Notice to Member Summaries Continued

NTM 06-04

NASD Rule 3012 requires members to have in place a system to test and verify that their supervisory procedures are reasonably designed with respect to the activities of that member and their firm.  Also included within Rule 3012 is the requirement that a member’s procedures are designed to review and supervise any customer account activity conducted by a producing manager. 

Generally, only a person senior to or “otherwise independent” of the producing manager can conduct the daily supervising reviews of producing managers.   Within Rule 3012, however, there is an exception for any member firm that is so limited in size and resources that they would not have sufficient staff who could conduct the reviews.

In the SEC’s order approving Rule 3012, they specified that the NASD must notify the SEC of any members electing to rely on Rule 3012’s “limited and resource” exception.  To facilitate this request, the NASD created the Rule 3012 Exception Notification System. RETURN TO INDEX