KENNETH M. CHERRIER,JD, FLMI - Financial Services Institute

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& Mediation tab, or simply contact Vandna Gargh form NASD Dispute Resolution at(212) 858-4327.Become an NASD District Committee Member.This year’s NASD District Committee race was very active. Hundreds of small brokerdealersunder the banner of the <strong>Financial</strong> Industry Association (FIA) spoke up to contestNASD District Committee elections in every one of the eleven NASD districts. Themessage was clear: small broker-dealers wanted the NASD to hear their concerns andgrievances. Although the “heated tone” from the FIA leadership ruffled some in theindustry, their uncompromising communications brought the District Committee venueinto the spotlight and our industry as a whole was educated on the importance of thisplatform through which members can directly communicate with top NASD officials.Although the District Committees hold no official regulatory power, they do play a veryimportant role in advising and consulting with the NASD on industry matters. “Amongother things, District Committee members: Alert [NASD] staff to industry trends thatcould be a potential regulatory concern. Consult with NASD staff on proposed policiesand rule changes brought to a District Committee for its views. Serve on DisciplinaryPanels in accordance with NASD Rules. Promote NASD’s mission and statedpositions.” 2Becoming an NASD District Committee member allows you to assist in the guiding andshaping of our current and future regulation and is a great way for a member to lead andenhance our industry. For more information on how to become a NASD DistrictCommittee member, look for a Special Notice to Members which should be issuedsometime this Summer by the NASD.Become a member of an industry association.Industry associations can be very beneficial in assisting securities professionals ineducating themselves and staying abreast of regulatory changes. In addition, theseassociations also provide an arena in which to vet and gather support for your opinionsand viewpoints.Of course there is the National Society of Compliance Professionals (NSCP), which is thepremier compliance association of our industry, and has grown significantly over the pastseveral years in membership as well as respect and clout with industry regulators.There are numerous other strong and highly respected industry associations from whichto choose: the aforementioned FSI, NAIBD, the Securities Industry and <strong>Financial</strong>Management Association (SIFMA), and the Banking, Insurance and SecuritiesAssociation (BISA) are a just a few of the respected professional associations to whichmany of us currently belong.You should closely review any association to determine which group or groups are rightfor you and your company. Regardless of which association you chose, most groups2 NASD Special Notice to Members 06-24: District Elections, p.1.
share common benefits: a venue to discuss and debate issues and platforms, access to toplevelregulators through conferences and seminars, and the availability to strengthen yourvoice by joining with others who share your opinions. These benefits make industryassociations great platforms to support your stewardship activities.For your reference, the websites of some of the industry associations mentioned are listedbelow. It should be noted, the NSCP does not certify, endorse, formally sanction orrecommend any of these associations. FSI: www.financialservices.org, BISA:www.bisanet.org, NAIBD: www.naibd.com, SIFMA: www.sifma.org.Respond to proposed SRO and SEC rules.Industry rules do not just materialize out of thin air, although to some, it may haveappeared that way several years ago. There are in fact, due process rules which requirethe NASD and the SEC to publicly post all proposed rules and amendments and invitecomments from the public. The public’s comments must be considered prior to approvalof the proposed rule. Therefore, becoming involved in the due process of a proposed ruleis an excellent opportunity for all of us to review, question, opine and comment on everyrule and amendment that is proposed to our industry.As stated, due process requirements exist for every regulatory level of our industry,including NASD rules. The NASD has improved its member communication in this areaby creating a “rule filing” page under the Rules & Regulations tab of the NASD websitein which members can track the status of all NASD proposed rules and amendments. 3In addition, much work is done internally by the NASD in the creation of a new rule orrule amendment before the membership is notified of the proposal. Normally a proposedrule is first presented to the District Committees and other internal committees forconsideration. The rule or amendment is always submitted to the Small Firm AdvisoryBoard (SFAB) to ensure the rule or amendment has no undue negative effect on smallerbroker-dealers. After this internal vetting takes place, the NASD submits the resultingproposal to the entire membership via a Notice to Members.It is at this point that all of us have an opportunity to review and respond to the NASD onthe proposal. After the NASD has had the opportunity to assess member comment, theNASD can take several steps. The proposal can be amended pursuant to the collectedcomments and be resubmitted to the members for additional comment, or the NASD cansubmit the proposal as it stands, or amended, to the SEC for approval.However, our ability to comment on the proposal does not stop there. The SEC is alsorequired to publish the proposed rule or amendment and solicit comment. Thissubmission for comment is normally done through the United States Federal Register.We as members of the industry, can once again comment on the proposed rule oramendment and submit our opinions to the SEC for consideration. The SEC can require3 www.nasd.com/RulesRegulation/RuleFilings/index.htm
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KENNETH M. CHERRIER,JD, FLMI - Financial Services Institute

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