Self-Regulatory Organizations; National Association of Securities Dealers, Inc. (n/k/a Financial Industry Regulatory Authority, Inc.); Order Approving Proposed Rule Change Relating to Interpretative Material 9216, Violations Appropriate for Disposition Under Plan Pursuant to SEC Rule 19d-1(c)(2), 55850-55852 [E7-19271]

Download as PDF mstockstill on PROD1PC66 with NOTICES 55850 Federal Register / Vol. 72, No. 189 / Monday, October 1, 2007 / Notices Act,20 which provides that an exchange shall not extend UTP to a security unless the exchange has in effect a rule or rules providing for transactions in the class or type of security to which the exchange extends UTP. The Exchange has represented that it meets this requirement because it deems the Shares to be equity securities, thus rendering trading in the Shares subject to the Exchange’s existing rules governing the trading of equity securities. The Commission further believes that the proposal is consistent with Section 11A(a)(1)(C)(iii) of the Act,21 which sets forth Congress’ finding that it is in the public interest and appropriate for the protection of investors and the maintenance of fair and orderly markets to assure the availability to brokers, dealers, and investors of information with respect to quotations for and transactions in securities. Quotations for and last-sale information regarding the Shares are disseminated through the facilities of the CTA and the Consolidated Quotation System. In addition, an IIV for each Fund, updated to reflect changes in currency exchange rates, is calculated by NYSE and published via the facilities of the Consolidated Tape Association on a 15second delayed basis throughout the trading hours for the Shares. Moreover, information about the prices of the currencies underlying the Funds is publicly available from a number of sources. The Commission also believes that the proposal appears reasonably designed to preclude trading of the Shares when transparency is impaired. Amex has represented that it will cease trading in the Shares if the listing market stops trading the Shares because of a regulatory halt similar to a halt based on Amex Rule 117 and/or a halt because the IIV is not being calculated or disseminated. In support of this proposal, the Exchange has made the following additional representations: 1. The Exchange’s surveillance procedures are adequate to properly monitor Exchange trading of the Shares in all trading sessions and to deter and detect violations of Exchange rules. 2. Prior to the commencement of trading, the Exchange would inform its members in an Information Bulletin of the special characteristics and risks associated with trading the Shares. 3. Prior to the commencement of trading, the Exchange would inform its members in an Information Bulletin the 20 17 21 15 18:31 Sep 28, 2007 SECURITIES AND EXCHANGE COMMISSION This approval order is based on the Exchange’s representations. Self-Regulatory Organizations; National Association of Securities Dealers, Inc. (n/k/a Financial Industry Regulatory Authority, Inc.); Order Approving Proposed Rule Change Relating to Interpretative Material 9216, Violations Appropriate for Disposition Under Plan Pursuant to SEC Rule 19d– 1(c)(2) The Commission notes that, if the Shares should be delisted by the listing exchange, the Exchange would no longer have authority to trade the Shares pursuant to this order. The Commission finds good cause for approving this proposal before the thirtieth day after the publication of notice thereof in the Federal Register. As noted previously, the Commission previously found that the listing and trading of the Shares on NYSE and the trading of the Shares on NYSE Arca pursuant to UTP are consistent with the Act. The Commission presently is not aware of any regulatory issue that should cause it to revisit those findings or would preclude the trading of the Shares on the Exchange pursuant to UTP. Therefore, accelerating approval of this proposal should benefit investors by creating, without undue delay, additional competition in the market for the Shares. V. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act 22 that the proposed rule change (SR–Amex–2007– 101), be and it hereby is, approved on an accelerated basis. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.23 Nancy M. Morris, Secretary. [FR Doc. E7–19273 Filed 9–28–07; 8:45 am] BILLING CODE 8011–01–P 22 15 CFR 240.12f–5. U.S.C. 78k–1(a)(1)(C)(iii). VerDate Aug<31>2005 requirement that members deliver a prospectus to investors purchasing newly issued Shares prior to or concurrently with the confirmation of a transaction. 23 17 Jkt 214001 PO 00000 U.S.C. 78s(b)(2). CFR 200.30–3(a)(12). Frm 00115 Fmt 4703 Sfmt 4703 [Release No. 34–56504; File No. SR–NASD– 2007–055] September 24, 2007. I. Introduction On July 24, 2007, the National Association of Securities Dealers, Inc. (‘‘NASD’’) (n/k/a Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’)) 1 filed with the Securities and Exchange Commission (‘‘Commission’’ or ‘‘SEC’’) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Exchange Act’’) 2 and Rule 19b–4 thereunder,3 a proposed rule change to amend Interpretative Material 9216 (Violations Appropriate for Disposition Under Plan Pursuant to SEC Rule 19d– 1(c)(2)) (‘‘IM–9216’’) to expand the list of violations eligible for disposition under NASD’s Minor Rule Violation Plan (‘‘MRVP’’). The proposed rule change was published for comment in the Federal Register on August 7, 2007.4 The Commission received no comment letters on the proposed rule change. This order approves the proposed rule change. II. Description of the Proposed Rule Change In connection with the recently approved plan to consolidate the member regulation operations of NASD and the NYSE Group, Inc. into a single organization (‘‘Transaction’’),5 NASD proposed to amend IM–9216 to expand the list of violations eligible for 1 On July 26, 2007, the Commission approved a proposed rule change filed by NASD to amend NASD’s Certificate of Incorporation to reflect its name change to the Financial Industry Regulatory Authority, Inc., or FINRA, in connection with the consolidation of the member firm regulatory functions of NASD and NYSE Regulation, Inc. See Securities Exchange Act Release No. 56146 (July 26, 2007). 2 15 U.S.C. 78s(b)(1). 3 17 CFR 240.19b–4. 4 See Securities Exchange Act Release No. 56175 (July 31, 2007), 72 FR 44201 (‘‘Notice’’). 5 On July 26, 2007, the Commission approved amendments to NASD’s By-Laws to implement governance and related changes to accommodate the consolidation of the member firm regulatory functions of NASD and NYSE Regulation, Inc. See Securities Exchange Act Release No. 56145 (July 26, 2007). The date of closing of the Transaction was July 30, 2007. E:\FR\FM\01OCN1.SGM 01OCN1 Federal Register / Vol. 72, No. 189 / Monday, October 1, 2007 / Notices mstockstill on PROD1PC66 with NOTICES disposition under NASD’s MRVP to include certain NYSE rules that pertain to the regulation of member firm conduct. 6 The proposed rule change would amend NASD’s MRVP to include those Incorporated NYSE Rules currently enumerated in NYSE’s MRVP. This would permit FINRA, during the interim period until the adoption of a consolidated rulebook, to impose a fine for minor rule violations by a Dual Member of the Incorporated NYSE Rules in lieu of commencing disciplinary proceedings. As discussed in Release No. 34–56147, NASD is not proposing to incorporate, among other rules, the NYSE disciplinary rules or related interpretations, including NYSE’s MRVP as set forth in NYSE Rule 476A (Imposition of Fines for Minor Violation(s) of Rules). 7 The proposed amendments to IM– 9216 also would specify the applicability of the rules listed therein to various members of FINRA. Specifically, any Dual Member (including any persons affiliated with such member) may be subject to a fine under Rule 9216(b) with respect to any rule listed in IM–9216 that applies to such member or person; provided, however, that any Dual Member that was not also a member of NASD as of the date of closing of the Transaction and that does not engage in any activities that would have required it to be an NASD member (and its affiliated persons that are not otherwise subject to NASD rules) would only be subject to a fine under Rule 9216(b) with respect to the following rules listed in IM–9216: any NYSE rule, Exchange Act rule, NASD By-Law or Schedule to By-Laws, 6 Until the adoption of a consolidated rulebook that would reduce to one the two sets of rules currently applicable to members of both the NASD and NYSE (‘‘Dual Members’’), NASD has proposed to incorporate into FINRA’s rulebook certain NYSE Rules that pertain to the regulation of member firm conduct (‘‘Incorporated NYSE Rules’’). See Securities Exchange Act Release No. 56147 (July 26, 2007) (SR–NASD–2007–054, Exhibit 5) (incorporating certain NYSE Rules relating to member firm conduct into FINRA’s rulebook) (‘‘Release No. 34–56147’’). As noted in Release No. 34–56147, the Incorporated NYSE Rules apply solely to FINRA members that are Dual Members on or after the date of closing of the Transaction. NASD represented that FINRA will work expeditiously to consolidate the rules that apply to its member firms. See Notice, supra note 4. The Incorporated NYSE Rules will apply solely to Dual Members until such time as FINRA adopts, subject to Commission approval, consolidated rules applicable to all of its members. 7 NASD is not proposing to incorporate NYSE’s MRVP (NYSE Rule 476A), because NYSE Rule 476A contains procedures that would conflict with the finding of a minor rule violation by FINRA. For example, NYSE Rule 476A permits a person against whom a fine is imposed to contest the NYSE’s fine determination by, among other things, appealing to the NYSE board of directors. VerDate Aug<31>2005 18:31 Sep 28, 2007 Jkt 214001 or the NASD Rule 8000 Series. In addition, any member of FINRA that is not also a member of the NYSE (and its associated persons that are not otherwise subject to NYSE rules) may be subject to a fine under Rule 9216(b) with respect to any rule listed in IM– 9216, with the exception of the NYSE rules. NASD is not proposing to adopt the provision in NYSE’s MRVP that establishes a $5,000 maximum fine that may be imposed under NYSE’s MRVP for minor violations of NYSE rules. Rather, FINRA would continue to apply the $2,500 maximum fine level under NASD’s MRVP in determining fine levels for minor violations of either an NASD or NYSE rule included in NASD’s MRVP. 8 The proposed rule change also would delete from IM–9216 references to NASD rules that have been rescinded. III. Discussion After careful review, the Commission finds that the proposed rule change is consistent with the Exchange Act and the rules and regulations thereunder applicable to a national securities association.9 Specifically, the Commission finds that the proposed rule change is consistent with Section 15A(b)(2) of the Exchange Act 10 in that it will permit FINRA to be so organized 8 Rule 19d–1(c)(2) under the Exchange Act, 17 CFR 240.19d–1(c)(2), provides that any disciplinary action taken by a self-regulatory organization (‘‘SRO’’) against any person of a rule of the SRO that has been designated as a minor rule violation pursuant to a plan is not considered ‘‘final’’ for purposes of Rule 19d–1(c)(1) under the Exchange Act, 17 CFR 240.19d–1(c)(2), if the sanction imposed consists of a fine not exceeding $2,500 and the sanctioned person has not sought an adjudication, including a hearing, or otherwise exhausted his administrative remedies at the SRO with respect to the matter. SROs are permitted to report such minor rule violations (where the fine does not exceed $2,500) to the Commission on a periodic, rather than immediate, basis. In addition, members are not required to report ‘‘minor rule violations’’ on the Forms BD, U4 or U5 (as such term is defined on the forms). These forms provide that a rule violation may be designated as ‘‘minor’’ under a plan approved by the Commission if, among other things, the sanction imposed consists of a fine of $2,500 or less. See also Securities Exchange Act Release No. 40193 (July 10, 1998), 63 FR 39338 (July 22, 1998) (Order Granting Approval to Proposed Rule Change Relating to Fines for Disruptive Action on the Options Floor) (SR-PCX– 98–21) (stating in the context of amendments to the MRVP of the Pacific Exchange, Inc’s (‘‘PCX’’) (now NYSE Arca, Inc.) that, as noted in PCX’s MRVP, pursuant to Securities Exchange Act Release No. 30958, any person or organization found in violation of a minor rule under an MRVP is not required to report such violation on Form BD, provided that, among other things, the sanction imposed consists of a fine not exceeding $2,500). 9 In approving this proposed rule change, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 10 15 U.S.C. 78o–3(b)(2). PO 00000 Frm 00116 Fmt 4703 Sfmt 4703 55851 to carry out the purposes of the Exchange Act and to enforce compliance by FINRA members and persons associated with its members with the Exchange Act, the rules and regulations thereunder, and FINRA rules. The Commission also finds that the proposed rule change is consistent with Section 15A(b)(6) of the Exchange Act 11 in that it is designed, among other things, to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. Further, the Commission finds that the proposed rule change is consistent with Section 15A(b)(7) of the Exchange Act 12 in that it will provide that FINRA members and persons associated with its members will be appropriately disciplined for violations of the Exchange Act, the rules and regulations thereunder, and FINRA rules. The Commission also finds the proposed rule change consistent with Section 15A(b)(8) of the Exchange Act 13 in that it furthers the statutory goals of providing a fair procedure for the disciplining of members and persons associated with members. As a result of the proposed rule change, FINRA would be able to impose a fine for minor rule violations with respect to the Incorporated NYSE Rules that currently are enumerated in NYSE’s MRVP. The proposed rule change is designed to ensure that Dual Members will have substantially the same set of regulatory obligations immediately following the closing date of the Transaction that such members had prior to the closing of the Transaction until the member conduct rules of the NASD and NYSE are consolidated into a single set of FINRA rules. The proposed rule change provides a reasonable means of addressing violations of both NASD and NYSE rules that do not rise to the level of requiring formal disciplining proceedings, while providing greater flexibility in handling certain violations. The Commission expects that FINRA will continue to conduct surveillance with due diligence and make a determination based on its findings, on a case-by-case basis, whether a fine under the MRVP is appropriate, or whether a violation requires formal disciplinary action. 11 15 U.S.C. 78o–3(b)(6). U.S.C. 78o–3(b)(7). 13 15 U.S.C. 78o–3(b)(8). 12 15 E:\FR\FM\01OCN1.SGM 01OCN1 55852 Federal Register / Vol. 72, No. 189 / Monday, October 1, 2007 / Notices The proposed rule change also provides that Dual Members will be subject to FINRA’s disciplinary procedures, including FINRA’s current $2,500 maximum fine level for minor rule violations of either an NASD or NYSE rule included in FINRA’s MRVP. While there are some distinctions between NASD’s and NYSE’s rules, both sets of rules applicable to the disciplinary process were previously approved by the Commission as consistent with the Exchange Act, generally following notice and comment.14 Accordingly, although Dual Members and their associated persons no longer would be subject to NYSE’s disciplinary procedures with respect to the Incorporated NYSE Rules, but to FINRA’s instead, the Commission finds that the proposed rule change should help ensure greater consistency in the administration of the disciplinary process for FINRA and its members, as well as in the related reporting obligations for minor violations of rules. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Exchange Act,15 that the proposed rule change (SR– NASD–2007–055), be, and it hereby is, approved. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.16 Nancy M. Morris, Secretary. [FR Doc. E7–19271 Filed 9–28–07; 8:45 am] BILLING CODE 8011–01–P SUSQUEHANNA RIVER BASIN COMMISSION Notice of Actions Taken at September 12, 2007 Meeting Susquehanna River Basin Commission. ACTION: Notice of Commission Actions. AGENCY: mstockstill on PROD1PC66 with NOTICES SUMMARY: At its regular business meeting on September 12, 2007 in Binghamton, New York, the Commission: (1) Convened a panel session on New York State’s involvement in the Chesapeake Bay Program, (2) approved a proposed rulemaking action to amend the 14 See Securities Exchange Act Release Nos. 21688 (January 25, 1985), 50 FR 5025 (February 5, 1985) (order approving NYSE’s Rule 476A— Imposition of Fines for Minor Violation(s) of Rules); and 32383 (May 28, 1993), 58 FR 31768 (June 4, 1993) (order approving establishment of NASD’s Minor Rule Violations Plan). 15 15 U.S.C. 78s(b)(2). 16 17 CFR 200.30–3(a)(12). VerDate Aug<31>2005 18:31 Sep 28, 2007 Jkt 214001 consumptive use provisions of 18 CFR Part 806 relating to agricultural water use, and (3) approved a grant and four contracts. It also conducted a public hearing to approve certain water resources projects and rescind one docket approval. See the SUPPLEMENTARY INFORMATION section below for more details on these actions. DATES: September 12, 2007. ADDRESSES: Susquehanna River Basin Commission, 1721 N. Front Street, Harrisburg, PA 17102–2391. FOR FURTHER INFORMATION CONTACT: Richard A. Cairo, General Counsel, telephone: (717) 238–0423; ext. 306; fax: (717) 238–2436; e-mail: rcairo@srbc.net or Deborah J. Dickey, Secretary to the Commission, telephone: (717) 238– 0422, ext. 301; fax: (717) 238–2436; email: ddickey@srbc.net. Regular mail inquiries may be sent to the above address. SUPPLEMENTARY INFORMATION: The September 12th agenda included a panel session focusing on New York State’s involvement in the Chesapeake Bay Program and the active steps that New York is taking to participate in the effort to restore the Bay, including the implementation of a tributary strategy and other measures such as sewage treatment plant improvements, improved farming practices and constructed wetlands. In regards to the proposed rulemaking action to amend the agricultural consumptive use provisions of 18 CFR part 806, notice thereof will be published in the Federal Register and in state notice publications. In addition, a public hearing will be scheduled and the public comment period will run until November 15, 2007. Comments may be submitted to Richard A. Cairo, General Counsel (e-mail: rcairo@srbc.net), Susquehanna River Basin Commission, 1721 N. Front St., Harrisburg, PA 17102, or Deborah J. Dickey, Secretary to the Commission (email: ddickey@srbc.net) at the same address. The Commission also convened a public hearing and took the following actions: Public Hearing—Projects Approved 1. Project Sponsor and Facility: Town of Erwin (Wells 2 and 3, and ID Park Well 1), Steuben County, N.Y. Modification of groundwater approval (Docket No. 20070602). 2. Project Sponsor: South Slope Development Corporation. Project Facility: Song Mountain Ski Resort, Town of Preble, Cortland County, N.Y. Approval for surface water withdrawal of up to 3.705 mgd, when available, PO 00000 Frm 00117 Fmt 4703 Sfmt 4703 from an unnamed tributary to Crooked Lake, groundwater withdrawal (Well MW–3) of 0.960 mgd as a 30-day average, and consumptive water use of up to 0.815 mgd. 3. Project Sponsor: AES Westover, LLC. Project Facility: AES Westover Generating Station, Town of Union and Village of Johnson City, Broome County, N.Y. Approval for surface water withdrawal of up to 97.300 mgd from the Susquehanna River and consumptive water use of up to 1.748 mgd. 4. Project Sponsor and Facility: Town of Cohocton (Well 3), Steuben County, N.Y. Approval of groundwater withdrawal of 0.072 mgd as a 30-day average. 5. Project Sponsor: Northampton Fuel Supply Company, Inc. Project Facility: Loomis Bank Operation, Hanover Township, Luzerne County, Pa. Modification of consumptive water use approval (Docket No. 20040904). 6. Project Sponsor: PPL Susquehanna, LLC. Project Facility: Susquehanna Steam Electric Station, Salem Township, Luzerne County, Pa. Approval for groundwater withdrawal of 0.125 mgd as a 30-day average, surface water withdrawal of up to 66.000 mgd from the Susquehanna River, modification of a consumptive water use approval of up to 48.000 mgd, and acceptance of a settlement offer from the Project Sponsor in the amount of $500,000 to resolve a compliance issue at the Project Facility (Docket No. 19950301). 7. Project Sponsor: Bionol Clearfield LLC. Project Facility: Bionol-Clearfield, Clearfield Borough, Clearfield County, Pa. Approval for surface water withdrawal of up to 2.505 mgd from the West Branch Susquehanna River and consumptive water use of up to 2.000 mgd. 8. Project Sponsor and Facility: Walker Township Water Association (Snydertown Well 3), Walker Township, Centre County, Pa. Approval for groundwater withdrawal of 0.523 mgd as a 30-day average. 9. Project Sponsor and Facility: Bedford Township Municipal Authority (Bowman Wells 1 and 2), Bedford Township, Bedford County, Pa. Modification of groundwater withdrawal approval (Docket No. 19990502). 10. Project Sponsor and Facility: Dillsburg Area Authority (Well 7), Carroll Township, York County, Pa. Approval for groundwater withdrawal of 0.460 mgd as a 30-day average. 11. Project Sponsor: PPL Brunner Island, LLC. Project Facility: Brunner Island Steam Electric Station, East E:\FR\FM\01OCN1.SGM 01OCN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 72, Number 189 (Monday, October 1, 2007)]
[Notices]
[Pages 55850-55852]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-19271]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56504; File No. SR-NASD-2007-055]


Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc. (n/k/a Financial Industry Regulatory Authority, Inc.); 
Order Approving Proposed Rule Change Relating to Interpretative 
Material 9216, Violations Appropriate for Disposition Under Plan 
Pursuant to SEC Rule 19d-1(c)(2)

 September 24, 2007.

I. Introduction

    On July 24, 2007, the National Association of Securities Dealers, 
Inc. (``NASD'') (n/k/a Financial Industry Regulatory Authority, Inc. 
(``FINRA'')) \1\ filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC'') pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Exchange Act'') \2\ and Rule 19b-4 
thereunder,\3\ a proposed rule change to amend Interpretative Material 
9216 (Violations Appropriate for Disposition Under Plan Pursuant to SEC 
Rule 19d-1(c)(2)) (``IM-9216'') to expand the list of violations 
eligible for disposition under NASD's Minor Rule Violation Plan 
(``MRVP''). The proposed rule change was published for comment in the 
Federal Register on August 7, 2007.\4\ The Commission received no 
comment letters on the proposed rule change. This order approves the 
proposed rule change.
---------------------------------------------------------------------------

    \1\ On July 26, 2007, the Commission approved a proposed rule 
change filed by NASD to amend NASD's Certificate of Incorporation to 
reflect its name change to the Financial Industry Regulatory 
Authority, Inc., or FINRA, in connection with the consolidation of 
the member firm regulatory functions of NASD and NYSE Regulation, 
Inc. See Securities Exchange Act Release No. 56146 (July 26, 2007).
    \2\ 15 U.S.C. 78s(b)(1).
    \3\ 17 CFR 240.19b-4.
    \4\ See Securities Exchange Act Release No. 56175 (July 31, 
2007), 72 FR 44201 (``Notice'').
---------------------------------------------------------------------------

II. Description of the Proposed Rule Change

    In connection with the recently approved plan to consolidate the 
member regulation operations of NASD and the NYSE Group, Inc. into a 
single organization (``Transaction''),\5\ NASD proposed to amend IM-
9216 to expand the list of violations eligible for

[[Page 55851]]

disposition under NASD's MRVP to include certain NYSE rules that 
pertain to the regulation of member firm conduct. \6\ The proposed rule 
change would amend NASD's MRVP to include those Incorporated NYSE Rules 
currently enumerated in NYSE's MRVP. This would permit FINRA, during 
the interim period until the adoption of a consolidated rulebook, to 
impose a fine for minor rule violations by a Dual Member of the 
Incorporated NYSE Rules in lieu of commencing disciplinary proceedings. 
As discussed in Release No. 34-56147, NASD is not proposing to 
incorporate, among other rules, the NYSE disciplinary rules or related 
interpretations, including NYSE's MRVP as set forth in NYSE Rule 476A 
(Imposition of Fines for Minor Violation(s) of Rules). \7\
---------------------------------------------------------------------------

    \5\ On July 26, 2007, the Commission approved amendments to 
NASD's By-Laws to implement governance and related changes to 
accommodate the consolidation of the member firm regulatory 
functions of NASD and NYSE Regulation, Inc. See Securities Exchange 
Act Release No. 56145 (July 26, 2007). The date of closing of the 
Transaction was July 30, 2007.
    \6\ Until the adoption of a consolidated rulebook that would 
reduce to one the two sets of rules currently applicable to members 
of both the NASD and NYSE (``Dual Members''), NASD has proposed to 
incorporate into FINRA's rulebook certain NYSE Rules that pertain to 
the regulation of member firm conduct (``Incorporated NYSE Rules''). 
See Securities Exchange Act Release No. 56147 (July 26, 2007) (SR-
NASD-2007-054, Exhibit 5) (incorporating certain NYSE Rules relating 
to member firm conduct into FINRA's rulebook) (``Release No. 34-
56147''). As noted in Release No. 34-56147, the Incorporated NYSE 
Rules apply solely to FINRA members that are Dual Members on or 
after the date of closing of the Transaction. NASD represented that 
FINRA will work expeditiously to consolidate the rules that apply to 
its member firms. See Notice, supra note 4. The Incorporated NYSE 
Rules will apply solely to Dual Members until such time as FINRA 
adopts, subject to Commission approval, consolidated rules 
applicable to all of its members.
    \7\ NASD is not proposing to incorporate NYSE's MRVP (NYSE Rule 
476A), because NYSE Rule 476A contains procedures that would 
conflict with the finding of a minor rule violation by FINRA. For 
example, NYSE Rule 476A permits a person against whom a fine is 
imposed to contest the NYSE's fine determination by, among other 
things, appealing to the NYSE board of directors.
---------------------------------------------------------------------------

    The proposed amendments to IM-9216 also would specify the 
applicability of the rules listed therein to various members of FINRA. 
Specifically, any Dual Member (including any persons affiliated with 
such member) may be subject to a fine under Rule 9216(b) with respect 
to any rule listed in IM-9216 that applies to such member or person; 
provided, however, that any Dual Member that was not also a member of 
NASD as of the date of closing of the Transaction and that does not 
engage in any activities that would have required it to be an NASD 
member (and its affiliated persons that are not otherwise subject to 
NASD rules) would only be subject to a fine under Rule 9216(b) with 
respect to the following rules listed in IM-9216: any NYSE rule, 
Exchange Act rule, NASD By-Law or Schedule to By-Laws, or the NASD Rule 
8000 Series. In addition, any member of FINRA that is not also a member 
of the NYSE (and its associated persons that are not otherwise subject 
to NYSE rules) may be subject to a fine under Rule 9216(b) with respect 
to any rule listed in IM-9216, with the exception of the NYSE rules.
    NASD is not proposing to adopt the provision in NYSE's MRVP that 
establishes a $5,000 maximum fine that may be imposed under NYSE's MRVP 
for minor violations of NYSE rules. Rather, FINRA would continue to 
apply the $2,500 maximum fine level under NASD's MRVP in determining 
fine levels for minor violations of either an NASD or NYSE rule 
included in NASD's MRVP. \8\
---------------------------------------------------------------------------

    \8\ Rule 19d-1(c)(2) under the Exchange Act, 17 CFR 240.19d-
1(c)(2), provides that any disciplinary action taken by a self-
regulatory organization (``SRO'') against any person of a rule of 
the SRO that has been designated as a minor rule violation pursuant 
to a plan is not considered ``final'' for purposes of Rule 19d-
1(c)(1) under the Exchange Act, 17 CFR 240.19d-1(c)(2), if the 
sanction imposed consists of a fine not exceeding $2,500 and the 
sanctioned person has not sought an adjudication, including a 
hearing, or otherwise exhausted his administrative remedies at the 
SRO with respect to the matter. SROs are permitted to report such 
minor rule violations (where the fine does not exceed $2,500) to the 
Commission on a periodic, rather than immediate, basis. In addition, 
members are not required to report ``minor rule violations'' on the 
Forms BD, U4 or U5 (as such term is defined on the forms). These 
forms provide that a rule violation may be designated as ``minor'' 
under a plan approved by the Commission if, among other things, the 
sanction imposed consists of a fine of $2,500 or less. See also 
Securities Exchange Act Release No. 40193 (July 10, 1998), 63 FR 
39338 (July 22, 1998) (Order Granting Approval to Proposed Rule 
Change Relating to Fines for Disruptive Action on the Options Floor) 
(SR-PCX-98-21) (stating in the context of amendments to the MRVP of 
the Pacific Exchange, Inc's (``PCX'') (now NYSE Arca, Inc.) that, as 
noted in PCX's MRVP, pursuant to Securities Exchange Act Release No. 
30958, any person or organization found in violation of a minor rule 
under an MRVP is not required to report such violation on Form BD, 
provided that, among other things, the sanction imposed consists of 
a fine not exceeding $2,500).
---------------------------------------------------------------------------

    The proposed rule change also would delete from IM-9216 references 
to NASD rules that have been rescinded.

III. Discussion

    After careful review, the Commission finds that the proposed rule 
change is consistent with the Exchange Act and the rules and 
regulations thereunder applicable to a national securities 
association.\9\ Specifically, the Commission finds that the proposed 
rule change is consistent with Section 15A(b)(2) of the Exchange Act 
\10\ in that it will permit FINRA to be so organized to carry out the 
purposes of the Exchange Act and to enforce compliance by FINRA members 
and persons associated with its members with the Exchange Act, the 
rules and regulations thereunder, and FINRA rules. The Commission also 
finds that the proposed rule change is consistent with Section 
15A(b)(6) of the Exchange Act \11\ in that it is designed, among other 
things, to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system, and, in general, to protect investors and the public 
interest. Further, the Commission finds that the proposed rule change 
is consistent with Section 15A(b)(7) of the Exchange Act \12\ in that 
it will provide that FINRA members and persons associated with its 
members will be appropriately disciplined for violations of the 
Exchange Act, the rules and regulations thereunder, and FINRA rules. 
The Commission also finds the proposed rule change consistent with 
Section 15A(b)(8) of the Exchange Act \13\ in that it furthers the 
statutory goals of providing a fair procedure for the disciplining of 
members and persons associated with members.
---------------------------------------------------------------------------

    \9\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. 15 U.S.C. 78c(f).
    \10\ 15 U.S.C. 78o-3(b)(2).
    \11\ 15 U.S.C. 78o-3(b)(6).
    \12\ 15 U.S.C. 78o-3(b)(7).
    \13\ 15 U.S.C. 78o-3(b)(8).
---------------------------------------------------------------------------

    As a result of the proposed rule change, FINRA would be able to 
impose a fine for minor rule violations with respect to the 
Incorporated NYSE Rules that currently are enumerated in NYSE's MRVP. 
The proposed rule change is designed to ensure that Dual Members will 
have substantially the same set of regulatory obligations immediately 
following the closing date of the Transaction that such members had 
prior to the closing of the Transaction until the member conduct rules 
of the NASD and NYSE are consolidated into a single set of FINRA rules. 
The proposed rule change provides a reasonable means of addressing 
violations of both NASD and NYSE rules that do not rise to the level of 
requiring formal disciplining proceedings, while providing greater 
flexibility in handling certain violations. The Commission expects that 
FINRA will continue to conduct surveillance with due diligence and make 
a determination based on its findings, on a case-by-case basis, whether 
a fine under the MRVP is appropriate, or whether a violation requires 
formal disciplinary action.

[[Page 55852]]

    The proposed rule change also provides that Dual Members will be 
subject to FINRA's disciplinary procedures, including FINRA's current 
$2,500 maximum fine level for minor rule violations of either an NASD 
or NYSE rule included in FINRA's MRVP. While there are some 
distinctions between NASD's and NYSE's rules, both sets of rules 
applicable to the disciplinary process were previously approved by the 
Commission as consistent with the Exchange Act, generally following 
notice and comment.\14\ Accordingly, although Dual Members and their 
associated persons no longer would be subject to NYSE's disciplinary 
procedures with respect to the Incorporated NYSE Rules, but to FINRA's 
instead, the Commission finds that the proposed rule change should help 
ensure greater consistency in the administration of the disciplinary 
process for FINRA and its members, as well as in the related reporting 
obligations for minor violations of rules.
---------------------------------------------------------------------------

    \14\ See Securities Exchange Act Release Nos. 21688 (January 25, 
1985), 50 FR 5025 (February 5, 1985) (order approving NYSE's Rule 
476A--Imposition of Fines for Minor Violation(s) of Rules); and 
32383 (May 28, 1993), 58 FR 31768 (June 4, 1993) (order approving 
establishment of NASD's Minor Rule Violations Plan).
---------------------------------------------------------------------------

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Exchange Act,\15\ that the proposed rule change (SR-NASD-2007-055), be, 
and it hereby is, approved.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78s(b)(2).

For the Commission, by the Division of Market Regulation, pursuant 
to delegated authority.\16\
---------------------------------------------------------------------------

    \16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Nancy M. Morris,
Secretary.
[FR Doc. E7-19271 Filed 9-28-07; 8:45 am]
BILLING CODE 8011-01-P

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.