(6) A record of any denial, suspension, expuision or revocation of membership or registration of any member, broker or dealer with which he was associated in any capacity when such action was taken;

(7) A record of any permanent or temporary injunction entered against him or any member, broker or dealer with which he as associated in any capacity at the time such injunction was entered;

(8) A record of any arrests, indictments or convictions for any felony or any misdemeanor, except minor traffic offenses, of which he has been the subject;

(9) A record of any other name or names by which he has been known or which he has used: Provided, however, That if such associated person has been registererd as a registered representative of such member, broker or dealer with, or his employment has been approved by, the National Association of Securities Dealers, Inc., or the American Stock Exchange, the Boston Stock Exchange, the Midwest Stock Exchange, the New York Stock Exchange, the Pacific Coast Stock Exchange, or the Philadelphia-Baltimore-Washington Stock Exchange, then retention of a full, correct, and complete copy of any and all applications for such registration or approval shall be deemed to satisfy the requirements of this subparagraph.

(B) For purposes of subparagraph (12) of paragraph (a) of this rule the term "associated person" shall mean a partner, officer, director, salesman, trader, manager, or any employee handling funds or securities or soliciting transactions or accounts for such member, broker or dealer.

(b) This rule shall not be deemed to require a member of a national securities exchange to make or keep such records of transactions cleared for such member by another member as are customarily made and kept by the clearing member.

(c) This rule shall not be deemed to require a member of a national securities exchange, or a broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934, as amended, to make or keep such records as are required by paragraph (a) reflecting the sale of U.S. Tax Savings Notes, U.S. Defense Savings Stamps, or U.S. Defense Savings Bonds, Series E, F, and G.

(d) The records specified in paragraph (a) of this rule shall not be required with respect to any cash transaction of $100 or less involving only

subscription rights or warrants which by their terms expire within 90 days after the issuance thereof.

(Amended subpara. (11) to para. (a) Jan. 18, eff. Mar. 1, 1967, Release 34-8023; amended subpara. (7) to para. (a) Oct. 16, 1968, eff. Jan. 13, 1969, Release 34-8429.) Rule 17a-4. Records To Be Preserved by Certain Exchange Members, Brokers, and Dealers

(a) Every member, broker, and dealer subject to Rule 17a-3 shall preserve for a period of not less than 6 years, the first 2 years in an easily accessible place, all records required to be made pursuant to paragraphs 1, 2, 3, and 5 of Rule 17a-3.

(b) Every such member, broker, and dealer shall preserve for a period of not less than 3 years, the first 2 years in an easily accessible place:

(1) All records required to be made pursuant to paragraphs 4, 6, 7, 8, 9, and 10 of Rule 17a-3. (2) All checkbooks, bank statements, canceled checks, and cash reconciliations.

(3) All bills receivable or payable (or copies thereof), paid or unpaid, relating to the business of such member, broker, or dealer, as such.

(4) Originals of all communications received and copies of all communications sent by such member, broker, or dealer (including interoffice memoranda and communications) relating to his business as such.

(5) All trial balances, computations of aggregate indebtedness and net capital (and working papers in connection therewith), financial statements, branch office reconciliations, and internal audit working papers, relating to the business of such member, broker, or dealer, as such.

(6) All guarantees of accounts and all powers of attorney and other evidence of the granting of any discretionary authority given in respect of any account, and copies of resolutions empowering an agent to act on behalf of a corporation.

(7) All written agreements (or copies thereof) entered into by such member, broker, or dealer relating to his business as such, including agreements with respect to any account.

(c) Every such member, broker, and dealer shall preserve for a period of not less than 6 years after the closing of any cutomer's account any account cards or records which relate to the terms and conditions with respect to the opening and maintenance of such account.

(d) Every such member, broker, and dealer shall preserve during the life of the enterprise and of any successor enterprise all partnership articles or, in the case of a corporation, all articles of incorporation or charter, minute books, and stock certificate books.

(e) Every such member, broker and dealer shall maintain and preserve in an easily accessible place all records required under subparagraph (12) of Rule 17a-3 until at least 3 years after the "associated person" has terminated his employment and any other connection with the member, broker or dealer.

(f) After a record or other document has been preserved for 2 years, a photograph thereof on film may be substituted therefor for the balance of the required time.

(g) If a person who has been subject to Rule 17a-3 ceases to transact a business in securities directly with others than members of a national securities exchange, or ceases to transact a business in securities through the medium of a member of a national securities exchange, or ceases to be registered pursuant to section 15 of the Securities Exchange Act of 1934, as amended, such person shall, for the remainder of the periods of time specified in this rule, continue to preserve the records which he theretofore preserved pursuant to this rule.

(Amended subpara. (5) to para. (b) Jan. 18, eff. Mar. 1, 1967, Release 34-8023.)

Rule 17a-5. Reports To Be Made by Certain Exchange Members, Brokers, and Dealers (a) Filing Reports. This rule shall apply to every member of a national securities exchange who transacts a business in securities directly with or for others than members of a national securities exchange, every broker or dealer (other than a member) who transacts a business in securities through the medium of any member of a national securities exchange, and every broker or dealer registered pursuant to section 15 of the Act.

Every member, broker or dealer subject to this rule shall file reports of financial condition containing the information required by Form X-17A5, as follows: (A) a report shall be filed as of a date within each calendar year, except that (i) the first such report of a member, broker or dealer (other than one succeeding to and continuing the business of another member, broker or dealer) shall be as of a date not less than 1 nor more than 5 months after the date on which such mem

ber, broker or dealer becomes subject to this rule (in the case of a registered broker or dealer this shall be the date the registration becomes effective) and (ii) a member, broker or dealer succeeding to and continuing the business of another member, broker or dealer need not file a report as of a date in the calendar year in which the succession occurs if the predecessor member, broker or dealer has filed a Form X-17A-5 report in compliance with this rule as of a date in such calendar year; (B) such reports shall be filed not more than 45 days after the date of the report of financial condition; and (C) reports for any 2 consecutive years shall not be as of dates within 4 months of each other. The reports provided for in this rule shall be filed in duplicate original with the Regional Office of the Commission for the region in which the member, broker or dealer has his or its principal place of business.

(b) Nature and Form of Reports. Each report of financial condition filed pursuant to paragraph (a) hereof shall be prepared and filed in accordance with the following requirements:

(1) The report of a member, broker or dealer shall be certified by a certified public accountant or a public accountant who shall be in fact independent: Provided, however, That such report need not be certified if, since the date of the previous financial statement or report filed pursuant to Rule 15b1-2 or 17a-5; (A) said member has not transacted a business in securities directly with or for others than members of a national securities exchange; has not carried any margin account, credit balance or security for any person other than a general partner; and has not been required to file a certified financial statement with any national securities exchange; or (B) his or its securities business has been limited to acting as broker (agent) for the issuer in soliciting subscriptions for securities of such issuer, said broker has promptly transmitted to such issuer all funds and promptly delivered to the subscriber all securities received in connection therewith, and said broker has not otherwise held funds or securities for or owed money or securities to customers; or (C) his or its securities business has been limited to buying and selling evidences of indebtedness secured by mortgage, deed or trust, or other lien upon real estate or leasehold interest, and said broker or dealer has not carried any margin account, credit balance, or security for any securities customer.

A member, broker or dealer who files a report which is not certified shall include in the oath or affirmation required by paragraph (b) (2) of this rule a statement of the facts and circumstances relied upon as a basis for exemption from the certification requirements.

(2) Attached to the report shall be an oath or affirmation that, to the best knowledge and belief of the person making such oath or affirmation, (A) the financial statement and supporting schedules are true and correct and (B) neither the member, broker, or dealer, nor any partner, officer, or director, as the case may be, has any proprietary interest in any account classified solely as that of a customer. The oath or affirmation shall be made before a person duly authorized to administer such oaths or affirmations. If the member, broker, or dealer is a sole proprietorship, the oath or affirmation shall be made by the proprietor; if a partnership, by a general partner; or if a corporation, by a duly authorized officer.

(3) If the schedules furnished pursuant to the requirements of Items (a), (b), and (c) of Part II and the supplementary accountant's certificate furnished pursuant to the audit requirements of Form X-17A-5 are bound separately from the balance of the report, they shall be deemed confidential, except that they shall be available for official use by any official or employee of the United States or any State, by national securities exchanges and national secruities associations of which the person filing such report is a member, and by any other person to whom the Commission authorizes disclosure of such information as being in the public interest. Nothing contained in this paragraph shall be deemed to be in derogation of the rules of any national securities association or national securities exchange which give to customers of a member, broker, or dealer the right, upon request to such member, broker, or dealer, to obtain information relative to his financial condition.

(c) Use of Certain Statements Filed With the Securities and Exchange Commission, State Commissions and National Securities Exchanges.

(1) Any member, broker, or dealer who is subject to the provisions of paragraph (a) hereof may file in lieu of the report required by that paragraph a copy of any financial statement which he is, or has been, required to file with any national secu

rities exchange of which he is a member, or with any agency of any State as a condition of doing business in securities therein: Provided, That (A) the copy so included reflects his financial condition as of a date not more than forty-five (45) days prior to the filing thereof with the Commission; and (B) the report, as filed with this Commission, meets the requirements of this rule and Form X-17A-5 and contains the information called for by that form.

(2) At the request of any member, broker, or dealer who is (A) an investment company registered under the Investment Company Act of 1940, or (B) a sponsor or depositor of such a registered investment company who effects transactions in securities only with, or on behalf of, such registered investment company, the Commission will accept any statement of his financial condition filed pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 or section 30 of the Investment Company Act of 1940 and the rules and regulations promulgated thereunder as a filing pursuant to this rule. Such a filing shall be deemed to satisfy the requirements of this rule for any calendar year in which such a financial statement is filed: Provided, That the statement so filed meets the requirements of the other rules under which it is filed with respect to time of filing and content.

(d) Extension of Time for Filing Reports. In the event any member, broker, or dealer finds that he cannot file his report for any year within the time specified in paragraphs (a) or (c) hereof without undue hardship, he may file with the Commission an application for an extension of time to a specified date which shall not be more than 90 days after the date as of which his financial condition is reported. The application shall state the reasons for the requested extension and shall contain an agreement to file the report on or before the specified date. The application shall be deemed granted unless the Commission, within 10 days after receipt thereof, enters an order denying the application.

(e) Exemptions. Any "bank," as defined in section 3(a) (6) of the Act, shall be exempt from the provisions of this rule.

(f) Qualifications of Accountants. The Commission will not recognize any person as a certified public accountant who is not duly registered and in good standing as such under the laws of his

place of residence or principal office. The Commission will not recognize any person as a public accountant who is not in good standing and entitled to practice as such under the laws of the place of his residence or principal office. (g) Accountant's Certificate.

(1) Technical Requirements. The acountant's certificate shall be dated, shall be signed manually, and shall identify without detailed enumeration the items of the report covered by the certificate.

(2) Representations as to Audit. The accountant's certificate (A) shall contain a reasonably comprehensive statement as to the scope of the audit made, including a statement as to whether the accountant reviewed the procedures followed for safeguarding the securities of customers, and including, if with respect to significant items in the report covered by the certificate any auditing procedures generally recognized as normal have been omitted, a specific designation of such procedures and of the reasons for their omission; (B) shall state whether the audit was made in accordance with generally accepted auditing standards applicable in the circumstances; and (C) shall state whether the audit made omitted any procedure deemed necessary by the accountant under the circumstances of the particular case.

(3) Nothing in this rule shall be construed to imply authority for the omission of any procedure which independent accountants would ordinarily employ in the course of an audit made for the purpose of expressing the opinions required by paragraph (h) of this rule.

(h) Accountant's Certificate-Opinions To Be Expressed. The accountant's certificate shall state clearly the opinion of the accountant with respect to the financial statement covered by the certificate and the accounting principles and practices reflected therein.

(i) Accountant's Certificate-Exceptions. Any matters to which the accountant takes exception shall be clearly identified; the exception thereto shall be specifically and clearly stated; and to the extent practicable, the effect of each such exception on the related item of the report shall be given.

(Amended para. (b) (1), Release 34-7700, dated Sept. 10, eff. Sept. 24, 1965; amended para. (b)(3), Oct. 3, Release 34-8172, eff. Nov. 30, 1967.)

Rule 17a-6. Right of a National Securities Exchange To Destroy or Dispose of Applications, Reports, and Documents Filed With It Pursuant to Sections 12, 13, 14, and 16

(a) Any application, report or document, or portion thereof, which has been on file with a national securities exchange for more than 5 years pursuant to sections 12, 13, 14, or 16 of the Act or any rule or regulation promulgated by the Commission pursuant to any of such sections may be destroyed or otherwise disposed of by such exchange pursuant to the terms of a plan for the destruction or disposition of such application, report, or document, if such plan has been filed with the Commission by such exchange and has been declared effective by the Commission.

(6) For the purposes of this rule a plan filed with the Commission by a national securities exchange shall not become effective unless the Commission, having due regard for the public interest and for the protection of investors, declares the plan to be effective. The Commission in its declaration may limit the applications, reports, and documents as to which it shall apply, and may impose any other terms and conditions to the plan and to the period of its effectiveness which it deems necessary or appropriate in the public interest or for the protection of investors.

Rule 17a-7. Records of Nonresident Brokers and Dealers

(a) (1) Except as provided in paragraph (b) hereof, each nonresident broker or dealer registered or applying for registration pursuant to section 15 of the Act shall keep, maintain, and preserve, at a place within the United States designated in a notice from him as provided in subparagraph (2) hereof, true, correct, complete and current copies of the books and records which he is required to make, keep current, maintain or preserve pursuant to any provision of any rule or regulation of the Commission adopted under the Act.

(2) Except as provided in paragraph (b) hereof, each nonresident broker or dealer subject to this rule shall furnish to the Commission a written notice specifying the address of the place within the United States where the copies of the books and records required to be kept and preserved by him pursuant to subparagraph (1) are located. Each nonresident broker or dealer reg

istered or applying for registration when this rule becomes effective shall file such notice within 30 days after such rule becomes effective. Each nonresident broker or dealer who files an application for registration after this rule becomes effective shall file such notice with such application for registration.

(b) Notwithstanding the provisions of paragraph (a) hereof, a nonresident broker or dealer subject to this rule need not keep or preserve within the United States copies of the books and records referred to in said paragraph (a), if:

(1) Such broker or dealer files with the Commission, at the time or within the period provided by paragraph (a) (2) hereof, a written undertaking in form acceptable to the Commission and signed by a person thereunto duly authorized, to furnish to the Commission, upon demand, at its principal office in Washington, D.C., or at any Regional Office of the Commission designated in such demand, true, correct, complete and current copies of any or all of the books and records which he is required to make, keep current, maintain or preserve pursuant to any provision of any rule or regulation of the Commission adopted under the Act, or any part of such books and records which may be specified in such demand. Such undertaking shall be in substantially the following form:

The undersigned hereby undertakes to furnish at his own expense to the Securities and Exchange Commission at its principal office in Washington, D.C., or at any Regional Office of said Commission specified in a demand for copies of books and records made by or on behalf of said Commission, true, correct, complete and current copies of any or all, or any part, of the books and records which the undersigned is required to make, keep current or preserve pursuant to any provision of any rule or regulation of the Securities and Exchange Commission under the Securities Exchange Act of 1934. This undertaking shall be suspended during any period when the undersigned is making, keeping current, and preserving copies of all of said books and records at a place within the United States in compliance with rule 17a-7 under the Securities Exchange Act of 1934. This undertaking shall be binding upon the undersigned and the heirs, successors and assigns of the undersigned, and the written irrevocable consents and powers of attorney of the undersigned, its general partners and managing agents filed with the Securities and Exchange Commission shall extend to and cover any action to enforce same; and

(2) Such broker or dealer furnishes to the Commission at his own expense within 14 days after written demand therefor forwarded to him

by registered mail at his last address of record filed with the Commission and signed by the Secretary of the Commission or such other person as the Commission may authorize to act in its behalf, true, correct, complete and current copies of any or all books and records which such broker or dealer is required to make, keep current or preserve pursuant to any provision of any rule or regulation of the Commission adopted under the Act, or any part of such books and records which may be specified in said written demand. Such copies shall be furnished to the Commission at its principal office in Washington, D.C. or at any Regional Office of the Commission which may be specified in said written demand.

(c) For purposes of this rule the following definitions shall apply:

(1) The term "broker" shall have the meaning set out in section 3 (a) (4) of theAct;

(2) The term "dealer" shall have the meaning set out in section 3 (a) (5) of the Act;

(3) The term "nonresident broker or dealer" shall mean (A) in the case of an individual, one who resides in or has his principal place of business in any place not subject to the jurisdiction of the United States; (B) in the case of a corporation, one incorporated in or having its principal place of business in any place not subject to the jurisdiction of the United States; (C) in the case of a partnership or other unincorporated organization or association, one having its principal place of business in any place not subject to the jurisdiction of the United States.

Rule 17a-8. Reports of Proposed Rule Changes by Exchanges

(a) Each national securities exchange shall file with the Commission three copies of a report of any proposed amendment or repeal of, or any addition to, its rules not less than 3 weeks (or such shorter period as the Commission may authorize) before any action is taken on such amendment repeal or addition by the members of such exchange or by any governing body thereof: Provided, however, That under emergency circumstances such report need not be filed as hereinabove provided, but in such case the exchange shall file three copies of a report giving the Commission as much notice as the circumstances permit, together with a written statement of the reasons why the filing of a report as above provided was impracticable.

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