NASD Notice to Members 96-82 - December 1996

NASD Solicits Comment on Proposed Rules Governing Supervision, Review, and Record Retention of Correspondence

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.