[Federal Register Volume 65, Number 99 (Monday, May 22, 2000)]
[Notices]
[Page 32140]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-12758]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42783: File No. SR-NASD-00-05]


Self-Regulatory Organizations; Order Granting Approval to 
Proposed Rule Change by the National Association of Securities Dealers, 
Inc. Relating to the Release of Disciplinary Information

May 15, 2000.

I. Introduction

    On February 16, 2000, the National Association of Securities 
Dealers, Inc. (``NASD'' or ``Association''), through its wholly owned 
subsidiary NASD Regulation, Inc. (``NASD Regulation''), filed with the 
Securities and Exchange Commission (``SEC'' or ``Commission''), 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to 
amend IM-8310-2 of the Association, to provide for the publication of 
all final, litigated decisions issued by the Office of Hearing Officers 
(``OHO''),\3\ the National Ad judicatory Council (``NAC''), and the 
NASD Board, regardless of sanctions imposed.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ The OHO issues decisions rendered by Hearing Officers 
(default decisions) and Hearing Panels.
---------------------------------------------------------------------------

    The proposed rule change was published for comment in the Federal 
Register on April 11, 2000.\4\ No comments were received on the 
proposal. This order approves the proposal.
---------------------------------------------------------------------------

    \4\ Securities Exchange Act Release No. 42607 (April 3, 2000), 
65 FR 19421.
---------------------------------------------------------------------------

II. Description of the Proposal

    Some NASD disciplinary decisions are currently available in 
electronic legal research databases, such as Westlaw, Lexis-Nexis, and 
Books on Screen. Interpretative Material 8310-2 (the 
``Interpretation'') permits the NASD to release any disciplinary 
decision: (1) Imposing a suspension, cancellation or expulsion of a 
member; (2) imposing a suspension or revocation of the registration of 
any associated person; (3) imposing a suspension or barring a member or 
associated person from association with all members; (4) imposing 
monetary sanctions of $10,000 or more on a member or associated person; 
(5) containing on alleged violation of a Designated Rule; or (6) deemed 
by the President of NASD Regulation to involve a significant policy or 
enforcement determination where the release of information would be in 
the public interest.
    The Association is proposing to amend the Interpretation to provide 
for the publication of all final, litigated decisions issued by the 
OHO, the NAC, and the NASD Board, regardless of sanctions imposed. 
However, the names of the parties and other identifying information 
mentioned in the decisions that do not meet the current enumerated 
publication criteria, as outlined in the Interpretation (listed above), 
will be redacted from these decisions. Settlements, Letters of 
Acceptance, Waivers and Consents (``AWCs''), and Minor Rule Violation 
Plan letters are excluded from this proposal. The proposed rule change 
will not have any impact on the information contained in or disclosed 
by the Central Registration Depository system. The NASD will make 
available all decisions covered under this proposal that were issued 
after August 7, 1997, the effective date of the most recent significant 
changes to the NASD Code of Procedure.\5\
---------------------------------------------------------------------------

    \5\ See Special NASD Notice to Member 97-55 (August 1997).
---------------------------------------------------------------------------

III. Discussion

    The Commission finds that the proposal is consistent with Section 
15A(b)(6) of the Act,\6\ which requires, among other things, that the 
rules of an association be designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, and, in general, to protect investors and the 
public interest. In particular, the Commission finds that the proposal 
is consistent with Section 15A(b)(7) of the Act \7\ in that it works to 
adequately safeguard the interest of investors while establishing fair 
rules for its members and persons associated with its members.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78-o 3(b)(6).
    \7\ 15 U.S.C. 78-o 3(b)(7).
---------------------------------------------------------------------------

    The Commission believes that providing the public with this 
expanded information on disciplinary decisions will provide a clearer 
picture of the Association's current application and interpretation of 
its substantive and procedural rules. The NASD will make the 
information available to vendors of legal research databases. Members 
will have additional insight into how NASD rules are enforced, making 
it easier for them to comply with the rules.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
\8\ that the proposed rule change (SR-NASD-00-05) is approved. The NASD 
will announce the effective date of this rule in a Notice to Members to 
be published within 60 days of the date on this order. The effective 
date will be 30 days following publication of the Notice to Members 
announcing Commission approval.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

    For the Commission, by the Division of Market Regulation, pursuant 
to delegated authority.\9\
---------------------------------------------------------------------------

    \9\ 17 CFR 200.30-3(a)(12).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-12758 Filed 5-19-00; 8:45 am]
BILLING CODE 8010-01-M