Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend FINRA Rule 2251 (Forwarding of Proxy and Other Issuer-Related Materials), Which Includes Fees for Processing and Forwarding Proxy and Other Issuer Communications to Beneficial Owners, and Establish a Fee Under Certain Conditions for an Enhanced Brokers' Internet Platform, 2741-2745 [2014-00581]
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Federal Register / Vol. 79, No. 10 / Wednesday, January 15, 2014 / Notices
All submissions should refer to File
Number SR–OCC–2013–23. 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 of submission. 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 Section, 100 F Street NE.,
Washington, DC 20549–1090, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for
inspection and copying at the principal
office of OCC and on OCC’s Web site at
https://www.optionsclearing.com/
components/docs/legal/rules_and_
bylaws/sr_occ_13_23.pdf and at https://
www.theocc.com/components/docs/
legal/rules_and_bylaws/sr_occ_13_23_
a1.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–OCC–2013–23 and should
be submitted on or before February 5,
2014.
For the Commission by the Division of
Trading and Markets, pursuant to delegated
Authority.11
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–00578 Filed 1–14–14; 8:45 am]
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BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–71272; File No. SR–FINRA–
2013–056]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend FINRA Rule
2251 (Forwarding of Proxy and Other
Issuer-Related Materials), Which
Includes Fees for Processing and
Forwarding Proxy and Other Issuer
Communications to Beneficial Owners,
and Establish a Fee Under Certain
Conditions for an Enhanced Brokers’
Internet Platform
January 9, 2014.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (‘‘Act,’’
‘‘SEA’’ or ‘‘Exchange Act’’) 1 and Rule
19b–4 thereunder,2 notice is hereby
given that, on December 30, 2013,
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 and
II below, which Items have been
prepared by FINRA. FINRA has
designated the proposed rule change as
constituting a ‘‘non-controversial’’ rule
change under paragraph (f)(6) of Rule
19b–4 under the Act,3 which renders
the proposal effective upon receipt of
this filing by the Commission. 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 the
provisions of FINRA Rule 2251
(Forwarding of Proxy and Other IssuerRelated Materials) relating to rates of
reimbursement for expenses incurred in
forwarding proxy and other issuerrelated material, to establish a five-year
fee for the development of an enhanced
brokers internet platform and to make
miscellaneous conforming revisions.
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.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 17 CFR 240.19b–4(f)(6).
2 17
11 17
CFR 200.30–3(a)(12).
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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
FINRA Rule 2251 requires FINRA
members to transmit proxy materials
and other communications to beneficial
owners of securities and limits the
circumstances in which FINRA
members may vote proxies without
instructions from those beneficial
owners.4 The Supplementary Material
under FINRA Rule 2251 (FINRA Rule
2251.01) sets forth the rate
reimbursement provisions pursuant to
which FINRA members are entitled to
receive fees in connection with the
rule’s forwarding obligations. FINRA
has previously indicated that, in the
interest of ensuring regulatory clarity
and harmonization with respect to
proxy rate reimbursement, it intends to
conform the rate reimbursement
provisions of FINRA Rule 2251 with the
New York Stock Exchange (‘‘NYSE’’)
provisions in this area.5
On February 1, 2013, NYSE filed with
the Commission a proposed rule
change 6 to amend the provisions set
forth under NYSE Rules 451 and 465,
and the related provisions of Section
402.10 of the NYSE Listed Company
Manual, for the reimbursement of
expenses by issuers to NYSE member
organizations for the processing and
transmission of proxy materials and
4 FINRA Rule 2251 was adopted as a
consolidation of former NASD Rule 2260 and IM–
2260 as part of FINRA’s rulebook consolidation
process. See Securities Exchange Act Release No.
61052 (November 23, 2009), 74 FR 62857
(December 1, 2009) (Order Granting Approval of
Proposed Rule Change; File No. SR–FINRA–2009–
066).
5 See Securities Exchange Act Release No. 47392
(February 21, 2003), 68 FR 9730 (February 28, 2003)
(Notice of Filing and Immediate Effectiveness of
Proposed Rule Change; File No. SR–NASD–2003–
019).
6 See Securities Exchange Act Release No. 68936
(February 15, 2013), 78 FR 12381 (February 22,
2013) (Notice of Filing of Proposed Rule Change;
File No. SR–NYSE–2013–07).
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other issuer communications, and to
establish a specified success fee for the
development of qualified internet
platforms for proxy voting purposes (the
‘‘Enhanced Brokers’ Internet Platform’’
or ‘‘EBIP’’). The SEC approved NYSE’s
proposed rule change on October 18,
2013 (for purposes of this filing, referred
to as the ‘‘new NYSE proxy rate
rules’’).7 Consistent with the NYSE
action, FINRA is proposing to amend
FINRA Rule 2251 to establish, in
language virtually identical to the
corresponding provisions under the new
NYSE proxy rate rules, the same rate
reimbursement provisions that have
been adopted by the NYSE, including
the specified success fee for the
development of EBIPs, and to delete the
provisions under FINRA Rule 2251 that
are rendered obsolete by the NYSE rule
change, as described below.
• Processing Unit Fees: Proposed
FINRA Rule 2251.01(a)(1)(B) 8
establishes, for each set of proxy
material, i.e., proxy statement, form of
proxy and annual report when
processed as a unit, a Processing Unit
Fee based on the following schedule
according to the number of nominee 9
accounts through which the issuer’s
securities are beneficially owned:
• 50 cents for each account up to
10,000 accounts;
• 47 cents for each account above
10,000 accounts, up to 100,000
accounts;
• 39 cents for each account above
100,000 accounts, up to 300,000
accounts;
• 34 cents for each account above
300,000 accounts, up to 500,000
accounts;
• 32 cents for each account above
500,000 accounts.
The proposed rule change provides
that, under the above schedule, a
member may charge the issuer the tier
one rate for the first 10,000 accounts, or
portion thereof, with decreasing rates
applicable only on additional accounts
in the additional tiers. The proposed
7 See Securities Exchange Act Release No. 70720
(October 18, 2013), 78 FR 63530 (October 24, 2013)
(Order Granting Approval of Proposed Rule Change;
File No. SR–NYSE–2013–07) (the ‘‘Approval
Order’’).
8 Proposed FINRA Rule 2251.01(a)(1)(B)
corresponds to NYSE Rule 451.90(1)(b).
9 Proposed FINRA Rule 2251.01(a)(1)(A)(i)
defines ‘‘nominee’’ to mean a broker or bank subject
to SEA Rule 14b–1 or Rule 14b–2, respectively. This
provision corresponds with NYSE Rule
451.90(1)(a)(i). The new rule, in combination with
proposed new FINRA Rule 2251.01(a)(1)(A)(ii) as
set forth in note 10 below, replaces current FINRA
Rule 2251.01(a)(1)(A) [sic]. The Commission notes
that it is proposed FINRA Rule 2251.01(a)(1)(B)(i)
that replaces current FINRA Rule 2251.01(a)(1)(A)
and current FINRA Rule 2251 does not define
‘‘nominee.’’
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rule change provides that references in
the Supplementary Material to the
number of accounts means the number
of accounts holding securities of the
issuer at any nominee that is providing
distribution services without the
services of an intermediary, or when an
intermediary 10 is involved, the
aggregate number of nominee accounts
with beneficial ownership in the issuer
served by the intermediary. Further, the
proposed rule change provides that, in
the case of a meeting for which an
opposition proxy has been furnished to
security holders, the Processing Unit
Fee shall be $1.00 per account, in lieu
of the fees in the above schedule.
• Intermediaries: Proposed FINRA
Rule 2251.01(a)(1)(C) 11 establishes the
following supplemental fees for
intermediaries:
• $22.00 for each nominee served by
the intermediary that has at least one
account beneficially owning shares in
the issuer;
• an Intermediary Unit Fee for each
set of proxy material, based on the
following schedule according to the
number of nominee accounts through
which the issuer’s securities are
beneficially owned:
• 14 cents for each account up to
10,000 accounts;
• 13 cents for each account above
10,000 accounts, up to 100,000
accounts;
• 11 cents for each account above
100,000 accounts, up to 300,000
accounts;
• 9 cents for each account above
300,000 accounts, up to 500,000
accounts;
• 7 cents for each account above
500,000 accounts.
The proposed rule change provides
that, under the above schedule, a
member may charge the issuer the tier
one rate for the first 10,000 accounts, or
portion thereof, with decreasing rates
applicable only on additional accounts
in the additional tiers. For special
meetings, the proposed rule change
provides that the Intermediary Unit Fee
shall be based on the following
schedule, in lieu of the fees described in
the schedule above:
• 19 cents for each account up to
10,000 accounts;
• 18 cents for each account above
10,000 accounts, up to 100,000
accounts;
10 Proposed FINRA Rule 2251.01(a)(1)(A)(ii)
defines ‘‘intermediary’’ to mean a proxy service
provider that coordinates the distribution of proxy
or other materials for multiple nominees. This
provision corresponds to NYSE Rule
451.90(1)(a)(ii).
11 Proposed FINRA Rule 2251.01(a)(1)(C)
corresponds to NYSE Rule 451.90(1)(c).
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• 16 cents for each account above
100,000 accounts, up to 300,000
accounts;
• 14 cents for each account above
300,000 accounts, up to 500,000
accounts;
• 12 cents for each account above
500,000 accounts.
The proposed rule change provides
that, under the above schedule, a
member may charge the issuer the tier
one rate for the first 10,000 accounts, or
portion thereof, with decreasing rates
applicable only on additional accounts
in the additional tiers. For purposes of
the proposed rule, a special meeting is
a meeting other than the issuer’s
meeting for the election of directors.
Further, the proposed rule change
provides that, in the case of a meeting
for which an opposition proxy has been
furnished to security holders, the
Intermediary Unit Fee shall be 25 cents
per account, with a minimum fee of
$5,000 per soliciting entity, in lieu of
the fees described in the two schedules
given in this paragraph above, as the
case may be. Where there are separate
solicitations by management and an
opponent, the opponent is to be
separately billed for the costs of its
solicitation.
• Proxy Follow-up Material: The
proposed rule change revises FINRA
Rule 2251.01(a)(2) 12 (Charges for Proxy
Follow-Up Mailings) to establish, for
each set of proxy follow-up material, a
Processing Unit Fee of 40 cents per
account, except for those relating to an
issuer’s annual meeting for the election
of directors, for which the Processing
Unit Fee shall be 20 cents per account.
The proposed rule change revises the
header of FINRA Rule 2251.01(a)(2) to
read ‘‘Charges for Proxy Follow-Up
Material’’ and deletes the current text
under that rule provision.
• Beneficial Ownership Information:
Current FINRA Rule 2251.01(a)(3) 13
(Charge for Providing Beneficial
Ownership Information) establishes a
rate of six and one-half cents per name
of non-objecting beneficial owner
(‘‘NOBO’’) provided to the issuer
pursuant to the issuer’s request. The
proposed rule change revises Rule
2251.01(a)(3) to provide that, where the
non-objecting beneficial ownership
information is not furnished directly to
the issuer by the member, but is
furnished through an agent designated
by the member, the issuer will be
expected to pay in addition the
12 FINRA Rule 2251.01(a)(2), as revised by the
proposed rule change, corresponds to NYSE Rule
451.90(2).
13 FINRA Rule 2251.01(a)(3), as revised by the
proposed rule change, corresponds to NYSE Rule
451.92.
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Federal Register / Vol. 79, No. 10 / Wednesday, January 15, 2014 / Notices
following fee to the agent, with a
minimum fee of $100 per requested list:
• 10 cents per name for the first
10,000 names or portion thereof;
• 5 cents per name for additional
names up to 100,000 names; and
• 4 cents per name above 100,000.
The rule currently provides that any
member that designates an agent for the
purpose of furnishing requesting issuers
with beneficial ownership information
pursuant to SEA Rule 14b-1(c) and
thereafter cancels that designation or
appoints a new agent for such purpose
should promptly inform interested
issuers. The proposed rule change
retains this language and provides that,
when an issuer requests beneficial
ownership information as of a date
which is the record date for an annual
or special meeting or a solicitation of
written shareholder consent, the issuer
may ask to eliminate names holding
more or less than a specified number of
shares, or names of shareholders that
have already voted, and the issuer may
not be charged a fee for the NOBO
names so eliminated. In all other cases
the issuer may be charged for all the
names in the NOBO list.
• Interim Report, Post Meeting Report
and Other Material: The proposed rule
change revises FINRA Rule
2251.01(a)(4) 14 (Charges for Interim
Report, Post Meeting Report and Other
Material Mailings) to establish for
interim reports, annual reports if
processed separately, post meeting
reports, or other material, a Processing
Unit Fee of 15 cents per account. The
proposed rule change revises the header
of FINRA Rule 2251.01(a)(4) to read
‘‘Charges for Interim Report, Post
Meeting Report and Other Material.’’
• Preference Management Fees: The
proposed rule change deletes the
current text under FINRA Rule
2251.01(a)(5) 15 (Incentive Fees) and
establishes, with respect to each account
for which the nominee has eliminated
the need to send materials in paper
format through the mails (or by courier
service), a Preference Management Fee
in the following amount:
• 32 cents for each set of proxy
material described in proposed FINRA
Rule 2251.01(a)(1)(B); provided,
however, that if the account is a
Managed Account (as defined in
proposed FINRA Rule 2251.01(a)(7),
below), the Preference Management Fee
shall be 16 cents.
14 FINRA Rule 2251.01(a)(4), as revised by the
proposed rule change, corresponds to NYSE Rule
451.90(3).
15 FINRA Rule 2251.01(a)(5), as revised by the
proposed rule change, corresponds to NYSE Rule
451.90(4).
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• 10 cents for each set of material
described in either FINRA Rule
2251.01(a)(2) or (a)(4), as discussed
above.
The proposed rule change provides
that the Preference Management Fee is
in addition to, and not in lieu of, the
other fees set forth under FINRA Rule
2251.01 as revised by the rule change.
The proposed rule change revises the
header of FINRA Rule 2251.01(a)(5) to
read ‘‘Preference Management Fees.’’
• Notice and Access Fees: Proposed
FINRA Rule 2251.01(a)(6) 16 (Notice and
Access Fees) provides that, when an
issuer elects to utilize Notice and
Access for a proxy distribution, there is
an incremental fee based on all nominee
accounts through which the issuer’s
securities are beneficially owned as
follows:
• 25 cents for each account up to
10,000 accounts;
• 20 cents for each account over
10,000 accounts, up to 100,000
accounts;
• 15 cents for each account over
100,000 accounts, up to 200,000
accounts;
• 10 cents for each account over
200,000 accounts, up to 500,000
accounts;
• 5 cents for each account over
500,000 accounts.
The proposed rule change provides
that, under the above schedule, a
member may charge the issuer the tier
one rate for the first 10,000 accounts, or
portion thereof, with decreasing rates
applicable only on additional accounts
in the additional tiers. The proposed
rule change further provides that follow
up notices will not incur an incremental
fee for Notice and Access. In addition,
no incremental fee will be imposed for
fulfillment transactions (i.e., a full
package sent to a notice recipient at the
recipient’s request), although out of
pocket costs such as postage will be
passed on as in ordinary distributions.
• Managed Accounts: Proposed
FINRA Rule 2251.01(a)(7) 17 (Fee
Exclusion in Certain Circumstances)
provides that, notwithstanding any
other provision under the rule, no fee
shall be imposed for a nominee account
that is a Managed Account and contains
five or fewer shares or units of the
security involved. The proposed rule
defines ‘‘Managed Account’’ to mean an
account at a nominee which is invested
in a portfolio of securities selected by a
professional adviser, and for which the
account holder is charged a separate
16 Proposed
FINRA Rule 2251.01(a)(6)
corresponds to NYSE Rule 451.90(5).
17 Proposed FINRA Rule 2251.01(a)(7)
corresponds to NYSE Rule 451.90(6).
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2743
asset-based fee for a range of services
which may include ongoing advice,
custody and execution services. The
adviser can be either employed by or
affiliated with the nominee, or a
separate investment advisor contracted
for the purpose of selecting investment
portfolios for the managed account.
Requiring that investments or changes
to the account be approved by the client
shall not preclude an account from
being a ‘‘Managed Account,’’ nor shall
the fact that commissions or transactionbased charges are imposed in addition
to the asset-based fee. Proposed FINRA
Rule 2251.01(a)(7) further provides that,
notwithstanding any other provision
under the rule, no fee shall be imposed
for any nominee account which
contains only a fractional share, i.e., less
than one share or unit of the security
involved.
• EBIP Fee: Proposed FINRA Rule
2251.01(a)(8) 18 (Enhanced Brokers’
Internet Platform Fee) provides that,
during the period ending December 31,
2018, there shall be a supplemental fee
of 99 cents for each new account that
elects, and each full package recipient
among a brokerage firm’s accounts that
converts to, electronic delivery while
having access to an EBIP. The proposed
rule change provides that this fee does
not apply to electronic delivery
consents captured by issuers (for
example, through an open-enrollment
program), nor to positions held in
Managed Accounts (as defined in
proposed FINRA Rule 2251.01(a)(7)) nor
to accounts voted by investment
managers using electronic voting
platforms.19 The proposed rule change
provides that this is a one-time fee,
meaning that an issuer may be billed
this fee by a particular member only
once for each account covered by this
rule. Further, billing for this fee should
be separately indicated on the issuer’s
invoice and must await the next proxy
or consent solicitation by the issuer that
follows the triggering election of
electronic delivery by an eligible
account. Accounts receiving a notice
pursuant to the use of notice and access
by the issuer, and accounts to which
mailing is suppressed by householding,
will not trigger the fee under the
proposed rule change. The proposed
rule change further provides:
• To qualify under the rule, an EBIP
must provide notices of upcoming
corporate votes (including record and
shareholder meeting dates) and the
18 Proposed FINRA Rule 2251.01(a)(8)
corresponds to NYSE Rule 451.90(7).
19 FINRA notes that the EBIP fee does not apply
to accounts that converted to electronic delivery
prior to January 1, 2014.
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ability to access proxy materials and a
voting instruction form, and cast the
vote, through the investor’s account
page on the member’s Web site without
an additional log-in.
• Any member that is not also a
member of the NYSE with a qualifying
EBIP must provide notice thereof to
FINRA,20 including the date such EBIP
became operational, and any limitations
on the availability of the EBIP to its
customers.
• Conversions to electronic delivery
by accounts with access to an EBIP need
to be tracked for the purpose of
reporting the activity to FINRA when
requested, as do records of marketing
efforts to encourage account holders to
use the EBIP. In addition, records need
to be maintained and reported to FINRA
when requested regarding the
proportion of non-institutional accounts
that vote proxies after being provided
access to an EBIP.
• Miscellaneous Revisions: The
proposed rule change revises the header
of FINRA Rule 2251.01(a)(1) to read
‘‘Basic Processing and Intermediary
Unit Fees.’’ To reflect the use of the
term ‘‘process’’ throughout the new
NYSE proxy rate rules, the proposed
rule change revises ‘‘forward,’’
‘‘forwarding’’ and ‘‘transmit’’
throughout FINRA Rule 2251 to read
‘‘process and forward,’’ ‘‘processing and
forwarding’’ and ‘‘process and
transmit,’’ respectively.
FINRA notes that the guidance
applicable to the new NYSE proxy rate
rules as set forth in the Commission’s
Approval Order shall apply to Rule
2251 as revised by the proposed rule
change.
FINRA has filed the proposed rule
change for immediate effectiveness and
has requested that the SEC waive the
requirement that the proposed rule
change not become operative for 30 days
after the date of the filing, so FINRA can
implement the proposed rule change on
January 1, 2014.
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2. Statutory Basis
FINRA believes that the proposed rule
change is consistent with the provisions
of Section 15A(b)(6) of the Act,21 which
requires, among other things, that
FINRA rules must be designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
20 Under the new NYSE proxy rate rules, the
notification applies to NYSE member organizations
as to the NYSE. To avoid regulatory duplication, the
proposed rule change applies the EBIP notification
requirement only to FINRA members that are not
NYSE members. However, as noted below, all
FINRA members would need to maintain, and
would be subject to requests by FINRA for, the
specified EBIP tracking information and records.
21 15 U.S.C. 78o–3(b)(6).
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equitable principles of trade, and, in
general, to protect investors and the
public interest. FINRA believes that, by
conforming the rate reimbursement
provisions under FINRA Rule 2251 with
the new NYSE proxy rate rules, the
proposed rule change helps to ensure
regulatory clarity and harmonization
with respect to proxy rate
reimbursement, thereby facilitating the
processing and transmittal of proxy and
other issuer-related materials to
investors and conducing to the orderly
administration of the Commission’s
proxy rules. Further, for the reasons set
forth in the Approval Order, the
Commission found that the new NYSE
proxy rate rules are consistent with the
requirements of Section 6(b)(4),22
Section 6(b)(5) 23 and Section 6(b)(8) 24
of the Act. Because the proposed rule
change conforms with the new NYSE
proxy rate rules, FINRA believes that
the proposed rule change is consistent
with the corresponding provisions
under Section 15A(b)(5),25 Section
15A(b)(6) 26 and Section 15A(b)(9) 27 of
the Act.
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. FINRA
believes that, by conforming the rate
reimbursement provisions under FINRA
Rule 2251 with the new NYSE proxy
rate rules, the proposed rule change
helps to ensure regulatory clarity and
22 15 U.S.C. 78f(b)(4). Section 6(b)(4) requires that
an exchange have rules that provide for the
equitable allocation of reasonable dues, fees and
other charges among its members, issuers and other
persons using its facilities.
23 15 U.S.C. 78f(b)(5). Section 6(b)(5) requires that
the rules of an exchange be designed, among other
things, 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, and not be
designed to permit unfair discrimination between
customers, issuers, brokers or dealers.
24 15 U.S.C. 78f(b)(8). Section 6(b)(8) prohibits
any exchange rule from imposing any burden on
competition that is not necessary or appropriate in
furtherance of the Act.
25 15 U.S.C. 78o–3(b)(5). Section 15A(b)(5)
requires that FINRA rules provide for the equitable
allocation of reasonable dues, fees, and other
charges among members and issuers and other
persons using any facility or system that FINRA
operates or controls. Relatedly, SEA Rule 14b–1
conditions a broker-dealer’s obligation to forward
issuer proxy materials to beneficial owners on the
issuer’s assurance that it will reimburse the brokerdealer’s reasonable expenses, both direct and
indirect, incurred in connection with performing
that obligation. See 17 CFR 240.14b–1.
26 15 U.S.C. 78o–3(b)(6).
27 15 U.S.C. 78o–3(b)(9).
PO 00000
Frm 00113
Fmt 4703
Sfmt 4703
harmonization with respect to proxy
rate reimbursement. FINRA believes
that this will help FINRA members
avoid conflicting requirements and
related burdens that would otherwise
result in the absence of the proposed
rule change.
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 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 if
consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 28 and Rule 19b–4(f)(6)
thereunder.29
A proposed rule change filed under
Rule 19b–4(f)(6) 30 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),31 the
Commission may designate a shorter
time if such action is consistent with the
protection of investors and the public
interest. FINRA has asked the
Commission to waive the 30-day
operative delay so FINRA can
implement the proposed rule change on
January 1, 2014, in alignment with the
implementation date of the new NYSE
proxy rate rules. The Commission
believes that waiving the 30-day
operative delay is consistent with the
protection of investors and the public
interest because it will allow FINRA to
harmonize its rules with the new NYSE
proxy rate rules, which should reduce
the potential for investor confusion
regarding the applicable proxy fees.
Therefore, the Commission hereby
waives the 30-day operative delay and
28 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires a self-regulatory organization to
give the Commission written notice of its intent to
file the proposed rule change, along with a brief
description and the text of the proposed rule
change, at least five business days prior to the date
of filing of the proposed rule change, or such
shorter time as designated by the Commission.
FINRA has satisfied this requirement.
30 17 CFR 240.19b–4(f)(6).
31 17 CFR 240.19b–4(f)(6)(iii).
29 17
E:\FR\FM\15JAN1.SGM
15JAN1
Federal Register / Vol. 79, No. 10 / Wednesday, January 15, 2014 / Notices
designates the proposal operative upon
filing.32
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend 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. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or 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
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
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–
2013–056 and should be submitted on
or before February 5, 2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.33
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–00581 Filed 1–14–14; 8:45 am]
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #13827 and #13828]
Paper Comments
SUMMARY:
wreier-aviles on DSK5TPTVN1PROD with NOTICES
All submissions should refer to File
Number SR–FINRA–2013–056. 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
32 For
purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
VerDate Mar<15>2010
14:04 Jan 14, 2014
Jkt 232001
Nebraska Disaster Number NE–00055
U.S. Small Business
Administration.
ACTION: Amendment 1.
AGENCY:
This is an amendment of the
Presidential declaration of a major
disaster for Public Assistance Only for
the State of Nebraska (FEMA—4156—
DR), dated 11/26/2013.
Incident: Severe Storms, Winter
Storms, Tornadoes, and Flooding
Incident Period: 10/02/2013 through
10/06/2013
Effective Date: 01/07/2014
Physical Loan Application Deadline
Date: 01/27/2014
Economic Injury (EIDL) Loan
Application Deadline Date: 08/25/2014
ADDRESSES: Submit completed loan
applications to: U.S. Small Business
Administration, Processing and
Disbursement Center, 14925 Kingsport
Road, Fort Worth, TX 76155.
FOR FURTHER INFORMATION CONTACT: A.
Escobar, Office of Disaster Assistance,
U.S. Small Business Administration,
409 3rd Street SW., Suite 6050,
Washington, DC 20416.
SUPPLEMENTARY INFORMATION: The notice
of the President’s major disaster
declaration for Private Non-Profit
organizations in the State of
NEBRASKA, dated 11/26/2013, is
hereby amended to include the
following areas as adversely affected by
the disaster.
Primary Counties: Greeley.
33 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00114
Fmt 4703
All other information in the original
declaration remains unchanged.
(Catalog of Federal Domestic Assistance
Numbers 59002 and 59008)
James E. Rivera,
Associate Administrator for Disaster
Assistance.
[FR Doc. 2014–00557 Filed 1–14–14; 8:45 am]
BILLING CODE 8025–01–P
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #13841 and #13842]
Arkansas Disaster #AR–00066
U.S. Small Business
Administration.
ACTION: Notice.
AGENCY:
This is a Notice of the
Presidential declaration of a major
disaster for Public Assistance Only for
the State of Arkansas (FEMA—4160—
DR), dated 01/06/2014.
Incident: Severe Winter Storm
Incident Period: 12/05/2013 through
12/06/2013
Effective Date: 01/06/2014
Physical Loan Application Deadline
Date: 03/07/2014
Economic Injury (EIDL) Loan
Application Deadline Date: 10/06/2014
ADDRESSES: Submit completed loan
applications to: U.S. Small Business
Administration, Processing and
Disbursement Center, 14925 Kingsport
Road, Fort Worth, TX 76155.
FOR FURTHER INFORMATION CONTACT: A.
Escobar, Office of Disaster Assistance,
U.S. Small Business Administration,
409 3rd Street SW., Suite 6050,
Washington, DC 20416.
SUMMARY:
BILLING CODE 8011–01–P
• 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–2013–056 on the subject line.
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street NE., Washington, DC
20549–1090.
2745
Sfmt 4703
Notice is
hereby given that as a result of the
President’s major disaster declaration on
01/06/2014, Private Non-Profit
organizations that provide essential
services of governmental nature may file
disaster loan applications at the address
listed above or other locally announced
locations.
The following areas have been
determined to be adversely affected by
the disaster:
Primary Counties:
Crawford, Franklin, Johnson, Logan,
Madison, Marion, Newton, Polk,
Scott, Searcy, Sebastian, Sharp, Van
Buren.
The Interest Rates are:
SUPPLEMENTARY INFORMATION:
Percent
For Physical Damage:
Non-Profit Organizations With
Credit Available Elsewhere ...
E:\FR\FM\15JAN1.SGM
15JAN1
2.625
]]>Agencies
[Federal Register Volume 79, Number 10 (Wednesday, January 15, 2014)]
[Notices]
[Pages 2741-2745]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-00581]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71272; File No. SR-FINRA-2013-056]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend FINRA Rule 2251 (Forwarding of Proxy and
Other Issuer-Related Materials), Which Includes Fees for Processing and
Forwarding Proxy and Other Issuer Communications to Beneficial Owners,
and Establish a Fee Under Certain Conditions for an Enhanced Brokers'
Internet Platform
January 9, 2014.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act,'' ``SEA'' or ``Exchange Act'') \1\ and Rule 19b-4
thereunder,\2\ notice is hereby given that, on December 30, 2013,
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 and II below, which Items
have been prepared by FINRA. FINRA has designated the proposed rule
change as constituting a ``non-controversial'' rule change under
paragraph (f)(6) of Rule 19b-4 under the Act,\3\ which renders the
proposal effective upon receipt of this filing by the Commission. 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.
\3\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
FINRA is proposing to amend the provisions of FINRA Rule 2251
(Forwarding of Proxy and Other Issuer-Related Materials) relating to
rates of reimbursement for expenses incurred in forwarding proxy and
other issuer-related material, to establish a five-year fee for the
development of an enhanced brokers internet platform and to make
miscellaneous conforming revisions.
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
FINRA Rule 2251 requires FINRA members to transmit proxy materials
and other communications to beneficial owners of securities and limits
the circumstances in which FINRA members may vote proxies without
instructions from those beneficial owners.\4\ The Supplementary
Material under FINRA Rule 2251 (FINRA Rule 2251.01) sets forth the rate
reimbursement provisions pursuant to which FINRA members are entitled
to receive fees in connection with the rule's forwarding obligations.
FINRA has previously indicated that, in the interest of ensuring
regulatory clarity and harmonization with respect to proxy rate
reimbursement, it intends to conform the rate reimbursement provisions
of FINRA Rule 2251 with the New York Stock Exchange (``NYSE'')
provisions in this area.\5\
---------------------------------------------------------------------------
\4\ FINRA Rule 2251 was adopted as a consolidation of former
NASD Rule 2260 and IM-2260 as part of FINRA's rulebook consolidation
process. See Securities Exchange Act Release No. 61052 (November 23,
2009), 74 FR 62857 (December 1, 2009) (Order Granting Approval of
Proposed Rule Change; File No. SR-FINRA-2009-066).
\5\ See Securities Exchange Act Release No. 47392 (February 21,
2003), 68 FR 9730 (February 28, 2003) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change; File No. SR-NASD-
2003-019).
---------------------------------------------------------------------------
On February 1, 2013, NYSE filed with the Commission a proposed rule
change \6\ to amend the provisions set forth under NYSE Rules 451 and
465, and the related provisions of Section 402.10 of the NYSE Listed
Company Manual, for the reimbursement of expenses by issuers to NYSE
member organizations for the processing and transmission of proxy
materials and
[[Page 2742]]
other issuer communications, and to establish a specified success fee
for the development of qualified internet platforms for proxy voting
purposes (the ``Enhanced Brokers' Internet Platform'' or ``EBIP''). The
SEC approved NYSE's proposed rule change on October 18, 2013 (for
purposes of this filing, referred to as the ``new NYSE proxy rate
rules'').\7\ Consistent with the NYSE action, FINRA is proposing to
amend FINRA Rule 2251 to establish, in language virtually identical to
the corresponding provisions under the new NYSE proxy rate rules, the
same rate reimbursement provisions that have been adopted by the NYSE,
including the specified success fee for the development of EBIPs, and
to delete the provisions under FINRA Rule 2251 that are rendered
obsolete by the NYSE rule change, as described below.
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 68936 (February 15,
2013), 78 FR 12381 (February 22, 2013) (Notice of Filing of Proposed
Rule Change; File No. SR-NYSE-2013-07).
\7\ See Securities Exchange Act Release No. 70720 (October 18,
2013), 78 FR 63530 (October 24, 2013) (Order Granting Approval of
Proposed Rule Change; File No. SR-NYSE-2013-07) (the ``Approval
Order'').
---------------------------------------------------------------------------
Processing Unit Fees: Proposed FINRA Rule 2251.01(a)(1)(B)
\8\ establishes, for each set of proxy material, i.e., proxy statement,
form of proxy and annual report when processed as a unit, a Processing
Unit Fee based on the following schedule according to the number of
nominee \9\ accounts through which the issuer's securities are
beneficially owned:
---------------------------------------------------------------------------
\8\ Proposed FINRA Rule 2251.01(a)(1)(B) corresponds to NYSE
Rule 451.90(1)(b).
\9\ Proposed FINRA Rule 2251.01(a)(1)(A)(i) defines ``nominee''
to mean a broker or bank subject to SEA Rule 14b-1 or Rule 14b-2,
respectively. This provision corresponds with NYSE Rule
451.90(1)(a)(i). The new rule, in combination with proposed new
FINRA Rule 2251.01(a)(1)(A)(ii) as set forth in note 10 below,
replaces current FINRA Rule 2251.01(a)(1)(A) [sic]. The Commission
notes that it is proposed FINRA Rule 2251.01(a)(1)(B)(i) that
replaces current FINRA Rule 2251.01(a)(1)(A) and current FINRA Rule
2251 does not define ``nominee.''
---------------------------------------------------------------------------
50 cents for each account up to 10,000 accounts;
47 cents for each account above 10,000 accounts, up to
100,000 accounts;
39 cents for each account above 100,000 accounts, up to
300,000 accounts;
34 cents for each account above 300,000 accounts, up to
500,000 accounts;
32 cents for each account above 500,000 accounts.
The proposed rule change provides that, under the above schedule, a
member may charge the issuer the tier one rate for the first 10,000
accounts, or portion thereof, with decreasing rates applicable only on
additional accounts in the additional tiers. The proposed rule change
provides that references in the Supplementary Material to the number of
accounts means the number of accounts holding securities of the issuer
at any nominee that is providing distribution services without the
services of an intermediary, or when an intermediary \10\ is involved,
the aggregate number of nominee accounts with beneficial ownership in
the issuer served by the intermediary. Further, the proposed rule
change provides that, in the case of a meeting for which an opposition
proxy has been furnished to security holders, the Processing Unit Fee
shall be $1.00 per account, in lieu of the fees in the above schedule.
---------------------------------------------------------------------------
\10\ Proposed FINRA Rule 2251.01(a)(1)(A)(ii) defines
``intermediary'' to mean a proxy service provider that coordinates
the distribution of proxy or other materials for multiple nominees.
This provision corresponds to NYSE Rule 451.90(1)(a)(ii).
---------------------------------------------------------------------------
Intermediaries: Proposed FINRA Rule 2251.01(a)(1)(C) \11\
establishes the following supplemental fees for intermediaries:
---------------------------------------------------------------------------
\11\ Proposed FINRA Rule 2251.01(a)(1)(C) corresponds to NYSE
Rule 451.90(1)(c).
---------------------------------------------------------------------------
$22.00 for each nominee served by the intermediary that
has at least one account beneficially owning shares in the issuer;
an Intermediary Unit Fee for each set of proxy material,
based on the following schedule according to the number of nominee
accounts through which the issuer's securities are beneficially owned:
14 cents for each account up to 10,000 accounts;
13 cents for each account above 10,000 accounts, up to
100,000 accounts;
11 cents for each account above 100,000 accounts, up to
300,000 accounts;
9 cents for each account above 300,000 accounts, up to
500,000 accounts;
7 cents for each account above 500,000 accounts.
The proposed rule change provides that, under the above schedule, a
member may charge the issuer the tier one rate for the first 10,000
accounts, or portion thereof, with decreasing rates applicable only on
additional accounts in the additional tiers. For special meetings, the
proposed rule change provides that the Intermediary Unit Fee shall be
based on the following schedule, in lieu of the fees described in the
schedule above:
19 cents for each account up to 10,000 accounts;
18 cents for each account above 10,000 accounts, up to
100,000 accounts;
16 cents for each account above 100,000 accounts, up to
300,000 accounts;
14 cents for each account above 300,000 accounts, up to
500,000 accounts;
12 cents for each account above 500,000 accounts.
The proposed rule change provides that, under the above schedule, a
member may charge the issuer the tier one rate for the first 10,000
accounts, or portion thereof, with decreasing rates applicable only on
additional accounts in the additional tiers. For purposes of the
proposed rule, a special meeting is a meeting other than the issuer's
meeting for the election of directors. Further, the proposed rule
change provides that, in the case of a meeting for which an opposition
proxy has been furnished to security holders, the Intermediary Unit Fee
shall be 25 cents per account, with a minimum fee of $5,000 per
soliciting entity, in lieu of the fees described in the two schedules
given in this paragraph above, as the case may be. Where there are
separate solicitations by management and an opponent, the opponent is
to be separately billed for the costs of its solicitation.
Proxy Follow-up Material: The proposed rule change revises
FINRA Rule 2251.01(a)(2) \12\ (Charges for Proxy Follow-Up Mailings) to
establish, for each set of proxy follow-up material, a Processing Unit
Fee of 40 cents per account, except for those relating to an issuer's
annual meeting for the election of directors, for which the Processing
Unit Fee shall be 20 cents per account. The proposed rule change
revises the header of FINRA Rule 2251.01(a)(2) to read ``Charges for
Proxy Follow-Up Material'' and deletes the current text under that rule
provision.
---------------------------------------------------------------------------
\12\ FINRA Rule 2251.01(a)(2), as revised by the proposed rule
change, corresponds to NYSE Rule 451.90(2).
---------------------------------------------------------------------------
Beneficial Ownership Information: Current FINRA Rule
2251.01(a)(3) \13\ (Charge for Providing Beneficial Ownership
Information) establishes a rate of six and one-half cents per name of
non-objecting beneficial owner (``NOBO'') provided to the issuer
pursuant to the issuer's request. The proposed rule change revises Rule
2251.01(a)(3) to provide that, where the non-objecting beneficial
ownership information is not furnished directly to the issuer by the
member, but is furnished through an agent designated by the member, the
issuer will be expected to pay in addition the
[[Page 2743]]
following fee to the agent, with a minimum fee of $100 per requested
list:
---------------------------------------------------------------------------
\13\ FINRA Rule 2251.01(a)(3), as revised by the proposed rule
change, corresponds to NYSE Rule 451.92.
---------------------------------------------------------------------------
10 cents per name for the first 10,000 names or portion
thereof;
5 cents per name for additional names up to 100,000 names;
and
4 cents per name above 100,000.
The rule currently provides that any member that designates an
agent for the purpose of furnishing requesting issuers with beneficial
ownership information pursuant to SEA Rule 14b-1(c) and thereafter
cancels that designation or appoints a new agent for such purpose
should promptly inform interested issuers. The proposed rule change
retains this language and provides that, when an issuer requests
beneficial ownership information as of a date which is the record date
for an annual or special meeting or a solicitation of written
shareholder consent, the issuer may ask to eliminate names holding more
or less than a specified number of shares, or names of shareholders
that have already voted, and the issuer may not be charged a fee for
the NOBO names so eliminated. In all other cases the issuer may be
charged for all the names in the NOBO list.
Interim Report, Post Meeting Report and Other Material:
The proposed rule change revises FINRA Rule 2251.01(a)(4) \14\ (Charges
for Interim Report, Post Meeting Report and Other Material Mailings) to
establish for interim reports, annual reports if processed separately,
post meeting reports, or other material, a Processing Unit Fee of 15
cents per account. The proposed rule change revises the header of FINRA
Rule 2251.01(a)(4) to read ``Charges for Interim Report, Post Meeting
Report and Other Material.''
---------------------------------------------------------------------------
\14\ FINRA Rule 2251.01(a)(4), as revised by the proposed rule
change, corresponds to NYSE Rule 451.90(3).
---------------------------------------------------------------------------
Preference Management Fees: The proposed rule change
deletes the current text under FINRA Rule 2251.01(a)(5) \15\ (Incentive
Fees) and establishes, with respect to each account for which the
nominee has eliminated the need to send materials in paper format
through the mails (or by courier service), a Preference Management Fee
in the following amount:
---------------------------------------------------------------------------
\15\ FINRA Rule 2251.01(a)(5), as revised by the proposed rule
change, corresponds to NYSE Rule 451.90(4).
---------------------------------------------------------------------------
32 cents for each set of proxy material described in
proposed FINRA Rule 2251.01(a)(1)(B); provided, however, that if the
account is a Managed Account (as defined in proposed FINRA Rule
2251.01(a)(7), below), the Preference Management Fee shall be 16 cents.
10 cents for each set of material described in either
FINRA Rule 2251.01(a)(2) or (a)(4), as discussed above.
The proposed rule change provides that the Preference Management
Fee is in addition to, and not in lieu of, the other fees set forth
under FINRA Rule 2251.01 as revised by the rule change. The proposed
rule change revises the header of FINRA Rule 2251.01(a)(5) to read
``Preference Management Fees.''
Notice and Access Fees: Proposed FINRA Rule 2251.01(a)(6)
\16\ (Notice and Access Fees) provides that, when an issuer elects to
utilize Notice and Access for a proxy distribution, there is an
incremental fee based on all nominee accounts through which the
issuer's securities are beneficially owned as follows:
---------------------------------------------------------------------------
\16\ Proposed FINRA Rule 2251.01(a)(6) corresponds to NYSE Rule
451.90(5).
---------------------------------------------------------------------------
25 cents for each account up to 10,000 accounts;
20 cents for each account over 10,000 accounts, up to
100,000 accounts;
15 cents for each account over 100,000 accounts, up to
200,000 accounts;
10 cents for each account over 200,000 accounts, up to
500,000 accounts;
5 cents for each account over 500,000 accounts.
The proposed rule change provides that, under the above schedule, a
member may charge the issuer the tier one rate for the first 10,000
accounts, or portion thereof, with decreasing rates applicable only on
additional accounts in the additional tiers. The proposed rule change
further provides that follow up notices will not incur an incremental
fee for Notice and Access. In addition, no incremental fee will be
imposed for fulfillment transactions (i.e., a full package sent to a
notice recipient at the recipient's request), although out of pocket
costs such as postage will be passed on as in ordinary distributions.
Managed Accounts: Proposed FINRA Rule 2251.01(a)(7) \17\
(Fee Exclusion in Certain Circumstances) provides that, notwithstanding
any other provision under the rule, no fee shall be imposed for a
nominee account that is a Managed Account and contains five or fewer
shares or units of the security involved. The proposed rule defines
``Managed Account'' to mean an account at a nominee which is invested
in a portfolio of securities selected by a professional adviser, and
for which the account holder is charged a separate asset-based fee for
a range of services which may include ongoing advice, custody and
execution services. The adviser can be either employed by or affiliated
with the nominee, or a separate investment advisor contracted for the
purpose of selecting investment portfolios for the managed account.
Requiring that investments or changes to the account be approved by the
client shall not preclude an account from being a ``Managed Account,''
nor shall the fact that commissions or transaction-based charges are
imposed in addition to the asset-based fee. Proposed FINRA Rule
2251.01(a)(7) further provides that, notwithstanding any other
provision under the rule, no fee shall be imposed for any nominee
account which contains only a fractional share, i.e., less than one
share or unit of the security involved.
---------------------------------------------------------------------------
\17\ Proposed FINRA Rule 2251.01(a)(7) corresponds to NYSE Rule
451.90(6).
---------------------------------------------------------------------------
EBIP Fee: Proposed FINRA Rule 2251.01(a)(8) \18\ (Enhanced
Brokers' Internet Platform Fee) provides that, during the period ending
December 31, 2018, there shall be a supplemental fee of 99 cents for
each new account that elects, and each full package recipient among a
brokerage firm's accounts that converts to, electronic delivery while
having access to an EBIP. The proposed rule change provides that this
fee does not apply to electronic delivery consents captured by issuers
(for example, through an open-enrollment program), nor to positions
held in Managed Accounts (as defined in proposed FINRA Rule
2251.01(a)(7)) nor to accounts voted by investment managers using
electronic voting platforms.\19\ The proposed rule change provides that
this is a one-time fee, meaning that an issuer may be billed this fee
by a particular member only once for each account covered by this rule.
Further, billing for this fee should be separately indicated on the
issuer's invoice and must await the next proxy or consent solicitation
by the issuer that follows the triggering election of electronic
delivery by an eligible account. Accounts receiving a notice pursuant
to the use of notice and access by the issuer, and accounts to which
mailing is suppressed by householding, will not trigger the fee under
the proposed rule change. The proposed rule change further provides:
---------------------------------------------------------------------------
\18\ Proposed FINRA Rule 2251.01(a)(8) corresponds to NYSE Rule
451.90(7).
\19\ FINRA notes that the EBIP fee does not apply to accounts
that converted to electronic delivery prior to January 1, 2014.
---------------------------------------------------------------------------
To qualify under the rule, an EBIP must provide notices of
upcoming corporate votes (including record and shareholder meeting
dates) and the
[[Page 2744]]
ability to access proxy materials and a voting instruction form, and
cast the vote, through the investor's account page on the member's Web
site without an additional log-in.
Any member that is not also a member of the NYSE with a
qualifying EBIP must provide notice thereof to FINRA,\20\ including the
date such EBIP became operational, and any limitations on the
availability of the EBIP to its customers.
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\20\ Under the new NYSE proxy rate rules, the notification
applies to NYSE member organizations as to the NYSE. To avoid
regulatory duplication, the proposed rule change applies the EBIP
notification requirement only to FINRA members that are not NYSE
members. However, as noted below, all FINRA members would need to
maintain, and would be subject to requests by FINRA for, the
specified EBIP tracking information and records.
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Conversions to electronic delivery by accounts with access
to an EBIP need to be tracked for the purpose of reporting the activity
to FINRA when requested, as do records of marketing efforts to
encourage account holders to use the EBIP. In addition, records need to
be maintained and reported to FINRA when requested regarding the
proportion of non-institutional accounts that vote proxies after being
provided access to an EBIP.
Miscellaneous Revisions: The proposed rule change revises
the header of FINRA Rule 2251.01(a)(1) to read ``Basic Processing and
Intermediary Unit Fees.'' To reflect the use of the term ``process''
throughout the new NYSE proxy rate rules, the proposed rule change
revises ``forward,'' ``forwarding'' and ``transmit'' throughout FINRA
Rule 2251 to read ``process and forward,'' ``processing and
forwarding'' and ``process and transmit,'' respectively.
FINRA notes that the guidance applicable to the new NYSE proxy rate
rules as set forth in the Commission's Approval Order shall apply to
Rule 2251 as revised by the proposed rule change.
FINRA has filed the proposed rule change for immediate
effectiveness and has requested that the SEC waive the requirement that
the proposed rule change not become operative for 30 days after the
date of the filing, so FINRA can implement the proposed rule change on
January 1, 2014.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\21\ 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, by conforming the rate
reimbursement provisions under FINRA Rule 2251 with the new NYSE proxy
rate rules, the proposed rule change helps to ensure regulatory clarity
and harmonization with respect to proxy rate reimbursement, thereby
facilitating the processing and transmittal of proxy and other issuer-
related materials to investors and conducing to the orderly
administration of the Commission's proxy rules. Further, for the
reasons set forth in the Approval Order, the Commission found that the
new NYSE proxy rate rules are consistent with the requirements of
Section 6(b)(4),\22\ Section 6(b)(5) \23\ and Section 6(b)(8) \24\ of
the Act. Because the proposed rule change conforms with the new NYSE
proxy rate rules, FINRA believes that the proposed rule change is
consistent with the corresponding provisions under Section
15A(b)(5),\25\ Section 15A(b)(6) \26\ and Section 15A(b)(9) \27\ of the
Act.
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\21\ 15 U.S.C. 78o-3(b)(6).
\22\ 15 U.S.C. 78f(b)(4). Section 6(b)(4) requires that an
exchange have rules that provide for the equitable allocation of
reasonable dues, fees and other charges among its members, issuers
and other persons using its facilities.
\23\ 15 U.S.C. 78f(b)(5). Section 6(b)(5) requires that the
rules of an exchange be designed, among other things, 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, and
not be designed to permit unfair discrimination between customers,
issuers, brokers or dealers.
\24\ 15 U.S.C. 78f(b)(8). Section 6(b)(8) prohibits any exchange
rule from imposing any burden on competition that is not necessary
or appropriate in furtherance of the Act.
\25\ 15 U.S.C. 78o-3(b)(5). Section 15A(b)(5) requires that
FINRA rules provide for the equitable allocation of reasonable dues,
fees, and other charges among members and issuers and other persons
using any facility or system that FINRA operates or controls.
Relatedly, SEA Rule 14b-1 conditions a broker-dealer's obligation to
forward issuer proxy materials to beneficial owners on the issuer's
assurance that it will reimburse the broker-dealer's reasonable
expenses, both direct and indirect, incurred in connection with
performing that obligation. See 17 CFR 240.14b-1.
\26\ 15 U.S.C. 78o-3(b)(6).
\27\ 15 U.S.C. 78o-3(b)(9).
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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. FINRA believes that, by
conforming the rate reimbursement provisions under FINRA Rule 2251 with
the new NYSE proxy rate rules, the proposed rule change helps to ensure
regulatory clarity and harmonization with respect to proxy rate
reimbursement. FINRA believes that this will help FINRA members avoid
conflicting requirements and related burdens that would otherwise
result in the absence of the proposed rule change.
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 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 if consistent with the protection of investors
and the public interest, the proposed rule change has become effective
pursuant to Section 19(b)(3)(A) of the Act \28\ and Rule 19b-4(f)(6)
thereunder.\29\
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\28\ 15 U.S.C. 78s(b)(3)(A).
\29\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and the text of the proposed rule change,
at least five business days prior to the date of filing of the
proposed rule change, or such shorter time as designated by the
Commission. FINRA has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \30\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\31\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. FINRA has asked the
Commission to waive the 30-day operative delay so FINRA can implement
the proposed rule change on January 1, 2014, in alignment with the
implementation date of the new NYSE proxy rate rules. The Commission
believes that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest because it will allow
FINRA to harmonize its rules with the new NYSE proxy rate rules, which
should reduce the potential for investor confusion regarding the
applicable proxy fees. Therefore, the Commission hereby waives the 30-
day operative delay and
[[Page 2745]]
designates the proposal operative upon filing.\32\
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\30\ 17 CFR 240.19b-4(f)(6).
\31\ 17 CFR 240.19b-4(f)(6)(iii).
\32\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend 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. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or 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-2013-056 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-2013-056. 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
10:00 a.m. and 3:00 p.m. Copies of the 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-2013-056 and should be
submitted on or before February 5, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\33\
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\33\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-00581 Filed 1-14-14; 8:45 am]
BILLING CODE 8011-01-P
