NASD Notice to Members 06-72 - December 2006

Amendments to Rule 2340 Requiring Customer Account Statements to Include a Statement Reminding Customers to Report Inaccuracies in Their Accounts in Writing; Revised Effective Date: May 31, 2007

Executive Summary

NASD is issuing this Notice to supersede NASD Notice to Members (NTM) 06-60 and replace the guidance provided in that Notice. On September 7, 2006, the Securities and Exchange Commission (SEC) approved amendments to Rule 2340 requiring customer account statements to include a statement advising customers to promptly report any inaccuracy or discrepancy in their account to the introducing firm and clearing firm (where these are different firms) and to re-confirm any oral communication in writing.1NTM 06-60 announced the effective date of that rule change as March 6, 2007. On December 5, 2006, the SEC approved NASD’s request to change the effective date of this requirement to May 31, 2007.2

Additionally, this Notice clarifies an interpretation of the SEC’s Division of Market Regulation under the net capital rule and SEC Rule 15c3-3 that requires clearing firms to include in customer account statements a telephone number at the clearing firm that a customer may use to contact the firm with inquiries regarding the customer’s account.3

As revised, the effective date of this rule change is May 31, 2007. Included with this Notice is Attachment A, the text of amended Rule 2340.

Questions concerning this Notice may be directed to Susan M. DeMando, Associate Vice President, Financial Operations, Department of Member Regulation, at (202) 728-8411.

1 See Exchange Act Release No. 54411 (Sept. 7, 2006) 71 FR 54105 (Sept. 13, 2006) (Order Granting Approval of Proposed Rule Change Relating to Rule 2340 Concerning Customer Account Statements; File No. SR-NASD-2004-171) (SEC Approval Order), as corrected by Exchange Act Release No. 54411A (Oct. 6, 2006).

2 See Exchange Act Release No. 54872 (December 5, 2006) (Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change Relating to Establishing an Effective Date for Amendments to NASD Rule 2340); File No. SRNASD-2006-128). NASD notes that the effective date of May 31, 2007 is consistent with the effective date of a substantially similar New York Stock Exchange LLC requirement. See SR-NYSE-2005-09.

3 See infra note 6.

 

NTM 06-72 supersedes NTM 06-60.