NASD Notice to Members 98-048 - July 1998

SEC Approves Amendments to Free-Riding and Withholding Interpretation; Effective August 17, 1998

Executive Summary

On May 18, 1998, the Securities and Exchange Commission (SEC) approved amendments to National Association of Securities Dealers, Inc. (NASD®) Interpretive Material 2110-1 (IM-2110-1) and Rule 2720, revising certain provisions of the Free-Riding and Withholding Interpretation (Interpretation). These amendments address direct and indirect owners of broker/dealers, investment grade debt offerings, foreign investment companies, secondary offerings, issuer directed share programs, and accounts under the Employment Retirement Income Security Act. The amendments also provide NASD Regulation, Inc., staff with general exemptive authority. These rule amendments will be effective on August 17, 1998. The text of the amended rules and the Federal Register version of the SEC approval order are attached. This Notice is being issued to alert members of their revised compliance responsibilities under the Interpretation.