Interpretive Letter to Karen A. Steighner, Brokerage Administrators Corporation (includes attached incoming letter)
December 23, 1999
Ms. Karen A. Steighner
Chief Compliance Officer
Brokerage Administrators Corporation
5619 DTC Parkway, 12th Floor
Englewood, CO 80111-3017
Re: Registration Requirements for Teleservicing Activities
Dear Ms. Steighner:
This is in response to your letters dated April 22, 1999, April 30, 1999, June 16, 1999, September 20, 1999, November 2, 1999, and November 29, 1999, in which you seek guidance on whether employees of Brokerage Administrators Corporation ("BAC") that will engage in various teleservicing activities are required to register with the NASD, and if so, under what registration category.
Based upon the representations contained in your letters, we understand the pertinent facts to be the following. BAC is a member firm and a wholly owned subsidiary of an integrated marketing company that contracts with other broker/dealers to provide inbound and outbound teleservicing activities. In your letters dated November 2, 1999, and November 15, 1999, you have provided us with an Activities Summary listing each of the possible activities to be performed by BAC personnel. NASD Regulation staff has reviewed the Activities Summary and disagrees with your conclusions with respect to the following:
Establish Interest in New Account/Establish New Account
Item 6 requires registration as general securities representative ("Series 7"). Collecting new account data is the type of function that may only be performed by Series 7 personnel.
- Items 2 and 3 do not require registration.
- Item 6 requires Series 7 registration. Providing definitions of items such as market order, limit order and market maker may only be performed by Series 7 personnel.
- Items 1, 2, 7, 8, and 10 do not require registration.
- Items 4 and 6 require Series 7 or limited representative – investment company and variable contracts products ("Series 6") registration, depending on the scope of the securities business.
Internet Interactive/Navigation Assistance
- Items 2, 3 and 4 do not require registration.
Investment Selection/Order Processing and Entry
- Items 1, 2 and 5 do not require registration.
Establishing Interest in New Account/Investing
- Items 2 and 5 require Series 6 or 7 registration depending on the scope of the securities business. NASD Notice to Members 88-50 ("NTM 88-50") lists the activities that may be performed by unregistered persons. Since the activities listed in these items go beyond the limits of NTM 88-50, registration is required.
- Item 7 requires Series 6 registration. NASD Notice to Members 88-50 ("NTM 88-50") lists the activities that may be performed by unregistered persons. Since the activities listed in this item go beyond the limits of NTM 88-50, Series 6 registration is required.
- We do not believe that any of the items in this section would require registration. However, with respect to items 2 and 3, in providing performance data, persons should be careful not to provide any analysis or interpretation of performance data that may be construed as providing recommendations or investment advice.
Answer Account Inquiry/Provide Account Service
- We do not believe that any of the items in this section would require registration.
Investment Selection/Order Processing & Entry
- No changes necessary.
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, Inc. This letter responds only to the issues you have raised based on the facts as you have described them in your letters, and does not necessarily address any other rule or interpretation of the NASD or all the possible regulatory and legal issues involved.
Gary L. Goldsholle
Assistant General Counsel
|cc:||Alden S. Adkins, Senior Vice President and General Counsel
Frank J. Birgfeld, Vice President, District 5
Jeffrey Holik, Director, Member Regulation
Frank McAuliffe, Vice President, Qualifications
Allison Reid, Manager, Member Regulation