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Notice To Members 84-73

Proposed Amendment to the Uniform Practice Code to Require Prompt Settlement of Syndicate Accounts

Published Date:

TO: All NASD Members and Other Interested Persons

ATTN: Syndicate Department

As a result of a recommendation of the Advisory Council of the Board of Governors of the Association, the Corporate Financing Committee has recently considered the need for more prompt settlement of syndicate accounts in distributions of corporate securities. Syndicate accounts are ordinarily formed by underwriting groups to process the income and expenses of the syndicate. After consideration of the matter the Committee concluded that the problem of delays in the settlement of syndicate accounts which the industry has been experiencing should be addressed through establishing a period within which syndicate accounts must be settled. The Committee recommended to the Board, with the agreement of the Uniform Practice Committee, that the Uniform Practice Code be amended to require syndicate managers to settle syndicate accounts within 120 days of the date securities are delivered by the issuer to or for the account of syndicate members. The Committee determined to review this matter one year after adoption of the proposed rule with a view to reducing that time period to 90 days.

The Board of Governors has approved the recommendation of the Committee and is publishing a request for comment by the membership on the proposed amendment to the Uniform Practice Code. Attached to this Notice is a proposal to amend the Uniform Practice Code by adopting a new Section 66 which would require the settlement of syndicate accounts within 120 days. One year after adoption of the rule, the Committee will review the experience under the 120 day requirement with a view to reducing the time period for required settlement to 90 days.

All comments pertaining to this proposal should be made in writing to James Cangiano, Secretary, National Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006 and be received on or before January 28, 1985 in order to receive consideration. Questions regarding the proposal may be directed to Harry E. Tutwiler or Suzanne E. Rothwell of the Corporate Financing Department at (202) 728-8258.


Frank J. Wilson
Executive Vice President
Legal and Compliance

Proposed New Section 66 of The Uniform Practice Code

• • • •

Section 66

Settlement of Syndicate Accounts

(a) Definitions
(1) "selling syndicate" means any syndicate formed in connection with a public offering to distribute all or part of an issue of corporate securities by sales made directly to the public by or through participants in such syndicate.
(2) "syndicate account" means an account formed by members of the selling syndicate for the purpose of purchasing and distributing the corporate securities of a public offering.
(3) "syndicate manager" means the member of the selling syndicate that is responsible for maintenance of syndicate account records.
(4) "syndicate settlement date" means the date upon which corporate securities of a public offering are delivered by the issuer to or for the account of the syndicate members.
(b) Final settlement of syndicate accounts shall be effected by the syndicate manager within 120 days following the syndicate settlement date.