NASD Issues Guidance on Rule Change Regarding Nonelectronic Correspondence

Washington, DC, January 20, 1999 - The Securities and Exchange Commission recently approved changes to NASD Rule 3010 relating to incoming, nonelectronic correspondence. The rule amendments will be effective on March 15, 1999. As anticipated, the NASD has issued a Notice to Members setting forth the text of, and guidance concerning, the rule changes.

The Notice essentially reiterates information provided in the SEC's release approving the amendments concerning procedures that NASD member firms may follow to comply with the amended rule. In addition, in response to a comment on the proposed rule change, the Notice expresses NASD Regulation's view that "member firms possess the legal capacity to insist that mail addressed to their offices be deemed to be related to their business, even if marked to the attention of a particular associated person, if they advise associated persons that personal correspondence should not be received at the firm." The Notice also reminds NASD members that broker-dealers are required by Rule 17a-4(b)(4) under the Securities Exchange Act to preserve for not less than three years originals of all communications received relating to their business as such. Finally, the Notice makes clear that a requirement to review all incoming, nonelectronic correspondence directed to registered representatives and related to a member's investment banking or securities business, set forth in Notice to Members 98-11 (January 1998), no longer applies. It has been superseded by the amendment to Rule 3010(d)(2) and the guidance provided in Notice to Members 99-03.