Notice To Members 90-68

Amendment to Schedule C of the NASD By-Laws Regarding Requalification by Examination For Persons Whose Registration Has Been Revoked, Effective October 1, 1990

Published Date:

SUGGESTED ROUTING*

Senior Management
Internal Audit
Legal & Compliance
Operations

*These are suggested departments only. Others may be appropriate for your firm.

EXECUTIVE SUMMARY

The Securities and Exchange Commission has approved an amendment to Schedule C of the NASD By-Laws that would require any person whose registration(s) has been revoked to re-qualify by examination prior to again becoming registered. The amendment became effective October 1, 1990.

EXPLANATION

The Securities and Exchange Commission has approved an amendment to Part II, Section (l)(c) and Part III, Section (l)(c) of Schedule C to the By-Laws to require any person whose registration(s) has been revoked, pursuant to Article V, Section 2 of the Rules of Fair Practice, to requalify by examination prior to again becoming registered. Article V, Section 2 of the Rules of Fair Practice authorizes the NASD to revoke the registration of a person associated with a member if such person fails promptly to pay any fine or monetary sanction or any costs assessed pursuant to Article V, Section 1 and Article V, Section 3, respectively, of the Rules of Fair Practice.

The NASD's normal policy in attempting to collect fines is to send several requests for payment prior to revoking a person's registration. The NASD believes the requirement that a person requalify by examination if his or her registration(s) is revoked will serve to encourage the prompt payment of fines and costs levied in NASD disciplinary proceedings. Under the present provisions of Schedule C, a person whose registration has been terminated for any reason has two years from the date of such termination to again become registered with the NASD without taking the appropriate qualifying examinations.

Questions concerning this notice may be directed to Craig L. Landauer, Assistant General Counsel, NASD Office of General Counsel, at (202)728-8291.

TEXT OF RULE CHANGE

(Note: New text is underlined.)

Schedule C of the NASD By-Laws

II

REGISTRATION OF PRINCIPALS

(1) Registration Requirements
(c) Requirements for Examination on Lapse of Registration - Any person whose registration has been revoked pursuant to Article V, Section 2 of the Rules of Fair Practice or whose most recent registration as a principal has been terminated for a period of two or more years immediately preceding the date of receipt by the Corporation of a new application shall be required to pass a Qualification Examination for Principals appropriate to the category of registration as specified in Part II, Section (2) hereof.

III

REGISTRATION OF REPRESENTATIVES

(1) Registration Requirements
(c) Requirement for Examination on Lapse of Registration - Any person whose registration has been revoked pursuant to Article V, Section 2 of the Rules of Fair Practice or whose most recent registration as a representative or principal has been terminated for a period of two (2) or more years immediately preceding the date of receipt by the Corporation of a new application shall be required to pass a Qualification Examination for Representatives appropriate to the category of registration as specified in Part III, Section 2 hereof.