Document ID: SEC-2006-0600-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Association of Securities Dealers, Inc.
Posted Date: 2006-05-10T04:00Z

[Federal Register: May 10, 2006 (Volume 71, Number 90)]
[Notices]               
[Page 27299-27300]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10my06-112]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53751]

 
Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Declaration of Effectiveness of the Fingerprint Plan of 
the National Association of Securities Dealers, Inc.

May 2, 2006.
    On May 1, 2006, the National Association of Securities Dealers, 
Inc. (``NASD'') filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC'') an amended fingerprinting plan (``Amended 
Plan'') pursuant to Rule 17f-2(c) \1\ under the Securities Exchange Act 
of 1934 (``Act'').\2\ The Amended Plan \3\ supersedes and replaces the 
NASD's current fingerprinting plan.\4\
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    \1\ 17 CFR 240.17f-2(c).
    \2\ 15 U.S.C. 78a et seq.
    \3\ Attached hereto as Exhibit A.
    \4\ The Commission declared the current fingerprint plan of the 
NASD effective in 1988.
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    The NASD believes that the Amended Plan will be an improvement over 
the current NASD fingerprinting plan. It permits the NASD to record in 
the Central Registration Depository (``CRD'') the status of 
fingerprints submitted to the Attorney General. Through the CRD system, 
NASD makes available to a member or other securities industry 
participant that has submitted fingerprints the status and results of 
such fingerprints after submission to the Attorney General. In 
addition, the NASD has made other minor clarifying and typographical 
revisions.
    Under the NASD's current fingerprinting plan, members or other 
securities industry 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 Office of the Attorney General 
of the United States). The FBI identifies submitted fingerprints, 
retrieves relevant criminal history information, and returns 
fingerprint reports (including the original paper fingerprint cards, if 
any) to the NASD. Under the terms of the Amended Plan, the member or 
other securities industry participant will be able to view the status 
and results of fingerprints, including any relevant criminal history 
information, through the CRD system.
    The Commission has reviewed the procedures detailed in the Amended 
Plan and believes that the Amended Plan is consistent with the public 
interest and the protection of investors. Enabling members or other 
securities industry participants to view the status and results of 
fingerprints, including relevant criminal history information, through 
the CRD system should improve the efficiency of members or other 
securities industry participants in identifying persons who may be 
subject to statutory disqualification more rapidly. Thus, the 
Commission declares the Amended 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 Amended Plan substantially differs 
therefrom, the Commission would expect the NASD to revise its 
fingerprinting plan to incorporate the industry-wide standard.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\5\
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    \5\ 17 CFR 200.30-3(a)(17)(iii).
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Nancy M. Morris,
Secretary.

Exhibit A--National Association of Securities Dealers, Incorporated; 
Fingerprint Plan

    National Association of Securities Dealers, Inc. (``NASD'') submits 
this Fingerprint Plan (``Plan'') pursuant to Rule 17f-2(c) under the 
Securities Exchange Act of 1934 (``Exchange Act''). This Plan 
supersedes and replaces the NASD's Fingerprint Plan approved by the 
Securities and Exchange Commission (``Commission'') on June 22, 1976, 
and as amended thereafter.
    The purpose of this Plan is to facilitate securities industry 
participants' compliance with Section 17(f)(2) of the Exchange Act and 
Rule 17f-2 thereunder, by providing a facility for securities industry 
participants to

[[Page 27300]]

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) and Rule 17f-2, thereunder. NASD, pursuant to a Plan filed 
with and declared effective by the Commission, processes fingerprint 
records of securities industry participants as described herein 
consistent with those provisions.
    NASD accepts fingerprints and identifying information from member 
firms and other securities industry participants required to be 
fingerprinted pursuant to Rule 17f-2. Securities industry participants 
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 accepts a single set of fingerprints and identifying 
information for an associated person in lieu of separate fingerprint 
submissions by affiliated NASD member firms with which the individual 
is associated in satisfaction of the Section 17(f)(2) fingerprinting 
requirement, provided that the NASD affiliate member firms are under 
common ownership or control as reported on Form BD, and that affiliate 
information is provided with the initial application for registration.
    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 member or other securities 
industry participant 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 
securities industry participant that submitted the fingerprints. In 
cases where the Attorney General's search yields Criminal History 
Record Information (CHRI), NASD transmits that information to the 
securities industry participant that submitted the fingerprints. With 
respect to 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 to take action, as 
appropriate, with respect to such persons.
    NASD advises its members and member applicants of the availability 
of fingerprint services and any fees charged by NASD in connection with 
those services and the processing of fingerprints pursuant to this 
Plan. NASD will file any such NASD 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 NASD's Record Retention 
Plan filed with the Commission. Any maintenance of fingerprint records 
by NASD shall be for NASD's own administrative purposes, and NASD is 
not undertaking to maintain fingerprint records on behalf of NASD 
members pursuant to Rule 17f-2(d)(2). NASD records in the Central 
Registration Depository (CRD[supreg]) the status of fingerprints 
submitted to the Attorney General. Through the CRD system, NASD makes 
available to a member that has submitted fingerprints the status and 
results of such fingerprints after submission to the Attorney General.
    NASD shall not be liable for losses or damages of any kind in 
connection with its fingerprinting services, as a result of its 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 NASD's failure to take action in connection with this Plan.
 [FR Doc. E6-7100 Filed 5-9-06; 8:45 am]

BILLING CODE 8010-01-P