NASD Adopts Amendment to Recordkeeping Rules

Washington, DC, August 12, 1998 - The National Association of Securities Dealers, Inc. recently published a Notice to Members announcing the Securities and Exchange Commission's approval of a proposal to amend NASD Rule 3110 to exclude from certain recordkeeping requirements accounts that are limited to mutual fund shares that are not recommended by the NASD member or its associated persons.

Prior to this amendment, under NASD Rule 3110(c)(2), members were generally required for each account to make reasonable efforts to obtain:

the customer's tax identification or Social Security number,
the customer's occupation and name and address of employer, and
whether the customer is an associated person of another member.

This requirement, however, did not apply to institutional accounts and accounts limited to transactions in money market funds. The amendment expands the exemption from this requirement to include all accounts that are limited to transactions in mutual funds that are not recommended by the member or its associated persons. It also revises the definition of "institutional account" to include the accounts of investment advisers that under the National Securities Markets Improvement Act of 1996 and new SEC rules are now required to register with the states.