Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of Proposed Rule Change To Amend NASD Rule 2711 and NYSE Rule 472 Regarding a Member's Disclosure and Supervisory Review Obligations When Distributing Third-Party Research, 54698-54700 [E7-18958]
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54698
Federal Register / Vol. 72, No. 186 / Wednesday, September 26, 2007 / Notices
Therefore, it is ordered, pursuant to
Section 12(k) of the Securities Exchange
Act of 1934, that trading in the abovelisted company is suspended for the
period of 9:30 a.m. EDT, September 24,
2007 through 11:59 p.m. EDT, on
October 5, 2007.
By the Commission.
Nancy M. Morris,
Secretary.
[FR Doc. 07–4759 Filed 9–24–07; 1:11 pm]
BILLING CODE 8010–01–M
[File No. 500–1]
In the Matter of Evolution Global
Capital Partners, Inc.; Order of
Suspension of Trading
September 24, 2007.
mstockstill on PROD1PC66 with NOTICES
It appears to the Securities and
Exchange Commission that the market
for the securities of Evolution Global
Capital Partners, Inc. (‘‘Evolution,’’
trading symbol EGCA), may be reacting
to manipulative forces or deceptive
practices and that there is insufficient
current public information about the
issuer upon which an informed
investment decision may be made,
particularly concerning (1) The identity
of and prior securities fraud judgments
against persons who appear to be
involved in the offer and sale, or in
connection with the purchase or sale, of
Evolution shares; (2) the financial
performance and business prospects of
Evolution; and (3) offerings to foreign
investors and any restrictions on the
resale of shares.
The Commission is of the opinion that
the public interest and the protection of
investors require a suspension of trading
in the securities of the above-listed
company.
Therefore, it is ordered, pursuant to
Section 12(k) of the Securities Exchange
Act of 1934, that trading in the abovelisted company is suspended for the
period of 9:30 a.m. EDT, September 24,
2007 through 11:59 p.m. EDT, on
October 5, 2007.
BILLING CODE 8010–01–P
[Release No. 34–56480; File No. SR–FINRA–
2007–011]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing of
Proposed Rule Change To Amend
NASD Rule 2711 and NYSE Rule 472
Regarding a Member’s Disclosure and
Supervisory Review Obligations When
Distributing Third-Party Research
September 20, 2007.
SECURITIES AND EXCHANGE
COMMISSION
By the Commission.
Nancy M. Morris,
Secretary.
[FR Doc. 07–4760 Filed 9–24–07; 1:11 pm]
SECURITIES AND EXCHANGE
COMMISSION
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
September 12, 2007, Financial Industry
Regulatory Authority, Inc. (‘‘FINRA’’)
(f/k/a National Association of Securities
Dealers, Inc. (‘‘NASD’’)) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I, II,
and III below, which Items have been
prepared by FINRA. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
FINRA is proposing to amend NASD
Rule 2711 and NYSE Rule 472 with
respect to a member’s disclosure and
supervisory review obligations when it
distributes or makes available thirdparty research reports.
The text of the proposed rule change
is available at FINRA, on FINRA’s Web
site at https://www.finra.org, and in the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
FINRA 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. FINRA has prepared
summaries, set forth in sections A, B,
and C below, of the most significant
aspects of such statements.3
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 The Commission has modified parts of these
statements.
2 17
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17:57 Sep 25, 2007
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
NASD Rule 2711(h)(13) and NYSE
Rule 472(k)(4) set forth a member’s
disclosure and supervisory review
obligations when the member
distributes—i.e., ‘‘pushes out’’—or
makes available a research report
produced by a third party. A member
that distributes a third-party research
report must accompany the report with
certain current applicable disclosures
(‘‘third-party disclosures’’), as they
pertain to the member: (1) If the member
owns 1% or more of any class of equity
securities of the subject company; (2) if
the member or any affiliate has managed
or co-managed a public offering of
securities of the subject company or
received compensation for investment
banking services from the subject
company in the past 12 months, or
expects to receive or intends to seek
compensation for such services in the
next three months; (3) if the member
makes a market in the subject
company’s securities; and (4) any other
actual, material conflict of interest of the
research analyst or member of which the
research analyst knows or has reason to
know at the time the research report is
distributed or made available. The thirdparty disclosure requirements do not
apply if a member makes available to its
customers non-affiliate research either
upon request or through a membermaintained Web site.
NASD Rule 2711(h)(13) further
requires that a registered principal (or
supervisory analyst approved pursuant
to Rule 344 of the New York Stock
Exchange) must review and approve by
signature or initial any third-party
research distributed by a member.
Consistent with NASD Rule
2210(d)(1)(B), the member must review
such research to ensure that the
applicable disclosures discussed above
are complete and accurate (‘‘disclosure
review’’) and the content of the research
reports contains no untrue statement of
material fact or is otherwise not false or
misleading (‘‘content review’’).
Similarly, NYSE Rule 472(k)(4) requires
a supervisory analyst approved
pursuant to New York Stock Exchange
Rule 344 to approve by signature or
initial any third-party research
distributed by a member organization.
Additionally, NYSE Rule 472(k)(4)
requires a supervisory analyst or
qualified person, designated pursuant to
NYSE Rule 342(b)(1), to conduct the
same disclosure and content review as
NASD Rule 2711(h)(13).
E:\FR\FM\26SEN1.SGM
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mstockstill on PROD1PC66 with NOTICES
Federal Register / Vol. 72, No. 186 / Wednesday, September 26, 2007 / Notices
FINRA has interpreted that content
review requirement to mean that a
member’s supervisory obligation for
review of third-party research extends to
any untrue statement of material fact or
any false or misleading information that
(1) should be known from a reading of
the report or (2) is known based on
information otherwise possessed by the
member.4 No supervisory review is
required under either rule when a
member makes available non-affiliate
research either upon request or through
a member-maintained Web site.
The proposed rule change would
define a ‘‘third-party research report’’
for the purposes of the rules as a
research report that is produced by a
person or entity other than a member.
The proposal further would create the
subcategory of ‘‘independent third-party
research’’ and eliminate the content
review requirement when a member
distributes or makes available such
research. The proposal would define
‘‘independent third-party research’’ for
the purposes of the rules to mean a
third-party research report, in respect of
which the person or entity producing
the report: (1) Has no affiliation or
business or contractual relationship
with the distributing member or that
member’s affiliates that is reasonably
likely to inform the content of its
research reports; and (2) makes coverage
and content determinations without any
input from the distributing member or
that member’s affiliates.
The proposed rule change would
create an exception from the disclosure
review requirement for independent
third-party research reports made
available by a member either (1) upon
request, (2) through a membermaintained Web site, or (3) where such
report is made available by a member to
a customer in connection with a
solicited order in which the registered
representative has informed the
customer, during the course of the
solicitation, of the availability of
independent research on the solicited
equity security and the customer
requests such independent research.
The proposed rule change would
require that current applicable thirdparty disclosures accompany any thirdparty research report that does not meet
the definition of ‘‘independent thirdparty research report,’’ irrespective of
whether it is distributed or made
available upon request, on a membermaintained Web site or in connection
with a solicitation, as described above.
4 See
Notice to Members 07–04. NYSE
Information Memo 07–11, which has been
incorporated by FINRA, sets out the same standard
for NYSE Rule 472(k)(4).
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17:57 Sep 25, 2007
Jkt 211001
However, the proposed rule change
would amend NASD Rule 2711(h)(13)
and NYSE 472(k)(4) to allow a member
to direct a customer to a Web address
where such applicable third-party
disclosures could be found.
FINRA believes the proposed rule
change will promote the availability of
independent third-party research—a
valuable source of independent analysis
for investors that can be compared with
or supplement a member’s own
research. At the same time, the proposal
would maintain member supervisory
review in those circumstances where
the member’s relationship with the
research provider is such that the
research is not wholly free from the
control or influence of the member.
Moreover, the proposed rule change
preserves the requirement that a
member disclose potential conflicts
with the subject company whenever it
‘‘pushes out’’ research to customers.
The filing includes a statement about
when FINRA will announce the
effective date of the proposed rule
change.
2. Statutory Basis
FINRA believes that the proposed rule
change is consistent with the provisions
of section 15A(b)(6) of the Act,5 which
requires, among other things, that
FINRA rules must 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. FINRA believes that the
proposed rule change is consistent with
the provisions of the Act noted above in
that it will promote the availability of
independent third-party research
reports, thereby resulting in more fully
informed investment decisions by
investors.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
FINRA does not believe that the
proposed rule change 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 Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
5 15
PO 00000
U.S.C. 78o–3(b)(6).
Frm 00061
Fmt 4703
Sfmt 4703
54699
III. Date of Effectiveness of the
Proposed Rule Change 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 (i)
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 change, or
(B) Institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
changes are consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–FINRA–2007–011 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–FINRA–2007–011. 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 (https://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
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54700
Federal Register / Vol. 72, No. 186 / Wednesday, September 26, 2007 / Notices
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 FINRA. 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–FINRA–2007–011 and
should be submitted on or before
October 17, 2007.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.6
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–18958 Filed 9–25–07; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–56481; File No. SR–FINRA–
2007–010]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing of
Proposed Rule Change To Amend an
Exemption to NASD Rule 1050 and
NYSE Rule Interpretation 344/02 for
Certain Research Analysts Employed
by a Member’s Foreign Affiliate Who
Contribute to the Preparation of a
Member’s Research Report
September 20, 2007.
mstockstill on PROD1PC66 with NOTICES
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
September 12, 2007, Financial Industry
Regulatory Authority, Inc. (‘‘FINRA’’) (f/
k/a National Association of Securities
Dealers, Inc. (‘‘NASD’’)) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I, II,
and III below, which Items have been
prepared by FINRA. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
FINRA is proposing to amend an
exemption to NASD Rule 1050 and
NYSE Rule Interpretation 344/02 for
certain research analysts employed by a
member’s foreign affiliate who
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
contribute to the preparation of a
member’s research report.
The text of the proposed rule change
is available at FINRA, on FINRA’s Web
site at https://www.finra.org., and in the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
FINRA 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. FINRA has prepared
summaries, set forth in sections A, B,
and C below, of the most significant
aspects of such statements.3
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Background
NASD Rule 1050 and NYSE 344
(‘‘Rules’’) require an associated person
who functions as a research analyst to
register as such with FINRA and pass a
qualification examination. In the
context of this requirement, the Rules
define ‘‘research analyst’’ as ‘‘an
associated person who is primarily
responsible for the preparation of the
substance of a research report or whose
name appears on a research report.’’ The
term ‘‘research report’’ in the Rules have
the meaning as defined in NASD Rule
2711(a)(8) and NYSE Rule 472.10(2): A
written or electronic communication
that includes an analysis of equity
securities of individual companies or
industries, and that provides
information reasonably sufficient upon
which to base an investment decision.
Pursuant to the Rules, FINRA has
implemented the Research Analyst
Qualification Examination (Series 86/
87). The examination consists of an
analysis part (Series 86) and a regulatory
part (Series 87). Prior to taking either
the Series 86 or 87, a candidate also
must have passed the General Securities
Registered Representative Examination
(Series 7), the Limited Registered
Representative (Series 17), or the
Canada Module of Series 7 (Series 37 or
38). Persons who were functioning as
research analysts on the effective date of
March 30, 2004, and submitted a
registration application to NASD by
6 17
1 15
VerDate Aug<31>2005
17:57 Sep 25, 2007
3 The Commission has modified part of these
statements.
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June 1, 2004, had until April 4, 2005, to
meet the registration requirements. The
Rules currently provide exemptions
from the Series 86 examination for
certain applicants who have passed
Levels I and II of the Chartered
Financial Analyst examination or have
passed Levels I and II of the Chartered
Market Technician Examination and
produce only ‘‘technical research
reports’’ as that term is defined in the
Rules. The Rules further exempt certain
research analysts who are employed by
a member’s foreign affiliate and
contribute to the preparation of a
member’s research report. The proposed
rule change would modify this latter
exemption.
Current Exemption
In March 2004, FINRA and the New
York Stock Exchange issued joint
guidance on the determination of
whether a research report is considered
the product of a member or that of a
third party, including a foreign
affiliate.4 The guidance explained that
FINRA considers a ‘‘research report’’ to
be attributable to the member if (1) the
report appears to be the product of the
member or (2) a ‘‘research analyst’’ as
defined by FINRA rules associated with
a member is involved in producing the
research report. Where either of the two
factors pertain, the research report and
any ‘‘research analyst’’ involved in its
production must meet all of the
applicable requirements of NASD Rules
1050 and 2711 and NYSE Rules 344 and
472. Thus, for example, a ‘‘globallybranded’’ research report that is not
clearly labeled to the reader as being
wholly the product of a foreign affiliate
would be deemed the member’s
research. Similarly, FINRA considers a
research report prepared by a ‘‘mixedteam’’ that includes at least one research
analyst associated with the member to
be a member’s report for the purpose of
application of NASD Rule 2711 and
NYSE Rule 472.
Since the Rules require any ‘‘research
analyst’’ who contributes to the
preparation of a member’s research
report or whose name appears on such
report to be registered, certain foreign
analysts who contribute to the
production of a member’s ‘‘globallybranded’’ research or ‘‘mixed-team’’
research report could be required to
meet the qualification requirements, but
only if they are associated persons of the
member. FINRA affirmed this
interpretation in announcing the
4 See NASD Notice to Members 04–18 and New
York Stock Exchange Information Memo 04–10. The
New York Stock Exchange memo applies to its Rule
472. FINRA has incorporated both Rule 472 and the
applicable interpretive guidance.
E:\FR\FM\26SEN1.SGM
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]]>Agencies
[Federal Register Volume 72, Number 186 (Wednesday, September 26, 2007)]
[Notices]
[Pages 54698-54700]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-18958]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-56480; File No. SR-FINRA-2007-011]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing of Proposed Rule Change To Amend NASD
Rule 2711 and NYSE Rule 472 Regarding a Member's Disclosure and
Supervisory Review Obligations When Distributing Third-Party Research
September 20, 2007.
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 September 12, 2007, Financial Industry Regulatory Authority, Inc.
(``FINRA'') (f/k/a National Association of Securities Dealers, Inc.
(``NASD'')) filed with the Securities and Exchange Commission (``SEC''
or ``Commission'') the proposed rule change as described in Items I,
II, and III below, which Items have been prepared by FINRA. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
FINRA is proposing to amend NASD Rule 2711 and NYSE Rule 472 with
respect to a member's disclosure and supervisory review obligations
when it distributes or makes available third-party research reports.
The text of the proposed rule change is available at FINRA, on
FINRA's Web site at https://www.finra.org, and in the Commission's
Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, FINRA 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. FINRA has prepared summaries, set forth in sections A,
B, and C below, of the most significant aspects of such statements.\3\
---------------------------------------------------------------------------
\3\ The Commission has modified parts of these statements.
---------------------------------------------------------------------------
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
NASD Rule 2711(h)(13) and NYSE Rule 472(k)(4) set forth a member's
disclosure and supervisory review obligations when the member
distributes--i.e., ``pushes out''--or makes available a research report
produced by a third party. A member that distributes a third-party
research report must accompany the report with certain current
applicable disclosures (``third-party disclosures''), as they pertain
to the member: (1) If the member owns 1% or more of any class of equity
securities of the subject company; (2) if the member or any affiliate
has managed or co-managed a public offering of securities of the
subject company or received compensation for investment banking
services from the subject company in the past 12 months, or expects to
receive or intends to seek compensation for such services in the next
three months; (3) if the member makes a market in the subject company's
securities; and (4) any other actual, material conflict of interest of
the research analyst or member of which the research analyst knows or
has reason to know at the time the research report is distributed or
made available. The third-party disclosure requirements do not apply if
a member makes available to its customers non-affiliate research either
upon request or through a member-maintained Web site.
NASD Rule 2711(h)(13) further requires that a registered principal
(or supervisory analyst approved pursuant to Rule 344 of the New York
Stock Exchange) must review and approve by signature or initial any
third-party research distributed by a member. Consistent with NASD Rule
2210(d)(1)(B), the member must review such research to ensure that the
applicable disclosures discussed above are complete and accurate
(``disclosure review'') and the content of the research reports
contains no untrue statement of material fact or is otherwise not false
or misleading (``content review''). Similarly, NYSE Rule 472(k)(4)
requires a supervisory analyst approved pursuant to New York Stock
Exchange Rule 344 to approve by signature or initial any third-party
research distributed by a member organization. Additionally, NYSE Rule
472(k)(4) requires a supervisory analyst or qualified person,
designated pursuant to NYSE Rule 342(b)(1), to conduct the same
disclosure and content review as NASD Rule 2711(h)(13).
[[Page 54699]]
FINRA has interpreted that content review requirement to mean that
a member's supervisory obligation for review of third-party research
extends to any untrue statement of material fact or any false or
misleading information that (1) should be known from a reading of the
report or (2) is known based on information otherwise possessed by the
member.\4\ No supervisory review is required under either rule when a
member makes available non-affiliate research either upon request or
through a member-maintained Web site.
---------------------------------------------------------------------------
\4\ See Notice to Members 07-04. NYSE Information Memo 07-11,
which has been incorporated by FINRA, sets out the same standard for
NYSE Rule 472(k)(4).
---------------------------------------------------------------------------
The proposed rule change would define a ``third-party research
report'' for the purposes of the rules as a research report that is
produced by a person or entity other than a member. The proposal
further would create the subcategory of ``independent third-party
research'' and eliminate the content review requirement when a member
distributes or makes available such research. The proposal would define
``independent third-party research'' for the purposes of the rules to
mean a third-party research report, in respect of which the person or
entity producing the report: (1) Has no affiliation or business or
contractual relationship with the distributing member or that member's
affiliates that is reasonably likely to inform the content of its
research reports; and (2) makes coverage and content determinations
without any input from the distributing member or that member's
affiliates.
The proposed rule change would create an exception from the
disclosure review requirement for independent third-party research
reports made available by a member either (1) upon request, (2) through
a member-maintained Web site, or (3) where such report is made
available by a member to a customer in connection with a solicited
order in which the registered representative has informed the customer,
during the course of the solicitation, of the availability of
independent research on the solicited equity security and the customer
requests such independent research.
The proposed rule change would require that current applicable
third-party disclosures accompany any third-party research report that
does not meet the definition of ``independent third-party research
report,'' irrespective of whether it is distributed or made available
upon request, on a member-maintained Web site or in connection with a
solicitation, as described above. However, the proposed rule change
would amend NASD Rule 2711(h)(13) and NYSE 472(k)(4) to allow a member
to direct a customer to a Web address where such applicable third-party
disclosures could be found.
FINRA believes the proposed rule change will promote the
availability of independent third-party research--a valuable source of
independent analysis for investors that can be compared with or
supplement a member's own research. At the same time, the proposal
would maintain member supervisory review in those circumstances where
the member's relationship with the research provider is such that the
research is not wholly free from the control or influence of the
member. Moreover, the proposed rule change preserves the requirement
that a member disclose potential conflicts with the subject company
whenever it ``pushes out'' research to customers.
The filing includes a statement about when FINRA will announce the
effective date of the proposed rule change.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of section 15A(b)(6) of the Act,\5\ which requires, among
other things, that FINRA rules must 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. FINRA believes that the proposed rule change is
consistent with the provisions of the Act noted above in that it will
promote the availability of independent third-party research reports,
thereby resulting in more fully informed investment decisions by
investors.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
FINRA does not believe that the proposed rule change 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 Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change 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 (i) 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 change, or
(B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
changes are consistent with the Act. Comments may be submitted by any
of the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-FINRA-2007-011 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-FINRA-2007-011. 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 (https://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
[[Page 54700]]
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
FINRA. 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-
FINRA-2007-011 and should be submitted on or before October 17, 2007.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\6\
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\6\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-18958 Filed 9-25-07; 8:45 am]
BILLING CODE 8010-01-P
