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or otherwise in furtherance of the For the Commission, by the Division of Register on June 2, 2005.4 The purposes of the Act.12 Market Regulation, pursuant to delegated Commission received six comment authority.13 letters on the proposal, as amended.5 On IV. Solicitation of Comments Jonathan G. Katz, August 17, 2005, NASD submitted a 6 Interested persons are invited to Secretary. response to the comment letters. On submit written data, views, and [FR Doc. E5–5533 Filed 10–6–05; 8:45 am] August 18, 2005, NASD amended the BILLING CODE 8010–01–P proposed rule change (‘‘Amendment No. arguments concerning the foregoing, 7 including whether the proposed rule 2’’). This order approves the proposed rule change, as amended by change is consistent with the Act. SECURITIES AND EXCHANGE Amendment No. 1; grants accelerated Comments may be submitted by any of COMMISSION approval to Amendment No. 2; and the following methods: solicits comments from interested [Release No. 34–52544; File No. SR–NASD– persons on Amendment No. 2. Electronic Comments 2005–030] • II. Description of Proposed Rule Change Use the Commission’s Internet Self-Regulatory Organizations; NASD proposes to establish Form BR, comment form (http://www.sec.gov/ National Association of Securities a uniform branch office registration rules/sro.shtml); or Dealers, Inc.; Order Approving form developed by a working group • Send an e-mail to rule- Proposed Rule Change and composed of representatives from [email protected]. Please include File Amendment No. 1 Thereto and Notice NASD, the New York Stock Exchange, Number SR–NASD–2005–115 on the of Filing and Order Granting Inc. (‘‘NYSE’’), the North American subject line. Accelerated Approval to Amendment Securities Administrators Association No. 2 to the Proposed Rule Change Paper Comments (‘‘NASAA’’) and various states Relating to the Proposed Uniform (hereinafter referred to as the ‘‘Working • Send paper comments in triplicate Branch Office Registration Form Group’’).8 The proposed Form BR would to Jonathan G. Katz, Secretary, (‘‘Form BR’’) and Amendments to the enable firms to register branch offices Securities and Exchange Commission, Uniform Application for Securities electronically with NASD, the NYSE, Station Place, 100 F Street, NE., Industry Registration or Transfer other self-regulatory organizations Washington, DC 20549–9303. (‘‘Form U4’’) and the Uniform (‘‘SROs’’), and states, as applicable, Termination Notice for Securities through a single filing with the Central All submissions should refer to File Industry Registration (‘‘Form U5’’)  Number SR–NASD–2005–115. This file Registration Depository (‘‘CRD ,’’ the number should be included on the September 30, 2005. ‘‘CRD system,’’ or ‘‘Web CRD’’). In addition, the proposed Form BR subject line if e-mail is used. To help the I. Introduction Commission process and review your eliminates the need for Schedule E of comments more efficiently, please use On March 11, 2005, the National Association of Securities Dealers, Inc. 4 See Securities Exchange Act Release No. 51742 only one method. The Commission will (May 25, 2005), 70 FR 32386. See also Correction, post all comments on the Commission’s (‘‘NASD’’) filed with the Securities and 70 FR 48802 (August 19, 2005) (including language Internet Web site (http://www.sec.gov/ Exchange Commission (‘‘SEC’’ or inadvertently omitted from the first sentence of rules/sro.shtml). Copies of the ‘‘Commission’’), pursuant to Section footnote 3). 5 See letters from Mario DiTrapani, President, submission, all subsequent 19(b)(1) of the Securities Exchange Act 1 Association of Registration Management, dated June amendments, all written statements of 1934 (‘‘Act’’) and Rule 19b–4 22, 2005 (‘‘ARM Letter’’); Michael Pagano, Chief 2 with respect to the proposed rule thereunder, a proposed rule change to Compliance Officer, 1st Global, dated June 23, 2005 change that are filed with the adopt the Uniform Branch Office (‘‘1st Global Letter’’); Sandra T. Masek Ray, CRCP, Registration Form (‘‘Form BR’’) 3 and to Executive Vice President/Chief Compliance Officer, Commission, and all written Rhodes Securities, Inc., dated June 23, 2005 communications relating to the make conforming changes to the (‘‘Rhodes Letter’’); Robert S. Rosenthal, Vice proposed rule change between the Uniform Application for Securities President & Chief Legal Officer, MML Investors Services, Inc., dated June 23, 2005 (‘‘MML Letter’’); Commission and any person, other than Industry Registration or Transfer (‘‘Form U4’’) and the Uniform Termination Franklin L. Widmann, President and Chief, New those that may be withheld from the Jersey Bureau of Securities, North American public in accordance with the Notice for Securities Industry Securities Administrators Association, Inc., dated Registration (‘‘Form U5’’). On May 12, July 12, 2005 (‘‘NASAA Letter’’); and Carl B. provisions of 5 U.S.C. 552, will be Wilkerson, Vice President & Chief Counsel, available for inspection and copying in 2005, NASD amended the proposed rule change (‘‘Amendment No. 1’’). Securities & Litigation, American Council of Life the Commission’s Public Reference Insurers, dated June 23, 2005 (‘‘ACLI Letter’’). In Room. Copies of such filing also will be The proposed rule change, as addition, the Commission received a comment amended by Amendment No. 1, was letter on SR–NASD–2005–012, a filing dealing with available for inspection and copying at published for comment in the Federal the same substance but that had been rejected by the principal office of the NASD. All the Commission. The letter raised a number of comments received will be posted technical concerns which have been addressed by 13 17 CFR 200.30–3(a)(12). without change; the Commission does the NASD or will be addressed during the 1 15 U.S.C. 78s(b)(1). implementation phase for Form BR. not edit personal identifying 2 17 CFR 240.19b–4. 6 See letter from Shirley H. Weiss, Associate information from submissions. You 3 At the request of the NASD, the Commission General Counsel, NASD, to Katherine A. England, should submit only information that staff has made corrections to the title of the Form Assistant Director, Division, Commission, dated you wish to make available publicly. All BR, which was inadvertently shown in the initial August 17, 2005 (‘‘NASD Response Letter’’). filing and Amendment No. 2 to the filing, see infra 7 See discussion of Amendment No. 2 in Section submissions should refer to File note 7, as ‘‘Uniform Branch Office Form.’’ II, Description of Proposed Rule Change, infra. Number SR–NASD–2005–115 and Telephone conversation between Richard Pullano, 8 The NYSE also filed a proposed rule change to should be submitted on or before Associate Vice President/Chief Counsel, adopt the Form BR, which is substantially similar October 28, 2005. Registration and Disclosure, NASD, Elizabeth to NASD’s proposal. The Commission is Badawy, Accountant, Division of Market Regulation simultaneously approving the NYSE’s proposed (‘‘Division’’), Commission, and Kate Robbins, rule change. See Securities Exchange Act Release 12 See Section 19(b)(3)(C) of the Act, 15 U.S.C. Attorney, Division, Commission, on September 20, No. 52543 (September 30, 2005) (SR–NYSE–2005– 78s(b)(3)(C). 2005. 13).

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the Uniform Application for Broker- enhancements would enable registered Section 3—Types of Activities/Other Dealer Registration (‘‘Form BD’’), the persons to submit the name of the Business Names/Websites current NYSE Branch Office branch office(s) with which they are Application Form, and certain state associated via the Form U4. Firms Section 3 would collect information branch office forms.9 would be able to obtain a report via Web with respect to the types of financial The Working Group derived the CRD that would list individuals who are industry activities conducted by the applicant and any investment-related majority of questions on the proposed currently associated with a branch or activities conducted by associated Form BR from questions currently on who were associated with a branch one or more of the existing branch office persons at the branch location. Section during a specific time period. Regulators forms and added questions to elicit 3 also would ask for the names being also would be able to obtain reports that additional information that it believed used by any associated person to would be of regulatory value to SROs would list branch offices within a firm conduct investment-related activities at and states. To the extent possible, the as well as registered individuals in the branch office other than those names proposed Form BR uses the same terms those branches. NASD also proposes to disclosed on the applicant’s Form BD or as those used in existing uniform make certain conforming and technical Uniform Application for Investment forms.10 changes to the current Form U4 and Adviser Registration (‘‘Form ADV’’). The proposed Form BR is only one Form U5. Section 3 also would ask for the website component of a broader project Highlights of the Proposed Form BR addresses used by the branch office regarding the registration of branch other than the applicant’s primary Web offices through the CRD system. NASD There are nine sections of the site address. is planning enhancements to the CRD proposed Form BR, as described below. Section 4—Branch Office Arrangements system to coincide with the The Form BR would permit applicants implementation of Form BR that would (i.e., firms) to: (1) Apply for approval of Consistent with questions currently enable firms to designate, and users to or report a branch office (an ‘‘initial’’ identify, the branch office(s) in which a asked on Schedule E of the Form BD, filing); (2) amend information registered person works. These Section 4 of the proposed Form BR previously reported (an ‘‘amendment’’ would elicit information on branch 9 Currently, broker-dealers register or report filing); (3) terminate a branch office office arrangements, including space branch offices or other business locations on registration (a ‘‘closing’’ filing); or (4) sharing arrangements and liability for Schedule E of the Form BD. NYSE member firms withdraw an initial filing before expenses. Section 4 would not require are required to submit the NYSE Branch Office approval by a jurisdiction or SRO (a applicants to report insurance agency Application Form to register a branch office with the NYSE. In addition, Connecticut, Florida, ‘‘withdrawal’’ filing). agreements with the main office Nevada and Vermont have separate branch office pursuant to which the branch operates. forms that request similar information for firms Section 1—General Information seeking to register a branch office in those states. Section 5—Associated Individuals 11 Moreover, more than 20 states require broker- Section 1 would report the applicant’s dealers to submit a ‘‘notice filing’’ when a firm CRD number, name, address, billing Section 5, which would have to be opens or closes a branch office. code, branch address, and telephone completed only for initial branch office With the implementation of Form BR, the NYSE would retire the current NYSE Branch Office number. NASD would pre-populate the registration filings, would ask for the Application Form. Seven states, Connecticut, applicant’s CRD number, name, and names and CRD numbers of registered Florida, Maine, Nevada, Texas, Vermont and West address. persons associated with a branch.12 Virginia, also have indicated that they plan to use Individuals identified by the firm in this the Form BR. Other jurisdictions that currently Section 2—Registration/Notice Filing/ require ‘‘notice filings’’ for branch openings and section would populate a dynamic closings, including Alabama, Alaska, Hawaii, Idaho, Type of Office ‘‘branch roster’’ of registered persons in Indiana, Illinois, Kansas, Michigan, New Mexico, Web CRD, which would be made Ohio, Rhode Island, South Dakota, Tennessee and Section 2 would ask the applicant to available to firms. Once the branch has Wisconsin, have indicated that they also expect to state where the branch would be use the Form BR. Telephone conversation between been established, changes to the branch John Veator, Director, Regulatory User Liaison, registered (or notice filed), the type of roster would automatically be made NASD, Elizabeth Badawy, Accountant, Division, branch office registration, and whether through Web CRD when: (1) The ‘‘Office Commission and Kate Robbins, Attorney, Division, it would be an NASD Office of of Employment Address’’ question on Commission, on September 20, 2005. Supervisory Jurisdiction (‘‘OSJ’’). If it is The Division has granted no-action relief the Form U4 is amended when an indicating that it will not recommend enforcement not an OSJ, the applicant would be individual leaves a branch for another action to the Commission under Rules 15b1–1, required to provide the CRD branch branch; or (2) the Form U5 is filed when 15b3–1, 15Ba2–2, and 15Ca2–1 under the Act for number, or firm billing code, for the OSJ an individual leaves a firm. Firms broker-dealers that file the Form BR, and do not complete Schedule E, or file amendments to that has supervisory responsibility over would be able to print a report, among Schedule E, of the Form BD, as of the date on which the branch and the CRD number of the other reports, that would list registered the transition to the Form BR begins and the CRD supervisor in charge of that OSJ. individuals who are currently no longer accepts Schedule E filings, which is currently anticipated to be October 15, 2005. See Consistent with the concept of a associated with a branch, or who were letter from Catherine McGuire, Chief Counsel, uniform form, Section 2 of the proposed associated with the branch during a Division, Commission, to Patrice M. Gliniecki, Form BR would give applicants the specific time period. This functionality Senior Vice President and Deputy General Counsel, should facilitate firms’ compliance with NASD, dated September 30, 2005. opportunity to designate whether the 10 The ‘‘Explanation of Terms’’ section of branch office filing is being made on proposed Form BR would include definitions of behalf of a broker-dealer (‘‘BD’’), an 11 NASD notes that the title of Section 5— additional terms used in the context of branch investment adviser (‘‘IA’’), or both. This ‘‘Associated Individuals’’—refers to registered office registration and reporting, such as ‘‘closing,’’ individuals who are associated with the particular ‘‘person-in-charge,’’ ‘‘regular branch,’’ ‘‘small feature would enable firms to register or branch office. Applicants would not be required to branch,’’ ‘‘supervisor,’’ and ‘‘withdrawal.’’ The report IA branches in states that require report the names of associated persons who are not NYSE made slight modifications to the definitions such registration and reporting. Section registered. of ‘‘small branch’’ and ‘‘regular branch’’ that were 12 Firms would be required to enter the CRD published in NASD’s Notice to Members 04–55 to 2 also would ask for NYSE Small number, and then the name would populate in the conform to its interpretive materials. Branch information. field.

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one of the requirements contained in Section 8—Branch Withdrawal be more appropriately placed on the 13 SEC Rule 17a–4(l). Firms would be required to complete Form U4. Section 6—NYSE Branch Information Section 8 only upon withdrawal of a In addition, NASD is proposing pending application. Information in this changes to the Specific Instructions on Only firms registered with the NYSE section would include the date of the Forms U4 and U5 to reflect the would be able to view and would be withdrawal, the reason for withdrawal, proposed changes to the forms. NASD is required to complete Section 6. The and the name and telephone number of proposing other technical changes to the proposed Form BR would incorporate the contact person. Forms U4 and U5 as well. Specifically, the information elicited on the NYSE’s NASD proposes to: (1) Add to the Forms Section 9—Signature current Branch Office Application Form U4 and U5 registration categories that and Office Space-Sharing Form. The Section 9 would be the signature the Commission has previously CRD system would interact with the page. The language on the signature approved; 16 (2) reorganize the NYSE’s branch office system on NYSE page would be consistent with the electronic filing representations on the branch office registration filings. current attestations on the Form U4 and Form U4, Section 6 (Regulatory The NYSE’s current protocol for the Form BD. Requests with Affiliated Firms) for requesting approval for new branch Conforming and Technical Changes to submitting a fingerprint for registration offices would continue with the Forms U4 and U5 with an affiliated firm, so that the proposed Form BR. NYSE members representations would follow a more would use Form BR to request such NASD is proposing conforming logical order (the content of the approvals, and the information provided changes to the Forms U4 and U5 to fully representations would not change) and by NYSE members would be transmitted integrate the branch office registration modify the Specific Instructions to the NYSE, which, in turn, would and reporting process through the CRD regarding the same; (3) amend the communicate its determinations (e.g., system. First, NASD is proposing Forms U4 and U5 to reflect the change approvals) to the requesting NYSE firms changes to the ‘‘Office of Employment in name of the Cincinnati Stock through the CRD system. Address’’ to parallel the information Exchange (CSE) to the National Stock reported on the Form BR, and to ensure Exchange (NSX); 17 and (4) add new Section 7—Branch Closing the accuracy and integrity of the link instructions on the Form U5 explaining between registered representatives and the circumstances under which the Section 7 would be completed by a their branches. When completing the ‘‘Office of Employment Address’’ would firm only upon the closing of a branch Form U4, the firm/individual would be be pre-populated. office registered with a jurisdiction or asked to select the branch office(s) from an SRO. Information in Section 7 would which the registered person will work Making the Transition to Form BR include the date operations ceased, or based on the list of branch offices NASD expects that the effective date will cease, the location of the branch’s identified by the firm (through the filing of the proposed rule change will be books and records, and the name and of Forms BR). Once the registered October 31, 2005. NASD plans to telephone number of the contact person. locations are selected, CRD would announce the effective date of the Because branch offices located close populate the ‘‘Office of Employment proposed rule change, along with a to state borders often move from one Address’’ on the General Information timetable for the transition to the Form state to another, the proposed Form BR screen on the Form U4 for each BR, in a Notice to Members to be and the CRD system have been designed registered person with the following published no later than 30 days to accommodate such moves through data elements based on information following Commission approval. amendment filings. Specifically, a firm reported on the Form BR: CRD Branch would be able to file a single Form BR Number, NYSE Branch Code Number, NASD has designated October 15, amendment that would both close the address, and start and end dates. The 2005 through October 30, 2005 as a branch in one state and register or Form U5 would display the same ‘‘lock-out’’ period for the CRD system, notice file the branch in another state information.15 If the individual is not during which time NASD would help that also has a registration or notice located at a registered branch office, the firms with branch offices in existence as filing requirement. The Specific firm must enter the business address of of the close of business on October 14, Instructions and notifications (the latter the location at which the individual is 2005 to register these offices. During the triggered by the state address change) in employed and the location from which ‘‘lock-out’’ period, NASD would create Section 1 (General Information) and the individual is supervised. a ‘‘conversion’’ Form BR on the CRD Section 2 (Registration/Notice Filing/ NASD is also proposing to add a system for all branch offices in existence Type of Office) would advise applicants question to the Form U4 to elicit as of the close of business on October that the amendment has both changed whether the individual has an 14, 2005. NASD would assign a unique the branch address to another state and independent contractor relationship branch CRD number to each of these closed the branch in the first state. In with the firm. Information regarding branches and pre-populate the addition, the amendment would serve independent contractors currently is ‘‘conversion’’ Forms BR with limited as a request to open a branch in the state elicited on Schedule E of Form BD. The information for each of these to which the branch has moved if it is Working Group initially proposed to a state that requires registration or include this question on the Form BR 16 See Securities Exchange Act Release Nos. notice filing of branches.14 but subsequently decided that the 50162 (August 6, 2004), 69 FR 50406 (August 16, 2004) (SR–NASD–2004–078) (Research Analyst (RS) independent contractor question would and Research Principal (RP)) and 49922 (June 28, 13 17 CFR 240.17a–4(l). SEC Rule 17a–4(l) 2004), 69 FR 40701 (July 6, 2004) (SR–PCX–2003– requires certain records for the most recent two-year 15 NASD states that it would remove from the 51) (Pacific Exchange positions Market Maker (44), period to be maintained at the office to which they Forms U4 and U5 the Specific Instructions and Floor Broker (45), and Market Maker acting as a relate. form fields that currently require reporting of Floor Broker (46)). 14 NASD states that it would view a change in information that would be provided via Form BR 17 See Securities Exchange Act Release No. 48774 location simply as an amendment filing, not a and would pre-populate the appropriate fields on (November 12, 2003), 68 FR 65332 (November 19, request to open a new branch. the Forms U4 and U5. 2003) (SR–CSE–2003–12).

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branches.18 During this ‘‘lock-out’’ automatically update the ‘‘branch discussed many of the benefits of Form period, the CRD system would not roster’’ of registered persons in Web BR. Three commenters indicated that accept any branch office forms or CRD.20 The ‘‘branch roster’’ would be the Form BR would eliminate amendments via any of the current made available to firms. duplicative or redundant filings; 24 one forms or Form BR. of these commenters noted that Form Starting on October 31, 2005, the new Amendment No. 2 BR would still provide regulators with branch office functionality would be In Amendment No. 2, NASD: (1) pertinent information,25 and another available in the CRD system. Beginning Indicated that it expects that October 31, noted that it would promote on that date, firms with branch offices 2005 will be the effective date of the efficiency.26 Another commenter also in existence before the close of business proposed rule change, and that the praised the efficiencies that would on October 14, 2005 could: (1) Complete Notice to Members announcing the result from Form BR, including the data fields for each ‘‘conversion’’ effective date (to be published no later ‘‘registration of both state and NASD Form BR created by NASD during the than 30 days following Commission branch offices through CRD, centralized ‘‘lock-out’’ period; and (2) file through approval) will provide the timetable for fee collection and on-line work CRD the completed Forms BR. the transition to the Form BR; (2) queues.’’ 27 Two commenters indicated In addition, firms would be able to replaced the ‘‘Making the Transition to that the Form BR would improve data amend Forms U4 to assign each Form BR’’ subsection of the ‘‘Purpose’’ accuracy.28 One of these commenters registered person to a registered branch section in its entirety; (3) modified the felt that a single filing would reduce the office. Firms could assign registered ‘‘Conforming Changes to Forms U4 and number of clerical oversights,29 while persons to branches by means of either U5’’ discussion in the ‘‘Purpose’’ section the other thought that the cross-checks individual Form U4 filings or an with respect to (i) Changes to the of filings in the CRD system would serve electronic file transfer (i.e., a ‘‘batch’’ ‘‘Office of Employment Address’’ to improve the accuracy of the data.30 filing) established exclusively for this section of the Form U4, (ii) reporting The latter commenter also stated that purpose. independent contractor relationships on Form BR will assist regulators by Firms with branch offices in existence the Form U4, (iii) the procedures to be allowing them to generate reports about before the close of business on October followed if an individual is not located branch offices and, since it will link 14, 2005 would have until May 1, 2006 at a registered branch office, and (iv) the registered persons to branches, will to comply with the Form BR and Form effective date of the proposed rule allow regulators to better track U4 filing requirements for those branch change; (4) clarified in footnote 10 that complaints to branches.31 offices. Therefore, by May 1, 2006, these the referenced report concerns Of the commenters who voiced firms would have to have: (1) registered individuals; and (5) made support for the proposal, two of the Completed and filed the ‘‘conversion’’ other minor edits to the proposal, commenters supported the proposed Form BR for each such branch; and (2) including technical, non-substantive rule change without qualification.32 As with respect to the registered persons changes to the proposed Form BR, discussed below, the other four employed by such branches, amended modifications to Sections 1 and 6 and commenters expressed concerns about all applicable Forms U4 to assign these related Specific Instructions on the the proposed form.33 registered persons to the branch office(s) Form U4 and modifications to Sections One of the commenters’ main (or other locations) from which they 1 and 6 and related Specific Instructions concerns was the potential increase in 34 work. and other technical, non-substantive costs and administrative burden. A Starting on October 31, 2005, firms changes to the Form U5. commenter stated that ‘‘a more would have to file a Form BR to register reasonable amount of information any new branch office opened on or III. Comment Summary and NASD should be included on the Form BR that after October 15, 2005.19 Once a firm Response Letter would result in less of an administrative has filed a Form BR, the new branch As noted above, the Commission burden for broker-dealers.’’ 35 Another would be established on the CRD received 6 comment letters with respect commenter stated that ‘‘the complexity system, and CRD would automatically to the proposed rule change.21 NASD of the proposed Form BR is extremely populate the ‘‘Office of Employment filed a response letter to address burdensome and solicits information Address’’ of the Form U4 for each concerns raised by the commenters.22 beyond that necessary to register a person identified in Section 5 Most of the commenters generally branch office,’’ and requested that (Associated Individuals) of the Form supported uniform electronic BR. Individuals identified in this registration of branch offices through initiative will result in any enhancement to any 23 objective related to customer protection,’’ and section would populate a dynamic the CRD system. The commenters indicated that ‘‘two things are necessary before this ‘‘branch roster’’ of registered persons in initiative becomes one that it can support.’’ See 1st CRD. Thereafter, firms would be 20 Article V, Section 2 of the NASD By-Laws Global Letter, supra note 5. required to submit amended Forms U4 requires amendments to the Form U4 to be filed 24 See ARM Letter, Rhodes Letter and NASAA to assign additional registered persons within 30 days after learning of the facts or Letter, supra note 5.  circumstances giving rise to the amendment. The 25 See ARM Letter, supra note 5. to the branch, and CRD would ‘‘Specific Instructions’’ for completing the Form U4, 26 See NASAA Letter, supra note 5. as amended, address procedures for updating the 27 See MML Letter, supra note 5. 18 Form U4 to include all branch office addresses at NASD noted that the conversion process would 28 See ARM Letter and NASAA Letter, supra note  which the individual is employed. download the following data in CRD or the 5. 21 See supra note 5. Investment Adviser Registration Depository 29 See ARM Letter, supra note 5. (IARDSM), as well as data provided from the NYSE 22 See NASD Response Letter, supra note 6. 30 See NASAA Letter, supra note 5. and participating states: Branch Address, CRD 23 One commenter stated that it ‘‘strongly 31 Id. Branch Number, NYSE Branch Code Number, supports the efforts of NASD and other working 32 NASD/NYSE Supervisor/Person-In-Charge Name group members to integrate branch office See Rhodes Letter and NASAA Letter, supra and CRD Number, Operational Status, and NYSE/ registration into the CRD in order to create note 5. Jurisdiction Registration Status. efficiencies for member firms,’’ however, the 33 See ARM Letter, 1st Global Letter, MML Letter 19 Article IV, Section 8 of the NASD By-Laws commenter later stated that it ‘‘cannot support the and ACLI Letter, supra note 5. requires firms to report the opening of a branch Form BR as it is currently proposed.’’ See MML 34 See 1st Global Letter, MML Letter and ACLI office not later than 30 days after the branch is Letter, supra note 5. Another commenter noted that Letter, supra note 5. opened. ‘‘[w]e see no viable explanation for how this 35 See 1st Global Letter, supra note 5.

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‘‘more information be made available NASD’s proposed rule change regarding One commenter suggested that regarding the workflow and data the definition of branch office.’’ 43 Section 3 be eliminated in its entirety maintenance that would be required of However, the Commission notes that, in ‘‘since the information is beyond that firms before the Form BR is fact, the Form BR is predicated upon a needed to register a branch office and finalized.’’ 36 One of the commenters uniform branch office definition and because business activities at a branch stated that the proposed Form BR is views the two rule filings to operate in location, use of DBA names and duplicative of Schedule E of Form BD concert. Additionally, the NASD has websites are already subject to and, ‘‘[w]ithout a formal SEC action delayed the effective date of the branch regulatory compliance.’’ 50 Additionally, eliminating Schedule E,’’ the Form BR, office definition until early 2006 to the commenter recommended that ‘‘would exacerbate administrative allow firms a smooth transition to the Section 4 be eliminated or changed to burdens.’’ 37 NASD responded to Form BR and associated filing protocols apply only to OSJs since ‘‘requiring this comments regarding the burdensome before making the new definition information for all locations where a nature of the proposed Form BR by effective.44 registered representative is located will reiterating the benefits of the Form BR Furthermore, some of the commenters cause an undue burden on firms to and the enhancements to the CRD voiced concerns about the specific provide complete, accurate information system, including making the sections of the form. One of the and to monitor any type of change to registration process more efficient and commenters requested that the fields such operations.’’ 51 NASD responded to allowing regulators and firms to obtain requiring the branch telephone number these comments by indicating that it reports showing branch offices within a and facsimile number be removed believes that the information being firm and the registered individuals in because ‘‘they are unnecessarily elicited by these questions has 38 each branch office. burdensome to enter and maintain.’’ 45 significant regulatory value and that the Two of the commenters were Another commenter indicated a need for questions should be retained.52 concerned about the effect of the multiple firm billing code fields to One commenter firmly disagreed with adoption of the proposed ‘‘branch the requirement that the Form BR be 39 allow the entry of more than one billing office’’ definition on the instant code per branch, noting that ‘‘different signed, and noted that ‘‘neither the proposal, indicating that the new supervisors (those running different current NYSE Branch Office definition would greatly increase the businesses in a single location) would Application nor the amendment of number of branch offices that had to be Schedule E of Form BD require 40 likely possess different ‘billing codes’,’’ registered on Form BR. One of these and that ‘‘a scenario could exist wherein signature. * * *’’ 53 The commenter commenters indicated that NASD’s a single office being managed by a single stated that ‘‘[r]equiring a signature on proposed branch office definition would individual will have more than one Form BR is taking a step backwards and have a ‘‘significantly disproportionate billing code.’’ 46 The commenter is tantamount to suggesting that the impact on broker-dealers affiliated with suggested that, if necessary, this change person submitting the filing is not life insurers.’’ 41 The same commenter be made as an enhancement after the accountable for the accuracy of the data also expressed concern that the NASD Form BR is initially implemented so contained in that filing.’’ 54 proposal ‘‘does not evaluate the that NASD can maintain its planned NASD responded that the Working burdensome economic impact’’ of the rollout schedule. One of the Group ‘‘believes that the integrity of the proposed 30-day time frame for commenters recommended that data to be reported on the proposed amendments to the Form BR, and stated ‘‘supervisor information be limited to Form BR requires an attestation that the that, ‘‘[t]he sheer number of offices and one person who would be the primary statements are ‘current, true and filings that would need updates on a 55 supervisor * * *,’’ 47 while another complete.’’’ NASD further indicated very short time horizon is daunting commenter applauded the NASD for that the signature requirement on Form ***’’ 42 NASD responded to allowing for multiple supervisors at a BR is consistent with the signature comments regarding the proposed single office location.48 NASD requirements on the Forms U4 and branch office definition by stating that responded by indicating that it plans to U5.56 ‘‘the proposed Form BR is not linked to maintain the current implementation One commenter discussed the schedule but that it would ask the placement of a question regarding an 36 See MML Letter, supra note 5. NASD indicated Working Group ‘‘to consider modifying individual’s status as an independent that this commenter is an insurance-affiliated contractor, which was added to the broker-dealer. See NASD Response Letter, supra the Form BR to permit a single branch note 6. office to report multiple billing Form U4 and removed from the 37 See ACLI Letter, supra notes 5 and 9. codes.’’ 49 originally proposed Form BR in 38 See NASD Response Letter, supra note 6. response to comments received in 39 The Commission recently approved the response to NASD’s Notice to Members 43 See NASD Response Letter, supra note 6. NASD’s and the NYSE’s proposed definition of 04–55 published in August 2004.57 The ‘‘branch office.’’ See Securities Exchange Act NASD also indicated that it was addressing the Release Nos. 52403 (September 9, 2005), 70 FR impact of the proposed branch office definition in commenter urged that ‘‘the independent 54782 (September 16, 2005) (SR–NASD–2003–104) a separate rule filing, SR–NASD–2003–104. As contractor question be placed in a and 52402 (September 9, 2005), 70 FR 54788 noted above, NASD’s proposed branch office section of Form U4 that does not require (September 16, 2005) (SR–NYSE–2002–34). definition has been approved by the Commission. See supra note 39. 40 See 1st Global Letter and ACLI Letter, supra 44 50 See MML Letter, supra note 5. note 5. One of these commenters also stated that it See Securities Exchange Act Release No. 52403 51 Id. was ‘‘premature’’ to publish Form BR for comment (September 9, 2005), 70 FR 54782 (September 16, 52 given the uncertainty surrounding the definition of 2005) (SR–NASD–2003–104). Telephone conversation between Shirley branch office. See ACLI Letter, supra note 5. 45 See MML Letter, supra note 5. Weiss, Associate General Counsel, NASD, Elizabeth 46 Badawy, Accountant, Division, Commission, and 41 See ACLI Letter, supra note 5. NASD indicated See ARM Letter, supra note 5. Kate Robbins, Attorney, Division, Commission, on in its response letter that both of these commenters 47 See MML Letter, supra note 5. This commenter September 22, 2005. were concerned about the effect of the proposed further noted that, once the supervisor’s CRD 53 Form BR on the insurance industry. The number is entered, the field for the supervisor’s See ARM Letter, supra note 5. Commission notes that, according to its review, name could be populated from the supervisor’s 54 Id. only the ACLI Letter specifically addressed the Form U4. Id. 55 See NASD Response Letter, supra note 6. impact on the insurance industry. 48 See ARM Letter, supra note 5. 56 Id. 42 Id. 49 See NASD Response Letter, supra note 6. 57 See ARM Letter, supra note 5.

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a registered representative signature so amendments, all written statements single form, Form BR, will make the as to avoid triggering a [NASD] Rule with respect to the proposed rule branch office registration process more 3080 notification,’’ 58 and that NASD change that are filed with the efficient by eliminating duplicative should ‘‘set a ‘no’ default to the Commission, and all written forms and questions and reconciling response to that question’’ so that, when communications relating to the inconsistencies among existing forms, the independent contractor question is proposed rule change between the while retaining or adding questions that added to the Form U4, every registered Commission and any person, other than elicit information that will be of person will not immediately have an those that may be withheld from the regulatory value to SROs and states, as incomplete Form U4.59 public in accordance with the well as the Commission. The NASD responded by confirming that provisions of 5 U.S.C. 552, will be conforming and technical changes to the the independent contractor question available for inspection and copying in Form U4 and the Form U5 will also will be located in a section of the Form the Commission’s Public Reference ensure that the information elicited by U4 that does not require a registered Room. Copies of the filing also will be such forms is of regulatory value to person’s signature if amended.60 With available for inspection and copying at SROs and states. In this regard, the regard to the request for a ‘‘no’’ default the principal office of the NASD. All Commission believes that, by response to the independent contractor comments received will be posted significantly streamlining the branch question, NASD indicated that it would without change; the Commission does office registration process, such not set a default response but that it not edit personal identifying regulatory coordination and cooperation would allow member firms to provide information from submissions. You should result in an effective and the answers to the independent should submit only information that efficient regulation that will serve the contractor question as part of a ‘‘batch’’ you wish to make available publicly. All entire broker-dealer community. data file that firms will be able to submit submissions should refer to File The Commission also supports to assign registered persons to Number SR–NASD–2005–030 and established branch offices.61 should be submitted on or before NASD’s planned enhancements to the October 28, 2005. CRD system, which will coincide with IV. Solicitation of Comments the implementation of the Form BR, that V. Discussion and Commission’s will enable registered persons to submit Interested persons are invited to Findings submit written data, views, and via the Form U4 the name of the branch arguments concerning Amendment No. After careful consideration of the office(s) with which they are associated. 2, including whether Amendment No. 2 proposed rule change, the comment From this information, firms and is consistent with the Act. Comments letters, and NASD’s responses to the regulators will be able to generate may be submitted by any of the comment letters, the Commission finds reports showing, for example, the following methods: that the proposed rule change, as individuals who are currently amended, is consistent with the associated with a branch, or were Electronic Comments requirements of the Act and the rules associated with a branch during a • Use the Commission’s Internet and regulations thereunder applicable to specific time period. The Commission comment form (http://www.sec.gov/ a national securities association.62 The believes that this is an important rules/sro.shtml); or Commission believes that the proposed improvement to the CRD database and • Send an e-mail to rule- rule change is consistent with Section will allow regulators to gather [email protected]. Please include File 15A(b) of the Act,63 in general, and information and deploy examination Number SR–NASD–2005–030 on the furthers the objectives of Section resources more efficiently. The subject line. 15A(b)(6),64 in particular, in that it is enhancements to the CRD system also designed to prevent fraudulent and will serve to reconcile inconsistencies Paper Comments manipulative acts and practices, to in the CRD database, thereby • Send paper comments in triplicate promote just and equitable principles of improving data integrity, via cross- to Jonathan G. Katz, Secretary, trade, to foster cooperation and checks between the Form BR and the Securities and Exchange Commission, coordination with persons engaged in corresponding sections of the Form U4. 100 F Street, NE., Washington, DC regulating, clearing, settling, processing Finally, the Commission believes it is 20549–9303. information with respect to, and reasonable for NASD to implement the All submissions should refer to File facilitating transactions in securities, to Number SR–NASD–2005–030. This file remove impediments to and perfect the proposed Form BR pursuant to the number should be included on the mechanism of a free and open market schedule set forth by NASD. The subject line if e-mail is used. To help the and a national market system, and in creation of ‘‘conversion’’ Forms BR for Commission process and review your general, to protect investors and the branch offices already in existence public interest. before the launch of the branch office comments more efficiently, please use  only one method. The Commission will The Commission supports NASD, the functionality in CRD should allow for post all comments on the Commission’s NYSE, and state securities regulators’ a smooth transition to the new branch Internet Web site (http://www.sec.gov/ joint regulatory effort to develop a office registration system. In addition, rules/sro.shtml). Copies of the uniform branch office registration form the transition will be facilitated by submission, all subsequent that will enable firms to register branch NASD’s allowing firms to make ‘‘batch’’ offices electronically with NASD, the filings to assign registered persons to 58 Id. NASD notes that ‘‘NASD Rule 3080 requires NYSE, other SROs and states. The branch offices, thereby amending certain disclosures regarding the predispute Commission believes that utilizing a multiple registered persons’ Forms U4 arbitration clause contained in the Form U4 to be with one filing. Furthermore, the six- made whenever an associated person is asked to 62 In approving this proposed rule change, the month period for firms to complete the sign a new or amended Form U4.’’ See NASD Commission has considered the proposed rule’s Forms BR for such branch offices and Response Letter, supra note 6. impact on efficiency, competition, and capital 59 See ARM Letter, supra note 5. formation. 15 U.S.C. 78c(f). amend the Form U4 for each registered 60 See NASD Response Letter, supra note 6. 63 15 U.S.C. 78o–3(b). person should give firms ample time to 61 Id. 64 15 U.S.C. 78o–3(b)(6). comply with their filing requirements.

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Accelerated Approval of Amendment SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s No. 2 COMMISSION Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule The Commission finds good cause for Change approving Amendment No. 2 to the [Release No. 34–52550; File No. SR–NYSE– proposed rule change prior to the 2005–64] 1. Purpose thirtieth day after the amendment is On August 12, 2005, the Exchange published for comment in the Federal Self-Regulatory Organizations; New York Stock Exchange, Inc.; Notice of filed with the Commission a proposed Register pursuant to Section 19(b)(2) of rule change relating to NYSE Rule 65 Filing of Proposed Rule Change to Add the Act. Amendment No. 2 clarified: 103.12,3 which requires specialists and Rules Regarding Time Tracking (1) The effective date of the proposed specialist organizations to record and Requirements of Specialists and rule change and the process for report the actual time individuals spend transitioning to Form BR; (2) the Specialist Organizations to Its Minor working as a specialist or clerk while on description of conforming changes to be Rule Violation Plan the trading floor of the Exchange. NYSE made to Forms U4 and U5; and (3) the October 3, 2005. Rule 103.12 requires specialists and description of the reports that will be specialist member organizations to make able to be generated in the CRD system. Pursuant to Section 19(b)(1) of the and keep, in the regular course of Amendment No. 2 also included other Securities Exchange Act of 1934 business, records of the times that each minor edits, including technical, non- (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 of the member organization’s specialists substantive changes to the proposed notice is hereby given that on and clerks work in such capacities on Form BR, modifications to Sections 1 September 22, 2005, the New York the floor. The specialists and specialist and 6 and related Specific Instructions Stock Exchange, Inc. (‘‘NYSE’’ or member organizations must be able to on the Form U4, and modifications to ‘‘Exchange’’) filed with the Securities provide such records to the Exchange Sections 1 and 6 and related Specific and Exchange Commission within the time frame and in a format Instructions and other technical, non- (‘‘Commission’’) the proposed rule determined by the Exchange. In substantive changes to the Form U5. change as described in Items I, II, and addition, NYSE Rule 103.12 requires The Commission believes that III below, which Items have been specialists and clerks to log in to the Amendment No. 2 provides for a clearer prepared by the Exchange. The Exchange’s IDTrack system and register understanding of the implementation Commission is publishing this notice to their presence with respect to specialty schedule of the proposed Form BR, the stocks in which they are working. The proposed changes to Forms U4 and U5, solicit comments on the proposed rule change from interested persons. IDTrack system provides reports and and the new functionality in the CRD information pertaining to specialist and system and notes that the technical and I. Self-Regulatory Organization’s clerk activity to the Exchange’s Division clarifying changes made to the Form BR Statement of the Terms of Substance of of Market Surveillance and to specialist and Forms U4 and U5 raise no new the Proposed Rule Change firms. issues of regulatory concern. NYSE Rule 103.12 allows the Accordingly, the Commission believes The Exchange proposes to amend Exchange to more accurately track the that accelerated approval of NYSE Rule 476A in order to include identity of specialists and their clerks Amendment No. 2 is appropriate. NYSE Rule 103.12, which relates to time and the times when each specialist and tracking requirements of specialists and clerk act in such capacities while on the VI. Conclusion specialist organizations, in its Minor floor. This proposed rule change seeks For the foregoing reasons, the Rule Violation Plan. The text of the to add NYSE Rule 103.12 to NYSE Rule Commission finds that the proposed proposed rule change is available on the 476A’s Supplementary Material, List of rule change, as amended, is consistent Exchange’s Internet Web site (http:// Exchange Rule Violations and Fines with the requirements of the Act and www.nyse.com), at the Exchange’s Applicable Thereto Pursuant to Rule rules and regulations thereunder principal office, and at the 476A, as an enforcement tool. applicable to a national securities Commission’s Public Reference Room. NYSE Rule 476A provides that the association, and, in particular, Section Exchange may impose a fine, not to 15A(b)(6) of the Act.66 II. Self-Regulatory Organization’s exceed $5,000, on any member, member It is therefore ordered, pursuant to Statement of the Purpose of, and organization, allied member, approved Section 19(b)(2) of the Act,67 that the Statutory Basis for, the Proposed Rule person, or registered or non-registered proposed rule change (SR–NASD–2005– Change employee of a member or member organization for a minor violation of 030), as amended by Amendment No. 1, In its filing with the Commission, the is hereby approved and that certain specified Exchange rules. NYSE Exchange included statements Amendment No. 2 thereto is hereby Rule 476A’s procedures for the concerning the purpose of, and basis for, approved on an accelerated basis. imposition of fines are designed to the proposed rule change and discussed provide meaningful sanctions for certain For the Commission, by the Division of any comments it received on the rule violations when the initiation of a Market Regulation, pursuant to delegated proposed rule change. The text of these authority.68 formal disciplinary procedure under statements may be examined at the NYSE Rule 476 would be more costly Jonathan G. Katz, places specified in Item IV below. The and time consuming than would be Secretary. Exchange has prepared summaries, set warranted given the minor nature of the [FR Doc. E5–5534 Filed 10–6–05; 8:45 am] forth in sections A, B, and C below, of violation or when the violation calls for BILLING CODE 8010–01–P the most significant aspects of such a stronger response than an admonition statements. letter. The Exchange believes that 65 15 U.S.C. 78s(b)(2). 66 15 U.S.C. 78o–3(b)(6). 3 See Securities Exchange Act Release No. 52251 67 15 U.S.C. 78s(b)(2). 1 15 U.S.C. 78s(b)(1). (August 12, 2005), 70 FR 48790 (August 19, 2005) 68 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4. (SR–NYSE–2005–47).

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