Document ID: SEC-2007-0825-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Association of Securities Dealers, Inc
Posted Date: 2007-06-14T04:00Z

[Federal Register: June 14, 2007 (Volume 72, Number 114)]
[Notices]               
[Page 32934-32935]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14jn07-101]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55879; File No. SR-NASD-2007-036]

 
Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to a Technical Amendment to New NASD Rule 2342 
(SIPC Information)

June 8, 2007
    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 June 1, 2007, the National Association of Securities Dealers, Inc. 
(``NASD'') 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. NASD has 
filed the proposal as a ``non-controversial'' rule change pursuant to 
Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ 
which renders the proposal effective upon receipt of this filing by 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).
    \4\ 17 CFR 240.19b-4(f)(6).
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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 Rule 2342 (SIPC Information) to make a 
technical amendment to clarify the categories of members that are 
excepted from the scope of the rule. Below is the text of the proposed 
rule change.\5\ Proposed new language is in italics; proposed deletions 
are in brackets.
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    \5\ The underlying rule text used in this proposed rule change 
is based on new NASD Rule 2342 which was approved by the SEC on May 
10, 2007. See Securities Exchange Act Release No. 55737 (May 10, 
2007), 72 FR 27606 (May 16, 2007) (Approval Order).
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* * * * *
2342. SIPC Information
    All members, except those members: (a) That pursuant to Section 
3(a)(2)(A)(i) through (iii) of the Securities Investor Protection Act 
of 1970 (SIPA) are excluded from membership in the Securities Investor 
Protection Corporation (SIPC) and that are not SIPC members; [and] or 
(b) whose business consists exclusively of the sale of investments that 
are ineligible for SIPC protection, shall advise all new customers, in 
writing, at the opening of an account, that they may obtain information 
about SIPC, including the SIPC brochure, by contacting SIPC, and also 
shall provide the Web site address and telephone number of SIPC. In 
addition, such members shall provide all customers with the same 
information, in writing, at least once each year. In cases where both 
an introducing firm and clearing firm service an account, the firms may 
assign these requirements to one of the firms.
* * * * *

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
    On May 10, 2006, the Commission approved new Rule 2342 (SIPC 
Information) to require NASD members, except those members (a) that 
pursuant to Section 3(a)(2)(A)(i) through (iii) of the Securities 
Investor Protection Act of 1970 (``SIPA'') are excluded from membership 
in the Securities Investor Protection Corporation (``SIPC'') and that 
are not SIPC members; or (b) whose business consists exclusively of the 
sale of investments that are ineligible for SIPC protection, to provide 
new customers, and all customers annually, with certain information 
about SIPC.\6\ As approved, however, the rule text could be mistakenly 
read to except only those members that are excluded from membership in 
SIPC and are not SIPC members, and also have a business consisting 
exclusively of investment products that are ineligible for SIPC 
protection. Accordingly, NASD is filing this proposed rule change to 
delete the ``and'' between paragraphs (a) and (b) of new Rule 2342 and 
replace it with an ``or'' to clarify that the rule excepts from its 
requirements a member that meets the conditions in either paragraphs 
(a) or (b).
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    \6\ See supra note 5.
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    NASD has filed the proposed rule change for immediate 
effectiveness. The effective date of new Rule 2342, as amended by this 
proposed rule change, is November 6, 2007.
2. Statutory Basis
    NASD believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\7\ which requires, among 
other things, 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 
consistent with the protection of investors and the public interest in 
that it will avoid any confusion when reading the provisions of Rule 
2342.
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    \7\ 15 U.S.C. 78o-3(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 result in 
any

[[Page 32935]]

burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.\8\
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    \8\ 15 U.S.C. 78a.
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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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) \9\ of the Act and Rule 19b-
4(f)(6) thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
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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 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-2007-036 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASD-2007-036. This file 
number should be included on the subject line if e-mail is used. To 
help the 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 such 
filing also will be available for inspection and copying at the 
principal office of 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 the File Number SR-NASD-2007-
036 and should be submitted on or before July 5, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-11441 Filed 6-13-07; 8:45 am]

BILLING CODE 8010-01-P