[Federal Register Volume 62, Number 37 (Tuesday, February 25, 1997)]
[Notices]
[Pages 8477-8478]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-4610]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38291; File No. SR-NASD-97-10]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by National Association of Securities Dealers, Inc. Relating to 
the Distribution of Information Concerning the Availability of the NASD 
Regulation, Inc. Public Disclosure Program

February 14, 1997.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on February 
11, 1997, the National Association of Securities Dealers, Inc. 
(``NASD'' or ``Association'') filed with the Securities and Exchange 
Commission (``SEC'' or ``Commission'') the proposed rule change as 
described in Items I, II, and III below, which Items have been prepared 
by the NASD. The Commission is publishing this notice to

[[Page 8478]]

solicit comments on the proposed rule change from interested persons.

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Below is the text of the proposed rule change. Proposed new 
language is italicized.

2280. Investor Education and Protection

    (a) Each member shall, with a frequency of not less than once every 
calendar year, provide in writing to each customer the following items 
of information.

(1) NASD Regulation Public Disclosure Program Hotline Number
(2) NASD Regulation Web Site Address
(3) A statement as to the availability to the customer of an investor 
brochure that includes information describing the Public Disclosure 
Program

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the commission, the NASD included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The NASD has prepared summaries, set forth in Sections 
A, B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    During 1995, at the request of the Honorable Edward J. Markey, the 
General Accounting Office (``GAO'') undertook a review of the 
effectiveness of the NASD's toll-free telephone information service 
used to disseminate information under the NASD Regulation Public 
Disclosure Program (``PDP''). In July 1996, the General Accounting 
Office issued a report of its review of the PDP. The report included a 
recommendation that NASD Regulation publicize and educate investors 
about the availability of information through the NASD Regulation PDP. 
Specifically, the report recommended that NASD Regulation:
    [E]xplore other ways of publicizing the hotline to a wider audience 
of investors, such as including the hotline number on account-opening 
documents or account statements, making disciplinary-related 
information directly available to investors through the Internet.
    The Proposed amendment in new paragraph 2280(a) would require each 
member to provide to each customer, at least once annually on a written 
statement, the 800 telephone number for the PDP, the NASD Regulation 
Web Site Address, and the availability of an investor brochure that 
includes information describing the PDP. This proposal gives NASD 
members the flexibility to determine what kind of written statement is 
to be used. Some members may elect to include this information on 
customer account statements and some may elect to use another kind of 
publication.
    The NASD believes that the proposed rule change is consistent with 
the provision of Sections 15A(b)(6) and 15A(i) of the Act in that the 
requirement that firms publish on a written statement to existing 
customer accounts, as least annually, the availability of information 
through the PDP is an important element in promoting the availability 
of the PDP information to investors.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The NASD does not believe that the proposed rule change will result 
in any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, as amended.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participant, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    At any time within 60 days of the filing of a rule change pursuant 
to Section 19(b)(3)(A) of the Act, the Commission may summarily 
abrogate the rule change if it appears to the Commission that such 
action is necessary or appropriate in the public interest, for the 
protection of investors, or otherwise in furtherance of the purposes of 
the Act.
    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    A. by order approve such proposed rule change, or
    B. institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning SR-NASD-97-10. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, N.W., Washington, DC 20549. 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for inspection and copying in the 
Commission's Public Reference Room. Copies of such filing will also be 
available for inspection and copying at the principal office of the 
NASD. All submissions should refer to the file number in the caption 
above and should be submitted by March 18, 1997.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority, 17 CFR 200.30-3(a)(12).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-4610 Filed 2-24-97; 8:45 am]
BILLING CODE 8010-01-M