Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Approving a Proposed Rule Change Relating to Availability of Information Pursuant to FINRA Rule 8312 (FINRA BrokerCheck Disclosure), 61193-61197 [E9-27997]

Download as PDF Federal Register / Vol. 74, No. 224 / Monday, November 23, 2009 / Notices become the industry standard for determining settlement value.7 ISE therefore proposes to amend its rules to allow the closing settlement value for the Brazilian real to be determined based on the PTAX rate. Doing so will reflect the current industry standard with respect to this product and will align trading in it with other regulated and exchange-listed products in the U.S. The PTAX rate is the same as that used by the Bolsa de Mercadorias & Futuros to cash settle its U.S. dollar futures contract as well as that used by the Chicago Mercantile Exchange to cash settle its Brazilian real futures contract. In the event the PTAX rate is not available, the Exchange shall calculate the closing settlement value for options on the Brazilian real using the WM/ Reuters Intraday Spot price corresponding to 12:00 p.m. New York time, which is what the Exchange currently uses to calculate the closing settlement values for all the FX options that are currently listed on the Exchange. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 (the ‘‘Act’’) and the rules and regulations under the Act applicable to a national securities exchange and, in particular, the requirements of Section 6(b) of the Act.8 Specifically, the Exchange believes the proposed rule change is consistent with Section 6(b)(5) of the Act’s 9 requirements that the rules of a national securities exchange be designed to promote just and equitable principles of trade, to prevent fraudulent and manipulative acts and, in general, to protect investors and the public interest. In particular, the proposed rule change will allow the Exchange to use the PTAX, an industryrecognized source, to determine the closing settlement value for options on the Brazilian real which the Exchange expects shortly to list for trading. jlentini on DSKJ8SOYB1PROD with NOTICES B. Self-Regulatory Organization’s Statement on Burden on Competition The proposed rule change does not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. 7 Additional information on the PTAX is available on BACEN’s Web site at https://www.bcb.gov.br/ sddsi/taxacambio_i.htm. 8 15 U.S.C. 78f(b). 9 15 U.S.C. 78f(b)(5). VerDate Nov<24>2008 16:37 Nov 20, 2009 Jkt 220001 C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any unsolicited written comments from members or other interested parties. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not significantly affect the protection of investors or the public interest, does not impose any significant burden on competition, and, by its terms, does not become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) 10 of the Act and Rule 19b– 4(f)(6) 11 thereunder. The Exchange provided the Commission with written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing the proposed rule change. 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: 61193 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–ISE–2009–97. 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, on official business days between the hours of 10 a.m. and 3 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. 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–ISE– 2009–97 and should be submitted on or before December 14, 2009. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12 Florence E. Harmon, Deputy Secretary. [FR Doc. E9–27999 Filed 11–20–09; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Electronic Comments [Release No. 34–61002; File No. SR–FINRA– 2009–050] • 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–ISE–2009–97 on the subject line. Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Approving a Proposed Rule Change Relating to Availability of Information Pursuant to FINRA Rule 8312 (FINRA BrokerCheck Disclosure) Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 10 15 11 17 PO 00000 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). Frm 00091 Fmt 4703 Sfmt 4703 November 13, 2009. I. Introduction On July 24, 2009, the Financial Industry Regulatory Authority, Inc. 12 17 E:\FR\FM\23NON1.SGM CFR 200.30–3(a)(12). 23NON1 61194 Federal Register / Vol. 74, No. 224 / Monday, November 23, 2009 / Notices (‘‘FINRA’’) 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 make available in BrokerCheck information about former associated persons of a FINRA member who were the subject of a final regulatory action as defined in Form U4 that has been reported to the Central Registration Depository (‘‘CRD®’’ or ‘‘CRD System’’). The proposal was published for comment in the Federal Register on August 7, 2009.3 The Commission received fifty-two comments on the proposal.4 FINRA responded to the comments on October 15, 2009.5 This order approves the proposed rule change. II. Description of the Proposal Pursuant to FINRA Rule 8312, BrokerCheck allows the public to obtain information regarding current and former members, as well as associated persons and persons who were associated with a member within the preceding two years. Formerly registered persons, although no longer in the securities industry in a registered capacity, may, however, work in other investment-related industries or attain positions of trust. FINRA thus proposed to expand the information available via BrokerCheck to certain information with respect to persons who were associated with a member but who have not been associated with a member in the preceding two years (‘‘formerly associated persons’’), if those persons were the subject of any final regulatory action, as defined in Form U4, that has been reported to CRD via a uniform registration form.6 ‘‘Final regulatory action’’ includes any final action of the Commission, Commodity Futures Trading Commission, a Federal banking agency, the National Credit Union Administration, another Federal regulatory agency, a State regulatory agency, a foreign financial regulatory authority, or a self-regulatory organization, including actions that have been appealed.7 FINRA staff will 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 60462 (August 7, 2009), 74 FR 41470 (August 17, 2009 ‘‘Notice’’). 4 See Exhibit A for a list of comment letters. 5 See letter to Elizabeth M. Murphy, Secretary, Commission, from Richard E. Pullano, Associate Vice President and Chief Counsel, FINRA, dated October 15, 2009 (‘‘Response Letter’’). 6 See proposed FINRA Rule 8312(c). 7 See Form U4 questions 14C, 14D, and 14E, as well as Question 7D of Form U5. See also Section 3(a)(39) of the Act. jlentini on DSKJ8SOYB1PROD with NOTICES 2 17 VerDate Nov<24>2008 16:37 Nov 20, 2009 Jkt 220001 review the information on Forms U4 and U5 (including predecessor questions), as well as information filed on Form U6, to determine whether a formerly associated person is subject to a final regulatory action and should be included in BrokerCheck pursuant to the proposed rule.8 For such formerly associated persons,9 FINRA will disclose: (i) Information concerning any final regulatory action; (ii) administrative information, such as employment and registration history as reported on a registration form; (iii) the most recently submitted comment, if any, provided by the person, if the comment is relevant and in accordance with the procedures established by FINRA; and (iv) dates and names of qualification examinations passed by the formerly associated person, if available.10 The proposed rule change would not expand access to other information that is included in the CRD System, such as customer complaints, bankruptcies, liens, criminal events or arbitration claims. In addition, a final regulatory action would not include any action limited to the revocation or suspension of an individual’s authorization to act as an attorney, accountant or Federal contractor (Form U4, Question 14F). If FINRA receives a request regarding a formerly associated person for which it has data in a different format, FINRA’s staff will manually prepare the BrokerCheck report, convert the report to an electronic format, and make the report available through BrokerCheck. Once the information has been converted to the Web CRD format it will be available in Web CRD from that point forward.11 8 Under the proposed rule change, FINRA may disclose a final action that is reported by a regulator on a Form U6 even if that action has not been reported by an individual on a Form U4 because, for example, the individual was not registered at the time the final regulatory action was reported. 9 Certain information about some formerly associated persons who have not been associated with a member since January 1, 1999, may not be available through BrokerCheck. As discussed more fully in the Notice, two conditions apply to a small percentage of individuals who were no longer registered at the time Web CRD was established in 1999. First, not all of these individuals’ records are available in the Web CRD format; instead, their records exist in the Legacy CRD format. Second, for a very small percentage of individuals, certain administrative information is unavailable in either the Web or Legacy CRD format. 10 See proposed FINRA Rule 8312(c). 11 FINRA stated that if it identifies or becomes aware of potentially inappropriate information, including customer names, confidential account information or possibly offensive or potentially defamatory language in a BrokerCheck report, FINRA would balance the value of the language in controversy for regulatory and investor protection purposes against the objector’s asserted privacy rights and/or potential defamation claims. Based on PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 III. Summary of Comments and FINRA’s Response The Commission received fifty-two comment letters on the proposed rule change.12 Most comments focus on two issues. First, commenters address the provision of FINRA Rule 8312 that provides for the release of certain information regarding an individual who is a current or former member or current associated person of a member of FINRA, or a person who has been an associated person of a member of FINRA within the past two preceding years. FINRA is not making a substantive change to this provision.13 Second, commenters take issue with the limited nature of the information to be disclosed regarding formerly associated persons. A. General Two-Year BrokerCheck Disclosure Period Most information available through BrokerCheck is only available with respect to current or former members, or associated persons of members, or persons who were associated persons of FINRA members within the preceding two years.14 Forty commenters argue that, for investor protection purposes, this two-year time frame should be increased so that information remains available to the public via BrokerCheck for a longer period of time—anywhere from five years to forever.15 Twelve commenters 16 advised a six-year disclosure period, which corresponds to the time limit in FINRA’s rule for the submission of arbitration claims involving public customers (‘‘eligibility this balancing, FINRA may determine to redact language from BrokerCheck reports on a case-bycase basis. See the Notice, citing, e.g., Securities Exchange Act Release No. 42402 (February 7, 2000), 65 FR 7582 (February 15, 2000) (Order Approving SR–NASD–99–45). 12 See supra, note 4. 13 Current FINRA Rule 8312(a); proposed to be renumbered to FINRA Rule 8312(b). 14 Id. FINRA stated that some commenters incorrectly mentioned that information regarding an individual is ‘‘purged’’ from BrokerCheck once that individual ceases to be registered with FINRA for a period of two years. See, e.g., comment letters from Lipner, Van Kampen, Sigler, Speyer, and Claxton. FINRA stated that the information is retained in the CRD system even though it is not displayed through BrokerCheck and would be available for display through BrokerCheck should the individual reregister with FINRA or otherwise become covered by BrokerCheck. See Response Letter at 2. 15 See comment letters from Lipner, Van Kampen, Sigler, Pounds, Steiner, Neuman, Bleecher, Estell, Layne, PIABA, Schultz 1, Shewan, Port, Graham, Speyer, AARP, Griffin, Sherman, Cornell, Evans/ Edmiston, St. John’s, Rosenfield, Ilgenfritz, Buchwalter, Miller, Rosca, Guiliano, Greco, Sonn, Haigney, Sutherland, Davis, Mougey, Claxton, DeVita, Ledbetter, Gladden, McCauley, Malarney, and Willcutts. 16 See comment letters from Pounds, Steiner, Estell, PIABA, Schultz 1, Graham, Rosenfield, Ilgenfritz, Miller, Greco, Sonn, and Haigney. E:\FR\FM\23NON1.SGM 23NON1 Federal Register / Vol. 74, No. 224 / Monday, November 23, 2009 / Notices rule’’).17 FINRA believes that these comments are outside the scope of the rule proposal, since it is not proposing to change the two-year disclosure period currently set forth in Rule 8312; rather, the proposed rule change expands BrokerCheck only with respect to formerly associated persons who are subject to a final regulatory action.18 Nevertheless, FINRA notes that the two-year disclosure period coincides with the period in which an individual can return to the industry without being required to requalify by examination and the initial period in which an individual remains subject to FINRA’s jurisdiction.19 FINRA states that when the two-year time frame was proposed, FINRA believed that the two-year time frame struck the appropriate balance between an investor’s interest in being easily able to obtain information about a former registered person and a person’s desire for privacy once he has left the securities industry,20 and it continues to believe that is the proper balance today.21 Finally, FINRA disagrees with the commenters who represent investors in securities litigation or other matters who suggest a six-year disclosure period, which FINRA believes is in order to make it easier to conduct research on former registered persons.22 FINRA states that the BrokerCheck system was established principally to help members of the public determine whether to conduct or continue to conduct business with a FINRA member or any of the member’s associated persons and not for the purpose suggested by these commenters.23 FINRA believes that the commenters’ attempt to link the time limitation on the submission of claims provided for under the eligibility rule and the time frame for BrokerCheck disclosure is misplaced, since the time limitation under the eligibility rule is determined by the date of the occurrence or event giving rise to the claim and has no relationship 17 See FINRA Rule 12206. Response Letter at 3. FINRA clarifies that four commenters (Lipner, Neuman, AARP, and Malarney) erroneously state that the proposal will limit the time frame during which information on former registered persons will be available through BrokerCheck. 19 See Response Letter at 3, citing Securities Exchange Act Release No. 42240 (December 16, 1999), 64 FR 72125 (December 23, 1999) (Notice of Filing SR–NASD–99–45). 20 Id. FINRA also notes that the Commission received no comments when FINRA proposed establishing the two-year disclosure period for BrokerCheck. 21 See Response Letter at 3. 22 See Response Letter at 4, citing e.g., comment letters from PIABA, Rosca, Greco, Sonn, and Haigney. 23 See Response Letter at 4. jlentini on DSKJ8SOYB1PROD with NOTICES 18 See VerDate Nov<24>2008 16:37 Nov 20, 2009 Jkt 220001 whatsoever to the termination of an individual’s registration with FINRA.24 Therefore, in FINRA’s opinion, the commenters’ suggested change is outside the scope of the rule proposal and also would not necessarily address the commenters’ concerns.25 B. Expanding Access to Disclosure Information, Other Than Final Regulatory Actions, Pertaining to Individuals Not Registered With FINRA for More Than Two Years Eighteen commenters express concern that FINRA’s proposal may be too limiting in that it only expands BrokerCheck with respect to those formerly associated persons who are the subject of a final regulatory action, and for those persons, only with respect to certain information.26 Many of these commenters suggest that BrokerCheck should include additional information, such as arbitration claims, criminal proceedings, and bankruptcies and liens, contending that these other categories are just as valuable to investors as final regulatory actions.27 FINRA believes that these comments are outside the scope of the rule proposal because they pertain to categories of disclosure that are not the subject of the current rule proposal.28 Notwithstanding that, FINRA states these other categories of information are more relevant when the individual is registered or was recently registered (i.e., within two years) and reiterates that it believes the proposal strikes a balance between personal privacy and investor protection concerns.29 FINRA justifies one distinction by noting that while final regulatory actions are subject to procedures that allow an opportunity for the person to present arguments to a fact-finder about the allegations before the final disposition of the matter,30 24 Id. 25 Id. 26 See comment letters from Caruso, Bleecher, PIABA, Schultz 1, Feldman, Sherman, Lewins, Cornell, Bakhtiari, Evans/Edmiston, St. John’s, Rosenfield, NASAA, Guiliano, Sonn, Meyer, Haigney, and Amato. Two commenters stated that FINRA’s proposed rule change would apply only to those formerly associated persons who are the subject of a final regulatory action and who work in other investment-related industries or positions of trust. See comment letters from Schultz 1 and Sonn. FINRA clarified that the proposal will, in fact, apply to all former registered persons who are the subject of a final regulatory action regardless of their current occupation, if any. See Response Letter at 4. 27 See, e.g., comment letters from PIABA, Schultz 1, Cornell, Evans/Edmiston, St. John’s, and Rosenfield. 28 See Response Letter at 4. 29 See Response Letter at 5. 30 The formerly associated person has the opportunity to submit a comment for publication in BrokerCheck in response to information provided PO 00000 Frm 00093 Fmt 4703 Sfmt 4703 61195 arbitration claims may not be subject to procedures that allow an opportunity for the person to present arguments to a fact-finder about the allegations before final disposition. Further, FINRA notes, a firm may choose to settle an arbitration claim regardless of whether the person wishes to contest the claim (e.g., for business reasons). With respect to criminal charges and convictions, FINRA states that these claims that are reported subsequently may have a different disposition, which may significantly change the meaning of the matter as originally reported (for example, such charges or convictions may have been dismissed or expunged). Finally, FINRA does not think that reportable financial matters have the same degree of materiality as final regulatory actions such that they warrant disclosure on a permanent basis. IV. Discussion and Commission Findings After carefully reviewing the proposed rule change, the comment letters, and the Response Letter, the Commission finds that the proposal is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities association.31 In particular, the Commission finds that the proposal is consistent with Section 15A(b)(6) of the Act,32 which requires, among other things, that FINRA’s rules be designed to prevent fraudulent and manipulative acts and practices, 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. Specifically, the Commission believes that making information available through BrokerCheck about formerly associated persons who were the subject of a final regulatory action will help members of the public to protect themselves from unscrupulous people and thus the proposed rule change should help prevent fraudulent and manipulative acts and practices, and protect investors and the public interest. One commenter suggests the disclosure of this additional information may serve through BrokerCheck if the comment is in the form and in accordance with the procedures established by FINRA and relates to the information provided through BrokerCheck. 31 In approving this proposed rule change, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 32 15 U.S.C. 78o–3(b)(6). E:\FR\FM\23NON1.SGM 23NON1 jlentini on DSKJ8SOYB1PROD with NOTICES 61196 Federal Register / Vol. 74, No. 224 / Monday, November 23, 2009 / Notices as a deterrent to fraudulent activity.33 The Commission believes that the information FINRA proposes to disclose is relevant to investors and members of the public who wish to educate themselves with respect to the professional history of a formerly associated person. It is possible that a formerly associated person could become a financial planner or work in another related field where his securities record would help members of the public decide if they should accept his financial advice or rely on his advice or expertise. One commenter suggested a formerly associated person could serve as a non-public arbitrator.34 Clearly, in any of these circumstances, the formerly associated person’s BrokerCheck information would be relevant in determining whether to do business with him, or, in the case of a claimant, in deciding whether to challenge a potential arbitrator. The Commission agrees that the concerns raised by commenters who believe that the time frame for general disclosure should be increased are outside the scope of this proposal. However, the categories of information that should be disclosed for formerly associated persons is within the scope of the instant proposal and the commenters make a number of legitimate arguments with respect to the usefulness of the additional information they seek to have disclosed. The Commission understands that certain commenters, as well as other members of the public, may utilize information in BrokerCheck in considering whether to bring action against a formerly associated person for potentially actionable deeds 35 and believes that this is a legitimate use for BrokerCheck. The Commission recognizes that the public’s ability to access information, whether to inquire about a registered person or to obtain information in connection with an alleged wrongdoing of a formerly associated person may serve to protect investors, the integrity of the marketplace, and the public interest. The Commission urges the public to utilize all sources of information, particularly the databases of the State regulators, as well as legal search engines and records searches, in conducting a thorough search of any associated person’s activities. The Commission notes that FINRA stated it would continue to evaluate all aspects of the BrokerCheck program to determine whether future circumstances should lead to greater disclosure 33 See Cornell letter. Estell letter. 35 See supra, note 22. 34 See VerDate Nov<24>2008 16:37 Nov 20, 2009 Jkt 220001 through BrokerCheck.36 FINRA has a statutory obligation to make information available to the public and,37 as stated in the past, the Commission believes that FINRA should continuously strive to improve BrokerCheck because it is a valuable tool for the public in deciding whether to work with an industry member.38 The changes proposed in this filing will enhance BrokerCheck by including more information that should prove useful to the general public. For the reasons discussed above, the Commission finds that the rule change is consistent with the Act. V. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,39 that the proposed rule change (SR–FINRA– 2009–050), be, and hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.40 Florence E. Harmon, Deputy Secretary. Exhibit A—List of Comment Letters Received for FINRA–2009–050 1. Daniel W. Roberts, President/CEO, Roberts & Ryan Investments Inc., dated August 21, 2009 (‘‘Roberts’’). 2. Seth E. Lipner, Professor of Law, Zicklin School of Business, Baruch College, CUNY, dated August 27, 2009 (‘‘Lipner’’). 3. Al Van Kampen, Attorney at Law, dated August 31, 2009 (‘‘Van Kampen’’). 4. James A. Sigler, Esq., dated August 31, 2009 (‘‘Sigler’’). 5. Herb Pounds, dated August 31, 2009 (‘‘Pounds’’). 6. Leonard Steiner, Lawyer, dated August 31, 2009 (‘‘Steiner’’). 7. David P. Neuman, Stoltmann Law Offices, PC, dated August 31, 2009 (‘‘Neuman’’). 8. Steven B. Caruso, Esq., Maddox Hargett & Caruso, P.C., dated September 1, 2009 (‘‘Caruso’’). 9. Rob Bleecher, Attorney, dated September 1, 2009 (‘‘Bleecher’’). 10. Barry D. Estell, Esq., dated September 1, 2009 (‘‘Estell’’). 11. Richard M. Layne, Esq., Law Office of Richard M. Layne, dated September 1, 2009 (‘‘Layne’’). 12. Brian N. Smiley, President, Public Investors Arbitration Bar Association, dated September 4, 2009 (‘‘PIABA’’). 13. Laurence S. Schultz, Driggers, Schultz & Herbst, P.C., dated September 4, 2009 (‘‘Schultz 1’’). 36 See Response Letter at 5. Section 15A(i) of the Act. 38 See, e.g., Securities Exchange Act Release No. 59916 (May 13, 2009), 74 FR 23750 (May 20, 2009). 39 15 U.S.C. 78s(b)(2). 40 17 CFR 200.30–3(a)(12). 37 See PO 00000 Frm 00094 Fmt 4703 Sfmt 4703 14. Scott R. Shewan, Pape Shewan LLP, dated September 4, 2009 (‘‘Shewan’’). 15. Robert C. Port, Esq., dated September 4, 2009 (‘‘Port’’). 16. Jan Graham, Graham Law Offices, dated September 4, 2009 (‘‘Graham’’). 17. Jeffrey A. Feldman, dated September 7, 2009 (‘‘Feldman’’). 18. Debra G. Speyer, Esq., Law Offices of Debra G. Speyer, dated September 7, 2009 (‘‘Speyer’’). 19. Tim Canning, Law Offices of Timothy A. Canning, dated September 8, 2009 (‘‘Canning’’). 20. David Certner, Legislative Counsel and Legislative Policy Director, AARP, dated September 8, 2009 (‘‘AARP’’). 21. Keith L. Griffin, Griffin Law Firm, LLC, dated September 8, 2009 (‘‘Griffin’’). 22. Steven M. Sherman, Sherman Business Law, received September 8, 2009 (‘‘Sherman’’). 23. Richard A. Lewins, Esq., dated September 8, 2009 (‘‘Lewins’’). 24. William A. Jacobson, Esq., Associate Clinical Professor of Law, Director, Cornell Securities Law Clinic, dated September 8, 2009 (‘‘Cornell’’). 25. Ryan K. Bakhtiari, Aidikoff, Uhl and Bakhtiari, dated September 8, 2009 (‘‘Bakhtiari’’). 26. Jonathan W. Evans and Michael S. Edmiston, dated September 8, 2009 (‘‘Evans/Edmiston’’). 27. Christine Lazaro, Supervising Attorney, Lisa A. Catalano, Director, Peter J. Harrington, Legal Intern, Securities Arbitration Clinic, St. John’s University School of Law, dated September 8, 2009 (‘‘St. John’s’’). 28. William S. Shepherd, Managing Partner, Shepherd Smith Edwards Kantas, LLP, dated September 8, 2009 (‘‘Shepherd’’). 29. Howard Rosenfield, Law Offices of Howard Rosenfield, received September 8, 2009 (‘‘Rosenfield’’). 30. Rex Staples, General Counsel, North American Securities Administrators Association, dated September 8, 2009 (‘‘NASAA’’). 31. Scott C. Ilgenfritz, Johnson, Pope, Bokor, Ruppel & Burns, LLP, dated September 8, 2009 (‘‘Ilgenfritz’’). 32. Steve A. Buchwalter, Esq., dated September 8, 2009 (‘‘Buchwalter’’). 33. John Miller, Attorney, Swanson Midgley, LLC, dated September 9, 2009 (‘‘Miller’’). 34. Alin L. Rosca, Attorney at Law, John S. Chapman & Associates, LLC, received September 9, 2009 (‘‘Rosca’’). 35. Nicholas J. Guiliano, The Guiliano Law Firm, received September 9, 2009 (‘‘Guiliano’’). 36. W. Scott Greco, Greco Greco, P.C., dated September 9, 2009 (‘‘Greco’’). E:\FR\FM\23NON1.SGM 23NON1 Federal Register / Vol. 74, No. 224 / Monday, November 23, 2009 / Notices 37. Jeffrey Sonn, Esq., Sonn & Erez, PLC, dated September 9, 2009 (‘‘Sonn’’). 38. Stephen P. Meyer, Esq., Meyer, Ford & Glasser, dated September 10, 2009 (‘‘Meyer’’). 39. Dayton P. Haigney, III, Attorney at Law, dated September 10, 2009 (‘‘Haigney’’). 40. John E. Sutherland, Brickley, Sears & Sorett, P.A., dated September 11, 2009 (‘‘Sutherland’’). 41. Theodore M. Davis, Esq., dated September 11, 2009 (‘‘Davis’’). 42. Peter J. Mougey, Esq., dated September 14, 2009 (‘‘Mougey’’). 43. Roger F. Claxton, Law Office of Roger F. Claxton, dated September 15, 2009 (‘‘Claxton’’). 44. Richard D. DeVita, Esq., dated September 15, 2009 (‘‘DeVita’’). 45. Dale Ledbetter, Ledbetter & Associates, P.A., dated September 16, 2009 (‘‘Ledbetter’’). 46. William J. Gladden, JD, CFP, dated September 16, 2009 (‘‘Gladden’’). 47. Steven M. McCauley, Esq., dated September 16, 2009 (‘‘McCauley’’). 48. Michael W. Malarney, Esq., The Pearl Law Firm, P.A., dated September 17, 2009 (‘‘Malarney’’). 49. Ronald M. Amato, Esq., Shaheen, Novoselsky, Staat, Filipowski Eccleston, PC, dated September 18, 2009 (‘‘Amato’’). 50. Thomas P. Willcutts, Willcutts Law Group, LLC, dated September 21, 2009 (‘‘Willcutts’’). 51. Scot D. Bernstein, Law Offices of Scot D. Bernstein, dated September 24, 2009 (‘‘Bernstein’’). 52. Laurence S. Schultz, Driggers, Schultz & Herbst, P.C., dated September 30, 2009 (‘‘Schultz 2’’). [FR Doc. E9–27997 Filed 11–20–09; 8:45 am] BILLING CODE 8011–01–P Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by NASDAQ. 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 NASDAQ proposes to modify pricing for NASDAQ members using the Nasdaq Market Center. This proposed rule change, which is effective upon filing, will become operative on November 2, 2009. The text of the proposed rule change is available at https:// nasdaqomx.cchwallstreet.com/, at NASDAQ’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, 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 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–60980; File No. SR– NASDAQ–2009–098] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify Fees for Members Using the NASDAQ Options Market jlentini on DSKJ8SOYB1PROD with NOTICES November 10, 2009. 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 October 30, 2009, The NASDAQ Stock Market LLC (‘‘NASDAQ’’) filed with the 1 15 2 17 U.S.C. 78s(b)(1). CFR 240.19b–4. VerDate Nov<24>2008 16:37 Nov 20, 2009 Jkt 220001 Nasdaq is modifying NASDAQ Rule 7050, the fee schedule for NOM, regarding orders with an account type of ‘‘Customer.’’ Specifically, Nasdaq is establishing a fee of $0.35 per executed contract for Customer orders in Penny Pilot options, as opposed to the fee of $0.20 that has applied to such orders since July 2009. Nasdaq notes that this fee remains lower than the fees that other options exchanges apply to such customer orders. Nasdaq believes that the proposed fees are competitive, fair and reasonable, and non-discriminatory in that they apply equally to all similarly situated members and customers. As with all fees, Nasdaq may adjust these proposed fees in response to competitive conditions by filing a new proposed rule change. PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 61197 2. Statutory Basis Nasdaq believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,3 in general, and with Section 6(b)(4) of the Act,4 in particular, in that it provides for the equitable allocation of reasonable dues, fees and other charges among members and issuers and other persons using any facility or system which NASDAQ operates or controls. Consistent with past practice, the proposed change identifies a class of person subject to transaction execution fees based on the role of that class in bringing order flow to NASDAQ. B. Self-Regulatory Organization’s Statement on Burden on Competition NASDAQ 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, as amended. 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 The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act 5 and subparagraph (f)(2) of Rule 19b–4 thereunder.6 At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File 3 15 U.S.C. 78f. U.S.C. 78f(b)(4). 5 15 U.S.C. 78s(b)(3)(a)(ii). 6 17 CFR 240.19b–4(f)(2). 4 15 E:\FR\FM\23NON1.SGM 23NON1

Agencies

[Federal Register Volume 74, Number 224 (Monday, November 23, 2009)]
[Notices]
[Pages 61193-61197]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-27997]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61002; File No. SR-FINRA-2009-050]


Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Order Approving a Proposed Rule Change Relating to 
Availability of Information Pursuant to FINRA Rule 8312 (FINRA 
BrokerCheck Disclosure)

November 13, 2009.

I. Introduction

    On July 24, 2009, the Financial Industry Regulatory Authority, Inc.

[[Page 61194]]

(``FINRA'') 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 make available in BrokerCheck information about 
former associated persons of a FINRA member who were the subject of a 
final regulatory action as defined in Form U4 that has been reported to 
the Central Registration Depository (``CRD[supreg]'' or ``CRD 
System''). The proposal was published for comment in the Federal 
Register on August 7, 2009.\3\ The Commission received fifty-two 
comments on the proposal.\4\ FINRA responded to the comments on October 
15, 2009.\5\ This order approves the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 60462 (August 7, 
2009), 74 FR 41470 (August 17, 2009 ``Notice'').
    \4\ See Exhibit A for a list of comment letters.
    \5\ See letter to Elizabeth M. Murphy, Secretary, Commission, 
from Richard E. Pullano, Associate Vice President and Chief Counsel, 
FINRA, dated October 15, 2009 (``Response Letter'').
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II. Description of the Proposal

    Pursuant to FINRA Rule 8312, BrokerCheck allows the public to 
obtain information regarding current and former members, as well as 
associated persons and persons who were associated with a member within 
the preceding two years. Formerly registered persons, although no 
longer in the securities industry in a registered capacity, may, 
however, work in other investment-related industries or attain 
positions of trust. FINRA thus proposed to expand the information 
available via BrokerCheck to certain information with respect to 
persons who were associated with a member but who have not been 
associated with a member in the preceding two years (``formerly 
associated persons''), if those persons were the subject of any final 
regulatory action, as defined in Form U4, that has been reported to CRD 
via a uniform registration form.\6\
---------------------------------------------------------------------------

    \6\ See proposed FINRA Rule 8312(c).
---------------------------------------------------------------------------

    ``Final regulatory action'' includes any final action of the 
Commission, Commodity Futures Trading Commission, a Federal banking 
agency, the National Credit Union Administration, another Federal 
regulatory agency, a State regulatory agency, a foreign financial 
regulatory authority, or a self-regulatory organization, including 
actions that have been appealed.\7\ FINRA staff will review the 
information on Forms U4 and U5 (including predecessor questions), as 
well as information filed on Form U6, to determine whether a formerly 
associated person is subject to a final regulatory action and should be 
included in BrokerCheck pursuant to the proposed rule.\8\
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    \7\ See Form U4 questions 14C, 14D, and 14E, as well as Question 
7D of Form U5. See also Section 3(a)(39) of the Act.
    \8\ Under the proposed rule change, FINRA may disclose a final 
action that is reported by a regulator on a Form U6 even if that 
action has not been reported by an individual on a Form U4 because, 
for example, the individual was not registered at the time the final 
regulatory action was reported.
---------------------------------------------------------------------------

    For such formerly associated persons,\9\ FINRA will disclose: (i) 
Information concerning any final regulatory action; (ii) administrative 
information, such as employment and registration history as reported on 
a registration form; (iii) the most recently submitted comment, if any, 
provided by the person, if the comment is relevant and in accordance 
with the procedures established by FINRA; and (iv) dates and names of 
qualification examinations passed by the formerly associated person, if 
available.\10\
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    \9\ Certain information about some formerly associated persons 
who have not been associated with a member since January 1, 1999, 
may not be available through BrokerCheck. As discussed more fully in 
the Notice, two conditions apply to a small percentage of 
individuals who were no longer registered at the time Web CRD was 
established in 1999. First, not all of these individuals' records 
are available in the Web CRD format; instead, their records exist in 
the Legacy CRD format. Second, for a very small percentage of 
individuals, certain administrative information is unavailable in 
either the Web or Legacy CRD format.
    \10\ See proposed FINRA Rule 8312(c).
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    The proposed rule change would not expand access to other 
information that is included in the CRD System, such as customer 
complaints, bankruptcies, liens, criminal events or arbitration claims. 
In addition, a final regulatory action would not include any action 
limited to the revocation or suspension of an individual's 
authorization to act as an attorney, accountant or Federal contractor 
(Form U4, Question 14F).
    If FINRA receives a request regarding a formerly associated person 
for which it has data in a different format, FINRA's staff will 
manually prepare the BrokerCheck report, convert the report to an 
electronic format, and make the report available through BrokerCheck. 
Once the information has been converted to the Web CRD format it will 
be available in Web CRD from that point forward.\11\
---------------------------------------------------------------------------

    \11\ FINRA stated that if it identifies or becomes aware of 
potentially inappropriate information, including customer names, 
confidential account information or possibly offensive or 
potentially defamatory language in a BrokerCheck report, FINRA would 
balance the value of the language in controversy for regulatory and 
investor protection purposes against the objector's asserted privacy 
rights and/or potential defamation claims. Based on this balancing, 
FINRA may determine to redact language from BrokerCheck reports on a 
case-by-case basis. See the Notice, citing, e.g., Securities 
Exchange Act Release No. 42402 (February 7, 2000), 65 FR 7582 
(February 15, 2000) (Order Approving SR-NASD-99-45).
---------------------------------------------------------------------------

III. Summary of Comments and FINRA's Response

    The Commission received fifty-two comment letters on the proposed 
rule change.\12\ Most comments focus on two issues. First, commenters 
address the provision of FINRA Rule 8312 that provides for the release 
of certain information regarding an individual who is a current or 
former member or current associated person of a member of FINRA, or a 
person who has been an associated person of a member of FINRA within 
the past two preceding years. FINRA is not making a substantive change 
to this provision.\13\ Second, commenters take issue with the limited 
nature of the information to be disclosed regarding formerly associated 
persons.
---------------------------------------------------------------------------

    \12\ See supra, note 4.
    \13\ Current FINRA Rule 8312(a); proposed to be re-numbered to 
FINRA Rule 8312(b).
---------------------------------------------------------------------------

A. General Two-Year BrokerCheck Disclosure Period

    Most information available through BrokerCheck is only available 
with respect to current or former members, or associated persons of 
members, or persons who were associated persons of FINRA members within 
the preceding two years.\14\ Forty commenters argue that, for investor 
protection purposes, this two-year time frame should be increased so 
that information remains available to the public via BrokerCheck for a 
longer period of time--anywhere from five years to forever.\15\ Twelve 
commenters \16\ advised a six-year disclosure period, which corresponds 
to the time limit in FINRA's rule for the submission of arbitration 
claims involving public customers (``eligibility

[[Page 61195]]

rule'').\17\ FINRA believes that these comments are outside the scope 
of the rule proposal, since it is not proposing to change the two-year 
disclosure period currently set forth in Rule 8312; rather, the 
proposed rule change expands BrokerCheck only with respect to formerly 
associated persons who are subject to a final regulatory action.\18\
---------------------------------------------------------------------------

    \14\ Id. FINRA stated that some commenters incorrectly mentioned 
that information regarding an individual is ``purged'' from 
BrokerCheck once that individual ceases to be registered with FINRA 
for a period of two years. See, e.g., comment letters from Lipner, 
Van Kampen, Sigler, Speyer, and Claxton. FINRA stated that the 
information is retained in the CRD system even though it is not 
displayed through BrokerCheck and would be available for display 
through BrokerCheck should the individual reregister with FINRA or 
otherwise become covered by BrokerCheck. See Response Letter at 2.
    \15\ See comment letters from Lipner, Van Kampen, Sigler, 
Pounds, Steiner, Neuman, Bleecher, Estell, Layne, PIABA, Schultz 1, 
Shewan, Port, Graham, Speyer, AARP, Griffin, Sherman, Cornell, 
Evans/Edmiston, St. John's, Rosenfield, Ilgenfritz, Buchwalter, 
Miller, Rosca, Guiliano, Greco, Sonn, Haigney, Sutherland, Davis, 
Mougey, Claxton, DeVita, Ledbetter, Gladden, McCauley, Malarney, and 
Willcutts.
    \16\ See comment letters from Pounds, Steiner, Estell, PIABA, 
Schultz 1, Graham, Rosenfield, Ilgenfritz, Miller, Greco, Sonn, and 
Haigney.
    \17\ See FINRA Rule 12206.
    \18\ See Response Letter at 3. FINRA clarifies that four 
commenters (Lipner, Neuman, AARP, and Malarney) erroneously state 
that the proposal will limit the time frame during which information 
on former registered persons will be available through BrokerCheck.
---------------------------------------------------------------------------

    Nevertheless, FINRA notes that the two-year disclosure period 
coincides with the period in which an individual can return to the 
industry without being required to requalify by examination and the 
initial period in which an individual remains subject to FINRA's 
jurisdiction.\19\ FINRA states that when the two-year time frame was 
proposed, FINRA believed that the two-year time frame struck the 
appropriate balance between an investor's interest in being easily able 
to obtain information about a former registered person and a person's 
desire for privacy once he has left the securities industry,\20\ and it 
continues to believe that is the proper balance today.\21\
---------------------------------------------------------------------------

    \19\ See Response Letter at 3, citing Securities Exchange Act 
Release No. 42240 (December 16, 1999), 64 FR 72125 (December 23, 
1999) (Notice of Filing SR-NASD-99-45).
    \20\ Id. FINRA also notes that the Commission received no 
comments when FINRA proposed establishing the two-year disclosure 
period for BrokerCheck.
    \21\ See Response Letter at 3.
---------------------------------------------------------------------------

    Finally, FINRA disagrees with the commenters who represent 
investors in securities litigation or other matters who suggest a six-
year disclosure period, which FINRA believes is in order to make it 
easier to conduct research on former registered persons.\22\ FINRA 
states that the BrokerCheck system was established principally to help 
members of the public determine whether to conduct or continue to 
conduct business with a FINRA member or any of the member's associated 
persons and not for the purpose suggested by these commenters.\23\ 
FINRA believes that the commenters' attempt to link the time limitation 
on the submission of claims provided for under the eligibility rule and 
the time frame for BrokerCheck disclosure is misplaced, since the time 
limitation under the eligibility rule is determined by the date of the 
occurrence or event giving rise to the claim and has no relationship 
whatsoever to the termination of an individual's registration with 
FINRA.\24\ Therefore, in FINRA's opinion, the commenters' suggested 
change is outside the scope of the rule proposal and also would not 
necessarily address the commenters' concerns.\25\
---------------------------------------------------------------------------

    \22\ See Response Letter at 4, citing e.g., comment letters from 
PIABA, Rosca, Greco, Sonn, and Haigney.
    \23\ See Response Letter at 4.
    \24\ Id.
    \25\ Id.
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B. Expanding Access to Disclosure Information, Other Than Final 
Regulatory Actions, Pertaining to Individuals Not Registered With FINRA 
for More Than Two Years

    Eighteen commenters express concern that FINRA's proposal may be 
too limiting in that it only expands BrokerCheck with respect to those 
formerly associated persons who are the subject of a final regulatory 
action, and for those persons, only with respect to certain 
information.\26\ Many of these commenters suggest that BrokerCheck 
should include additional information, such as arbitration claims, 
criminal proceedings, and bankruptcies and liens, contending that these 
other categories are just as valuable to investors as final regulatory 
actions.\27\ FINRA believes that these comments are outside the scope 
of the rule proposal because they pertain to categories of disclosure 
that are not the subject of the current rule proposal.\28\
---------------------------------------------------------------------------

    \26\ See comment letters from Caruso, Bleecher, PIABA, Schultz 
1, Feldman, Sherman, Lewins, Cornell, Bakhtiari, Evans/Edmiston, St. 
John's, Rosenfield, NASAA, Guiliano, Sonn, Meyer, Haigney, and 
Amato. Two commenters stated that FINRA's proposed rule change would 
apply only to those formerly associated persons who are the subject 
of a final regulatory action and who work in other investment-
related industries or positions of trust. See comment letters from 
Schultz 1 and Sonn. FINRA clarified that the proposal will, in fact, 
apply to all former registered persons who are the subject of a 
final regulatory action regardless of their current occupation, if 
any. See Response Letter at 4.
    \27\ See, e.g., comment letters from PIABA, Schultz 1, Cornell, 
Evans/Edmiston, St. John's, and Rosenfield.
    \28\ See Response Letter at 4.
---------------------------------------------------------------------------

    Notwithstanding that, FINRA states these other categories of 
information are more relevant when the individual is registered or was 
recently registered (i.e., within two years) and reiterates that it 
believes the proposal strikes a balance between personal privacy and 
investor protection concerns.\29\ FINRA justifies one distinction by 
noting that while final regulatory actions are subject to procedures 
that allow an opportunity for the person to present arguments to a 
fact-finder about the allegations before the final disposition of the 
matter,\30\ arbitration claims may not be subject to procedures that 
allow an opportunity for the person to present arguments to a fact-
finder about the allegations before final disposition. Further, FINRA 
notes, a firm may choose to settle an arbitration claim regardless of 
whether the person wishes to contest the claim (e.g., for business 
reasons). With respect to criminal charges and convictions, FINRA 
states that these claims that are reported subsequently may have a 
different disposition, which may significantly change the meaning of 
the matter as originally reported (for example, such charges or 
convictions may have been dismissed or expunged). Finally, FINRA does 
not think that reportable financial matters have the same degree of 
materiality as final regulatory actions such that they warrant 
disclosure on a permanent basis.
---------------------------------------------------------------------------

    \29\ See Response Letter at 5.
    \30\ The formerly associated person has the opportunity to 
submit a comment for publication in BrokerCheck in response to 
information provided through BrokerCheck if the comment is in the 
form and in accordance with the procedures established by FINRA and 
relates to the information provided through BrokerCheck.
---------------------------------------------------------------------------

IV. Discussion and Commission Findings

    After carefully reviewing the proposed rule change, the comment 
letters, and the Response Letter, the Commission finds that the 
proposal is consistent with the requirements of the Act and the rules 
and regulations thereunder applicable to a national securities 
association.\31\ In particular, the Commission finds that the proposal 
is consistent with Section 15A(b)(6) of the Act,\32\ which requires, 
among other things, that FINRA's rules be designed to prevent 
fraudulent and manipulative acts and practices, 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.
---------------------------------------------------------------------------

    \31\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \32\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

    Specifically, the Commission believes that making information 
available through BrokerCheck about formerly associated persons who 
were the subject of a final regulatory action will help members of the 
public to protect themselves from unscrupulous people and thus the 
proposed rule change should help prevent fraudulent and manipulative 
acts and practices, and protect investors and the public interest. One 
commenter suggests the disclosure of this additional information may 
serve

[[Page 61196]]

as a deterrent to fraudulent activity.\33\ The Commission believes that 
the information FINRA proposes to disclose is relevant to investors and 
members of the public who wish to educate themselves with respect to 
the professional history of a formerly associated person. It is 
possible that a formerly associated person could become a financial 
planner or work in another related field where his securities record 
would help members of the public decide if they should accept his 
financial advice or rely on his advice or expertise. One commenter 
suggested a formerly associated person could serve as a non-public 
arbitrator.\34\ Clearly, in any of these circumstances, the formerly 
associated person's BrokerCheck information would be relevant in 
determining whether to do business with him, or, in the case of a 
claimant, in deciding whether to challenge a potential arbitrator.
---------------------------------------------------------------------------

    \33\ See Cornell letter.
    \34\ See Estell letter.
---------------------------------------------------------------------------

    The Commission agrees that the concerns raised by commenters who 
believe that the time frame for general disclosure should be increased 
are outside the scope of this proposal. However, the categories of 
information that should be disclosed for formerly associated persons is 
within the scope of the instant proposal and the commenters make a 
number of legitimate arguments with respect to the usefulness of the 
additional information they seek to have disclosed. The Commission 
understands that certain commenters, as well as other members of the 
public, may utilize information in BrokerCheck in considering whether 
to bring action against a formerly associated person for potentially 
actionable deeds \35\ and believes that this is a legitimate use for 
BrokerCheck. The Commission recognizes that the public's ability to 
access information, whether to inquire about a registered person or to 
obtain information in connection with an alleged wrongdoing of a 
formerly associated person may serve to protect investors, the 
integrity of the marketplace, and the public interest. The Commission 
urges the public to utilize all sources of information, particularly 
the databases of the State regulators, as well as legal search engines 
and records searches, in conducting a thorough search of any associated 
person's activities.
---------------------------------------------------------------------------

    \35\ See supra, note 22.
---------------------------------------------------------------------------

    The Commission notes that FINRA stated it would continue to 
evaluate all aspects of the BrokerCheck program to determine whether 
future circumstances should lead to greater disclosure through 
BrokerCheck.\36\ FINRA has a statutory obligation to make information 
available to the public and,\37\ as stated in the past, the Commission 
believes that FINRA should continuously strive to improve BrokerCheck 
because it is a valuable tool for the public in deciding whether to 
work with an industry member.\38\ The changes proposed in this filing 
will enhance BrokerCheck by including more information that should 
prove useful to the general public.
---------------------------------------------------------------------------

    \36\ See Response Letter at 5.
    \37\ See Section 15A(i) of the Act.
    \38\ See, e.g., Securities Exchange Act Release No. 59916 (May 
13, 2009), 74 FR 23750 (May 20, 2009).
---------------------------------------------------------------------------

    For the reasons discussed above, the Commission finds that the rule 
change is consistent with the Act.

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\39\ that the proposed rule change (SR-FINRA-2009-050), be, and 
hereby is, approved.
---------------------------------------------------------------------------

    \39\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\40\
---------------------------------------------------------------------------

    \40\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.

Exhibit A--List of Comment Letters Received for FINRA-2009-050

    1. Daniel W. Roberts, President/CEO, Roberts & Ryan Investments 
Inc., dated August 21, 2009 (``Roberts'').
    2. Seth E. Lipner, Professor of Law, Zicklin School of Business, 
Baruch College, CUNY, dated August 27, 2009 (``Lipner'').
    3. Al Van Kampen, Attorney at Law, dated August 31, 2009 (``Van 
Kampen'').
    4. James A. Sigler, Esq., dated August 31, 2009 (``Sigler'').
    5. Herb Pounds, dated August 31, 2009 (``Pounds'').
    6. Leonard Steiner, Lawyer, dated August 31, 2009 (``Steiner'').
    7. David P. Neuman, Stoltmann Law Offices, PC, dated August 31, 
2009 (``Neuman'').
    8. Steven B. Caruso, Esq., Maddox Hargett & Caruso, P.C., dated 
September 1, 2009 (``Caruso'').
    9. Rob Bleecher, Attorney, dated September 1, 2009 (``Bleecher'').
    10. Barry D. Estell, Esq., dated September 1, 2009 (``Estell'').
    11. Richard M. Layne, Esq., Law Office of Richard M. Layne, dated 
September 1, 2009 (``Layne'').
    12. Brian N. Smiley, President, Public Investors Arbitration Bar 
Association, dated September 4, 2009 (``PIABA'').
    13. Laurence S. Schultz, Driggers, Schultz & Herbst, P.C., dated 
September 4, 2009 (``Schultz 1'').
    14. Scott R. Shewan, Pape Shewan LLP, dated September 4, 2009 
(``Shewan'').
    15. Robert C. Port, Esq., dated September 4, 2009 (``Port'').
    16. Jan Graham, Graham Law Offices, dated September 4, 2009 
(``Graham'').
    17. Jeffrey A. Feldman, dated September 7, 2009 (``Feldman'').
    18. Debra G. Speyer, Esq., Law Offices of Debra G. Speyer, dated 
September 7, 2009 (``Speyer'').
    19. Tim Canning, Law Offices of Timothy A. Canning, dated September 
8, 2009 (``Canning'').
    20. David Certner, Legislative Counsel and Legislative Policy 
Director, AARP, dated September 8, 2009 (``AARP'').
    21. Keith L. Griffin, Griffin Law Firm, LLC, dated September 8, 
2009 (``Griffin'').
    22. Steven M. Sherman, Sherman Business Law, received September 8, 
2009 (``Sherman'').
    23. Richard A. Lewins, Esq., dated September 8, 2009 (``Lewins'').
    24. William A. Jacobson, Esq., Associate Clinical Professor of Law, 
Director, Cornell Securities Law Clinic, dated September 8, 2009 
(``Cornell'').
    25. Ryan K. Bakhtiari, Aidikoff, Uhl and Bakhtiari, dated September 
8, 2009 (``Bakhtiari'').
    26. Jonathan W. Evans and Michael S. Edmiston, dated September 8, 
2009 (``Evans/Edmiston'').
    27. Christine Lazaro, Supervising Attorney, Lisa A. Catalano, 
Director, Peter J. Harrington, Legal Intern, Securities Arbitration 
Clinic, St. John's University School of Law, dated September 8, 2009 
(``St. John's'').
    28. William S. Shepherd, Managing Partner, Shepherd Smith Edwards 
Kantas, LLP, dated September 8, 2009 (``Shepherd'').
    29. Howard Rosenfield, Law Offices of Howard Rosenfield, received 
September 8, 2009 (``Rosenfield'').
    30. Rex Staples, General Counsel, North American Securities 
Administrators Association, dated September 8, 2009 (``NASAA'').
    31. Scott C. Ilgenfritz, Johnson, Pope, Bokor, Ruppel & Burns, LLP, 
dated September 8, 2009 (``Ilgenfritz'').
    32. Steve A. Buchwalter, Esq., dated September 8, 2009 
(``Buchwalter'').
    33. John Miller, Attorney, Swanson Midgley, LLC, dated September 9, 
2009 (``Miller'').
    34. Alin L. Rosca, Attorney at Law, John S. Chapman & Associates, 
LLC, received September 9, 2009 (``Rosca'').
    35. Nicholas J. Guiliano, The Guiliano Law Firm, received September 
9, 2009 (``Guiliano'').
    36. W. Scott Greco, Greco Greco, P.C., dated September 9, 2009 
(``Greco'').

[[Page 61197]]

    37. Jeffrey Sonn, Esq., Sonn & Erez, PLC, dated September 9, 2009 
(``Sonn'').
    38. Stephen P. Meyer, Esq., Meyer, Ford & Glasser, dated September 
10, 2009 (``Meyer'').
    39. Dayton P. Haigney, III, Attorney at Law, dated September 10, 
2009 (``Haigney'').
    40. John E. Sutherland, Brickley, Sears & Sorett, P.A., dated 
September 11, 2009 (``Sutherland'').
    41. Theodore M. Davis, Esq., dated September 11, 2009 (``Davis'').
    42. Peter J. Mougey, Esq., dated September 14, 2009 (``Mougey'').
    43. Roger F. Claxton, Law Office of Roger F. Claxton, dated 
September 15, 2009 (``Claxton'').
    44. Richard D. DeVita, Esq., dated September 15, 2009 (``DeVita'').
    45. Dale Ledbetter, Ledbetter & Associates, P.A., dated September 
16, 2009 (``Ledbetter'').
    46. William J. Gladden, JD, CFP, dated September 16, 2009 
(``Gladden'').
    47. Steven M. McCauley, Esq., dated September 16, 2009 
(``McCauley'').
    48. Michael W. Malarney, Esq., The Pearl Law Firm, P.A., dated 
September 17, 2009 (``Malarney'').
    49. Ronald M. Amato, Esq., Shaheen, Novoselsky, Staat, Filipowski 
Eccleston, PC, dated September 18, 2009 (``Amato'').
    50. Thomas P. Willcutts, Willcutts Law Group, LLC, dated September 
21, 2009 (``Willcutts'').
    51. Scot D. Bernstein, Law Offices of Scot D. Bernstein, dated 
September 24, 2009 (``Bernstein'').
    52. Laurence S. Schultz, Driggers, Schultz & Herbst, P.C., dated 
September 30, 2009 (``Schultz 2'').
[FR Doc. E9-27997 Filed 11-20-09; 8:45 am]
BILLING CODE 8011-01-P
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