2740. Selling Concessions, Discounts and Other Allowances
This rule is no longer applicable.
In connection with the sale of securities which are part of a fixed price offering:
(a) A member may not grant or receive selling concessions, discounts, or other allowances except as consideration for services rendered in distribution and may not grant such concessions, discounts or other allowances to anyone other than a broker or dealer actually engaged in the investment banking or securities business; provided, however, that nothing in this Rule shall prevent any member from (1) selling any such securities to any person, or account managed by any person, to whom it has provided or will provide bona fide research, if the stated public offering price for such securities is paid by the purchaser; or (2) selling any such securities owned by him to any person at any net price which may be fixed by him unless prevented therefrom by agreement.
(b) The term "bona fide research," when used in this Rule means advice, rendered either directly or through publications or writings, as to the value of securities, the advisability of investing in, purchasing, or selling securities, and the availability of securities or purchasers or sellers of securities, or analyses and reports concerning issuers, industries, securities, economic factors and trends, portfolio strategy, and performance of accounts; provided, however, that investment management or investment discretionary services are not bona fide research.
(c) A member who grants a selling concession, discount or other allowance to another person shall obtain a written agreement from that person that he will comply with the provisions of this Rule, and a member who grants such selling concession, discount or other allowance to a non-member broker or dealer in a foreign country shall also obtain from such broker or dealer a written agreement to comply, as though such broker or dealer were a member, with the provisions of Rules 2730 and 2750 and to comply with Rule 2420 as that Rule applies to a non-member broker/dealer in a foreign country.
(d) A member who receives an order from any person designating another broker or dealer to receive credit for the sale shall, within 30 days after the end of each calendar quarter, file reports with the Association containing the following information with respect to each fixed price offering which terminated during that calendar quarter: the name of the person making the designation; the identity of the brokers or dealers designated; the identity and amount of securities for which each broker or dealer was designated; the date of the commencement and termination of the offering and such other information as the Association shall deem pertinent.
(e) A member who is designated by its customer for the sale of securities shall keep, and maintain for a period of 24 months, records in such form and manner to show the following information: name of customer making the designation; the identity and amount of securities for which the member was designated; the identity of the manager or managers in the offering, if any; the date of the commencement of the offering and such other information as the Association shall deem pertinent.
|Amended by SR-NASD-88-47 eff. Jan. 27, 1989.
Amended by SR-NASD-78-03 eff. March 1, 1981.
Selected Notices: 77-31, 78-05, 78-14, 80-37, 80-66, 81-03, 81-11, 88-72, 89-28.