NASD Notice to Members 97-10 - March 1997

SEC to Approve Amendments to NASD Rules to Facilitate Compliance With SEC Regulation M

Executive Summary

The Securities and Exchange Commission's (SEC) Regulation M, which regulates the market activities of persons with an interest in the outcome of an offering of securities, became effective on March 4, 1997. The new Rule replaced SEC Rules 10b-6, 10b-6A, 10b-7, 10b-8, and 10b-21. The NASD has filed with the SEC proposed amendments, to be effective March 4, 1997, to NASD rules regarding corporate financing, The Nasdaq Stock Market, Inc. (Nasdaq), and the OTC Bulletin Board (OTCBB) that are designed to assist members in complying with Regulation M. In general, the amendments to NASD rules establish a new requirement for members to obtain an Underwriting Activity Report from the Corporate Financing Department of NASD Regulation, Inc. (NASD Regulation) with respect to a proposed distribution subject to SEC Rule 101; modify current Nasdaq requirements with respect to the entry of a stabilizing or penalty bid and requests for excused withdrawal of quotations or designation of quotations as those of a passive market maker; and establish new requirements for notification with respect to penalty bids and syndicate covering transactions for Nasdaq and OTCBB securities. It is anticipated the amendments will be effective March 4, 1997.