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Notice To Members 94-27

Increased Advertising Regulation Department Filing Fees Take Effect May 1, 1994

Published Date:


Senior Management
Legal & Compliance
Mutual Fund

Executive Summary

Beginning May 1, 1994, the NASD will assess increased charges for the review of certain advertisements and sales literature, including printed material, video and audio media, printed and audio material in excess of a certain amount, and material submitted for expedited review. The text of the amendments follows this Notice.

Background And Description

The NASD's Advertising/Investment Companies Regulation Department began offering an expedited review process in February 1991 for those members who desired review and comment of advertising and sales literature that was faster than the normal review and comment process, which is 10 business days. The expedited process is completed within three business days.

Over the past three years, use of the expedited process has increased far beyond the NASD's expectation. The expedited filing process has become standard operating procedure for many of the program's most frequent users, and many items filed are frequently more difficult to review because they contain new concepts and approaches requiring greater time for research and analysis. The increase in the number of expedited filings has led to a significant increase in the amount of administrative processing and has made it more difficult to provide service within the 10-day turnaround time for normal filings.

The SEC has approved an amendment to Section 13 of Schedule A to the NASD By-Laws which establishes a fee structure that will give members the ability to choose the level of service that best fits their needs, taking into consideration the costs related to that level. Each of the specific fees has been increased, including the service charge for expedited service. However, the service charge for expedited service will no longer be imposed in addition to the base service charge. In addition, the number of pages or minutes of video that triggers an additional fee has also been increased from 5 to 10 pages and from 5 to 10 minutes. The text of the amendment set forth below identifies each of the changes to the fees. The amendment takes effect on May 1, 1994.

Questions regarding this Notice may be directed to R. Clark Hooper, Vice President, Advertising/Investment Companies Regulation Department, (202) 728-8325, or Robert J. Smith, Attorney, Office of General Counsel, (202) 728-8176.

Text Of Amendments to Section 13, Schedule A To The By-Laws

(Note: New language is underlined; deletions are in brackets)

Service Charge for Advertisement, Sales Literature, and Other Such Material Filed or Submitted

There shall be a service charge for each and every item of advertisement, sales literature, and other such material, whether in printed, video or other form, filed with or submitted to the Association, except for items that are filed or submitted in response to a written request from the Association's Advertising Regulation Department issued pursuant to the spot check procedures set forth in the Association's Rules of Fair Practice and Government Securities Rules, as follows: (1) for printed material reviewed, $50.00 [$25.00] plus $10.00 [$5.00] for each page reviewed in excess of 10 [5] pages; and (2) for video or audio media, $50.00 [$25.00] plus $10.00 [$5.00] per minute for each minute of tape reviewed in excess of 10 [5] minutes.

[In addition, w] Where a member requests expedited review of material submitted to the Advertising Regulation Department there shall be a[n additional] service charge of $500.00 [$200] per item plus $25 for each page reviewed in excess of 10 pages. Expedited review shall be completed within three business days, not including the date the item is received by the Advertising Regulation Department, unless a shorter or longer period is agreed to by the Advertising Regulation Department. The Advertising Regulation Department may, in its sole discretion, refuse requests for expedited review.