Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Approving Proposed Rule Change, as Modified by Amendment No. 1 Thereto, To Amend the FINRA Rule 9520 Series Regarding Eligibility Procedures for Persons Subject to Certain Disqualifications, 12166-12167 [E9-6208]
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12166
Federal Register / Vol. 74, No. 54 / Monday, March 23, 2009 / Notices
The subject matter of the Closed
Meeting scheduled for Thursday, March
26, 2009 will be:
• Institution and settlement of
injunctive actions;
• Institution and settlement of
administrative proceedings of an
enforcement nature;
• Other matters relating to enforcement
proceedings.
At times, changes in Commission
priorities require alterations in the
scheduling of meeting items.
For further information and to
ascertain what, if any, matters have been
added, deleted or postponed, please
contact:
The Office of the Secretary at (202)
551–5400.
Dated: March 19, 2009.
Elizabeth M. Murphy,
Secretary.
[FR Doc. E9–6434 Filed 3–19–09; 4:15 pm]
BILLING CODE
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59586; File No. SR–FINRA–
2008–045]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Order Approving
Proposed Rule Change, as Modified by
Amendment No. 1 Thereto, To Amend
the FINRA Rule 9520 Series Regarding
Eligibility Procedures for Persons
Subject to Certain Disqualifications
March 17, 2009.
dwashington3 on PROD1PC60 with NOTICES
I. Introduction
The Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) (f/k/a
National Association of Securities
Dealers, Inc. (‘‘NASD’’)) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) and amended
on December 11, 2008,1 pursuant to
Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 2 and Rule
19b–4 thereunder,3 a proposed rule
change relating to amendments to the
FINRA Rule 9520 Series, which governs
the eligibility procedures for persons
subject to certain disqualifications, to
comport with the amended definition of
disqualification in the FINRA By-Laws.
The proposed rule change was
published for comment in the Federal
1 Amendment No. 1 to SR–FINRA–2008–045
replaced and superseded the original rule filing
submitted to the Commission on September 8, 2008.
2 15 U.S.C. 78s(b)(1).
3 17 CFR 240.19b–4.
VerDate Nov<24>2008
15:28 Mar 20, 2009
Jkt 217001
Register on January 13, 2009.4 The
Commission received no comments on
the proposed rule change. This order
approves the proposed rule change, as
modified by Amendment No. 1.
II. Description of the Proposed Rule
Change
In light of FINRA’s obligation to
enforce the federal securities laws, and
as part of the consolidation of the
member firm regulatory functions of
NASD and NYSE Regulation, Inc. and
the formation of FINRA, FINRA adopted
by Board and membership vote a
revised By-Law definition of
disqualification that is consistent with
the federal securities laws, such that any
person subject to a statutory
disqualification under Section 3(a)(39)
of the Act also is subject to
disqualification under Article III,
Section 4 of the FINRA By-Laws.5
Consequently, as further detailed in the
proposed Regulatory Notice (filed with
the Commission as Exhibit 2 to SR–
FINRA–2008–045), FINRA’s revised
definition of disqualification
incorporates three additional categories
of statutory disqualification, including
willful violations of the federal
securities or commodities laws, grounds
for statutory disqualification that were
enacted in the Sarbanes-Oxley Act, and
associations with certain other persons
subject to disqualification.
Absent the proposed rule change, all
persons subject to any of the added
categories of disqualification would be
required to obtain approval from FINRA
to enter or remain in the securities
industry. The proposed rule change
would both amend the text of the
FINRA Rule 9520 Series generally to
reflect the amended definition of
disqualification in the By-Laws, as well
as include the proposed Regulatory
Notice that outlines in detail the
applicable eligibility procedures. The
amended FINRA Rule 9520 Series
would incorporate by reference the
procedures set forth in the Regulatory
Notice. As further detailed in the
Regulatory Notice, the need for a
member to file an application with
FINRA for approval notwithstanding the
disqualification would depend on (1)
4 See Securities Exchange Act Release No. 59208
(January 6, 2009), 74 FR 1738 (January 13, 2009)
(SR–FINRA–2008–045) (notice).
5 See Securities Exchange Act Release No. 55495
(March 20, 2007), 72 FR 14149 (March 26, 2007)
(SR–NASD–2007–023) (notice). See also Securities
Exchange Act Release No. 56145 (July 26, 2007), 72
FR 42169 (August 1, 2007) (SR–NASD–2007–023)
(approval order), as amended by Securities
Exchange Act Release No. 56145A (May 30, 2008),
73 FR 32377 (June 6, 2008). See also NASD, SEC
No-Action Letter, 2007 SEC No-Act. LEXIS 540
(July 27, 2007).
PO 00000
Frm 00060
Fmt 4703
Sfmt 4703
the type of the disqualification; (2) the
date of the disqualification; and (3)
whether the firm or individual is
seeking admission, readmission or
continuation in the securities industry.
The proposed rule change would
amend FINRA Rule 9522 to address the
initiation of eligibility proceedings and
the authority of FINRA’s Department of
Member Regulation (‘‘Member
Regulation’’) to approve applications
relating to a disqualification, where the
disqualification arises from findings or
orders specified in Section 15(b)(4)(D),
(E) or (H) of the Act or arises under
Section 3(a)(39)(E) of the Act (i.e., the
added categories of disqualification).
Currently, FINRA Rule 9522(a)(1)
provides, among other things, that if
FINRA staff has reason to believe that a
disqualification exists, FINRA staff will
issue a written notice to the member or
applicant for membership under NASD
Rule 1013, specifying the grounds for
such disqualification. The proposed
amendments to FINRA Rule 9522(a)(1)
provide that FINRA staff would issue
such written notice with respect to the
added categories of disqualification only
when the member or applicant is
required to file an application pursuant
to the Regulatory Notice. Similarly, the
proposed rule change would amend
FINRA Rule 9522(b) to require a
member to file an application with
FINRA with respect to the added
categories of disqualification only when
instructed to submit one by the
Regulatory Notice.
Moreover, under the current rules,
Member Regulation is responsible for
evaluating applications for relief from a
disqualification filed by a disqualified
member or sponsoring member. In
certain circumstances, Member
Regulation is authorized to approve the
application, while in other cases,
Member Regulation must make a
recommendation to either approve or
deny the applications to the National
Adjudicatory Council (‘‘NAC’’). The
proposed amendments to FINRA Rule
9522 would authorize Member
Regulation to approve applications
based on the added categories of
disqualification. In the event Member
Regulation does not approve these
applications, the disqualified member or
sponsoring member would have the
right to have the matter decided by the
NAC after a hearing and consideration
by the Statutory Disqualification
Committee under FINRA Rule 9524.
In addition, if Member Regulation
determines that an application relating
to a disqualification that arises from
findings or orders specified in Section
15(b)(4)(D), (E), or (H) of the Act or
arises under Section 3(a)(39)(E) of the
E:\FR\FM\23MRN1.SGM
23MRN1
Federal Register / Vol. 74, No. 54 / Monday, March 23, 2009 / Notices
Act should be approved, but with
specific supervisory requirements that
have the consent of the disqualified
member, sponsoring member and/or
disqualified person, then proposed
FINRA Rule 9523(b) would authorize
Member Regulation to approve a
supervisory plan, without submitting a
recommendation to the Chairman of the
Statutory Disqualification Committee,
acting on behalf of the NAC. Consistent
with the current rule regarding the
submission of supervisory plans,6
proposed FINRA Rule 9523(b)(1) would
provide that, by submitting an executed
letter consenting to a supervisory plan,
a disqualified member, sponsoring
member and/or disqualified person
waive the following (in summary):
(a) The right to a hearing and any
right of appeal to challenge the validity
of the supervisory plan;
(b) The right to claim bias or
prejudgment by Member Regulation or
the General Counsel regarding the
supervisory plan; and
(c) The right to claim a violation of
the ex parte prohibitions or the
separation of functions provisions of
FINRA Rules 9143 and 9144,
respectively, in connection with
participation in the supervisory plan.
If the supervisory plan is rejected, the
disqualified member, sponsoring
member and/or disqualified person
would have the right to proceed under
FINRA Rule 9524.
The proposed rule change also would
make several technical amendments.
For example, the proposed rule change
would amend FINRA Rule 9522(c) to
allow a member that has filed a
statutory disqualification application to
withdraw that application after the start
of a hearing but prior to the issuance of
a decision by the NAC by filing a
written notice with FINRA’s Department
of Registration and Disclosure and
FINRA’s Office of General Counsel. In
addition, for purposes of clarity and
consistency, the proposed rule change
would amend FINRA Rule 9522(e) to
replace references that Member
Regulation ‘‘may grant’’ or ‘‘may
approve’’ certain matters with ‘‘is
authorized to approve’’ such matters.
dwashington3 on PROD1PC60 with NOTICES
III. Discussion and Findings
After careful review of the proposed
rule change, the Commission finds that
the proposed rule change is consistent
with the requirements of the Act, and
the rules and regulations thereunder
that are applicable to a national
6 See FINRA Rule 9523(b)(1) (to be renumbered as
FINRA Rule 9523(a)(1)).
VerDate Nov<24>2008
15:28 Mar 20, 2009
Jkt 217001
securities association.7 In particular, the
Commission believes the proposed rule
change is consistent with the provisions
of Section 15A(b)(6) of the Act,8 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 Commission
believes that the proposed rule change
is consistent with the provisions of the
Act noted above because it should allow
FINRA to integrate filings mandated by
the revised definition of disqualification
into established programs that monitor
subject persons and allow FINRA and
the Commission to focus resources on
filings that raise important investor
protection concerns.
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,9 that the
proposed rule change (SR–FINRA–
2008–045), as modified by Amendment
No. 1, be, and hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–6208 Filed 3–20–09; 8:45 am]
BILLING CODE
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59579; File No. SR–
NASDAQ–2006–056]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Order
Approving Proposed Rule Change as
Modified by Amendment No. 2 Thereto
To Establish Nasdaq Custom Data
Feeds
March 13, 2009.
On December 12, 2006, The NASDAQ
Stock Market LLC (‘‘Nasdaq’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change to establish a data filtration
service called Nasdaq Custom Data
Feeds (‘‘Service’’). The Service would
7 In approving this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition and capital formation. See
15 U.S.C. 78c(f).
8 15 U.S.C. 78o–3(b)(6).
9 15 U.S.C. 78s(b)(2).
10 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
PO 00000
Frm 00061
Fmt 4703
Sfmt 4703
12167
permit entities to request and receive
customized data feeds containing data
elements from Nasdaq’s current data
feeds. The proposed rule change was
published in the Federal Register on
December 27, 2006.3 On March 9, 2009,
Nasdaq filed Amendment No. 1 to the
proposed rule change. On March 10,
2009, Nasdaq filed Amendment No. 2 to
the proposed rule change.4
The Commission received one
comment on the proposal from the
Securities Industry and Financial
Markets Association (‘‘SIFMA’’).5
SIFMA believes that the proposed rule
change does not meet the requirements
of the Act because ‘‘there is no costbased analysis or justification for the
service in the release.’’ 6 SIFMA also
asserts that the proposed rule change
‘‘raises problems regarding how the
proposed fee was calculated.’’ 7 Finally,
SIFMA questions if competitors will be
disadvantaged by the proposal as
Nasdaq will have processed the raw
data into a customized data feed when
the data is released, and if a commercial
service should be provided by Nasdaq
or if it should instead ‘‘be offered by an
affiliate on the condition that the terms
under which that affiliate receives the
underlying market data are offered to
other vendors so as to assure
competition and prevent commercial
conflicts of interest.’’ 8
The Commission has reviewed
carefully the proposed rule change and
finds that the proposed rule change is
consistent with the requirements of the
Act and the rules and regulations
thereunder applicable to a national
securities exchange 9 and, in particular,
Section 6(b)(4) of the Act,10 which
requires, among other things, that
Nasdaq’s rules provide for the equitable
allocation of reasonable dues, fees and
other charges among members and
3 See Securities Exchange Act Release No. 54959
(December 18, 2006), 71 FR 77842 (‘‘Notice’’).
4 Amendment No. 2 replaced Amendment No. 1,
which was withdrawn. In Amendment No. 2,
Nasdaq proposed to re-number the new rule from
Rule 7038 to Rule 7047, as rule number 7038 has
since been used for a subsequent rule. Nasdaq also
clarified that the Service will only be available with
respect to data feeds that contain non-core market
data. Nasdaq also listed the current data feeds
which can be customized through the Service.
Because Amendment No. 2 is technical in nature,
it is not subject to notice and comment.
5 See letter from Melissa MacGregor, Assistant
Vice President and Assistant General Counsel,
SIFMA, to Nancy M. Morris, Secretary,
Commission, dated January 17, 2007.
6 Id. at 1.
7 Id.
8 Id. at 2.
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. 78f(b)(4).
E:\FR\FM\23MRN1.SGM
23MRN1
]]>Agencies
[Federal Register Volume 74, Number 54 (Monday, March 23, 2009)]
[Notices]
[Pages 12166-12167]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-6208]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-59586; File No. SR-FINRA-2008-045]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Order Approving Proposed Rule Change, as Modified by
Amendment No. 1 Thereto, To Amend the FINRA Rule 9520 Series Regarding
Eligibility Procedures for Persons Subject to Certain Disqualifications
March 17, 2009.
I. Introduction
The Financial Industry Regulatory Authority, Inc. (``FINRA'') (f/k/
a National Association of Securities Dealers, Inc. (``NASD'')) filed
with the Securities and Exchange Commission (``SEC'' or ``Commission'')
and amended on December 11, 2008,\1\ pursuant to Section 19(b)(1) of
the Securities Exchange Act of 1934 (``Act'') \2\ and Rule 19b-4
thereunder,\3\ a proposed rule change relating to amendments to the
FINRA Rule 9520 Series, which governs the eligibility procedures for
persons subject to certain disqualifications, to comport with the
amended definition of disqualification in the FINRA By-Laws. The
proposed rule change was published for comment in the Federal Register
on January 13, 2009.\4\ The Commission received no comments on the
proposed rule change. This order approves the proposed rule change, as
modified by Amendment No. 1.
---------------------------------------------------------------------------
\1\ Amendment No. 1 to SR-FINRA-2008-045 replaced and superseded
the original rule filing submitted to the Commission on September 8,
2008.
\2\ 15 U.S.C. 78s(b)(1).
\3\ 17 CFR 240.19b-4.
\4\ See Securities Exchange Act Release No. 59208 (January 6,
2009), 74 FR 1738 (January 13, 2009) (SR-FINRA-2008-045) (notice).
---------------------------------------------------------------------------
II. Description of the Proposed Rule Change
In light of FINRA's obligation to enforce the federal securities
laws, and as part of the consolidation of the member firm regulatory
functions of NASD and NYSE Regulation, Inc. and the formation of FINRA,
FINRA adopted by Board and membership vote a revised By-Law definition
of disqualification that is consistent with the federal securities
laws, such that any person subject to a statutory disqualification
under Section 3(a)(39) of the Act also is subject to disqualification
under Article III, Section 4 of the FINRA By-Laws.\5\ Consequently, as
further detailed in the proposed Regulatory Notice (filed with the
Commission as Exhibit 2 to SR-FINRA-2008-045), FINRA's revised
definition of disqualification incorporates three additional categories
of statutory disqualification, including willful violations of the
federal securities or commodities laws, grounds for statutory
disqualification that were enacted in the Sarbanes-Oxley Act, and
associations with certain other persons subject to disqualification.
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 55495 (March 20,
2007), 72 FR 14149 (March 26, 2007) (SR-NASD-2007-023) (notice). See
also Securities Exchange Act Release No. 56145 (July 26, 2007), 72
FR 42169 (August 1, 2007) (SR-NASD-2007-023) (approval order), as
amended by Securities Exchange Act Release No. 56145A (May 30,
2008), 73 FR 32377 (June 6, 2008). See also NASD, SEC No-Action
Letter, 2007 SEC No-Act. LEXIS 540 (July 27, 2007).
---------------------------------------------------------------------------
Absent the proposed rule change, all persons subject to any of the
added categories of disqualification would be required to obtain
approval from FINRA to enter or remain in the securities industry. The
proposed rule change would both amend the text of the FINRA Rule 9520
Series generally to reflect the amended definition of disqualification
in the By-Laws, as well as include the proposed Regulatory Notice that
outlines in detail the applicable eligibility procedures. The amended
FINRA Rule 9520 Series would incorporate by reference the procedures
set forth in the Regulatory Notice. As further detailed in the
Regulatory Notice, the need for a member to file an application with
FINRA for approval notwithstanding the disqualification would depend on
(1) the type of the disqualification; (2) the date of the
disqualification; and (3) whether the firm or individual is seeking
admission, readmission or continuation in the securities industry.
The proposed rule change would amend FINRA Rule 9522 to address the
initiation of eligibility proceedings and the authority of FINRA's
Department of Member Regulation (``Member Regulation'') to approve
applications relating to a disqualification, where the disqualification
arises from findings or orders specified in Section 15(b)(4)(D), (E) or
(H) of the Act or arises under Section 3(a)(39)(E) of the Act (i.e.,
the added categories of disqualification). Currently, FINRA Rule
9522(a)(1) provides, among other things, that if FINRA staff has reason
to believe that a disqualification exists, FINRA staff will issue a
written notice to the member or applicant for membership under NASD
Rule 1013, specifying the grounds for such disqualification. The
proposed amendments to FINRA Rule 9522(a)(1) provide that FINRA staff
would issue such written notice with respect to the added categories of
disqualification only when the member or applicant is required to file
an application pursuant to the Regulatory Notice. Similarly, the
proposed rule change would amend FINRA Rule 9522(b) to require a member
to file an application with FINRA with respect to the added categories
of disqualification only when instructed to submit one by the
Regulatory Notice.
Moreover, under the current rules, Member Regulation is responsible
for evaluating applications for relief from a disqualification filed by
a disqualified member or sponsoring member. In certain circumstances,
Member Regulation is authorized to approve the application, while in
other cases, Member Regulation must make a recommendation to either
approve or deny the applications to the National Adjudicatory Council
(``NAC''). The proposed amendments to FINRA Rule 9522 would authorize
Member Regulation to approve applications based on the added categories
of disqualification. In the event Member Regulation does not approve
these applications, the disqualified member or sponsoring member would
have the right to have the matter decided by the NAC after a hearing
and consideration by the Statutory Disqualification Committee under
FINRA Rule 9524.
In addition, if Member Regulation determines that an application
relating to a disqualification that arises from findings or orders
specified in Section 15(b)(4)(D), (E), or (H) of the Act or arises
under Section 3(a)(39)(E) of the
[[Page 12167]]
Act should be approved, but with specific supervisory requirements that
have the consent of the disqualified member, sponsoring member and/or
disqualified person, then proposed FINRA Rule 9523(b) would authorize
Member Regulation to approve a supervisory plan, without submitting a
recommendation to the Chairman of the Statutory Disqualification
Committee, acting on behalf of the NAC. Consistent with the current
rule regarding the submission of supervisory plans,\6\ proposed FINRA
Rule 9523(b)(1) would provide that, by submitting an executed letter
consenting to a supervisory plan, a disqualified member, sponsoring
member and/or disqualified person waive the following (in summary):
---------------------------------------------------------------------------
\6\ See FINRA Rule 9523(b)(1) (to be renumbered as FINRA Rule
9523(a)(1)).
---------------------------------------------------------------------------
(a) The right to a hearing and any right of appeal to challenge the
validity of the supervisory plan;
(b) The right to claim bias or prejudgment by Member Regulation or
the General Counsel regarding the supervisory plan; and
(c) The right to claim a violation of the ex parte prohibitions or
the separation of functions provisions of FINRA Rules 9143 and 9144,
respectively, in connection with participation in the supervisory plan.
If the supervisory plan is rejected, the disqualified member,
sponsoring member and/or disqualified person would have the right to
proceed under FINRA Rule 9524.
The proposed rule change also would make several technical
amendments. For example, the proposed rule change would amend FINRA
Rule 9522(c) to allow a member that has filed a statutory
disqualification application to withdraw that application after the
start of a hearing but prior to the issuance of a decision by the NAC
by filing a written notice with FINRA's Department of Registration and
Disclosure and FINRA's Office of General Counsel. In addition, for
purposes of clarity and consistency, the proposed rule change would
amend FINRA Rule 9522(e) to replace references that Member Regulation
``may grant'' or ``may approve'' certain matters with ``is authorized
to approve'' such matters.
III. Discussion and Findings
After careful review of the proposed rule change, the Commission
finds that the proposed rule change is consistent with the requirements
of the Act, and the rules and regulations thereunder that are
applicable to a national securities association.\7\ In particular, the
Commission believes the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\8\ 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 Commission believes that the proposed rule change
is consistent with the provisions of the Act noted above because it
should allow FINRA to integrate filings mandated by the revised
definition of disqualification into established programs that monitor
subject persons and allow FINRA and the Commission to focus resources
on filings that raise important investor protection concerns.
---------------------------------------------------------------------------
\7\ In approving this proposal, the Commission has considered
the proposed rule's impact on efficiency, competition and capital
formation. See 15 U.S.C. 78c(f).
\8\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\9\ that the proposed rule change (SR-FINRA-2008-045), as modified
by Amendment No. 1, be, and hereby is, approved.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
---------------------------------------------------------------------------
\10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-6208 Filed 3-20-09; 8:45 am]
BILLING CODE
