Document ID: SEC-2006-1320-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Association of Securities Dealers, Inc.
Posted Date: 2006-10-11T04:00Z

[Federal Register: October 11, 2006 (Volume 71, Number 196)]
[Notices]               
[Page 59845-59847]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11oc06-157]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54562; File No. SR-NASD-2006-111]

 
Self Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to Amending the Citation to Section 19 of the 
Securities Exchange Act in NASD Rule 9559

October 3, 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 September 25, 2006, 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 and II below, which Items have been prepared by NASD. NASD has 
designated the proposed rule change as constituting a ``non-
controversial'' rule change under 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 NASD Rule 9559(s), to amend the citation 
to section 19 of the Act. Below is the text

[[Page 59846]]

of the proposed rule change. Proposed deletions are in [brackets].
* * * * *
    9559. Hearing Procedures for Expedited Proceedings Under the Rule 
9550 Series
    (a) through (r) No Change.
    (s) Application to Commission for Review
    The right to have any action pursuant to this Rule reviewed by the 
Securities and Exchange Commission is governed by Section 19[(f)] of 
the Securities Exchange Act. The filing of an application for review by 
the Securities and Exchange Commission shall not stay the effectiveness 
of final NASD action, unless the Securities and Exchange Commission 
otherwise orders.
* * * * *

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 Rule 9550 Series of NASD's procedural rules establishes the 
procedures for expedited proceedings brought against NASD members or 
associated persons for certain types of actions. These actions include 
proceedings initiated for failure to pay NASD dues, fees, and other 
charges;\5\ failure to comply with an arbitration award or related 
settlement;\6\ and failure to comply with temporary cease and desist 
orders.\7\ The hearing procedures for all expedited proceedings 
initiated under the NASD Rule 9550 Series are set forth in NASD Rule 
9559. Although most of the provisions in NASD Rule 9559 relate to the 
procedural requirements of the hearing and NASD's written decisions, 
paragraph (s) notes that respondents have the right to appeal any 
decision issued after an expedited proceeding to the Commission and 
cites section 19(f) of the Act. Other provisions of NASD's procedural 
rules refer more broadly to the Commission's review of NASD decisions 
under section 19 of the Act without specifying a particular paragraph 
of the section.\8\ The proposed rule change would amend the reference 
to the Commission's review of NASD decisions in expedited proceedings 
pursuant to section 19 of the Act by deleting the specific reference to 
paragraph (f) of section 19 and replacing it with a broad reference to 
section 19.
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    \5\ See NASD Rule 9553.
    \6\ See NASD Rule 9554.
    \7\ See NASD Rule 9556.
    \8\ See e.g. NASD Rule 9870.
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    NASD has filed the proposed rule change for immediate 
effectiveness. The effective date and the implementation date will be 
the date of filing, September 25, 2006.
2. Statutory Basis
    NASD believes that the proposed rule change is consistent with the 
provisions of section 15A of the Act,\9\ in general, and with section 
15A(b)(6) of the Act,\10\ in particular, 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 and with section 15A(b)(8) of the Act,\11\ which 
requires, among other things, that NASD rules must provide a fair 
procedure for the disciplining of members and persons associated with 
members. NASD believes that the proposed rule change will clarify the 
citation to the Act with respect to the appeal of expedited proceedings 
to the Commission.
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    \9\ 15 U.S.C. 78o-3.
    \10\ 15 U.S.C. 78o-3(b)(6).
    \11\ 15 U.S.C. 78o-3(b)(8).
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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.

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 if 
consistent with the protection of investors and the public interest, it 
has become effective pursuant to section 19(b)(3)(A) of the Act-\12\ 
and Rule 19b-4(f)(6) thereunder.\13\ As required under Rule 19b-
4(f)(6)(iii),\14\ NASD provided the Commission with written notice of 
NASD's intent to file the proposed rule change along with a brief 
description and text of the proposed rule change, at least five 
business days prior to the filing date of the proposed rule change.
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 17 CFR 240.19.6-4(P)(6)(iii).
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    A proposed rule change filed under Rule 19b-4(f)(6) normally may 
not become operative for 30 days after the date of its filing.\15\ 
However, Rule 19b-4(f)(6)(iii) \16\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. NASD has requested that the 
Commission waive the 30-day operative delay based upon a representation 
that the proposed rule change merely clarifies a citation to section 19 
of the Act. In light of the foregoing, the Commission believes such 
waiver is consistent with the protection of investors and the public 
interest. Accordingly, the Commission designated the proposal to be 
effective and operative upon filing with the Commission.\17\
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    \15\ 17 CFR 240.19b-4(f)(6).
    \16\ 17 CFR 240.19b-4(f)(6)(iii).
    \17\ For purposes only of waiving the 30-day operative delay of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
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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:

[[Page 59847]]

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-2006-111 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-2006-111. 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 File Number SR-NASD-2006-111 
and should be submitted on or before November 1, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-16717 Filed 10-10-06; 8:45 am]

BILLING CODE 8011-01-P