NASD Board of Governors Approves Rule Changes and Amendments
Washington, D.C.—The National Association of Securities Dealers, Inc. (NASD® ) announced that its Board of Governors has approved a series of proposed rules and amendments to existing rules related to a variety of issues.
The changes, which are subject to approval by the Securities and Exchange Commission (SEC), include:
- A rule proposal that would require clearing and market-maker brokerage firms to participate in industry-wide systems testing to ensure compliance with Year 2000 standards, and to encourage participation in Year 2000 testing by other firms. The scope of required testing has yet to be determined.
- A rule amendment that would increase advertising fees and simplify the manner in which corporate finance fees are calculated. The fees cover the costs associated with the review of mutual fund advertising.
- A clarification that NASD Regulation will disclose, through its Public Disclosure Program, actions taken by regulators and reported on Form U-6 involving persons who have left the industry. The filing will also include an interpretation of the Program’s jurisdictional period. In addition, NASD Regulation will seek public comment shortly on the scope of disclosure of certain felony information not relating to investments, fraud, or theft.
- A proposal that would amend the rule proposal on file with the SEC with respect to bond fund volatility ratings removing the requirement that the ratings be issued exclusively by nationally recognized statistical rating organizations and allowing the Disclosure Statement to contain "any additional information that is relevant to an investor’s understanding of the rating."
- A rule proposal that would amend conduct rules to require increased disclosure to investors regarding predispute arbitration agreements. The expanded disclosure would encompass additional explanation of the arbitration procedure and the differences between arbitration and litigation; incorporation of proposed rule changes pending approval at the SEC relating to eligibility and punitive damages; making available a copy of the arbitration contract to the investor; and providing information to investors about SRO arbitration forums.
- A filing that would seek approval to extend the list-selection method of appointing arbitrators, previously approved for customer disputes, to intra-industry claims.
The appropriate rule filings and amendments to existing rules will be filed with the SEC shortly.
The National Association of Securities Dealers is the largest securities-industry, self-regulatory organization in the United States. Through its subsidiaries, NASD Regulation, Inc., and The Nasdaq Stock Market, Inc., the NASD develops rules and regulations; provides a dispute resolution forum; conducts regulatory reviews of members’ activities; and designs, operates, and regulates securities markets all for the benefit and protection of investors.