Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rules 9552, 9554 and 9559 To Conform NASDAQ's Rules to Recent Changes to the Rules of FINRA, 26823-26825 [2010-11255]
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26823
Federal Register / Vol. 75, No. 91 / Wednesday, May 12, 2010 / Notices
WReier-Aviles on DSKGBLS3C1PROD with NOTICES
Pursuant to the Exchange’s proposed
MRVP, under Rule 8.15, the Exchange
may impose a fine (not to exceed
$2,500) on a member, an associated
person of a member, or a registered or
non-registered employee of a member
with respect to any rule listed in Rule
8.15.01. The Exchange shall serve the
person against whom a fine is imposed
with a written statement setting forth
the rule or rules allegedly violated, the
act or omission constituting each such
violation, the fine imposed, and the date
by which such determination becomes
final or by which such determination
must be contested. If the person against
whom the fine is imposed pays the fine,
such payment shall be deemed to be a
waiver of such person’s right to a
disciplinary proceeding and any review
of the matter under Exchange rules. Any
person against whom a fine is imposed
may contest the Exchange’s
determination by filing with the
Exchange a written response, at which
point the matter shall become a
disciplinary proceeding.
Upon approval of the plan, the
Exchange will provide the Commission
a quarterly report of actions taken on
minor rule violations under the plan.
The quarterly report will include the
Exchange’s internal file number for the
case, the name of the individual and/or
organization, the nature of the violation,
the specific rule provision violated, the
sanction imposed, the number of times
the rule violation has occurred, and the
date of disposition.7
The Commission finds that the
proposed MRVP is consistent with the
requirements of the Act and the rules
and regulations thereunder applicable to
a national securities exchange. In
particular, the Commission believes that
the proposal is consistent with Section
6(b)(5) of the Act,8 which requires that
the rules of an exchange be designed to
promote just and equitable principles of
trade, to remove impediments and to
perfect the mechanism of a free and
open market and national market
system, and, in general, to protect
national securities exchange, including the rules
governing the EDGX Exchange. See Securities
Exchange Act Release No. 61698, 75 FR 13151
(March 18, 2010). In the approval order, the
Commission noted that EDGX Exchange Rule 8.15
provides for the imposition of fines for minor rule
violations pursuant to a minor rule violation plan.
Accordingly, the Commission noted that, EDGX
Exchange Rule 8.15 provides for the imposition of
fines for minor rule violations pursuant to a minor
rule violation plan. Accordingly, the Commission
noted that as a condition to the operation of EDGX
Exchange, the Exchange must file a minor rule
violation plan with the Commission.
7 EDGX Exchange attached a sample form of the
quarterly report with its submission to the
Commission.
8 15 U.S.C. 78f(b)(5).
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15:00 May 11, 2010
Jkt 220001
investors and the public interest. The
Commission also believes that the
proposal is consistent with Sections
6(b)(1) and 6(b)(6) of the Act 9 which
require that the rules of an exchange
enforce compliance with, and provide
appropriate discipline for, violations of
the Commission and Exchange rules. In
addition, because the MRVP offers
procedural rights to a person sanctioned
under Rule 8.15, the Commission
believes that Rule 8.15 provides a fair
procedure for the disciplining of
members and persons associated with
members, consistent with Sections
6(b)(7) and 6(d)(1) of the Act.10
Finally, the Commission finds that the
proposal is consistent with the public
interest, the protection of investors, or
otherwise in furtherance of the purposes
of the Act, as required by Rule 19d–
1(c)(2) under the Act,11 because the
MRVP strengthens EDGX Exchange’s
ability to carry out its oversight and
enforcement responsibilities as an SRO
in cases where full disciplinary
proceedings are unsuitable in view of
the minor nature of the particular
violation.
In approving this proposal, the
Commission in no way minimizes the
importance of compliance with
Exchange rules and all other rules
subject to the imposition of sanctions
under Rule 8.15. The Commission
believes that the violation of an SRO’s
rules, as well as Commission rules, is a
serious matter. However, Rule 8.15
provides a reasonable means of
addressing violations that do not rise to
the level of requiring formal
disciplinary proceedings, while
providing greater flexibility in handling
certain violations. The Commission
expects that EDGX Exchange will
continue to conduct surveillance with
due diligence and make determinations
based on its findings, on a case-by-case
basis, whether a sanction under the
MRVP is appropriate, or whether a
violation requires formal disciplinary
action.
It is therefore ordered, pursuant to
Rule 19d–1(c)(2) under the Act,12 that
the proposed MRVP for EDGX
Exchange, File No. 4–594, be, and
hereby is, approved and declared
effective.
U.S.C. 78f(b)(1) and 78f(b)(6).
U.S.C. 78f(b)(7) and 78f(d)(1).
11 17 CFR 240.19d–1(c)(2).
12 Id.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–11259 Filed 5–11–10; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–62044; File No. SR–
NASDAQ–2010–057]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend
Rules 9552, 9554 and 9559 To Conform
NASDAQ’s Rules to Recent Changes
to the Rules of FINRA
May 5, 2010.
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 May 3,
2010, The NASDAQ Stock Market LLC
(‘‘NASDAQ’’ or ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II 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 is proposing to amend
Rules 9552, 9554 and 9559 to conform
NASDAQ’s rules to recent changes to
the rules of the Financial Industry
Regulatory Authority (‘‘FINRA’’). The
text of the proposed rule change is
below. Proposed new language is
italicized and proposed deletions are in
brackets.
*
*
*
*
*
9550. Expedited Proceedings
*
*
*
*
9552. Failure To Provide Information
or Keep Information Current
(a)–(g) No change.
(h) Defaults
A member or person who is
suspended under this Rule and fails to
request termination of the suspension
within three[six] months of issuance of
9 15
10 15
PO 00000
Frm 00118
Fmt 4703
Sfmt 4703
*
13 17
CFR 200.30–3(a)(44).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
E:\FR\FM\12MYN1.SGM
12MYN1
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Federal Register / Vol. 75, No. 91 / Wednesday, May 12, 2010 / Notices
the original notice of suspension will
automatically be expelled or barred.
*
*
*
*
*
9554. Failure To Comply with an
Arbitration Award or Related
Settlement or an Order of Restitution
or Settlement Providing for
Restitution
(a) Notice of Suspension or[,]
Cancellation[ or Bar]
If a member, person associated with a
member or person subject to Nasdaq’s
jurisdiction fails to comply with an
arbitration award or a settlement
agreement related to an arbitration or
mediation under the Nasdaq By-Laws,
or a FINRA order of restitution or FINRA
settlement agreement providing for
restitution, Nasdaq Regulation staff may
provide written notice to such member
or person stating that the failure to
comply within 21 days of service of the
notice will result in a suspension or
cancellation of membership or a
suspension [or bar] from associating
with any member.
(b) Service of Notice of Suspension
or[,] Cancellation[ or Bar]
Nasdaq Regulation staff shall serve
the member or person with such notice
in accordance with Rule 9134. A copy
of a notice under this Rule that is served
on a person associated with a member
also shall be served on such member.
(c) No change.
(d) Effective Date of Suspension or[,]
Cancellation[ or Bar]
The suspension or[,] cancellation [or
bar ]referenced in a notice issued and
served under this Rule shall become
effective 21 days after service of the
notice, unless stayed by a request for a
hearing pursuant to Rule 9559.
(e) No change.
(f) Failure to Request Hearing
If a member or person does not timely
request a hearing, the suspension or[,]
cancellation [or bar ]specified in the
notice shall become effective 21 days
after the service of the notice and the
notice shall constitute final Nasdaq
action.
(g) No change.
*
*
*
*
*
WReier-Aviles on DSKGBLS3C1PROD with NOTICES
9559. Hearing Procedures for Expedited
Proceedings Under the Rule 9550 Series
(a)–(e) No change.
(f) Time of Hearing
(1)–(2) No change.
(3) A hearing shall be held within
30[60] days after a respondent subject to
a notice issued under Rules 9551
through 9555 files a written request for
a hearing with the Office of Hearing
Officers.
(4) No change.
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15:00 May 11, 2010
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(g) No change.
(h) Transmission of Documents
(1) Not less than two business days
before the hearing in an action brought
under Rule 9557, not less than seven
days before the hearing in an action
brought under Rules 9556 and 9558, and
not less than 14[40] days before the
hearing in an action brought under
Rules 9551 through 9555, Nasdaq
Regulation staff shall provide to the
respondent who requested the hearing,
by facsimile or overnight courier, all
documents that were considered in
issuing the notice unless a document
meets the criteria of Rule 9251(b)(1)(A),
(B) or (C). A document that meets such
criteria shall not constitute part of the
record, but shall be retained until the
date upon which the Nasdaq’s final
decision is served or, if applicable, upon
the conclusion of any review by the
Securities and Exchange Commission or
the federal courts.
(2) Not less than two business days
before the hearing in an action brought
under Rule 9557, not less than three
days before the hearing in an action
brought under Rules 9556 and 9558, and
not less than seven[14] days before the
hearing in an action brought under
Rules 9551 through 9555, the parties
shall exchange proposed exhibit and
witness lists. The exhibit and witness
lists shall be served by facsimile or by
overnight courier.
(i)–(s) No change.
*
*
*
*
*
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
NASDAQ included statements
concerning the purpose of, and basis for,
the proposed rule change. The text of
these statements may be examined at
the places specified in Item IV below,
and is set forth in Sections A, B, and C
below.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
NASDAQ proposes certain
conforming changes to its rules
concerning expedited hearings in light
of changes made to the rules of FINRA.
Many of NASDAQ’s rules are based on
rules of FINRA (formerly the National
Association of Securities Dealers
(‘‘NASD’’)). NASDAQ endeavors to keep
such common rules identical to the
extent practicable. FINRA recently
amended certain rules under its Rule
PO 00000
Frm 00119
Fmt 4703
Sfmt 4703
9000 Series concerning expedited
proceedings, which are closely mirrored
in NASDAQ’s Rule 9000 Series.3
Accordingly, NASDAQ is proposing to
amend its analogous rules consistent
with the changes made by FINRA, as
discussed below.
The expedited proceedings rules of
FINRA, and in turn of NASDAQ,
address certain types of misconduct
more quickly than would be possible
under the ordinary disciplinary process,
while also affording members numerous
procedural protections. In its rule
change,4 FINRA modified various time
requirements regarding expedited
proceedings, added an expedited
proceeding for failure to pay restitution,
and harmonized a remedy in an
expedited procedure with a remedy in
the FINRA By-Laws. With respect to
modifying time requirements, FINRA
amended Rule 9552 to shorten the
period before a suspension
automatically turns into an expulsion or
bar from six to three months. In
addition, FINRA amended Rule 9559 to
shorten the timeframe within which a
hearing must be held from 60 days after
a hearing request to 30 days after the
request. As consequence of shortening
the timeframe for hearings, FINRA also
shortened the timeframes under Rule
9559(h) concerning the pre-hearing
exchange of documents between the
parties to the expedited proceeding.
FINRA amended Rule 9554, which
contains expedited procedures for
failure to pay FINRA arbitration awards,
to also permit FINRA to take expedited
action for failure to comply with a
FINRA order of restitution or a FINRA
settlement providing for restitution.
FINRA noted that it did not have
explicit authority to take expedited
action against firms or associated
persons who fail to pay restitution to a
third party (usually investors who have
been harmed), and that its only recourse
was to initiate an ordinary disciplinary
action, which can take several months
to conclude. In adding the new
expedited procedure, FINRA stated it
believed that firms and associated
persons should not be permitted to
continue doing business for prolonged
periods when they have failed to pay
restitution to third parties.
FINRA also eliminated from Rule
9554 the remedy of barring an
individual for failure to pay an
arbitration award. FINRA noted that it
had no such authority under its by-laws,
and as such that it was harmonizing the
3 Securities Exchange Act Release No. 61242
(December 28, 2009), 75 FR 167 (January 4, 2010)
(SR–FINRA–2009–076).
4 Id.
E:\FR\FM\12MYN1.SGM
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Federal Register / Vol. 75, No. 91 / Wednesday, May 12, 2010 / Notices
remedy for this misconduct with the
remedy provided in its by-laws.
NASDAQ is proposing to incorporate all
the changes made by FINRA to its
expedited proceedings rules into the
analogous NASDAQ Rules 9552, 9554,
and 9559.
2. Statutory Basis
NASDAQ believes that the proposed
rule change is consistent with the
provisions of Section 6 of the Act,5 in
general and with Section 6(b)(5) of the
Act,6 in particular in that it is designed
to prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to foster
cooperation and coordination with
persons engaged in regulating, clearing,
settling, processing information with
respect to, and facilitating transactions
in securities, 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. The
proposed changes will conform
NASDAQ’s rules to recent changes
made to corresponding FINRA rules,
which will promote the application of
consistent regulatory standards.
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.
WReier-Aviles on DSKGBLS3C1PROD with NOTICES
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) 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) 7 of the Act and Rule 19b–
4(f)(6) thereunder.8
At any time within 60 days of the
filing of the proposed rule change, the
Commission may summarily abrogate
5 15
U.S.C. 78f.
6 15 U.S.C. 78f(b)(5).
7 15 U.S.C. 78s(b)(3)(A).
8 17 CFR 240.19b–4(f)(6).
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15:00 May 11, 2010
Jkt 220001
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. NASDAQ has
provided the Commission 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 of the proposed rule change.
NASDAQ believes that the proposed
rule change does not significantly affect
the protection of investors or the public
interest because it merely eliminates
erroneous citations that, if left in the
rule text, would cause investor
confusion.9
NASDAQ asks that the Commission
waive the 30-day pre-operative waiting
period contained in Exchange Act Rule
19b–4(f)(6)(iii).10 NASDAQ requests this
waiver so that these corrections can be
both immediately effective and
operative, thus minimizing any
confusion that may be caused by the
differing rule sets.
The Commission acknowledges that
the proposal presents no novel issues,
and that it will provide a benefit to
market participants by aligning
Nasdaq’s rules with those of FINRA. For
these reasons, the Commission believes
it is consistent with the protection of
investors and the public interest to
waive the 30-day operative delay, and
hereby grants such waiver.11
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NASDAQ–2010–057 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
9 The Commission believes that this statement is
incorrect. The proposed rule change does not
simply eliminate erroneous citations; instead, the
proposed rule change makes specific changes to
align Nasdaq’s rules with that of FINRA.
10 17 CFR 240.19b–4(f)(6)(iii).
11 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule change’s impact on efficiency,
competition, and capital formation. 15 U.S.C. 78c(f).
PO 00000
Frm 00120
Fmt 4703
Sfmt 4703
26825
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–NASDAQ–2010–057. 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 web site viewing and
printing in the Commission’s Public
Reference Room. 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–
NASDAQ–2010–057 and should be
submitted on or before June 2, 2010.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–11255 Filed 5–11–10; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–62038; File No. SR–NYSE–
2010–22]
Self-Regulatory Organizations; New
York Stock Exchange, LLC; Order
Approving Proposed Rule Change To
Make Permanent a Unit-of-Count
Metric Alternative for NYSE OpenBook
Products
May 5, 2010.
I. Introduction
On March 11, 2010, the New York
Stock Exchange, LLC (‘‘NYSE’’ or the
‘‘Exchange’’) filed with the Securities
12 17
E:\FR\FM\12MYN1.SGM
CFR 200.30–3(a)(12).
12MYN1
]]>Agencies
[Federal Register Volume 75, Number 91 (Wednesday, May 12, 2010)]
[Notices]
[Pages 26823-26825]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-11255]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62044; File No. SR-NASDAQ-2010-057]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Rules 9552, 9554 and 9559 To Conform NASDAQ's Rules to Recent
Changes to the Rules of FINRA
May 5, 2010.
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 May 3, 2010, The NASDAQ Stock Market LLC (``NASDAQ'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
NASDAQ is proposing to amend Rules 9552, 9554 and 9559 to conform
NASDAQ's rules to recent changes to the rules of the Financial Industry
Regulatory Authority (``FINRA''). The text of the proposed rule change
is below. Proposed new language is italicized and proposed deletions
are in brackets.
* * * * *
9550. Expedited Proceedings
* * * * *
9552. Failure To Provide Information or Keep Information Current
(a)-(g) No change.
(h) Defaults
A member or person who is suspended under this Rule and fails to
request termination of the suspension within three[six] months of
issuance of
[[Page 26824]]
the original notice of suspension will automatically be expelled or
barred.
* * * * *
9554. Failure To Comply with an Arbitration Award or Related Settlement
or an Order of Restitution or Settlement Providing for Restitution
(a) Notice of Suspension or[,] Cancellation[ or Bar]
If a member, person associated with a member or person subject to
Nasdaq's jurisdiction fails to comply with an arbitration award or a
settlement agreement related to an arbitration or mediation under the
Nasdaq By-Laws, or a FINRA order of restitution or FINRA settlement
agreement providing for restitution, Nasdaq Regulation staff may
provide written notice to such member or person stating that the
failure to comply within 21 days of service of the notice will result
in a suspension or cancellation of membership or a suspension [or bar]
from associating with any member.
(b) Service of Notice of Suspension or[,] Cancellation[ or Bar]
Nasdaq Regulation staff shall serve the member or person with such
notice in accordance with Rule 9134. A copy of a notice under this Rule
that is served on a person associated with a member also shall be
served on such member.
(c) No change.
(d) Effective Date of Suspension or[,] Cancellation[ or Bar]
The suspension or[,] cancellation [or bar ]referenced in a notice
issued and served under this Rule shall become effective 21 days after
service of the notice, unless stayed by a request for a hearing
pursuant to Rule 9559.
(e) No change.
(f) Failure to Request Hearing
If a member or person does not timely request a hearing, the
suspension or[,] cancellation [or bar ]specified in the notice shall
become effective 21 days after the service of the notice and the notice
shall constitute final Nasdaq action.
(g) No change.
* * * * *
9559. Hearing Procedures for Expedited Proceedings Under the Rule 9550
Series
(a)-(e) No change.
(f) Time of Hearing
(1)-(2) No change.
(3) A hearing shall be held within 30[60] days after a respondent
subject to a notice issued under Rules 9551 through 9555 files a
written request for a hearing with the Office of Hearing Officers.
(4) No change.
(g) No change.
(h) Transmission of Documents
(1) Not less than two business days before the hearing in an action
brought under Rule 9557, not less than seven days before the hearing in
an action brought under Rules 9556 and 9558, and not less than 14[40]
days before the hearing in an action brought under Rules 9551 through
9555, Nasdaq Regulation staff shall provide to the respondent who
requested the hearing, by facsimile or overnight courier, all documents
that were considered in issuing the notice unless a document meets the
criteria of Rule 9251(b)(1)(A), (B) or (C). A document that meets such
criteria shall not constitute part of the record, but shall be retained
until the date upon which the Nasdaq's final decision is served or, if
applicable, upon the conclusion of any review by the Securities and
Exchange Commission or the federal courts.
(2) Not less than two business days before the hearing in an action
brought under Rule 9557, not less than three days before the hearing in
an action brought under Rules 9556 and 9558, and not less than
seven[14] days before the hearing in an action brought under Rules 9551
through 9555, the parties shall exchange proposed exhibit and witness
lists. The exhibit and witness lists shall be served by facsimile or by
overnight courier.
(i)-(s) No change.
* * * * *
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, NASDAQ included statements
concerning the purpose of, and basis for, the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below, and is set forth in Sections A, B, and C below.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
NASDAQ proposes certain conforming changes to its rules concerning
expedited hearings in light of changes made to the rules of FINRA. Many
of NASDAQ's rules are based on rules of FINRA (formerly the National
Association of Securities Dealers (``NASD'')). NASDAQ endeavors to keep
such common rules identical to the extent practicable. FINRA recently
amended certain rules under its Rule 9000 Series concerning expedited
proceedings, which are closely mirrored in NASDAQ's Rule 9000
Series.\3\ Accordingly, NASDAQ is proposing to amend its analogous
rules consistent with the changes made by FINRA, as discussed below.
---------------------------------------------------------------------------
\3\ Securities Exchange Act Release No. 61242 (December 28,
2009), 75 FR 167 (January 4, 2010) (SR-FINRA-2009-076).
---------------------------------------------------------------------------
The expedited proceedings rules of FINRA, and in turn of NASDAQ,
address certain types of misconduct more quickly than would be possible
under the ordinary disciplinary process, while also affording members
numerous procedural protections. In its rule change,\4\ FINRA modified
various time requirements regarding expedited proceedings, added an
expedited proceeding for failure to pay restitution, and harmonized a
remedy in an expedited procedure with a remedy in the FINRA By-Laws.
With respect to modifying time requirements, FINRA amended Rule 9552 to
shorten the period before a suspension automatically turns into an
expulsion or bar from six to three months. In addition, FINRA amended
Rule 9559 to shorten the timeframe within which a hearing must be held
from 60 days after a hearing request to 30 days after the request. As
consequence of shortening the timeframe for hearings, FINRA also
shortened the timeframes under Rule 9559(h) concerning the pre-hearing
exchange of documents between the parties to the expedited proceeding.
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\4\ Id.
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FINRA amended Rule 9554, which contains expedited procedures for
failure to pay FINRA arbitration awards, to also permit FINRA to take
expedited action for failure to comply with a FINRA order of
restitution or a FINRA settlement providing for restitution. FINRA
noted that it did not have explicit authority to take expedited action
against firms or associated persons who fail to pay restitution to a
third party (usually investors who have been harmed), and that its only
recourse was to initiate an ordinary disciplinary action, which can
take several months to conclude. In adding the new expedited procedure,
FINRA stated it believed that firms and associated persons should not
be permitted to continue doing business for prolonged periods when they
have failed to pay restitution to third parties.
FINRA also eliminated from Rule 9554 the remedy of barring an
individual for failure to pay an arbitration award. FINRA noted that it
had no such authority under its by-laws, and as such that it was
harmonizing the
[[Page 26825]]
remedy for this misconduct with the remedy provided in its by-laws.
NASDAQ is proposing to incorporate all the changes made by FINRA to its
expedited proceedings rules into the analogous NASDAQ Rules 9552, 9554,
and 9559.
2. Statutory Basis
NASDAQ believes that the proposed rule change is consistent with
the provisions of Section 6 of the Act,\5\ in general and with Section
6(b)(5) of the Act,\6\ in particular in that it is designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in regulating, clearing, settling, processing
information with respect to, and facilitating transactions in
securities, 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. The proposed changes will
conform NASDAQ's rules to recent changes made to corresponding FINRA
rules, which will promote the application of consistent regulatory
standards.
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\5\ 15 U.S.C. 78f.
\6\ 15 U.S.C. 78f(b)(5).
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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
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
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) \7\ of the Act and Rule 19b-
4(f)(6) thereunder.\8\
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\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 17 CFR 240.19b-4(f)(6).
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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. NASDAQ has provided the
Commission 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 of the
proposed rule change.
NASDAQ believes that the proposed rule change does not
significantly affect the protection of investors or the public interest
because it merely eliminates erroneous citations that, if left in the
rule text, would cause investor confusion.\9\
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\9\ The Commission believes that this statement is incorrect.
The proposed rule change does not simply eliminate erroneous
citations; instead, the proposed rule change makes specific changes
to align Nasdaq's rules with that of FINRA.
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NASDAQ asks that the Commission waive the 30-day pre-operative
waiting period contained in Exchange Act Rule 19b-4(f)(6)(iii).\10\
NASDAQ requests this waiver so that these corrections can be both
immediately effective and operative, thus minimizing any confusion that
may be caused by the differing rule sets.
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\10\ 17 CFR 240.19b-4(f)(6)(iii).
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The Commission acknowledges that the proposal presents no novel
issues, and that it will provide a benefit to market participants by
aligning Nasdaq's rules with those of FINRA. For these reasons, the
Commission believes it is consistent with the protection of investors
and the public interest to waive the 30-day operative delay, and hereby
grants such waiver.\11\
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\11\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule change's impact on
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NASDAQ-2010-057 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NASDAQ-2010-057. 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 web site viewing and printing in
the Commission's Public Reference Room. 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-
NASDAQ-2010-057 and should be submitted on or before June 2, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-11255 Filed 5-11-10; 8:45 am]
BILLING CODE 8011-01-P
