NASD Notice to Members 97-68 - October 1997

SEC Approves Amendment to Definition of Qualified Independent Underwriter in Conduct Rule 2720; Effective September 4, 1997

Executive Summary

On September 4, 1997, the Securities and Exchange Commission (SEC) approved an amendment to the definition of “qualified independent underwriter” in Rule 2720 of the National Association of Securities Dealers, Inc. (NASD®) Conduct Rules that eliminates the requirement that a member intending to act as a qualified independent underwriter in a public offering record net income in three of the five years immediately preceding the offering.1 The net income requirement was found to be an unreliable indicator of a member’s ability to fulfill the responsibilities of a qualified independent underwriter. The amendment is effective as of the date of SEC approval with respect to all offerings of securities that have not, as yet, commenced sales of securities.

 

Questions concerning this Notice may be directed to Richard J. Fortwengler, Associate Director, Corporate Financing, NASD Regulation, Inc., at (202) 974-2700.