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Self-Regulatory Organizations; Order Approving Proposed Rule Change and Notice of Filing and Order Granting Accelerated Approval to Amendment No. 2 to the Proposed Rule Change by the National Association of Securities Dealers, Inc. Relating to the Application of NASD Rules and Interpretive Materials to Exempted Securities; Corrections

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Start Preamble October 17, 2001.

In FR Document No. 01-19700, beginning on page 41283, column 3, for Tuesday, August 7, 2001, a sentence was incorrectly stated. Specifically, footnote 10 should be revised to delete references to National Association of Securities Dealers, Inc. (“NASD”) Rule 2440, “Fair Prices and Commissions,” and to IM-2440, “Mark-Up Policy.”

Footnote 10 is revised to read as follows:

10See Securities Exchange Act Release No. 37588 (August 20, 1996), 61 FR 44100 (August 27, 1996) (order approving File No. SR-NASD-95-39) (“1996 Order”). The 1996 Order approved the application of the following NASD rules to exempted securities, including government securities but not municipal securities: NASD Rule 2110, “Standards of Commercial Honor and Principles of Trade;” NASD Rule 2120, ”Use of Manipulative, Deceptive or Other Fraudulent Devices;” NASD Rule 2210, “Communications with the Public;” IM-2210-2, “Communications with the Public about Collateralized Mortgage Obligations;” IM-2210-2, “Communications with the Public about Variable Life Insurance and Variable Annuities;” IM-2210-3, “Use of Rankings in Investment Companies Advertisements and Sales Literature;” NASD Rule 2250, “Disclosure of Participation or Interest in Primary or Secondary Distribution;” NASD Rule 2270, “Disclosure of Financial Condition to Customers;” NASD Rule 2310, “Recommendations to Customers (Suitability);” IM-2310-2, “Fair Dealing with Customers;” IM-2310-3, “Suitability Obligations to Institutional Customers;” NASD Rule 2320, “Best Execution and Interpositioning;” NASD Rule 2330, “Customers' Securities or Funds;” IM-2330, “Segregation of Customers' Securities;” NASD Rule 2340, “Customer Account Statements;” NASD Rule 2430, “Charges for Services Performed;” NASD Rule 2450, “Installment or Partial Sales;” NASD Rule 2510, “Discretionary Accounts;” NASD Rule 2520, “Margin Accounts;” NASD Rule 2521, “Margin Requirements—Exception for Certain Members” (formerly NASD Rule 2520(a); NASD Rule 2522, “Definitions Related to Options, Currency Warrants Currency Index Warrants and Stock Index Warrants Transactions” (formerly NASD Rule 2520(b); NASD Rule 2770, “Disclosure of Price in Selling Agreements” (applicable only to traditional underwriting arrangements); NASD Rule 2780, “Solicitation of Purchases on an Exchange to Facilitate a Distribution of Securities;” NASD Rule 2910, “Disclosure of Financial Condition to Other Members;” NASD Rule 3010, “Supervision;” NASD Rule 3020, “Fidelity Bonds;” NASD Rule 3030, “Outside Business Activities of an Associated Person;” NASD Rule 3040, “Private Securities Transactions of an Associated Person;” NASD Rule 3050, “Transactions for or by Associated Persons;” NASD Rule 3060, “Influencing or Rewarding Employees of Others;” NASD Rule 3070, “Reporting Requirements;” NASD Rule 3120, “Use of Information Obtained in a Fiduciary Capacity;” NASD Rule 3110, “Books and Records;” IM-3110, “Customer Account Information;” NASD Rule 3130, “Regulation of Members Experiencing Financial and/or Operational Difficulties;” IM-3130, “Restrictions on a Member's Activity;” NASD Rule 3131, “Regulation of Activities of Section 15C Members Experiencing Financial and/or Operational Difficulties;” NASD Rule 3140, “Approval of Change in Exempt Status under SEC Rule 15c3-3;” NASD Rule 3230, “Clearing Agreements;” NASD Rule 3310, “Publication of Transactions and Quotations;” IM-3310, “Manipulative and Deceptive Quotations;” NASD Rule 3320, “Offers at Stated Prices;” IM-3320, “Firmness of Quotations;” NASD Rule 3330, “Payment Designed to Influence Market Prices, Other than Paid Advertising;” NASD Rule 8110, “Availability to Customers of Certificate, By-Laws, and Rules;” NASD Rule 8120, “Complaints by Public Against Members for Violations of Rules;” NASD Rule 8130, “Complaints by District Business Conduct Committees;” NASD Rule 8140, “Complaints by the Board of Governors;” NASD Rule 8210, “Reports and Inspections of Books for Purpose of Investigating Complaints;” NASD Rule 8220, “Suspension of Members for Failure to Furnish Information Duly Requested;” NASD Rule 8310, “Sanctions for Violation of the Rules;” IM-8310-1, “Effect of a Suspension, Revocation, or Bar;” IM-8310-2, “Release of Disciplinary Information;” NASD Rule 8320, “Payment of Fines, Other Monetary Sanctions, or Costs;” and NASD Rule 8330, “Cost of Proceedings.” As discussed more fully below, Amendment No. 2 clarifies NASD Regulation's reasons for including NASD Rules 2521, 2522, 2910, 8220 (which was expanded to include current NASD Rules 8221 through 8227), and IM-8310-2 in its list of rules and interpretative materials applicable to exempted securities, including government securities, other than municipal securities. See Amendment No. 2, supra note 4.

In addition, in FR Document No. 01-19700, beginning on page 41284, column 1, a sentence in footnote 12 was incorrectly stated. Specifically, footnote 12 should be changed to delete references to NASD Rule 2300 and to IM-8310 and to add a reference to IM-2522.

Footnote 12 is revised to read as follows:

12 Specifically, NASD Rule 0116(b) states that, unless otherwise indicated within a particular provision, the following NASD rules and interpretative materials apply to transactions and business activities relating to exempted securities but not municipal securities, conducted by members and associated persons: 2110, 2120, 2210, IM-2210-1, IM-2210-2, IM-2210-3, 2250, 2270, 2310, IM-2310-2, IM-2310-3, 2320, 2330, IM-2330, 2340, 2430, 2450, 2510, 2520, 2521, 2522, IM-2522, 2770, 2780, 2820(g), 2910, 3010, 3020, 3030, 3040, 3050, 3060, 3070, 3110, IM-3110, 3120, 3130, IM-3130, 3131, 3140, 3230, 3310, IM-3310, 3320, IM-3320, 3330, 8110, 8120, 8210, 8221, 8222, 8223, 8224, 8225, 8226, 8227, 8310, IM-8310-1, IM-8310-2, 8320, and 8330. See Amendment No. 2, supra note 4.

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[1]

Start Signature

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble


[FR Doc. 01-26728 Filed 10-23-01; 8:45 am]