[Federal Register Volume 60, Number 34 (Tuesday, February 21, 1995)]
[Notices]
[Pages 9708-9709]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-4086]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35370; File No. SR-NASD-94-05]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by National Association of Securities Dealers, Inc. Relating to 
Time Period for the Exchange of Documents Before an Arbitration Hearing

February 14, 1995.
    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 
1, 1995, 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 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

    The NASD is proposing to amend Section 32(c) of the NASD Code of 
Arbitration Procedure (``Code'').\1\ Below is the text of the proposed 
rule change. Proposed new language is in italics; proposed deletions 
are in brackets.

    \1\NASD Manual, Code of Arbitration Procedure, Part III, Sec. 
32(c) (CCH) para.3732.
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Code of Arbitration Procedure

* * * * *

General Provisions Governing Per-Hearing Proceedings

Sec. 32.

* * * * *
    (c) Pre-Hearing Exchange. At least [ten (10)] Twenty (20) calendar 
days prior to the first scheduled hearing date, all parties shall serve 
on each other copies of documents in their possession they intend to 
present at the hearing and shall identify witnesses they intend to 
present at the hearing. The arbitrators may exclude from the 
arbitration any documents not exchanged or witnesses not identified. 
This paragraph does not require service of copies of documents or 
identification of witnesses which parties may use for cross-examination 
or rebuttal.
* * * * *

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 [[Page 9709]] 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

    Section 32(c) currently requires all parties to serve on each other 
copies of documents in their possession they intend to present at the 
hearing and to identify witnesses they intend to present at the hearing 
not less than 10 calendar days prior to the first scheduled hearing 
date. Parties often request additional discovery as a result of 
information obtained through the exchange of documents. These requests 
create a significant burden on the NASD's Arbitration Department, which 
currently must respond in a short period of time to numerous requests 
for additional discovery that arise from the exchange of documents 
intended to be used by the parties at the hearing. These requests also 
create a significant burden on the arbitrators and the parties. 
Accordingly, the NASD is proposing to amend Section 32(c) of the Code 
to increase the amount of time before a hearing where the parties are 
required to exchange documents from 10 to 20 days.\2\ The proposed rule 
change is intended to reduce the burden to the Arbitration Department, 
arbitrators and the parties in responding to last minute discovery 
requests by increasing the time for exchanging pre-hearing memoranda.

    \2\The Securities Industry Conference on Arbitration approved 
the proposed rule change as an amendment to the Uniform Code of 
Arbitration at its meeting on October 21, 1994.
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    The NASD believes that the proposed rule change is consistent with 
the provisions of Section 15A(b)(6) of the Act\3\ in that increasing 
the time for exchange of documents prior to arbitration hearing will 
facilitate the arbitration process by providing a more reasonable time 
frame in which to address last minute discovery requests and by 
reducing the burdens on the forum staff, arbitrators and the parties in 
dealing with such requests.

    \3\15 U.S.C. 78o-3.
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(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, Participants, or Others

    Written comments were neither solicited nor received.

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

    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 the foregoing. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street NW., Washington, D.C. 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 [insert date 21 days from the date of 
publication].

    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. 95-4086 Filed 2-17-95; 8:45 am]
BILLING CODE 8010-01-M