Influencing or Rewarding Employees of Others 3060
      11. Payment Designed to Influence Market Prices, Other than Paid Advertising 3330
      12. Disclosure on Confirmations 2230
      Explanation on "Third Market Confirmations" IM-2230
      13. Disclosure of Control 2240
      14. Disclosure of Participation or Interest in Primary or Secondary Distribution 2250
      15. Discretionary Accounts 2510
      16. Offering "At the Market" 2760
      17. Solicitation of Purchase on an Exchange to Fcilitate a Distribution of Securities 2780
      18. Use of Fraudulent Devices 2120
      19. Customers' Securities or Funds 2330
      Explanation of Paragraph (d) of Section 19 IM-2330
      20. Installment or Partial Payment Sales 2450
      21. Books and Records 3110
      22. Disclosure of Financial Condition 2270
      Resolution on Requirements of Members to Furnish Recent Financial Statement to Other Members 2910
      23. Net Price to Persons Not in Investment Banking or Securities Business 2410
      24. Selling Concessions 2740
      Interpretation on Services in Distribution IM-2710
      25. Dealing with Non-Members 2420
      Interpretation on Transactions Between Members and Non_Members IM-2420-1
      26. Investment Companies 2830
      27. Supervision 3010
      28. Transactions for or by Associated Persons 3050
      29. Variable Contracts of an Insurance Company 2820
      30. Margin Accounts 2520
      31. Securities "Failed to Receive" and "Failed to Deliver" 3210
      32. Fidelity Bonds 3020
      33. Options 2860
      Interpretations on Opening Accounts for Options Customer IM-2860-2
      34. Direct Participation Programs 2810
      35. Communications with the Public 2210
      Guidelines Regarding Communications with the Public Collateralized Mortgage Obligations (CMOs) IM-2210-1
      Guidelines Regarding Communications with the Public about Variable Life Insurance and Variable Annuities IM-2210-2
      Guidelines for the Use of Ranking in investment Companies Advertisements and Sales Literature IM-2210-3
      35A. Options Communications with the Public 2220
      36. Transactions with Related Persons 2750
      Interpretation on Transaction with Related Persons IM-2750
      37. [Reserved]  
      38. Regulation of Activities of Members Experiencing Financial and/or Operational Difficulties 3130
      Explanation on Restrictions on a Member's Activity IM-3130
      39. Approval of Change in Exempt Status under SEC Rule 15c3-3 3140
      40. Private Securities Transactions 3040
      41. Short-Interest Transactions 3360
      42. Prohibition on Transactions During Trading Halts 3340
      43. Outside Business Activities 3030
      44. The Corporate Financing Rule 2710
      45. Customer Account Statements 2340
      46. Adjustment of Open Orders 3220
      47. Clearing Agreements 3230
      48. Short Sale Rule 3350
      Interpretation on Short Sale Rule IM-3350
      49. Primary Nasdaq Market Maker Standards 4612
      50. Reporting Requirements 3070
      Article IV  
      Complaints  
      1. Availability to Customer of Certificate, By-Laws, Rules and Code of Procedure 8110
      2. Complaints by Public Against Members for Violations of Rules 8120
      3. Complaints by District Business Conduct Committees 8130
      4. Complaints by the board of Governors 8140
      5. Reports and Inspection of Books for Purpose of Investing Complaints 8210
      Resolution on Suspension of Members for Failure to Furnish Information Duly Requested 8220
      Article V  
      Penalties  
      1. Sanctions for Violation of the Rules 8310
      Interpretation on the Effect of a Suspension or Revocation of the Registration, If Any, of a Person Associated with a member or the Barring of a Person from Further Association with a Member IM-8310-1
      Resolution on Notice to Membership and Press of Suspension, Expulsions, Revocation, and Monetary Sanctions and Release of Certain Information Regarding Disciplinary History of Members and Their Associated Persons IM-8310-2
      2. Payments of Fines, Other Monetary Sanctions, or Costs 8320
      3. Costs of Proceedings 8330
      Article VI  
      Current Membership List 1130
        GOVERNMENT SECURITIES RULES [ToBeRescinded]
        SOES RULES  
      a. Definitions 4710
      b. SOES Participant Registration 4720
      c. Participant Obligations in SOES 4730
      d. Clearance and Settlement 4740
      e. Obligations to Honor System Trades 4750
      f. Compliance with Rules and Registration Requirements 4760
        Fees Applicable to SOES 4770
        ITS/CAES RULES  
      a. Definitions 5210
      b. ITS/CAES Registration 5220
      c. Suspension or Revocation of ITS/CAES Registration 5221
      d. ITS Operations 5230
      e. Pre-Opening Application-Opening by ITS/CAES Market Maker 5240
      f. Pre-Opening Application-Opening on Other Participant Markets 5250
      g. Obligation to Honor System Trades 5261
      h. Trade-Thoughts 5262
      i. Locked or Crossed Markets 5263
      j. Block Transactions 5264
      k. Authority to Cancel or Adjust Transactions 5265
        ACT RULES  
      a. Definitions 6110
      b. Participation in ACT 6120(a)
      c. Participation Obligations in ACT 6120(b)
      d. Trade Report Input 6130
      e. ACT Processing 6140
      f. ACT Risk Management Functions 6150
      g. Obligation to Honor Trades 6160
      h. Audit Trail Requirements 6170
      i. Violation of ACT Rules 6180
      j. Termination of ACTS Service 6190
        FIXED INCOME PRICING SYSTEM RULES  
      Part I  
      Definitions 6210
      Part II  
      Resignation of High Yield Bonds Quoted in the Fixed Income Pricing System 6220
      Part III  
      Requirements Applicable to Participants in the Fixed Income Pricing System - Quotations 6230
      a. Participations in FIPS  
      b. Participant Obligations in FIPS  
      c. Character of Quotations  
      d. Operating Hours  
      e. Quotations Halts  
      f. Voluntary Termination of Quotations  
      g. FIPS Processing and Trade Execution Functions  
      Part IV  
      Reporting Transactions in High Yield Fixed Income Securities 6240
      a. Trade Reporting Requirements for Bonds Quoted in FIPS  
      b. Trade Reporting Requirements for High Yield Bonds Not Quoted in FIPS  
      c. Transaction Not Required to Be Reported  
      Part V  
      Dissemination of Quotation and Volume Information 6250
      Part VI  
      Compliance with FIPS Rules and Trade Reporting Requirements 6260
        OTCBB RULES 6500
      1. Applicability 6510
      2. Operation of the Service 6520
      3. OTCCB-Eligible Securities 6530
      4. Requirements Applicable to Market Makers 6540
      5. Transaction Reporting 6550
        NASDAQ INTERNATIONAL SERVICE RULES 5100
      1. Applicability 5101
      2. Definitions 5102
      3. Normal Business Hours 5103
      4. Qualified Securities 5104
      5. Access 5105
      6. Requirements Applicable to Market Makers 5106
      7. Automated Submission of Trading Data 5107
      8. Reports 5108
      9. Clearance and Settlement of International Transactions 5109
      10. Suspension and Termination of Quotations by NASD Action 5110
      11. Termination of Access 5111
      12. Transaction Reporting Requirements 5112
      13. Audit Trail Requirements 5113
        CODE OF PROCEDURE 9000
      Article I  
      Application and Purpose of Code  
      1. Purpose 9110
      2. Definitions 9120
      3. Interpretation 9110(c)
      4. Communication Relating to Grievances 9111
      Article II  
      Disciplinary Actions by District Business Conduct Committees, The Market Surveillance Committee and Others 9200
      1. Issuance of Complaints by Committees 9211
      2. Form, Content, Notice and Withdrawal of Complaints 9212
      3. Answer to Complaints 9216
      4. Request for Hearing 9221
      5. Venue 9222
      6. Hearing Panels 9223
      7. Evidence and Procedure in Committee Hearings 9224
      8. Decision of the Committee 9225
      9. Consolidation of the Committee 9215
      10. Acceptance, Waiver and Consent, Minor Rule Violations And Summary Complaint Procedure 9217
      11. Settlement Procedure 9226
      12. Complaints Directed by the Board or the National Business Conduct Committee 9213
      13. Complaint Docket 9214
      Article III  
      1. Review of Disciplinary Actions by the National Business Conduct Committee and the Board 9310
      2. Proceedings 9311
      3. Evidence in National Business Conduct Committee Proceedings 9312
      4. Powers of the National Business Conduct Committee on Review 9313
      5. Decision of the National Business Conduct Committee 9314
      6. Notification of Decision; Final Disciplinary Action 9315
      7. Discretionary Review by the Board 9316
      8. Application to SEC for Review 9317
      Article IV  
      Imposition of Sanctions and Costs 9400
      1. Sanctions 9410
      2. Costs of Proceedings 9420
      Article V  
      Limitations and Approval Procedures under Article III, Sections 38 and 39 of the Rules of Fair Practice 9500
      A. Procedures under Article III, Section 38 of The Rule of Fair Practice 9510
      1. Board of Governors' Surveillance Committee 9511
      2. District Surveillance Committee 9512
      3. Written Notification 9513
      4. Hearing 9514
      5. Decision and Effective Date 9515
      6. Review by Board 9516
      7. Composition of Board of Governors' Hearing Panel 9517
      8. Decision 9518
      9. Application to Commission for Review 9519
      10. Successive Notices 9520
      11. Complaint by the Committee 9521
      B. Procedures under Article III, Section 39 of The Rules of Fair Practice 9530
      1. District Staff Procedures 9531
      2. District Business Conduct Committee Review 9532
      3. Review by Board 9533
      4. Decision of Board 9534
      5. Applicable to Commission for Review 9535
      Article VI  
      Revocation Proceedings 9620
      1. Purpose 9621
      2. Commencement of Revocation Proceedings 9622
      3. Hearings 9623
      4. Decisions 9624
      5. Other Action Not Foreclosed 9625
      Article VII  
      Eligibility Proceedings 9640
      1. Purpose 9641
      2. Eligibility Proceedings 9642
      Article VIII  
      Summary Suspension 9610
      1. Summary Action 9611
      2. Written Notification 9612
      3. Request for Hearing 9613
      4. Hearing 9614
      5. Decision 9615
      6. Review by Board 9616
      7. Finding of Board on Review 9617
      8. Application to Commission for Review 9618(a)
      9. Application to Commission for Stay of Summary Action 9618(b)
      10. Other Action Not Foreclosed 9619
      Article IX  
      Procedures on Grievances Concerning the Automated System 9700
      1. Purpose 9710
      2. Form of Application 97203
      3. Request for Hearing 9730
      4. Consideration of Applications 9740
      5. Decision 9750
      6. Review by the Nasdaq Hearing Review Committee 9760
      7. Findings of Nasdaq Hearing Review Committee on Review 9770
      8. Discretionary Review by the Board 9780
      9. Application to Commission for Review 9790
      Article X  
      Miscellaneous  
      1. Grounds of Disqualification of Participate in Proceedings 9131
      2. Reports and Examination of Books and Records 9132
      3. Rulings on Procedural Matters 9133
      4. Service of Complaints, Decisions and Other Notices 9134
      5. Amendments to Code of Procedure [Deleted]
      Article XI  
      Expedited Remedial Proceedings 9630
      1. Purpose 9631
      2. Commencement of Expedited Remedial Proceedings 9632
      3. District or Market Surveillance Decision 9633
      4. Review by Board 9634
      5. Board Decision 9635
      6. Hearings 9636
      7. Other Action Not Foreclosed 9637
      8. Application to Commission for Review 9638
      Article XII  
      Code of Procedures for Corporate Financing and Direct Participation Program Matters 9800
      1. Purpose 9810
      2. Application by Aggrieved Member 9820
      3. Application for Review 9830
      4. Notice of Hearing 9840
      5. Hearing Committee and Procedure 9850
      6. Requirement for Written Determination 9860
      7. Review by Committee of Board 9870
      8. Nature of Determination 9880
        UNIFORM PRACTICE CODE 11000
      1. Scope of Uniform Practice Code 11100
      2. Committees 11110
      Resolution on Refusal to Abide by Rulings of the Committee IM-11110
      3. Definitions 11120
      4. When, as and If Distributed Contracts 11130
      Ruling on Notice re: Trade Date IM-11120
      5. Transactions in Securities "Ex-Dividend," "Ex-Rights" or "Ex-Warrants" 11140
      6. Transactions "Ex-Interest" in Bonds Which Are Dealt in "Flat" 11150
      7. Transactions in "Part-Redeemed" Bonds 11160
      8. Comparisons or Confirmations and "Don't Know Notices" 11170
      Comparisons or Confirmations and "Don't Know Notices" 11200
      9. Sent by Each Party 11210
      10. Description of Securities 11220
      Delivery of Securities 11300
      11. Book Entry Settlement 11310
      12. Dates of Delivery 11320
      13. Payment 11330
      14. Stamp Taxes 11340
      15. Part Delivery 11350
      16. Units of Delivery-Stocks 11360
      17. Units of Delivery-Bonds 11370
      17A. Units of Delivery-Unit Investment Trust Securities 11380
      18. Units of Delivery-Certificates of Deposit for Bonds 11390
      Ruling on Notice re: Trading Securities as "Units" or Bonds "With Stock" IM-11390
      Delivery of Securities with Draft Attached 11400
      19. Acceptance of Draft: Time of Presentation 11410(a)
      20. Prior to Settlement Date 11410(b)
      21. With Irregularities 11410(c)
      22. Expenses Due to Shipment 11410(d)
      23. Expenses Due to Delay 11410(e)
      24. Claims for Irregularities 11410(f)
      Delivery of Securities with Restrictions 11500
      25. Delivery of Temporary Certificates 11510
      26. Delivery of Mutilated Securities 11520
      27. Delivery of Securities Called for Redemption or Which are Deemed Worthless 11530
      28. Delivery under Government Regulations 11540
      29. Assignments and Powers of Substitution; Delivery of Registered Securities 11550
      30. [Rescinded]  
      31. Certificate of Company Whose Transfer Books Are Closed 11560
      32. Certificate in Name of Corporation, Etc. 11571
      33. Certificate in Name of Firm 11572
      34. Certificate in Name of Dissolved Firm Succeeded by New Firm 11573
      36. Certificate in Name of Deceased Person, Trustee, Etc. 11574
      Delivery of Bonds and Other Evidences of Indebtedness 11600
      39. Liability for Expenses 11610
      40. Coupon Bonds 11610(a)
      41. Registerable as to Principal 11610(d)
      42. Endorsements for Banking or Insurance Requirements 11610(e)
      43. Coupon Detached Prior to Delivery 11610(f)
      44. Stamped Bonds 11610(g)
      45. Certificates of Deposit 11610(h)
      46. Computation of Interest 11620
      48. Due-Bills and Due-Bill Checks 11630
      49. Claims for Dividends, Rights, Interest, Etc. 11640
      50. Transfer Fees 11650
      Reclamation and Rejection 11700
      51 Definitions 11710(a)
      52. Uniform Reclamation Form 11710(b)
      53. Time for Delivery on Reclamation and Manner of Settlement 11710(c)
      54. Minor Irregularities 11710(d)
      55. Wrong Form of Certificate 11710(e)
      56. Irregular Delivery - Transfer Refused - Lost or Stolen Securities 11720
      Policy Obligations of Members Who Discover Securities in Their Possession to Which They Are Not Entitled IM-11720
      57. Called Securities 11730
      58. Marking to the Market 11740
      Close-Out Procedure 11800
      59. "Buying-In" 11810
      60. "Selling-Out" 11820
      61. Rights and Warrants 11840
      62. CUSIP Number 11100(d)
      63. Tendering Procedures for Exercise of Options 11850
      64. Acceptance and Settlement of COS Orders 11860
      65. Customer Account Transfer Contracts 11870
      66. Settlement of Syndicate Accounts 11880
      67. Settlement of Underwritten Public Offerings 11880(d)
      68. Use of Trade Acceptance and Reconciliation Service 11180
      69. Reconfirmation and Pricing Service Participants 11190
      Clearly Erroneous Trades 11890
      70. Authority to Declare Transactions Void 11890(a)
      Mandatory Close-Out for Short Sales 11830
      72. Clearance of Corporate Debt Securities 11900
        CODE OF ARBITRATION PROCEDURE  
      Part I  
      Administrative Provisions 10100
      1. Matters Eligible for Submission 10101
      2. National Arbitration Committee 10102
      3. Director of Arbitration 10103
      4. Composition and Appointment of Panels 10104
      Resolution on Arbitrators' Honorarium IM-10104
      5. Non-Waiver of Association Objects and Purposes 10105
      6. Legal Proceedings 10106
      7. Amendments, Modification, or Cancellation of Code [Deleted]
      Part II.  
      Industry and clearing Controversies 10200
      8. Required Submission 10201
      9. Composition fo Panels 10202
      10. Simplified Industry Arbitration 10203
      11. Applicability of Uniform Code 10204
      Part III.  
      Uniform Code of Arbitration 10300
      12. Required Submission 10301
      13. Simplified Arbitration 10302
      Interpretation on Related Counterclaim IM-10302
      14. Hearing Requirements—Waiver of Hearing 10303
      15. Time Limitation upon Submission 10304
      16. Dismissal of Proceedings 10305
      17. Settlements 10306
      18. Tolling of Time Limitations(s) for the Institution of Legal Proceedings and Extension of Time Limitation(s) for Submission to Arbitration 10307
      19. Designation of Number of Arbitrators 10308.
      20. Composition of Panels 10309
      21. Notice of Selection of Arbitrators 10310
      22. Peremptory Challenge 10311
      23. Disclosures Required of Arbitrators 10312
      24. Disqualified or Other Disability of Arbitrators 10313
      25. Initiation of Proceedings 10314
      26. Designation of Time and Place of Hearing 10315
      27. Representation by Counsel 10316
      28. Attendance at Hearings 10317
      29. Policy on Closing Arguments IM-10317
      29. Failure to Appear 10318
      30. Adjournments 10319
      31. Acknowledgement of Pleadings 10320
      32. General Provisions Governing Pre-Hearing Proceedings 10321
      33. Subpoenas and Power to Direct Appearances 10322
      34. Evidence 10323
      35. Interpretation of Provisions of Code and Enforcement of Arbitrator Rulings 10324
      36. Determination of Arbitrators 10325
      37. Record of Proceedings 10326
      38. Oaths of the Arbitrators and Witnesses 10327
      39. Amendments 10328
      40. Reopening of Hearings 10329
      41. Awards 10330
      42. Incorporation by Reference 10331
      43. Schedule of Fees for Customer Disputes 10332
      44. Schedule of Fees for Industry and Clearing Controversies 10205
      45. Member Surcharge 10333
      46. Procedures for Large and Complex Cases 10334
      47. Injunctions 10335
      48. [Reserved]  
      49. [Reserved]  
      Part IV  
      Mediation Rules 10400
      50. Scope and Authority 10401
      51. Submission of Eligible Matters 10402
      52. Arbitration Proceedings 10403
      53. Mediator Selection 10404
      54. Limitation on Liability 10405
      55. Mediation Ground Rules 10406
      Resolution on Failure to ACT under Provisions of Code of Arbitration Procedure IM-10100
        Investment Company Securities [Deleted]
      Introduction [Deleted]
        Interpretation and Policies of the Board of Governors Regarding Investment Company Securities  
      Promt Payment by Members for Shares of Investment Companies [Rescinded]
      "Breakpoint" Sales IM-2830-1
      Policy with Respect to Continuing Commissions IM-2420-2
      Maintaining the Policy Offering Price IM-2830-2
        Explanatory Material Concerning Investment Company Sales Literature and Advertising  
      "Tombstone" Advertising (SEC Rule 134) SEC Rules Tab
      Generic or Institutional Literature and Advertising (SEC Rule 15a) SEC Rules Tab
      Investment Company Prospectus Advertising (SEC Rule 482) SEC Rules Tab
      Sales Literature Deemed to Be Misleading (SEC Rule 34b-1) SEC Rules Tab
      Investment Company Sales Literature (SEC Rule 156 SEC Rules Tab
      Guidelines Regarding Communications with the Public about Investment Companies and Variable Contracts [Rescinded]

    • 96-24 SEC Approves Rule Mandating TIF Immobilization

      Effective Date: July 1, 1996

      Executive Summary

      On March 11, 1996, the Securities and Exchange Commission (SEC) approved an amendment to Section 65 of the NASD Uniform Practice Code (UPC) to require members to transmit customer account transfer instructions electronically. The NASD is amending Section 65 of the UPC to require members that are currently participants in the National Securities Clearing Corporation's (NSCC) Automated Customer Account Transfer Service (ACATS) to become participants in the securities industry's Transfer Initiation Form (TIF) Immobilization Pilot Program (Pilot Program) and transmit transfer instructions electronically through ACATS.

      The NASD is adopting this change because it believes that requiring participation in the Pilot Program should help reduce or eliminate the infrequent delays that some customers may be experiencing when transferring accounts and improve investor confidence in the industry's ability and willingness to comply expeditiously with customer instructions. The amendment is effective on July 1, 1996; therefore, members that are participants in NSCC, including members that are also members of another self-regulatory organization (SRO), must take the actions necessary to become participants in the Pilot Program. The text of the amended Rule follows this Notice.

      Members, including members of other SROs, should contact Wally Bolling at NSCC, at (212) 412-8657, to obtain information about the Pilot Program and become participants in the Pilot Program by the effective date of the amendment.

      Questions regarding this Notice may be directed to Dorothy L. Kennedy, Assistant Director, Nasdaq Market Operations, at (203) 385-6243, or Elliott R. Curzon, Assistant General Counsel, Office of General Counsel, at (202) 728-8451.

    • 96-23 Treasury Issues Updated List Of Specially Designated Nationals And Blocked Persons

      Executive Summary

      The Department of Treasury (Treasury) recently asked the NASD to provide members with the Office of Foreign Assets Control's (OFAC) latest list of persons and entities identified as "Specially Designated Nationals and Blocked Persons." In addition to the list, the NASD has included a summary of OFAC's regulations governing the activities of financial institutions that have such persons or entities as customers. These regulations require broker/dealers to block1 accounts and other assets of countries identified as threats to national security by the President of the United States and prohibit broker/dealers from engaging in unlicensed trade and financial transactions with such countries. OFAC is authorized to impose significant monetary fines for violations of these regulations.

      Questions concerning this Notice may be directed to OFAC at (202) 622-2490. For additional information, refer to Notice to Members 95-97.

    • 96-22 Fixed Income Pricing System Additions, Changes, and Deletions as of February 28, 1996

      [Please note: there is currently no text to accompany this notice. To be updated when material is published by NASD.]

    • 96-21 Nasdaq National Market Additions, Changes, and Deletions as of February 22, 1996

      Executive Summary

      As of February 22, 96, the following 87 issues joined the Nasdaq National Market®, bringing the total number of issues to 4,023:

      Symbol Company Entry Date Level
      DHSM Diagnostic Health Services, Inc. 1/22/96 500
      DHSMW Diagnostic Health Services, Inc.(Wts 6/22/98) 1/22/96 500
      RNCO Alrenco, Inc 1/23/96 200
      FYII F.Y.I. Incorporated 1/23/96 200
      REDB Red Brick Systems, Inc. 1/23/96 200
      MENS K&G Men's Center, Inc 1/24/96 200
      OTEXF Open Text Corporation 1/24/96 200
      PPDI Pharmaceutical Product Development, Inc. 1/24/96 200
      PHMX PhyMatrix Corporation 1/24/96 200
      SLAB Sage Laboratories, Inc. 1/24/96 200
      WLMR Wilmar Industries, Inc. 1/24/96 200
      ELEX ELEXSYS International, Inc. 1/25/96 200
      ESCMF ESC Medical Systems, Limited (Ord Shrs) 1/25/96 200
      HYBN Hybridon, Inc. 1/25/96 1000
      NICEY NICE-Systems, Limited (ADR) 1/25/96 1000
      PTIX Performance Technologies, Inc. 1/25/96 200
      ALLIF Alliance Communications Corporation (Cl B) 1/26/96 200
      MOYC Moyco Technologies, Inc. 1/26/96 200
      OMPT Omnipoint Corporation 1/26/96 200
      PRNIA Premiere Radio Networks, Inc. (Cl A) 1/26/96 200
      NMFS National Medical Financial Services Corp. 1/29/96 200
      AATT Aavid Thermal Technologies, Inc. 1/30/96 200
      HTST Heartstream, Inc. 1/31/96 200
      BOATZ Boatmen's Bancshares, Inc. (Dep Shrs) 1/2/96 200
      CPTS Conceptus, Inc. 1/2/96 200
      CNCT Connective Therapeutics, Inc. 1/2/96 200
      IMTN Iron Mountain Incorporated 1/2/96 200
      NWCI New World Coffee, Inc 1/2/96 1000
      UNDG Unidigital, Inc. 1/2/96 200
      USSB United States Satellite Broadcasting Company, Inc 1/2/96 200
      CTIM Childtime Learning Centers, Inc. 2/2/96 200
      ITRC Intercardia, Inc. 2/2/96 200
      RACF RAC Financial Group, Inc. 2/2/96 200
      REMC REMEC, Inc 2/2/96 200
      RLCO Realco, Inc 2/2/96 200
      RLCOW Realco, Inc. (Wts 2/1/01) 2/2/96 200
      ARTC ArthroCare Corporation 5/2/96 200
      TDGO 3-D Geophysical, Inc. 6/2/96 200
      ABAN American Bancshares, Inc. 6/2/96 200
      DGIT Digital Generation Systems, Inc. 6/2/96 200
      DCTM Documentum, Inc. 6/2/96 200
      AIII Autologic Information International, Inc. 7/2/96 200
      EVTI Endovascular Technologies, Inc. 7/2/96 200
      RAPT Raptor Systems, Inc 7/2/96 200
      RCGI Renal Care Group, Inc 7/2/96 500
      VOCLF VocalTec, Limited (Ord Shrs) 7/2/96 200
      CVUS CellularVision USA, Inc. 8/2/96 200
      CNRMF Cinram Limited 8/2/96 200
      GLBE Globe Business Resources, Inc. 8/2/96 500
      PMOR Phar-Mor, Inc 8/2/96 200
      PMORW Phar-Mor, Inc. (Wts 9/10/02) 8/2/96 200
      RCCC Rural Cellular Corporation 8/2/96 200
      TRES TresCom International, Inc. 8/2/96 200
      CBCA Chancellor Corporation (Cl A) 9/2/96 200
      CDTX Colonial Data Technologies Corp. 9/2/96 200
      SVRID Silicon Valley Research Inc. 9/2/96 500
      ASIA Sunbase Asia, Inc. 9/2/96 200
      VCSI Voice Control Systems, Inc. 9/2/96 200
      OVBC Ohio Valley Banc Corporation 12/2/96 200
      PHSS Physician Support Systems, Inc. 12/2/96 200
      DCRNZ Diacrin, Inc. (Uts 12/30/00) 2/13/96 200
      MACC MACC Private Equities Inc. 2/13/96 500
      OGNB Orange National Bancorp 2/13/96 200
      COTL Cotelligent Group, Inc. 2/14/96 200
      DPNR Dignity Partners, Inc 2/14/96 200
      NCSS NCS HealthCare, Inc. (Cl A) 2/14/96 200
      OPSI Optical Sensors Incorporated 2/14/96 200
      QZARF Q-Zar, Inc 2/1496 200
      SWEBF SoftQuad International, Inc. 2/1496 200
      VIST Vista 2000, Inc. 2/1496 500
      VISTW Vista 2000, Inc. (Wts 10/24/98) 2/1496 500
      VCOM VitalCom, Inc 2/1496 200
      XTEL XeTel Corporation 2/14/96 200
      ICGN ICC Technologies, Inc 2/15/96 500
      CYCH CyberCash, Inc. 2/15/96 200
      ICGN ICC Technologies, Inc 2/15/96 500
      LNDC Landec Corporation 2/15/96 200
      SCBI SCB Computer Technology, Inc. 2/15/96 200
      CHRI COHR Inc 2/16/96 200
      CYLK Cyklink Corporation 2/16/96 200
      GNSM Gensym Corporation 2/16/96 200
      IRIX IRIDEX Corporation 2/16/96 200
      KTIE KTI, Inc 2/16/96 500
      NTEC Neose Technologies, Inc. 2/16/96 200
      ULTD Ultradata Corporation 2/16/96 200
      ANDE Andersons, Inc. (The) 2/20/96 200
      IMPH Impath, Inc 2/21/96 200

      Nasdaq National Market Symbol And/Or Name Changes

      The following changes to the list of Nasdaq National Market securities occurred since January 20, 96:

      New/Old Symbol New/Old Security Date Of Change
      LPGLY/GOVTY London Pacific Group, Limited (Spon ADR)/Govett & Company, Limited (Spon ADR) 1/25/96
      PRNI/PRNI Premiere Radio Networks, Inc. (DE)/Premiere Radio Networks, Inc. (CA) 1/25/96
      PBFI/PBFI Paris Corporation/Paris Business Forms,Inc. 1/30/96
      CELIW/CELIW Cel-Sci Corporation (Wts 2/6/97)/Cel-Sci Corporation (Wts 2/6/96) 2/2/96
      DIIG/DOVT DII Group, Inc. (The)/DOVatron International, Inc. 2/2/96
      EQMD/EQVN EquiMed, Inc. (DE)/Equivision, Inc. (PA) 2/5/96
      PBKB/PBKB People's Bancshares, Inc./People's Savings Bank of Brockton 2/8/96
      BROC/BROC Brock International, Inc./Brock Control Systems, Inc. 2/12/96
      AUGIW/AUGIW American United Global, Inc. (Wts 2/17/97)/American United Global, Inc. (Wts 2/17/96) 2/15/96
      USFC/TNTF TNT Freightways Corporation/TNT Freightways Corporation 2/15/96

      Nasdaq National Market Deletions

      Symbol Security Date
      ETCO The Earth Technology Corporation (USA) 1/22/96
      HWEC Hallwood Energy Corporation 1/22/96
      EPTK EP Technologies, Inc. 1/23/96
      EFMC E for M Corporation 1/23/96
      NTRSZ Northern Trust Corp. (Dep Shrs) 1/24/96
      INMC Inmac Corporation 1/26/96
      PNDR Ponder Industries, Inc. 1/26/96
      SING Singing Machine Company, Inc. (The) 1/26/96
      SINGW Singing Machine Company, Inc. (The) (Wts 11/10/99) 1/26/96
      CBRA Cobra Golf Inc. 1/29/96
      DYPR Drypers Corporation 1/29/96
      FSBXW Framingham Savings Bank (Wts 1/31/96) 1/29/96
      LAUR Laurel Bancorp, Inc. 1/29/96
      IINT Information International, Inc. 1/30/96 DPGE Dial Page, Inc. 1/31/96
      FRTH Fourth Financial Corporation 2/1/96
      FRTHZ Fourth Financial Corporation (Dep Shrs) 2/1/96
      MFIN Metro Financial Corporation 2/1/96
      MTEC Microtec Research, Inc. 2/1/96
      SFFD SFFed Corporation 2/1/96
      WSBK Western Bank 2/1/96
      CBKI Community Banks, Inc. 2/2/96
      CONS Conservative Savings Corp. 2/2/96
      ENVG Envirogen, Inc. 2/2/96
      ENVGW Envirogen, Inc. (Wts 10/12/98) 2/2/96
      GWLD Gaming World International, Ltd 2/2/96
      GWLDW Gaming World International, Ltd. (Wts A 5/11/99) 2/2/96
      CEXCF Conwest Exploration Company Ltd 2/5/96
      OCOMA Outlet Communications, Inc. (Cl A) 2/5/96
      YONK Younkers, Inc. 2/5/96
      PCOR PSICOR, Inc. 2/7/96
      SWIS St. Ives Laboratories, Inc 2/7/96
      CARH Career Horizons, Inc. 2/8/96
      IVFAP IVF America, Inc. (Pfd A) 2/9/96
      MSYS Medical Technology Systems, Inc 2/9/96
      MSYSZ Medical Technology Systems, Inc. (Wts 7/9/96) 2/9/96
      SOLOQ Solo Serve Corporation 2/9/96
      UTIQE Unitech Industries, Inc. 2/9/96
      FBAI Foodbrands America, Inc. 2/13/96
      GBCT GBC Technologies, Inc. 2/13/96
      ABCI Allied Bank Capital, Inc. 2/14/96
      MIHOW Miles Homes, Inc. (Wts 4/1/97) 2/14/96
      CODA Coda Energy, Inc. 2/20/96
      FRST FirsTier Financial, Inc. 2/20/96
      CNRG Coastwide Energy Services, Inc 2/21/96
      CHPP Champps Entertainment, Inc 2/22/96
      DPKG Dolco Packaging Corp. 2/22/96
      MPTR MedPartners/Mullikin, Inc. 2/22/96

      Questions regarding this Notice should be directed to Mark A. Esposito, Nasdaq Market Services Director, Issuer Services, at (202) 496-2536. Questions pertaining to trade-reporting rules should be directed to Bernard Thompson, Assistant Director, NASD Market Surveillance, at (301) 590-6436.

    • 96-20 Good Friday: Trade Date — Settlement Date Schedule

      The Nasdaq Stock MarketSM and the securities exchanges will be closed on Good Friday, April 5, 1996. "Regular way" transactions made on the business days noted below will be subject to the following schedule:

      Trade Date Settlement Date Reg. T Date *
      Apr. 1 Apr. 4 Apr. 9
      2 8 10
      3 9 11
      4 10 12
      5 Markets Closed
      8 11 15
      * Pursuant to Sections 220.8(b)(1) and (4) of Regulation T of the Federal Reserve Board, a broker/dealer must promptly cancel or otherwise liquidate a customer purchase transaction in a cash account if full payment is not received within five (5) business days of the date of purchase or, pursuant to Section 220.8(d)(1), make application to extend the time period specified. The date by which members must take such action is shown in the column entitled "Reg. T Date."

    • 96-19 Annual Check List of NASD Notices to Members

      The NASD® published the following Notices to Members during 95. Duplicate copies are available at $25 per monthly or special issue. A 2-volume bound-set, indexed reprint of the entire year's Notices, is also available at $150. Requests, accompanied by a self-addressed mailing label and a check payable to the National Association of Securities Dealers, Inc., or credit card information, should be sent to NASD MediaSourceSM, P.O. Box 9403, Gaithersburg, MD 20898-9403. Credit card telephone orders for bound volumes can be made by telephoning (301) 590-6578, Monday to Friday, 9 a.m. to 5 p.m., Eastern Time.

      Notice Date Topic Page
      95-1 1/95 NASD Solicits Comment On NASD Mediation Program And Draft Mediation Procedures; Comment Period Expires March 1, 95 1
      95-2 1/95 SEC Adopts Changes To Rule 10b-10; Defers Action On Proposed New Rule 15c2-13 11
      95-3 1/95 Annual Check List Of NASD Notices to Members 25
      95-4 1/95 Presidents' Day: Trade Date-Settlement Date Schedule 31
      95-5 1/95 Nasdaq National Market Additions, Changes, And Deletions As Of December 28, 1994 33
      95-6 1/95 Fixed Income Pricing System Additions, Changes, And Deletions As Of December 29, 1994 37
      95-7 2/95 SEC Approves NASD Proposal Amending Free-Riding And Withholding Interpretation Provisions 55
      95-8 2/95 Short-Interest Reporting Requirements Revision For Exchange-Listed Securities; Effective March 95 67
      95-9 2/95 NASD Qualification Examinations Revisions; Effective Date: May 1, 95 69
      95-10 2/95 1994-95 Renewal Rosters And Final Adjusted Invoices 71
      95-11 2/95 Nasdaq National Market Additions, Changes, And Deletions As Of January 26, 95 73
      95-12 2/95 Fixed Income Pricing System Additions, Changes, And Deletions As Of January 30, 95 75
      95-13 3/8/95 SEC Approves Amendments Relating To Continuing-Education Requirements 91
      95-14 3/95 Revised General Securities Registered Representative Examination (Series 7) Effective Date: May 1, 95 95
      95-15 3/95 Treasury Requests Comments On Large Position Recordkeeping And Reporting For Government Securities; Comment Period Expires: April 24, 95 97
      95-16 3/95 Predispute Arbitration Clauses In Customer Agreements 101
      95-17 3/95 Good Friday: Trade Date-Settlement Date Schedule 103
      95-18 3/95 Nasdaq National Market Additions, Changes, And Deletions As Of February 23, 95 105
      95-19 3/95 Fixed Income Pricing System Additions, Changes, And Deletions As Of February 28, 95 109
      95-20 3/21/95 NASD Solicits Member Comment On Proposals For Comprehensive Improvements To The Regulation And Operation Of The Nasdaq Stock Market; Comment Period Expires April 21, 95 127
      95-21 4/95 Request For Comments On Proposed Suitability Obligations To Institutional Customers Interpretations; Comment Period Expires: May 17, 95 131
      95-22 4/95 SEC Approves Amendments To Article III, Section 44 Of The NASD Rules Of Fair Practice About Filing Requirements For Modified Guaranteed Annuity And Life Insurance Contracts 135
      95-23 4/95 SEC Adopts Amendments To Rule 15c2-12, Municipal Securities Disclosure 137
      95-24 4/95 SEC Approves Recordkeeping And Reporting Requirements For Trading Systems Operated By Broker/Dealers 161
      95-25 4/95 SEC Approves NASD And Options Exchanges' Proposal Regarding Information Storage 175
      95-26 4/95 Conversion To T+3 Settlement, Reg. T, And SEC Rule 15c3-3(m), And Ex-Dividend Schedule 177
      95-27 4/95 NASD Introduces Revised Free-Riding Questionnaire And Form FR-1 181
      95-28 4/95. Treasury Provides Government Securities Broker/Dealers With Exemptive Relief In Calculating Haircuts For Options On Certain Mortgage-Backed Securities 191
      95-29 4/95 Treasury Approves Amendments To Capital Requirements Under The Government Securities Act Of 1986 193
      95-30 4/95 Memorial Day: Trade Date-Settlement Date Schedule 195
      95-31 4/95 Nasdaq National Market Additions, Changes, And Deletions As Of March 27, 95 97
      95-32 4/95 Fixed Income Pricing System Additions, Changes, And Deletions As Of March 29, 95 201
      95-33 5/95 Mail Vote - NASD Solicits Member Vote On Measures To Discipline Members And Registered Persons For Failing To Honor Arbitration And Mediation Settlement Agreements; Last Voting Date: June 15, 95 211
      95-34 5/95 Survey Of Members That Transact Business In PORTAL Securities 215
      95-35 5/95 Continuing Education Program Update: Regulatory Element Questions And Answers 217
      95-36 5/95 SEC Approves T+3-Related Amendments To The NASD Uniform Practice Code And Rules Of Fair Practice 229
      95-37 5/95 SEC Approves NASD Proposal Amending The Foreign-Associate Provisions Of Schedule C To The NASD By-Laws 233
      95-38 5/95 Treasury Adopts Amendments To Form G-405 And Form G-FIN-4 235
      95-39 5/95 Members Reminded To Report Address, Contact Changes To The NASD 237
      95-40 5/95 Nasdaq National Market Additions, Changes, And Deletions As Of April 27, 95 239
      95-41 5/95 Fixed Income Pricing System Additions, Changes, And Deletions As Of April 27, 95 243
      95-42 5/24/95 SEC Approves Amendments To Prospectus Delivery Requirements To Accommodate T+3 Settlement 261
      95-43 6/5/95 SEC Approves Expanded Limit-Order Protection Rule 305
      95-44 6/95 Request For Comments On Proposed Amendments To The Exception To The Qualified Independent Underwriter Requirement In Schedule E To The NASD By-Laws; Comment Period Expires August 1, 95 313
      95-45 6/95 SEC Approves Amendments To NASD Interpretation Of Forwarding Of Proxy And Other Materials Under Article III, Section 1 Of The Rules Of Fair Practice 317
      95-46 6/95 SEC Approves Amendment To UPC To Add New Section 72 321
      95-47 6/95 SEC Approves NASD Proposal To Raise Position Limits For Certain Equity Securities Not Subject To Standardized Options Trading 323
      95-48 6/95 Treasury Approves Risk Assessment Rules For Government Securities Broker/Dealers 327
      95-49 6/95 NASD Clarifies Use Of Bank And Financial Institution Logos And Names 329
      95-50 6/95 Availability Of New Qualification Examination For Registered Options Limited Representative (Series 42) 331
      95-51 6/95 Independence Day: Trade Date-Settlement Date Schedule 333
      95-52 6/95 Nasdaq National Market Additions, Changes, And Deletions As Of May 25, 95 335
      95-53 6/95 Fixed Income Pricing System Additions, Changes, And Deletions As Of May 31, 95 339
      95-54 7/95 SEC Approves Amendments To Article III, Section 21 Of The NASD Rules Of Fair Practice Relating To Cold-Calling Requirements 349
      95-55 7/95 SEC Approves Depository Eligibility Requirements For Nasdaq Securities 351
      95-56 7/95 NASD Files With The SEC Proposals Related To Non-Cash Incentive Programs, Disclosure Of Cash Compensation, And Direct Payments To Associated Persons 355
      95-57 7/95 Nasdaq National Market Additions, Changes, And Deletions As Of June 27, 95 365
      95-58 7/95 Fixed Income Pricing System Additions, Changes, And Deletions As Of May 31, 95 369
      95-59 7/25/95 Temporary Fee Increase For Agent Registration Filings; Effective August 1, 95 383
      95-60 7/27/95 NASD Solicits Member Comment On Refined N * Aqcess Proposal; Comment Period Expires August 30, 95 385
      95-61 8/95 Mail Vote-NASD Solicits Member Vote On Amendments To The By-Laws To Include Statutory Disqualification Provision Adopted By Congress; Last Voting Date: September 15, 95 395
      95-62 8/95 SEC Approves New NASD Mediation Rules That Take Effect August 1, 95 399
      95-63 8/95 SEC Approves Amendments To Article III, Section 34 Of The NASD Rules Of Fair Practice Relating To Freely Tradable Direct Participation Program Securities 405
      95-64 8/95 EC Approves Amendments To Article III, Section 34 Of The NASD Rules Of Fair Practice And Part I Of Schedule D To The NASD By-Laws Relating To Limited Partnership Rollup Transactions 407
      95-65 8/95 NASD Files NASD Manual Revisions With The SEC For Review And Approval 409
      95-66 8/95 PROCTOR Adds PRO System To Automate Regulatory Element Training 413
      95-67 8/95 NASD Clarifies The Expanded Limit-Order Protection Interpretation 415
      95-68 8/95 Fed. Proposes Changes To Reg. T; Comment Period Expires: August 28, 95 419
      95-69 8/95 Treasury Amends Bank Secrecy Act; Requires Additional Recordkeeping Requirements For Wire Transfers 439
      95-70 8/95 Labor Day: Trade Date-Settlement Date Schedule 443
      95-71 8/95 Nasdaq National Market Additions, Changes, And Deletions As Of July 27, 95 445
      95-72 8/95 Fixed Income Pricing System Additions, Changes, And Deletions As Of July 28, 95 449
      95-73 9/95 NASD Requests Comment On Member Obligations To File Certain Exchange Offers That Result In Public Distributions; Comment Period Expires October 15, 95 461
      95-74 9/95 SEC Approves Amendments To Advertising And Sales Literature Filing And Review Requirements 467
      95-75 9/95 SEC Approves Amendment Regarding Trading In Anticipation Of The Issuance Of A Research Report 473
      95-76 9/95 SEC Permits NASD To Discipline Members And Associated Persons Who Fail To Honor Arbitration Or Mediation Settlement Agreements 477
      95-77 9/95 Columbus Day: Trade Date-Settlement Date Schedule 481
      95-78 9/95 Nasdaq National Market Additions, Changes, And Deletions As Of August 21, 95 483
      95-79 9/95 Fixed Income Pricing System Additions, Changes, And Deletions As Of August 25, 95 487
      95-80 9/26/95 NASD Further Explains Members' Obligations And Responsibilities Regarding Mutual Funds Sales Practices 501
      95-81 9/26/95 SEC Approves Rules For Reporting Customer Complaint Information 505
      95-82 10/95 SEC Approves NASD Rules Concerning Index, Currency, And Currency Index Warrants 509
      95-83 10/95 SEC Approves Rules Permitting Arbitration Participants To Seek Injunctive Relief From Arbitrators 519
      95-84 10/95 Rudman Committee Releases Summary Of Conclusions And Recommendations 525
      95-85 10/95 Clarification Of NASD Notices to Members 95-16 And NYSE Information Memorandum 95-16: Content And Enforcement Of Provisions In Customer Agreements And Predispute Arbitration Clauses 533
      95-86 10/95 NASD Reminds Members About Continuing Education Program Regulatory Element 537
      95-87 10/95 Confidentiality Clauses In Settlement Agreements 543
      95-88 10/95 Treasury Delays Effective Date Of Wire Transfer Recordkeeping Requirements Until April 1, 1996; Proposes Clarifying Amendments 545
      95-89 10/95 Broker/Dealer And Agent Renewals For 1996; Dues Must Be Paid By December 15, 95 547
      95-90 10/95 Thanksgiving Day: Trade Date-Settlement Date Schedule 551
      95-91 10/95 SOES Tier Levels Set To Change November 13, 95 553
      95-92 10/95 Nasdaq National Market Additions, Changes, And Deletions As Of September 20, 95 565
      95-93 10/95 Fixed Income Pricing System Additions, Changes, And Deletions As Of September 28, 95 569
      95-94 10/27/95 NASD Requests Comment On Proposed Redefinition Of Gross Revenue For Assessment Purposes; Comment Period Expires November 27, 95 581
      95-95 11/95 SEC Approves Amendments To The Corporate Financing Rule Relating To Rights Of First Refusal 583
      95-96 11/95 Continuing Education Rosters Now Available To Member Firms 587
      95-97 11/95 NASD Reminds Members About Treasury's Foreign Assets Control Regulations 589
      95-98 11/95 Christmas Day And New Year's Day: Trade Date-Settlement Date Schedule 597
      95-99 11/95 Nasdaq National Market Additions, Changes, And Deletions As Of October 20, 95 599
      95-100 11/95 Fixed Income Pricing System Additions, Changes, And Deletions As Of October 27, 95 603
      95-101 12/11/95 Mail Vote - NASD Solicits Member Vote On Amendments To The NASD By-Laws To Reconfigure The NASD Board And Establish A National Nominating Committee; Last Voting Date: January 12, 1996 631
      95-102 12/11/95 Overview Of Planned Changes To Disciplinary And Enforcement Procedures 639
      95-103 12/95 SEC Approves A Policy That Delegates Authority To The NASD Staff And The NASD Fixed Income Committee To Review Member Requests For Exemptions From MSRB Rule G-37(b) 645
      95-104 12/95 Expanded Sign-In Procedures At The PROCTOR Centers, Effective February 1, 1996; And PROCTOR Adds Remote Delivery Sites 649
      95-105 12/95 Treasury Offers Revised Currency Transaction Report Form 651
      95-106 12/95 NASD 1996 Holiday Schedule 659
      95-107 12/95 Trade Date-Settlement Date Schedule For 1996 661
      95-108 12/95 Nasdaq National Market Additions, Changes, And Deletions As Of November 20, 95 667
      95-109 12/95 Fixed Income Pricing System Additions, Changes, And Deletions As Of November 29, 95 671

      * Pursuant to Sections 220.8(b)(1) and (4) of Regulation T of the Federal Reserve Board, a broker/dealer must promptly cancel or otherwise liquidate a customer purchase transaction in a cash account if full payment is not received within five (5) business days of the date of purchase or, pursuant to Section 220.8(d)(1), make application to extend the time period specified. The date by which members must take such action is shown in the column entitled "Reg. T Date."

    • 96-18 Compliance Desk Will Help Members Report Free-Riding And Withholding Information To NASD; Workshops Scheduled For Late April, Early May

      Executive Summary

      To help members comply with the Free-Riding and Withholding Interpretation of the NASD Board of Governors (Free-Riding Interpretation), on May 13, 1996, the NASD will initiate a new regulatory service called "Compliance Desk." The NASD believes that Compliance Desk will give members timely notification of hot issues that are subject to NASD regulatory review, and give members adequate time to correct inadvertent errors and/or prohibited sales to restricted persons or accounts, and redistribute the security to nonrestricted persons or accounts at the public-offering price in accordance with the Interpretation.

      Compliance Desk, which was developed jointly by the NASD and CommScan, Inc., will permit the NASD to advise new-issue distribution participants by the close of business on the day secondary market trading begins (trade date), that the NASD has determined that the offering is a hot issue. Compliance Desk will permit the NASD to transmit data to members through a pre-existing electronic communications system, and members will transmit distribution-related information back to the NASD's Free-Riding Regulatory Database through a related system, known as NASDesk. The electronic exchange of information will increase the accuracy and the efficiency of member reporting of hot-issue information to the NASD. Compliance Desk will also aid members that want to take advantage of the cancellation and reallocation provision of the Free-Riding Interpretation and avoid potential violations caused by inadvertent sales of new-issue securiti es to restricted persons or accounts. To familiarize NASD members with Compliance Desk and give them the opportunity to ask questions about its operation, the NASD Corporate Financing Department and CommScan, Inc., will hold a series of workshops throughout the country during the weeks of April 22 and May 6, 1996.

      Questions about the Free-Riding Interpretation should be directed to Craig Landauer, Associate General Counsel, NASD Office of General Counsel, at (202) 728-8953. Questions regarding the electronic data communications of Free-Riding information and the planned workshops should be directed to Carl Sperapani, LaNita Tyler, or Kemba Walker, NASD Corporate Financing Department, at (301) 208-2700.

    • 96-17 SOES Tier Levels Set To Change April 1, 1996

      Executive Summary

      Effective April 1, 1996, tier sizes for 1,024 Nasdaq National Market securities will be revised in accordance with Paragraph 2451a7 of the Rules of Practice and Procedure for the Small Order Execution System (SOESSM).

      For more information, please contact Nasdaq Market Operations at (203) 378-0284.

    • 96-16 NASD Adds Remote Sites to Deliver Training and Exams

      The delivery of Continuing Education Regulatory Element and Qualifications Examinations is now available at the following remote sites on the dates specified

       
      Alaska
      Anchorage March 19-21
      June 11-13
       
      California
      Bakersfield April 23-26
      Fresno May 14-16
      Fullerton May 7-10
      Riverside April 30-May 3
      San Jose May 21-24
      Santa Barbara April 16-19
       
      Florida
      Fort Meyers May 14-16
      Jacksonville May 21-23
      West Palm Beach March 5-8
      June 4-7
      Hawaii
      Honolulu Call (800) 999-6647 for dates
       
      Idaho
      Boise March 12-14
      June 4-6
       
      Louisiana
      Shreveport March 19-21
      June 18-20
       
      Michigan
      Lansing May 7-9
       
      Mississippi
      Jackson March 26-28
      June 25-27
       
      Montana
      Billings March 12-14
      June 4-6
      Great Falls May 21-23
       
      Nevada
      Las Vegas April 9-12
       
      New Hampshire
      Manchester April 9-11
       
      New Jersey
      Edison April 23-26
      Newark April 9-12
      Paterson April 16-19
       
      New York
      Buffalo April 30-May 2
      Loudonville April 24-26
       
      North Dakota
      Bismarck May 14-16
       
      Puerto Rico
      Puerto Nuevo March 12-15
      June 11-14
       
      South Carolina
      Charleston May 7-9
       
      South Dakota
      Sioux Falls March 7-8
      June 17-19
       
      Texas
      Austin March 26-28
        June 18-20
      Lubbock March 19-21
      June 10-12
       
      Vermont
      Burlington April 16-18
       
      Virginia
      Norfolk April 30-May 2
       
      Washington
      Spokane March 26-28
      June 19-21
       
      Wyoming
      Cheyenne March 5-7
      June 25-27

      To schedule an appointment at one of these remote locations, call (800) 999-6647 and select option 1 at the voice prompt.

    • 96-15 SEC Approves NASD Proposals to Add Two New Options Position-Limit Tiers and Extend and Expand the NASD's Equity Option Position-Limit Hedge Exemption Pilot Program

      Executive Summary

      The Securities and Exchange Commission (SEC) recently approved two NASD proposals to amend the NASD's options position-limit rule, Article III, Section 33(b)(3) of the NASD Rules of Fair Practice. On January 22, 1996, the SEC approved an NASD proposal to add two new position-limit tiers for option classes overlying equity securities that meet certain criteria for high liquidity. On December 29, 1995, the SEC approved an NASD proposal to expand the NASD's hedge exemption pilot program to permit the establishment of hedged positions up to three times the applicable basic position limit. The SEC also approved an extension of the pilot program until December 31, 1997.

      Questions about this Notice should be directed to Joseph Alotto, NASD Market Surveillance, at (301) 590-6845, or Thomas R. Gira, Assistant General Counsel, at (202) 728-8957.

    • 96-14 SEC Approves Amendments To Sections 1(a)(v) And 73 Of NASD Uniform Practice Code Relating To The Use Of Standardized Limited Partnership Transfer Forms

      View PDF File

      Regulatory Notice
      Suggested Routing

      Senior Management
      Advertising
      Corporate Finance
      Government Securities
      Institutional
      Internal Audit
      Legal & Compliance
      Municipal
      Mutual Fund
      Operations
      Options
      Registration
      Research
      Syndicate
      Systems
      Trading
      Training

      Executive Summary

      On January 29, 1996, the Securities and Exchange Commission (SEC) approved amendments to Sections 1(a)(v) and 73 of the NASD® Uniform Practice Code (UPC) that requires members to use standardized limited partnership transfer forms when transferring interests in a limited partnership security. The text of amendments and the new limited partnership transfer forms follow this Notice. The use of the forms becomes mandatory on May 15, 1996.

      Although only NASD members are required to use the standardized forms, the NASD has worked closely with sponsors and industry groups in designing these forms and believes that general partners and transfer agents engaged in the transfer of limited partnership securities will use and honor the forms to establish uniform transfer practices and procedures industry-wide.1

      Background

      Historically, limited partnership securities were not structured to be freely transferrable in secondary market transactions. However, secondary markets now exist for many limited partnership securities, and are in addition to the large publicly traded partnerships that list on The Nasdaq Stock MarketSM and the national securities exchanges. Therefore, it is critical to process limited partnership securities transfers more timely and accurately.

      The terms and requirements relating to the transfer of limited partnership interests are controlled by the partnership agreement,2 almost all of which state that assignment or transfer of limited partnership interests requires the consent and approval of the general partner(s). As a result, when transferring limited partnership interests, NASD members are currently confronted with transfer requirements unique to each partnership that may vary widely on the type and amount of documents necessary for the valid transfer of a partnership interest. Some partnership agreements require information so extensive that the transfer documents sometimes reach 30 to 40 pages. The transfer of the partnership interest may take up to six months, in some cases, to be finalized. However, in most cases, prior to the recognition by the general partner of the actual transfer of the partnership property interest from one holder (transferor/seller) to another (transferee/purchaser), a security interest in the property is created whenever the purchaser gives and seller accepts economic consideration to secure the purchaser's right to have the partnership interests transferred. The security interest creates the right for the purchaser to have the security interest transferred in advance of the date specified in the partnership agreement and entitles the purchaser to legal certainty that his or her ownership rights can be recognized and protected until the actual transfer of the partnership interest is complete.

      Transfer delays of the security interest and nonstandardized payment provisions have also caused or contributed to delays or mistakes in the allocation of cash distributions between buyers and sellers. A seller of a limited partnership interest, as a recordholder of the securities, often receives distributions that rightly should have accrued to the buyer and subsequently disposes of such distributions without knowledge of the claims of purchasers. Under current transfer standards and practices, buyers and sellers of limited partnership securities in the secondary market often cannot protect their rights to such distributions. This leads to disputes over distributions that often must be settled by broker/dealers at their own expense or through arbitration or litigation.3

      Description

      To provide a uniform way for members that transfer limited partnership interests to receive and recognize information on the valid transfer of the security interest separate and apart from the partnership interest, and to record information of valid transfer on members' books and records, the NASD has amended Section 1(a)(v) of the UPC so that the UPC will apply to over-thecounter secondary market transfers of Direct Participation Programs to the extent provided in individual provisions of the UPC. New Section 73 has also been added to the UPC to require members to use standardized transfer forms that are in Exhibit A to Section 73 when transferring limited partnership securities. Section 73 does not apply to limited partnership securities that are traded on The Nasdaq Stock Market or a registered national securities exchange. Such securities trade and settle on a regular-way basis, like publicly traded common stock, and do not require the use of extensive transfer documents. The forms standardize the format for gathering transfer information by members and registered representatives, reduce the amount of information necessary to perform a valid transfer, and eliminate delays and inefficiencies in the transfer and settlement process.

      The standardized transfer forms in Exhibit A to Section 73 include:

      •   Transferor's (Seller's) Application For Transfer and Transferee's (Buyer's) Application For Transfer that contain the essential information necessary to perform a valid transfer, including customer identification, partnership identification, tax identifi- cation, quantity transferred, broker/ dealer and registered representative involved, and signature execution.
      •   Registration Confirmation Form that confirms to the buyer/transferee that the transfer has been completed and contains information regarding, among other things, the partnership's NASD symbol, CUSIP number, tax identification number, number of units transferred, and the effective/ admission date.
      •  Distribution Allocation Agreement that is to be completed when the transfer documents are completed and sent to the general partner of the limited partnership security being transferred. The agreement contains certain affirmations on which the transferor and transferee agree and acts as a contract between the buyer and seller setting forth their agreement regarding all unpaid distributions. The agreement specifies when the transferee becomes the unitholder of record, when a unitholder of record is entitled to cash distributions and capital distributions, and who is responsible for correcting a distribution made to the wrong party. The agreement requires, among other things, the party who incorrectly receives a distribution to promptly endorse and deliver to the correct party the distribution checks or otherwise pay to the other party the amount of such distribution.

      The NASD believes that, over time, as the use of the standardized forms becomes commonplace, they will significantly reduce the time and effort required by member firms to process limited partnership transfers from its current time of about 180 days to less than 30 days. The use of standardized forms will also permit uniform identification of limited partnership securities between members that should facilitate transfer of customer accounts through the Automatic Customer Account Transfer System (ACATS). In particular, the use of the Distribution Allocation Agreement will help to provide certainty as to the buyer/transferee and seller/transferor regarding distributions not yet announced or received by memorializing the agreement between the buyer and seller as to the method for handling distributions. The Distribution Allocation Agreement will also prevent member broker/dealers representing such buyers and sellers from effecting and settling trades without knowledge of the buyers' and sellers' rights to any distributions.

      The use of the forms will become mandatory for NASD members and registered representatives on May 15, 1996.

      Questions about this Notice may be directed to Carl R. Sperapani, Assistant Director, Corporate Financing Department, at (301) 208-2759; Dorothy Kennedy, Assistant Director, Nasdaq Market Operations, at (203) 385-6243; or Robert J. Smith, Attorney, Office of General Counsel at (202) 728-8176.


      1 The NASD has worked closely with transfer agents who specialize in the transfer of partnership securities, and the Investment Partnership Association, a trade organization for the partnership industry, to reach an informal consensus on the general applicability of forms throughout the industry.

      2 The Revised Uniform Limited Partnership Act and the Delaware Revised Uniform Limited Partnership Act expressly provide for the ability to recognize transfers and admit new partners under whatever rules the general partners design.

      3 These problems are exacerbated by the fact that general partners relying on no-action letters issued by the Division of Market Regulation do not believe they are required under SEC Rule 10b-17 to publicly disclose the payment of regular or special distributions. In response to this issue, the NASD Board of Governors approved, and the staff has filed, a petition with the SEC that requests that the SEC take action to require that partnership distributions be disclosed timely to the market pursuant to SEC Rule 10b-17 (See, Correspondence of John E. Pinto, Executive Vice President, NASD, to Jonathan G. Katz, Secretary, SEC, dated February 14, 1996, SEC File No. 4-386.).


      Text Of Amendments
      (Note: New text is underlined.)

      UNIFORM PRACTICE CODE

      Scope of Uniform Practice Code

      Sec. 1

      (a) All over-the-counter secondary market transactions in securities between members shall be subject to the provisions of this Code except:
      (i) through (iv) No change.
      (v) transactions in Direct Participation Program securities as defined in Article III, Section 34 of the Association's Rules of Fair Practice, except as otherwise provided in this Code.

      Sec. 2 through Sec. 72 No change.

      Limited Partnership Securities

      Sec. 73

      Each member who participates in the transfer of limited partnership securities, as defined in Article III, Section 34 of the Association's Rules of Fair Practice, shall use standard transfer forms in the same form as set forth in Exhibit A of this section. This section shall not apply to limited partnership securities which are traded on the Nasdaq Stock Market or a registered national securities exchange.


      Attachment

      Click here to view Transferor's (Seller's) Application For Transfer Form in PDF format.

    • 96-13 Fixed Income Pricing System Additions, Changes, and Deletions as of January 30, 1996

      As of January 30, 1996, the following bonds were added to the Fixed Income Pricing System (FIPSSM).

      Symbol Name Coupon Maturity
      GRLC.GA Great Lakes Carbon Corp 10 1/1/2006
      NEOD.GA Neodata Services Inc 12 5/1/2003
      FNRI.GA Flores and Rucks Inc 13.5 12/1/2004
      BANC.GA BankAtlantic Bancorp Inc 9 10/1/2005
      CCIL.GA Cellular Comm. Int'l Inc 0 8/15/00
      CRWP.GA Crown Paper Company 11 9/1/2005
      PTEL.GA Peoples Telephone Company 12.25 7/15/02
      CYSS.GA County Seat Stores Inc 12 10/1/02
      KM.GA K Mart Corp 12.5 3/1/05
      KM.GB K Mart Corp 8.125 12/1/06
      KM.GC K Mart Corp 8.25 1/1/22
      KM.GD K Mart Corp 8.375 7/1/22
      KM.GE K Mart Corp 7.75 10/1/12
      KM.GF K Mart Corp 7.95 2/1/23
      MFST.GB MFS Communications 0 1/15/06
      PDQ.GA Prime Hospitality Corp 9.25 1/15/06
      TK.GA Teekay Shipping Corp 8.32 2/1/08
      CCG.GA Chelsea GCA Rlty Prtshp LP 7.75 1/26/01
      ATEL.GB American Telecasting Inc. 14.5 8/15/05

      As of January 30, 1996, the following bonds were deleted from FIPS.

      Symbol Name
      CG.GB Columbia Gas
      CG.GC Columbia Gas
      CG.GD Columbia Gas
      CG.GE Columbia Gas
      CG.GF Columbia Gas
      CG.GG Columbia Gas
      CG.GH Columbia Gas
      CG.GI Columbia Gas
      CG.GJ Columbia Gas
      CG.GK Columbia Gas
      CG.GL Columbia Gas
      CG.GM Columbia Gas
      CG.GN Columbia Gas
      CG.GO Columbia Gas
      CG.GP Columbia Gas
      CG.GQ Columbia Gas
      CG.GR Columbia Gas
      CG.GS Columbia Gas
      CG.GT Columbia Gas
      CG.GU Columbia Gas
      BLG.GA Ballys Grand Inc
      INSL.GC Insilco Corp
      STBP.GA Southeast Banking Corp
      SUCA.GA Sun Carriers Inc
      TRCK.GA Truck Components Inc
      TXSP.GA Texas Supermarkets Inc
      FLES.GA * Food-4-Less Supermkts Inc
      * FIPS mandatory bond

      As of January 30, 1996, changes were made to the symbols of the following FIPS bonds:

      New Symbol Old Symbol Name
      RBNC.GA RPBN.GB Republic Bancorp Inc
      STSA.GA STFI.GA Sterling Financial Corp
      SVN.GB SNV.GB Spectravision Inc

      In previous editions of the Notices to Members, the following FIPS bond symbols were listed incorrectly. Please note the corrected listings below.

      Correct Symbol Name
      SBO.GB Showboat
      OI.GH Owens Illinois

      All bonds listed above are subject to trade-reporting requirements. Questions pertaining to trade-reporting rules should be directed to James C. Dolan, Assistant Director, NASD Market Surveillance, at (301) 590-6460.

    • 96-12 Nasdaq National Market Additions, Changes, and Deletions as of January 19, 1996

      As of January 19, 1996, the following 35 issues joined the Nasdaq National Market®, bringing the total number of issues to 3,984:

      Symbol Company Entry Date SOES Execution Level
      ESTR ElectroStar, Inc. 12/21/95 200
      FRAG French Fragrances, Inc. 12/21/95 200
      HOMEF Home Centers (DIY), Limited (Ord Shs) 12/21/95 500
      RGNT Regent Assisted Living, Inc. 12/21/95 200
      SPAB SPACEHAB, Incorporated 12/21/95 200
      VBRK Vacation Break U.S.A., Inc. 12/21/95 1000
      ASHEW Aasche Transportation Svcs, Inc. (Wts 2/9/00) 12/22/95 200
      IPSW Ipswich Savings Bank 12/22/95 200
      MINI Mobile Mini, Inc. 12/26/95 200
      MTBN Mountbatten, Inc. 12/26/95 200
      AHCI Ambanc Holding Co., Inc. 12/27/95 200
      CMGT Complete Management, Inc. 12/28/95 200
      EMCG EMCOR Group, Inc. 12/28/95 200
      PPTV PPT Vision Inc. 12/28/95 200
      SPNSF Saipiens International Corp. N.V. (Ord Shs) 12/28/95 200
      ULTR Ultradata Systems, Inc. 12/28/95 200
      ULTRW Ultradata Systems, Inc. (Wts A 2/1/98) 12/28/95 200
      CBSB Charter Financial, Inc. 12/29/95 200
      HFNC HFNC Financial Corp. 12/29/95 200
      HBNK Highland Federal Bank, A Federal Savings Bank 12/29/95 200
      PEEK Peekskill Financial Corporation 12/29/95 200
      STLBV Stolt-Nielsen S.A. (ADR WI) 12/29/95 200
      AREA Area Bancshares Corporation 1/2/96 200
      ECIN EMCEE Broadcast Products Inc. 1/2/96 200
      ESOL Employee Solutions, Inc. 1/2/96 500
      ROADV Roadway Express, Inc. (WI) 1/2/96 200
      EQVN Equivision, Inc. 1/3/96 500
      BFITV Bally Total Fitness Holding Corporation (WI) 1/4/96 200
      LFBI Little Falls Bancorp, Inc. 1/5/96 200
      TCICP TCI Communications, Inc. 1/10/96 200
      USCM USCI, Inc. 1/10/96 200
      SAGE Sagebrush, Inc. 1/11/96 200
      INCY Incyte Pharmaceuticals, Inc. 1/16/96 200
      CCOW Capital Corp. of the West 1/18/96 200
      ALES Nor'Wester Brewing Company, Inc. 1/18/96 200

      Nasdaq National Market Symbol And/Or Name Changes

      The following changes to the list of Nasdaq National Market securities occurred since December 21, 1995:

      New/Old Symbol New/Old Security Date Of Change
      FNGB/FNGB First Northern Capital Corporation/ First Northern Savings Bank S.A. 12/21/95
      NICH/BEBA Nitches, Inc./Beeba's Creations, Inc. 12/22/95
      DENRF/NNEXF Denbury Resources, Inc./Newscope Resources Ltd. 12/22/95
      CWLR/CWLRV Chartwell Re Corporation/Chartwell Re Corporation (WI) 12/27/95
      IITCF/IITCF IITC Holdings, Ltd./Intera Information Technologies Corp. 12/28/95
      GNSAR/GNSRV Gensia, Inc. (Rts 12/31/96)/Gensia, Inc. (Rts 12/31/96 WI) 12/29/95
      FFBA/FFBA First Colorado Bancorp, Inc./First Federal Savings Bank of Colorado 1/2/96
      STLBY/STLBV Stolt-Nielsen S.A. (ADR)/Stolt-Nielsen S.A. (ADR WI) 1/2/96
      TCTC/TCTC Tompkins County Trustco, Inc./Tompkins County Trust Company 1/2/96
      MSBC/PBGI MainStreet BankGroup, Inc./Piedmont BankGroup, Inc. 1/3/96
      BFIT/BFITV Bally Total Fitness Holding Corp./Bally Total Fitness Holding Corp. (WI) 1/10/96
      NALC/NAGC National Lodging Corp./National Gaming Corp. 1/16/96
      ROAD/ROADV Roadway Express, Inc./Roadway Express, Inc. (WI) 1/16/96
      STMI/STMI S T M Wireless, Inc./Satellite Technology Management, Inc. 1/17/96
      NABI/NBIO NABI, Inc./North American Biologicals, Inc. 1/18/96

      Nasdaq National Market Deletions

      Symbol Security Date
      BSSI BioSafety Systems, Inc. 12/21/95
      CFBC CF Bancorp, Inc. 12/21/95
      CORT Cort Business Services Corp. 12/21/95
      CPIA CPI Aerostructures, Inc. 12/22/95
      HAMBQ Hamburger Hamlet Restaurants, Inc. 12/22/95
      MTMCW Micros to Mainframes, Inc. (Wts10/26/97) 12/22/95
      ORBT Orbit International Corporation1 2/22/95
      SBLT Sunbelt Companies, Inc. (The) 12/26/95
      PRES Prime Residential, Inc. 12/27/95
      WEST West One Bancorp 12/27/95
      BTEC BancTec, Inc. 12/28/95
      LRNG Learning Company (The) 12/28/95
      SUST Sunstates Corporation 12/28/95
      SUSTP Sunstates Corporation ($3.75 Cum Pfd) 12/28/95
      AECI American Electronic Components, Inc. 12/29/95
      HHGR Helian Health Group, Inc. 12/29/95
      SCTT Scotts Company (The) 12/29/95
      CABK Capital Bancorporation, Inc. 1/02/96
      CABKZ Capital Bancorporation, Inc. (Dep Shrs) 1/02/96
      HRTT Heart Technology, Inc. 1/02/96
      KYMDA Kentucky Medical Insurance Co. (Cl A) 1/02/96
      LOYC Loyola Capital Corp. 1/02/96
      MIDL Midlantic Corporation 1/02/96
      NORWY NORWEB plc (Sp ADR) 1/02/96
      FERTP Nu-West Industries, Inc. (Cl A Pfd) 1/02/96
      ADVG Advantage Companies, Inc. 1/03/96
      BRBC Bay Ridge Bancorp, Inc. 1/03/96
      HWKB Hawkeye Bancorporation 1/03/96
      INTFW Interface Systems, Inc. (Wts 12/29/95) 1/03/96
      MRBL Marble Financial Corporation 1/03/96
      PRBC Premier Bancorp, Inc. 1/03/96
      AHNT Access HealthNet, Inc. 1/04/96
      MMGT Medical Management, Inc. 1/04/96
      BKSO Bank South Corporation 1/10/96
      CSFC C S F Holdings, Inc. 1/10/96
      CFBKP Citizens Federal Bank, A Federal Savings Bank 1/10/96
      AROS Advance Ross Corporation 1/11/96
      CCHIA C C H, Inc. (Cl A) 1/11/96
      CCHIB C C H, Inc. (Cl B) 1/11/96
      DMCB Data Measurement Corp. 1/11/96
      RIOH Rio Hotel & Casino, Inc. 1/11/96
      RCMIF Rogers Cantel Mobile Communications, Inc. (ClB) 1/11/96
      RFBK R S Financial Corp. 1/12/96
      SUNY Sunrise Bancorp 1/12/96
      CLDRP Cliffs Drilling Company (Conv. Exch Pfd) 1/15/96
      MXTR Maxtor Corporation 1/15/96
      POPS National Beverage Corp. 1/15/96
      RULE Rule Industries, Inc. 1/15/96
      HOLI Hollinger International, Inc. (Cl A) 1/16/96
      ARANY Aran Energy plc (ADR) 1/17/96
      EFIC EFI Electronics Corporation 1/18/96
      KBKC K B K Capital Corporation 1/18/96
      NXGN NexGen, Inc. 1/18/96
      AMFF AMFED Financial, Inc. 1/19/96

      Questions regarding this Notice should be directed to Mark A. Esposito, Nasdaq Market Services Director, Issuer Services, at (202) 496-2536. Questions pertaining to trade-reporting rules should be directed to Bernard Thompson, Assistant Director, NASD Market Surveillance, at (301) 590-6436.

    • 96-11 Presidents' Day: Trade Date — Settlement Date Schedule

      The Nasdaq Stock MarketSM and the securities exchanges will be closed on Monday, February 19, 1996, in observance of Presidents' Day, "Regular way" transactions made on the business days noted below will be subject to the following schedule:

      Trade Date Settlement Date Reg. T Date*
      Feb. 12 Feb. 15 Feb. 20
      13 16 21
      14 20 22
      15 21 23
      16 22 26
      19 Markets Closed
      20 23 27
      * Pursuant to Sections 220.8(b)(1) and (4) of Regulation T of the Federal Reserve Board, a broker/dealer must promptly cancel or otherwise liquidate a customer purchase transaction in a cash account if full payment is not received within five (5) business days of the date of purchase or, pursuant to Section 220.8(d)(1), make application to extend the time period specified. The date by which members must take such action is shown in the column entitled "Reg. T Date."

      Brokers, dealers, and municipal securities dealers should use these settlement dates to clear and settle transactions pursuant to the NASD® Uniform Practice Code and Municipal Securities Rulemaking Board Rule G-12 on Uniform Practice.

      Questions regarding the application of these settlement dates to a particular situation may be directed to the NASD Uniform Practice Department at (203) 375-9609.

    • 96-10 Expanded Limit-Order Protection Rule Gets Further Clarification By NASD

      Executive Summary

      On September 6, 1995, the expanded Limit-Order Protection Interpretation to Article III, Section 1 of the NASD Rules of Fair Practice that prohibits member firms from trading ahead of customer limit orders (commonly known as Manning II) became fully effective. The expanded Interpretation extends the scope of limit-order protection in The Nasdaq Stock MarketSM to ensure that all customer limit orders are afforded the same protection throughout Nasdaq.

      From June 21, 1995, to September 6, 1995, the Interpretation allowed a temporary phase-in period that permitted a market maker holding customer limit orders greater than 1,000 shares sent to it by another member firm(member-to-member orders) to trade at the same price as such limit order without protecting the limit order. On September 6, 1995, the temporary phase-in period expired. Since that date, all customer limit orders, whether they come from the firm's own customers or from another member firm's customers, must be handled in the same way by thefirm accepting the limit order. That is, the member firm must not trade ahead of anycustomer limit order it holds without protecting that order.

      Since the SEC approved the rule change in June 1995, the NASD has issued Special Notice to Members 95-43 and Notice to Members 95-67 to provide guidance regarding a member's obligations under the Limit-Order Protection Interpretation. Since the Notices were issued, the NASD has continued to receive questions regarding the protection and reporting of limit orders handled on a net basis, defined as transactions where the customer wants the total transaction cost, inclusive of fees or commissions, to be set at a single price.

      Questions regarding this Notice should be directed to NASD Market Surveillance at (800) 925-8156.

    • 96-9 SEC Approves NASD Proposal Relating To Third-Market Trading In IPOs Of Exchange-Listed Securities

      Executive Summary

      On December 20, 1995, the Securities and Exchange Commission (SEC) approved a proposed Rule change by the NASD that prohibits NASD members from executing over-the-counter transactions in an exchange-listed security that is the subject of an initial public offering (IPO) until the security has opened for trading on the exchange that lists the security. The Rule change is effective immediately.

      Questions regarding this Rule change should be directed to NASD Market Surveillance, at (301) 590-6080, or Thomas R. Gira, Assistant General Counsel, The Nasdaq Stock Market, Inc., at (202) 728-8957.

    • 96-8 SEC Approves Amendments To Section 59 Of The Uniform Practice Code Clarifying Delivery Deadlines That May Be Specified In Buy-In Notices

      Executive Summary

      On December 28, 1995, the Securities and Exchange Commission (SEC) approved amendments to Section 59 of the Uniform Practice Code (UPC). The amendments clarify that the delivery deadlines that may be specified in buy-in notices issued pursuant to Section 59 may not specify a delivery time earlier than 3 p.m., Eastern Time (ET), for depository eligible securities. The amendments are effective immediately. The text of the amendments follows this Notice.

      Questions regarding this Notice may be directed to Dorothy L. Kennedy, Assistant Director, Nasdaq Market Operations, (203) 385-6243.

    • 96-7 Fixed Income Pricing System Additions, Changes, and Deletions as of December 28, 1996

      As of December 28, 1995, the following bonds were added to the Fixed Income Pricing System (FIPSSM).

      Symbol Name Coupon Maturity
      CBBS.GA CBS Inc 7.625 1/1/02
      CBBS.GB CBS Inc 7.750 6/1/99
      CBBS.GC CBS Inc 7.125 11/1/23
      CBBS.GD CBS Inc 8.875 6/1/22
      CMS.GC CMS Energy 7.000 6/15/00
      CMS.GD CMS Energy 7.000 7/15/00
      CMS.GE CMS Energy 7.000 7/15/00
      CMS.GF CMS Energy 8.000 7/15/02
      WHCR.GA Westinghouse Credit Corp 8.875 6/15/14
      WX.GA Westinghouse Electric 7.750 4/15/96
      WX.GB Westinghouse Electric 8.875 6/1/01
      WX.GC Westinghouse Electric 8.375 6/15/02
      WX.GD Westinghouse Electric 8.625 8/1/12
      WX.GE Westinghouse Electric 6.875 9/1/03
      WX.GF Westinghouse Electric 7.875 9/1/23
      GND.GA Grand Casinos Inc 10.125 12/1/03
      DAL.GY Delta Air Lines Inc 8.540 1/2/07
      DAL.GZ Delta Air Lines Inc 8.540 1/2/07
      DAL.HA Delta Air Lines Inc 8.540 1/2/07
      DAL.HB Delta Air Lines Inc 8.540 1/2/07
      DAL.HC Delta Air Lines Inc 9.300 1/2/10
      DAL.HD Delta Air Lines Inc 9.300 1/2/10
      DAL.HE Delta Air Lines Inc 9.300 1/2/10
      DAL.HF Delta Air Lines Inc 9.300 1/2/10
      DAL.HG Delta Air Lines Inc 9.300 1/2/10
      DAL.HH Delta Air Lines Inc 9.300 1/2/11
      MCAB.GC Marcus Cable/Marcus Cable Cap 14.250 12/15/05
      RGRO.GC Ralphs Grocery Co. 10.450 12/15/05
      VCI.GA Valassis Communication Inc. 9.550 12/1/03
      VLIN.GA Valassis Inserts Inc. 8.875 3/15/99
      VLIN.GB Valassis Inserts Inc. 8.375 3/15/97
      DMIC.GA Diamond Cable Commun 11.750 12/15/05
      RCCA.GD Rogers Cablesystems 10.000 12/1/07
      RCCA.GE Rogers Cablesystems 11.000 12/1/15
      BCKI.GB Buckeye Cellulose 8.500 12/15/05
      UIHI.GA United Int'l Hldgs Inc 14.000 11/15/99
      UIHI.GB United Int'l Hldgs Inc 0.000 0/0/99
      WALB.GA Walbro Corp 9.875 7/15/05
      FITZ.GA Fitzgerald Gaming 13.000 12/15/02
      VIA.GC Viacom Inc. 6.750 1/15/03
      VIA.GD Viacom Inc. 7.625 1/15/16
      VPI.GA Vintage Petroleum 9.000 12/15/05
      CPSS.GA Consumer Portfolio Svcs 10.000 1/1/06
      AMA.GB Advanced Medical 15.000 7/15/99
      BRRY.GA Berry Plastics Corp 12.250 4/15/04
      TEXN.GE Texas NewMex Pwr Co. 12.500 1/15/99

      As of December 28, 1995, the following bonds were deleted from FIPS.

      Symbol Name
      SCIH.GB SCI Holdings Corp
      BLJC.GA Blair John & Co.

      All bonds listed above are subject to trade-reporting requirements. Questions pertaining to trade-reporting rules should be directed to James C. Dolan, Assistant Director, NASD Market Surveillance, at (301) 590-6460.

    • 96-6 Nasdaq National Market Additions, Changes, and Deletions as of December 20, 1995

      As of December 20, 1995, the following 99 issues joined the Nasdaq National Market®, bringing the total number of issues to 4,003:

      Symbol Company Entry Date SOES
      Execution Level
      ANIC Anicom, Inc. 11/21/95 500
      CDLI Consolidated Delivery & Logistics, Inc. 11/21/95 500
      FFIC Flushing Financial Corporation 11/21/95 200
      IVAC Intevac, Inc. 11/21/95 200
      LSREF LaSalle Re Holdings, Limited 11/21/95 500
      MEDP MedPlus, Inc. 11/21/95 200
      NTAP Network Appliance Corporation 11/21/95 1000
      SSTI Silicon Storage Technology, Inc. 11/21/95 200
      OVEN The Italian Oven, Inc. 11/21/95 200
      AMRN Amerin Corporation 11/22/95 200
      CLNPP Callon Petroleum Company (Pfd A) 11/22/95 200
      GNSRV Gensia, Inc. (Rts 12/31/96 WI) 11/22/95 500
      GYNE Gynecare, Inc. 11/22/95 1000
      MAIDY M.A.I.D., plc (ADR) 11/22/95 200
      PRXL PAREXEL International Corporation 11/22/95 500
      PGNS PathoGenesis Corporation 11/22/95 200
      VSEIF Venture Seismic, Ltd. 11/22/95 200
      VSEWF Venture Seismic, Ltd. (Wts 11/7/00) 11/22/95 200
      TENWF Tee-Com Electronics Inc. (Wts 11/22/96) 11/24/95 200
      SWMCF Sanctuary Woods Multimedia Corporation 11/27/95 200
      MIDD The Middleby Corporation 11/28/95 200
      CGIX Carnegie Group, Inc. 11/29/95 200
      PIXR Pixar 11/29/95 200
      NWPX Northwest Pipe Company 11/30/95 200
      BMRQ BENCHMARQ Microelectronics, Inc. 12/1/95 200
      EUSA Eagle USA Airfreight, Inc. 12/1/95 200
      LHSPF Lernout & Hauspie Speech Products, N.V. 12/1/95 200
      METG META Group, Inc. 12/1/95 200
      OSII Objective Systems Integrators, Inc. 12/1/95 200
      RTEL Raytel Medical Corporation 12/1/95 200
      WSTL Westell Technologies, Inc.(Cl A) 12/1/95 200
      ABACF Abacan Resource Corporation 12/4/95 200
      PNDA Panda Project, Inc. (The) 12/4/95 200
      PBIX Patriot Bank Corporation 12/4/95 200
      BESIF BE Semiconductor Industries, N.V. (Ord Shrs) 12/5/95 200
      HAHI Help At Home, Inc. 12/5/95 200
      HAHIW Help At Home, Inc. (Wts 12/5/00) 12/5/95 200
      PCOP Pharmacopeia, Inc. 12/5/95 200
      WPAC Western Pacific Airlines, Inc. 12/5/95 200
      LTRE Learning Tree International, Inc. 12/6/95 200
      QTEL Quintel Entertainment, Inc. 12/6/95 200
      RDIC ReadiCare, Inc. 12/6/95 500
      SIMC Spacetec IMC Corporation 12/6/95 200
      MECN Mecon, Inc. 12/7/95 200
      CTXS Citrix Systems, Inc. 12/8/95 200
      CRNSF Cronos Group (The) 12/8/95 200
      NSIX Neuromedical Systems, Inc. 12/8/95 1000
      OHSL OHSL Financial Corp. 12/8/95 200
      FISHZ Small's Oilfield Services Corp.(Wts B 12/8/00) 12/8/95 200
      SRCM Source Media, Inc. 12/11/95 200
      VSNR Visioneer, Inc. 12/11/95 200
      AMLJ AML Communications, Inc. 12/12/95 200
      ADLT Advanced Lighting Technologies, Inc. 12/12/95 200
      AACIB All American Communications, Inc. (Cl B) 12/12/95 500
      CVDI Cardiovascular Diagnostics, Inc. 12/12/95 200
      MTLS MetaTools, Inc. 12/12/95 200
      PHYS Physio-Control International Corp. 12/12/95 200
      RAIN Rainforest Cafe, Inc. 12/12/95 500
      GOAL Ascent Entertainment Group, Inc. 12/13/95 200
      CWLRV Chartwell Re Corporation (WI) 12/13/95 500
      KNSY Kensey Nash Corporation 12/13/95 200
      LGAMV Lexington Global Asset Managers, Inc. (WI) 12/13/95 200
      MDCC Molecular Devices Corporation 12/13/95 200
      SQAX SQA, Inc. 12/13/95 200
      AACI All American Communications, Inc. 12/14/95 500
      ERGO Ergo Science Corporation 12/14/95 500
      STAY Extended Stay America, Inc. 12/14/95 200
      GTIS GT Interactive Software Corp. 12/14/95 200
      HOPS Hart Brewing, Inc. 12/14/95 200
      MRRW Morrow Snowboards, Inc. 12/14/95 200
      NKID Noodle Kidoodle, Inc. 12/14/95 200
      SNAP Synaptic Pharmaceutical Corporation 12/14/95 200
      TFRC TechForce Corporation 12/14/95 200
      THIR Third Financial Corp. 12/14/95 200
      TLGD Tollgrade Communications, Inc. 12/14/95 200
      ADTK Adept Technology, Inc. 12/15/95 200
      ADSP Ariel Corporation 12/15/95 200
      ADSPW Ariel Corporation (Wts 1/25/00) 12/15/95 200
      CKSG CKS Group, Inc. 12/15/95 200
      FUSE Fuisz Technologies Ltd. 12/15/95 200
      BUNZ Schlotzsky's, Inc. 12/15/95 200
      SGASZ Star Gas Partners, L.P. (Shrs Ben Int) 12/15/95 1000
      TPPPF Triple P, N.V. 12/15/95 200
      ZRAN Zoran Corporation 12/15/95 500
      OLSAY OLS Asia Holdings, Limited (ADR) 12/18/95 500
      OLSWF OLS Asia Holdings, Limited (Wts 12/18/98) 12/18/95 500
      GCREF GCR Holdings, Limited (Ord Shrs) 12/19/95 200
      NUCO NuCo2 Inc. 12/19/95 200
      UNHC Unison HealthCare Corporation 12/19/95 200
      AMCS AMISYS Managed Care Systems, Inc. 12/20/95 200
      CSTL Castelle 12/20/95 200
      CLTK Celeritek, Inc. 12/20/95 200
      CTYS Cityscape Financial Corp. 12/20/95 200
      ELCO Elcom International, Inc. 12/20/95 200
      FFGI ForeFront Group, Inc. (The) 12/20/95 200
      GUAR Guarantee Life Companies (The) 12/20/95 200
      ISEE Sterling Vision, Inc. 12/20/95 500
      TRNI Trans-Industries, Inc. 12/20/95 500
      XATA XATA Corporation 12/20/95 200

      Nasdaq National Market Symbol And/Or Name Changes

      The following changes to the list of Nasdaq National Market securities occurred since November 21, 1995:

      New/Old Symbol New/Old Security Date Of Change
      CABP/CMSH Cameron Ashley Building Products, Inc./Cameron Ashley, Inc. 11/21/95
      DDDDF/DDDDF New Dimension Software Ltd./ 4th Dimension Software Ltd. 11/27/95
      PSIX/PSIX PSINet Inc./Performance Systems International, Inc. 11/27/95
      RWIN/RWIN Republic Industries, Inc./Republic Waste Industries, Inc. 11/28/95
      AVNT/ARCS Avant! Corporation/ArcSys, Inc. 11/29/95
      AMTX/ICOT Amati Communications Corp./ICOT Corporation 11/29/95
      ARSNW/ARSNW Airsensors, Inc. (Wts 11/7/97) /Airsensors, Inc. (Wts 3/9/96) 11/30/95
      MPTR/MPTR MedPartners/Mullikin, Inc./MedPartners, Inc. 12/1/95
      NHSL/NHSL NHS Financial, Inc./New Horizons Savings and Loan Association 12/1/95
      RMED/REIC Research Medical, Inc./Research Industries Corporation 12/1/95
      SFFB/SFFB Southern Financial Bancorp/Southern Financial Federal Savings Bank 12/1/95
      IGPFF/IGPFF Imperial Ginseng Products, Ltd./Canadian Imperial Ginseng Products, Ltd. 12/8/95
      WLDN/COBK Walden Bancorp, Inc./Co-operative Bank of Concord (The) 12/11/95
      WPPGY/WPGDY WPP Group plc (ADR)/WPP Group plc (ADR New) 12/11/95
      CLZRW/CLZRW Candela Corp. (Wts 10/24/99) /Candela Laser Corp. (Wts 10/24/99) 12/13/95
      CLZR/CLZR Candela Corporation/Candela Laser Corporation 12/13/95
      CYNRW/CYNRW Canyon Resources Corp. (Wts 3/31/96)/Canyon Resources Corp. (Wts 12/31/95) 12/15/95
      REXI/REXI Resource America, Inc. (Cl A) /Resource America, Inc 12/15/95
      LGAM/LGAMV Lexington Global Asset Managers, Inc./Lexington Global Asset Managers, Inc. (WI) 12/18/95
      ICOMF/ICOMF Intelect Communications Sys, Ltd./Challenger International, Ltd. 12/19/95
      OLSWF/OLSWY OLS Asia Holdings, Ltd. (Wts 12/18/00)/OLS Asia Holdings, Ltd. (Wts 12/18/00) 12/19/95
      SESI/FISH Superior Energy Services, Inc./Small's Oilfield Services, Corp. 12/20/95
      SESIW/FISHW Superior Energy Services, Inc. (Wts A 7/6/97)/Small's Oilfield Svcs., Corp. (Wts A 7/6/97) 12/20/95
      SESIZ/FISHZ Superior Energy Services, Inc. (Wts B 12/8/00)/Small's Oilfield Svcs., Corp. (Wts B 12/8/00) 12/20/95

      Nasdaq National Market Deletions

      Symbol Security Date
      ACPI American Consumer Products, Inc. 11/21/95
      AGVS NDC Automation, Inc. 11/21/95
      SHKIF SHL Systemhouse Inc. 11/21/95
      ARAM Aramed, Inc. 11/22/95