Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Order Approving Proposed Rule Change and Amendment No. 1 Thereto and Notice of Filing and Order Granting Accelerated Approval To Amendment No. 2 To Amend NASD Interpretive Material 2210-4 To Require Certain Member Firms to Provide a Hyperlink to the NASD's Internet Home Page, 67184-67185 [E6-19546]

Download as PDF 67184 Federal Register / Vol. 71, No. 223 / Monday, November 20, 2006 / Notices SECURITIES AND EXCHANGE COMMISSION [Release No. 34–54740; File No. SR–NASD– 2006–073] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Order Approving Proposed Rule Change and Amendment No. 1 Thereto and Notice of Filing and Order Granting Accelerated Approval To Amendment No. 2 To Amend NASD Interpretive Material 2210–4 To Require Certain Member Firms to Provide a Hyperlink to the NASD’s Internet Home Page November 9, 2006. I. Introduction On June 8, 2006, the National Association of Securities Dealers, Inc. (‘‘NASD’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) a proposed rule change, pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 to amend NASD Interpretive Material 2210–4 to require certain member firms to provide a hyperlink to the NASD’s internet home page. NASD filed Amendment No. 1 to the proposed rule change on June 26, 2006.3 The proposed rule change, as amended, was published for comment in the Federal Register on July 6, 2006.4 The Commission received three comments on the proposal, as amended.5 On August 30, 2006, the NASD filed Amendment No. 2 to amend the filing and respond to the comment letters. This order grants accelerated approval of the proposed rule change, as amended by Amendment No. 2 and solicits comments from interested persons on Amendment No. 2. II. Description of Proposed Rule Change NASD proposes to amend NASD Interpretive Material (‘‘IM’’) 2210–4 to require a member firm or a person associated with a member firm that refers, on its Internet Web site, to the firm’s membership in NASD to provide 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 Amendment No. 1 replaced and superseded the original rule filing in its entirety. 4 See Securities Exchange Act Release No. 54058 (June 28, 2006), 71 FR 38439 (SR–NASD–2006– 073)(‘‘Notice’’). 5 See letters to Nancy M. Morris, Secretary, Commission, from Dale Brown, CEO, Financial Services Institute, dated July 27, 2006 (‘‘FSI Letter’’) and from Aimee Blinder, Vice President, Compliance, National Planning Holdings, Inc., dated July 27, 2006 (‘‘NPH Letter’’). See letter filed via the Commission’s Web Comment Form, from Phyllis Hawkins, Compliance Advisor, Lincoln Investment Planning, Inc., dated July 27, 2006 (‘‘Lincoln Letter’’). sroberts on PROD1PC70 with NOTICES 2 17 VerDate Aug<31>2005 17:10 Nov 17, 2006 Jkt 211001 a hyperlink to NASD’s Web site. According to the NASD, many brokerdealers refer to their membership in NASD on their internet Web sites, often in a description of the firm or in an ‘‘about us’’ section. The proposed rule change would require a firm, when referencing NASD membership on its Web site, to include an accompanying hyperlink to NASD’s internet home page. The proposed rule change also would apply to an internet Web site relating to a firm’s investment banking or securities business that is maintained by or on behalf of any person associated with the firm.6 The proposed rule change would not create an independent obligation for a firm (or persons associated with a firm where applicable) to state that the firm is an NASD member on its internet Web site. The proposed rule change would apply only to the extent that a firm or a person associated with a firm chooses to represent on its Web site that the firm is a member of NASD.7 that will be affected by this requirement.12 In Amendment No. 2, NASD responded to the concerns raised by the commenters and amended the rule text. In response to the FSI Letter regarding the definition of the term ‘‘most prominent,’’ NASD removed the requirement to place the hyperlink at the ‘‘most prominent indication of NASD membership.’’ Instead, members will be allowed to place the hyperlink at any reference that is reasonably designed to draw the public’s attention to NASD membership. With this change, NASD clarified that a firm subject to the proposed rule would be able to choose where to place a hyperlink to NASD’s Web site, provided that the hyperlink is in close proximity to a reference to NASD membership that is reasonably designed to draw the public’s attention to the fact that the firm is a member of NASD. In response to the NPH Letter, NASD explained that ‘‘a legend that denotes that a firm is a member of NASD, would III. Summary of Comments and NASD impose an obligation to provide a Response hyperlink.’’ That stated, the NASD The Commission received three reaffirmed that a firm would only need comment letters on the proposed rule to provide one hyperlink on its Web change: two were generally in favor of site.13 Additionally, in response to the request in the NPH Letter for more time the proposal in its current form; one to implement the proposed rule change, stated the requirement constitutes the NASD stated that based on feedback ‘‘overkill.’’ 8 Specifically, one it received from several member commenter stated that the failure to committees, the 180 days should define the term ‘‘most prominent’’ is likely to lead to differing interpretations provide sufficient time for implementation of the proposed rule and confusion.9 A second commenter change. requested clarification regarding the Finally, in response to the Lincoln extent of the requirement to include a Letter, NASD stated that the commenter hyperlink to the NASD’s Internet home page.10 They suggested that the language appears to have misunderstood the requirements of the proposed rule of the SIPC standard be used in the change as a member would not be NASD interpretation in order to avoid required to provide more than one confusion.11 The commenter also hyperlink to the NASD’s Web site.14 expressed concern over the effective date for compliance, requesting that the IV. Discussion and Commission time frame for compliance be increased Findings from 180 days to 360 days due to the The Commission has reviewed the tremendous number of active Web sites proposed rule change, comment letters, and NASD’s response and finds that the 6 This requirement is intended to capture, among proposed rule change, as amended, is other things, situations where a person associated consistent with the requirements of the with an NASD member firm maintains his own internet Web site or ‘‘home page’’ that relates to a Act and the rules and regulations member’s investment banking or securities thereunder applicable to a national business. For example, NASD understands that securities association.15 In particular, independent contractors or their firms sometimes the Commission finds the proposed rule maintain a separate home page for each independent contractor for marketing purposes. 7 The proposed rule change is similar to a rule adopted by the Securities Investor Protection Corporation (‘‘SIPC’’), which requires that its members provide a live hyperlink to SIPC’s Web site, https://www.SIPC.org, when referring to membership in SIPC. See Article 11, Section 4 of SIPC Bylaws. 8 See Lincoln letter. 9 See FSI letter. 10 See NPH letter. 11 Id. PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 12 Id. 13 NASD stated that the hyperlink requirement would not apply to references to NASD membership in disclosure documents or other offering documents linked to the member firm’s Web site. 14 See footnote 5 in the Notice, supra note 4. 15 In approving this proposed rule change the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). E:\FR\FM\20NON1.SGM 20NON1 Federal Register / Vol. 71, No. 223 / Monday, November 20, 2006 / Notices change, as amended, is consistent with Section 15A of the Act.16 Specifically, the Commission finds the proposal to be consistent with the provisions of Sections 15A(b)(6) of the Act,17 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. The Commission believes that the modifications to the proposed rule change that NASD made in response to issues raised by commenters should provide sufficient guidance to allow members to satisfy the requirements of the rule. Moreover, the Commission believes that facilitating investor access to NASD’s Web site should lead to better educated and informed investors. V. Solicitation of Comments Concerning Amendment No. 2 Interested persons are invited to submit written data, views, and arguments concerning Amendment No. 2, including whether Amendment No. 2 to the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: sroberts on PROD1PC70 with NOTICES Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–NASD–2006–073 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–2006–073. 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 (https://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 16 15 17 15 17:10 Nov 17, 2006 VI. Accelerated Approval of Filing as Amended by Amendment No. 2 The Commission finds good cause for approving the filing, as modified by Amendment No. 2 to the proposed rule change, on an accelerated basis. Amendment No. 2 modifies the proposal in response to issues raised by the commenters. Because Amendment No. 2 raises no novel issues, and provides improvements to the proposed rule change in direct response to issues raised by the commenters, the Commission finds good cause for approving Amendment No. 2 before the 30th day after its publication in the Federal Register. VII. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,18 that the proposed rule change (SR–NASD–2006– 073), as amended by Amendment No. 2, is approved on an accelerated basis. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.19 Nancy M. Morris, Secretary. [FR Doc. E6–19546 Filed 11–17–06; 8:45 am] BILLING CODE 8011–01–P [Release No. 34–54737; File No. SR–NSCC– 2006–10] Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Clarifying and Technical Changes to NSCC’s Rules Regarding ACATS Fund/SERV November 9, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 notice is hereby given that on September 29, 2006, the National Securities Clearing Corporation (‘‘NSCC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change described in Items I, II, and III below, which items have been prepared primarily by NSCC. NSCC filed the proposed rule change pursuant to Section 19(b)(3)(A)(i) of the Act 2 and Rule 19b–4(f)(1) thereunder 3 so that the proposal was effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested parties. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The proposed rule change would make clarifying and technical changes to NSCC’s Rules principally as they relate to funds which are eligible for processing on Fund/Serv, NSCC’s mutual fund processing system. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, NSCC 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. NSCC has prepared summaries, set forth in sections (A), (B), and (C) below, of the most significant aspects of these statements.4 U.S.C. 78s(b)(1). U.S.C. 78s(b)(3)(A)(i). 3 17 CFR 240.19b–4(f)(1). 4 The Commission has modified the text of the summaries prepared by NSCC. 2 15 19 17 Jkt 211001 SECURITIES AND EXCHANGE COMMISSION 1 15 18 15 U.S.C. 78o–3. U.S.C. 78o–3(b)(6). VerDate Aug<31>2005 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 the filing also will be available for inspection and copying at the principal office of the 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–2006–073 and should be submitted on or before December 11, 2006. PO 00000 U.S.C. 78s(b)(2). CFR 200.30–3(a)(12). Frm 00093 Fmt 4703 Sfmt 4703 67185 E:\FR\FM\20NON1.SGM 20NON1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 71, Number 223 (Monday, November 20, 2006)]
[Notices]
[Pages 67184-67185]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-19546]



[[Page 67184]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54740; File No. SR-NASD-2006-073]


Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Order Approving Proposed Rule Change and Amendment No. 1 
Thereto and Notice of Filing and Order Granting Accelerated Approval To 
Amendment No. 2 To Amend NASD Interpretive Material 2210-4 To Require 
Certain Member Firms to Provide a Hyperlink to the NASD's Internet Home 
Page

 November 9, 2006.

I. Introduction

    On June 8, 2006, the National Association of Securities Dealers, 
Inc. (``NASD'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') a proposed rule change, pursuant to Section 
19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 
19b-4 thereunder,\2\ to amend NASD Interpretive Material 2210-4 to 
require certain member firms to provide a hyperlink to the NASD's 
internet home page. NASD filed Amendment No. 1 to the proposed rule 
change on June 26, 2006.\3\ The proposed rule change, as amended, was 
published for comment in the Federal Register on July 6, 2006.\4\ The 
Commission received three comments on the proposal, as amended.\5\ On 
August 30, 2006, the NASD filed Amendment No. 2 to amend the filing and 
respond to the comment letters. This order grants accelerated approval 
of the proposed rule change, as amended by Amendment No. 2 and solicits 
comments from interested persons on Amendment No. 2.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 1 replaced and superseded the original rule 
filing in its entirety.
    \4\ See Securities Exchange Act Release No. 54058 (June 28, 
2006), 71 FR 38439 (SR-NASD-2006-073)(``Notice'').
    \5\ See letters to Nancy M. Morris, Secretary, Commission, from 
Dale Brown, CEO, Financial Services Institute, dated July 27, 2006 
(``FSI Letter'') and from Aimee Blinder, Vice President, Compliance, 
National Planning Holdings, Inc., dated July 27, 2006 (``NPH 
Letter''). See letter filed via the Commission's Web Comment Form, 
from Phyllis Hawkins, Compliance Advisor, Lincoln Investment 
Planning, Inc., dated July 27, 2006 (``Lincoln Letter'').
---------------------------------------------------------------------------

II. Description of Proposed Rule Change

    NASD proposes to amend NASD Interpretive Material (``IM'') 2210-4 
to require a member firm or a person associated with a member firm that 
refers, on its Internet Web site, to the firm's membership in NASD to 
provide a hyperlink to NASD's Web site. According to the NASD, many 
broker-dealers refer to their membership in NASD on their internet Web 
sites, often in a description of the firm or in an ``about us'' 
section. The proposed rule change would require a firm, when 
referencing NASD membership on its Web site, to include an accompanying 
hyperlink to NASD's internet home page. The proposed rule change also 
would apply to an internet Web site relating to a firm's investment 
banking or securities business that is maintained by or on behalf of 
any person associated with the firm.\6\ The proposed rule change would 
not create an independent obligation for a firm (or persons associated 
with a firm where applicable) to state that the firm is an NASD member 
on its internet Web site. The proposed rule change would apply only to 
the extent that a firm or a person associated with a firm chooses to 
represent on its Web site that the firm is a member of NASD.\7\
---------------------------------------------------------------------------

    \6\ This requirement is intended to capture, among other things, 
situations where a person associated with an NASD member firm 
maintains his own internet Web site or ``home page'' that relates to 
a member's investment banking or securities business. For example, 
NASD understands that independent contractors or their firms 
sometimes maintain a separate home page for each independent 
contractor for marketing purposes.
    \7\ The proposed rule change is similar to a rule adopted by the 
Securities Investor Protection Corporation (``SIPC''), which 
requires that its members provide a live hyperlink to SIPC's Web 
site, https://www.SIPC.org, when referring to membership in SIPC. See 
Article 11, Section 4 of SIPC Bylaws.
---------------------------------------------------------------------------

III. Summary of Comments and NASD Response

    The Commission received three comment letters on the proposed rule 
change: two were generally in favor of the proposal in its current 
form; one stated the requirement constitutes ``overkill.'' \8\ 
Specifically, one commenter stated that the failure to define the term 
``most prominent'' is likely to lead to differing interpretations and 
confusion.\9\ A second commenter requested clarification regarding the 
extent of the requirement to include a hyperlink to the NASD's Internet 
home page.\10\ They suggested that the language of the SIPC standard be 
used in the NASD interpretation in order to avoid confusion.\11\ The 
commenter also expressed concern over the effective date for 
compliance, requesting that the time frame for compliance be increased 
from 180 days to 360 days due to the tremendous number of active Web 
sites that will be affected by this requirement.\12\
---------------------------------------------------------------------------

    \8\ See Lincoln letter.
    \9\ See FSI letter.
    \10\ See NPH letter.
    \11\ Id.
    \12\ Id.
---------------------------------------------------------------------------

    In Amendment No. 2, NASD responded to the concerns raised by the 
commenters and amended the rule text. In response to the FSI Letter 
regarding the definition of the term ``most prominent,'' NASD removed 
the requirement to place the hyperlink at the ``most prominent 
indication of NASD membership.'' Instead, members will be allowed to 
place the hyperlink at any reference that is reasonably designed to 
draw the public's attention to NASD membership. With this change, NASD 
clarified that a firm subject to the proposed rule would be able to 
choose where to place a hyperlink to NASD's Web site, provided that the 
hyperlink is in close proximity to a reference to NASD membership that 
is reasonably designed to draw the public's attention to the fact that 
the firm is a member of NASD.
    In response to the NPH Letter, NASD explained that ``a legend that 
denotes that a firm is a member of NASD, would impose an obligation to 
provide a hyperlink.'' That stated, the NASD reaffirmed that a firm 
would only need to provide one hyperlink on its Web site.\13\ 
Additionally, in response to the request in the NPH Letter for more 
time to implement the proposed rule change, the NASD stated that based 
on feedback it received from several member committees, the 180 days 
should provide sufficient time for implementation of the proposed rule 
change.
---------------------------------------------------------------------------

    \13\ NASD stated that the hyperlink requirement would not apply 
to references to NASD membership in disclosure documents or other 
offering documents linked to the member firm's Web site.
---------------------------------------------------------------------------

    Finally, in response to the Lincoln Letter, NASD stated that the 
commenter appears to have misunderstood the requirements of the 
proposed rule change as a member would not be required to provide more 
than one hyperlink to the NASD's Web site.\14\
---------------------------------------------------------------------------

    \14\ See footnote 5 in the Notice, supra note 4.
---------------------------------------------------------------------------

IV. Discussion and Commission Findings

    The Commission has reviewed the proposed rule change, comment 
letters, and NASD's response and finds that the proposed rule change, 
as amended, is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to a national securities 
association.\15\ In particular, the Commission finds the proposed rule

[[Page 67185]]

change, as amended, is consistent with Section 15A of the Act.\16\ 
Specifically, the Commission finds the proposal to be consistent with 
the provisions of Sections 15A(b)(6) of the Act,\17\ 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.
---------------------------------------------------------------------------

    \15\ In approving this proposed rule change the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \16\ 15 U.S.C. 78o-3.
    \17\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

    The Commission believes that the modifications to the proposed rule 
change that NASD made in response to issues raised by commenters should 
provide sufficient guidance to allow members to satisfy the 
requirements of the rule. Moreover, the Commission believes that 
facilitating investor access to NASD's Web site should lead to better 
educated and informed investors.

V. Solicitation of Comments Concerning Amendment No. 2

    Interested persons are invited to submit written data, views, and 
arguments concerning Amendment No. 2, including whether Amendment No. 2 
to 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 (https://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NASD-2006-073 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-2006-073. 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 (https://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 the filing 
also will be available for inspection and copying at the principal 
office of the 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-2006-073 and should be submitted on or before December 11, 
2006.

VI. Accelerated Approval of Filing as Amended by Amendment No. 2

    The Commission finds good cause for approving the filing, as 
modified by Amendment No. 2 to the proposed rule change, on an 
accelerated basis. Amendment No. 2 modifies the proposal in response to 
issues raised by the commenters. Because Amendment No. 2 raises no 
novel issues, and provides improvements to the proposed rule change in 
direct response to issues raised by the commenters, the Commission 
finds good cause for approving Amendment No. 2 before the 30th day 
after its publication in the Federal Register.

VII. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\18\ that the proposed rule change (SR-NASD-2006-073), as amended 
by Amendment No. 2, is approved on an accelerated basis.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\19\
---------------------------------------------------------------------------

    \19\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Nancy M. Morris,
Secretary.
 [FR Doc. E6-19546 Filed 11-17-06; 8:45 am]
BILLING CODE 8011-01-P

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