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News October 3, 2005 Issue

NASD IPO Rule Notice to Members Expected This Week

Look for the NASD to issue a Notice to Members this week describing recent rule amendments to Rule 2790, the IPO rule.

You may recall that last summer, the NASD issued an interpretative memorandum that quashed the hopes of offshore hedge funds that had listed on the Cayman Islands Stock Exchange or Irish Stock Exchange in order to avail themselves of the "foreign investment company" exemption in Rule 2790 (see IM Insight, August 16, 2004). A few months after it issued that interpretative memo, the NASD asked the SEC to approve rule amendments to codify the interpretation into law. The SEC approved the amendments in August 2005, and indicated that the NASD would issue a Notice to Members discussing the amendments within 60 days. That 60-day period ends next week.

The notice will set forth the effective date of the changes, which is expected to be sometime in early November.