SRO Rulemaking: SR- NASD- 9. SECURITIES AND EXCHANGE COMMISSION. Release No. SR- NASD- 9. February 7, 2. 00. Self- Regulatory Organizations; Order Granting Approval to Proposed Rule Change by the National Association of Securities Dealers, Inc. Relating to Amendments to the Public Disclosure Program. I. Introduction. On September 1. National Association of Securities Dealers, Inc. Notice of the proposal was published in the Federal Register on December 2. The Commission received no comment letters on the filing and this order approves the proposal. Description of the Proposal. NASD Regulation proposes to amend certain aspects of the PDP in an effort to make the operation of the PDP clearer and fairer to NASD members, associated persons, and the public. The PDP is described in Interpretive Material 8. NASD Rules (. Under the PDP, NASD Regulation discloses to the public certain information regarding employment history, other business experience, and disciplinary history of NASD members and associated persons. NASD Regulation uses information reported on the uniform forms. Central Registration Depository (. One of the primary purposes of the PDP is to help investors make informed choices about the individuals and firms with whom they may wish to do business. Although the NASD currently releases information about current or former members and associated persons, the Interpretation does not explicitly address the issue of disclosure regarding former members and associated persons. Under NASD Regulation's proposal, the firms or persons subject to disclosure through the PDP will be: (1) current and former NASD members; (2) persons currently associated with an NASD member; and (3) persons who have been associated with an NASD member within the preceding two years. This two- year disclosure period coincides with the period in which an individual can return to the industry without being required to requalify by examination and the initial period in which an individual remains subject to the jurisdiction of the Association. Clarification of the . In 1. 99. 6, the Commission approved a rule change that permitted the NASD to release information . The rule change allowed the NASD to release all of the information that it possessed that was . The current Interpretation does not, however, explicitly address events and proceedings reported on Form U- 5 or Form U- 6. NASD Regulation presently interprets the . For example, a former employer of a currently registered representative may report a customer complaint against that registered representative by amending his Form U- 5.
NASD Regulation includes information about this complaint in any public disclosure report it issues about the registered representative, even if the current employer of the registered person has not updated his Form U- 4 to reflect the complaint. Consequently, when NASD Regulation receives a public disclosure request about a former associated person or member, NASD Regulation releases all information reported to CRD up to the date of the termination of association or membership. However, events and proceedings reported on an initial or amended Form U- 5 or Form BDW,9 or on Form U- 6 after an individual has terminated his association or after termination of a firm's membership, are not released under the PDP. If a former associated person or member reapplies and is approved for NASD registration or membership, NASD Regulation resumes public disclosure under the . Among other things, NASD Regulation believes that the information reported on Form U- 6 is highly reliable because it is filed by state securities regulators and self- regulatory organizations (. NASD Regulation, however, does not currently release information that has been reported on a Form U- 5 regarding former registered persons and does not propose any change to this policy. This information is already available to the public pursuant to NASD arbitration rules. PDP receives this information from the NASD's Office of Dispute Resolution. Further, the proposed rule change clarifies that NASD Regulation will not release information through the PDP that it is otherwise prohibited from releasing under Federal law, e. Federal Bureau of Investigation. Through the Public Disclosure Program (PDP). Note that the Interim Form BD is being implemented on a prospective basis. A PUBLICATION OF THE NASD REGULATION CRD/PUBLIC DISCLOSURE DEPARTMENT VOLUME 6/NO. PRIVACY POLICY We are a NASD registered fixed income Broker / Dealer spe-. NASD Regulation’s web site at www.nasdr.com or via the. Public Disclosure Program is available to you upon request. The criminal history information that is released through the PDP is the information provided by the associated person or the member on the uniform forms. NASD Regulation occasionally receives requests to expunge an event from CRD where the person who was the subject of the CRD filing can demonstrate to the NASD's satisfaction that it was factually impossible for him to have been involved in the event (e. NASD Regulation and the North American Securities Administrators Association (. To access the information, call the. Public Disclosure NASD Regulation, Inc. Brochure Availability NASD Regulations Public Disclosure Program. However, NASD Regulation believes that obtaining a court order can be time- consuming and expensive. Further, NASD Regulation believes that information that can be proven to be factually incorrect should be expunged from the CRD system without a court order and is discussing this issue with NASAA. Until an agreement is reached with NASAA on expunging factually incorrect information from the CRD system, NASD Regulation will discontinue releasing this information via the PDP. NASD Regulation plans to develop guidelines to implement this policy. Currently, when NASD Regulation receives a public disclosure request, NASD Regulation staff reviews the CRD record of the subject of the request, identifies events that must be disclosed under the Interpretation, and manually prepares a summary report for the requester. Under the proposal, NASD Regulation will discontinue the manual preparation of these reports and instead use a computer program that automatically generates a report after drawing information directly from the Web CRD database. The report then will be sent by regular or electronic mail to the requester. In the future, NASD Regulation may develop electronic notices that would appear on the electronic screen when forms are being completed on- line advising Web CRD users of this issue. NASD Regulation plans to undertake a continuing program to educate members and registered persons on this issue. After receiving an objection, NASD Regulation will identify the filer (i. NASD Regulation will provide the filer with the opportunity to amend the filing to remove the language in controversy. If the filer determines not to amend, NASD Regulation will apply a balancing test to weigh the value of the language in controversy for regulatory and investor protection purposes against the objector's asserted privacy rights and/or defamation claims. Based on the outcome of this test, NASD Regulation may determine to redact the language in controversy from reports prepared under the PDP. NASD Regulation will inform any requester of a report that has been redacted of the reasons for the redaction. NASD Regulation staff anticipates that objections to disclosure will be infrequent. If objections are more frequent than anticipated, NASD Regulation staff will consider alternative approaches. Discussion. The Commission finds that the proposal is consistent with the requirements of Section 1. A of the Act. 14 and the rules and regulations thereunder that govern the NASD. In particular, the Commission finds that the proposal is consistent with Section 1. A(b)(6) of the Act. Under the PDP, NASD Regulation will now release information contained on the Form U- 6, which contains disciplinary and other information provided by SROs and state regulators. This information should help investors determine whether to conduct or continue to conduct business with a particular firm or individual. Further, the disclosure of this additional information may serve as a deterrent to fraudulent activity. For example, NASD Regulation has clarified its policy about the release of information on a former associated person. Under the proposed rule change, NASD Regulation will release information on a former associated person for a two- year period after the associated person's effective date of termination. This clarification helps balance an investor's interest in obtaining information about a former associated person with the former associated person's interest in privacy. For investors, the automation of public disclosure reports should help them receive information in a timelier manner, which in turn should help them make quicker decisions about the individuals and firms with whom they choose to do business. For the NASD, the automation of public disclosure reports should help it reduce its costs in providing these reports to the public. Katz. Footnotes. 11. U. S. C. 7. 8s(b)(1). CFR 2. 40. 1. 9b- 4. See Securities Exchange Act Release No. December 1. 6, 1. FR 7. 21. 25 (File No. SR- NASD- 9. 9- 4. The uniform forms are Form BD (the Uniform Application for Broker- Dealer Registration); Form BDW (the Uniform Request for Broker- Dealer Withdrawal); Form U- 4 (the Uniform Application for Securities Industry Registration or Transfer); Form U- 5 (the Uniform Termination Notice for Securities Industry Registration); and Form U- 6 (the Uniform Disciplinary Action Reporting Form). Except for the Form U- 6, the Commission has approved all of these forms. See Securities Exchange Act Release No. July 2, 1. 99. 9), 6. FR 3. 75. 86 (July 1. Form BD); Securities Exchange Act Release No. April 3. 0, 1. 99. FR 2. 51. 44 (May 1. Form BDW); Securities Exchange Act Release No. June 2. 5, 1. 99. FR 3. 60. 59 (July 2, 1. Forms U- 4 and U- 5). See NASD Rules 1. NASD By- Laws Article V, Section 4. Article V, Section 4 of the By- Laws provides that a person whose association with a member has been terminated or revoked shall continue to be subject to the NASD's jurisdiction for certain specified purposes. Under that provision, the two- year period begins on the effective date of the termination, and may be extended under certain circumstances. For purposes of disclosure under the PDP, the two- year period would begin on the effective date of the termination and would not be extended beyond the initial two- year period.
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