[Federal Register: February 11, 2009 (Volume 74, Number 27)]
[Notices]
[Page 6904-6906]
[DOCID:fr11fe09-64]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2009-N-0664]

Request for Nominations for Voting and Nonvoting Consumer
Representative Members on Public Advisory Committee and Panels

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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SUMMARY: The Food and Drug Administration (FDA) is requesting
nominations for voting and nonvoting consumer representatives to serve
on the National Mammography Quality Assurance Advisory Committee
(NMQAAC) and certain devices panels of the Medical Devices Advisory
Committee in the Center for Devices and Radiological Health (CDRH).
    FDA has a special interest in ensuring that women, minority groups,
and individuals with disabilities are adequately represented on
advisory committees and, therefore, encourages nominations of qualified
candidates from these groups.

DATES: Nominations will be accepted for current vacancies and for those
that will or may occur through October 31, 2009. Because vacancies
occur on various dates throughout the year, there is no cutoff date for
the receipt of nominations.

ADDRESSES: All nominations for membership should be sent electronically
to<EMAIL_ADDRESS>or by mail to Advisory Committee Oversight and
Management Staff (HF-4), 5600 Fishers Lane, Rockville, MD 20857.
Information about becoming a member on an FDA advisory committee can
also be obtained by visiting FDA's Web site at http://www.fda.gov/oc/
advisory/default.htm.

FOR FURTHER INFORMATION CONTACT: For specific committee questions,
contact the following persons listed in table 1 of this document:

                                 Table 1
------------------------------------------------------------------------
           Contact Person                      Committee/Panel
------------------------------------------------------------------------
Geretta P. Wood, Center for Devices  Certain Device Panels of the
 and Radiological Health (HFZ-400),   Medical Devices Advisory Committee
 Food and Drug Administration, 9200
 Corporate Blvd., Rockville, MD
 20850,<PHONE_NUMBER>, e-mail:
<EMAIL_ADDRESS>------------------------------------------------------------------------
Nancy M. Wynne, Center for Devices   National Mammography Quality
 and Radiological Health (HFZ-240),   Assurance Advisory Committee
 Food and Drug Administration, 1350
 Piccard Dr., Rockville, MD 20850,
 e-mail<EMAIL_ADDRESS>------------------------------------------------------------------------

SUPPLEMENTARY INFORMATION:

I. Vacancies

    FDA is requesting nominations for voting and nonvoting consumer
representatives for the vacancies listed in table 2 of this document:

                                 Table 2
------------------------------------------------------------------------
   Committee/Panel Expertise     Current & Upcoming    Approximate Date
            Needed                   Vacancies              Needed
------------------------------------------------------------------------
Circulatory System Devices             1--nonvoting          Immediately
 Panel of the Medical Devices
 Advisory Committee--
 interventional cardiologists,
 electrophysiologists,
 invasive (vascular)
 radiologists, vascular and
 cardiothoracic surgeons, and
 cardiologists with special
 interest in congestive heart
 failure
------------------------------------------------------------------------
Clinical Chemistry and                 1--nonvoting        March 1, 2009
 Clinical Toxicology Devices
 Panel of the Medical Devices
 Advisory Committee--doctors
 of medicine or philosophy
 with experience in clinical
 chemistry, clinical
 toxicology, clinical
 pathology, clinical
 laboratory medicine,
 endocrinology, and diabetes
------------------------------------------------------------------------
Dental Products Panel of the           1--nonvoting     November 1, 2009
 Medical Devices Advisory
 Committee--dentists,
 engineers and scientists who
 have expertise in the areas
 of dental implants, dental
 materials, periodontology,
 tissue engineering, and
 dental anatomy
------------------------------------------------------------------------
General and Plastic Surgery             1-nonvoting          Immediately
 Devices Panel of the Medical
 Devices Advisory Committee--
 surgeons (general, plastic,
 reconstructive, pediatric,
 thoracic, abdominal, pelvic
 and endoscopic);
 dermatologists; experts in
 biomaterials, lasers, wound
 healing, and quality of life;
 and biostatisticians
------------------------------------------------------------------------
Medical Devices Dispute                 1-nonvoting          Immediately
 Resolution Panel of the
 Medical Devices Advisory
 Committee--experts with
 broad, cross-cutting
 scientific, clinical,
 analytical or mediation
 skills
------------------------------------------------------------------------
Microbiology Devices Panel of           1-nonvoting        March 1, 2009
 the Medical Devices Advisory
 Committee--infectious disease
 clinicians, e.g., pulmonary
 disease specialists, sexually
 transmitted disease
 specialists, pediatric
 infectious disease
 specialists, experts in
 tropical medicine and
 emerging infectious diseases,
 biofilm development;
 mycologists; clinical
 microbiologists and
 virologists; clinical
 virology and microbiology
 laboratory directors, with
 expertise in clinical
 diagnosis and in vitro
 diagnostic assays, e.g.,
 hepatologists; molecular
 biologists
------------------------------------------------------------------------
Ophthalmic Devices Panel of             1-nonvoting     November 1, 2009
 the Medical Devices Advisory
 Committee--ophthalmologists
 specializing in cataract and
 refractive surgery and vitreo-
 retinal surgery, in addition
 to vision scientists,
 optometrists, and
 biostatisticians practiced in
 ophthalmic clinical trials
------------------------------------------------------------------------
Orthopaedic and Rehabilitation                    1     January 31, 2009
 Devices Panel of the Medical
 Devices Advisory Committee--
 orthopedic surgeons (joint,
 spine, trauma, and
 pediatric); rheumatologists;
 engineers (biomedical,
 biomaterials, and
 biomechanical); experts in
 rehabilitation medicine,
 sports medicine, and
 connective tissue
 engineering; and
 biostatisticians
------------------------------------------------------------------------
National Mammography Quality            2-nonvoting     February 1, 2009
 Assurance Advisory Committee--
 physicians, practitioners, or
 other health professionals
 whose clinical practice,
 research specialization, or
 professional expertise
 include a significant focus
 on mammography
------------------------------------------------------------------------

II. Functions

A. NMQAAC

    The committee advises FDA on the following topics: (1) Developing
appropriate quality standards and regulations for mammography
facilities; (2) developing appropriate standards and regulations for
bodies accrediting mammography facilities under this program; (3)
developing regulations with respect to sanctions; (4) developing
procedures for monitoring compliance with standards; (5) establishing a
mechanism to investigate consumer complaints; (6) reporting new
developments concerning breast imaging which should be considered in
the oversight of mammography facilities; (7) determining whether there
exists a shortage of mammography facilities in rural and health
professional shortage areas and determining the effects of personnel on
access to the services of such facilities in such areas; (8)
determining whether there will exist a sufficient number of medical
physicists after October 1, 1999; and (9) determining the costs and
benefits of compliance with these requirements.

B. Certain Panels of the Medical Devices Advisory Committee

    The committee reviews and evaluates data on the safety and
effectiveness of marketed and investigational devices and makes
recommendations for their regulation. The panels engage in a number of
activities to fulfill the functions of the Federal Food, Drug, and
Cosmetic Act's (the act) envisions for device advisory panels. With the
exception of the Medical Devices Dispute Resolution Panel, each panel,
according to its specialty area, does the following: (1) Advises the
Commissioner of Food and Drugs (the Commissioner) regarding recommended
classification or reclassification of devices into one of three
regulatory categories, (2) advises on any possible risks to health
associated with the use of devices, (3) advises on formulation of
product development protocols, (4) reviews premarket approval
applications for medical devices, (5) reviews guidelines and guidance
documents, (6) recommends exemption of certain devices from the
application of portions of the act, (7) advises on the necessity to ban
a device, and (8) responds to requests from the agency to review and
make recommendations on specific issues or problems concerning the
safety and effectiveness of devices.

With the exception of the Medical Devices Dispute Resolution Panel,
each panel, according to its specialty area, may also make appropriate
recommendations to the Commissioner on issues relating to the design of
clinical studies regarding the safety and effectiveness of marketed and
investigational devices.

III. Criteria for Members

    Persons nominated for membership as a consumer representatives on
the committee/panels must meet the following criteria: (1) Demonstrate
ties to consumer and community-based organizations, (2) be able to
analyze technical data, (3) understand research design, (4) discuss
benefits and risks, and (5) evaluate the safety and efficacy of
products under review. The consumer representative must be able to
represent the consumer perspective on issues and actions before the
advisory committee; serve as a liaison between the committee and
interested consumers, associations, coalitions, and consumer
organizations; and facilitate dialogue with the advisory committees on
scientific issues that affect consumers.

IV. Selection Procedures

    Selection of members representing consumer interests is conducted
through procedures that include the use of organizations representing
the public interest and consumer advocacy groups. The organizations
have the responsibility of recommending candidates of the agency's
selection.

V. Nomination Procedures

    All nominations must include a cover letter, a curriculum vita or
resume (that includes the nominee's office address, telephone number,
and e-mail address), and a list of consumer or community-based
organizations for which the candidate can demonstrate active
participation.
    Nominations will specify the advisory committee or panel(s) for
which the nominee is recommended. Nominations will include confirmation
that the nominee is aware of the nomination.
    Any interested person or organization may nominate one or more
qualified persons for membership as consumer representatives on the
advisory committee/panels. Self-nominations are also accepted.
Potential candidates will be required to provide detail information
concerning such matters as financial holdings, employment, and research
grants and/or contracts to permit evaluation of possible sources of a
conflict of interest. The nomination should specify the committee/
panels of interest. The term of office is up to 4 years, depending on
the appointment date.
    This notice is issued under the Federal Advisory Committee Act (5
U.S.C. app. 2) and 21 CFR part 14, relating to advisory committees.

    Dated: February 4, 2009.
Randall W. Lutter,
Deputy Commissioner for Policy.
[FR Doc. E9-2845 Filed 2-10-09; 8:45 am]

BILLING CODE 4160-01-S


[Federal Register: March 11, 2008 (Volume 73, Number 48)]
[Notices]
[Page 13057-13058]
[DOCID:fr11mr08-114]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57424; File No. SR-CBOE-2008-22]

Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change, as Modified by Amendment No. 1 Thereto, Extending the
Dividend, Merger, and Short Stock Interest Strategies Fee Cap Pilot
Program

March 4, 2008.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on February 29, 2008, Chicago Board Options Exchange, Incorporated
(``CBOE'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been substantially
prepared by CBOE. On March 3, 2008, the Exchange filed Amendment No. 1
to the proposal.\3\ CBOE has designated this proposal as one
establishing or changing a due, fee, or other charge imposed by the
Exchange under Section 19(b)(3)(A),\4\ and Rule 19b-4(f)(2)
thereunder,\5\ which renders the proposal effective upon filing with
the Commission. The Commission is publishing this notice to solicit
comments on the proposed rule change, as modified by Amendment No. 1,
from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 1 made clarifying changes to the statutory
basis section of the original filing.
    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    CBOE proposes to amend its Fees Schedule to extend until March 1,
2009, the dividend, merger, and short stock interest strategies fee cap
program. Thetext of the proposed rule change is available at the
Exchange, the Commission's Public Reference Room, and http://
www.cboe.org/legal.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, CBOE included statements
concerning the purpose of, and basis for, the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. CBOE has prepared summaries, set forth in Sections A, B,
and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange currently caps market-maker, firm, and broker-dealer
transaction fees associated with dividend, merger, and short stock
interest strategies, as described in Footnote 13 of the CBOE Fees
Schedule (``Strategy Fee Cap''). The Strategy Fee Cap is in effect as a
pilot program that expired on March 1, 2008.
    The Exchange proposes to extend the Strategy Fee Cap pilot program
until March 1, 2009. No other changes are proposed. The Exchange
believes that extension of the Strategy Fee Cap pilot program would
enable the Exchange to remain competitive for these types of strategies
by keeping fees low.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the
Act,\6\ in general, and furthers the objectives of Section 6(b)(4),\7\
in particular, in that it is designed to provide for the equitable
allocation of reasonable dues, fees, and other charges among CBOE
members and other persons using its facilities. The Exchange believes
that the proposed extension of the Strategy Fee Cap pilot program will
continue to benefit market participants who trade these strategies by
lowering their fees.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    CBOE does not believe that the proposed rule change will impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others

    No written comments were solicited or received with respect to the
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act \8\ and subparagraph (f)(2) of Rule 19b-4
thereunder,\9\ because it establishes or changes a due, fee or other
charge imposed by the Exchange. At any time within 60 days of the
filing of the proposed rule change, the Commission may summarily
abrogate such rule change if it appears to the Commission that such
action is necessary or appropriate in the public interest, for the
protection of investors, or otherwise in furtherance of the purposes of
the Act.\10\
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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 17 CFR 240.19b-4(f)(2).
    \10\ For purposes of calculating the 60-day period within which
the Commission may summarily abrogate the proposed rule change under
Section 19(b)(3)(C) of the Act, the Commission considers the period
to commence on March 3, 2008, the date on which CBOE filed Amendment
No. 1. See 15 U.S.C. 78s(b)(3)(C).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to<EMAIL_ADDRESS>Please include
File Number SR-CBOE-2008-22 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2008-22. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for inspection and
copying in the Commission's Public Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal office of CBOE. All comments
received will be posted without change; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File No. SR-CBOE-2008-22 and should be
submitted on or before April 1, 2008.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-4682 Filed 3-10-08; 8:45 am]

BILLING CODE 8011-01-P


[Federal Register Volume 76, Number 235 (Wednesday, December 7, 2011)]
[Rules and Regulations]
[Pages 76293-76295]
[FR Doc No: 2011-31501]

========================================================================
Rules and Regulations
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents.
Prices of new books are listed in the first FEDERAL REGISTER issue of each
week.

========================================================================

Federal Register / Vol. 76, No. 235 / Wednesday, December 7, 2011 /
Rules and Regulations

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2011-1299; Directorate Identifier 2011-NE-40-AD;
Amendment 39-16878; AD 2011-25-02]
RIN 2120-AA64

Airworthiness Directives; BRP-Powertrain GmbH & Co. KG
Reciprocating Engines

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final rule; request for comments.

-----------------------------------------------------------------------

SUMMARY: We are adopting a new airworthiness directive (AD) for BRP-
Powertrain GmbH & Co. KG Rotax 912 F2, 912 F3, 912 F4, 912 S2, 912 S3,
912 S4, 914 F2, 914 F3, and 914 F4 reciprocating engines. This AD
results from mandatory continuing airworthiness information (MCAI)
issued by an aviation authority of another country to identify and
correct an unsafe condition on an aviation product. The MCAI describes
the unsafe condition as:

    During a production process review, a deviation in the
manufacturing process of certain part number (P/N) 888164
crankshafts has been detected, which may have resulted in a latent
defect. This condition, if not corrected, could lead to crack
formation on the power takeoff side of the crankshaft journal,
possibly resulting in failure of the crankshaft support bearing, in-
flight engine shutdown and forced landing, damage to the aeroplane
and injury to the occupants.

    We are issuing this AD to prevent in-flight failure of the engine
and forced landing.

DATES: This AD becomes effective December 22, 2011.
    We must receive comments on this AD by January 6, 2012.
    The Director of the Federal Register approved the incorporation by
reference of BRP-Powertrain GmbH & Co. KG, Rotax Aircraft Engines,
Mandatory Alert Service Bulletins (ASB) Nos. ASB-912-059 and ASB 914-
042 (combined in one document), dated November 15, 2011, listed in the
AD as of December 22, 2011.

ADDRESSES: You may send comments by any of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov and follow the instructions for sending your
comments electronically.
     Mail: U.S. Department of Transportation, 1200 New Jersey
Avenue SE., West Building Ground Floor, Room W12-140, Washington, DC
20590-0001.
     Hand Delivery: Deliver to Mail address above between 9
a.m. and 5 p.m., Monday through Friday, except Federal holidays.
     Fax:<PHONE_NUMBER>.
    For service information identified in this AD, contact BRP-
Powertrain GmbH & Co. KG, Welser Strasse 32, A-4623 Gunskirchen,
Austria, or go to: http://www.rotax-aircraft-engines.com. You may
review copies of the referenced service information at the FAA, Engine
& Propeller Directorate, 12 New England Executive Park, Burlington, MA.
For information on the availability of this material at the FAA, call
(781) 238-7125.

Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov; or in person at the Docket Operations office
between 9 a.m. and 5 p.m., Monday through Friday, except Federal
holidays. The AD docket contains this AD, the regulatory evaluation,
any comments received, and other information. The street address for
the Docket Operations office (phone:<PHONE_NUMBER>) is the same as the
Mail address provided in the ADDRESSES section. Comments will be
available in the AD docket shortly after receipt.

FOR FURTHER INFORMATION CONTACT: Alan Strom, Aerospace Engineer, Engine
Certification Office, FAA, Engine & Propeller Directorate, 12 New
England Executive Park, Burlington, MA 01803; email:
<EMAIL_ADDRESS>phone:<PHONE_NUMBER>; fax:<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Discussion

    The European Aviation Safety Agency (EASA), which is the Technical
Agent for the Member States of the European Community, has issued EASA
AD 2011-0222-E, dated November 15, 2011 (referred to after this as
``the MCAI''), to correct an unsafe condition for the specified
products. The MCAI states:

    During a production process review, a deviation in the
manufacturing process of certain part number (P/N) 888164
crankshafts has been detected, which may have resulted in a latent
defect. This condition, if not corrected, could lead to crack
formation on the power takeoff side of the crankshaft journal,
possibly resulting in failure of the crankshaft support bearing, in-
flight engine shutdown and forced landing, damage to the aeroplane
and injury to the occupants.

You may obtain further information by examining the MCAI in the AD
docket.

Relevant Service Information

    We reviewed BRP-Powertrain GmbH & Co. KG, Rotax Aircraft Engines,
Mandatory ASB Nos. ASB-912-059 and ASB 914-042 (combined in one
document), dated November 15, 2011. The actions described in this
service information are intended to correct the unsafe condition
identified in the MCAI.

FAA's Determination and Requirements of this AD

    This product has been approved by the aviation authority of
Austria, and is approved for operation in the United States. Pursuant
to our bilateral agreement with the European Community, EASA has
notified us of the unsafe condition described in the MCAI and service
information referenced above. We are issuing this AD because we
evaluated all information provided by EASA and determined the unsafe
condition exists and is likely to exist or develop on other products of
the same type design.

Differences Between the AD and the MCAI or Service Information

    None.

FAA's Determination of the Effective Date

    An unsafe condition exists that requires the immediate adoption of
this AD. The FAA has found that the risk to the flying public justifies
waiving notice and comment prior to adoption of this rule because of
the short compliance

time of 4 operating hours, and the risk to single-engine airplanes
affected. Therefore, we determined that notice and opportunity for
public comment before issuing this AD are impracticable and that good
cause exists for making this amendment effective in fewer than 30 days.

Comments Invited

    This AD is a final rule that involves requirements affecting flight
safety, and we did not precede it by notice and opportunity for public
comment. We invite you to send any written relevant data, views, or
arguments about this AD. Send your comments to an address listed under
the ADDRESSES section. Include ``Docket No. FAA-2011-1299; Directorate
Identifier 2011-NE-40-AD'' at the beginning of your comments. We
specifically invite comments on the overall regulatory, economic,
environmental, and energy aspects of this AD. We will consider all
comments received by the closing date and may amend this AD because of
those comments.
    We will post all comments we receive, without change, to http://www.regulations.gov, including any personal information you provide. We
will also post a report summarizing each substantive verbal contact
with FAA personnel concerning this AD. Using the search function of the
Web site, anyone can find and read the comments in any of our dockets,
including, if provided, the name of the individual who sent the comment
(or signed the comment on behalf of an association, business, labor
union, etc.). You may review the DOT's complete Privacy Act Statement
in the Federal Register published on April 11, 2000 (65 FR 19477-78).

Authority for This Rulemaking

    Title 49 of the United States Code specifies the FAA's authority to
issue rules on aviation safety. Subtitle I, section 106, describes the
authority of the FAA Administrator. ``Subtitle VII: Aviation
Programs,'' describes in more detail the scope of the Agency's
authority.
    We are issuing this rulemaking under the authority described in
``Subtitle VII, Part A, Subpart III, Section 44701: General
requirements.'' Under that section, Congress charges the FAA with
promoting safe flight of civil aircraft in air commerce by prescribing
regulations for practices, methods, and procedures the Administrator
finds necessary for safety in air commerce. This regulation is within
the scope of that authority because it addresses an unsafe condition
that is likely to exist or develop on products identified in this
rulemaking action.

Regulatory Findings

    We determined that this AD will not have federalism implications
under Executive Order 13132. This AD will not have a substantial direct
effect on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government.
    For the reasons discussed above, I certify this AD:
    1. Is not a ``significant regulatory action'' under Executive Order
12866;
    2. Is not a ``significant rule'' under the DOT Regulatory Policies
and Procedures (44 FR 11034, February 26, 1979); and
    3. Will not have a significant economic impact, positive or
negative, on a substantial number of small entities under the criteria
of the Regulatory Flexibility Act.
    We prepared a regulatory evaluation of the estimated costs to
comply with this AD and placed it in the AD docket.

List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by
reference, Safety.

Adoption of the Amendment

    Accordingly, under the authority delegated to me by the
Administrator, the FAA amends 14 CFR part 39 as follows:

PART 39--AIRWORTHINESS DIRECTIVES

0
1. The authority citation for part 39 continues to read as follows:

    Authority:  49 U.S.C. 106(g), 40113, 44701.

Sec.  39.13  [Amended]

0
2. The FAA amends Sec.  39.13 by adding the following new AD:

2011-25-02 BRP-Powertrain GmbH & Co. KG (formerly BRP-Rotax GmbH &
Co KG, Bombardier-Rotax GmbH & Co. KG, and Bombardier-Rotax GmbH):
Amendment 39-16878; Docket No. FAA-2011-1299; Directorate Identifier
2011-NE-40-AD.

(a) Effective Date

    This airworthiness directive (AD) becomes effective December 22,
2011.

(b) Affected ADs

    None.

(c) Applicability

    This AD applies to BRP-Powertrain GmbH & Co. KG Rotax 912 F2,
912 F3, 912 F4, 912 S2, 912 S3, 912 S4, 914 F2, 914 F3, and 914 F4
reciprocating engines, with the following part number (P/N) 888164
crankshafts installed.

       Table 1--Affected P/N 888164 Crankshaft Serial Nos. (S/Ns)
------------------------------------------------------------------------

-------------------------------------------------------------------------
S/Ns 40232 through 40267 inclusive.
S/Ns 40293 through 40374 inclusive.
S/Ns 40408 through 40433 inclusive.
S/Ns 40435 through 40507 inclusive.
------------------------------------------------------------------------

(d) Reason

    This AD results from mandatory continuing airworthiness
information (MCAI) issued by an aviation authority of another
country to identify and correct an unsafe condition on an aviation
product. The MCAI describes the unsafe condition as:

    During a production process review, a deviation in the
manufacturing process of certain part number (P/N) 888164
crankshafts has been detected, which may have resulted in a latent
defect. This condition, if not corrected, could lead to crack
formation on the power takeoff side of the crankshaft journal,
possibly resulting in failure of the crankshaft support bearing, in-
flight engine shutdown and forced landing, damage to the aeroplane
and injury to the occupants.

    We are issuing this AD to prevent in-flight failure of the
engine and forced landing.

(e) Actions and Compliance

    Unless already done, do the following actions.
    (1) Within 4 flight hours after the effective date of this AD,
clean and fluorescent-penetrant-inspect the crankshaft for cracks,
in accordance with the Accomplishment Instructions paragraphs
3.1)4., 3.1)6., and Figure 1 of BRP-Powertrain GmbH & Co. KG, Rotax
Aircraft Engines, Mandatory Alert Service Bulletins (ASB) Nos. ASB-
912-059 and ASB 914-042 (combined in one document), dated November
15, 2011.
    (2) If any crack is found, remove the crankshaft from service.

(f) Installation Prohibition

    (1) After the effective date of this AD, do not install an
engine having an affected P/N 888164 crankshaft installed, listed in
Table 1 of this AD, on any airplane, unless the crankshaft has
passed the inspection specified in paragraph (e)(1) of this AD.
    (2) After the effective date of this AD, do not install an
affected P/N 888164 crankshaft listed in Table 1 of this AD, in any
engine, unless the crankshaft has passed the inspection specified in
paragraph (e)(1) of this AD.

(g) FAA AD Differences

    None.

(h) Alternative Methods of Compliance (AMOCs)

    The Manager, Engine Certification Office, may approve AMOCs for
this AD. Use the procedures found in 14 CFR 39.19 to make your
request.

(i) Related Information

    (1) Refer to MCAI European Aviation Safety Agency AD 2011-0222-
E, dated November 15, 2011, for related information.
    (2) Contact Alan Strom, Aerospace Engineer, Engine Certification
Office, FAA,

Engine & Propeller Directorate, 12 New England Executive Park,
Burlington, MA 01803; email<EMAIL_ADDRESS>phone: (781) 238-
7143; fax:<PHONE_NUMBER>, for more information about this AD.

(j) Material Incorporated by Reference

    You must use BRP-Powertrain GmbH & Co. KG, Rotax Aircraft
Engines, Mandatory Alert Service Bulletins Nos. ASB 912-059 and ASB
914-042 (combined in one document), dated November 15, 2011, to do
the actions required by this AD, unless the AD specifies otherwise.
    (1) The Director of the Federal Register approved the
incorporation by reference of this service information under 5
U.S.C. 552(a) and 1 CFR part 51.
    (2) For service information identified in this AD, contact BRP-
Powertrain GmbH & Co. KG, Welser Strasse 32, A-4623 Gunskirchen,
Austria, or go to: http://www.rotax-aircraft-engines.com.
    (3) You may review copies of the service information at the FAA,
New England Region, 12 New England Executive Park, Burlington, MA.
For information on the availability of this material at the FAA,
call<PHONE_NUMBER>.
    (4) You may also review copies of the service information that
is incorporated by reference at the National Archives and Records
Administration (NARA). For information on the availability of this
material at an NARA facility, call<PHONE_NUMBER>, or go to http://www.archives.gov/federal-register/cfr/ibr-locations.html.

    Issued in Burlington, Massachusetts, on November 29, 2011.
Peter A. White,
Manager, Engine & Propeller Directorate, Aircraft Certification
Service.
[FR Doc. 2011-31501 Filed 12-6-11; 8:45 am]
BILLING CODE 4910-13-P


[Federal Register: June 28, 2006 (Volume 71, Number 124)]
[Notices]
[Page 36840-36847]
[DOCID:fr28jn06-131]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54023; File No. SR-NASD-2004-183]

Self-Regulatory Organizations: National Association of Securities
Dealers, Inc.; Notice of Filing Amendment No. 2 to Proposed Rule
Relating to Sales Practice Standards and Supervisory Requirements for
Transactions in Deferred Variable Annuities

June 21, 2006.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on December 14, 2004, NASD filed with the Securities and Exchange
Commission (``SEC'' or ``Commission''), the proposed rule. NASD filed
amendment No. 1 on July 8, 2005, which replaced and superseded the text
of the original rule filing. The proposed rule, as amended by Amendment
No. 1, was published for comment in the Federal Register on July 21,
2005.\3\ The Commission received approximately 1500 comments on the
proposal.\4\ NASD filed Amendment No. 2 on May 4, 2006, which addressed
the comments and proposed responsive amendments. Amendment No. 2 is
described in Items I, II and III below, which Items have been prepared
by NASD. The Commission is publishing this notice to solicit comments
on Amendment No. 2 to the proposed rule from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Exchange Act. Re. No. 52046A (July 19, 2005); 70 FR
42126 (July 21, 2005) (SR-NASD-2004-183).
    \4\ Approximately 1300 of these comments were virtually
identical.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule

    NASD is proposing a new rule, NASD Rule 2821, that would set forth
recommendation requirements (including a suitability obligation),
principal review and approval requirements, and supervisory and
training requirements tailored specifically to transactions in deferred
variable annuities. Below is the amended text of the proposed rule.
* * * * *
2821. Members' Responsibilities Regarding Deferred Variable Annuities
(a) General Considerations
(1) Application
    This Rule applies to the purchase or exchange of a deferred
variable annuity and the subaccount allocations. This Rule does not
apply to reallocations of subaccounts made or to funds paid after the
initial purchase or exchange of a deferred variable annuity. This Rule
also does not apply to deferred variable annuity transactions made in
connection with any tax-qualified, employer-sponsored retirement or
benefit plan that either is defined as a ``qualified plan'' under
Section 3(a)(12)(C) of the Securities Exchange Act of 1934 or meets the
requirements of Internal Revenue Code Sections 403(b), 457(b) or
457(f), unless, in the case of any such plan, a member makes
recommendations to an individual plan participant regarding a deferred
variable annuity, in which case the Rule would apply as to the
individual plan participant to whom the member makes such
recommendations.
(2) Creation, Storage and Transmission of Documents
    For purposes of this Rule, documents may be created, stored and
transmitted in electronic or paper form, and signatures may be
evidenced in electronic or other written form.
(3) Definitions
    For purposes of this Rule, the term ``registered principal'' shall
mean a person registered as a General Securities Sales Supervisor
(Series 9/10), a General Securities Principal (Series 24) or an
Investment Company Products/Variable Contracts Principal (Series 26),
as applicable.
(b) Recommendation Requirements
    (1) No member or person associated with a member shall recommend to
any customer the purchase or exchange of a deferred variable annuity
unless such member or person associated with a ember has a reasonable
basis to believe that.
    (A) The customer has been informed of the material features of a
deferred variable annuity, such as the potential surrender period and
surrender charge; potential tax penalty if the customer sells or
redeems the deferred variable annuity before he or she reaches the age
of 59\1/2\; mortality and expense fees; investment advisory fees;
potential charges for and features of riders; the insurance and
investment components of a deferred variable annuity; and market risk;
    (B) The customer would benefit from the unique features of a
deferred variable annuity (e.g., tax-deferred growth, annuitization or
a death benefit); and
    (C) The particular deferred variable annuity as a whole, the
underlying subaccounts to which funds are allocated at the time of the
purchase or exchange of the deferred variable annuity and riders and
similar product enhancements, if any, are suitable (and, in the case of
an exchange, the transaction as a whole also is suitable) for the
particular customer based ont he information required by paragraph
(b)(2) of this Rule.
    These determinations shall be documented and signed by the
associated person recommending the transaction.
    (2) Prior to recommending the purchase or exchange of a deferred
variable annuity, a member or person associated with a member shall
make reasonable efforts to obtain, at a minimum, information concerning
the customer's age, annual income, financial situation and needs,
investment experience, investment objectives, intended use of the
deferred variable annuity, investment time horizon, existing investment
and life insurance holdings, liquidity needs, liquid net worth, risk
tolerance, tax status and such other information used or considered to
be reasonable by the member or person associated with the member in
making recommendations to customers.
(c) Principal Review and Approval
    (1) No later than two business days following the date when a
member or person associated with a member transmits a customer's
application for a deferred variable annuity to the issuing insurance
company for processing and irrespective of whether the transaction has
been recommended, a registered principal shall review and determine
whether he or she approves of the purchase or exchange of the deferred
variable annuity. In reviewing the

purchase or exchange of a deferred variable annuity, the registered
principal shall consider.
    (A) The extent to which the customer would benefit from the unique
features of a deferred variable annuity (e.g., tax-deferred growth,
annunciation or a death benefit);
    (B) The extent to which the customer's age or liquidity needs make
the investment inappropriate;
    (C) The extent to which the amount of money invested would result
in an undue concentration in a deferred variable annuity or deferred
variable annuities in the context of the customer's overall investment
portfolio; and
    (D) If the transaction involves an exchange of a deferred variable
annuity, the extent to which (i) the customer would incur a surrender
charge, be subject to the commencement of a new surrender period, lose
death or existing benefits, or be subject to increased fees or charges
(such as mortality and expense fees, investment advisory fees and
charges for riders and similar product enhancements), (ii) the customer
would benefit from any potential product enhancements and improvements,
and (iii) the customer's account has had another deferred variable
annuity exchange within the preceding 36 months.
    These considerations shall be documented and signed by the
registered principal who reviewed and approved the transaction.
    (2) When a member or a person associated with a member has
recommended the purchase or exchange of a deferred variable annuity, a
registered principal, taking into account the underlying supporting
documentation described in paragraph (b)(2) of this Rule, shall review,
determine whether to approve and, if approved, sign the suitability
determination document required by paragraph (b)(1) of this Rule no
later than two business days following the date when the member or
person associated with the member transmits the customer's application
for a deferred variable annuity contract to the issuing insurance
company for processing.
(d) Supervisory Procedures
    In addition to the general supervisory and recordkeeping
requirements of Rules 3010, 3012, 3013 and 3110, a member must
establish and maintain specific written supervisory procedures
reasonably designed to achieve compliance with the standards set forth
in this Rule. In particular, the member must implement procedures to
screen the transaction and require a registered principal to consider
those items enumerated in paragraph (c) of this Rule, as well as
whether the associated person effecting the transaction has a
particularly high rate of effecting deferred variable annuity
exchanges.
(e) Training
    Members shall develop and document specific training policies or
programs reasonably designed to ensure that associated persons who
effect and registered principals who review transactions in deferred
variable annuities comply with the requirements of this Rule and that
they understand the material features of deferred variable annuities,
including those described in paragraph (b)(1)(A) of this Rule.
* * * * *

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule

    In its filing with the Commission, NASD included statements
concerning the purpose of and basis for the proposed rule and discussed
the comments it received on the proposed rule. The text of these
statements may be examined at the places specified in Item IV below.
NASD has prepared summaries, set forth in sections A, B, and C below,
of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule

1. Purpose
a. Background
    On December 14, 2004, NASD filed with the Commission proposed Rule
2821 (SR-NASD-2004-183). NASD filed with the Commission Amendment No. 1
to the proposed rule on July 8, 2005. The Commission published the
proposed rule, as amended by Amendment No. 1, in the Federal Register
on July 21, 2005.\5\ The comment period closed on September 19, 2005.
Based on comments received in response to the publication of the
proposed rule in the Federal Register, NASD filed Amendment No. 2 to
SR-NASD-2004-183 to address the comments and to make certain changes to
the proposed rule as discussed herein.
---------------------------------------------------------------------------

    \5\ See supra note 3.
---------------------------------------------------------------------------

b. Proposed Rule
    As described in the original and amended rule filings, NASD is
proposing new NASD Rule 2821, which would impose specific sales
practice standards and supervisory requirements on members for
transactions in deferred variable annuities.\6\ In general, NASD's
guidelines on deferred variable annuity transactions, developed with
substantial input from industry participants and published in Notice to
Members 99-35, served as the basis for the proposed rule.
---------------------------------------------------------------------------

    \6\ A variable annuity, in general, is a cotnract between an
investor and an insurance company whereby the insurance company
promises to make periodic payments to the contract owner or
beneficiary, starting immediately (an immediate variable annuity) or
at some future time (a deferred variable annuity). See Joint SEC and
NASD Staff Report on Broker-Dealer Sales of Variable Insurance
Products (June 2004) (``Joint Report''); NASD Notice to Members 99-
35 (May 1999). The proposed rule focuses exclusively on transactions
in deferred variable annuities. NASD recognizes that transactions
involving immediate variable annuities have begun to increase
recently, and NASD will continue to monitor sales practices relating
to these products. Currently, however, deferred variable annuities
make up the majority of variable annuity transactions. Moreover, to
date, most of the problems associated with transactions in variable
annuities that NASD has uncovered involve the purchase or exchange
of deferred variable annuities.
---------------------------------------------------------------------------

    The proposed rule would apply to the purchase or exchange of a
deferred variable annuity and the initial subaccount allocations.\7\
The proposed rule would not apply to reallocations of subaccounts or to
funds paid after the initial purchase or exchange of a

deferred variable annuity. However, other NASD rules would continue to
apply. For instance, NASD's suitability rule, Rule 2310, would continue
to apply to any recommendations to reallocate subaccounts.\8\
---------------------------------------------------------------------------

    \7\ NASD notes that the proposed rule focuses on customer
purchases and exchanges of deferred variable annuities, areas that,
to date, have given rise to many of the problems NASD has uncovered.
The proposed rule would thus cover a standalone purchase of a
deferred variable annuity and an exchange of one deferred variable
annuity for another for another deferred variable annuity. For
purposes of the proposed rule, an ``exchange'' of a product other
than a deferred variable annuity (such as a fixed annuity) for a
deferred variable annuity would be covered by the proposed rule as a
``purchase.'' The proposed rule would not cover customer sales of
deferred variable annuities, including the sale of a deferred
variable annuity in connection with an ``exchange'' of a deferred
variable annuity for another product (such as a fixed annuity).
However, recommendations of customer sales of deferred variable
annuities are fully and adequately covered by Rule 2310, NASD's
general suitability rule. Rule 2310 requires that, when recommending
that a customer purchase, sell or exchange a security, an associated
person determine whether the recommendation is suitable for the
customer. In general, deferred variable annuities are suitable only
as long-term investments and are inappropriate short-term trading
vehicles. As part of any analysis under Rule 2310 regarding the
suitability of a recommendation that a customer sell a deferred
variable annuity, the associated person must consider significant
tax consequences, surrender charges and loss of death or other
benefits. As NASD emphasized in a Regulatory & Compliance Alert in
2002, entitled ``Reminder--Suitablity of Variable Annuity Sales,''
members and their associated persons ``must keep in mind that the
suitability rule applies to any recommendation to sell a variable
annuity regardless of the use of the proceeds, including situations
where the member recommends using the proceeds to purchase an
unregistered product such as an equity-indexed annuity. Any
recommendation to sell the variable annuity must be based upon the
financial situation, objectives and needs of the particular
investor.''
    \8\ Indeed, except to the extent that specific provisions in the
proposed rule would govern, or unless the context otherwise
requires, the provisions of the by-laws and rules and all other
interpretations and policies of the NASD Board of Governors would be
applicable to transactions in deferred variable annuities.
---------------------------------------------------------------------------

    The proposed rule also would not apply to sales of deferred
variable annuities to certain tax-qualified, employer-sponsored
retirement or benefit plans. It would, however, apply if a member makes
recommendations to individual plan participants regarding a deferred
variable annuity.\9\ In addition, the rule would apply to the purchase
or exchange of deferred variable annuities to fund individual
retirement accounts (IRAs). In part, NASD determined not to exclude
IRAs from the scope of the proposed rule because, unlike transactions
for tax-qualified, employer-sponsored retirement or benefit plans,
investors funding IRAs are not limited to the options provided by a
plan.\10\
---------------------------------------------------------------------------

    \9\ In other words, the proposed rule would apply as to the
individual plan participants to whom the member makes
recommendations, but would not apply as to the plan sponsor, trustee
or custodian regarding the plan-level selection of investment
vehicles and options for such plans.
    \10\ NASD notes as well that a deferred variable annuity
purchased to fund an IRA does not provide any additional tax
deferred treatment of earnings beyond the treatment provided by the
IRA itself. Accordingly, where a customer is purchasing a deferred
variable annuity to fund an IRA, firms must ensure that the deferred
variable annuity's features other than tax deferral make the
purchase of the deferred variable annuity for the IRA appropriate.
---------------------------------------------------------------------------

    The proposed rule has four main provisions: (1) Requirements
governing recommendations, including a suitability obligation,
specifically tailored to deferred variable annuity transactions; \11\
(2) principal review and approval obligations; \12\ (3) a specific
requirement for members to establish and maintain written supervisory
procedures reasonable designed to achieve compliance with the standards
set forth in the proposed rule; \13\ and (4) a targeted training
requirement for members' associated persons, including their registered
principals.\14\
---------------------------------------------------------------------------

    \11\ See Proposed Rule 2821(b).
    \12\ See Proposed Rule 2821(c).
    \13\ See Proposed Rule 2821(d).
    \14\ See Proposed Rule 2821(e).
---------------------------------------------------------------------------

    NASD will announce the effective date of the proposed rule in a
Notice to Members to be published no later than 60 days following
Commission approval. The effective date will be 180 days following
publication of the Notice to Members announcing Commission approval.
c. Comments on the Proposed Rule
    The Commission received nearly 1500 comment letters in response to
the publication of the proposed rule in the Federal Register. These
comments are available on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml
). A summary of the comments and NASD's

response is set forth below.
    While some commenters expressed support for the proposed rule,\15\
most opposed it.\16\ Reasons for their opposition varied. Several
commenters stated that the proposal should be withdrawn, viewing it as
unnecessary and arguing that NASD has not demonstrated a need for
it.\17\ While NASD disagreed with the suggestion that there must be
demonstrable harm before it can engage in rulemaking, in its response
to comments it also noted the numerous Notices to Members, Regulatory &
Compliance Alerts and Investor Alerts that it has issued regarding
deferred variable annuities. NASD also noted that notwithstanding those
efforts, a recent joint review with the Commission, NASD examinations
and NASD enforcement actions indicate NASD's prior efforts have not
been sufficiently effective at curbing problems in this area.
---------------------------------------------------------------------------

    \15\ See, e.g., North American Securities Administrators
Association (``NASAA''), Patricia D. Struck, President and Wisconsin
Securities Administrator (9/20/05); Pace Investor Rights Project
(``Pace''), Barbara Black, Director (9/19/05); and Public Investors
Arbitration Bar Association (``PIABA''), Rosemary J. Shockman,
President (9/9/05).
    \16\ See, e.g., America Council of Life Insurers (``ACLI''),
Carl B. Wilkerson, Vice President & Chief Counsel (9/19/05);
Committee of Annuity Insurers (``CAI''), W. Thomas Conner and Eric
A. Arnold, Sutherland Asbill & Brennan LLP (9/19/05), National
Association for Variable Annuities (``NAVA''), Michael P. DeGeorge,
General Counsel (9/19/05); Securities Industry Association
(``SIA''), Ira D. Hammerman, Senior Vice President and General
Counsel (9/19/05); T. Rowe Price Investment Securities, Inc. (``T.
Rowe Price''), Henry H. Hopkins, Darrell N. Braman and Sara
McCafferty (9/19/05); and Wachovia Securities, LLC (``Wachovia''),
Ronald C. Long, Senior Vice President (9/19/05).
    \17\ See, e.g., ACLI; CAI; NAVA; and SIA.
---------------------------------------------------------------------------

i. Comments on Proposed Rule 2821(a)(1)--Application
    Numerous commenters argued that the rule should not apply to tax-
qualified, employer-sponsored retirement or benefit plans. One
commenter believed, however, that the rule should apply to those plans
in which the plan sponsor, trustee, or custodian is either
``unsophisticated'' or primarily relied on the recommendation of the
member.\18\ NASD disagreed. In its response to comments, NASD stated
that the rule should not apply to plan-level decisions. In NASD's view,
the factors that can be important to understanding the appropriateness
of a recommendation to a sponsor, trustee or custodian of a qualified
retirement or benefit plan can be distinct from those that are
important regarding the determination of the appropriateness of a
recommendation to a retirement-plan participant.
---------------------------------------------------------------------------

    \18\ NASAA.
---------------------------------------------------------------------------

    One commenter suggested that, in addition to transactions in
connection with ``qualified plans'' as defined in Section 3(a)(12)(C)
of the Act and plans that meet the requirements of Internal Revenue
Code Sections 403(b) and 457(b), the rule should not apply to
transactions with plans that meet the requirements of Section 457(f) of
the Internal Revenue Code, unless the member makes a recommendation to
an individual plan participant.\19\ NASD agreed and proposes to exclude
transactions in connection with these plans from the rule. Another
commenter argued that the rule should not apply to transactions with
individual plan participants if the only funding vehicle for a tax-
qualified employer sponsored plan is a deferred variable annuity.\20\
NASD disagreed and in its response to comments stated that the proposed
rule would apply if a registered representative recommends the deferred
variable annuity in the plan to an individual plan participant. It
noted, however, that only communications constituting a
``recommendation'' would trigger application of the rule.
---------------------------------------------------------------------------

    \19\ NAVA.
    \20\ Lincoln Investment Planning (``Lincoln''), Deirdre B.
Koerick, Vice President (9/19/05).
---------------------------------------------------------------------------

    A number of commenters asked NASD to clarify that the rule would
not apply to premiums paid into a deferred variable annuity after the
initial purchase and to subsequent purchase payments.\21\ As it noted
in its response to comments, NASD has modified the proposed rule to
specify that it ``does not apply * * * to funds paid after the initial
purchase or exchange.''
---------------------------------------------------------------------------

    \21\ CAI; Massachusetts Mutual Life Insurance Company (``Mass
Mutual''); Jennifer B. Sheehan, Assistant Vice President and Counsel
(9/19/05); NAVA; and Northwestern Mutual Investment Services
(``NMIS''), Daniel A. Riedl, Senior Vice President and Chief
Operating Officer (9/16/05).
---------------------------------------------------------------------------

    One commenter asserted that the NASD has no basis for excluding an
investor's reallocation of his or her subaccounts from the scope of the
proposed rule.\22\ This commenter believed that specific attention
should be paid to the broker's obligation to oversee and reallocate
sub-accounts

because brokers do not pay attention or fail to follow-up on a
customer's subaccount investments, often allowing these accounts to
flounder in unsuitable investments. NASD declined to take this
suggestion, but noted that NASD Rule 2310 continues to apply to a
customer's subaccount investments.
---------------------------------------------------------------------------

    \22\ PIABA.
---------------------------------------------------------------------------

    Another commenter stated that the rule should also apply to the
sale of immediate variable annuities.\23\ In response, NASD stated that
the majority of variable annuity transactions currently are in deferred
variable annuities, and that most of the problems NASD has uncovered
have been associated with the purchase or exchange of deferred variable
annuities. However, NASD also stated that it will continue to monitor
sales practices relating to immediate variable annuities.
---------------------------------------------------------------------------

    \23\ NASAA.
---------------------------------------------------------------------------

ii. Comments on Proposed rule 2821(b)--Recommendation Requirements
(a) General Comments
    Several commenters urged NASD to eliminate the specific suitability
requirements from paragraph (b) of the proposed rule.\24\ Some
commenters asserted that deferred variable annuities are too varied and
complex to mandate specific criteria for determining suitability.\25\
Others stated that NASD would need to clarify the level of knowledge
that would be sufficient to support a registered representative's
``reasonable basis'' for believing the standards of paragraph (b) have
been met with respect to a particular customer.\26\
---------------------------------------------------------------------------

    \24\ See, e.g., Association for Advanced Life Underwriting/
National Association of Insurance and Financial Advisers (``AALU/
NAIFA''), Gary A. Sanders, Senior Counsel (9/19/05); ACLI;
Intersecurities, Inc. (``Intersecurities''), Thomas R. Moriarty,
President (9/16/05); NAVA; SIA; and World Group Securities, Inc.
(``World Group''); Leesa M. Easley, Chief Legal Officer (9/8/05).
    \25\ HD Vest Financial Services (``HD Vest''), Roger C. Ochs,
President (9/20/05); Investment Company Institute (``ICI''), Frances
M. Stadler, Deputy Senior Counsel (9/19/06); and T. Rowe Price.
    \26\ Associated Securities Corporation (``Associated
Securities''), Denise M. Evans, General Counsel (9/19/05); Lincoln;
and Pacific Select Distributors, Inc. (``Pacific Distributers''),
John L. Dixon, President (9/16/05).
---------------------------------------------------------------------------

(b) Comments on Proposed Rule 2821(b)(1)(A)--Deferred Variable
Annuity's Material Features
    The rule, as originally proposed, would have required members to
have a reasonable basis to believe that the customer has been informed
of the material features of a specific deferred variable annuity before
recommending it. Commenters criticized this provision, arguing that it
would amount to a de facto requirement to provide written disclosure to
customers \27\ Commenters asserted that this disclosure along with the
other disclosures already provided to investors in deferred variable
annuities would be redundant and would overwhelm investors.\28\
---------------------------------------------------------------------------

    \27\ See, e.g., American Bankers Insurance Association/ABA
Securities Association (``ABIA/ABASA''), Beth L. Climo, Executive
Director (9/20/06); ACLI; A.G. Edwards & Sons, Inc. (``A.G.
Edwards''), Thomas M. Vacovino, Vice President (9/20/05); HD Vest;
ING; Intersecurities; NAVA; SIA; and Wachovia.
    \28\ AALU/NAIFA; ACLI; Intersecurities; NAVA; SIA; and World
Group. Commenters pointed out that investors already receive a
prospectus and state-mandated disclosures and may in the future
receive an SEC-mandated point of sale disclosure form.
---------------------------------------------------------------------------

    A few commenters supported a mandatory plain English summary and an
industry-wide or product specific Q&A that would answer basic questions
about fees, taxes, liquidity and other issues.\29\ While one commenter
requested that NASD wait and consider the proposed rule after the
Commission acts on its ``point of sale'' rule proposal.\30\ another
stated that the ``point of sale'' disclosure form would not be a
substitute for a ``plain English'' risk disclosure.\31\
---------------------------------------------------------------------------

    \29\ MWA Financial Services (``MWA''), Pamela S. Fritz, Chief
Compliance Officer (3/18/05); NASAA; and Pace.l
    \30\ National Planning Holdings, Inc. (``National Planning''),
M. Shawn Dreffein, President and Chief Executive Officer (9/9/05).
For details regarding the Commission's point of sale rule proposal,
see, Securities Exchange Act Release No. 49148, (January 29, 2004),
69 FR 6438 (February 10, 2004) and Securities Exchange Act Release
No. 51274 (Feb. 28, 2005), 70 FR 10521 (March 1, 2005). Securities
Exchange Act Release No. 51274 (Feb. 28, 2005), 70 FR 10521 (March
1, 2005) (``Supplemental Release'').
    \31\ Pace.
---------------------------------------------------------------------------

    Some commenters opined that the rule would be more effective if it
required a registered representative to direct the customer to the
variable annuity synopsis, fee table and risk disclosure in the
prospectus.\32\ Others argued that if NASD and the Commission believe
that the prospectus is inadequate, the solution would be to revise the
prospectus rather than to require additional disclosures.\33\
---------------------------------------------------------------------------

    \32\ ABIA./ABASA; ACLI; A.G. Edwards; HD Vest; ING; NAVA; SIA;
Wachovia; and World Group.
    \33\ ACLI and World Group.
---------------------------------------------------------------------------

    While noting in its response to comments that numerous commenters
sought to eliminate this provision, NASD modified it to no longer
require product-specific disclosure. As revised, the proposed rule
would require a registered representative to have a reasonable belief
that the customers has been informed of the material features of
deferred variable annuities in general. NASD cautioned, however, that
this modification would not mean that a firm and its associated person
may ignore product-specific features. It noted that the firm and its
associated person must be capable of discussing the specific features
of the deferred variable annuity under consideration, and must know
these features in order to adequately perform a suitability analysis.
    The proposed rule would have required a registered representative
to document and sign the determinations that he or she has made
pursuant to the proposed rule's recommendation requirements. Some
commenters criticized this requirement, noting that neither the rule
nor the release described what the documentation should look like or
how detailed it should be.\34\ Another commenter supported this
requirement, opining that it would serve the dual purpose of creating a
regulatory paper trail and reminding NASD members of the serious
analytical undertaking involved in recommending a deferred variable
annuity.\35\ After considering the comments, NASD has determined to
retain the requirement.
---------------------------------------------------------------------------

    \34\ See, e.g., ACLI; HD Vest; ING; NAVA; and SIA.
    \35\ Pace.
---------------------------------------------------------------------------

(c) Comments on Proposed Rule 2821(b)(1)(B)--Long-Term Investment
Objective
    The rule, as originally proposed, would have required members
recommending a deferred variable annuity to have a reasonable belief
that the customers had a long-term investment objective. Commenters
asserted that an investor's time horizon does not have to be long-term
in all circumstances for a deferred variable annuity to be suitable,
noting that some deferred variable annuities have features that can
benefit a customer regardless of age and potential for a long term
investment.\36\ Some commenters stated that an investor's time horizon
should be one factor in a suitability analysis, but that a deferred
variable annuity should not be deemed per se unsuitable based on that
factor alone.\37\
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    \36\ A.G. Edwards; CAI; Fintegra Financial Solutions
(``Fintegra''), Kenneth M. Cherrier, Chief Compliance Officer (8/11/
05); HD Vest; ING; Intersecurities; Lincoln; NMIS; NAVA; New York
Life Insurance and Annuity Corporation (``NY Life''), John R. Meyer,
Senior Vice President (9/19/05); SIA; United Planners Financial
Services of America (``United Planners), Julie Gebert, Vice
President and Chief Compliance Officer (9/19/06); and World Group.''
    \37\ Fintegra; Financial Services Institute (``FSI''), Dale E.
Brown, Executive Director (9/19/05); Great American Advisors
(``Great American''), Shawn M. Mihal, Chief Compliance Officer (9/
19/05); HD Vest; MWA; NMIS; National Planning; Pacific Select;
United Planners; and World Group.

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    In response to comments, NASD deleted this provision from paragraph
(b) of the proposed rule and all references to long-term investment
objectives in paragraph (c) (``Principal Review and Approval'') and
paragraph (d) (``Supervisory Procedures''). In addition, NASD stated
that in general, deferred variable annuities are appropriate only for
customers with long-term investment objectives who intend to take
advantage of tax-deferred accumulation and annuitization. Although NASD
recognized that some deferred variable annuities have shorter holding
periods and smaller surrender fees than traditional deferred variable
annuities, it stated that a deferred variable annuity is suitable for
an investor without a long-term investment objective only in rare
cases. NASD also ``strongly cautioned'' firms to scrutinize any
deferred variable annuity transaction involving customers without long-
term investment objectives and to carefully document any analysis in
favor of recommending such a transaction.
(d) Comments on Proposed Rule 2821(b)(1)(C)--Need for the Product as
Compared With Other Investment Vehicles
    As originally proposed, the rule would have required members to
have a reasonable belief that the customer had a need for the deferred
variable annuity as compared with other investment vehicles. Many
commenters criticized this provision.\38\ Some stated that while
customers may ``benefit'' from a deferred variable annuity, no customer
``needs'' one.\39\ Some viewed the standard as subjective and
overreaching, stating that it would require a determination that a
deferred variable annuity is the sole, unique investment to satisfy the
needs of a customer.\40\ Commenters also questioned what other
investment vehicles would have to be compared with the deferred
variable annuity \41\ and whether a registered representative would
have to compare the deferred variable annuity to products that he or
she is not licensed to sell.\42\
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    \38\ See, e.g., ACLI; CAI; HD Vest; NAVA; Pacific Select; United
Planners; and World Group.
    \39\ ACLI; CAI; NAVA; and ICI. Some commenters also stated that
these provisions conflict with NASD's longstanding concerns about
product comparisons.
    \40\ A.G. Edwards; Intersecurities; NMIS; NY Life; SIA; and
World Group.
    \41\ ACLI; CAI; ICI; ING; Mass Mutual; and NAVA.
    \42\ Intersecurities and World Group.
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    NASD noted in its response to comments that it did not intend to
require firms to perform a side-by-side comparison of a deferred
variable annuity with other investment vehicles or require firms to
prove that the customer needed the deferred variable annuity to the
exclusion of all other investments. Instead, NASD intends to require
firms to analyze whether the customer would benefit from the unique
features of a deferred variable annuity. To clarify this, NASD
eliminated the references in the proposed rule to ``need'' and ``as
compared with other investment vehicles.'' As revised, the rule would
require a member or associated person to have a reasonable basis to
believe that ``the customer would benefit from the unique features of a
deferred variable annuity (e.g., tax-deferred growth, annuitization or
a death benefit)''.
(e) Comments on proposed Rule 2921(b)(2)--Customer Information
    As originally proposed, the rule would have required members to
make reasonable efforts to obtain from a customer a variety of
information, including age, financial situation, liquid net worth and
intended use of the deferred variable annuity. Some commenters urged
NASD to delete this provision, stating that NASD Rules 2310 and 3110,
as well as Rule 17a-3(17)(i)(A) of the Act, should govern the
information that members are required to gather in making
recommendations to purchase or exchange deferred variable
annuities.\43\
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    \43\ National Planning; NAVA; NMIS; and Pacific Select.
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    Commenters also criticized a number of the terms used in this
provision. Some viewed the terms ``financial situation'' and ``liquid
net worth'' as vague and redundant.\44\ Others questioned what
constitutes a legitimate intended use of a deferred variable annuity
\45\ and whether ``other insurance holdings'' would be limited to life
insurance or would also encompass automobile and health insurance.\46\
One commenter also inquired whether a registered representative must
look to liquidity needs at the time of the sale or in the future and
whether investment experience means experience in deferred variable
annuities or overall investment experience.\47\After considering the
comments, NASD has determined to retain this paragraph with limited
revisions.
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    \44\ NAVA and NY Life.
    \45\ Associated Securities and FSI. Another commenter asked if
these terms were the same as the investment objective. Lincoln.
    \46\ See, e.g., 1717 Capital Management Company and Nationwide
Securities, Inc. (``1717 Capital''), Lance A. Reihl, President (9/
19/05); AALU/AIFA; ACLI; CAI; NAVA; NMIS; and NY Life.
    \47\ Lincoln.
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iii. Comments on Proposed Rule 2821(c)--Principal Review and Approval
    The rule, as originally proposed, would have required principals to
review and approve the purchase or exchange of a deferred variable
annuity before the customer's application was transmitted to the
issuing insurance company for processing, regardless of whether the
transaction was recommended.
(a) General Comments
    Several commenters viewed the proposed principal review requirement
as unduly duplicative of NASD Rule 3110.\48\ Some stated that the
proposed timing requirement and additional standards for principal
review would be disruptive for firms that use automated systems to
approve transactions that meet established criteria,\49\ and one
suggested requiring manual principal review only when an application
does not meet a firm's standard criteria.\50\
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    \48\ See, e.g., ACLI; Lincoln; Mass Mutual; NAVA; and SIA.
    \49\ CAI and NAVA.
    \50\ NAVA.
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(b) Comments on Proposed Rule 2821(c)(1)--Timing of Principal Review
    Two commenters supported the proposed provisions relating to the
timing of principal review, stating that it would ensure that a
principal would have sufficient time for a complete review while
providing greater assurances that unsuitable transactions would not be
consummated.\51\ Numerous commenters, however, objected to the
principal review deadline.\52\ Some were concerned that members would
be subject to liability for market changes during the delay for
supervisory review.\53\ Others stated that the timing deadline would
require costly reprogramming of broker-dealers' electronic processing
systems that forward contracts to the insurance company and the
broker's home office at the same time.\54\
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    \51\ NASAA and PIABA.
    \52\ See, e.g., ACLI; CAI; ING; and NAVA.
    \53\ Associated Securities; Pacific Direct; and United Planners.
    \54\ CAI and NMIS.
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    One commenter stated that the interaction of this provision with
other Commission and NASD rules could limit a firm's ability to review
applications thoroughly.\55\ Another stated that time-linking the
application process with supervisory review would

impair the goal under the Investment Company Act of 1940's for timely
processing.\56\ Some commenters stated that a delay in pricing the
contract would be unfair to investors.\57\
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    \55\ ING.
    \56\ ACLI.
    \57\ ACLI; Pacific Select; and United Planners.
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    Two commenters recommended that NASD require the review to be
completed prior to the insurance company issuing the contract.\58\ One
of these commenters noted that while this would require logistical
coordination between the principal and the issuer, it would allow
insurers to process applications coextensively with the supervisory
review, but before the security is issued.\59\ Others recommended
requiring principals to conduct their review and approval promptly
after the completion of the contract application and in accordance with
procedures reasonably designed to ensure that problematic purchases are
detected and disapproved.\60\
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    \58\ ACLI and NY Life.
    \59\ ACLI.
    \60\ CAI and NMIS.
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    A few commenters stated that the time deadline would not work in
the context of direct sales, in which an insurance company may not know
of an applicant's interest in a deferred variable annuity until it
receives the application.\61\ Another stated that the timing deadline
would not take into account situations in which the registered
principal is housed in the insurance company.\62\
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    \61\ CAI; NAVA; and T. Rowe Price.
    \62\ NMIS.
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    A few commenter also stated that their current supervisory
structure as an Office of Supervisory Jurisdiction would be incapable
of dealing with the prior approval requirement and they would be forced
to eliminate this form of supervisory structure.\63\ One commenter
stated the requirement could overwhelm principals,\64\ and another
stated that it would require members to allocate two to three times the
supervisory staff for deferred variable annuities than for any other
product.\65\
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    \63\ Great American and ING.
    \64\ Wachovia.
    \65\ Associated Securities.
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    NASD responded to commenters' concerns by modifying the timeframe
for principal review from ``prior to transmitting a customer's
application for a deferred variable annuity to the issuing insurance
company'' to ``no later than two business days following the date when
a member or person associated with a member transmits a customer's
application for a deferred variable annuity to the issuing insurance
company for processing.'' It stated that requiring completion of the
principal review within two business days of the firm's transmittal of
the application to the insurance company is necessary for the
protecting of investors and should promote efficiency. It also noted
that the proposed rule would not preclude firms from using automated
supervisory systems, or a mix of automated and manual supervisory
systems, to facilitate compliance with the rule. In addition, NASD
delineated what, at a minimum, a principal would need to do if his or
her firm intends to rely on automated supervisory systems to comply
with the proposed rule. Specifically, a principal would need to (1)
approve the criteria that the automated supervisory system uses, (2)
audit and update the system as necessary to ensure compliance with the
proposed rule, (3) review exception reports that the system creates,
and (4) remain responsible for each transaction's compliance with the
proposed rule. Finally, NASD noted that a principal would be
responsible for any deficiency in the system's criteria that would
result in the system not being reasonably designed to comply with the
rule.
    NASD also noted that commenters asked whether the principal review
would need to start, but not necessarily be completed, by the time
specified in the rule. In most circumstances, NASD stated that under
the revised timing requirement for principal review firms would be able
to determine the appropriateness of the transactions before the
insurance company issues the contract. In NASD's view, requiring
completion of the principal review with this time period is necessary
for the protection of investors. Moreover, it also believes that
requiring a thorough principal review at the early stages of the
process also should promote efficiency.
(c) Comments on Proposed Rule 2821(c)(1)--Specific Standard for
Principal Review
    Commenters objected to the proposed requirements for members to
establish standards regarding age, liquidity needs and the dollar
amount involved in the transactions and questioned the need for such
standards.\66\ While some requested more clarification of appropriate
standards, others stated that NASD should mandate specific
standards.\67\ One commenter criticized permitting firms to
individually set their own standards, stating that firms would defend
suitability challenges by asserting that the transaction met their own
standards.\68\ Others expressed concern that without defined standards,
a firm's suitability decisions would be second guessed and there would
be inconsistent regulation as different NASD districts establish and
impose different standards.\69\ One commenter stated that the provision
would lead principals to emphasize two or three elements of a
customer's profile rather than considering all of the facts and
circumstances.\70\
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    \66\ See, e.g., Associated Securities; Dominion Investor
Services, Inc. (``Dominion''), Kevin P. Takacs, Chief Compliance
Officer (9/9/05); FSI; Great American; ING; Intersecurities; Pacific
Select; and United Planners.
    \67\ Associated Securities; Dominion; FSI; Fintegra; Great
American; MWA; and Wachovia.
    \68\ Pace.
    \69\ See, e.g., ABIA/ABASA; Associated Securities; Dominion;
FSI; Great American; and ING.
    \70\ Intersecurities.
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    In its response to comments, NASD stated that the particular
provisions requiring members to establish standards were never intended
to require the adherence to brightline standards. It noted that the
establishment of specific thresholds in these instances would
unnecessarily limit a firm's discretion in establishing procedures that
adequately address its overall operations. NASD intended for principals
to consider these factors as part of their facts and circumstances
review. As a result, NASD deleted the requirement for firms to
establish standards for age, liquidity needs and dollar amounts.
(d) Comments on Proposed Rule 2821(c)(1)--Non-Recommended Transactions
    Some commenters objected to requiring principal review of
transactions that are not recommended,\71\ and one noted that the
information that would be needed for a principal review is not
currently required to be collected for non-recommended annuity
transactions.\72\ Another commenter stated that requiring review for
non-recommended transactions would allow principals to second guess
investors' decisions.\73\
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    \71\ See, e.g., ICI; NMIS; and T. Rowe Price.
    \72\ T. Rowe Price.
    \73\ ICI and NMIS.
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    NASD disagreed, noting that due to the complexity of the products,
it is appropriate to require firms to review all deferred variable
annuity transactions for problematic sales practices. It stated that
the proposed rule would create requirements to ensure that firms
perform a consistent, baseline analysis of transactions, irrespective
of whether the customer purchased the deferred variable annuity as a
result of an associated person's

recommendation, thereby enhancing investor protection for all
customers.
(e) Comments on Proposed Rule 2821(c)(1)(D)--Rate of Exchanges
    Two commenters criticized the proposed provision that would require
principals to consider whether the customer's account had a deferred
variable annuity exchange within the preceding 36 months, stating it
could signal to registered representatives that exchanges occurring
more than 36 months apart are appropriate.\74\ One commenter stated
that, while a firm should generate reports and review a registered
representative's sales activity for patterns of inappropriate
replacements as part of its supervisory procedures, it should not be
required to approve each transaction.\75\ After considering the
comments, NASD has determined to retain the requirement.
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    \74\ Intersecurities and World Group.
    \75\ Intersecurities.
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iv. Comments on Proposed Rule 2821(d)--Supervisory Procedures
    The rule, as originally proposed, would require members to
establish and maintain specific written supervisory procedures
reasonably designed to achieve compliance with the rule. Members would
be required to implement procedures to screen transactions and require
registered principals to consider all of the factors enumerated in
paragraph (c) of the proposed rule. They would also have to consider
whether the associated person effecting a transaction has a
particularly high rate of effecting deferred variable annuity
exchanges.
    One commenter supported requiring registered principals to review
the total production attributable to variable annuities of associated
person.\76\ One commenter requested guidance as to what a
``particularly high rate'' refers to and what must be compared to
determine it.\77\ After considering the comments, NASD determined to
retain without modification the provision relating to high rates of
exchange.
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    \76\ NASAA.
    \77\ Wachovia.
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v. Comments on Proposed Rule 2821(e)--Training
    Most of the commenters that addressed the training provision
supported it.\78\ However, one commenter questioned the need for a
specific training requirement and requested clarification regarding
what additional training is contemplated.\79\ Some suggested that the
training obligations in the proposed rule could be met through existing
``Firm Element'' programs.\80\ After considering the comments, NASD
determined to retain this requirement.
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    \78\ See, e.g., FSI; Great American; Lincoln; Mass Mutual; MWA;
NAVA; and PIABA.
    \79\ ING.
    \80\ See, e.g., Pacific Select; United Planners; and Wachovia.
NASD Rule 1120(b) requires each member to establish a training plan
that identifies certain minimum requirements. Each year the firm
must prepare a written training plan after an analysis of its
training needs. Firms must consider certain factors when conducting
their analyses and in developing their training plans, such as the
firm's size, organizational structure, scope and type of business
activities, as well as regulatory developments. This training is
referred to as the ``Firm Element'' portion of NASD's continuing
education requirements.
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(f) Comments on the Effective Date of Proposed Rule 2821
    NASD stated that the effective date of the proposal would be 120
days following publication of its Notice to Members announcing
Commission approval. Numerous commenters requested more time, from 180
days \81\ to no less than one year,\82\ to comply with the proposed
rule. In its response to comments, NASD stated that because some firms
likely will have to make operational changes, it would be appropriate
to provide additional time for members to comply with the rule, if
approved. As a result, NASD stated that the proposed rule's effective
date would be 180 days following publication of the Notice to Members
in which it announces Commission approval.
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    \81\ ING and Intersecurities.
    \82\ NAVA, SIA, and World Group.
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2. Statutory Basis
    NASD believes that the proposed rule is consistent with the
provisions of Section 15A(b)(6) of the Act,\83\ which requires, among
other things, that NASD rules be designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade and, in general, to protect investors and the
public interest. NASD believes that the proposed rule is consistent
with the provisions of the Act noted above in that it will enhance
firms' compliance and supervisory systems and provide more
comprehensive and targeted protection to investors in deferred variable
annuities. As such, the proposed rule will decrease the likelihood of
fraud and manipulative acts, promote just and equitable principles of
trade and increase investor protection.
---------------------------------------------------------------------------

    \83\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    NASD does not believe that the proposed rule will result in any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Received from Members, Participants, or Others

    The Commission published proposed rule 2821 (SR-NASD-2004-183) in
the Federal Register on July 21, 2005. The comment period closed on
September 19, 2005. The Commission received nearly 1500 comment letters
in response to the Federal Register publication of the SR-NASD-2004-
183. The comment letters and NASD's response to them are discussed in
section II above.

III. Date of Effectiveness of the Proposed Rule and Timing for
Commission Action

    Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (1) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
    (A) By order approve such proposed rule, or
    (B) Institute proceedings to determine whether the proposed rule
should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and
arguments concerning Amendment No. 2, including whether the proposed
rule is consistent with the Act.\84\ We also invite interested persons
to discuss how, if at all, the proposed rule's timing requirement for
principal review would impact member firms' ability to efficiently
review deferred variable annuity transactions. What changes, if any,
would member firms need to make to their supervisory procedures and
systems in order to comply with the proposed rule's timing requirement
for principal review? If changes would be necessary, we invite
interested persons to discuss how current supervisory procedures and
systems operate and why those procedures and systems would not
accommodate the proposed rule's timing requirement for principal
review.
---------------------------------------------------------------------------

    \84\ The Commission will consider the comments we previously
received. Commenters may reiterate or cross-reference previously
submitted comments.
---------------------------------------------------------------------------

    Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml.
); or     Send an e-mail to<EMAIL_ADDRESS>Please include

File Number SR -NASD-2004-183 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
    All submissions should refer to File Number SR-NASD-2004-183. This
file number should be included on the subject line if e-mail is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml
). Copies of the submission, all subsequent amendments,

all written statements with respect to the proposed rule that are filed
with the Commission, and all written communications relating to the
proposed rule between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for inspection and copying in the
Commisison's Public Reference Room. Copies of such filing also will be
available for inspection and copying at the principal office of NASD.
    All comments received will be posted without change; the Commission
does not edit personal identifying information from submissions. You
should submit only information that you wish to make available
publicly. All submissions should refer to File Number SR-NASD-2004-183
and should be submitted on or before July 19, 2006.

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\85\
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    \85\ 17 CFR 200.30-3(a)(12).
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 J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 06-5730 Filed 6-27-06; 8:45 am]

BILLING CODE 8010-01-M