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FINRA

FOR RELEASE:
CONTACTS:

Tuesday, December 2, 2003
Nancy A. Condon 
202-728-8379
Michael Shokouhi 
202-728-8304



 

NASD Board Approves Joint CEO/Chief Compliance Officer Certification Rule to be Filed with SEC

Washington, DC – NASD today announced that it has filed a proposed rule amendment with the Securities and Exchange Commission (SEC) that would require the Chief Executive Officer (CEO) and Chief Compliance Officer (CCO) of each securities firm to jointly certify annually that the firm has processes in place to establish and maintain policies and procedures that will ensure compliance with applicable NASD rules, MSRB rules and the federal securities laws. Once approved by the SEC, a firm would be required to designate a Chief Compliance Officer if one does not already exist.

 

The proposed certification is intended to enhance investor protection by ensuring that senior management focuses increased attention on their firm’s compliance and supervisory systems and by fostering regular interaction between business and compliance officers.

 

“With so many regulatory challenges facing the securities industry today, it’s time for senior management to pay more attention to the compliance function,” said Robert R. Glauber, NASD Chairman and CEO. “A joint certification by the CEO and Chief Compliance Officer will demand increased interaction between business and compliance officers throughout the firm and should promote a more effective culture of compliance.”

 

The rule would require that the firm’s processes be set forth in a report reviewed by the CEO, CCO and certain other compliance officers designated by the firm. The firm’s board of directors and audit committee would also need to review the report as part of their functions.

 

The intent of this proposal is not to make the CEO and Chief Compliance Officer personally liable for every compliance or supervisory failure a firm might experience. Rather, the proposal seeks to promote an enduring compliance culture within firms by elevating the status of the Chief Compliance Officer and by compelling periodic and significant consultation between senior business and compliance personnel.

 

NASD is the leading private-sector provider of financial regulatory services, dedicated to bringing integrity to the markets and confidence to investors through effective and efficient regulation and complementary compliance and technology-based services. NASD touches virtually every aspect of the securities business - from registering and educating all industry participants, to examining securities firms, enforcing both NASD rules and the federal securities laws, and administering the largest dispute resolution forum for investors and member firms. For more information, please visit our Web site at www.nasd.com.