Document ID: SEC-2006-0855-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Association of Securities Dealers, Inc.
Posted Date: 2006-07-06T04:00Z

[Federal Register: July 6, 2006 (Volume 71, Number 129)]
[Notices]               
[Page 38439-38441]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06jy06-123]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54058; File No. SR-NASD-2006-073]

 
Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing of Proposed Rule Change and Amendment 
No. 1 Thereto Relating to the Amendment of NASD Interpretive Material 
2210-4 To Require Certain Member Firms To Provide a Hyperlink to the 
NASD's Internet Home Page

June 28, 2006.
    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 8, 2006, 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 NASD. On June 26, 
2006, NASD filed with the Commission Amendment No. 1 to the proposed 
rule change.\3\ The Commission is publishing this notice to solicit 
comments on the proposed rule change, as amended, from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 1 replaced and superseded the original rule 
filing in its entirety.

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[[Page 38440]]

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NASD is proposing to amend NASD Interpretive Material (``IM'') 
2210-4 to require a member firm or a person associated with a member 
firm that refers, on its Internet Web site, to the firm's membership in 
NASD to provide a hyperlink to NASD's Web site. Below is the text of 
the proposed rule change. Proposed new language is in italics.
* * * * *

IM-2210-4. Limitations on Use of NASD's Name

    Members may indicate NASD membership in conformity with Article XV, 
Section 2 of the NASD By-Laws in one or more of the following ways:
    (1) through (2). No change.
    (3) on a member's internet Web site provided that the member 
provides a hyperlink to NASD's internet home page, http://www.nasd.com, in 

close proximity to the member's most prominent indication of NASD 
membership. A member is not required to provide more than one such 
hyperlink on its Web site. This provision also shall apply to an 
internet Web site relating to the member's investment banking or 
securities business maintained by or on behalf of any person associated 
with a member.
* * * * *
    (b) Not applicable.
    (c) Not applicable.

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
    Currently, many broker-dealers refer to their membership in NASD on 
their internet Web sites, often in a description of the firm or in an 
``about us'' section. The proposed rule change would require a firm, 
when referencing membership in NASD on its Web site, to include an 
accompanying hyperlink to NASD's Internet home page, http://www.nasd.com.
 The proposed rule change also would apply to an Internet 

Web site relating to a firm's investment banking or securities business 
that is maintained by or on behalf of any person associated with the 
firm.\4\ The proposed rule change would require a firm (and persons 
associated with a firm where applicable) to provide a hyperlink in 
close proximity to the most prominent indication of the firm's 
membership in NASD.\5\ However, the proposed rule change would not 
create an independent obligation requiring a firm (or persons 
associated with a firm where applicable) to refer to the firm's NASD 
membership on an Internet Web site. The proposed rule change only would 
apply to the extent that a firm or a person associated with a firm 
chooses to represent on its Web site that the firm is a member of NASD.
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    \4\ This requirement is intended to capture, among other things, 
situations where a person associated with an NASD member firm 
maintains its own Internet Web site or ``home page'' that relates to 
a member's investment banking or securities business. For example, 
NASD understands that independent contractors or their firms 
sometimes maintain a separate home page for each independent 
contractor for marketing purposes.
    \5\ While a member would be free to provide hyperlinks relating 
to subsequent or additional references to NASD on its Web site, it 
would not be required to provide more than one hyperlink. In 
addition, a member would be permitted to make the word NASD itself a 
live hyperlink or to provide a separate hyperlink to NASD's home 
page so long as it is in ``close proximity'' to the member's most 
prominent indication of its NASD membership.
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    The proposed rule change is intended to help investors understand 
the significance of a firm being an NASD member and also is designed to 
facilitate access to the information on http://www.nasd.com. NASD 

believes that facilitating investor access to NASD's Web site will 
enhance investor protection and lead to better educated and informed 
investors. The proposed rule change is similar to a rule adopted by the 
Securities Investor Protection Corporation (``SIPC''), which requires 
that its members provide a live hyperlink to SIPC's Web site, http://www.SIPC.org
, when referring to membership in SIPC.\6\

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    \6\ See Article 11, Section 4 of SIPC Bylaws.
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    NASD will announce the effective date of the proposed rule change 
in a Notice to Members to be published no later than 60 days following 
Commission approval. The effective date will be 180 days following 
publication of the Notice to Members announcing Commission approval.
2. Statutory Basis
    NASD believes that the proposed rule change, as amended, is 
consistent with the provisions of Sections 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 facilitating 
investor access to NASD's Web site will lead to better educated and 
informed investors and help investors understand the significance of 
NASD membership.
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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 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

    Written comments were neither solicited nor received by NASD.

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 NASD 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, including whether the proposed rule 
change, as amended, 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-2006-073 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary,

[[Page 38441]]

Securities and Exchange Commission, 100 F Street, NE., Washington, DC 
20549-1090.

All submissions should refer to File Number SR-NASD-2006-073. 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 
provision 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 submission should refer to File Number SR-NASD-
2006-073 and should be submitted on or before July 27, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6-10531 Filed 7-5-06; 8:45 am]

BILLING CODE 8010-01-P