The Bulletin
March 2005 - A Publication of the NASD Registration and Disclosure Department
- From the Desk of…
- A New Look and Feel to Web CRD and IARD
- Disclosure Inquiry Letter Tracking To Begin
- Testing and Continuing Education Department Update
- A New Firm E-mail Notification For Firms
- What’s New On Web CRD Regarding Fingerprints?
- Web CRD and IARD Regional Training Available For Firms
- Use Web E-Pay To Fund Your CRD/IARD Accounts – It’s Easy!
- Updates to IARD
From the Desk of …
On March 14, we will implement our first software release of this year, providing both Web CRD and IARD users requested enhancements, such as, an additional emailed notification to alert firms about registrations that are about to go CE or Fingerprint Inactive, and presenting users with an updated and streamlined look and feel to both systems that is consistent with other NASD Web applications that they use. This Release also transitions the underlying code to Microsoft's .Net platform, providing the upgraded technical framework to remain world-class systems. Be sure to note the upgraded minimum recommended client configuration requirements. I hope that you will be pleased to see that individual and organization User IDs are now displayed on all system screens for your reference. For a complete listing of all of the changes that are being implemented with Release 7.0, please reference the Release Notes, posted on this site. We continue to reach out to firms via industry forums, focus groups, user testing and training seminars to solicit feedback, understand your needs, and prioritize your requests.
Of particular importance to firms with this release, is a new tracking program, Disclosure Inquiry Letter Tracking. This is the first phase of a recommendation made by the Public Information Review Task Force and is an important component to the future implementation of an Inactive Disclosure Review registration status. The program has been intentionally phased to provide firms the time and tools to identify and analyze those letters that, if not responded to in a timely manner, could result, at a future point in time, in an approved NASD registration status being changed to an inactive status.
Recently, we have launched Web CRD Online Training, on this site and will be expanding the modules offered over the next few months. This training was developed to provide you and your staff, up-to-date, self-paced opportunities to expand your knowledge of Web CRD, as your needs arise and your time permits. We will also offer our CERT/IRT, instructor-led training this year, Information, including the schedule and the registration form should be posted on this site this month.
On a final note, I want to remind you about Web E-Pay, an online payment system that is quick and easy. Enrollment grew significantly last year; and, if you have not enrolled to use it, I encourage you to do so this year. To register only takes a few minutes, and we provide you links on these pages and on Web CRD to it. NASD does not charge any fees for this service.
If you have any questions about the information in this Bulletin or anything else related to Web CRD, you can always contact us at (301) 869-6699 or you can e-mail us. We always are pleased to hear from you.
Regards,
Jay Cummings
A New Look and Feel to Web CRD and IARD
Release 7.0 will include changes to the Web CRD and IARD screens so they are consistent with the look and feel of other Web applications operated by NASD. Although there will be cosmetic changes to the screens, users should rest assure that overall functionality will remain the same with the exception of the modifications or enhancements noted with this software release. Please refer to the 7.0 Release Notes for all of the system changes that will be implemented with this release.
The following are some highlights of the design and layout updates:
- The system screens will continuously display the User ID and Organization in which the user is accessing the application. This should be particularly useful for those organizations that file on behalf of multiple firms.
- Both the ‘CRD Main’ and ‘IARD Main’ tabs will be displayed alongside the other navigation tabs at the top of the screen.
- The color scheme for the Web CRD and IARD screens will change to mirror the color palette used in other NASD Web applications.
- The navigation links at the bottom of the screen will no longer display, as they were duplicative of the left navigation panel links. This change will allow for a more streamlined approach to the screens.
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Update to Bookmarks for Web CRD and IARD
As part of the technological updates to Web CRD and IARD included with Release 7.0, the underlying code for these applications will be converted from “Microsoft Visual Basic 6” to “Visual Basic .Net.” Although most of the .Net conversion will be transparent to system users, any bookmarks that contained “.asp” will no longer work.
Update your Web CRD and IARD bookmarks:
Additionally, if you had bookmarks for any other sections of either application (i.e., U4 Form Amendment, Daily Account Transaction Detail, NFI individual Search, etc.), you must also update those bookmarks.
Web CRD/IARD Minimum Recommended Client Configuration
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Disclosure Inquiry Letter Tracking To Begin
Background
One of the recommendations of NASD's Public Information Review (PIR) Task Force) was to create an 'Inactive Disclosure Review' (Inactive DR) registration status [similar to the existing Continuing Education (CE) Inactive status (Rule 1120) and the Fingerprint Inactive status (Rule 1140)] that would require a registered individual to cease all activities requiring registration, and prohibit that individual from functioning in any capacity requiring registration until the member either reports or updates a disclosure item on Form U4 or provides disclosure-related documentation requested for that individual. This proposal is part of a multi-pronged effort to help ensure that members report information on the Uniform Forms in a timely manner. NASD has not yet implemented the Inactive DR status which will require a new rule; however in an effort to enable firms to make appropriate adjustments to their internal work processes prior to full implementation, NASD plans to implement the proposed new registration status in phases over multiple Web CRD® software releases. In the first phase, the Web CRD System will identify and track Inquiry Letters that potentially could trigger the Inactive DR registration status. This phase, which is described in more detail below, will be implemented with Web CRD Release 7.0 on March 14, 2005. A description of the proposed Inactive DR registration status is described in NASD Notice to Members 04-23.
Changes Being Implemented With Release 7.0
In Release 7.0, NASD will deploy a new functionality that will enable Disclosure Review staff to initiate letter tracking when creating certain Inquiry Letters, as well as to identify firms that have not resolved the "tracked" Inquiry Letters within 30 days from the date the letter was generated. This will enable NASD to provide additional notice to firms that have unresolved, aged letters before potentially making a referral to NASD's Member Regulation Department. Receipt of such notices may indicate that a firm should adjust its compliance procedures to ensure that responses to Inquiry Letters are made within 30 days.
Disclosure Review staff will begin setting Inquiry Letter "alerts" which will appear in a firms's Web CRD Outstanding Disclosure Letters Notice Queue as of the software release on March 14, 2005. The three criteria for setting the letter tracking alert are:
- The individual is NASD registered and has no other deficient registration requests.
- The letter being sent is an Inquiry Letter and not a Deficiency Letter (a Deficiency Letter is sent when there are one or more deficient registration requests outstanding).
- The Inquiry Letter is being sent for one of the following reasons:
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- A request for new disclosure.
- A request to update the status for a previously-reported disclosure event.
- A request for documentation regarding a disclosure event or potential disclosure event.
Inactive DR letter tracking will not be applied to Inquiry Letters requesting other additional details (such as a dates, case numbers, etc.) regarding a previously reported disclosure event.
Release 7.0 will enable firms to readily identify outstanding Inquiry Letters that may be subject to Inactive DR tracking through a new sort feature in their Outstanding Disclosure Letters Notice Queue Search Criteria screen. NASD emphazises that all disclosure letters should promptly be resolved by a firm. Because the letters identified through the new tracking system could, after full implementation of the Inactive DR status, cause an individual's registration status to become inactive, firms should familiarize themselves with the tracking system and criteria during this transition period and adjust compliance procedures accordingly
Below is a sample screen that contains the new filter option that identifies Inquiry Letters that are being tracked and could result in adverse regulatory consequences if not promptly addressed by firms.
Additionally, a new column, Alert: Inactive DR May Apply, will appear in the Outstanding Disclosure Letters Notice Queue, to help firms readily identify letters that could result in an Inactive DR registration status once the program has been fully implemented.
Letter Tracking Follow Up
Although the Inactive DR registration status (as well as an accompanying additional firm email notification) will not be implemented until a later phase, as of March 14, NASD's Disclosure Review staff will begin to identify tracked Inquiry Letters that remain unresolved for more than 30 days and mail hard copy notification letters to remind firms about unresolved letters. If no response is received and the Inquiry Letter remains unresolved, staff may refer cases to NASD Member Regulation. If a firm is having difficulty obtaining requested documents or complying with an Inquiry Letter request, it should contact the Gateway Call Center at 301-869-6699 to advise of the issue.
If you have questions regarding the new Inquiry Letter Tracking Program, please contact the Gateway Call Center at 301-869-6699 or e-mail us.
Testing and Continuing Education Department Update
NASD’s Testing and Continuing Education Department recently posted three Notices to Members announcing recent developments regarding the CE Regulatory Element requirement and also the requirements for Research Analyst registration:
NASD Notice to Members 04-78 - NASD announced that the Securities and Exchange Commission has approved amendments to Rule 1120 (Continuing Education Requirements) to eliminate all current exemptions from the Continuing Education Regulatory Element requirement. The effective date of the rule change will be on or about April 4, 2005. Registered persons currently exempt from the Continuing Education Regulatory Element, the computer-based education program administered by NASD, will be re-introduced to this requirement. Re-entry into the Regulatory Element will occur over a three-year period using each registered person’s “base date” (in most cases this is the person’s date of initial securities registration).
NASD Notice to Members 05-13 - NASD announced that the Research Analyst registration requirements and examination program went into effect on March 30, 2004. As of that date, any associated person functioning as a Research Analyst must pass the Research Analyst Qualification Examination (Series 86/87) or obtain an exemption or waiver. Persons functioning as Research Analysts on March 30, 2004, were granted a grace period until April 4, 2005, within which to meet the registration requirements, provided the member firm with which they are associated applied for the Research Analyst registration by June 1, 2004. NASD reminds such persons and member firms that the grace period will end on April 4, 2005, and should a Research Analyst fail to pass (or receive an exemption from) the necessary examination(s) by April 4, 2005, such individual’s registration as a Research Analyst will terminate on April 4, 2005. NASD will not grant any extensions of the grace period.
NASD Notice to Members 05-14 - NASD has amended NASD Rule 1050 to provide an exemption from the analysis portion of the Research Analyst Qualification Examination (Series 86) for certain applicants who prepare only “technical research reports” and have passed Levels I and II of the Chartered Market Technician (CMT) Certification Examination administered by the Market Technicians Association (MTA). There will be no extension to the April 4, 2005, grace-period deadline for applicants who are eligible for the grace period to satisfy the Research Analyst registration requirements. Therefore, those individuals who wish to avail themselves of the CMT exemption must complete the process set forth in this NtM and meet the other registration requirements by that date.
For any questions that you have regarding any of the information contained in these Notices to Members, please see the contacts contained in each or you may call the NASD Gateway Call Center at (301) 869-6699.
A New Firm E-mail Notification For Firms
A new firm e-mail notification has been added to the current list of e-mails that firms may elect to receive. This new notification, Notify when registered individuals are within 10 days of CE Inactive or Prints Inactive statuses, lists individuals associated with the firm whose registration status could change to an inactive status within the next ten (10) days. The selection box for this new notification is found in the “Other” section of the Maintain Firm Notification Request screen. Firms must check the box to select it.
If your firm is not taking full advantage of Web CRD’s e-mailed notifications about important registration-related conditions for either the firm or an individual registered with the firm, to set up receipt of one or more of them or to add a new designated recipient for a notification:
1. Logon to Web CRD.
2. Click on NFI ORGANIZATION SEARCH under ORGANIZATION-NON-FILING INFORMATION on the Site Map.
3. Click on FIRM NOTIFICATION on the Navigation Panel. NOTE: If you do not see Firm Notification on the Navigation Panel, you may not have authorization for this function. Please contact your firm's Web CRD Account Administrator.
4. Click the ADD NEW button.
5. Enter the Contact Name (name of the individual to receive the e-mail).
6. Enter the Contact Phone Number (phone number of the individual who will receive the e-mail).
7. Enter the E-mail Address of the individual whom you want to receive each of the Firm Notifications selected.
8. Place a check mark in the box before each Firm Notification that the individual is to receive.
9. Click on SAVE.
To update an existing Firm Notification recipient:
Steps 1 through 3 are the same.
4. Click on the e-mail address hyperlink of the existing Firm Notification Recipient for whom you would like to add or change the Firm Notifications sent to that individual.
5. Make any applicable adjustments to the Firm Notifications that the individual should receive.
6. Click on SAVE.
An instructional Firm Notification Navigation Guide is available to assist firms in setting up receipt of Firm Notifications.
E-mail Address Maintenance Reminder
Firm users who are entitled to the Maintain Firm Notification function in Web CRD always have the ability to update information, including Notification selections, Contact Name, Contact Phone Number and E-mail Address information.
Remember to keep your Primary Account Administrator's e-mail address current with us as this address is used to send important information related to Web CRD to you throughout the year. To notify us of any changes to either your Primary Account Administrator or his/her e-mail address, complete the appropriate NASD Entitlement Modification Form and either fax or mail it to NASD Entitlement.
If you have any questions regarding Firm E-mail Notification functionality, please contact the Gateway Call Center at (301) 869-6699.
What’s New On Web CRD Regarding Fingerprints?
New Statuses Associated with FBI Name Check Searches
In March 2004, NASD added a new step to its fingerprint card process when the FBI identified a third successive fingerprint card as “illegible.” In such cases, NASD now requests that the FBI conduct a search of its database based on the associated person's name (Name Check Search), rather than on the fingerprints submitted, to verify whether the database contains Criminal History Record Information (CHRI) on that individual based on the name search. This Name Check process does not alter the fingerprint process for firms with respect to an individual who receives three successive "Illegible" results from the FBI after three good-faith attempts to be printed as required under Rule 17f-2 of the Securities Exchange Act of 1934. Firms are not required to submit a 4th fingerprint card for the individual. Upon receipt of the third "Illegible" result, the individual's fingerprint status in CRD changes from "ILEG" to "NMCK," to indicate that an FBI Name Check is being requested. The firm can click on the barcode associated with NMCK to see the history for that card.
With Release 7.0, after a Name Check is performed, a status of "CLRX” (Clear after Name Check search) or "RAPX” (CHRI received following Name Check search) will be added to the View Individual Fingerprint Card Statuses Screen. An “x” has been placed at the end of the FBI status to reflect a final status as a result of the Name Check search. Therefore,
- If the FBI Name Check search returns no CHRI:
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- The individual's FBI status will be updated from NMCK to CLRX
- NASD will take no further action.
- If the FBI Name Check search returns CHRI:
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- The individual's FBI status will be updated from NMCK to RAPX. As a reminder:
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- Disclosure Review staff will review the CHRI.
- NASD will send the firm a letter with the CHRI. (Additional information may be requested from the firm following NASD’s review.)
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- Once the review has been completed, a Fingerprint Status of ” CMPX” (Disclosure Review complete following Name Check search) will be added to the View Individual Fingerprint Card Statuses Screen.
- Once the review has been completed, a Fingerprint Status of ” CMPX” (Disclosure Review complete following Name Check search) will be added to the View Individual Fingerprint Card Statuses Screen.
Queue Enhancements
Web CRD users will see the following changes related to fingerprint statuses in their Queues with this Release:
1. “CHRI” will replace ‘RAP criminal record’, “DR complete” replaces ‘COMP’, and “Processed as CHRI through another SRO” replaces ‘RECR’.
2. If the final Fingerprint Status is ‘NMCK’ (Name Check), the final FBI statuses will now be “CLRX” (Clear after Name Check search), “RAPX” (CHRI received following Name Check search), “CMPX” (Disclosure Review complete following Name Check search) and “TERM” (terminated by U5 submission or by notification from your firm).
Also, the Notices of Undelivered Fingerprint Cards Queue “Search” criteria have been enhanced to include the following filters: Registered Individuals, Non-registered Individuals and All, affording firms the ability to refine their searches.
Report Changes
Three current Fingerprint Reports, (1) Fingerprint – Clear, RAPP and Exempt Cards, (2) Fingerprint- Deficient and Illegible Cards, and (3) Fingerprint – Receive Status are being retired with this Release. These reports have been combined in a new, more robust report, the Fingerprint – Status and Download, that provide users the flexibility to select any fingerprint status, subsets of fingerprint statuses, or all fingerprint statuses.
Additionally, the new statuses of “CLRX”, “RAPX” and “CMPX” have been added to the Fingerprint Reconciliation Download Report.
Form Filing
Firms should note the following two system changes related to fingerprint cards:
- A fingerprint card will no longer invalidate a “Pending” U4 filing or an “NRF” (Non-Registered Fingerprint) filing.
- If you are an affiliated firm, Web CRD will only allow you to share the filing firm’s fingerprint card if the final FBI status for that card is thirty (30) days or less from the date that you are submitting the filing.
Web CRD and IARD Regional Training Available For Firms
CRD Effective Regional Training/Investment Adviser Training (CERT /IRT) training sessions will again be offered in 2005 and will begin this June with the first session conducted at the NASD facilities in Rockville, Maryland. CERT/IRT provides the opportunity for "hands-on" CRD and/or IARD training for broker-dealer firms or joint broker-dealer/investment adviser firms. IRT offers "hands-on" training and is geared toward investment adviser-only firms or those who are new to investment adviser registration.
The joint session of CERT/IRT training is conducted over two days and includes a detailed and comprehensive Web CRD User’s Manual and Investment Adviser Firm User’s Manual. The IRT Session training is a one-day training session and includes a detailed and comprehensive Investment Adviser Firm User’s Manual. Training for either session will include topics such as account administration (system access and management), the accounting process (registration fees and payment transactions), submission of electronic form filings, report requests, firm queue management, as well as topics specific to Web CRD and/or IARD. The sessions are continuously refined based upon changes to the system and the feedback and suggestions provided by participants.
Additional information about CERT/IRT Training and how to register online can be found on the CRD pages of this site under User Support.
New Training Offerings - Web CRD Online Courses
New this year are Web CRD Online Courses. They offer users a self-study training opportunity on how to use Web CRD. These courses do not require registration in order to be accessed; therefore, users have the flexibility to set a schedule convenient to them and learn to use Web CRD at their own pace.
The following courses on Web CRD are currently available
- Introduction to Web CRD – Designed for new users to the Web CRD System, this course reviews the purpose of the Web CRD System, provides an overview of the Web CRD Site map, demonstrates basic system navigation and functionality the Account Administration, Form Filing, Accounting, Reports, and Individual and Firm sections.
- Web CRD Firm Reports – Web CRD Firm Reports provides an overview of CRD Reports functionality and includes requesting and viewing standard report online, a description of some of the most frequently requested reports, and how to request a non-standard (ad-hoc) report.
Other available Online Courses
- NASD Entitlement Program for Account Administrators - Designed specifically for firm Account Administrators, this course covers what the NASD Entitlement Program encompasses, the role and responsibilities of Account Administrators, and how to perform the functions for which they are responsible.
Trainer’s Tip: Our Web CRD and IARD User’s Manuals and Web CRD and IARD Navigation Guides are updated with each software release. If you are using them for training purposes, please make sure that you are using the most current versions.
Use Web E-Pay To Fund Your CRD/IARD Accounts – It’s Easy!
A convenient and easy way to fund your firm’s Daily and/or Renewal Account with NASD is by electronic payment via the Web CRD/IARD E-Pay online application. For the past few years, Web CRD/IARD E-Pay has been available as a payment method for firms. Web CRD/IARD E-Pay is an online payment application that enables a firm to authorize electronic payment directly from its designated bank account to the firm’s Daily and/or Renewal Accounts. NASD does not charge firms any fees for utilizing Web CRD/IARD E-Pay. Firms should verify with their banks whether ACH transaction fees are assessed by their bank for using Web CRD/IARD E-Pay.
To date, 9,000+ broker-dealer and investment adviser firms are enrolled to use Web CRD/IARD E-Pay and feedback from individual users has been overwhelmingly positive as to its ease of use and convenience, particularly when the firm needs to fund its Daily and/or Renewal Account within a short timeframe. Electronic (ACH) payments that are submitted by 8:30 p.m., Eastern Time (ET), should post within two business days to a firm’s Daily and/or Renewal Accounts with NASD. A user may view in Web CRD/IARD E-Pay all electronic payments submitted by him/her in the past 180 days.
In order to use Web CRD/IARD E-Pay, a firm user must complete an online Enrollment Form available through the E-Pay application to establish an E-Pay User ID and set an E-Pay Password. Once an E-Pay user account is established, the user will be able to update his/her own E-Pay User Profile information, including updated or changed bank account and contact information as well as change or reset his/her E-Pay Password.
Tip: Bookmark the Web CRD/IARD E-Pay login page if you choose to enroll in and utilize this payment method. This link is also accessible from the CRD section of this Web site or the IARD Web site.
Updates to IARD
Applicable to Investment Adviser (IA) firms and joint Broker-Dealer/IA firms, Release 7.0 will include enhancements and modifications to the IARD system. An important update to IARD will be a revised question that must be answered on the next Form ADV Amendment filing made by your firm. The question on the Form ADV, Item 7B and Schedule D which currently reads “Are you or any related person a general partner in an investment-related limited partnership or manager of an investment-related liability company,” will be changed to “Are you or any related person a general partner in an investment-related limited partnership or manager of an investment-related limited liability company, or do you advise any other ‘private fund’ as defined under SEC rule 203(b)(3)-2?”
Other changes to IARD will include system checks and warning messages to users. For instance, in order to help prevent the creation of duplicate records for individuals, the system will require an individual to have a unique last name, first name, date of birth, and Social Security Number when creating an individual(s) on a Form ADV filing or a Form U4. Another new warning feature is if a user attempts to retrieve and complete a saved ‘Pending Form ADV Filing’ that was created on an outdated version of the form, the system will display the following message: “The pending filing is on an outdated version of the Form ADV. Please delete the pending filing and initiate a new filing.”
For many sections of the Form ADV, the IARD System currently directs a user from one section of the Form ADV to another when details must be provided for that section. With the implementation of Release 7.0, a user will be systematically directed to “Schedule D” if there are details that need to be completed for Sections 6 and 10 of the Form ADV. Also with the release, users will find that all of the left navigation panel links for the Form ADV and ADV-W will now consistently match the form section names on the screen. These are only highlights of the changes users can expect with this release; please refer to the 7.0 Release Notes for all of the IARD and Web CRD System changes that will be implemented with this release.
(Please note: Although some references to the Form ADV Part 2 will be visible on IARD, the ADV Part 2 functionality will not be implemented until a later date. Also, the ADV Form Filing screen will be updated to include links to the SEC and NASAA Web sites for guidance on the ADV Part 2. Additional information will be provided regarding Part 2 of the Form ADV prior to implementation.)
