Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of Proposed Rule Change To Delay Implementation of Certain FINRA Rule Changes Approved in SR-NASD-2004-183, 531-533 [E7-25571]
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Federal Register / Vol. 73, No. 2 / Thursday, January 3, 2008 / Notices
rule change, at least five business days
prior to the date of filing.
FINRA has requested that the
Commission waive the 30-day operative
delay contained in Rule 19b–
4(f)(6)(iii) 15 under the Act based upon
a representation that the temporary
exemptive relief provided by FINRA
and NYSE expires on January 1, 2008.
In light of the foregoing, the
Commission believes such waiver is
consistent with the protection of
investors and the public interest.
Accordingly, the Commission
designates the proposal to be effective
upon filing with the Commission and
operative on January 1, 2008.16
At any time within 60 days of the
filing of the proposed rule change, the
Commission may summarily abrogate
such rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is 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–2007–037 on the
subject line.
pwalker on PROD1PC71 with NOTICES
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–2007–037. 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
15 17
CFR 240.19b–4(f)(6)(iii).
purposes only of waiving the 30-day
operative delay of this proposal, the Commission
has considered the proposed rule’s impact on
efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
16 For
VerDate Aug<31>2005
20:29 Jan 02, 2008
Jkt 214001
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
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–2007–037 and
should be submitted on or before
January 24, 2008.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Nancy M. Morris,
Secretary.
[FR Doc. E7–25508 Filed 1–2–08; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–57050; File No. SR–FINRA–
2007–040]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing of
Proposed Rule Change To Delay
Implementation of Certain FINRA Rule
Changes Approved in SR–NASD–
2004–183
December 27, 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 December
21, 2007, Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) (f/k/a
National Association of Securities
Dealers, Inc. (‘‘NASD’’)) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
substantially prepared by FINRA. The
Commission is publishing this notice to
17 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
PO 00000
Frm 00088
Fmt 4703
Sfmt 4703
531
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 delay the
effective date of certain FINRA rule
changes approved in SR–NASD–2004–
183 until August 4, 2008.
There are no new changes proposed to
the text of the FINRA rules. Paragraphs
(a), (b), (d), and (e) of Rule 2821,
approved pursuant to SR–NASD–2004–
183, will become effective on May 5,
2008.3 FINRA is proposing to delay the
effective date of paragraph (c) of Rule
2821, also approved pursuant to SR–
NASD–2004–183,4 until August 4, 2008.
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.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
On September 7, 2007, the
Commission noticed the filing of
Amendment Nos. 3 and 4 and granted
accelerated approval of SR–NASD–
2004–183, FINRA’s new NASD Rule
2821, regarding broker-dealers’
compliance and supervisory
responsibilities for deferred variable
annuities.5 On November 6, 2007,
FINRA published Regulatory Notice 07–
53, which announced the Commission’s
approval of Rule 2821 (SR–NASD–
2004–183) and established May 5, 2008
as the rule’s effective date. Following
Commission approval of the rule and
publication of the Regulatory Notice,
several firms requested that the effective
3 See Order Approving FINRA’s NASD Rule 2821
Regarding Members’ Responsibilities for Deferred
Variable Annuities (Approval Order), Securities
Exchange Act Release No. 56375 (September 7,
2007), 72 FR 52403 (September 13, 2007) (SR–
NASD–2004–183); Corrective Order, Securities
Exchange Act Release No. 56375A (September 14,
2007), 72 FR 53612 (September 19, 2007) (SR–
NASD–2004–183) (correcting the rule’s effective
date).
4 Id.
5 Id.
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532
Federal Register / Vol. 73, No. 2 / Thursday, January 3, 2008 / Notices
date of the approved rule be delayed to
allow firms additional time to make
necessary systems changes. In addition,
some firms raised various concerns
regarding paragraph (c) of Rule 2821
(Principal Review and Approval), which
had been substantially changed by
Amendment No. 4.
Rule 2821(c), in part, requires
principal review and approval ‘‘[p]rior
to transmitting a customer’s application
for a deferred variable annuity to the
issuing insurance company for
processing, but no later than seven
business days after the customer signs
the application.’’ A number of firms
asserted that seven business days
beginning from the time when the
customer signs the application may not
allow for a thorough principal review in
all cases. These firms have asked that a
different timing mechanism be used.
Rule 2821(c) also states that a
principal must treat ‘‘all transactions as
if they have been recommended for
purposes of this principal review,’’ and
may only approve the transaction if he
or she determines ‘‘that there is a
reasonable basis to believe that the
transaction would be suitable based on
the factors delineated in paragraph (b) of
this Rule.’’ A principal who determines
that the transaction is unsuitable
nonetheless may authorize the
processing of the transaction if the
principal determines that the
transaction was not recommended and
that the customer, after being informed
of the reason why the principal found
it to be unsuitable, affirms that he or she
wants to proceed with the purchase or
exchange of the deferred variable
annuity. Some firms questioned
whether broker-dealers that do not make
any recommendations to customers (and
generally do not employ principals to
perform suitability reviews) should be
subject to this provision.
Finally, in Regulatory Notice 07–53,
FINRA stated that Rule 2821(c) does not
permit the depositing of a customer’s
funds in an account at the insurance
company prior to completion of
principal review. In response to the
Regulatory Notice, a number of firms
explained that insurers’ financial
controls regarding the receipt of money
from customers often include holding
such funds in a general ‘‘suspense’’
account at the insurer. According to
these firms, insurers use an identifier to
track money held in the suspense
account and, if a contract is not issued,
the funds are promptly returned to the
customers. The firms further stated that
this process has been used for many
years without complications, makes
processing much more efficient and
effective, and receives significant
VerDate Aug<31>2005
20:29 Jan 02, 2008
Jkt 214001
scrutiny by examiners from the
Commission and state insurance
departments. Accordingly, these firms
asked that insurers be allowed to
deposit customer funds in suspense
accounts under certain circumstances.
In light of these concerns, among
others, FINRA staff believes it is
prudent to give further consideration to
paragraph (c) of Rule 2821 and the
interpretation addressed in the
Regulatory Notice to determine whether
certain unintended and harmful
consequences might ensue upon the
currently scheduled effective date of
May 5, 2008. If, based on this review,
FINRA concludes that further
rulemaking is warranted, FINRA will
file a separate rule change with the
Commission.
To provide adequate time for firms to
make systems changes and for FINRA to
consider and potentially act upon the
concerns discussed above, FINRA is
proposing that the effective date of
paragraph (c) of Rule 2821, approved in
SR–NASD–2004–183, be delayed until
August 4, 2008. All other parts of Rule
2821 approved in SR–NASD–2004–183
will become effective as scheduled on
May 5, 2008.
2. Statutory Basis
FINRA believes that the proposed rule
change is consistent with the provisions
of section 15A(b)(6) of the Act,6 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. The rule change will
promote investor protection because it
will allow firms to better prepare
procedures and systems to implement
Rule 2821(c) and will allow FINRA to
more fully consider the new comments
discussed above.
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.
6 15
PO 00000
U.S.C. 78o–3(b)(6).
Frm 00089
Fmt 4703
Sfmt 4703
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
change is 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–2007–040 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–2007–040. 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
E:\FR\FM\03JAN1.SGM
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Federal Register / Vol. 73, No. 2 / Thursday, January 3, 2008 / 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–2007–040 and
should be submitted on or before
January 24, 2008.
Accounts to Customers) to delete the
requirement that certain confirmations
and reports include the name of the
securities market on which a transaction
is effected. The proposed rule change
conforms NYSE’s version of NYSE Rule
409 to proposed amendments filed by
the Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) to its version
of NYSE Rule 409. Below is the text of
the proposed rule change. Proposed new
language is in italics; proposed
deletions are in brackets.
*
*
*
*
*
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.7
Nancy M. Morris,
Secretary.
[FR Doc. E7–25571 Filed 1–2–08; 8:45 am]
Rule 409. Statements of Accounts to
Customers
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–57046; File No. SR–NYSE–
2007–118]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Relating to
NYSE Rule 409(f)
December 27, 2007.
pwalker on PROD1PC71 with NOTICES
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (‘‘Act’’)
and Rule 19b–4 thereunder,2 notice is
hereby given that on December 21, 2007,
the New York Stock Exchange LLC
(‘‘NYSE’’ or the ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been substantially prepared by
NYSE. NYSE has designated the
proposed rule change as constituting a
‘‘non-controversial’’ rule change
pursuant to Section 19(b)(3)(A) of the
Act 3 and Rule 19b–4(f)(6) 4 thereunder,
which renders the proposal effective
upon receipt of this filing by the
Commission. 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
This proposal is to amend New York
Stock Exchange Rule 409 (Statements of
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6).
1 15
20:29 Jan 02, 2008
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization 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.
The self-regulatory organization has
prepared summaries, set forth in
sections A, B, and C below, of the most
significant aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
7 17
VerDate Aug<31>2005
(a) through (e) No change.
(f) Confirmation of all transactions
(including those made ‘‘over-thecounter’’ and on other exchanges) in
securities admitted to dealings on the
Exchange, sent by members or member
organizations to their customers, shall
[indicate]clearly set forth with a suitable
legend the settlement date of each
transaction[ and bear the name of the
securities market on which the
transaction was made]. This
requirement also applies to
confirmations or reports from an
organization to a correspondent, but
does not apply to reports made by floor
brokers to the member organization
from whom the orders were received.
[All confirmations shall contain a
suitable legend clearly setting forth all
required information.]
(g) No change.
*
*
*
*
*
On July 30, 2007, NASD and NYSE
Regulation, Inc. consolidated their
member firm regulation operations into
Jkt 214001
PO 00000
Frm 00090
Fmt 4703
Sfmt 4703
533
a combined organization, FINRA.5
Pursuant to FINRA’s new regulatory
responsibilities, FINRA amended
FINRA’s NYSE Rule 409 to delete the
requirement that certain confirmations
and reports include the name of the
securities market on which a transaction
is effected. The NYSE is proposing to
amend its version of NYSE Rule 409 to
conform to FINRA’s NYSE Rule 409.
As noted in Item 2 of this filing, the
operative date of the proposed rule
change is January 1, 2008, which is the
operative date of FINRA’s identical
amendments to its version of Rule 409.
2. Statutory Basis
The basis under the Act for this
proposed rule change is the requirement
under Section 6(b)(5) 6 that an Exchange
have rules that are designed 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.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
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
The Exchange has neither solicited
nor received written comments on the
proposed rule change.
5 Pursuant to Rule 17d–2 under the Exchange Act,
NYSE, NYSE Regulation, Inc., and NASD entered
into an agreement (the ‘‘Agreement’’) to reduce
regulatory duplication for firms that are members of
FINRA and also members of NYSE on or after July
30, 2007 (‘‘Dual Members’’), by allocating to FINRA
certain regulatory responsibilities for selected NYSE
rules. The Agreement includes a list of all of those
rules (‘‘Common Rules’’) for which FINRA has
assumed regulatory responsibilities. See Securities
and Exchange Act Release No. 56148 (July 26,
2007), 72 FR 42146 (August 1, 2007) (Notice of
Filing and Order Approving and Declaring Effective
a Plan for the Allocation of Regulatory
Responsibilities). The Common Rules are the same
NYSE rules that FINRA has incorporated into its
rulebook. See Securities Exchange Act Release No.
56418 (July 26, 2007), 72 FR 42146 (August 1, 2007)
(Notice of Filing and Order Granting Accelerated
Approval of Proposed Rule Change to Incorporate
Certain NYSE Rules Relating to Member Firm
Conduct; File No. SR–NASD–2007–054). Paragraph
2(b) of the 17d–2 Agreement sets forth procedures
regarding proposed changes by either NYSE or
FINRA to the substance of any of the Common
Rules.
6 15 U.S.C. 78f(b)(5).
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]]>Agencies
[Federal Register Volume 73, Number 2 (Thursday, January 3, 2008)]
[Notices]
[Pages 531-533]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-25571]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-57050; File No. SR-FINRA-2007-040]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing of Proposed Rule Change To Delay
Implementation of Certain FINRA Rule Changes Approved in SR-NASD-2004-
183
December 27, 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 December 21, 2007, Financial Industry Regulatory Authority, Inc.
(``FINRA'') (f/k/a National Association of Securities Dealers, Inc.
(``NASD'')) filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been substantially 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 delay the effective date of certain FINRA
rule changes approved in SR-NASD-2004-183 until August 4, 2008.
There are no new changes proposed to the text of the FINRA rules.
Paragraphs (a), (b), (d), and (e) of Rule 2821, approved pursuant to
SR-NASD-2004-183, will become effective on May 5, 2008.\3\ FINRA is
proposing to delay the effective date of paragraph (c) of Rule 2821,
also approved pursuant to SR-NASD-2004-183,\4\ until August 4, 2008.
---------------------------------------------------------------------------
\3\ See Order Approving FINRA's NASD Rule 2821 Regarding
Members' Responsibilities for Deferred Variable Annuities (Approval
Order), Securities Exchange Act Release No. 56375 (September 7,
2007), 72 FR 52403 (September 13, 2007) (SR-NASD-2004-183);
Corrective Order, Securities Exchange Act Release No. 56375A
(September 14, 2007), 72 FR 53612 (September 19, 2007) (SR-NASD-
2004-183) (correcting the rule's effective date).
\4\ Id.
---------------------------------------------------------------------------
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.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
On September 7, 2007, the Commission noticed the filing of
Amendment Nos. 3 and 4 and granted accelerated approval of SR-NASD-
2004-183, FINRA's new NASD Rule 2821, regarding broker-dealers'
compliance and supervisory responsibilities for deferred variable
annuities.\5\ On November 6, 2007, FINRA published Regulatory Notice
07-53, which announced the Commission's approval of Rule 2821 (SR-NASD-
2004-183) and established May 5, 2008 as the rule's effective date.
Following Commission approval of the rule and publication of the
Regulatory Notice, several firms requested that the effective
[[Page 532]]
date of the approved rule be delayed to allow firms additional time to
make necessary systems changes. In addition, some firms raised various
concerns regarding paragraph (c) of Rule 2821 (Principal Review and
Approval), which had been substantially changed by Amendment No. 4.
---------------------------------------------------------------------------
\5\ Id.
---------------------------------------------------------------------------
Rule 2821(c), in part, requires principal review and approval
``[p]rior to transmitting a customer's application for a deferred
variable annuity to the issuing insurance company for processing, but
no later than seven business days after the customer signs the
application.'' A number of firms asserted that seven business days
beginning from the time when the customer signs the application may not
allow for a thorough principal review in all cases. These firms have
asked that a different timing mechanism be used.
Rule 2821(c) also states that a principal must treat ``all
transactions as if they have been recommended for purposes of this
principal review,'' and may only approve the transaction if he or she
determines ``that there is a reasonable basis to believe that the
transaction would be suitable based on the factors delineated in
paragraph (b) of this Rule.'' A principal who determines that the
transaction is unsuitable nonetheless may authorize the processing of
the transaction if the principal determines that the transaction was
not recommended and that the customer, after being informed of the
reason why the principal found it to be unsuitable, affirms that he or
she wants to proceed with the purchase or exchange of the deferred
variable annuity. Some firms questioned whether broker-dealers that do
not make any recommendations to customers (and generally do not employ
principals to perform suitability reviews) should be subject to this
provision.
Finally, in Regulatory Notice 07-53, FINRA stated that Rule 2821(c)
does not permit the depositing of a customer's funds in an account at
the insurance company prior to completion of principal review. In
response to the Regulatory Notice, a number of firms explained that
insurers' financial controls regarding the receipt of money from
customers often include holding such funds in a general ``suspense''
account at the insurer. According to these firms, insurers use an
identifier to track money held in the suspense account and, if a
contract is not issued, the funds are promptly returned to the
customers. The firms further stated that this process has been used for
many years without complications, makes processing much more efficient
and effective, and receives significant scrutiny by examiners from the
Commission and state insurance departments. Accordingly, these firms
asked that insurers be allowed to deposit customer funds in suspense
accounts under certain circumstances.
In light of these concerns, among others, FINRA staff believes it
is prudent to give further consideration to paragraph (c) of Rule 2821
and the interpretation addressed in the Regulatory Notice to determine
whether certain unintended and harmful consequences might ensue upon
the currently scheduled effective date of May 5, 2008. If, based on
this review, FINRA concludes that further rulemaking is warranted,
FINRA will file a separate rule change with the Commission.
To provide adequate time for firms to make systems changes and for
FINRA to consider and potentially act upon the concerns discussed
above, FINRA is proposing that the effective date of paragraph (c) of
Rule 2821, approved in SR-NASD-2004-183, be delayed until August 4,
2008. All other parts of Rule 2821 approved in SR-NASD-2004-183 will
become effective as scheduled on May 5, 2008.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of section 15A(b)(6) of the Act,\6\ 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. The rule change will promote investor protection
because it will allow firms to better prepare procedures and systems to
implement Rule 2821(c) and will allow FINRA to more fully consider the
new comments discussed above.
---------------------------------------------------------------------------
\6\ 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
change is 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-2007-040 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-2007-040. 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 533]]
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-2007-040 and should be submitted on or before January 24, 2008.
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\7\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\7\
Nancy M. Morris,
Secretary.
[FR Doc. E7-25571 Filed 1-2-08; 8:45 am]
BILLING CODE 8011-01-P
