Last Voting Date: February 16, 1996
Executive Summary
The NASD invites members to vote on proposed amendments to the NASD By-Laws that will require members to file electronically Forms U-4, U-5, and BD and amendments thereto. These amendments also establish time periods for when such filings must be made. Ballots must be postmarked no later than February 16, 1996.
Text of the amendment follows this Notice.
Background
Since 1992, the NASD has undertaken an extensive redesign effort to improve the Central Registration Depository (CRDSM) and to move toward total electronic filing of registration-related forms. The central focus of the redesign effort is to provide efficient, reliable, effective state-of-the-art systems and procedures at reasonable cost to support licensing and regulation of the securities industry. Implementation of mandatory electronic filing will eliminate delays in processing information in hard copy. Currently scheduled for pilot phase during February 1996, the redesigned CRD will offer efficient processing of registration-related filings and user-friendly access to information in those filings for all industry and regulatory participants. A detailed discussion of the CRD implementation plan appears in Membership On Your Side, Vol. 4, No. 5, December 1995. (Copies of this issue may be obtained by contacting your assigned Quality & Service Team.)
The revisions to the By-Laws include amendments that require filers to submit information on Forms U-4, U-5, and BD electronically. The impact of this requirement on smaller member firms with limited access and form-filing needs was considered by the NASD Board of Governors. The Board addressed this concern by providing all firms with the option to contract with third-party service bureaus to handle the filings with the CRD. Member firms can choose for themselves based on their needs whether to file information electronically themselves by acquiring the necessary hardware and software and training their registration staff or to do so via a third-party service bureau. The NASD Membership Department is working with vendors and service bureaus to make sure they are prepared to provide this service to members.
Specific By-Laws provisions that currently require filers to use "forms" or provide "written notification" are changed to require filing forms electronically. The provisions that refer to the filer obligations to keep applications "current" have been revised to set out more specific requirements including specific time frames (usually 30 days) for the filing of information. In addition, NASD membership eligibility criteria are amended to require firms to file electronically. Firms who fail to comply with the electronic filing requirement may be subject to suspension or cancelation of membership.
Request For Vote
The NASD Board of Governors believes the proposed amendments will provide a more efficient and reliable system for the filing of required forms and amendments thereto. Please mark the attached ballot according to your convictions and mail it in the enclosed, stamped envelope to The Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware, 19801. Ballots must be postmarked no later than February 16, 1996.
Questions regarding this Notice may be directed to Craig L. Landauer, Associate General Counsel, Office of General Counsel, at (202) 728-8291.
For Member Vote-Text Of Proposed Amendments To The By-Laws
(Note: New language is shown by xxx; deletions are bracketed.)
NASD BY-LAWS
ARTICLE II QUALIFICATIONS OF MEMBERS AND ASSOCIATED PERSONS
Sec. 1 and Sec. 2 No change.
Sec. 3 Ineligibility of Certain Persons for Membership or Association
(a) No registered broker, dealer, municipal securities broker or dealer, or government securities broker or dealer shall be admitted to membership, and no member shall be continued in membership, if such broker, dealer, municipal securities broker or dealer, or government securities broker or dealer, or member fails or ceases to satisfy the qualification requirements under Section 2 of this Article, if applicable, or if such broker, dealer, municipal securities broker or dealer or government securities broker or dealer, or member is or becomes subject to a disqualification under Section 4 of this Article[.] or if such member fails to comply with the requirement that all forms filed pursuant to these By-Laws be filed via electronic process or such other process the Corporation may prescribe.
(b) through (f) No change.
Sec. 4 No change.
ARTICLE III MEMBERSHIP
Sec. 1 Application for Membership
(a) Application for membership in the Corporation, properly signed by the applicant, shall be made to the Corporation via electronic process or such other process the Corporation may prescribe, on the form to be prescribed by the Corporation, and shall contain:
(b) and (c) No change.
(d) Each member shall ensure that its membership application with the Corporation is kept current at all times by supplementary amendments via electronic process or such other process the Corporation may prescribe to the original application. Such amendments to the application shall be filed with the Corporation not later than thirty (30) calendar days after learning of the facts or circumstances giving rise to the amendment.
Sec. 2 No change.
Sec. 3 Executive Representative
Each member shall appoint and certify to the Secretary of the Corporation one "executive representative" who shall represent, vote and act for the member in all the affairs of the Corporation, except that other executives of a member may also hold office in the Corporation, serve on the Board of Governors or committees of the Corporation, or otherwise take part in the affairs of the Corporation. A member may change its executive representative upon giving [written] notice thereof via electronic process or such other process the Corporation may prescribe to the Secretary, or may, when necessary, appoint, by [written] notice via electronic process to the Secretary, a substitute for its executive representative. An executive representative of a member or a substitute shall be a member of senior management and registered principal of the member.
Sec. 4 No change.
Sec. 5 Resignation of Members
Membership in the Association may be voluntarily terminated only by formal resignation. Resignations of members must be filed via electronic process or such other process the Corporation may prescribe [in writing] and addressed to the Corporation which shall immediately notify the appropriate District Committee. Any member may resign from the Corporation at any time. Such resignation shall not take effect until thirty (30) calendar days after the receipt thereof by the Corporation and until all indebtedness due the Corporation from such member shall have been paid in full and so long as any complaint or action is pending against the member under the Code of Procedure. The Corporation, however, may in its discretion declare a resignation effective at any time.
Sec. 6 and Sec. 7 No change.
Sec. 8 Registration of Branch Offices
(a) No change.
(b) Each member of the Corporation shall promptly advise the Corporation via electronic process or such other process the Corporation may prescribe of the opening, [or] closing, relocation, change in designated supervisor or change in designated activities of any branch office of such member not later than thirty (30) calendar days after the effective date of such change.
Sec. 9 and Sec. 10 No change.
ARTICLE IV REGISTERED REPRESENTATIVES AND ASSOCIATED PERSONS
Qualification Requirements
Sec. 1 No change.
Sec. 2
(a) Application by any person for registration with the Corporation, properly signed by the applicant, shall be made to the Corporation
via electronic process or such other process the Corporation may prescribe, on the form to be prescribed by the
Corporation [Board of Governors] and shall contain:
(1) through (3) No change.
(b) No change.
(c) Every application for registration filed with the Corporation shall be kept current at all times by supplementary amendments via electronic process or such other process the Corporation may prescribe to the original application. Such amendments to the application shall be filed with the Corporation not later than thirty (30) calendar days of learning of the facts or circumstances giving rise to the amendment. If such amendment involves a statutory disqualification as defined in Section 3(a)(39) and Section 15(b)(4) of the Act, such amendment shall be filed not later than ten (10) calendar days after such disqualification occurs.
Sec. 3 Notification by Member to Corporation and Associated Person of Termination; Amendment to Notification
(a) Following the termination of the association with a member of a person who is registered with it, such member shall [promptly, but] not [in no event] later than thirty (30) calendar days after such termination, give [written] notice of the termination of such association to the Corporation [Association] via electronic process or such other process the Corporation may prescribe on a form designated by the Corporation [Board of Governors], and concurrently shall provide to the person whose association has been terminated a copy of said notice as filed with the Corporation [Association]. A member which does not submit such notification [in writing], and provide a copy to the person whose association has been terminated, within the time period prescribed shall be assessed a late filing fee as specified by the Corporation [Board of Governors]. Termination of registration of such person associated with a member shall not take effect so long as any complaint or action under the Code of Procedure is pending against a member and to which complaint or action such person associated with a member is also a respondent, or so long as any complaint or action is pending against such person individually under the Code of Procedure. The Corporation, however, may in its discretion declare the termination effective at any time.
(b) The member shall notify the Corporation [Association] via electronic process or such other process the Corporation may prescribe [in writing] by means of an amendment to the notice filed pursuant to paragraph (a) above in the event that the member learns of facts or circumstances causing any information set forth in said notice to become inaccurate or incomplete. Such amendment shall be filed with the Corporation [Association] via electronic process or such other process the Corporation may prescribe and a copy provided to the person whose association with the member has been terminated not later than thirty (30) calendar days after the member learns of facts or circumstances giving rise to the amendment.
