[Federal Register Volume 66, Number 10 (Tuesday, January 16, 2001)]
[Notices]
[Pages 3629-3630]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-1155]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43813; File No. SR-NASD-00-75]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of a Proposed Rule Change and Amendment 
No. 1 by the National Association of Securities Dealers, Inc. to Extend 
the Effectiveness of the Pilot Injunctive Relief Rule

January 5, 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 December 19, 2000, the National Association of Securities Dealers, 
Inc. (``NASD'' or ``Association''), through its wholly-owned subsidiary 
NASD Dispute Resolution, Inc. (``NASD Dispute Resolution'') filed with 
the Securities and Exchange Commission (``SEC'' or ``Commission'') a 
proposed rule change as described in Items I and II below, which Items 
have been prepared by NASD Dispute Resolution. On January 4, 2001, NASD 
Dispute Resolution submitted Amendment No. 1 to the proposed rule 
change.\3\ For the reasons discussed below, the Commission is 
publishing this notice to solicit comments on the proposed rule change 
and Amendment No. 1 and to approve the proposal and Amendment No. 1 on 
an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See letter to Katherine A. England, Assistant Director, 
Division of Market Regulation, Commission, from Laura Leedy Gansler, 
Counsel, NASD Dispute Resolution, dated January 3, 2001 (``Amendment 
No. 1'').
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    NASD Dispute Resolution is proposing to amend Rule 10335 of the 
Code of Arbitration (``Code'') of the NASD, to extend the pilot 
injunctive relief rule for one year, pending Commission action on a 
pending rule filing, SR-NASD-00-02, to amend Rule 19335 and make it a 
permanent part of the code. Below is the text of the proposed rule 
change. Proposed new language is in italics; proposed delections are in 
brackets.

10335. Injunctions

    (i) Effective Date. This Rule shall apply to arbitration claims 
filed on or after January 3, 1996. Except as otherwise provided in this 
Rule, the remaining provisions of the Code shall apply to proceedings 
instituted under this Rule. This rule shall expire on [January 5, 2000] 
January 4, 2002, unless extended by the Association's Board of 
Governors.

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 Dispute Resolution 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 III below. NASD Dispute Resolution 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
    Rule 10335, the NASD's pilot injunctive relief rule, provides 
procedures for obtaining interim injunctive relief in controversies 
involving member firms and associated persons in arbitration. The rule 
has primarily been used in ``raiding cases,'' or cases involving the 
transfer of an employee from one firm to another firm. Rule 10335 took 
effect on January 3, 1996, for a one-year pilot period. The SEC has 
periodically extended the initial pilot period in order to permit the 
NASD to assess the effectiveness of the rule. The pilot rule is 
currently due to expire on January 5, 2001.\4\
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    \4\ On January 12, 2000, NASD Regulation, Inc. filed a proposed 
rule filing, SR-NASD-00-02 to amend rule 10335 and to make it a 
permanent part of the Code. See Securities Exchange Act Release No. 
42606 (April 3, 2000), 65 FR 18405 (April 7, 2000) (File No. NASD-
00-02). Simultaneously with this rule filing, the NASD Dispute 
Resolution has filed a response to Comments and Amendment No. 3 to 
SR-NASD-00-02.
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    NASD Dispute Resolution believes that it is in the interest of 
members and associated persons that the effectiveness of the pilot rule 
remain uninterrupted pending final Commission action on SR-NASD-00-02. 
Therefore, NASD Dispute Resolution believes that the pilot rule should 
be extended to January 4, 2002, or such earlier time as permitted by 
Commission action on the permanent rule filing, which makes clear that, 
if approved, the amended rule would supersede the pilot rule in its 
entirety.
2. Statutory Basis
    NASD Dispute Resolution believes that the proposed rule change is 
consistent with the provisions of Section 15A(b)(6) of the Act,\5\ 
which requires, among other things, that the Association's rules 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.
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    \5\ 15 U.S.C. 780o-(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    NASD Dispute Resolution 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, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, as amended, is consistent with the Act.\6\1\ Persons making 
written submissions should file six copies thereof with the Secretary, 
Securities and Exchange Commission, 450 Fifth

[[Page 3630]]

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 provision of the 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 No. SR-NASA-00-75 and should be 
submitted by February 6, 2001.
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    \6\ In reviewing this proposal, the Commission has considered 
its impact on efficiency, competition, and capital formation. 15 
U.S.C. 78c(f)
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IV. Commission Findings and Order Granting Accelerated Approval of 
Proposed Rule Change

    NASD Dispute Resolution has requested that the Commission find good 
cause pursuant to Section 19(b)(2) \7\ for approving the proposed rule 
change and Amendment No. 1 prior to the 30th day after publication in 
the Federal Register. The Commission finds that the proposed rule 
change and Amendment No. 1 are consistent with the requirements of the 
Act and the rules and regulations thereunder applicable to the NASD 
and, in particular, the requirements of Section 15A of the Act and the 
rules and regulations thereunder.\8\ Rule 10335 is intended to provide 
a pilot system within the NASD arbitration forum to process requests 
for temporary injunctive relief. Rule 10335 is intended principally to 
facilitate the disposition of employment disputes, and related 
disputes, concerning members who file for injunctive relief, to prevent 
registered representatives from transferring their client accounts to 
their new firms.
    The Commission finds good cause for approving the proposed rule 
change and Amendment No. 1 prior to the 30th day after the date of 
publication of notice of filing thereof in that accelerated approval 
will permit members to have the benefit of injunctive relief in 
arbitration pending Commission action on the rule filing proposing to 
amend Rule 10335 and make it a permanent part of the Code.\9\ Amendment 
No. 1 makes several technical changes to the proposal and adds the 
statutory basis to the rule filing. The Commission believes, therefore, 
that granting accelerated approval of the proposed rule change, as 
amended, is consistent with Section 15A of the Act.\10\
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    \7\ 15 U.S.C. 78s(b)(2).
    \8\ 15 U.S.C. 78o-3.
    \9\ See supra note 4.
    \10\ 17 U.S.C. 78o-3.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\11\ that the proposed rule change (SR-NASD-00-75), as amended, is 
approved on an accelerated basis through January 4, 2002.
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    \11\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 01-1155 Filed 1-12-01; 8:45 am]
BILLING CODE 8010-01-M