Proposed Amendment to Article VI, Section 3 of the By-Laws to Extend the NASD's Summary Suspension Procedures to Situations Where Members or Associated Persons Fail to Comply with Arbitration Awards; Last Voting Date: February 18, 1992

MAIL VOTE

EXECUTIVE SUMMARY

The NASD invites members to vote on a proposed amendment to the NASD By-Laws to extend the NASD's summary suspension procedures to permit the NASD to suspend the membership or registration of a party that has failed to comply with a valid arbitration award in situations when the award is not the subject of a motion to vacate or modify the award or when such a motion has been denied. The last voting date is February 18, 1992. The text of the amendment follows this Notice.

BACKGROUND AND DESCRIPTION OF PROPOSAL

The NASD is concerned about an increase in the number of referrals made to District Business Conduct Committees for failure to pay arbitration awards and about the impact such referrals have had on the districts' complaint dockets. To address this problem, the NASD is proposing to extend its summary suspension procedures to include situations in which members or registered persons fail to comply with arbitration awards. The amendment to Article VI, Section 3 of the NASD By-Laws would permit the NASD to suspend the membership or registration of a party that has failed to comply with a valid arbitration award in situations when the award is not the subject of a motion to vacate or modify the award or when such a motion has been denied.

REQUEST FOR VOTE

The NASD Board of Governors believes that the proposed amendment to the summary suspension procedures will alleviate the burden on districts' complaint dockets of referrals for failure to pay arbitration awards and may encourage timely payment of awards. The Board considers the proposed amendment necessary and appropriate and recommends that members vote their approval. Please mark the attached ballot according to your convictions and mail it in the enclosed, stamped envelope to The Corporation Trust Company. Ballots must be postmarked no later than February 18, 1992.

Questions concerning this Notice should be directed to Deborah Masucci, Vice President, Arbitration, at (212) 858-4488.

PROPOSED AMENDMENTS TO ARTICLE VI OF THE NASD BY-LAWS

(Note: New text is underlined; deleted text is in brackets.)

ARTICLE VI

Dues, Assessments and Other Charges

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Suspension or Cancellation of Membership or Registration [for Non-Payment of Dues]

Sec. 3. The Corporation after fifteen (15) days notice in writing, may suspend or cancel the membership of any member or the registration of any person in arrears in the payment of any fees, dues, assessments or other charges, or for failure to furnish any information or reports requested pursuant to Section 2 of this Article, or for failure to comply with an award of arbitrators properly rendered pursuant to Section 41 of the Code of Arbitration Procedure, where a timely motion to vacate or modify such award has not been made pursuant to applicable law or where such a motion has been denied.