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March 5, 1990
TO: SEC RULES MEMBERS NO. 19-90
BROKER/DEALER ADVISORY COMMITTEE NO. 9-90
BROKER-DEALER ASSOCIATE MEMBERS
RE: NASD PROPOSED AMENDMENTS CONCERNING CUSTOMER ACCOUNT
INFORMATION
__________________________________________________________
The NASD is requesting its members to vote by April 5, 1990
on proposed amendments to the Rules of Fair Practice concerning
customer account information. (Attached is copy of the March
NASD Notice to Members regarding the amendments.) Specifically,
the proposed amendment to Section 21(c) would require a member to
make reasonable efforts to obtain, prior to settlement of the
initial transaction in a non-institutional account, the tax
identification or Social Security number and the occupation and
name and address of the employer of each customer for each
account, in addition to the information already required under
that Section.
In addition, where the customer is a corporation,
partnership or other legal entity, the member must obtain the
names of any persons authorized to transact business on behalf of
such entity. In the case of discretionary accounts, the member
would be required to obtain the signature of each person
authorized to exercise discretion in the account and the date
such discretion was granted.
The NASD also is proposing an amendment to Section 2 to
require members to make a reasonable effort to obtain information
concerning a non-institutional customer's financial status, tax
status, investment objectives, and any other information that may
be considered to be reasonable in making a recommendation to a
customer.
The proposed amendments exclude transactions and accounts
in which investments are limited to money market mutual funds.
Amy B. Rosenblum
Assistant General Counsel
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Attachment