Document ID: SEC-2006-0737-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations: NASDAQ Stock Market LLC; fingerprint plan effectiveness
Posted Date: 2006-06-07T04:00Z

[Federal Register: June 7, 2006 (Volume 71, Number 109)]
[Notices]               
[Page 33007-33008]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07jn06-137]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53908]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Declaration of Effectiveness of the Fingerprint Plan of the NASDAQ 
Stock Market LLC

May 31, 2006.
    On May 30, 2006, the NASDAQ Stock Market LLC (``Nasdaq'') filed 
with the Securities and Exchange Commission (``Commission'' or ``SEC'') 
a fingerprint plan (``Plan'') pursuant to Rule 17f-2(c) \1\ under the 
Securities Exchange Act of 1934 (``Act'').\2\
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    \1\ 17 CFR 240.17f-2(c).
    \2\ 15 U.S.C. 78a et seq.
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    Nasdaq believes that the Plan will facilitate compliance by Nasdaq 
members and Nasdaq member applicants (together, ``participants'') with 
section 17(f)(2) of the Exchange Act and Rule 17f-2 thereunder, by 
providing a facility for participants to have the fingerprints of their 
partners, directors, officers, and employees processed by the Attorney 
General of the United States or his designee (``Attorney General'').
    The Plan will be administered for Nasdaq by NASD Regulation, Inc. 
(``NASDR'') and the National Association of Securities Dealers, Inc. 
(``NASD''), the parent corporation of NASDR, pursuant to a regulatory 
services agreement between NASDR and Nasdaq (the ``Regulatory 
Contract''). The Commission notes that, notwithstanding the fact that 
Nasdaq has entered into the Regulatory Contract to have NASDR perform 
some of Nasdaq's functions, Nasdaq shall retain ultimate legal 
responsibility for, and control of, such functions.
    Under the Plan, participants submit fingerprints and identifying 
information, on paper or electronically, to the NASD, which then 
forwards the cards to the Federal Bureau of Investigation (``FBI'') 
(the fingerprint processing arm of the Attorney General). The FBI 
identifies submitted fingerprints, retrieves relevant criminal history 
information, and returns fingerprint reports (including the original 
paper fingerprint cards, if any)

[[Page 33008]]

to authorized recipients (i.e., to a participant that submitted the 
fingerprints and to regulators for licensing, registration and other 
regulatory purposes). Under the terms of the Plan, participants will be 
able to view the status and results of fingerprints, including any 
relevant criminal history information, through the NASD's Central 
Registration Depository (CRD[supreg]) system after submission to the 
Attorney General.
    The Commission has reviewed the procedures detailed in the Plan and 
believes that the Plan is consistent with the public interest and the 
protection of investors. Thus, the Commission declares the Plan to be 
effective.
    The Commission notes that securities industry fingerprinting 
procedures are in a state of flux due to rapidly advancing technology. 
In the event that an industry-wide standard is adopted or becomes 
prevalent and in the event that this Plan substantially differs 
therefrom, the Commission would expect Nasdaq to revise its fingerprint 
plan to incorporate the industry-wide standard.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\3\
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    \3\ 17 CFR 200.30-3(a)(17)(iii).
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J. Lynn Taylor,
Assistant Secretary.

Exhibit A--The NASDAQ Stock Market LLC; Fingerprint Plan

    The NASDAQ Stock Market LLC (``Nasdaq'') submits this Fingerprint 
Plan (``Plan'') pursuant to Rule 17f-2(c) under the Securities Exchange 
Act of 1934 (``Exchange Act'').
    The purpose of this Plan is to facilitate compliance by Nasdaq 
members and Nasdaq member applicants with section 17(f)(2) of the 
Exchange Act and Rule 17f-2 thereunder, by providing a mechanism for 
Nasdaq members and Nasdaq member applicants to have the fingerprints of 
their partners, directors, officers, and employees processed by the 
Attorney General of the United States or his designee (hereinafter 
``Attorney General'') as required by section 17(f)(2) of the Exchange 
Act and Rule 17f-2 thereunder. The Plan will be administered for Nasdaq 
by NASD Regulation, Inc. (``NASDR'') and the National Association of 
Securities Dealers, Inc. (``NASD''), the parent corporation of NASDR, 
pursuant to a regulatory services agreement between NASDR and Nasdaq 
(the ``Regulatory Contract''). In the event that Nasdaq enters into a 
contract to administer the Plan with a regulatory service provider 
other than NASDR or decides to administer the Plan itself, Nasdaq shall 
file an amendment to the Plan with the Securities and Exchange 
Commission (the ``Commission''). Notwithstanding the fact that Nasdaq 
has entered into the Regulatory Contract to have NASDR perform some of 
Nasdaq's functions, Nasdaq shall retain ultimate legal responsibility 
for, and control of, such functions.
    NASD, pursuant to a Plan filed with and declared effective by the 
Commission,\4\ processes fingerprint records of securities industry 
participants as described herein consistent with section 17(f)(2) of 
the Exchange Act and Rule 17f-2 thereunder.
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    \4\ Securities Exchange Act Release No. 53751 (May 2, 2006), 71 
FR 27299 (May 10, 2006).
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    NASD accepts fingerprints and identifying information from 
associated persons of Nasdaq members and Nasdaq member applicants 
required to be fingerprinted pursuant to Rule 17f-2. Nasdaq members and 
Nasdaq member applicants may submit fingerprints and identifying 
information on paper or electronically, provided such submissions are 
consistent with protocols and requirements established by the Attorney 
General.
    NASD transmits fingerprints and identifying information, on paper 
or electronically, to the Attorney General for identification and 
processing, consistent with protocols and requirements established by 
the Attorney General.
    NASD receives processed results from the Attorney General (on paper 
or electronically) and transmits those results via paper or electronic 
means to authorized recipients (i.e., to a Nasdaq member or Nasdaq 
member applicant that submitted the fingerprints and to regulators for 
licensing, registration and other regulatory purposes), consistent with 
protocols and requirements established by the Attorney General. In 
cases where the Attorney General's search on the fingerprints submitted 
fails to disclose prior arrest data, NASD transmits that result to the 
Nasdaq member or Nasdaq member applicant that submitted the 
fingerprints. In cases where the Attorney General's search yields 
Criminal History Record Information (CHRI), NASD transmits that 
information to the Nasdaq member or Nasdaq member applicant that 
submitted the fingerprints. With respect to Nasdaq members, NASD also 
reviews any CHRI returned by the Attorney General to identify persons 
who may be subject to statutory disqualification under the Exchange Act 
and notifies NASD and Nasdaq staff to take action, as appropriate, with 
respect to such persons.
    Nasdaq advises its members and member applicants of the 
availability of fingerprint services and any fees charged in connection 
with those services and the processing of fingerprints pursuant to this 
Plan. Nasdaq will file any such Nasdaq member fees with the Commission 
pursuant to section 19(b) of the Exchange Act.
    NASD maintains copies of fingerprint processing results received 
from the Attorney General with respect to fingerprints submitted by 
NASD pursuant to this Plan, in accordance with Nasdaq's record 
retention obligations under the Act. Any maintenance of fingerprint 
records by NASD shall be for NASD's and Nasdaq's own administrative 
purposes, and NASD is not undertaking to maintain fingerprint records 
on behalf of Nasdaq members pursuant to Rule 17f-2(d)(2). NASD records 
in the Central Registration Depository (CRD() the status of 
fingerprints submitted to the Attorney General. Through the CRD system, 
NASD makes available to a Nasdaq member that has submitted fingerprints 
the status and results of such fingerprints after submission to the 
Attorney General.
    Neither NASD nor Nasdaq shall be liable for losses or damages of 
any kind in connection with fingerprinting services, as a result of a 
failure to follow, or properly to follow, the procedures described 
above, or as a result of lost or delayed fingerprint cards, electronic 
fingerprint records, or fingerprint reports, or as a result of any 
action by NASD or Nasdaq or NASD's or Nasdaq's failure to take action 
in connection with this Plan.

 [FR Doc. E6-8808 Filed 6-6-06; 8:45 am]

BILLING CODE 8010-01-P