NASD Announces Changes To The By-Laws Associated Person Definition
NASD By-Laws Amendments
Effective Date: December 1, 1999
Legal & Compliance
Associated Person Definition
The Suggested Routing function is meant to aid the reader of this document. Each NASD member firm should consider the appropriate distribution in the context of its own organizational structure.
Effective December 1, 1999, the definition of "person associated with a member" contained in the By-Laws of National Association of Securities Dealers, Inc. (NASD®), NASD Regulation, Inc. (NASD RegulationSM) and The Nasdaq Stock Market, Inc. (collectively, the "By-Laws") will be amended to expand the current definition to encompass those who hold a five percent or greater interest in the member firm and to include explicitly a person who has applied for registration on Form U-4. The amendments are included in Exhibit I.
Questions concerning this Notice to Members may be directed to Mary Dunbar, Associate General Counsel, Office of General Counsel, NASD Regulation, at (202) 728-8252.
Description Of Rule Change
The first amendment expands the definition of "person associated with a member" specifically for the purposes of NASD Rule 8210. This Rule authorizes the NASD to require a member or associated person to provide information or testimony with respect to an investigation, complaint, examination, or proceeding by the NASD. The current definition of "person associated with a member" includes only owners who are natural persons engaged in the member's investment banking or securities business and who have a direct or indirect control relationship with the member. The amendment to the definition gives the staff the authority to require information and testimony under Rule 8210 from any person - including a natural person or corporate or other entity - who holds a five percent or greater interest in a member firm, regardless of whether they "control" the member firm or are actively engaged in its securities or investment banking business.
The second amendment clarifies that any person who signs and submits a Form U-4 is an associated person. This is consistent with Form U-4, which provides that by signing the Form, a person is subject to the jurisdiction of the NASD.
Finally, the amendments insert the word "other" into subsection 2 of the definition of "person associated with a member" to clarify that the subsection describes only natural persons.
Text Of Amendments
(Note: New text is underlined; deletions are in brackets.)
By-Laws Of The NASD, Article 1
Conforming changes will also be made to Article I(y) of the NASD Regulation By-Laws and Article I(r) of the Nasdaq® By-Laws, respectively.