Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Approving Proposed Rule Change To Adopt FINRA Rule 2261 (Disclosure of Financial Condition) in the Consolidated FINRA Rulebook, 8771-8772 [2010-3778]
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Federal Register / Vol. 75, No. 37 / Thursday, February 25, 2010 / Notices
of Section 15A(b)(6) of the Act,7 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. FINRA believes that the
proposed rule change will streamline
and improve FINRA’s rulebook by
eliminating a rule that contains terms
that are not clearly defined and may
raise potential investor protection
concerns.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
FINRA does not believe that the
proposed rule change will result in any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the self-regulatory
organization consents, the Commission
will:
(A) By order approve such proposed
rule change, or
(B) Institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.8
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–3780 Filed 2–24–10; 8:45 am]
BILLING CODE 8011–01–P
jlentini on DSKJ8SOYB1PROD with NOTICES
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–FINRA–2010–005 on the
subject line.
U.S.C. 78o–3(b)(6).
VerDate Nov<24>2008
16:34 Feb 24, 2010
8 17
Jkt 220001
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–61540; File No. SR–FINRA–
2009–081]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Order Approving
All submissions should refer to File
Number SR–FINRA–2010–005. This file Proposed Rule Change To Adopt
FINRA Rule 2261 (Disclosure of
number should be included on the
subject line if e-mail is used. To help the Financial Condition) in the
Consolidated FINRA Rulebook
Commission process and review your
comments more efficiently, please use
February 18, 2010.
only one method. The Commission will
On November 18, 2009, the Financial
post all comments on the Commission’s Industry Regulatory Authority, Inc.
(‘‘FINRA’’) (f/k/a National Association of
Internet Web site (https://www.sec.gov/
Securities Dealers, Inc. (‘‘NASD’’)) filed
rules/sro.shtml). Copies of the
with the Securities and Exchange
submission, all subsequent
Commission (‘‘Commission’’), pursuant
amendments, all written statements
to Section 19(b)(1) of the Securities
with respect to the proposed rule
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
change that are filed with the
19b–4 thereunder,2 a proposed rule
Commission, and all written
change to adopt FINRA Rule 2261
communications relating to the
(Disclosure of Financial Condition) in
proposed rule change between the
the Consolidated FINRA Rulebook. The
Commission and any person, other than
proposed rule change was published for
those that may be withheld from the
comment in the Federal Register on
public in accordance with the
January 5, 2010.3 The Commission
provisions of 5 U.S.C. 552, will be
received no comments on the proposal.
available for Web site viewing and
This order approves the proposed rule
printing in the Commission’s Public
change.
Reference Room, 100 F Street, NE.,
As part of the process of developing
Washington, DC 20549, on official
a new consolidated rulebook
business days between the hours of 10
(‘‘Consolidated FINRA Rulebook’’),4
a.m. and 3 p.m. Copies of such filing
FINRA proposed adopting NASD Rule
also will be available for inspection and 2270 (Disclosure of Financial Condition
to Customers) and NASD Rule 2910
copying at the principal office of
(Disclosure of Financial Condition to
FINRA. All comments received will be
posted without change; the Commission Other Members), subject to certain
amendments, as FINRA Rule 2261 in the
does not edit personal identifying
Consolidated FINRA Rulebook.
information from submissions. You
NASD Rule 2270 requires members to
should submit only information that
make available for inspection, upon the
you wish to make available publicly. All
request of any bona fide regular
submissions should refer to File
customer,5 the information relative to
Number SR–FINRA–2010–005 and
such member’s financial condition as
should be submitted on or before March disclosed in its most recent balance
18, 2010.
sheet prepared either in accordance
Electronic Comments
7 15
8771
PO 00000
CFR 200.30–3(a)(12).
Frm 00127
Fmt 4703
Sfmt 4703
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act of 1934 Release No.
61253 (December 29, 2009), 75 FR 0475.
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 Information
Notice, March 12, 2008 (Rulebook Consolidation
Process).
5 For purposes of the rule, ‘‘customer’’ means any
person who, in the regular course of such member’s
business, has cash or securities in the possession of
such member.
2 17
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8772
Federal Register / Vol. 75, No. 37 / Thursday, February 25, 2010 / Notices
with such member’s usual practice or as
required by any State or Federal
securities laws, or any rule or regulation
thereunder.
FINRA proposed amending the
requirements of NASD Rule 2270 to
provide an alternative means of
satisfying the requirement that members
make balance sheet information
available to bona fide regular customers.
Currently, the rule requires that
members ‘‘make available to inspection
by any bona fide regular customer, upon
request, the information relative to such
member’s financial condition as
disclosed in its most recent balance
sheet * * *.’’ FINRA proposed
providing members with the option of
delivering their balance sheet, in paper
or electronic form, to customers who
request it. With respect to electronic
delivery, the requesting customer must
consent to receive the balance sheet in
electronic form to ensure that such
information is accessible to the
customer. FINRA did not propose
requiring members to deliver their
balance sheet to all customers (instead
of making them available to inspection
or delivering them upon request)
because Rule 17a–5(c) under the Act 6
generally requires a broker-dealer that
carries customer accounts to send its
full balance sheet and certain other
financial information to each of its
customers twice a year.7 NASD Rule
2270 provides customers with
additional access to their broker’s
balance sheet information by requiring
that members permit customers to
inspect or obtain a copy of a member’s
most recent balance sheet at any time
upon request.
NASD Rule 2910 requires any
member that is a party to an open
transaction or who has on deposit cash
or securities of another member to
furnish, upon the written request of the
other member, a statement of its
financial condition as disclosed in its
most recently prepared balance sheet.
FINRA proposed amending the
provisions of NASD Rule 2910 to
require, consistent with NASD Rule
2270, that members provide to other
members the balance sheet that was
‘‘prepared either in accordance with
6 17
CFR 240.17a–5(c).
Rule 17a–5(c)(5) contains a conditional
exemption from the requirement that broker-dealers
semi-annually send customers a full balance sheet.
Under the exemption, a broker-dealer can semiannually send its customers summary information
regarding its net capital, as long as it also provides
customers with a toll-free number to call for a free
copy of its full balance sheet, makes its full balance
sheet available to customers on its Web site, and
meets other specified requirements. See Securities
Exchange Act Release No. 48272 (August 1, 2003),
68 FR 46446 (August 6, 2003).
jlentini on DSKJ8SOYB1PROD with NOTICES
7 SEC
VerDate Nov<24>2008
16:34 Feb 24, 2010
Jkt 220001
such member’s usual practice or as
required by any State or Federal
securities laws, or any rule or regulation
thereunder.’’ In addition, FINRA
proposed that members be permitted to
provide their balance sheet to other
members in paper or electronic form.
However, unlike the proposed
amendments to NASD Rule 2270,
FINRA did not propose requiring
members to obtain the consent of other
members to electronically deliver the
balance sheet. FINRA believes that other
members, unlike all customers, will be
equipped to receive electronic delivery.
FINRA believes that the requirements
of NASD Rule 2270 and NASD Rule
2910 continue to provide access to
important information by allowing
customers and other members to have
access to a copy of a member’s most
recent balance sheet at any time upon
request and should be transferred, as
amended, to the Consolidated FINRA
Rulebook as FINRA Rule 2261.
FINRA 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.
The Commission 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
association.8 In particular, the
Commission finds that the proposal is
consistent with Section 15A(b)(6) of the
Act,9 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, and, in
general, to protect investors and the
public interest. The Commission
believes that the proposed rule change
will further the purposes of the Act by,
among other things, ensuring that basic,
current information regarding the
financial condition of members with
which customers and other members
conduct business is available upon
request. The Commission therefore
believes that it is appropriate and
consistent with the Act for FINRA to
Adopt FINRA Rule 2261 (Disclosure of
Financial Condition) in the
Consolidated FINRA Rulebook.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,10 that the
proposed rule change (SR–FINRA–
2009–081) is approved.
8 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).
9 15 U.S.C. 78o–3(b)(6).
10 15 U.S.C. 78s(b)(2).
PO 00000
Frm 00128
Fmt 4703
Sfmt 4703
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–3778 Filed 2–24–10; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–61537; File No. SR–FINRA–
2009–095]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Order Approving
Proposed Rule Change To Adopt
FINRA Rule 3240 (Borrowing From or
Lending to Customers) in the
Consolidated FINRA Rulebook
February 18, 2010.
I. Introduction
On December 31, 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’’),
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 adopt NASD
Rule 2370 (Borrowing From or Lending
to Customers) as FINRA Rule 3240
(Borrowing From or Lending to
Customers) in the Consolidated FINRA
Rulebook 3 with certain changes and to
delete Incorporated NYSE Rules 352(e)
(Limitations on Borrowing From or
Lending to Customers), (f) (Loan
Procedures) and (g). The proposed rule
change would also add a Supplementary
Material section regarding record
retention requirements to proposed
FINRA Rule 3240. The proposed rule
change was published for comment in
the Federal Register on January 12,
2010.4 The Commission received no
11 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 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 Information
Notice, March 12, 2008 (Rulebook Consolidation
Process).
4 See Securities Exchange Act Release No. 61302
(January 6, 2010), 75 FR 1672 (January 12, 2010).
1 15
E:\FR\FM\25FEN1.SGM
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]]>Agencies
[Federal Register Volume 75, Number 37 (Thursday, February 25, 2010)]
[Notices]
[Pages 8771-8772]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-3778]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61540; File No. SR-FINRA-2009-081]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Order Approving Proposed Rule Change To Adopt FINRA
Rule 2261 (Disclosure of Financial Condition) in the Consolidated FINRA
Rulebook
February 18, 2010.
On November 18, 2009, the Financial Industry Regulatory Authority,
Inc. (``FINRA'') (f/k/a National Association of Securities Dealers,
Inc. (``NASD'')) 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 adopt FINRA Rule 2261 (Disclosure of Financial
Condition) in the Consolidated FINRA Rulebook. The proposed rule change
was published for comment in the Federal Register on January 5,
2010.\3\ The Commission received no comments on the proposal. 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 of 1934 Release No. 61253
(December 29, 2009), 75 FR 0475.
---------------------------------------------------------------------------
As part of the process of developing a new consolidated rulebook
(``Consolidated FINRA Rulebook''),\4\ FINRA proposed adopting NASD Rule
2270 (Disclosure of Financial Condition to Customers) and NASD Rule
2910 (Disclosure of Financial Condition to Other Members), subject to
certain amendments, as FINRA Rule 2261 in the Consolidated FINRA
Rulebook.
---------------------------------------------------------------------------
\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 Information Notice, March 12, 2008 (Rulebook
Consolidation Process).
---------------------------------------------------------------------------
NASD Rule 2270 requires members to make available for inspection,
upon the request of any bona fide regular customer,\5\ the information
relative to such member's financial condition as disclosed in its most
recent balance sheet prepared either in accordance
[[Page 8772]]
with such member's usual practice or as required by any State or
Federal securities laws, or any rule or regulation thereunder.
---------------------------------------------------------------------------
\5\ For purposes of the rule, ``customer'' means any person who,
in the regular course of such member's business, has cash or
securities in the possession of such member.
---------------------------------------------------------------------------
FINRA proposed amending the requirements of NASD Rule 2270 to
provide an alternative means of satisfying the requirement that members
make balance sheet information available to bona fide regular
customers. Currently, the rule requires that members ``make available
to inspection by any bona fide regular customer, upon request, the
information relative to such member's financial condition as disclosed
in its most recent balance sheet * * *.'' FINRA proposed providing
members with the option of delivering their balance sheet, in paper or
electronic form, to customers who request it. With respect to
electronic delivery, the requesting customer must consent to receive
the balance sheet in electronic form to ensure that such information is
accessible to the customer. FINRA did not propose requiring members to
deliver their balance sheet to all customers (instead of making them
available to inspection or delivering them upon request) because Rule
17a-5(c) under the Act \6\ generally requires a broker-dealer that
carries customer accounts to send its full balance sheet and certain
other financial information to each of its customers twice a year.\7\
NASD Rule 2270 provides customers with additional access to their
broker's balance sheet information by requiring that members permit
customers to inspect or obtain a copy of a member's most recent balance
sheet at any time upon request.
---------------------------------------------------------------------------
\6\ 17 CFR 240.17a-5(c).
\7\ SEC Rule 17a-5(c)(5) contains a conditional exemption from
the requirement that broker-dealers semi-annually send customers a
full balance sheet. Under the exemption, a broker-dealer can semi-
annually send its customers summary information regarding its net
capital, as long as it also provides customers with a toll-free
number to call for a free copy of its full balance sheet, makes its
full balance sheet available to customers on its Web site, and meets
other specified requirements. See Securities Exchange Act Release
No. 48272 (August 1, 2003), 68 FR 46446 (August 6, 2003).
---------------------------------------------------------------------------
NASD Rule 2910 requires any member that is a party to an open
transaction or who has on deposit cash or securities of another member
to furnish, upon the written request of the other member, a statement
of its financial condition as disclosed in its most recently prepared
balance sheet. FINRA proposed amending the provisions of NASD Rule 2910
to require, consistent with NASD Rule 2270, that members provide to
other members the balance sheet that was ``prepared either in
accordance with such member's usual practice or as required by any
State or Federal securities laws, or any rule or regulation
thereunder.'' In addition, FINRA proposed that members be permitted to
provide their balance sheet to other members in paper or electronic
form. However, unlike the proposed amendments to NASD Rule 2270, FINRA
did not propose requiring members to obtain the consent of other
members to electronically deliver the balance sheet. FINRA believes
that other members, unlike all customers, will be equipped to receive
electronic delivery.
FINRA believes that the requirements of NASD Rule 2270 and NASD
Rule 2910 continue to provide access to important information by
allowing customers and other members to have access to a copy of a
member's most recent balance sheet at any time upon request and should
be transferred, as amended, to the Consolidated FINRA Rulebook as FINRA
Rule 2261.
FINRA 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.
The Commission 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 association.\8\ In
particular, the Commission finds that the proposal is consistent with
Section 15A(b)(6) of the Act,\9\ 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,
and, in general, to protect investors and the public interest. The
Commission believes that the proposed rule change will further the
purposes of the Act by, among other things, ensuring that basic,
current information regarding the financial condition of members with
which customers and other members conduct business is available upon
request. The Commission therefore believes that it is appropriate and
consistent with the Act for FINRA to Adopt FINRA Rule 2261 (Disclosure
of Financial Condition) in the Consolidated FINRA Rulebook.
---------------------------------------------------------------------------
\8\ 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).
\9\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\10\ that the proposed rule change (SR-FINRA-2009-081) is approved.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
---------------------------------------------------------------------------
\11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-3778 Filed 2-24-10; 8:45 am]
BILLING CODE 8011-01-P
