Brokers on Military Active Duty

Hey everyone, GREAT NEWS!!!  Looks like we all joined together in a positive way to get the NASD to issue some much needed (and requested) clarification.  I think we have all shown that there are times when self regulation still works.  Job well done to all.  And a special thanks to Registered Rep. Magazine’s Forum for making this effort possible.

 

 

FOR RELEASE:
CONTACTS: Wednesday, July 27, 2005
Nancy Condon (202) 728-8379
Herb Perone (202) 728-8464

 

NASD Acts to Clarify, Expand Regulatory Relief For Associated Persons on Active Military Duty

 

Washington, D.C. — NASD announced today it will file rule amendments to clarify and expand the scope of relief from NASD rules provided to securities industry professionals actively serving in the Armed Forces of the United States.

 

Since the Sept. 11, 2001, terrorist attacks, NASD has provided tailored regulatory relief to registered industry professionals who volunteer for, or were called into, active military duty. NASD currently permits firms to place a registered representative on "inactive" status, which excuses the representative from continuing education obligations, waives dues and assessments, and ensures that the representative is not subject to the two-year expiration period for securities licenses of individuals who terminate their associations with registered firms. Additionally, NASD has informed firms that registered persons serving in the Armed Forces may continue to receive transaction-related compensation, provided that they do not perform any functions of a registered person while on inactive status.

 

In response to continuing questions from firms, NASD will propose amendments to NASD rules that will:

Clarify that the scope of the active military duty relief extends to registered principals as well as to registered representatives. 

Codify prior guidance that a registered person on active military duty remains eligible to receive transaction-related compensation, including continuing commissions, because he or she remains registered with a firm while on inactive status. The amendments will expressly state that an employing firm may allow a registered person on inactive status to enter into an arrangement with another person registered with the employing firm to service his or her accounts and to share in commissions generated by those accounts.  A person on inactive status may not perform any duties of a registered person. 

Clarify that the relief provided to an inactive registered person is available to that person during the period he or she remains registered with the employing firm - regardless of whether that individual goes to work for a different firm upon completion of his or her active military duty.

Allow a registered person on inactive status who ceases to be registered with a firm to ask NASD to stop the clock on the two-year expiration period for securities licenses during the time he or she was on active duty but not registered with a firm.  

    Allow a formerly registered person who volunteers for or is called into active duty at any time within two years from the date his or her registration was terminated to request that NASD stop the clock on the two-year expiration period for securities licenses during the period he or she was on active duty. 

NASD will submit formal proposal for these rule amendments to the SEC in the near future.

 

Investors can obtain more information about, and the disciplinary record of, any NASD-registered broker or brokerage firm by using NASD's BrokerCheck.  NASD makes BrokerCheck available at no charge to the public.  In 2004, members of the public used this service to conduct more than 3.8 million searches and request almost 190,000 reports for existing brokers or firms.  Investors can link directly to BrokerCheck at www.nasdbrokercheck.com.  Investors can also access this service by calling (800) 289-9999.

 

NASD is the leading private-sector provider of financial regulatory services, dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services.  NASD touches virtually every aspect of the securities business - from registering and educating all industry participants, to examining securities firms, enforcing both NASD rules and the federal securities laws, and administering the largest dispute resolution forum for investors and member firms.  For more information, please visit our Web site at www.nasd.com.