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Microcap & Penny Stocks : Zia Sun(zsun)
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To: Sir Auric Goldfinger who wrote (4297)9/20/1999 2:15:00 PM
From: Coachman  Read Replies (2) of 10354
 
Auric: Are you sure?

My interpretation of the rule is that Swiftrade is a representative of West America Securities a NASD firm. Why would West America Securities enter into a written agreement otherwise.

Frequently Asked Interpretive Questions About NASD Rules And Regulations With
Responses From Its Office Of General Counsel
Question: Can members or their associated persons pay finders' or referral fees to
third parties that introduce or refer prospective brokerage customers to the
members?
Interpretation: The NASD consistently takes the position, affirmed by its Board of
Governors in Notice to Members 89-3, that it is improper for a member or person
to make such payments unless the recipient is registered as a representative of an
NASD member firm. This position is based on the definition of "representative" in
Part III(1)(b) of Schedule C to the By-Laws. This provision defines
"representative" as:
Persons associated with a member . . . who are engaged in the investment banking or
securities business for the member including the functions of supervision,
solicitation or conduct of business in securities . . . ..
The NASD has consistently maintained that persons who introduce or refer
prospective customers and receive compensation for such activities are engaged in
the securities business for the member in the form of solicitation. As the Board of
Governors has stated in numerous disciplinary decisions, solicitation is the first
step in the consummation of a securities transaction and must be regarded as part of
the conduct of a business in securities. On an informal basis, the Association has
permitted "one time" fees not tied to the completion of a transaction or opening of
an account.
The NASD believes that the following factors should be analyzed in any finder
situation and a "yes" answer to any questions raises the presumption that the finder
should be registered:
(1) Did the finder repeatedly refer prospective customers to the member?
(2) Did the finder make any sort of sales pitch or recommendation concerning the
investment purchased?
(3) What was the nature of the contacts between the finder and the customers?
(4) Was direct transaction-based compensation paid to the finder?
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