Notice to Members 04-07

NASD Requests Comment on Proposed Amendments to Rules 2710 (Corporate Financing) and 2810 (Direct Participation Programs)

Comment Period Expired March 12, 2004
This version corrects certain administrative and other non-substantive text.

This Notice addresses the regulation of certain pooled investment vehicles under NASD Rule 2710 (the Corporate Financing Rule)1 and NASD Rule 2810 (the Direct Participation Programs Rule or DPP Rule). These pooled investment vehicles include publicly offered limited partnership securities, real estate investment trusts (REITs), and closed-end investment companies. This Notice proposes amendments to the Corporate Financing Rule and DPP Rule (together, the Rules), and describes policies in the Corporate Financing Department’s Public Offering Review program that will clarify the Rules’ application to these products. This Notice:

  • Requests comment on the rescission of an NASD interpretive policy regarding trail commissions charged by commodity DPPs;
  • Requests comment on proposed amendments to prohibit sales loads on reinvested dividends in REITs, DPPs, and closed-end funds;
  • Requests comment on proposed amendments to the non-cash compensation provisions in the Rules regarding the “appropriate location” for training and education meetings;
  • Requests comment on proposed amendments to the non-cash compensation provisions in the Rules to include “equal weighting” and “total production” limitations for internal sales contests;
  • Addresses due diligence practices and disclosure in connection with DPP and REIT programs; and
  • Addresses the allocation of compensation and organization and offering expenses in the review of DPP and REIT programs by NASD’s Corporate Financing Department (Department).

Questions concerning this Notice should be directed to Joseph E. Price, Vice President, or Minh Le, Assistant Supervisor, Corporate Financing Department, NASD, at (240) 386-4623.

The views, expressions, findings and opinions expressed in the comments on this Web page are solely those of the author(s) and FINRA accepts no responsibility for the content of the comments: 
DateCommenterFormat - Size
3/16/2004A.G. Edwards & Sons, Inc.PDF - 83.59 KB
3/11/2004Beacon Management CorporationPDF - 53.18 KB
2/25/2004Bob CornishPDF - 24.37 KB
3/12/2004Campbell & CompanyPDF - 202.47 KB
3/10/2004Cambridge Investment ResearchPDF - 67.58 KB
3/15/2004Capital Analysts IncorporatedPDF - 92.6 KB
3/12/2004CIS Investments, Inc.PDF - 75.31 KB
3/12/2004Citigroup Alternative Investments, LLCPDF - 237.63 KB
3/12/2004CNL Securities Corp.PDF - 153.3 KB
3/5/2004Direct Participation Broker Dealer AssociationPDF - 75.36 KB
4/14/2004Duane MorrisPDF - 126.9 KB
3/12/2004Ferris, Baker Watts, Inc.PDF - 78.93 KB
3/9/2004Futures Investment CompanyPDF - 40.73 KB
3/11/2004Geneos Wealth Management, Inc.PDF - 67.85 KB
3/11/2004Hines Real Estate Securities, Inc.PDF - 213.64 KB
3/12/2004Managed Funds AssociationPDF - 102.01 KB
3/15/2004Mewbourne Securities, Inc.PDF - 76.06 KB
3/4/2004Michael P. PacultPDF - 40.71 KB
3/12/2004Morgan Keegan & Company, Inc.PDF - 110.5 KB
3/12/2004National Futures AssociationPDF - 74.54 KB
3/12/2004North American Securities Administrators Association, Inc.PDF - 59.41 KB
3/11/2004Pacific WestPDF - 123.79 KB
2/20/2004Polar Investment Counsel, Inc.PDF - 81.05 KB
4/1/2004QuadrigaPDF - 148.24 KB
3/4/2004Shira Del PacultPDF - 40.39 KB
3/5/2004Steben & Company, Inc.PDF - 226.05 KB
3/12/2004Steven PorterPDF - 67.73 KB
3/12/2004The Association of the Bar of the City of New YorkPDF - 161.44 KB
3/12/2004The Investment Program AssociationPDF - 124.22 KB
3/17/2004The Massachusetts Securities DivisionPDF - 72.63 KB
3/11/2004The Retzer Group of Polar Investment Counsel, Inc.PDF - 59.11 KB
3/12/2004VSR Financial Services, Inc.PDF - 141.42 KB
3/12/2004Wachovia Securities, LLCPDF - 77.71 KB
3/11/2004Wells Real Estate FundsPDF - 156.91 KB
3/12/2004Futures Industry AssociationPDF - 26 KB