Amendments Approved to Remove Exemptions from Regulatory Element of Continuing Education Program
On October 18, 2004, the Securities and Exchange Commission approved amendments to Rule G-3, on professional qualifications, to remove the exemptions from the Regulatory Element of the Continuing Education Program and require all registered persons to participate in the Regulatory Element.[1] The effective date of the amendments is dependent upon the effective date of similar amendments filed by the NASD[2] because NASD administers the Regulatory Element computer-based education program. NASD has stated that it will announce the effective date of its rule change in a Notice to Members to be published no later than 60 days following Commission approval. NASD stated that the effective date will be (1) not more than 30 days following publication of the Notice to Members announcing Commission approval, (2) not more than 30 days following the implementation of necessary changes to Web Central Registration Depository (Web CRD), or (3) April 4, 2005, whichever date is the latest to occur. The effective date of the MSRB’s amendments will be the same as the effective date of the NASD’s amendments.
A description of the amendments can be found at “Amendments Filed to Remove Exemptions from Regulatory Element of Continuing Education Program,” MSRB Notice 2004-27 (August 5, 2004) [click here to access MSRB Notice 2004-27].
October 25, 2004
TEXT OF AMENDMENTS [3]
Rule G- 3. Classification of Principals and Representatives; Numerical Requirements; Testing; Continuing Education Requirements
(a) – (g) No change.
(h) Continuing Education Requirements
This section (h) prescribes requirements regarding the continuing education of certain registered persons subsequent to their initial qualification and registration with a registered securities association with respect to a person associated with a member of such association, or the appropriate regulatory agency as defined in section 3(a)(34) of the Act with respect to a person associated with any other broker, dealer or municipal securities dealer (“the appropriate enforcement authority”). The requirements shall consist of a Regulatory Element and a Firm Element as set forth below.
(i) Regulatory Element
(A) Requirements—No broker, dealer or municipal securities dealer shall permit any registered person to continue to, and no registered person shall continue to, perform duties as a registered person, unless such person has complied with the requirements of section (i) hereof.
[(1)] Each registered person shall complete the Regulatory Element [beginning with] on the occurrence of their second registration anniversary date and every three years thereafter or as otherwise prescribed by the Board. On each occasion, the Regulatory Element must be completed within 120 days after the person’s registration anniversary date. A person’s initial registration date, also known as the “base date,” shall establish the cycle of anniversary dates for purposes of this section (i). The content of the Regulatory Element shall be determined by the Board for each registration category of persons subject to the rule.
[(2) Persons who have been continuously registered for more than 10 years as of the effective date of this section are exempt from the requirements of this rule relative to participation in the Regulatory Element, provided such persons have not been subject to any disciplinary action within the last 10 years as enumerated in paragraphs (i)(C)(1)-(2) of this section. However, persons delegated supervisory responsibility or authority pursuant to rule G-27 and registered in such supervisory capacity are exempt from participation in the Regulatory Element under this provision only if they have been continuously registered in a supervisory capacity for more than ten years as of the effective date of this rule and provided that such supervisory person has not been subject to any disciplinary action under paragraphs (i)(C)(1)-(2) of this section.]
[(3) In the event that a registered person who is exempt from participation in the Regulatory Element subsequently becomes the subject of a disciplinary action as enumerated in paragraphs (i)(C)(1)-(2), such person shall be required to satisfy the requirements of the Regulatory Element as if the date the disciplinary action becomes final is the person’s initial registration anniversary date.]
(B) No change.
(C) [Re-entry into Program] Disciplinary Actions—Unless otherwise determined by the appropriate enforcement authority, a registered person will be required to [re-enter] retake the Regulatory Element and satisfy all of its requirements in the event such person:
(1) becomes subject to any statutory disqualification as defined in Section 3(a)(39) of the Securities Exchange Act of 1934;
(2) becomes subject to suspension or to the imposition of a fine of $5,000 or more for violation of any provision of any securities law or regulation, or any agreement with or rule or standard of conduct of any securities governmental agency, securities self-regulatory organization, the appropriate enforcement authority or as imposed by any such regulatory or self-regulatory organization in connection with a disciplinary proceeding; or
(3) is ordered as a sanction in a disciplinary action to [re-enter] retake the [continuing education program] Regulatory Element by any securities governmental agency, the appropriate enforcement authority or securities self-regulatory organization.
[Re-entry] The retaking of the Regulatory Element shall commence with [initial] participation within 120 days of the registered person becoming subject to the statutory disqualification, in the case of (1) above, or the completion of the sanction or the disciplinary action becomes final, in the case of (2) or (3) above. The date that the disciplinary action becomes final will be deemed the person’s [initial registration anniversary] new base date for purposes of this section (i).
(D) - (G) No change.
(ii) No change.
