Permissible activities of a Series 11 Representative (Assistant Representative/Order Processing).


July 19, 2000

 

Ms. Joanne Ferrari
Compliance Manager
Weeden & Co., L.P.
145 Mason Street
Greenwich, Connecticut 06830

 

Re: Functions Performed by Series 11 Representatives

 

Dear Ms. Ferrari:

 

This letter is in response to your request for guidance with respect to the permissible activities of a Series 11 representative. Specifically, in your letter dated March 30, 2000, you ask whether a Series 11 representative can perform the following functions: (1) complete order tickets; (2) obtain quotes for clients; (3) enter orders into Instinet, SelectNet and/or Posit for execution; and (4) report order executions to clients. Your letter further states that a Series 11 representative would only perform these functions under the direct supervision of a Series 7 representative.

 

The Series 11 registration category does not cover the activities described in your letter. Rather, the Series 11 registration permits a person to accept unsolicited customer orders for execution by a member firm.1 However, Series 11 registration does not prohibit a person from performing tasks for which no registration is required. NASD rules contain an exemption from registration for a person performing clerical or ministerial activities ("administrative personnel").2

 

It is the position of this office that there are clerical or ministerial tasks associated with the activities outlined in your letter that can be delegated to administrative personnel, whether or not they also are registered under Series 11. For example, at the direction and supervision of an appropriately registered person, administrative personnel may perform the mechanical task of typing orders into Instinet, SelectNet and/or Posit. The administrative personnel, however, cannot exercise any discretion in performing these activities. They must be following the specific instructions of the appropriately registered representatives.

 

In addition, we believe that there may be activities associated with the tasks outlined in your letter that are not clerical or ministerial. Your letter does not provide sufficient information for us to conclude whether there are adequate control mechanisms in place to ensure that each Series 11 representative will only perform those functions authorized by this registration category and/or clerical or ministerial functions that do not require or permit the Series 11 representative to exercise independent judgment with respect to the securities transactions. For instance, under no circumstances may a Series 11 representative or an unregistered person solicit transactions or new accounts, render investment advice, make recommendations regarding the appropriateness of securities transactions, or function as a market maker or trade in securities markets.

 

I hope this letter is responsive to your inquiry. Please note that the opinions expressed in this letter are staff opinions only and have not been reviewed or endorsed by the Board of Directors of NASD Regulation. This letter responds only to the issues you have raised based on the facts as you have described them in your letter, and does not necessarily address any other rule or interpretation of the NASD or all the possible regulatory and legal issues involved.

 

Very truly yours,

 

 

 

 

Eric J. Moss
Assistant General Counsel

cc: Frederick F. McDonald Jr., District Director
NASD Regulation, District 11

1See NASD Rule 1042.

 

2 See NASD Rule 1060.