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Recent News for 2007

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1. FINRA Regulatory Notice 07-65
   December 26, 2007 - FINRA Amends NYSE Rule 409(f) (Statements of Accounts to Customers) to Eliminate the Requirement to Include the Name of the Securities Market on which a Transaction is Effected - Effective January 1, 2008, Dual Member firms will not be required to disclose the name of the securities market on which the transaction was effected on confirmations or reports as required under NYSE Rule 409(f). This change makes permanent the temporary relief that was granted in March 2007 and extended until January 1, 2008.
   Date posted: 12/26/2007
2. FINRA Regulatory Notice 07-62
   December 12, 2007 - Revisions to the Series 23, 24, 42, 55, 62, 72 and 82 Examination Programs; Implementation Date: February 12, 2008 - FINRA has revised the following examination programs: General Securities Principal Sales Supervisor Module (Series 23); General Securities Principal (Series 24); Limited Representative – Options (Series 42); Limited Representative – Equity Trader (Series 55); Limited Representative – Corporate Securities (Series 62); Limited Representative – Government Securities (Series 72); and Limited Representative – Private Securities Offerings (Series 82). The changes are reflected in the study outlines on FINRA’s Web site at www.finra.org/brokerqualifications/exams. The changes will appear in examinations starting on February 12, 2008.
   Date posted: 12/14/2007
3. FINRA Regulatory Notice 07-59
   December 12, 2007 - FINRA Provides Guidance Regarding the Review and Supervision of Electronic Communications - In June 2007, FINRA (then NASD and NYSE Member Regulation) issued for comment proposed guidance regarding the review and supervision of electronic communications. FINRA received 16 comment letters, with a majority of commenters supporting the guidance.
   Date posted: 12/12/2007
4. SEC Final Rule: Release No. 33-8869
   December 6, 2007 - Revision to Rules 144 and 145 - Rule 144 under the Securities Act of 1933 creates a safe harbor for the sale of securities under the exemption set forth in Section 4(1) of the Securities Act. We are shortening the holding period requirement under Rule 144 for “restricted securities” of issuers that are subject to the reporting requirements of the Securities Exchange Act of 1934 to six months. Restricted securities of issuers that are not subject to the Exchange Act reporting requirements will continue to be subject to a one-year holding period prior to any public resale. The amendments also substantially reduce the restrictions applicable to the resale of securities by non-affiliates.
   Date posted: 12/6/2007
5. SEC Final Rule: Release No. 34-56914
   December 6, 2007 - Shareholder Proposal Relating to the Election of Directors - The Securities and Exchange Commission is publishing this adopting release to codify the meaning of Rule 14a-8(i)(8) under the Securities Exchange Act of 1934. Rule 14a-8 provides shareholders with an opportunity to place certain proposals in a company’s proxy materials for a vote at an annual or special meeting of shareholders. Subsection (i)(8) of the Rule permits exclusion of certain shareholder proposals related to the election of directors. The Commission is adopting an amendment to Rule 14a-8(i)(8) to provide certainty regarding the meaning of this provision in response to a recent court decision.
   Date posted: 12/6/2007
6. CBOE Regulatory Circular RG07-128
   November 21, 2007 - Continuing Education Firm Element Advisory - The Securities Industry/Regulatory Council on Continuing Education ("Council") publishes a Firm Element Advisory ("FEA"), as a guide for members or member organizations to utilize when developing their continuing education Firm Element Training for covered registered persons and their supervisors. The Council has updated the FEA for firms to use in identifying topics to include in their Firm Element Training. Topics added to the FEA since the prior publication.
   Date posted: 11/23/2007
7. FINRA Regulatory Notice 07-56
   November 19, 2007 - Securities Industry/Regulatory Council on Continuing Education Issues Firm Element Advisory Update - This Notice advises firms of the fourth quarter 2007 Securities Industry/Regulatory Council on Continuing Education Firm Element Advisory, which identifies regulatory and sales practice topics that firms should consider in their Firm Element training plans. Topics updated or added since the prior Advisory are indicated in the document as such. The updated Firm Element Advisory is available at www.cecouncil.com/publications/ council_publications/FEA_2007_Semi_Annual_Update.pdf.
   Date posted: 11/20/2007
8. FINRA Regulatory Notice 07-55
   November 14, 2007 - FINRA Reminds Member Firms of Their Obligations Regarding Background Investigations of Prospective Personnel - A critical part of the hiring process in the securities industry is the background investigation of prospective personnel. For instance, background investigations can help member firms determine whether a prospective employee is subject to a statutory disqualification or whether he or she may present a regulatory risk for the firm and customers. It is essential for firms to understand their obligations with respect to background investigations. As such, this Notice reminds member firms of their obligations under FINRA rules.
   Date posted: 11/15/2007
9. FINRA Regulatory Notice 07-53
   November 6, 2007 - SEC Approves New NASD Rule 2821 Governing Deferred Variable Annuity Transactions - On September 7, 2007, the SEC approved new NASD Rule 2821 regarding broker-dealers' compliance and supervisory responsibilities for deferred variable annuities.1 The rule text is set forth in Attachment A and is effective May 5, 2008.
   Date posted: 11/12/2007
10. NYSE Information Memo 07-107
    Novemver 9, 2007 - NYSE Rule 92 - Customer Consent and Frequently Asked Questions - The purpose of this Information Memo is: (i) to provide additional guidance with respect to the recent amendment to NYSE Rule 92(b), which permits obtaining blanket consent to trade along with a customer’s order, but does not prevent a member organization from obtaining customer consent under Rule 92(b) on an order-by-order basis using the pre-amendment express consent procedures, and (ii) to answer frequently asked questions about amended Rule 92. The NYSE has filed this Information Memo with the SEC for immediate effectiveness.
    Date posted: 11/12/2007
11. FINRA Regulatory Notice 07-50
    October 29, 2007 - SEC Approves Amendments to NASD Rule 11870 and NYSE Rule 412 to Conform with NSCC's ACATS Transfer Cycle Time Frames - The SEC approved amendments to NASD Rule 11870 and NYSE Rule 412 to make the time frames in the rules for validating or taking exception to an instruction to transfer a customer's securities account assets and for completing the transfer of the assets consistent with the time frames in the NSCC Automated Customer Account Transfer Service (ACATS) transfer cycle.
    Date posted: 10/30/2007
12. FINRA Regulatory Notice 07-49
    October 26, 2007 - Guidance for Firms Affected by the California Wildfires - In light of the tragic situation resulting fromthe recent California wildfires, FINRA wants to assure those firms with offices in the affected areas that we will work closely with you as you recover.While we recognize your first priority is the well being of your family, employees and customers, we also understand that some firms are concerned with a number of regulatory and compliance issues. In this regard, FINRA is providing guidance on a variety of topics, including emergency office relocations, continuing education requirements for registered personnel, registered personnel engaged inmilitary duty, books and records, the handling of customers’ funds and securities and customer communication.
    Date posted: 10/26/2007
13. October 15 - NASAA Headline - Coordinated Examinations Identify Investment Adviser Deficiencies
    October 15, 2007 - Coordinated Examinations Identify Investment Adviser Deficiencies - State Securities Regulators Update Best Practices to Help Advisers Strengthen Compliance Procedures - NASAA today released an updated series of recommended best practices that investment advisers should consider in order to improve their compliance practices and procedures.
    Date posted: 10/25/2007
14. SIFMA Releases Amended and Restated Money Market Trading Practice Guidelines
    October 23, 2007 – SIFMA Releases Amended and Restated Money Market Trading Practice Guidelines - The Securities Industry and Financial Markets Association (SIFMA) today released amended and restated Money Market Guidelines (the “Guidelines”) adopted and approved by the SIFMA Money Market Executive Committee as of October 23, 2007. These Guidelines supersede and replace the Money Market Trading Practice Guidelines dated October 8, 1996 (the “1996 Guidelines”).
    Date posted: 10/25/2007
15. CBOE Regulatory Circular RG07-107
    October 11, 2007 - Elimination of Grandfather Provision of Regulation SHO - The SEC has amended Regulation SHO to eliminate the grandfather provision effective October 15, 2007 (SEC Rule 203(B)(3)(i).1 In order to accommodate the transition, market participants that have any grandfathered fails in a threshold security as of the effective date will have 35 settlement days to close out. If the position is not closed out within those 35 days, the clearing firm and the broker-dealers for whom it clears may not accept any short sale orders or effect further short sales in the particular threshold security without borrowing, or entering into a bona-fide arrangement to borrow, the security until the participant closes out the entire fail position. This 35-day period is a one-time phase in period. If a security becomes a threshold security after the effective date of the amendment, any fails (whether established before or after the threshold date) would be subject to the 13-day close out requirement.
    Date posted: 10/12/2007
16. CBOE Regulatory Circular RG07-99
    September 24, 2007 - Recordkeeping Obligations regarding Memoranda for Purchases or Sales - The Exchange’s Member and Regulatory Services Division is issuing this Regulatory Circular to remind members of their recordkeeping obligations for handwritten order records.
    Date posted: 9/26/2007
17. MSRB Notice 2007-29
    September 25, 2007 - MSRB Publishes Interpretive Letter Relating to Payments to Non-Political Accounts of Political Organizations Under Rule G-37 - The Municipal Securities Rulemaking Board has published an interpretive letter relating to Rule G-37, on political contributions and prohibitions on municipal securities business, with respect to payments to non-political accounts of political organizations. The text of the interpretive letter is included below. Questions regarding the interpretive letter may be directed to Ernesto A. Lanza, Senior Associate General Counsel, Jill C. Finder, Associate General Counsel, or Ronald W. Smith, Senior Legal Associate.
    Date posted: 9/26/2007
18. NFA Notice I-07-38
    September 24, 2007 - Regulatory Reminder: Associated Persons Registration Requirements - Over the last few years, NFA has found during examinations that certain individuals employed by Member firms should be registered as associated persons ("APs"), but are not. These individuals are either employed in a capacity that involves the solicitation or acceptance of customer orders or in the supervision of other persons so engaged. Additionally, these individuals may be listed principals of these Member firms either due to an ownership interest in the firm or by virtue of their title at the firm. For example, in a recent Member Responsibility Action, In re Renaissance Asset Management, a listed principal with the title "Chief Executive Officer" was not also registered as an AP despite the fact that he was in the firm's supervisory chain over another AP and involved in the solicitation and acceptance of customer orders.
    Date posted: 9/26/2007
19. NASAA Headlines - September 10, 2007
    September 10, 2007 - "Free Lunch" Investment Seminar Examinations Uncover Widespread Problems, Perils for Older Investors - WASHINGTON, D.C.-- During a Seniors Summit held today at the Securities and Exchange Commission, securities regulators released a joint report summarizing the results of their examinations of "free lunch" investment seminars.
    Date posted: 9/26/2007
20. NASAA Headline - September 10, 2007
    September 10, 2007 - State Securities Regulators Issue Senior Investor Alert - NASAA says retirees and those nearing retirement remain vulnerable as they manage a lifetime of savings - WASHINGTON, D.C.—The North American Securities Administrators Association (NASAA) today issued a Senior Investor Alert warning that retirees and those nearing retirement can face serious traps as they manage the savings they have accumulated throughout their working years.
    Date posted: 9/26/2007
21. SEC Final Rule - Release No. 34-56502
    September 24, 2007 - Exemptions for Banks Under Section 3(a)(5) of the Securities Exchange Act of 1934 and Related Rules - The SEC is adopting rules and rule amendments regarding exemptions from the definitions of "broker" and "dealer" under the Securities Exchange Act of 1934 ("Exchange Act") for banks’ securities activities. In particular, the Commission is adopting a conditional exemption that will allow banks to effect riskless principal transactions with non-U.S. persons pursuant to Regulation S under the Securities Act of 1933 ("Securities Act").
    Date posted: 9/26/2007
22. FINRA Regulatory Notice 07-45
    September 21, 2007 - Amendments to NASD Rule 3210 to Conform with Amendments to the SEC's Regulation SHO Delivery Requirements - FINRA is issuing this Notice to advise firms and other interested parties of changes to NASD Rule 3210 (Short Sale Delivery Requirements) to conform with amendments to the SEC's Regulation SHO delivery requirements.
    Date posted: 9/24/2007
23. FINRA Regulatory Notice 07-43
    September 10, 2007 - FINRA Reminds Firms of Their Obligations Relating to Senior Investors and Highlights Industry Practices to Serve these Customers - One of FINRA's priorities is the protection of senior investors, as well as Baby Boomers who are at or approaching retirement. FINRA's efforts in this area include investor education, member education and outreach, examinations and enforcement. The purpose of this Notice is to urge firms to review and, where warranted, enhance their policies and procedures for complying with FINRA sales practice rules, as well as other applicable laws, regulations and ethical principles, in light of the special issues that are common to many senior investors. The Notice also highlights, for the consideration of FINRA's member firms, a number of practices that some firms have adopted to better serve these customers.
    Date posted: 9/11/2007
24. FINRA Regulatory Notice 07-42
    September 7, 2007 - SEC Approves NASD Rule 1160 Regarding Firm Contact Information - Effective December 31, 2007, new NASD Rule 1160 (Contact Information Requirements) streamlines the review and verification of contact information and eliminates the requirement that member firms review and update certain designated contact information on a quarterly basis. The new rule requires firms to update designated contact information promptly upon any material change, verify such information annually and comply promptly with any request for such information.
    Date posted: 9/10/2007
25. FINRA Regulatory Notice 07-41
    September 6th, 2007 - Member Firms are Reminded to Register with FINRA Associated Persons Who Also are Registered with Another SRO in a FINRA-Recognized Registration Category - FINRA reminds member firms that when an associated person of a member is registered with another SRO in a registration category recognized by FINRA, the member must register such person in that category with FINRA.
    Date posted: 9/7/2007

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