A sales incentive program can combine non-conforming criteria based on sales prior to January 1, 1999 with conforming criteria based on sales subsequent to January 1, 1999 for incentives to be provided prior to June 30, 2000.


March 31, 1999

 

Robert B. Saginaw, Counsel
ReliaStar Financial Corp.
20 Washington Avenue South
Minneapolis, MN 55401

 

Dear Mr. Saginaw:

 

This letter is in response to your request dated January 12, 1999, to John Ramsay regarding the application of NASD Rule 2820 with respect to a non-cash compensation arrangement. In your letter, you state that Washington Square Securities, Inc. ("WSSI") is an NASD registered broker-dealer and a subsidiary of ReliaStar Financial Corp. ("RFC"), a financial services holding company.

 

You have asked whether eligibility for RFC’s Sales Convention, to be held between May 2 and May 8, 2000, can be based on the following scenario:

 

  1.  

  2. for the period July 1, 1998 to December 31, 1998, qualification for the Sales Convention would be based only on proprietary variable life sales instead of total variable life sales; and

  3. for the period January 1, 1999 through December 31, 1999, qualification for the Sales Convention would be based equally on both proprietary and non-proprietary variable life sales, in compliance with the amendments effective January 1, 1999.

NASD Notice to Members 98-75 permits non-cash sales incentives earned under the previous rules to be received by registered representatives for a period not to exceed 12 months following June 30, 1999, the expiration of the six-month implementation period of the amendments. Given that your sales incentive program will be in compliance with the amended rule as of January 1, 1999 and the award based on the previous rules will be held between May 2 and May 5, 2000, the staff believes the proposed arrangement complies with NASD Rules 2820 as set forth in NASD Notice to Members 98-75.

 

I hope this letter is responsive 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 you have described, and does not address any other rule or interpretation of the Association, or all the possible regulatory and legal issues involved.

 

Sincerely,

 

Stephanie M. Dumont
Assistant General Counsel

 

cc:

 

John M. Ramsay
Deputy General Counsel
NASD Regulation, Inc

  Virginia F. Mariano Jans
Associate District Director
NASD Regulation, District 8
  James P. Moran
Associate District Director
NASD Regulation, District 8