Self-Regulatory Organizations: Financial Industry Regulatory Authority, Inc.; Notice of Filing of Proposed Rule Change To Adopt FINRA Rule 3130 (Annual Certification of Compliance and Supervisory Processes) in the Consolidated FINRA Rulebook, 40647-40648 [E8-15989]
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Federal Register / Vol. 73, No. 136 / Tuesday, July 15, 2008 / Notices
disciplinary action under CBOE Chapter
XVII.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act 9 and Rule
19d–1(c)(2) under the Act,10 that the
proposed rule change (SR-CBOE–2008–
53) be, and hereby is, approved and
declared effective.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8–16061 Filed 7–14–08; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–58118; File No. SR–FINRA–
2008–030]
Self-Regulatory Organizations:
Financial Industry Regulatory
Authority, Inc.; Notice of Filing of
Proposed Rule Change To Adopt
FINRA Rule 3130 (Annual Certification
of Compliance and Supervisory
Processes) in the Consolidated FINRA
Rulebook
July 8, 2008.
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 June 18,
2008, 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.
mstockstill on PROD1PC66 with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
FINRA is proposing to adopt NASD
Rule 3013 (Annual Certification of
Compliance and Supervisory Processes)
and IM–3013 (Annual Compliance and
Supervision Certification) as a FINRA
rule in the consolidated FINRA
rulebook without material change and to
delete the corresponding provisions in
Incorporated NYSE Rule 342.30 and
NYSE Rule Interpretations 311(b)(5)/04
9 15
U.S.C. 78s(b)(2).
CFR 240.19d–1(c)(2).
11 17 CFR 200.30–3(a)(12); 17 CFR 200.30–
3(a)(44).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
10 17
VerDate Aug<31>2005
15:01 Jul 14, 2008
Jkt 214001
through /05 and 342.30(d)/01 through
(e)/01.3 The proposed rule change
would renumber NASD Rule 3013 and
IM–3013 as FINRA Rule 3130 in the
consolidated FINRA rulebook. The text
of the proposed rule change is at
FINRA’s Web site at https://
www.finra.org, at FINRA’s principal
office, and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
FINRA included statements concerning
the purpose of and basis for the
proposed rule change and discussed any
comments it received on the proposed
rule change. The text of these statements
may be examined at the places specified
in Item IV below. FINRA has prepared
summaries, set forth in sections A, B,
and C below, of the most significant
aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
As part of the process of developing
the new consolidated rulebook (the
‘‘Consolidated FINRA Rulebook’’),4
FINRA is proposing to adopt NASD
Rule 3013 (Annual Certification of
Compliance and Supervisory Processes)
and IM–3013–1 (Annual Compliance
and Supervision Certification) as a
FINRA Rule in the Consolidated FINRA
Rulebook.
NASD Rule 3013 and Incorporated
NYSE Rule 342 require each member to
designate one or more principals to
serve as a chief compliance officer
(‘‘CCO’’). These Rules further require
that the chief executive officer(s)
(‘‘CEO’’) certify annually that the
member has in place processes to
establish, maintain, review, modify and
test policies and procedures reasonably
designed to achieve compliance with
applicable NASD (or NYSE) rules and
federal securities laws and regulations.
The certification includes not only a
statement that the member has in place
3 See infra note 4 regarding ‘‘Incorporated NYSE
Rules.’’
4 The current FINRA rulebook consists of two sets
of rules: (1) NASD Rules and (2) rules incorporated
from NYSE (‘‘Incorporated NYSE Rules’’) (together
referred to as the ‘‘Transitional Rulebook’’). The
Incorporated NYSE Rules apply only to those
members of FINRA that are also members of the
NYSE (‘‘Dual Members’’). Dual Members also must
comply with NASD Rules. For more information
about the rulebook consolidation process, see
FINRA Information Notice, March 12, 2008
(Rulebook Consolidation Process).
PO 00000
Frm 00169
Fmt 4703
Sfmt 4703
40647
certain compliance processes, but also
that the CEO(s) has conducted one or
more meetings with the CCO(s) in the
preceding 12 months to discuss the
processes. Incorporated NYSE Rule 342
and NASD IM–3013 explain that the
mandated meetings between the CEO(s)
and CCO(s) must include a discussion of
the member’s compliance efforts to date
and identify and address significant
compliance problems and plans for
emerging business areas. NASD IM–
3013 contains additional guidance,
including setting forth the expertise that
is expected of a CCO. The same
expertise requirements are also found in
Incorporated NYSE Rule Interpretation
342.30.
There currently are four differences in
the rules. First, NASD IM–3013 requires
that the member provide to its board of
directors and audit committees (or
equivalent bodies) the report that
evidences the processes to which the
CEO(s) certifies either prior to execution
of the certification or at the earlier of
their next scheduled meetings or within
45 days of certification. The
Incorporated NYSE rules require
submission of the report to those bodies
prior to certification. FINRA does not
intend to require the board of directors
or audit committee to review or
consider the report as a condition to the
CEO executing the certification; rather,
FINRA intends the provision to ensure
that those governing bodies remain
informed of this aspect of the member’s
compliance system in the context of
their overall responsibility for
governance and internal controls of the
member for which they serve.
Accordingly, the proposed rule change
would maintain the NASD rule
requirements.
Second, the current rules differ in the
certification deadline. Incorporated
NYSE Rule 342.30 requires certification
as part of the submission of a member’s
annual compliance report, which is due
by April 1 of each year. NASD Rule
3013 requires certification not later than
the anniversary of the prior year’s
certification. And while NASD allowed
members to execute their first
certification no later than April 1, 2006,
to accommodate Dual Members, many
FINRA-only firms executed their first
certification earlier than that and thus
have differing anniversary dates.
Moreover, new members are required to
execute their first certification within a
year of approval for membership;
therefore some firms necessarily are on
a cycle that does not correspond to
April 1. The proposed rule change
would maintain the NASD rule deadline
to provide firms the flexibility to certify
on a schedule that meets with their
E:\FR\FM\15JYN1.SGM
15JYN1
40648
Federal Register / Vol. 73, No. 136 / Tuesday, July 15, 2008 / Notices
organizational structure and procedures.
Firms that have certified on April 1 of
each year could continue to do so on
that date.
Third, Incorporated NYSE Rule
342.30 requires that the member submit
its certification to the Exchange,
whereas the NASD rule requires only
that the certification be maintained for
inspection. FINRA believes the
submission of the certification creates
an unnecessary—albeit small—
additional burden on members with no
attendant benefits to FINRA’s
examination program. Therefore, the
proposed rule change would retain the
NASD requirement that the
certifications be kept for inspection by
members.
Finally, while both rules permit
designation of multiple CCOs subject to
certain conditions, Incorporated NYSE
Rule Interpretation 311(b)(5) requires
Exchange approval of the allocation of
supervisory responsibilities between
those CCOs. By comparison, the NASD
rules rely on the business judgment of
the member and require only that the
member define and document the areas
of responsibility allocated to each CCO.
FINRA believes the NASD approach is
more appropriate, and therefore the
proposed rule change would not adopt
the approval requirement into the new
rule in the Consolidated FINRA
Rulebook.
The proposed rule change would
replace NASD Rule 3013 and IM–3013
with a single rule that integrates the
substance of the IM either as provisions
in the new rule or as supplementary
material.
As noted above, FINRA will announce
the implementation date of the
proposed rule change in a Regulatory
Notice to be published no later than 60
days following Commission approval.
mstockstill on PROD1PC66 with NOTICES
2. Statutory Basis
FINRA believes that the proposed rule
change is consistent with the provisions
of Section 15A(b)(6) of the Act,5 which
requires, among other things, that
FINRA rules must be designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, and, in
general, to protect investors and the
public interest. The rules being adopted
as part of the Consolidated FINRA
Rulebook previously have been found to
meet the statutory requirements, and
FINRA believes those rules have since
proven effective in achieving the
statutory mandates.
5 15
U.S.C. 78o–3(b)(6).
VerDate Aug<31>2005
15:01 Jul 14, 2008
Jkt 214001
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 rulecomments@sec.gov. Please include File
Number SR–FINRA–2008–030 on the
subject line.
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–2008–030 and
should be submitted on or before
August 5, 2008.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8–15989 Filed 7–14–08; 8:45 am]
BILLING CODE 8010–01–P
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #11286 and #11287]
Indiana Disaster Number IN–00019
U.S. Small Business
Administration.
ACTION: Amendment 6.
AGENCY:
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Incident: Severe Storms, Flooding,
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Paper Comments
Incident Period: 05/30/2008 and
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• Send paper comments in triplicate
Effective Date: 06/27/2008.
to Secretary, Securities and Exchange
Physical Loan Application Deadline
Commission, 100 F Street, NE.,
Date: 08/11/2008.
Washington, DC 20549–1090.
EIDL Loan Application Deadline Date:
All submissions should refer to File
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post all comments on the Commission’s FOR FURTHER INFORMATION CONTACT: A.
Internet Web site (https://www.sec.gov/
Escobar, Office of Disaster Assistance,
rules/sro.shtml). Copies of the
U.S. Small Business Administration,
submission, all subsequent
6 17 CFR 200.30–3(a)(12).
amendments, all written statements
PO 00000
Frm 00170
Fmt 4703
Sfmt 4703
E:\FR\FM\15JYN1.SGM
15JYN1
]]>Agencies
[Federal Register Volume 73, Number 136 (Tuesday, July 15, 2008)]
[Notices]
[Pages 40647-40648]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-15989]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-58118; File No. SR-FINRA-2008-030]
Self-Regulatory Organizations: Financial Industry Regulatory
Authority, Inc.; Notice of Filing of Proposed Rule Change To Adopt
FINRA Rule 3130 (Annual Certification of Compliance and Supervisory
Processes) in the Consolidated FINRA Rulebook
July 8, 2008.
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 June 18, 2008, 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 adopt NASD Rule 3013 (Annual Certification of
Compliance and Supervisory Processes) and IM-3013 (Annual Compliance
and Supervision Certification) as a FINRA rule in the consolidated
FINRA rulebook without material change and to delete the corresponding
provisions in Incorporated NYSE Rule 342.30 and NYSE Rule
Interpretations 311(b)(5)/04 through /05 and 342.30(d)/01 through (e)/
01.\3\ The proposed rule change would renumber NASD Rule 3013 and IM-
3013 as FINRA Rule 3130 in the consolidated FINRA rulebook. The text of
the proposed rule change is at FINRA's Web site at https://
www.finra.org, at FINRA's principal office, and at the Commission's
Public Reference Room.
---------------------------------------------------------------------------
\3\ See infra note 4 regarding ``Incorporated NYSE Rules.''
---------------------------------------------------------------------------
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
As part of the process of developing the new consolidated rulebook
(the ``Consolidated FINRA Rulebook''),\4\ FINRA is proposing to adopt
NASD Rule 3013 (Annual Certification of Compliance and Supervisory
Processes) and IM-3013-1 (Annual Compliance and Supervision
Certification) as a FINRA Rule in the Consolidated FINRA Rulebook.
---------------------------------------------------------------------------
\4\ The current FINRA rulebook consists of two sets of rules:
(1) NASD Rules and (2) rules incorporated from NYSE (``Incorporated
NYSE Rules'') (together referred to as the ``Transitional
Rulebook''). The Incorporated NYSE Rules apply only to those members
of FINRA that are also members of the NYSE (``Dual Members''). Dual
Members also must comply with NASD Rules. For more information about
the rulebook consolidation process, see FINRA Information Notice,
March 12, 2008 (Rulebook Consolidation Process).
---------------------------------------------------------------------------
NASD Rule 3013 and Incorporated NYSE Rule 342 require each member
to designate one or more principals to serve as a chief compliance
officer (``CCO''). These Rules further require that the chief executive
officer(s) (``CEO'') certify annually that the member has in place
processes to establish, maintain, review, modify and test policies and
procedures reasonably designed to achieve compliance with applicable
NASD (or NYSE) rules and federal securities laws and regulations. The
certification includes not only a statement that the member has in
place certain compliance processes, but also that the CEO(s) has
conducted one or more meetings with the CCO(s) in the preceding 12
months to discuss the processes. Incorporated NYSE Rule 342 and NASD
IM-3013 explain that the mandated meetings between the CEO(s) and
CCO(s) must include a discussion of the member's compliance efforts to
date and identify and address significant compliance problems and plans
for emerging business areas. NASD IM-3013 contains additional guidance,
including setting forth the expertise that is expected of a CCO. The
same expertise requirements are also found in Incorporated NYSE Rule
Interpretation 342.30.
There currently are four differences in the rules. First, NASD IM-
3013 requires that the member provide to its board of directors and
audit committees (or equivalent bodies) the report that evidences the
processes to which the CEO(s) certifies either prior to execution of
the certification or at the earlier of their next scheduled meetings or
within 45 days of certification. The Incorporated NYSE rules require
submission of the report to those bodies prior to certification. FINRA
does not intend to require the board of directors or audit committee to
review or consider the report as a condition to the CEO executing the
certification; rather, FINRA intends the provision to ensure that those
governing bodies remain informed of this aspect of the member's
compliance system in the context of their overall responsibility for
governance and internal controls of the member for which they serve.
Accordingly, the proposed rule change would maintain the NASD rule
requirements.
Second, the current rules differ in the certification deadline.
Incorporated NYSE Rule 342.30 requires certification as part of the
submission of a member's annual compliance report, which is due by
April 1 of each year. NASD Rule 3013 requires certification not later
than the anniversary of the prior year's certification. And while NASD
allowed members to execute their first certification no later than
April 1, 2006, to accommodate Dual Members, many FINRA-only firms
executed their first certification earlier than that and thus have
differing anniversary dates. Moreover, new members are required to
execute their first certification within a year of approval for
membership; therefore some firms necessarily are on a cycle that does
not correspond to April 1. The proposed rule change would maintain the
NASD rule deadline to provide firms the flexibility to certify on a
schedule that meets with their
[[Page 40648]]
organizational structure and procedures. Firms that have certified on
April 1 of each year could continue to do so on that date.
Third, Incorporated NYSE Rule 342.30 requires that the member
submit its certification to the Exchange, whereas the NASD rule
requires only that the certification be maintained for inspection.
FINRA believes the submission of the certification creates an
unnecessary--albeit small--additional burden on members with no
attendant benefits to FINRA's examination program. Therefore, the
proposed rule change would retain the NASD requirement that the
certifications be kept for inspection by members.
Finally, while both rules permit designation of multiple CCOs
subject to certain conditions, Incorporated NYSE Rule Interpretation
311(b)(5) requires Exchange approval of the allocation of supervisory
responsibilities between those CCOs. By comparison, the NASD rules rely
on the business judgment of the member and require only that the member
define and document the areas of responsibility allocated to each CCO.
FINRA believes the NASD approach is more appropriate, and therefore the
proposed rule change would not adopt the approval requirement into the
new rule in the Consolidated FINRA Rulebook.
The proposed rule change would replace NASD Rule 3013 and IM-3013
with a single rule that integrates the substance of the IM either as
provisions in the new rule or as supplementary material.
As noted above, FINRA will announce the implementation date of the
proposed rule change in a Regulatory Notice to be published no later
than 60 days following Commission approval.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\5\ which requires, among
other things, that FINRA rules must be designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest. The rules being adopted as part of the Consolidated
FINRA Rulebook previously have been found to meet the statutory
requirements, and FINRA believes those rules have since proven
effective in achieving the statutory mandates.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
FINRA does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve such proposed rule change, or
(B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
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-2008-030 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-FINRA-2008-030. 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 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-2008-030 and
should be submitted on or before August 5, 2008.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\6\
---------------------------------------------------------------------------
\6\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-15989 Filed 7-14-08; 8:45 am]
BILLING CODE 8010-01-P
