Notice to Members 01-51
SEC Approves NASD Rule Proposal Requiring Registration of Chief Compliance Officers
On June 19, 2001, the Securities and Exchange Commission (SEC) approved amendments to National Association of Securities Dealers, Inc. (NASD®) Rule 1022(a), "General Securities Principal." These changes will require the chief compliance officer designated on Schedule A of a member's Form BD to be registered as a general securities principal unless the member's activities are limited to particular areas of the investment banking or securities business. In that case, the individual may apply for a limited principal registration. Acceptable limited principal categories for a chief compliance officer are the Limited Principal Investment Company and Variable Contracts Products (Series 26), Limited Principal Direct Participation Programs (Series 39), and the Government Securities Principal, if the activities of the chief compliance officer's firm are limited to these areas. NASD Regulation will accept, in lieu of any of these NASD principal examinations, the New York Stock Exchange (NYSE) Series 14 Compliance Official examination.
The amendments also permit individuals who have been listed continuously as a firm's chief compliance officer for the two years preceding January 1, 2002, to be grandfathered, i.e., not be required to take a principal examination, provided they have no disciplinary history as specified in Rule 1022(a).
Questions concerning this Notice may be directed to Carole B. Hartzog, Qualifications Department, Department of Member Regulation, NASD Regulation, Inc., at (240) 386-4678; John J. Linnehan, Director, Continuing Education Department, Department of Member Regulation, NASD Regulation, Inc., at (240) 386-4684; or Shirley H. Weiss, Associate General Counsel, Office of General Counsel, NASD Regulation, Inc., at (202) 728-8844.