Document ID: SEC-2006-0979-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Association of Securities Dealers, Inc.
Posted Date: 2006-08-01T04:00Z

[Federal Register: August 1, 2006 (Volume 71, Number 147)]
[Notices]               
[Page 43550-43551]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01au06-101]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54214; File No. SR-NASD-2006-082]

 
Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to Revisions to the Series 22 Examination Program

July 26, 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 July 14, 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 and 
II below, which Items have been prepared by NASD. NASD has designated 
the proposed rule change as constituting a stated policy, practice, or 
interpretation with respect to the meaning, administration, or 
enforcement of an existing rule of the self-regulatory organization 
pursuant to Section 19(b)(3)(A)(i) of the Act \3\ and Rule 19b-4(f)(1) 
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)(i).
    \4\ 17 CFR 240.19b-4(f)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NASD is filing revisions to the study outline and selection 
specifications for the Limited Representative--Direct Participation 
Programs (Series 22) examination program.\5\ The proposed revisions 
update the material to reflect changes to the laws, rules and 
regulations covered by the examination and to better reflect the duties 
and responsibilities of a direct participation programs representative. 
NASD is not proposing any textual changes to the By-Laws, Schedules to 
the By-Laws, or Rules of NASD.
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    \5\ NASD also is proposing corresponding revisions to the Series 
22 question bank, but based upon instruction from the Commission 
staff, NASD is submitting SR-NASD-2006-082 for immediate 
effectiveness pursuant to Section 19(b)(3)(A) of the Act and Rule 
19b-4(f)(1) thereunder, and is not filing the question bank for 
Commission review. See letter to Alden S. Adkins, Senior Vice 
President and General Counsel, NASD Regulation, from Belinda Blaine, 
Associate Director, Division of Market Regulation (``Division''), 
Commission, dated July 24, 2000. The question bank is available for 
Commission review.
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    The revised study outline is available on NASD's Web site (http://www.nasd.com
), at NASD, and at the Commission.\6\ The Series 22 

selection specifications have been submitted to the Commission under 
separate cover with a request for confidential treatment pursuant to 
Rule 24b-2 under the Act.\7\
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    \6\ Telephone conversation between Mia Zur, Special Counsel, 
Division, Commission, and Afshin Atabaki, Counsel, NASD, dated July 
19, 2006.
    \7\ 17 CFR 240.24b-2.
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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
    Section 15A(g)(3) of the Act \8\ requires NASD to prescribe 
standards of training, experience, and competence for persons 
associated with NASD members. In accordance with that provision, NASD 
has developed examinations, and administers examinations developed by 
other self-regulatory organizations, that are designed to establish 
that persons associated with NASD members have attained specified 
levels of competence and knowledge. NASD periodically reviews the 
content of the examinations to determine whether revisions are 
necessary or appropriate in view of changes pertaining to the subject 
matter covered by the examinations.
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    \8\ 15 U.S.C. 78o-3(g)(3).
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    Pursuant to NASD Rule 1032(c), an associated person of a member who 
meets the definition of representative in NASD Rule 1031 may register 
with NASD as a Limited Representative--Direct Participation Programs 
if: (1) The individual's activities in the investment banking and 
securities business are limited solely to the solicitation, purchase, 
and/or sale of equity interests in or debt of direct participation 
programs as defined in NASD Rule 1022(e)(2) and (2) the individual 
passes the Series 22 qualification examination.
    A committee of industry representatives, together with NASD staff, 
recently undertook a review of the Series 22 examination program. As a 
result of this review, NASD is proposing to make the following 
revisions to the study outline to reflect changes to the laws, rules 
and regulations covered by the examination and to better reflect the 
duties and responsibilities of a direct participation programs 
representative. NASD is proposing to add a section on SEC Form S-1 
registration. NASD also is proposing to add a section on NASD Rule 2370 
(Borrowing from or Lending to Customers) and a section on like-kind 
exchanges.
    In addition, NASD is proposing to revise the study outline to 
remove the sections on Section 4(3) (Transactions by a dealer) under 
the Securities Act of 1933 \9\ and SEC Rule 174 (Delivery of prospectus 
by dealers; exemptions under Section 4(3)).\10\ Further, NASD is 
proposing to remove the sections on NASD Rules 1040 (Registration of 
Assistant Representatives and Proctors) and 1110 (formerly Registration 
of

[[Page 43551]]

Government Securities Principals and Representatives), as well as to 
remove the section on NASD Certificate of Incorporation.
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    \9\ 15 U.S.C. 77d(3).
    \10\ 17 CFR 230.174.
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    NASD is proposing these changes to the entire content of the Series 
22 examination, including the selection specifications and question 
bank. The number of questions on each section of the Series 22 
examination will remain the same. In addition, the number of questions 
on the examination will remain at 100, and candidates will continue to 
have 2\1/4\ hours (135 minutes) to complete the exam. Also, each 
question will continue to count one point, and each candidate must 
correctly answer 70 percent of the questions to receive a passing 
grade.
2. Statutory Basis
    NASD believes that the proposed revisions to the Series 22 
examination program are consistent with the provisions of Sections 
15A(b)(6) \11\ and 15A(g)(3) of the Act,\12\ which authorize NASD to 
prescribe standards of training, experience, and competence for persons 
associated with NASD members.
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    \11\ 15 U.S.C. 78o-3(b)(6).
    \12\ 15 U.S.C. 78o-3(g)(3).
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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

    The proposed rule change has become effective pursuant to Section 
19(b)(3)(A)(i) of the Act \13\ and Rule 19b-4(f)(1) thereunder,\14\ in 
that the proposed rule change constitutes a stated policy, practice, or 
interpretation with respect to the meaning, administration, or 
enforcement of an existing rule of the self-regulatory organization. 
NASD proposes to implement the revised Series 22 examination program on 
August 15, 2006. NASD will announce the implementation date in a Notice 
to Members to be published on the same date as this filing.
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    \13\ 15 U.S.C. 78s(b)(3)(A)(i).
    \14\ 17 CFR 240.19b-4(f)(1).
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    At any time within 60 days of the filing of such 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 No. SR-NASD-2006-082 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.
    All submissions should refer to File Number SR-NASD-2006-082. 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-2006-082 and should be submitted on or before August 22, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
 [FR Doc. E6-12320 Filed 7-31-06; 8:45 am]

BILLING CODE 8010-01-P