Interpretive Letter to Name Not Public
December 23, 1996
I am responding to your letter of November 11, 1996 to Larry Marsh, Senior Examiner, NASD Regulation, Inc. ("NASD Regulation"), which was forwarded to this office on December 3, 1996, wherein you ask whether the NASD's Continuing Commissions Policy (Rule IM-2420-2) allows for the payment of commissions generated from new investments into existing accounts under periodic investment plans.
The NASD's Continuing Commissions Policy permits payments of commissions generated from new investments into existing accounts under periodic investment plans provided bona fide contracts between the employers and employees calling for such payments are in place at the time the employees are registered representatives of the employing members. However, such contracts may not permit the solicitation of new business or the opening of new accounts by persons who are not registered.
I hope this letter is responsive to your inquiry. Please note that the opinions expressed herein are staff opinions only and have not been reviewed or endorsed by the Board of Directors of NASD Regulation. This letter responds only the issues that you have raised based on the facts as you have described them, and does not address any other rule or interpretation of the Association or all the possible regulatory and legal issues involved.
Robert J. Smith
NASD Regulation, Inc.