March 2006 Archives
Intermarket Surveillance Group Issues Notice Regarding Deadline for Validations of Electronic Blue Sheet Reporting
On March 30, 2006, the SRO members of the Intermarket Surveillance Group (ISG) issued ISG Regulatory Memorandum 2006-01 regarding the deadline for completing the mandatory validation of electronic blue sheet (EBS) reporting systems. The ISG previously issued ISG Regulatory Memorandum 2005-01, which required that broker-dealers conduct and complete a validation of all required EBS data to ensure that EBS transmissions are consistent with current standards and accurately reflect broker-dealers’ books and records. The deadline for completion of the validation is March 31, 2006.
DOL Extends Filing Deadline for Initial LM-10
Last week, the Department of Labor (DOL) announced an extension of the filing deadline for initial LM-10 reports and issued additional guidance concerning employer LM-10 reporting obligations under the Labor-Management Reporting and Disclosure Act (LMRDA or Act), 29 U.S.C. §§ 401 et seq. Employers with fiscal years ending December 31 now have until May 15, 2006 to submit their initial LM-10 reports to the DOL. Reports filed by this date will be considered “timely” for purposes of the DOL’s previously announced grace period.
NASD Postpones Effective Date of Amended Definition of Branch Office and IM-3010-1
On March 10, the NASDfiled with the SEC a proposed rule change that postpones the effective date of (i) amendments to the definition of "branch office" and (ii) IM-3010-1, which provides guidance on factors to be considered by members when conducting internal office inspections. The proposed rule change, which was effective on filing with the SEC, postpone the effective date of the amendments and IM-3010-1 from May 1, 2006 to July 3, 2006.
NASD Files Proposal Regarding Submission of Supervisory Controls Reports to Board of Directors and Audit Committee
On March 7, 2006, NASD filed a proposed rule change with the SEC to amend IM-3013, which provides guidance regarding the CEO certification requirements of NASD Rule 3013. Under NASD Rule 3013, each member firm’s CEO or equivalent officer must certify annually that the member has in place processes to establish, maintain, review, modify, and test policies and procedures reasonably designed to achieve compliance with applicable NASD rules, MSRB rules and the federal securities laws. Among other things, IM-3013 provides that the CEO must certify that the member firm’s processes are “evidenced in a report reviewed by the chief executive officer (or equivalent officer), chief compliance officer, and such other officers as the Member may deem necessary to make this certification, and submitted to the Member’s board of directors and audit committee.”
Department of Labor Provides a No Enforcement Period for LM-10 Filings
The Department of Labor (“DOL”) issued the attached advisory effectively extending the Form LM-10 filing deadline by 45 days (from March 31, 2006 to May 15, 2006) for employers with fiscal years ending on December 31, 2005 who are filing reports covering calendar year 2005. In the advisory, the DOL provides that although it has no authority to grant extensions of statutory filing deadlines, it can, pursuant to its enforcement discretion, agree to not take enforcement action with respect to late filings.
SEC Proposes Amendments to Redemption Fee Rule
On February 28, the Securities and Exchange Commission (SEC) proposed amendments to Rule 22c-2 under the Investment Company Act of 1940. In addition to permitting mutual funds to charge redemption fees, Rule 22c-2 provides that a mutual fund may not allow redemption of its shares within seven days of purchase unless the fund (or its principal underwriter) has entered into a written agreement with each of its “financial intermediaries” under which the intermediary agrees: (1) to provide the identity of and transaction information about shareholders who hold their shares through the intermediary, and (2) to restrict or prohibit purchases or exchanges by shareholders whose trading violates the fund’s restrictions on short-term trading. These agreements are known as information-sharing agreements.