Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Granting Approval of Proposed Rule Change To Adopt IM-2830-1 (“Breakpoint” Sales) in the Consolidated FINRA Rulebook, 25795-25796 [E9-12443]

Download as PDF Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Notices Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File No. SR–BATS–2009–015. 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 BATS. 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 No. SR–BATS–2009–015 and should be submitted on or before June 19, 2009. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 Florence E. Harmon, Deputy Secretary. [FR Doc. E9–12446 Filed 5–28–09; 8:45 am] BILLING CODE 8010–01–P of Securities Dealers, Inc. (‘‘NASD’’)) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) a proposed rule change pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder.2 Notice of the proposal was published for comment in the Federal Register on April 20, 2009.3 The Commission received no comments on the proposed rule change. This order approves the proposed rule change. I. Description of the Proposed Rule Change As part of the process of developing a new consolidated rulebook (‘‘Consolidated FINRA Rulebook’’),4 FINRA proposed to adopt NASD IM– 2830–1 (‘‘Breakpoint’’ Sales), renumbered as FINRA Rule 2342, into the Consolidated FINRA Rulebook with the minor changes discussed below. NASD IM–2830–1 prohibits sales of mutual fund shares in amounts below a ‘‘breakpoint’’ if such sales are made ‘‘so as to share in the higher sales charges.’’ In the context of mutual fund sales, a ‘‘breakpoint’’ is that point at which the sales charge is reduced for quantity purchases of fund shares. The application of the standard in NASD IM–2830–1 depends on the facts and circumstances of particular transactions to determine whether a member executed a transaction for the purpose of earning a higher sales charge. In 1998, NASD IM–2830–1 was amended to address the use of modern portfolio investment strategies that utilize many different mutual funds with varying investment objectives.5 The amendments specify more precisely those facts and circumstances that FINRA will consider when examining whether trades that miss breakpoints, but are made pursuant to bona fide asset allocation programs, may have violated NASD IM–2830–1. In making such 1 15 [Release No. 34–59961; File No. SR–FINRA– 2009–018] mstockstill on PROD1PC66 with NOTICES Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Granting Approval of Proposed Rule Change To Adopt IM–2830–1 (‘‘Breakpoint’’ Sales) in the Consolidated FINRA Rulebook May 21, 2009. On March 26, 2009, Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) (f/k/a National Association 19 17 CFR 200.30–3(a)(12). VerDate Nov<24>2008 17:24 May 28, 2009 Jkt 217001 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Exchange Act Rel. No. 59754 (Apr. 13, 2009), 74 FR 18007 (Apr. 20, 2009). 4 The current FINRA rulebook consists of (1) FINRA Rules; (2) NASD Rules; and (3) rules incorporated from NYSE (‘‘Incorporated NYSE Rules’’) (together, the NASD Rules and Incorporated NYSE Rules are referred to as the ‘‘Transitional Rulebook’’). While the NASD Rules generally apply to all FINRA members, the Incorporated NYSE Rules apply only to those members of FINRA that are also members of the NYSE (‘‘Dual Members’’). The FINRA Rules apply to all FINRA members, unless such rules have a more limited application by their terms. For more information about the rulebook consolidation process, see FINRA Information Notice, March 12, 2008 (Rulebook Consolidation Process). 5 See Securities Exchange Act Release No. 40659 (Nov. 10, 1998), 63 FR 64136 (Nov. 18, 1998) (Order Approving Proposed Rule Change Relating to Mutual Fund Breakpoint Sales). 2 17 SECURITIES AND EXCHANGE COMMISSION PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 25795 determinations, the rule provides that FINRA will consider, among other things, whether a member has retained records that demonstrate that the trade was executed in accordance with a bona fide asset allocation program that the member offers to its customers which is designed to meet their diversification needs and investment goals, and under which the member discloses to its customers that they may not qualify for breakpoint reductions that are otherwise available. Breakpoint issues have been of concern to the regulatory community. On December 23, 2002, FINRA issued Special Notice to Members 02–85, which reminded firms of their obligation to apply correctly breakpoint discounts to front-end sales load mutual fund transactions.6 In 2003, the staffs of FINRA, the SEC, and the NYSE conducted examinations of brokerdealers to assess their ability to deliver breakpoint discounts and memorialized the findings of those examinations in a joint report.7 Concurrently, FINRA staff and industry members formed a joint task force to consider issues regarding breakpoints. The joint task force issued a report in July 2003 containing recommendations for the industry to facilitate the accurate delivery of breakpoint discounts.8 FINRA proposed to adopt NASD IM– 2830–1 as FINRA Rule 2342, stating it believes this rule continues to be an important tool in regulating members’ sales of mutual fund shares to ensure that they are not sold in dollar amounts just below breakpoints so as to share in higher sales charges. FINRA proposed to eliminate references to ‘‘just and equitable principles of trade’’ and make other minor changes to the text to reflect that it would be a stand-alone rule, rather than Interpretive Material, and to eliminate certain redundant text that is inconsistent with a rules-based format. FINRA stated that it will announce the implementation date of the proposed rule change in a Regulatory Notice to be published no later than 90 days following Commission approval. 6 NASD Special Notice to Members 02–85, NASD Requires Immediate Member Firm Action Regarding Mutual Fund Purchases and Breakpoint Schedules (December 2002). 7 See Joint SEC/NASD/NYSE Report of Examinations of Broker/Dealers Regarding Discounts on Front-End Sales Charges on Mutual Funds (March 2003), available at https:// www.finra.org/Industry/Issues/Breakpoints/ P006438. 8 See Report of the Joint NASD/Industry Task Force on Breakpoints (July 2003), available at https://www.finra.org/Industry/Issues/Breakpoints/ P006422. E:\FR\FM\29MYN1.SGM 29MYN1 25796 Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Notices II. Discussion and Findings DEPARTMENT OF TRANSPORTATION After careful review of the proposal, the Commission finds that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,9 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.10 The Commission believes that the proposed rule change will continue to provide FINRA with an important tool in regulating members’ sales of mutual fund shares, consistent with the goals of protecting investors and the public interest. Office of the Secretary III. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,11 that the proposed rule change (SR–FINRA– 2009–018) be, and hereby is, approved. For the Commission by the Division of Trading and Markets, pursuant to delegated authority.12 Florence E. Harmon, Deputy Secretary. [FR Doc. E9–12443 Filed 5–28–09; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–59908; File No. SR–BX– 2009–021] Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing of Proposed Rule Change to Amend the Restated Certificate of Incorporation and By-Laws of NASDAQ OMX BX, Inc. Correction In notice document E9–11609, beginning on page 23459 in the issue of Tuesday, May 19, 2009, make the following correction: On page 23462, in the second column, in the second line, ‘‘June 8, 2009’’ should read ‘‘June 9, 2009’’. [FR Doc. Z9–11609 Filed 5–28–09; 8:45 am] mstockstill on PROD1PC66 with NOTICES BILLING CODE 1505–01–D 9 15 U.S.C. 78o–3(b)(6). 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). 11 15 U.S.C. 78s(b)(2). 12 17 CFR 200.30–3(a)(12). 10 In VerDate Nov<24>2008 17:24 May 28, 2009 Jkt 217001 Notice of Applications for Certificates of Public Convenience and Necessity and Foreign Air Carrier Permits Filed Under Subpart B (formerly Subpart Q) During the Week Ending May 16, 2009 The following Applications for Certificates of Public Convenience and Necessity and Foreign Air Carrier Permits were filed under Subpart B (formerly Subpart Q) of the Department of Transportation’s Procedural Regulations (See 14 CFR 301.201 et seq.). The due date for Answers, Conforming Applications, or Motions to Modify Scope are set forth below for each application. Following the Answer period DOT may process the application by expedited procedures. Such procedures may consist of the adoption of a show-cause order, a tentative order, or in appropriate cases a final order without further proceedings. Docket Number: DOT–OST–2009– 0110. Date Filed: May 11, 2009. Due Date for Answers, Conforming Applications, or Motion to Modify Scope: June 1, 2009. Description: Application of Federal State Unitary Air Enterprise of Ministry For Emergency Situations of Russia requesting a foreign air carrier permit enabling it to engage in charter foreign air transportation of property and mail between a point or points in the Russian Federation and a point or points in the United States and in other charter trips in foreign air transportation, including between any point or points in the United States and any point or points in a third country or countries, subject to pertinent national, bilateral and international rules and regulations. Docket Number: DOT–OST–2009– 0116. Date Filed: May 12, 2009. Due Date for Answers, Conforming Applications, or Motion to Modify Scope: June 2, 2009. Description: Application of Key Lime Air Corp. requesting commuter air carrier authorization so that it may provide scheduled passenger service between Denver’s Rocky Mountain Metropolitan Airport (BJC) and Grand Junction, Colorado (GJT). Docket Number: DOT–OST–2009– 0120. Date Filed: May 14, 2009. Due Date for Answers, Conforming Applications, or Motion to Modify Scope: June 4, 2009. Description: Application of Vision Airlines, Inc. (‘‘Vision’’) requesting an PO 00000 Frm 00100 Fmt 4703 Sfmt 4703 amendment to its certificate of public convenience and necessity which would authorize Vision to engage in scheduled interstate air transportation of persons, property and mail with large aircraft. Renee V. Wright, Program Manager, Docket Operations, Federal Register Liaison. [FR Doc. E9–12570 Filed 5–28–09; 8:45 am] BILLING CODE 4910–9X–P DEPARTMENT OF TRANSPORTATION Office of the Secretary Aviation Proceedings, Agreements Filed the Week Ending May 16, 2009 The following Agreements were filed with the Department of Transportation under the Sections 412 and 414 of the Federal Aviation Act, as amended (49 U.S.C. 1383 and 1384) and procedures governing proceedings to enforce these provisions. Answers may be filed within 21 days after the filing of the application. Docket Number: DOT–OST–2009– 0113. Date Filed: May 11, 2009. Parties: Members of the International Air Transport Association. Subject: CSC/31/Meet/005/09 dated April 8, 2009. Finally Adopted Resolutions: Resolution 623 and Recommended Practice 1630. Intended effective date: 1 October 2009. Renee V. Wright, Program Manager, Docket Operations, Federal Register Liaison. [FR Doc. E9–12576 Filed 5–28–09; 8:45 am] BILLING CODE 4910–9X–P DEPARTMENT OF TRANSPORTATION Federal Railroad Administration Notice of Application for Approval of Discontinuance or Modification of a Railroad Signal System or Relief From the Requirements of Title 49 Code of Federal Regulations Part 236 Pursuant to Title 49 Code of Federal Regulations (CFR) Part 235 and 49 U.S.C. 20502(a), the following railroad has petitioned the Federal Railroad Administration (FRA) seeking approval for the discontinuance or modification of the signal system or relief from the requirements of 49 CFR Part 236, as detailed below. Docket Number FRA–2009–0037. Applicant: Norfolk Southern Corporation, Mr. B. L. Sykes, Chief Engineer C&S Engineering, Communications & Signal Department, E:\FR\FM\29MYN1.SGM 29MYN1

Agencies

[Federal Register Volume 74, Number 102 (Friday, May 29, 2009)]
[Notices]
[Pages 25795-25796]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-12443]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59961; File No. SR-FINRA-2009-018]


Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Order Granting Approval of Proposed Rule Change To 
Adopt IM-2830-1 (``Breakpoint'' Sales) in the Consolidated FINRA 
Rulebook

May 21, 2009.
    On March 26, 2009, 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'') a proposed rule change pursuant to Section 19(b)(1) 
of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder.\2\ Notice of the proposal was published for comment in the 
Federal Register on April 20, 2009.\3\ The Commission received no 
comments on the proposed rule change. This order approves the proposed 
rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Exchange Act Rel. No. 59754 (Apr. 13, 2009), 74 FR 18007 
(Apr. 20, 2009).
---------------------------------------------------------------------------

I. Description of the Proposed Rule Change

    As part of the process of developing a new consolidated rulebook 
(``Consolidated FINRA Rulebook''),\4\ FINRA proposed to adopt NASD IM-
2830-1 (``Breakpoint'' Sales), renumbered as FINRA Rule 2342, into the 
Consolidated FINRA Rulebook with the minor changes discussed below. 
NASD IM-2830-1 prohibits sales of mutual fund shares in amounts below a 
``breakpoint'' if such sales are made ``so as to share in the higher 
sales charges.'' In the context of mutual fund sales, a ``breakpoint'' 
is that point at which the sales charge is reduced for quantity 
purchases of fund shares.
---------------------------------------------------------------------------

    \4\ The current FINRA rulebook consists of (1) FINRA Rules; (2) 
NASD Rules; and (3) rules incorporated from NYSE (``Incorporated 
NYSE Rules'') (together, the NASD Rules and Incorporated NYSE Rules 
are referred to as the ``Transitional Rulebook''). While the NASD 
Rules generally apply to all FINRA members, the Incorporated NYSE 
Rules apply only to those members of FINRA that are also members of 
the NYSE (``Dual Members''). The FINRA Rules apply to all FINRA 
members, unless such rules have a more limited application by their 
terms. For more information about the rulebook consolidation 
process, see FINRA Information Notice, March 12, 2008 (Rulebook 
Consolidation Process).
---------------------------------------------------------------------------

    The application of the standard in NASD IM-2830-1 depends on the 
facts and circumstances of particular transactions to determine whether 
a member executed a transaction for the purpose of earning a higher 
sales charge. In 1998, NASD IM-2830-1 was amended to address the use of 
modern portfolio investment strategies that utilize many different 
mutual funds with varying investment objectives.\5\ The amendments 
specify more precisely those facts and circumstances that FINRA will 
consider when examining whether trades that miss breakpoints, but are 
made pursuant to bona fide asset allocation programs, may have violated 
NASD IM-2830-1. In making such determinations, the rule provides that 
FINRA will consider, among other things, whether a member has retained 
records that demonstrate that the trade was executed in accordance with 
a bona fide asset allocation program that the member offers to its 
customers which is designed to meet their diversification needs and 
investment goals, and under which the member discloses to its customers 
that they may not qualify for breakpoint reductions that are otherwise 
available.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 40659 (Nov. 10, 
1998), 63 FR 64136 (Nov. 18, 1998) (Order Approving Proposed Rule 
Change Relating to Mutual Fund Breakpoint Sales).
---------------------------------------------------------------------------

    Breakpoint issues have been of concern to the regulatory community. 
On December 23, 2002, FINRA issued Special Notice to Members 02-85, 
which reminded firms of their obligation to apply correctly breakpoint 
discounts to front-end sales load mutual fund transactions.\6\ In 2003, 
the staffs of FINRA, the SEC, and the NYSE conducted examinations of 
broker-dealers to assess their ability to deliver breakpoint discounts 
and memorialized the findings of those examinations in a joint 
report.\7\ Concurrently, FINRA staff and industry members formed a 
joint task force to consider issues regarding breakpoints. The joint 
task force issued a report in July 2003 containing recommendations for 
the industry to facilitate the accurate delivery of breakpoint 
discounts.\8\
---------------------------------------------------------------------------

    \6\ NASD Special Notice to Members 02-85, NASD Requires 
Immediate Member Firm Action Regarding Mutual Fund Purchases and 
Breakpoint Schedules (December 2002).
    \7\ See Joint SEC/NASD/NYSE Report of Examinations of Broker/
Dealers Regarding Discounts on Front-End Sales Charges on Mutual 
Funds (March 2003), available at https://www.finra.org/Industry/Issues/Breakpoints/P006438.
    \8\ See Report of the Joint NASD/Industry Task Force on 
Breakpoints (July 2003), available at https://www.finra.org/Industry/Issues/Breakpoints/P006422.
---------------------------------------------------------------------------

    FINRA proposed to adopt NASD IM-2830-1 as FINRA Rule 2342, stating 
it believes this rule continues to be an important tool in regulating 
members' sales of mutual fund shares to ensure that they are not sold 
in dollar amounts just below breakpoints so as to share in higher sales 
charges. FINRA proposed to eliminate references to ``just and equitable 
principles of trade'' and make other minor changes to the text to 
reflect that it would be a stand-alone rule, rather than Interpretive 
Material, and to eliminate certain redundant text that is inconsistent 
with a rules-based format.
    FINRA stated that it will announce the implementation date of the 
proposed rule change in a Regulatory Notice to be published no later 
than 90 days following Commission approval.

[[Page 25796]]

II. Discussion and Findings

    After careful review of the proposal, the Commission finds that the 
proposed rule change is consistent with the provisions of Section 
15A(b)(6) of the Act,\9\ 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.\10\ The 
Commission believes that the proposed rule change will continue to 
provide FINRA with an important tool in regulating members' sales of 
mutual fund shares, consistent with the goals of protecting investors 
and the public interest.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78o-3(b)(6).
    \10\ 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).
---------------------------------------------------------------------------

III. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\11\ that the proposed rule change (SR-FINRA-2009-018) be, and 
hereby is, approved.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(2).
    \12\ 17 CFR 200.30-3(a)(12).

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-12443 Filed 5-28-09; 8:45 am]
BILLING CODE 8010-01-P
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.