F.Y.I. 'ALL' Seems about time to get a up date to the NASD SHORTING RULES. As the date for this seems a little old........
I'm wondering if this WILL BE THE WEEK FOR A LITTLE NEWS OUT OF OUR FRIENDS AT NASD......
NASD Notice to Members 98-28 - March 1998
NASD Reminds Members Of Obligations Relating To The Short-Sale Rule
This Notice to Members supersedes Notice to Members 98-65, restates the views of
NASD Regulation, Inc. (NASD RegulationSM) and The Nasdaq Stock Market®
(Nasdaq®) concerning National Association of Securities Dealers, Inc. (NASD®) Rule
3350 (Short-Sale Rule) that were discussed in Notice to Members 98-65, and corrects
a statement concerning the use of cross-guaranteed accounts for Regulation T purposes.
In 1994, the Short-Sale Rule was adopted to stop market-destabilizing speculative
short sales in Nasdaq National Market® (NNM) securities. To prevent this conduct,
the Short-Sale Rule prohibits member firms from executing customer short sales and
non-Market Maker proprietary short sales in an NNM security at or below the current
inside bid when the current inside bid is lower than the previous inside bid.
It has come to the attention of NASD Regulation and Nasdaq that certain NASD
members may be assisting customers in the circumvention of this Rule. Specifically,
these members are failing to net security positions of accounts for customers who
maintain accounts in their name and exercise control over, or operate in concert with,
other accounts with a strategy designed to circumvent the Short-Sale Rule. The failure
to net these positions has permitted these customers, who operate the two accounts
with a single investment strategy, to avoid application of the Short-Sale Rule. Members
are expected to establish and maintain supervisory procedures to detect and deter this
improper trading activity. The purpose of this Notice is to highlight for members that,
depending on the facts and circumstances, they may be required to net positions for
accounts that are related or under common control to determine whether a sale is long
or short and subject to the Short-Sale Rule requirements. NASD Regulation is
committed to ensuring strict adherence to the Short-Sale Rule and will carefully review
whether firms have engaged in the conduct described in this Notice in examinations and
investigations. Violations of the Short-Sale Rule will be vigorously pursued.Questions
concerning this Notice should be directed to the Office of General Counsel, The
Nasdaq Stock Market, Inc., at (202) 728-8294; or the Legal Section, Market
Regulation, NASD Regulation, at (301) 590-6410.
Regards, Good trading to all..
Jim..... |
