Document ID: SEC-2005-0412-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Association of Securities Dealers, Inc.
Posted Date: 2005-12-20T05:00Z

[Federal Register: December 20, 2005 (Volume 70, Number 243)]
[Notices]               
[Page 75517-75519]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20de05-95]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52947; File No. SR-NASD-2005-132]

 
Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change Relating to a Session Fee Increase for the 
Regulatory Element of the Continuing Education Requirements of NASD 
Rule 1120

December 13, 2005.
    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 November 22, 2005, the National Association of Securities Dealers, 
Inc. (``NASD'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the NASD. NASD has 
designated this proposal as one establishing or changing a due, fee, or 
other charge imposed by the NASD under Section 19(b)(3)(A)(ii) of the 
Act,\3\ and Rule 19b-4(f)(2) thereunder,\4\ which renders the proposal 
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\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NASD is proposing to amend Section 4 of Schedule A to the NASD By-
Laws to increase the session fee for the Regulatory Element of the 
continuing education requirements of NASD Rule 1120. Below is the text 
of the proposed rule change. Proposed new language is in italics; 
proposed deletions are in [brackets].
SCHEDULE A TO NASD BY-LAWS
* * * * *
Section 4--Fees
    (a) through (e) No change.
    (f) There shall be a session fee of [$60.00] $75.00 assessed as to 
each individual who is required to complete the Regulatory Element of 
the Continuing Education Requirements pursuant to Rule 1120.
* * * * *

[[Page 75518]]

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 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 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
    The Regulatory Element, a computer-based education program 
administered by NASD to help ensure that registered persons are kept 
up-to-date on regulatory, compliance, and sales practice matters in the 
industry, is a component of the Securities Industry Continuing 
Education Program (``Program'') under NASD Rule 1120. The Securities 
Industry/Regulatory Council on Continuing Education (``Council'') \5\ 
was organized in 1995 to facilitate cooperative industry/regulatory 
coordination of the administration and future development of the 
Program in keeping with applicable industry regulations and changing 
industry needs. Its roles include recommending and helping develop 
specific content and questions for the Regulatory Element, defining 
minimum core curricula for the Firm Element component of the Program, 
and developing and updating information about the Program for industry-
wide dissemination.
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    \5\ The Council currently consists of 20 individuals, 14 of whom 
are securities industry professionals associated with NASD member 
firms, and six of whom represent self-regulatory organizations (the 
American Stock Exchange LLC, the Chicago Board Options Exchange, 
Inc., the Municipal Securities Rulemaking Board, NASD, the New York 
Stock Exchange, Inc., and the Philadelphia Stock Exchange, Inc.).
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    It is the Council's responsibility to maintain the Program on a 
revenue neutral basis while maintaining adequate reserves for 
unanticipated future expenditures.\6\ In December 2003, the Council 
voted to reduce the Regulatory Element session fee from $65 to $60 
effective January 1, 2004, in order to reduce the reserves to a level 
necessary to support current and expected programs and expenses. The 
Council decided to review the reserve level and evaluate the Regulatory 
Element session fee on an annual basis. The 2004 financial review and 
evaluation produced no change in the Regulatory Element session fee. In 
September 2005, the Council's annual financial review and evaluation 
revealed that unless the Regulatory Element session fee were adjusted, 
the Council's reserves were likely to be insufficient in 2006. The 
reasons for the declining surplus are: (1) Lower than projected session 
volume resulting in a significant decrease in actual revenue over 
projected revenue; (2) higher delivery-related expenses beginning in 
2006; and (3) costs associated with the rebuilding of PROCTOR 
[supreg].\7\ At its September 2005 meeting, the Council voted 
unanimously to increase the Regulatory Element session fee from $60 to 
$75, effective January 1, 2006, in order to meet costs and maintain an 
adequate reserve in 2006.
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    \6\ The Regulatory Element session fee was initially set at $75 
when NASD established the continuing education requirements in 1995. 
The fee was reduced in 1999 to $65 and again in 2004 to $60. The 
proposed fee increase returns the Regulatory Element session fee to 
its original level.
    \7\ PROCTOR [supreg] is a technology system that supports 
computer-based testing and training. The Regulatory Element program 
uses PROCTOR [supreg] to package content, deliver, score and report 
results, and maintain and generate statistical data related to the 
Program.
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    The proposed implementation date is January 1, 2006.
1. Statutory Basis
    NASD believes that the proposed rule change is consistent with the 
provisions of Section 15A of the Act,\8\ in general, and furthers the 
objectives of Sections 15A(b)(5) and 15A(b)(6) of the Act in 
particular.\9\ Section 15A(b)(5) of the Act requires, among other 
things, that NASD rules provide for the equitable allocation of 
reasonable dues, fees, and other charges among members and issuers and 
other persons using any facility or system that NASD operates or 
controls. Further, Section 15A(b)(6) of the Act provides that NASD 
rules must 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. NASD believes 
that the proposed rule change is designed to accomplish these ends by 
enabling the Program to be maintained on a revenue neutral basis while 
maintaining adequate reserves for unanticipated future expenditures.
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    \8\ 15 U.S.C. 78o-3.
    \9\ 15 U.S.C. 78o-3(b)(5) and (b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition

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

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

    NASD has neither solicited nor received comments on the proposed 
rule change.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act \10\ and Rule 19b-4(f)(2) thereunder,\11\ 
because it establishes or changes a due, fee, or other charge imposed 
by the NASD. Accordingly, the proposal will take effect upon filing 
with the Commission. 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.\12\
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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 17 CFR 240.19.b-4(f)(2).
    \12\ 15 U.S.C. 78s(b)(3)(C).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml.
); or     Send an e-mail to rule-comments@sec.gov. Please include 

File Number SR-NASD-2005-132 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303.

All submissions should refer to File Number SR-NASD-2005-132. This file 
number should be included on the subject line if e-mail is used. To 
help the

[[Page 75519]]

Commission process and review your comments more efficiently, please 
use only one method. The Commission will post all comments on the 
Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). 

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 the filing also will be 
available for inspection and copying at the principal offices of the 
NASD. All comments received will be posted without change; the 
Commission does not edit personal identifying information from 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
NASD-2005-132 and should be submitted on or before January 10, 2006.

    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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Jonathan G. Katz,
Secretary.
 [FR Doc. E5-7521 Filed 12-19-05; 8:45 am]

BILLING CODE 8010-01-P