Interpretive Letter to Mr. Alan E. Sorcher, Securities Industry Association & Ms. Sarah A. Miller, ABA Securities Association
NASD reaffirms its policy of exempting members from the requirement to supervise registered bank personnel under Rules 3010, 3030, 3040 and 3050, so long as such persons continue to be supervised by the bank and do not engage in any securities activity for or on behalf of the member firm of which they are registered.
December 12, 2005
Mr. Alan E. Sorcher
Vice President and Associate General Counsel
Securities Industry Association
1425 K Street, NW, Suite 700
Washington, DC 20005-2225
Ms. Sarah A. Miller
Director and Chief, Regulatory Counsel
ABA Securities Association
American Bankers Association
1120 Connecticut Avenue, NW
Washington, DC 20036
Dear Mr. Sorcher and Ms. Miller:
This letter responds to your inquiries concerning our prior letter to you dated August 5, 2004, addressing certain staff interpretive positions pertaining to the implementation of Title II of the Gramm-Leach-Bliley Act of 1999 ("GLBA"). In that letter, we declined to extend the tolling of the grace period during which an individual is not required to retake a qualification examination for persons whose grace period expired after November 12, 1999, the date GLBA was enacted. We also affirmed our position that Rule 1031 generally permits early registration of unregistered bank employees where there in an intent by the member for such person to function as a representative. In addition, we explained that so long as such registered persons continue to be supervised by the bank and do not engage in any securities activity for or on behalf of the member firm of which they become registered (and thus an associated person), the member will not be required to supervise such persons under Rules 3010, 3030, 3040 or 3050.
You have asked NASD staff to confirm that the positions stated in the August 5, 2004 letter, and in particular, the exclusion from a requirement to supervise certain persons under Rules 3010, 3030, 3040 and 3050, continue to apply even though Title II of GLBA is not taking effect on January 1, 2006, as contemplated in our letter. The staff hereby confirms that the interpretive positions in the August 5, 2004 letter will continue to apply until September 30, 2006, or such later date as NASD may specify. Thus, members should be aware that beginning the earlier of September 30, 2006 (or such later date as NASD may specify), or as soon as any bank employee engages in any securities activity for or on behalf of a member, such member will be required to supervise such person in accordance with Rules 3010, 3030, 3040 and 3050.
Please note that the opinions expressed in this letter are staff opinions and have not been reviewed or endorsed by the NASD Board. This letter responds only to the issues you have raised based on the facts as you have described them in your letter, and does not address any other NASD rule or interpretation or all the possible regulatory and legal issues involved.
Gary L. Goldsholle
Associate Vice President and
Associate General Counsel