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Notice To Members 86-11

New Application Fee For Statutorily Disqualified Individuals

Published Date:

TO: All NASD Members and Other Interested Persons

On January 29, 1986, a new Section 12 to Schedule A of the NASD By-Laws became effective, as announced in SEC Release No. 34-22861, dated February 4, 1986. The rule establishes a $500 fee to be paid in connection with application for registration in the securities industry by individuals subject to a disqualification pursuant to Article II, Section 4 of the NASD By-Laws. The rule requires member firms seeking to employ, or continuing to employ, a statutorily disqualified individual to submit the fee with the filing of the Membership Continuance Application (Form MC-400). The text of the new rule is attached.

The purpose of the new rule is to assist the NASD in recovering the costs associated with processing these applications. Frequently, a hearing before a subcommittee of the NASD Board of Governors is required to determine whether the admission of the individual into the securities industry is appropriate. The costs connected with these hearings can be significant. Even in situations where a hearing is not required, significant commitments of time and staff resources are required to process such applications.

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Questions concerning this notice may be directed to either Dennis C. Hensley or Eugene Bleier, NASD Office of the General Counsel, at (202) 728-8287.


Frank J. Wilson
Executive Vice President and General Counsel



Section 12 - Application Fee for Statutorily Disqualified Individuals

(a) Any member firm seeking to employ, or continuing to employ, as an associated person any individual who is subject to a disqualification from association with a member as set forth in Article II, Section 4 of the Association's By-Laws shall, upon the filing of an application pursuant to Article II, Section 3, paragraph (d) of the Association's By-Laws, pay to the Association a fee of $500.

* All language is new and became effective on January 29, 1986.