[Federal Register Volume 66, Number 90 (Wednesday, May 9, 2001)]
[Notices]
[Pages 23748-23749]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-11637]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44249; File No. SR-NASD-2001-22]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the National Association of 
Securities Dealers Regulation, Inc. Revising the Investment Company 
Products/Variable Contracts Limited Principal (Series 26) Examination

May 3, 2001.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on March 27, 2001, 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'') the proposed rule 
change as described in Items I, II, and III below, which Items have 
been prepared by NASD Regulation.\3\ NASD Regulation has designated 
this proposed rule change as constituting a stated policy, practice, or 
interpretation with respect to the meaning, administration, or 
enforcement of an existing rule of the self-regulatory organization 
under section 19(b)(3)(A)(i) of the Act \4\ and Rule 19b-4(f)(1),\5\ 
which renders the rule effective upon filing with the Commission. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Letter to Alden S. Adkins, Senior Vice President and 
General Counsel, NASD Regulation from Belinda Blaine, Associate 
Director, Division of Market Regulation, SEC, dated July 24, 2000. 
Revisions to the Series 26 Examination were originally filed with 
the Commission in SR-NASD-99-51. NASD Regulation has withdrawn SR-
NASD-99-51 and refiled the revisions in the instant proposed rule 
change.
    \4\ 15 U.S.C. 78s(b)(3)(A)(i).
    \5\ 17 CFR 240.19b-4(f)(1).
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    NASD Regulation is proposing revisons to the Investment Company 
Products/Variable Contracts Limited Principal (Series 26) 
examination.\6\ The proposed revisions consist of general revisions to 
update the examination to reflect changes in the rules, regulations, 
and practices covered by the examination. The text of the Study Outline 
for the Series 26 examination is available at NASD Regulation and at 
the Commission.
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    \6\ The revised examination specifications were filed with the 
Commission under separate cover pursuant to a request by NASD 
Regulation for confidential treatment. See 17 CFR 240.24b-2.
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II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, NASD Regulation 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. NASD Regulation 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

1. Purpose
    Pursuant to section 15A(g)(3) of the Act,\7\ which requires the 
NASD to prescribe standards of training, experience, and competence for 
persons associated with NASD members, the NASD has developed 
examinations, and administers examinations developed by other self-
regulatory organizations, that are designed to establish that persons 
associated with NASD members have attained specified levels of 
competence and knowledge. NASD Regulation periodically reviews the 
contents of the examinations to determine whether revisions are 
necessary or appropriate in view of changes pertaining to the subject 
matter covered by the examinations.
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    \7\ 15 U.S.C. 78o-3(g)(3).
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    The NASD's Series 26 Limited Principal examination qualifies 
individuals to function as a principal in a member's securities 
business limited to investment company products and variable contracts. 
This examination tests a candidate's knowledge of securities industry 
rules and regulations pertinent to such products.
    A committee of industry representatives, in conjunction with NASD 
Regulation staff, recently undertook a review of the Series 26 
examination. As a result of this review, NASD Regulation is proposing 
revisions to the Series 26 test selection specifications, study 
outline, and question bank to reflect changes in relevant laws, rules, 
and regulations and the development of new products, and to more 
accurately reflect the duties and responsibilities of a Series 26 
principal. The examination also has been revised to focus more closely 
on the supervision of sales activities. In addition, the material has 
been reorganized into five substantive categories of critical functions 
that a Series 26 principal may be required to perform. These categories 
are: hiring and qualification; training of representatives; 
supervision; sales practices; and business processing and record-
keeping. In order to adequately test the material on the revised Series 
26 examination, the number of questions will be increased to 110 
questions from 100 questions. The allowed testing time will change to 
2\1/2\ hours from 2 hours. The passing score for the examination will 
continue to be 70 percent.\8\
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    \8\ See telephone conversation between Rebekah Liu, Special 
Counsel, SEC, Cyndi Nguyen, Attorney, SEC and Eric Moss, Office of 
General Counsel, NASD Regulation on May 3, 2001.
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2. Statutory Basis
    NASD Regulation believes that the proposed revisions are consistent 
with the provisions of sections 15A(b)(6) \9\ and 15A(g)(3) of the 
Act,\10\ which authorize the NASD to prescribe standards of training, 
experience, and competence for persons associated with NASD members.
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    \9\ 15 U.S.C. 78o-3(b)(6).
    \10\ 15 U.S.C. 78o-3(g)(3).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    NASD Regulation 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 purpose of the Act.

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

    Written comments were neither solicited nor received.

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

    The proposed rule change has become effective pursuant to section 
19(b)(3)(A)(i) of the Act \11\ and subparagraph (f)(1) of Rule 19b-4

[[Page 23749]]

thereunder,\12\ in that the foregoing proposed rule change constitutes 
a stated policy, practice, or interpretation with respect to the 
meaning, administration, or enforcement of an existing rule of the 
self-regulatory organization. NASD Regulation proposes to implement the 
revised Series 26 examination program on July 2, 2001.
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    \11\ 15 U.S.C. 78s(b)(3)(A)(i).
    \12\ 17 CFR 240.19b-4(f)(1).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate such 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.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposal is 
consistent with the Act. Persons making written submissions should file 
six copies thereof with the Secretary, Securities and Exchange 
Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. 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 file number SR-NASD-2001-22 and should be 
submitted by May 30, 2001.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-11637 Filed 5-8-01; 8:45 am]
BILLING CODE 8010-01-M