NASD Regulation Inc.'s review of membership names.


September 28, 2000

 

Leslie U. Harris
Managing Partner
East/West Securities Co.
Suite 993
San Francisco, CA 94104

 

Re: Firm Name

 

Dear Mr. Harris:

 

This letter is in response to your letter of August 24, 2000, addressed to T. Grant Callery in which you seek assurance from the NASD that we will not admit to membership any firm with a name beginning with "East West" (or "East-West" or "East/West").

 

In your letter, you state that you are aware of two membership applications reviewed in the past by NASD which you believed to be problematic and you are concerned that future applicants may be admitted to membership with names that will be confusingly similar to your firm’s name.

 

As you note in your letter, Article IV, Section 2(a) of the NASD Bylaws reads as follows:

 

"No person or firm shall be admitted to or continue in membership in the NASD having a name that is identical to the name of another member appearing on the membership roll of the NASD or a name so similar to any such name as to tend to confuse or mislead." (italics added).

 

We regard this provision of the NASD By-Laws very seriously and consistently apply this provision in evaluating the appropriateness of an applicant’s name. In fact, with respect to this By-Law, NASD Regulation’s (NASDR) review effort is conducted on a two-part basis: NASDR’s CRD/Public Disclosure Department reviews all proposed names filed with initial membership applications, and NASDR’s Advertising Department monitors and reviews names proposed for use, or used, after a membership application has been approved.

 

As you may be aware, NASDR reviews both membership applications and on-going name usage on an individual, case-by-case basis; thus it would not be appropriate to provide general assurances concerning the outcome of a highly particularized review process. Nevertheless, in each such evaluation, we endeavor to uphold the NASD By-Laws, and, as part of that effort, consider whether a proposed name would violate NASD Bylaw Article IV, Section 2(a).

 

I hope this letter responds to your inquiry. Please note that the opinions expressed herein 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 that you have raised based on the facts as described, and does not address any other rule or interpretation of the Association, or all the possible regulatory and legal issues involved.

 

Sincerely,

 

 

 

Kosha K. Dalal
Assistant General Counsel
NASD Regulation, Inc.

cc:

T. Grant Callery
Sr. VP and General Counsel, National Association of Securities Dealers, Inc.


 

Alden S. Adkins
Sr. VP and General Counsel, NASD Regulation, Inc.


 

Richard E. Pullano
Associate Director and Counsel, CRD/Public Disclosure Department


 

Thomas A. Pappas
Director Disclosure and Investor Protection, Advertising