NASD Notice to Members 02-28 - May 2002

Member Obligations Regarding Long-Term Or Brokered Certificates Of Deposit

Executive Summary

Members increasingly have been offering to customers a number of non- traditional certificate of deposit (CD) products. Typically, these products are long- term CDs offered by "deposit brokers" that carry a maturity date of more than one year, are callable at the discretion of the issuer, and trade in a secondary market. In certain circumstances, these products are securities. Irrespective of whether a particular CD product is a security, members must ensure that their registered representatives are properly trained and informed about the products, and that customers receive adequate disclosure of risk factors. Members are advised to carry CD products at fair market value on customer account statements.

 

Members may direct questions about this Notice to Philip Shaikun, Assistant General Counsel, Office of General Counsel, NASD Regulation, Inc., or Kosha Dalal, Assistant General Counsel, Office of General Counsel, NASD Regulation, Inc., at (202) 728-8071.