Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of Proposed Rule Change Relating to Whistleblower Claims in Arbitration, 77283-77284 [2011-31761]
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Federal Register / Vol. 76, No. 238 / Monday, December 12, 2011 / Notices
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 Section, 100 F Street NE.,
Washington, DC 20549–1090, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of such filings
will also be available for inspection and
copying at the principal office of NSCC
and on NSCC’s Web site at https://
www.dtcc.com/downloads/legal/
rule_filings/2011/dtc/2011-10.pdf. 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–DTC–2011–10 and should
be submitted on or before January 3,
2012.
For the Commission by the Division of
Trading and Markets, pursuant to delegated
authority.14
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2011–31737 Filed 12–9–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–65896; File No. SR–FINRA–
2011–067]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing of
Proposed Rule Change Relating to
Whistleblower Claims in Arbitration
December 6, 2011.
jlentini on DSK4TPTVN1PROD with NOTICES
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 November
21, 2011, the Financial Industry
Regulatory Authority, Inc. (‘‘FINRA’’)
filed with the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’)
the proposed rule change as described
in Items I, II, and III below, which Items
have been prepared by FINRA. 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
FINRA is proposing to amend FINRA
Rule 13201 of the Code of Arbitration
14 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
VerDate Mar<15>2010
15:55 Dec 09, 2011
Jkt 226001
Procedure for Industry Disputes
(‘‘Industry Code’’) to align the rule with
statutes that invalidate predispute
arbitration agreements for whistleblower
claims. The proposed rule change also
would make a conforming amendment
to FINRA Rule 2263.
The text of the proposed rule change
is available on FINRA’s Web site at
https://www.finra.org, at the principal
office of FINRA 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,
FINRA 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. FINRA 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
The proposed rule change would
amend FINRA Rule 13201 (Statutory
Employment Discrimination Claims) of
the Industry Code, and FINRA Rule
2263 (Arbitration Disclosure to
Associated Persons Signing or
Acknowledging Form U4), to align the
rules with statutes that invalidate
predispute arbitration agreements for
whistleblower claims.
The Dodd-Frank Wall Street Reform
and Consumer Protection Act (‘‘DoddFrank Act’’) 3 amended the SarbanesOxley Act of 2002 (‘‘SOX’’) by adding a
new paragraph (e) to 18 U.S.C. 1514A 4
to provide that:
(1) WAIVER OF RIGHTS AND
REMEDIES—The rights and remedies
provided for in this section may not be
waived by any agreement, policy form,
or condition of employment, including
by a predispute arbitration agreement.
(2) PREDISPUTE ARBITRATION
AGREEMENTS—No predispute
arbitration agreement shall be valid or
enforceable, if the agreement requires
arbitration of a dispute arising under
this section.
3 See Dodd-Frank Wall Street Reform and
Consumer Protection Act, Public Law 111–203,
§ 919 (2010).
4 See Dodd-Frank Section 922(c)(2), adding 18
U.S.C. 1514A(e) (Nonenforceability of Certain
Provisions Waiving Rights and Remedies or
Requiring Arbitration of Disputes).
PO 00000
Frm 00081
Fmt 4703
Sfmt 4703
77283
Prior to the Dodd-Frank Act, it was
FINRA staff’s articulated position that
parties were required to arbitrate SOX
whistleblower claims under the
Industry Code.5
In light of the changes set forth in the
Dodd-Frank Act that invalidate
predispute arbitration agreements in the
case of SOX whistleblower claims, the
proposed rule change would amend
FINRA Rule 13201 of the Industry Code
to make clear that parties are not
required to arbitrate SOX whistleblower
claims, superseding the existing
guidance to the contrary. While the
main impetus for the proposed rule
change is the need to update FINRA
staff’s stated position on SOX
whistleblower claims, FINRA proposes
to make the rule text broad enough to
cover any statutes that prohibit
predispute arbitration agreements for
whistleblower claims.6
Rule 13201 of the Industry Code
currently provides that a claim alleging
employment discrimination, including
sexual harassment, in violation of a
statute, is not required to be arbitrated
under the Industry Code. Such a claim
may be arbitrated only if the parties
have agreed to arbitrate it, either before
or after the dispute arose. The proposed
rule change would amend Rule 13201 to
add a new provision to provide that a
dispute arising under a whistleblower
statute that prohibits the use of
predispute arbitration agreements is not
required to be arbitrated under the
Industry Code. The rule would state that
such a dispute may be arbitrated only if
the parties have agreed to arbitrate it
after the dispute arose.
FINRA also would amend the title of
Rule 13201 to reflect the addition of the
new provision relating to whistleblower
claims. FINRA structured the proposed
rule change to separate the provision
relating to statutory employment
discrimination claims from the
provision relating to whistleblower
claims. While parties may agree to
arbitrate a statutory employment
discrimination claim either before or
after a dispute arises, the Dodd-Frank
Act invalidates predispute agreements
to arbitrate certain whistleblower
claims.
The proposed rule change also would
make a conforming amendment to
FINRA Rule 2263, which requires firms
5 See Arbitrability of Sarbanes-Oxley
Whistleblower Claims by Laurence S. Moy, Pearl
Zuchlewski, Linda A. Neilan and Katherine
Blostein, The Neutral Corner (Volume 1—2008).
6 The Dodd-Frank Act also invalidated predispute
arbitration agreements in other whistleblower
statutes, including, for example, 7 USCA § 26(n)
relating to Commodity Exchange Whistleblower
Incentives and Protections.
E:\FR\FM\12DEN1.SGM
12DEN1
77284
Federal Register / Vol. 76, No. 238 / Monday, December 12, 2011 / Notices
to provide each associated person with
certain written disclosures regarding the
nature and process of arbitration
proceedings whenever the firm asks an
associated person, pursuant to FINRA
Rule 1010 (Electronic Filing
Requirements for Uniform Forms), to
manually sign a new or amended Form
U4, or to otherwise provide written
acknowledgment of an amendment to
the form. The proposed rule change
would amend FINRA Rule 2263 to add
a disclosure provision stating that a
dispute arising under a whistleblower
statute that prohibits the use of
predispute arbitration agreements is not
required to be arbitrated under FINRA
rules, and that such a dispute may be
arbitrated at FINRA only if the parties
have agreed to arbitrate it after the
dispute arose.
2. Statutory Basis
FINRA believes that the proposed rule
change is consistent with the provisions
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 amendments are consistent
with the provisions of the Act noted
above because they serve to align FINRA
rules with those provisions in the DoddFrank Act that invalidate predispute
arbitration agreements in the context of
certain whistleblower claims.
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.
jlentini on DSK4TPTVN1PROD with NOTICES
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 45 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
7 15
U.S.C. 78o–3(b)(6).
VerDate Mar<15>2010
15:55 Dec 09, 2011
Jkt 226001
organization consents, the Commission
will:
(A) By order approve or disapprove
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:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
Number SR–FINRA–2011–067 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–FINRA–2011–067. This file
number should be included on the
subject line if email 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, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of such filing
also will be available for inspection and
copying at the principal office of
FINRA. 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–FINRA–2011–067 and
PO 00000
Frm 00082
Fmt 4703
Sfmt 4703
should be submitted on or before
January 3, 2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.8
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2011–31761 Filed 12–9–11; 8:45 a.m.]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–65903; File No. SR–EDGX–
2011–37]
Self-Regulatory Organizations; EDGX
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule To Amend EDGX Rule 11.9
December 6, 2011.
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 December
2, 2011, the EDGX Exchange, Inc.
(‘‘Exchange’’ or ‘‘EDGX’’) 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 the Exchange. 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
The Exchange proposes to introduce
an additional routing option to Rule
11.9 and amend existing routing
options. The text of the proposed rule
change is attached as Exhibit 5 and is
available on the Exchange’s Web site at
www.directedge.com, at the Exchange’s
principal office, and at the Public
Reference Room of the Commission.
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
Exchange 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
8 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
E:\FR\FM\12DEN1.SGM
12DEN1
Agencies
[Federal Register Volume 76, Number 238 (Monday, December 12, 2011)]
[Notices]
[Pages 77283-77284]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-31761]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65896; File No. SR-FINRA-2011-067]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing of Proposed Rule Change Relating to
Whistleblower Claims in Arbitration
December 6, 2011.
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 November 21, 2011, the Financial Industry Regulatory Authority, Inc.
(``FINRA'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission'') the proposed rule change as described in Items I,
II, and III below, which Items have been prepared by FINRA. 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
FINRA is proposing to amend FINRA Rule 13201 of the Code of
Arbitration Procedure for Industry Disputes (``Industry Code'') to
align the rule with statutes that invalidate predispute arbitration
agreements for whistleblower claims. The proposed rule change also
would make a conforming amendment to FINRA Rule 2263.
The text of the proposed rule change is available on FINRA's Web
site at https://www.finra.org, at the principal office of FINRA 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, FINRA 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. FINRA 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
The proposed rule change would amend FINRA Rule 13201 (Statutory
Employment Discrimination Claims) of the Industry Code, and FINRA Rule
2263 (Arbitration Disclosure to Associated Persons Signing or
Acknowledging Form U4), to align the rules with statutes that
invalidate predispute arbitration agreements for whistleblower claims.
The Dodd-Frank Wall Street Reform and Consumer Protection Act
(``Dodd-Frank Act'') \3\ amended the Sarbanes-Oxley Act of 2002
(``SOX'') by adding a new paragraph (e) to 18 U.S.C. 1514A \4\ to
provide that:
---------------------------------------------------------------------------
\3\ See Dodd-Frank Wall Street Reform and Consumer Protection
Act, Public Law 111-203, Sec. 919 (2010).
\4\ See Dodd-Frank Section 922(c)(2), adding 18 U.S.C. 1514A(e)
(Nonenforceability of Certain Provisions Waiving Rights and Remedies
or Requiring Arbitration of Disputes).
---------------------------------------------------------------------------
(1) WAIVER OF RIGHTS AND REMEDIES--The rights and remedies provided
for in this section may not be waived by any agreement, policy form, or
condition of employment, including by a predispute arbitration
agreement.
(2) PREDISPUTE ARBITRATION AGREEMENTS--No predispute arbitration
agreement shall be valid or enforceable, if the agreement requires
arbitration of a dispute arising under this section.
Prior to the Dodd-Frank Act, it was FINRA staff's articulated
position that parties were required to arbitrate SOX whistleblower
claims under the Industry Code.\5\
---------------------------------------------------------------------------
\5\ See Arbitrability of Sarbanes-Oxley Whistleblower Claims by
Laurence S. Moy, Pearl Zuchlewski, Linda A. Neilan and Katherine
Blostein, The Neutral Corner (Volume 1--2008).
---------------------------------------------------------------------------
In light of the changes set forth in the Dodd-Frank Act that
invalidate predispute arbitration agreements in the case of SOX
whistleblower claims, the proposed rule change would amend FINRA Rule
13201 of the Industry Code to make clear that parties are not required
to arbitrate SOX whistleblower claims, superseding the existing
guidance to the contrary. While the main impetus for the proposed rule
change is the need to update FINRA staff's stated position on SOX
whistleblower claims, FINRA proposes to make the rule text broad enough
to cover any statutes that prohibit predispute arbitration agreements
for whistleblower claims.\6\
---------------------------------------------------------------------------
\6\ The Dodd-Frank Act also invalidated predispute arbitration
agreements in other whistleblower statutes, including, for example,
7 USCA Sec. 26(n) relating to Commodity Exchange Whistleblower
Incentives and Protections.
---------------------------------------------------------------------------
Rule 13201 of the Industry Code currently provides that a claim
alleging employment discrimination, including sexual harassment, in
violation of a statute, is not required to be arbitrated under the
Industry Code. Such a claim may be arbitrated only if the parties have
agreed to arbitrate it, either before or after the dispute arose. The
proposed rule change would amend Rule 13201 to add a new provision to
provide that a dispute arising under a whistleblower statute that
prohibits the use of predispute arbitration agreements is not required
to be arbitrated under the Industry Code. The rule would state that
such a dispute may be arbitrated only if the parties have agreed to
arbitrate it after the dispute arose.
FINRA also would amend the title of Rule 13201 to reflect the
addition of the new provision relating to whistleblower claims. FINRA
structured the proposed rule change to separate the provision relating
to statutory employment discrimination claims from the provision
relating to whistleblower claims. While parties may agree to arbitrate
a statutory employment discrimination claim either before or after a
dispute arises, the Dodd-Frank Act invalidates predispute agreements to
arbitrate certain whistleblower claims.
The proposed rule change also would make a conforming amendment to
FINRA Rule 2263, which requires firms
[[Page 77284]]
to provide each associated person with certain written disclosures
regarding the nature and process of arbitration proceedings whenever
the firm asks an associated person, pursuant to FINRA Rule 1010
(Electronic Filing Requirements for Uniform Forms), to manually sign a
new or amended Form U4, or to otherwise provide written acknowledgment
of an amendment to the form. The proposed rule change would amend FINRA
Rule 2263 to add a disclosure provision stating that a dispute arising
under a whistleblower statute that prohibits the use of predispute
arbitration agreements is not required to be arbitrated under FINRA
rules, and that such a dispute may be arbitrated at FINRA only if the
parties have agreed to arbitrate it after the dispute arose.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions 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 amendments are
consistent with the provisions of the Act noted above because they
serve to align FINRA rules with those provisions in the Dodd-Frank Act
that invalidate predispute arbitration agreements in the context of
certain whistleblower claims.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------
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 45 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 or disapprove 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:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-FINRA-2011-067 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-FINRA-2011-067. This
file number should be included on the subject line if email 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, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal office of FINRA. 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-FINRA-2011-067 and
should be submitted on or before January 3, 2012.
---------------------------------------------------------------------------
\8\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-31761 Filed 12-9-11; 8:45 a.m.]
BILLING CODE 8011-01-P