NASD Notice to Members 02-69 - October 2002

Clarification of Member Obligations Regarding Brokered Certificates of Deposit Effective Date: October 8, 2002

Executive Summary

NASD is issuing this Notice to supersede NASD Notice to Members 02-28 (Notice or Notice 02-28) and replace the guidance offered in Notice to Members 02-28, which addressed issues applicable to members offering "brokered" certificates of deposit (CDs). Accordingly, this Notice repeats pertinent information from Notice to Members 02-28. However, it also provides additional guidance not included in Notice to Members 02-28. First, the Notice gives a more detailed description of the characteristics of brokered CDs, the mechanics of the brokered CD market, and the circumstances in which brokered CDs may be considered securities. Second, the Notice harmonizes NASD's disclosure and sales practice requirements with the New York Stock Exchange's (NYSE's) disclosure and sales practice obligations applicable to its members offering brokered CDs. Finally, the Notice recommends the appropriate pricing that members should use in reporting the value of brokered CDs on customers' account statements and the appropriate disclosures that should appear in customers' account statements.

 

Members may direct questions about this Notice to Patricia Albrecht, Assistant General Counsel, Office of General Counsel, NASD Regulatory Policy and Oversight, at (202) 728-8206.

 

Note: This Notice supersedes Notice to Members 02-28