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]

Download as PDF 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 (http://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 (http://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. E:\FR\FM\03JAN1.SGM 03JAN1 pwalker on PROD1PC71 with NOTICES 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 (http://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 (http://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 03JAN1 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). E:\FR\FM\03JAN1.SGM 03JAN1

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]


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

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 (http://
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 (http://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.
---------------------------------------------------------------------------

    \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