Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of Proposed Rule Change, as Modified by Amendment No. 1, Relating To Protecting Personal Confidential Information in Documents Filed With FINRA Dispute Resolution, 32003-32008 [2014-12771]

Download as PDF Federal Register / Vol. 79, No. 106 / Tuesday, June 3, 2014 / Notices Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the advance notice that are filed with the Commission, and all written communications relating to the advance notice 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 such filings also will be available for inspection and copying at the principal office of OCC and on OCC’s Web site at https://www.theocc.com/about/ publications/bylaws.jsp. 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–2014–802 and should be submitted on or before June 24, 2014. Code of Arbitration Procedure for Customer Disputes (the ‘‘Customer Code’’) and the Code of Arbitration Procedure for Industry Disputes (the ‘‘Industry Code’’) to require parties to redact all but the last four digits of an individual’s Social Security number, taxpayer identification number, or financial account number (collectively, ‘‘personal confidential information’’ or ‘‘PCI’’) from documents filed with FINRA Dispute Resolution (‘‘DR’’). The proposed rule change was published for comment in the Federal Register on February 28, 2014.3 The Commission received six comments on the proposal.4 On April 10, 2014, FINRA granted the Commission an extension of time to act on the proposal until May 29, 2014.5 On May 5, 2014, FINRA responded to the comment letters 6 and filed Amendment No. 1 to the proposed rule change in response to a commenter’s concern.7 The Commission is publishing this notice and order to solicit comments on Amendment No. 1 from interested persons, and to approve the proposed rule change, as modified by Amendment No. 1, on an accelerated basis. By the Commission. Kevin O’Neill, Deputy Secretary. Overview FINRA filed the proposed rule change to amend the Customer Code and the Industry Code to provide that any document that a party files with DR that contains an individual’s Social Security number, taxpayer identification number, or financial account number must be [FR Doc. 2014–12772 Filed 6–2–14; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–72269; File No. SR–FINRA– 2014–008] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of Proposed Rule Change, as Modified by Amendment No. 1, Relating To Protecting Personal Confidential Information in Documents Filed With FINRA Dispute Resolution sroberts on DSK4SPTVN1PROD with NOTICES May 28, 2014. I. Introduction On February 13, 2014, the Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to amend FINRA’s 1 15 2 17 U.S.C. 78s(b)(1). CFR 240.19b–4. VerDate Mar<15>2010 17:35 Jun 02, 2014 Jkt 232001 II. Description of the Proposed Rule Change 3 See Securities Exchange Act Release No. 71608 (Feb. 24, 2014), 79 FR 11491 (Feb. 28, 2014) (‘‘Notice’’). 4 See Letters from Steven B. Caruso, Esq., Maddox Hargett & Caruso, P.C., dated March 4, 2014 (‘‘Caruso Letter’’); Nataliya Nemtseva, Student Intern, Timothy Guilmette, Student Intern, Thomas Abrahamson, Student Intern, and Nicole Iannarone, Assistant Clinical Professor, Georgia State University College of Law’s Investor Advocacy Clinic, dated March 14, 2014 (‘‘Georgia State Letter’’); Kara Cain, Esq., Aderant CompuLaw, dated March 19, 2014 (‘‘Aderant Letter’’); Jason Doss, Public Investors Arbitration Bar Association, dated March 20, 2014 (‘‘PIABA Letter’’); Ryan Jennings, Legal Intern, Christian Corkery, Legal Intern, and Daniel Coleman, Legal Intern, Securities Arbitration Clinic, St. Vincent DePaul Legal Program, Inc., St. John’s University School of Law, dated March 20, 2014 (‘‘St. John’s Letter’’); and Jill I. Gross, James D. Hopkins Professor of Law, Director, Investor Rights Clinic, Pace Law School, dated March 24, 2014 (‘‘Pace Letter’’). 5 See Letter from Margo A. Hassan, Assistant Chief Counsel, FINRA Dispute Resolution, Inc., to Lourdes Gonzalez, Assistant Chief Counsel, Sales Practices, Division of Trading and Markets, Securities and Exchange Commission, dated April 10, 2014. 6 See Letter from Margo A. Hassan, Assistant Chief Counsel, FINRA Dispute Resolution, Inc., to Secretary, Securities and Exchange Commission, dated May 5, 2014 (‘‘FINRA Response Letter’’). 7 See Aderant Letter. PO 00000 Frm 00088 Fmt 4703 Sfmt 4703 32003 redacted to include only the last four digits of any of these numbers.8 The proposed redaction requirements would apply only to documents filed with DR and would not apply to documents that parties exchange with each other or submit to the arbitrators at a hearing on the merits.9 In addition, the proposed redaction requirements would not apply to cases administered under FINRA Rule 12800 of the Customer Code and FINRA Rule 13800 of the Industry Code (collectively, the ‘‘Simplified Arbitration rules’’).10 Requiring Parties To Redact Specified PCI From Documents Filed With FINRA During an arbitration proceeding, parties file pleadings and other supporting documents with DR that may contain individuals’ PCI. FINRA stated that, as a service to forum users, DR serves certain pleadings on other parties to an arbitration.11 DR also provides arbitrators with pleadings and attachments.12 FINRA believes that the greatest risk of DR staff misdirecting PCI occurs when DR staff serves pleadings on a party at an incorrect or outdated address (e.g., an associated person of a member who has not updated his or her Central Registration Depository record).13 In addition, FINRA stated that arbitrators occasionally have misplaced parties’ pleadings containing PCI.14 FINRA also stated that, since FINRA employees are regularly exposed to PCI as they handle party documents, it has policies and procedures in place to help guide staff on how to keep confidential information safe.15 For example, FINRA maintains an Information Privacy and Protection Policy, and administers Information Privacy and Protection Training to all FINRA staff annually.16 In addition, DR has its own procedures for protecting confidential information relating to, among other matters, storage and disposal of case materials in a manner that preserves the confidentiality of the information, and removal of PCI that appears in awards 8 See proposed FINRA Rules 12300(g)(1) and 13300(g)(1); see also Notice, 79 FR at 11492. The text of the proposed rule change is available at the principal office of FINRA, on FINRA’s Web site at https://www.finra.org, and at the Commission’s Public Reference Room. 9 See proposed FINRA Rules 12300(g)(2) and 13300(g)(2); see also Notice, 79 FR at 11492. 10 See proposed FINRA Rules 12300(g)(3) and 13300(g)(3); see also Notice, 79 FR at 11492. The Simplified Arbitration rules generally apply to arbitrations involving $50,000 or less, exclusive of interest and expenses. 11 See Notice, 79 FR at 11492. 12 See id. 13 See id. 14 See id. 15 See Notice, 79 FR at 11492. 16 See id. E:\FR\FM\03JNN1.SGM 03JNN1 32004 Federal Register / Vol. 79, No. 106 / Tuesday, June 3, 2014 / Notices sroberts on DSK4SPTVN1PROD with NOTICES that will be published.17 In particular, DR procedures require arbitrators to keep confidential all information obtained in connection with arbitration and to participate in FINRA training programs on information security.18 In addition, FINRA has published guidance recommending that parties to an arbitration and their counsel take steps to protect confidential information.19 FINRA’s Protecting PCI Notice states, among other things, that parties and their counsel can safeguard confidential information by redacting such information from pleadings, exhibits, and other documents upon agreement of the parties.20 For example, parties may agree not to use, or to redact, Social Security, account, or driver license numbers and, where such data must be referenced, parties can use only the last few digits of these numbers or similar information.21 FINRA believes that while these efforts have enhanced the security of parties’ confidential information, the risks associated with the loss of PCI (e.g., identity theft) remain as long as parties continue to file with DR pleadings and attachments containing PCI.22 Accordingly, FINRA is proposing to amend the Customer Code and the Industry Code to require parties to redact specified PCI from documents that parties file with DR. Specifically, FINRA is proposing to amend Rule 12300 (Filing and Serving Documents) 23 and Rule 12307 (Deficient Claims) 24 of the Customer Code and Rule 1330 (Filing and Serving Documents) 25 and Rule 13307 (Deficient Claims) 26 of the Industry Code as described below. Given that the proposed amendments to Rules 13300 and 13307 of the Industry Code are identical to the proposed amendments to Rules 12300 and 12307 of the Customer Code, the 17 See id. at n.4 (stating that FINRA ‘‘keeps all documents and information in DR case files confidential except for arbitration awards. FINRA publishes every award in the Arbitration Awards Online Database on FINRA’s Web site’’). 18 See Notice, 79 FR at 11492. 19 FINRA Notice to Parties, Protecting Personal Confidential Information, available at https://www. finra.org/ArbitrationAndMediation/Arbitration/ Rules/NoticestoArbitratorsParties/NoticestoParties/ P123999 (‘‘Protecting PCI Notice’’); see also id. 20 See Notice, 79 FR at 11492 (discussing FINRA’s Protecting PCI Notice). 21 See id. 22 See id. 23 See proposed FINRA Rule 12300(g)(1)–(3); see also Notice, 79 FR at 11492. 24 See proposed FINRA Rule 12307(a)–(c); see also Notice, 79 FR at 11492. 25 See proposed FINRA Rule 13300(g)(1)–(3); see also Notice, 79 FR at 11492. 26 See proposed FINRA Rule 13307(a)–(c); see also Notice, 79 FR at 11492. VerDate Mar<15>2010 17:35 Jun 02, 2014 Jkt 232001 description below only refers to Rules 12300 and 12307 of the Customer Code. FINRA stated that its rationale is the same for both sets of rules.27 Proposed Amendments to FINRA Rule 12300 FINRA is proposing to amend Rule 12300 to provide that any document that a party files with DR that contains an individual’s Social Security number, taxpayer identification number, or financial account number must be redacted to include only the last four digits of any of these numbers.28 As proposed, the rule would specify that a party shall not include the full numbers.29 Under the proposed rule, if DR receives a claim, including supporting documents, with a full Social Security, taxpayer identification, or financial account number, it would deem the filing deficient under Rule 12307 and request that the party refile the document, without the PCI, within 30 days of receiving notice of noncompliance from DR.30 In addition, if a party files a document with PCI that is not covered by Rule 12307 (a document other than a claim, such as a motion), FINRA would deem the filing to be improper and would request that the party refile the document, with the required redaction, within 30 days.31 If the party refiles the document within the prescribed 30 days in compliance with the rule, FINRA would consider the document to be filed on the date the party initially filed it (i.e., the noncomplying document) with DR.32 Two Exemptions to the Proposed Amendments to FINRA Rule 12300 The proposed rule change would include two exemptions: (1) For documents that parties exchange with each other (not with DR) or submit to the arbitrators at a hearing on the merits; 33 and (2) for cases administered under the Simplified Arbitration rules.34 As explained above, FINRA believes that its greatest risk of misdirecting PCI 27 See Notice, 79 FR at 11492. 28 See proposed FINRA Rule 12300(g)(1); see also Notice, 79 FR at 11492. 29 See proposed FINRA Rule 12300(g)(1). 30 See proposed FINRA Rule 12307; see also Notice, 79 FR at 11492 n.7 (stating that ‘‘[t]he term ‘‘claim’’ means an allegation or request for relief and includes counterclaims, cross claims and third party claims’’). 31 See Notice, 79 FR at 11492. 32 See proposed FINRA Rule 12307(c); see also Notice, 79 FR at 11492. 33 See proposed FINRA Rule 12300(g)(2); see also Notice, 79 FR at 11492. 34 See proposed FINRA Rule 12300(g)(3); see also Notice, 79 FR at 11492. PO 00000 Frm 00089 Fmt 4703 Sfmt 4703 occurs when DR staff is transmitting pleadings and documents to parties and arbitrators (e.g., serving pleadings).35 Therefore, FINRA is proposing to exempt documents that parties exchange with each other or submit as exhibits during a hearing in order to minimize the burden of the new requirements.36 FINRA stated, however, that parties can always agree to measures that protect PCI in documents they exchange with each other or submit or use at a hearing and DR staff would not be at risk of transmitting PCI.37 Similarly, FINRA stated that parties typically only bring hard copies of exhibits to hearings, as opposed to transmitting them via email, and can safely dispose of them by using secure shredding services.38 FINRA believes that its proposal represents a balanced approach to protecting PCI while minimizing the burden on parties.39 The second exemption relates to claims administered under FINRA’s Simplified Arbitration rules.40 Generally, a single arbitrator decides these claims based solely on the parties’ written submissions. FINRA noted that many claimants who initiate claims under its Simplified Arbitration rules are not represented by counsel (i.e., pro se parties).41 FINRA believes that the redaction requirements in the proposed rule change may prove difficult for pro se parties.42 Therefore, FINRA is proposing to exempt from this proposed rule all claims administered under the Simplified Arbitration rules. Proposed Amendments to FINRA Rule 12307 FINRA Rule 12307 states that the DR Director will not serve any claim that is deficient, and identifies many reasons why a claim may be deficient, including that the claims does not name all the parties.43 FINRA is proposing to make conforming changes to FINRA Rule 12307(a) to include as a claim that is deficient failure to ‘‘comply with the restrictions on filings with personal confidential information under Rule 35 See supra note 13 (‘‘The greatest risk of DR staff misdirecting PCI occurs when DR staff serves pleadings on a party . . . at an incorrect/outdated address.’’). 36 See proposed FINRA Rule 12300(g)(2); see also Notice, 79 FR at 11493. 37 See Notice, 79 FR at 11493; see also supra note 19 (discussing FINRA’s Protecting PCI Notice). 38 See Notice, 79 FR at 11493. 39 See Notice, 79 FR at 11493. 40 See proposed FINRA Rule 12300(g)(3); see also Notice, 79 FR at 11493. 41 See Notice, 79 FR at 11493. 42 See id. (noting that pro se parties may not be familiar with the practice of redacting documents). 43 See proposed FINRA Rule 12307; see also Notice, 79 FR at 11493. E:\FR\FM\03JNN1.SGM 03JNN1 Federal Register / Vol. 79, No. 106 / Tuesday, June 3, 2014 / Notices 12300(g).’’ 44 The proposal would also amend Rule 12307(c) to clarify that if the submitting party corrects any deficiency within 30 days, the claim would be considered filed on the date the deficient claim was filed initially with FINRA.45 FINRA would also amend Rule 12307(c) to correct a typographical error by deleting the word ‘‘the’’ (indicated by brackets below) in the sentence that currently reads: ‘‘The Director will notify the party making the counterclaim, cross claim or third party claim of [the] any deficiencies in writing.’’ 46 III. Summary of Comments, FINRA’s Response, and Proposed Amendment No. 1 Overview As noted above, the Commission received six comment letters on the proposed rule change 47 and a response letter from FINRA.48 Five of the six commenters expressed support, in whole or in part, for FINRA’s proposal.49 Each of these five commenters, however, raised specific concerns about certain aspects of the proposed rule change as discussed in more detail below.50 The sixth commenter, although not expressing a general view of support for or opposition to the proposal, questioned what event triggers the 30-day deadline to correct a non-compliant document that is included in the proposed rule change.51 A. Deadline for Correcting NonCompliant Documents and Amendment No. 1 Under the proposed rule change, if FINRA finds a document to be deficient because a party did not comply with the redaction requirement, the filing party has 30 days to correct the submission.52 One commenter affirmatively supported the proposed 30-day cure period.53 Two other commenters, however, suggested amendments to FINRA’s proposal.54 One commenter suggested that FINRA should give parties an additional 15 days to submit compliant documents after the proposed 30-day period expired.55 Specifically, this commenter proposed FINRA Rule 12307(a). proposed FINRA Rule 12307(c). 46 See id. 47 See supra note 4. 48 See supra note 6. 49 See Caruso Letter; Georgia State Letter; PIABA Letter; St. John’s Letter; and Pace Letter. 50 See supra note 49. 51 See Aderant Letter 52 See proposed FINRA Rule 12307(c). 53 See PIABA Letter at 2. 54 See Aderant Letter and Georgia State Letter. 55 See Georgia State Letter. suggested that if a party does not resubmit a compliant document within the original 30-day cure period, FINRA should send the party a second notice granting an additional 15 days in which to comply.56 Another commenter requested that FINRA clarify what event triggers the 30-day deadline for a noncomplying party to correct a deficiency.57 This commenter stated that, as drafted, the proposed rule is ambiguous and could be read to begin either: 30 days from the date FINRA deems the filing improper, 30 days from the date of FINRA’s written notice of the deficiency, or 30 days from the date of the party’s receipt of the notice.58 In response to the comment suggesting that FINRA provide parties an additional 15 days to correct noncomplaint submissions, FINRA noted that its existing deficient claim Rules 12307(b) and 13307(b) provide a 30-day deadline to correct other claim deficiencies.59 FINRA also stated that it believes that the 30-day deadline for correcting any deficient claim, whether for non-compliance with redaction obligations or otherwise, should be consistent under FINRA’s rules.60 For this reason, FINRA believes that the proposed 30-day cure period is appropriate.61 In response to the comment recommending that FINRA clarify what event triggers the 30-day deadline to correct a deficiency, FINRA noted that its existing Deficient Claims Rules 12307(b) and 13307(b) provide that if the claimant corrects the deficiency ‘‘within 30 days from the time the claimant receives notice,’’ FINRA would consider the claim to be filed on the date the initial statement of claim was filed.62 FINRA also stated that it believes the deadline to submit compliant documents should be consistent under its rules.63 Therefore, FINRA proposed Amendment No. 1 to the proposed rule change to clarify that the triggering event for the deadline to submit compliant documents is 30 days ‘‘from the time a party receives notice’’ of non-compliance from the Director of FINRA arbitration.64 44 See sroberts on DSK4SPTVN1PROD with NOTICES 45 See VerDate Mar<15>2010 17:35 Jun 02, 2014 Jkt 232001 56 See id. Aderant Letter. 58 See id. at 1–2. 59 See FINRA Response Letter at 4. 60 See id. 61 See id. (‘‘FINRA staff believes that the deadline for all non-compliance should be . . . consistent, and that 30 days is sufficient.’’). 62 See id. 63 See id. 64 See id. at 4–6 (reflecting the text of FINRA’s Amendment No. 1 to the proposed rule). 57 See PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 32005 B. Exemptions From FINRA’s Proposed Redaction Requirements As noted above, the proposed rule change would include two exemptions: (1) For documents that parties exchange with each other (not with DR) or submit to the arbitrators at a hearing on the merits; 65 and (2) for cases administered under the Simplified Arbitration rules.66 Four commenters either raised concerns about or recommended changes to the proposed exemptions.67 One commenter suggested that the proposal should be more comprehensive.68 In particular, the commenter suggested that FINRA require parties to redact PCI from all documents submitted or exchanged in all stages, and in every type, of arbitration proceeding regardless of whether the documents are submitted to DR, another party, or an arbitrator.69 The same commenter reasoned that investors face the same potential harm regardless of the method of submission (e.g., electronically or on paper), the type of proceeding (including simplified arbitration), whether the submitting party is pro se or represented by counsel, or to whom the documents are provided.70 Similarly, another commenter suggested that FINRA not exempt from the redaction obligations documents submitted to DR by pro se parties.71 Specifically, this commenter stated that even if FINRA is concerned that many claimants in simplified arbitration are pro se parties who, in the absence of counsel, may have difficulty with the redaction process, ‘‘that concern is soundly outweighed by far greater concerns over identity theft.’’ 72 The commenter also suggested that instead of exempting pro se investors, FINRA should assist those pro se parties with the redaction process, if needed.73 Alternatively, this commenter stated that if indeed FINRA believes that pro se parties might have difficulty 65 See proposed FINRA Rule 12300(g)(2); see also Notice, 79 FR at 11492. 66 See proposed FINRA Rule 12300(g)(3); see also Notice, 79 FR at 11492. 67 See Georgia State Letter; PIABA Letter; St. John’s Letter; and Pace Letter. 68 See Georgia State Letter. 69 See id. 70 See id. 71 See Pace Letter. 72 Id. (stating that ‘‘[i]f anything, pro se investors need more protection from the possibility of identity theft, not less’’). 73 See id.; see also Georgia State Letter at 2–3 (recommending that FINRA inform parties about the redaction process by (1) ‘‘creating a guide outlining the process and offering tips for compliance’’ and (2) providing instructions, in both the Submission Agreement and the notices of noncompliance, on how to redact documents and the risks associated with non-compliance). E:\FR\FM\03JNN1.SGM 03JNN1 32006 Federal Register / Vol. 79, No. 106 / Tuesday, June 3, 2014 / Notices complying with the proposed redaction obligations, then the simplified arbitration exemption should be amended to exempt all pro se parties and not just all claims under the Simplified Arbitration rules. If FINRA decides to adopt an exception for pro se parties, the commenter stated that FINRA should explain to pro se parties the importance of protecting confidential information and strongly encourage them to redact PCI from the documents they file with FINRA.74 Two other commenters recommended that FINRA exempt all pro se parties from complying with the proposed redaction requirements, and not just those filing simplified arbitration claims, noting that pro se claims may be heard in both arbitration and simplified arbitration.75 One of these commenters also suggested that FINRA should not exempt represented parties in simplified arbitration as many claimants in simplified arbitration are represented by counsel.76 In its response, FINRA stated that the exemption for documents parties exchange with each other or submit to arbitrators at a hearing is appropriate because it ‘‘would reduce the burden of the redaction requirements on the parties and would not raise the risk of DR staff transmitting PCI.’’ 77 FINRA also noted that currently parties can agree to measures to help protect PCI in documents they share (e.g., parties can agree to use secure shredding facilities to dispose of documents used at a hearings).78 In addition, as a practical matter, FINRA does not receive copies of the documents parties exchange with each other during discovery, which would make policing that exchange more difficult.79 Moreover, FINRA explained that if it instructed arbitrators to reject documents with PCI at a hearing, the rejection could disrupt the hearing, resulting in significant delays in completing a case.80 FINRA also stated that given the current precautions in place it believes that, by adopting this exemption, ‘‘it is taking a balanced approach to protecting PCI and minimizing burden on parties.’’ 81 FINRA also believes that the exemption for cases administered under 75 See PIABA Letter and St. John’s Letter. St. John’s Letter. 77 See FINRA Response Letter at 2 (claiming that ‘‘[t]he number and size of documents produced during discovery or submitted at a hearing can be voluminous, and the burden of redaction can be onerous’’). 78 See id. at 2–3. 79 See id. at 3 n.6. 80 See id. at 3. 81 See id. 76 See sroberts on DSK4SPTVN1PROD with NOTICES C. Additional Redaction Requested by Certain Commenters Two commenters requested that FINRA amend the proposal to require the redaction of additional confidential 17:35 Jun 02, 2014 Jkt 232001 information.88 One commenter recommended that FINRA also require parties to redact the day and month of birth from documents filed with FINRA, noting that this would be consistent with the Federal Rules of Civil Procedure, Criminal Procedure, and Bankruptcy Procedure, and ‘‘should not place an unreasonable burden on the parties.’’ 89 The second commenter recommended that FINRA amend the proposal to require parties to redact the entire Social Security number and taxpayer identification number, stating that full redaction would provide the parties with more protection and would not be any more burdensome than partial redaction.90 This second commenter also noted that FINRA’s Discovery Guide already requires full redaction of these numbers for certain items set forth in the Document Production Lists.91 In response, FINRA stated that during the development of the proposed rule change, FINRA identified Social Security numbers, taxpayer identification numbers, and financial account numbers as the types of confidential information ‘‘most commonly found in arbitration documents’’ filed with DR and, as such, FINRA’s constituents raised concerns only about those numbers.92 Accordingly, FINRA declined to amend the proposal to require the redaction of an individual’s date of birth at this time. FINRA also stated, however, that if the Commission approves the proposal, FINRA would ‘‘consider whether it makes sense to propose additional redaction requirements after it evaluates the efficacy of the amendments.’’ 93 In addition, FINRA stated that it would update and reissue its Protecting PCI Notice 94 to include a reference to birth dates.95 In its response, FINRA also stated that it believes that the last four digits of an individual’s Social Security numbers, taxpayer identification numbers, and financial account numbers provide a useful way to identify parties and their accounts during an arbitration proceeding.96 In addition, FINRA 88 See Georgia State Letter and PIABA Letter. State Letter at 2. 90 See PIABA Letter. 91 See id.; see also Georgia State Letter (claiming that FINRA’s proposal ‘‘would take away some investor protections that are already in place, since the FINRA Discovery Guide requires certain redactions on documents parties exchange in the discovery process’’). 92 See FINRA Response Letter at 3. 93 Id. 94 See supra note 19. 95 See FINRA Response Letter at 3–4. 96 See id. at 4 (FINRA also explained that its Discovery Guide, which requires full redaction for 89 Georgia 82 See 74 Id. VerDate Mar<15>2010 the Simplified Arbitration rules is appropriate because, in part, ‘‘the risk of FINRA, the parties, or arbitrators misdirecting or losing documents with PCI is reduced’’ in simplified arbitration because, among other things, a single arbitrator resolves the dispute and hearings are not generally held in simplified arbitration.82 In addition, FINRA also stated that there is a large concentration of pro se parties in cases administered under the Simplified Arbitration rules and, as previously noted, those parties may have greater difficulty with the redaction process than parties represented by counsel.83 Finally, FINRA acknowledged that while not every simplified arbitration proceeding involves a pro se party and not every other type of arbitration proceeding involves represented parties, as a practical matter, ‘‘having a clear distinction between cases administered under the Simplified Arbitration rules and all other cases makes application of the exemption more straight forward for FINRA staff administering cases.’’ 84 For the reasons stated above, FINRA declined to amend the two exemptions from its proposed redaction requirements.85 FINRA also stated, however, that in order to respond to the concerns raised by commenters about the proposed exemption for cases administered under the Simplified Arbitration rules, FINRA would add a discussion to its Web page alerting pro se parties to the potential for identity theft associated with the disclosure of PCI and emphasizing the importance of excluding and/or redacting PCI from documents filed with FINRA.86 FINRA believes that this is a practical approach to alerting pro se parties to the importance of protecting PCI. FINRA also noted that its staff answers parties’ questions about the arbitration process on a regular basis, and that FINRA staff would explain the redaction process if asked by a party, pro se or otherwise.87 id. id.; see also Notice, 79 FR at 11493 (noting that pro se parties may not be familiar with the practice of redacting documents). 84 See FINRA Response Letter at 3. 85 See id. at 3. 86 See id. (explaining that FINRA’s Web site provides resources to pro se parties in arbitration and mediation such as a section on its Web site entitled ‘‘Resources for Investors Representing Themselves in FINRA Arbitrations and Mediations’’). 87 See id. 83 See PO 00000 Frm 00091 Fmt 4703 Sfmt 4703 E:\FR\FM\03JNN1.SGM 03JNN1 Federal Register / Vol. 79, No. 106 / Tuesday, June 3, 2014 / Notices explained that the Federal Rules of Civil Procedure allow parties to include the last four digits of the Social Security number and taxpayer identification number in filings made with the court.97 For these reasons, FINRA declined to amend the proposal to require the redaction of individuals’ entire Social Security numbers, taxpayer identification numbers, and financial account numbers.98 IV. Solicitation of Comments on Amendment No. 1 Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change, as amended by Amendment No. 1, is consistent with the Act. Comments may be submitted by any of the following methods: sroberts on DSK4SPTVN1PROD with NOTICES 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–2014–008 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–FINRA–2014–008. 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 certain items in the Document Production Lists, applies only to customer cases over $50,000, whereas the context of this proposed rule change is much broader). 97 See id. 98 See id. VerDate Mar<15>2010 17:35 Jun 02, 2014 Jkt 232001 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– 2014–008 and should be submitted on or before June 24, 2014. V. Discussion and Commission Findings After carefully considering the proposed rule change, as modified by Amendment No. 1, the comments submitted, and FINRA’s response to the comments, the Commission finds that the proposed rule change, as modified by Amendment No. 1, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities association.99 In particular, the Commission finds that the proposed rule change is consistent with Section 15A(b)(6) of the Act,100 which requires, among other things, that FINRA’s rules be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest. As discussed above, FINRA proposes to amend the Customer Code and the Industry Code to provide that any document that a party files with FINRA that contains an individual’s Social Security number, taxpayer identification number, or financial account number must be redacted to include only the last four digits of any of these numbers.101 Pursuant to the proposal, the proposed redaction requirements would not apply to documents (1) that parties exchange with each other or submit to the arbitrators at a hearing on the merits 102 or (2) related to cases administered under its Simplified Arbitration rules.103 The Commission believes that the proposed rule change would further the purposes of the Act as it is reasonably designed to protect investors and the public interest. In particular, the Commission agrees with FINRA’s assessment that prohibiting parties from 99 In approving the proposed rule change, the Commission has also considered the rule change’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 100 15 U.S.C. 78o–3(b)(6). 101 See proposed FINRA Rules 12300(g)(1) and 13300(g)(1); see also Notice, 79 FR at 11492. 102 See proposed FINRA Rules 12300(g)(2) and 13300(g)(2); see also Notice, 79 FR at 11492. 103 See proposed FINRA Rules 12300(g)(3) and 13300(g)(3); see also Notice, 79 FR at 11492. PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 32007 submitting documents with PCI would help ‘‘reduce the risk to forum users of identity theft.’’ 104 The Commission also agrees with FINRA’s assessment that given the processes FINRA already has in place,105 the proposed redaction requirements should enhance FINRA’s ongoing efforts to protect forum users’ PCI and that the proposed exemptions to those redaction requirements provide relief from the burden of redaction at minimal risk to the parties.106 The Commission also notes FINRA’s representations, made in response to various commenters, to: (1) Amend its Web site to alert pro se parties to the potential for identity theft associated with the disclosure of PCI and emphasize the importance of excluding and/or redacting PCI from documents filed with FINRA; 107 (2) explain the redaction process to any pro se party seeking guidance; 108 (3) consider whether to propose additional redaction requirements after it evaluates the efficacy of the amendments; 109 and (4) update and reissue its 2010 Protecting PCI Notice to include a reference to birth dates.110 In addition, the Commission also believes that the clarification provided in Amendment No. 1 is also consistent with the Act. In response to FINRA’s initial proposal, one commenter suggested that, as drafted, the proposed rule was ambiguous as to what event triggers the 30-day deadline for a noncomplying party to correct a deficiency.111 FINRA responded by partially amending its proposed rule to clarify that FINRA intends the deadline for correcting non-compliant documents to be 30 days from the time the party receives notice of non-compliance from FINRA.112 The Commission agrees with FINRA’s assessment that this trigger event is consistent with other trigger events used in its rules.113 Accordingly, 104 See FINRA Response Letter at 2; see also Notice, 79 FR at 11493. 105 See FINRA Response Letter at 2 (explaining that, as a general matter, FINRA has procedures in place to guide its staff on how to keep confidential information safe, maintains an Information Privacy and Protection Policy, and administers Information Privacy and Protection training to all FINRA staff annually. FINRA also noted that DR has its own procedures for protecting confidential information). 106 See FINRA Response Letter at 2; see also Notice, 79 FR at 11493. 107 See FINRA Response Letter at 3. 108 See id. 109 See id. 110 See id. at 3–4. 111 See Aderant Letter. 112 See FINRA Response Letter at 4–6 (reflecting the text of FINRA’s Amendment No. 1 to the proposed rule change). 113 See id. at 4 (stating that FINRA believes that the deadline for all non-compliance should be consistent under FINRA’s deficient claim rules). E:\FR\FM\03JNN1.SGM 03JNN1 32008 Federal Register / Vol. 79, No. 106 / Tuesday, June 3, 2014 / Notices the Commission believes that Amendment No. 1 is consistent with the Act. VI. Accelerated Approval The Commission finds good cause, pursuant to Section 19(b)(2) of the Act,114 for approving the proposed rule change, as amended by Amendment No. 1 thereto, prior to 30th day after publication of Amendment No. 1 in the Federal Register. As discussed above, Amendment No. 1 responds to one concern raised by a commenter by partially amending FINRA’s proposed rule change to clarify that FINRA intends the deadline for correcting noncompliant documents to be 30 days from the time the party receives notice of non-compliance from FINRA. The scope of the amendment adds clarity to one aspect of the proposal, and does not raise any novel regulatory concerns. Furthermore, accelerated approval would allow FINRA to institute the proposed rule change, as amended by Amendment No. 1, without delay. Accordingly, the Commission finds that good cause exists to approve the proposed rule change, as modified by Amendment No. 1, on an accelerated basis. VII. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,115 that the proposed rule change (SR–FINRA– 2014–008), as modified by Amendment No. 1, be and hereby is approved on an accelerated basis. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.116 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–12771 Filed 6–2–14; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–72267; File No. SR–CBOE– 2014–031] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Withdrawal of a Proposed Rule Change To Amend the Fees Schedule sroberts on DSK4SPTVN1PROD with NOTICES May 28, 2014. U.S.C. 78s(b)(2). 115 Id. 116 17 CFR 200.30–3(a)(12). VerDate Mar<15>2010 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.3 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–12770 Filed 6–2–14; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–72265; File No. SR– NYSEArca–2013–127] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Designation of a Longer Period for Commission Action on a Proposed Rule Change, as Modified by Amendments No. 1 and No. 2 Thereto, To List and Trade Shares of Nine Series of the IndexIQ Active ETF Trust Under NYSE Arca Equities Rule 8.600 May 28, 2014. On November 18, 2013, NYSE Arca, Inc. (‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’ or ‘‘Exchange Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to list and trade shares of the IQ Long/ Short Alpha ETF, IQ Bear U.S. Large Cap ETF, IQ Bear U.S. Small Cap ETF, IQ Bear International ETF, IQ Bear Emerging Markets ETF, IQ Bull U.S. Large Cap ETF, IQ Bull U.S. Small Cap ETF, IQ Bull International ETF and IQ Bull Emerging Markets ETF (collectively, ‘‘Funds’’). On November 26, 2013, the Exchange filed Amendment No. 1 to the proposed rule change.3 The proposed rule change, as modified by Amendment No. 1, was 1 15 On March 28, 2014, Chicago Board Options Exchange, Incorporated (the ‘‘Exchange’’ or ‘‘CBOE’’) filed with the Securities and Exchange Commission 114 15 (the ‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934,1 and Rule 19b– 4 thereunder,2 a proposed rule change to adopt a fee of $50 per month per login ID for off-floor PULSe Workstation users that elect to access a Complex Order Book Feed. On May 27, 2014, the Exchange withdrew the proposed rule change (SR–CBOE–2014–031). 17:35 Jun 02, 2014 Jkt 232001 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 Amendment No. 1 clarifies (i) how certain holdings will be valued for purposes of calculating a fund’s net asset value, and (ii) where investors will be able to obtain pricing information for certain underlying holdings. 2 17 PO 00000 Frm 00093 Fmt 4703 Sfmt 4703 published for comment in the Federal Register on December 4, 2013.4 On January 15, 2014, pursuant to Section 19(b)(2) of the Act,5 the Commission designated a longer period within which to either approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to disapprove the proposed rule change.6 On March 4, 2014, the Commission instituted proceedings to determine whether to approve or disapprove the proposed rule change.7 On April 11, 2014, the Exchange submitted Amendment No. 2 to the proposed rule change.8 The Commission received no comments on the proposed rule change. Section 19(b)(2) of the Act 9 provides that, after initiating disapproval proceedings, the Commission shall issue an order approving or disapproving the proposed rule change not later than 180 days after the date of publication of notice of filing of the proposed rule change. The Commission may extend the period for issuing an order approving or disapproving the proposed rule change, however, by not more than 60 days if the Commission determines that a longer period is appropriate and publishes the reasons for such determination. The proposed rule change was published for notice and comment in the Federal Register on December 4, 2013. June 2, 2014 is 180 days from that date, and August 1, 2014 is 240 days from that date. 4 Securities Exchange Act Release No. 70954 (November 27, 2013), 78 FR 72955 (‘‘Notice’’). 5 15 U.S.C. 78s(b)(2). 6 See Securities Exchange Act Release No. 71309, 79 FR 3657 (January 22, 2014). The Commission determined that it was appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change. Accordingly, the Commission designated March 4, 2014 as the date by which it should approve, disapprove, or institute proceedings to determine whether to disapprove the proposed rule change. 7 See Securities Exchange Act Release No. 71645, 79 FR 13349 (March 10, 2014). 8 In Amendment No. 2, the Exchange provided additional details describing how the contents of the portfolio composition of the Fund would be disclosed on a daily basis. Specifically, the Fund will disclose on the Fund’s Web site the following information regarding each portfolio holding, as applicable to the type of holding: ticker symbol, CUSIP number or other identifier, if any; a description of the holding (including the type of holding, such as the type of swap); the identity of the security, commodity, index or other asset or instrument underlying the holding, if any; for options, the option strike price; quantity held (as measured by, for example, par value, notional value or number of shares, contracts or units); maturity date, if any; coupon rate, if any; effective date, if any; market value of the holding; and the percentage weighting of the holding in the applicable Fund’s portfolio. 9 15 U.S.C. 78s(b)(2). E:\FR\FM\03JNN1.SGM 03JNN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 79, Number 106 (Tuesday, June 3, 2014)]
[Notices]
[Pages 32003-32008]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-12771]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72269; File No. SR-FINRA-2014-008]

Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing of Amendment No. 1 and Order Granting
Accelerated Approval of Proposed Rule Change, as Modified by Amendment
No. 1, Relating To Protecting Personal Confidential Information in
Documents Filed With FINRA Dispute Resolution

May 28, 2014.

I. Introduction

On February 13, 2014, the Financial Industry Regulatory Authority,
Inc. (``FINRA'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to amend FINRA's Code of Arbitration Procedure for
Customer Disputes (the ``Customer Code'') and the Code of Arbitration
Procedure for Industry Disputes (the ``Industry Code'') to require
parties to redact all but the last four digits of an individual's
Social Security number, taxpayer identification number, or financial
account number (collectively, ``personal confidential information'' or
``PCI'') from documents filed with FINRA Dispute Resolution (``DR'').
The proposed rule change was published for comment in the Federal
Register on February 28, 2014.\3\ The Commission received six comments
on the proposal.\4\
---------------------------------------------------------------------------

\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 71608 (Feb. 24,
2014), 79 FR 11491 (Feb. 28, 2014) (``Notice'').
\4\ See Letters from Steven B. Caruso, Esq., Maddox Hargett &
Caruso, P.C., dated March 4, 2014 (``Caruso Letter''); Nataliya
Nemtseva, Student Intern, Timothy Guilmette, Student Intern, Thomas
Abrahamson, Student Intern, and Nicole Iannarone, Assistant Clinical
Professor, Georgia State University College of Law's Investor
Advocacy Clinic, dated March 14, 2014 (``Georgia State Letter'');
Kara Cain, Esq., Aderant CompuLaw, dated March 19, 2014 (``Aderant
Letter''); Jason Doss, Public Investors Arbitration Bar Association,
dated March 20, 2014 (``PIABA Letter''); Ryan Jennings, Legal
Intern, Christian Corkery, Legal Intern, and Daniel Coleman, Legal
Intern, Securities Arbitration Clinic, St. Vincent DePaul Legal
Program, Inc., St. John's University School of Law, dated March 20,
2014 (``St. John's Letter''); and Jill I. Gross, James D. Hopkins
Professor of Law, Director, Investor Rights Clinic, Pace Law School,
dated March 24, 2014 (``Pace Letter'').
---------------------------------------------------------------------------

On April 10, 2014, FINRA granted the Commission an extension of
time to act on the proposal until May 29, 2014.\5\ On May 5, 2014,
FINRA responded to the comment letters \6\ and filed Amendment No. 1 to
the proposed rule change in response to a commenter's concern.\7\ The
Commission is publishing this notice and order to solicit comments on
Amendment No. 1 from interested persons, and to approve the proposed
rule change, as modified by Amendment No. 1, on an accelerated basis.
---------------------------------------------------------------------------

\5\ See Letter from Margo A. Hassan, Assistant Chief Counsel,
FINRA Dispute Resolution, Inc., to Lourdes Gonzalez, Assistant Chief
Counsel, Sales Practices, Division of Trading and Markets,
Securities and Exchange Commission, dated April 10, 2014.
\6\ See Letter from Margo A. Hassan, Assistant Chief Counsel,
FINRA Dispute Resolution, Inc., to Secretary, Securities and
Exchange Commission, dated May 5, 2014 (``FINRA Response Letter'').
\7\ See Aderant Letter.
---------------------------------------------------------------------------

II. Description of the Proposed Rule Change

Overview

FINRA filed the proposed rule change to amend the Customer Code and
the Industry Code to provide that any document that a party files with
DR that contains an individual's Social Security number, taxpayer
identification number, or financial account number must be redacted to
include only the last four digits of any of these numbers.\8\ The
proposed redaction requirements would apply only to documents filed
with DR and would not apply to documents that parties exchange with
each other or submit to the arbitrators at a hearing on the merits.\9\
In addition, the proposed redaction requirements would not apply to
cases administered under FINRA Rule 12800 of the Customer Code and
FINRA Rule 13800 of the Industry Code (collectively, the ``Simplified
Arbitration rules'').\10\
---------------------------------------------------------------------------

\8\ See proposed FINRA Rules 12300(g)(1) and 13300(g)(1); see
also Notice, 79 FR at 11492. The text of the proposed rule change is
available at the principal office of FINRA, on FINRA's Web site at
https://www.finra.org, and at the Commission's Public Reference Room.
\9\ See proposed FINRA Rules 12300(g)(2) and 13300(g)(2); see
also Notice, 79 FR at 11492.
\10\ See proposed FINRA Rules 12300(g)(3) and 13300(g)(3); see
also Notice, 79 FR at 11492. The Simplified Arbitration rules
generally apply to arbitrations involving $50,000 or less, exclusive
of interest and expenses.
---------------------------------------------------------------------------

Requiring Parties To Redact Specified PCI From Documents Filed With
FINRA

During an arbitration proceeding, parties file pleadings and other
supporting documents with DR that may contain individuals' PCI. FINRA
stated that, as a service to forum users, DR serves certain pleadings
on other parties to an arbitration.\11\ DR also provides arbitrators
with pleadings and attachments.\12\ FINRA believes that the greatest
risk of DR staff misdirecting PCI occurs when DR staff serves pleadings
on a party at an incorrect or outdated address (e.g., an associated
person of a member who has not updated his or her Central Registration
Depository record).\13\ In addition, FINRA stated that arbitrators
occasionally have misplaced parties' pleadings containing PCI.\14\
---------------------------------------------------------------------------

\11\ See Notice, 79 FR at 11492.
\12\ See id.
\13\ See id.
\14\ See id.
---------------------------------------------------------------------------

FINRA also stated that, since FINRA employees are regularly exposed
to PCI as they handle party documents, it has policies and procedures
in place to help guide staff on how to keep confidential information
safe.\15\ For example, FINRA maintains an Information Privacy and
Protection Policy, and administers Information Privacy and Protection
Training to all FINRA staff annually.\16\ In addition, DR has its own
procedures for protecting confidential information relating to, among
other matters, storage and disposal of case materials in a manner that
preserves the confidentiality of the information, and removal of PCI
that appears in awards

[[Page 32004]]

that will be published.\17\ In particular, DR procedures require
arbitrators to keep confidential all information obtained in connection
with arbitration and to participate in FINRA training programs on
information security.\18\
---------------------------------------------------------------------------

\15\ See Notice, 79 FR at 11492.
\16\ See id.
\17\ See id. at n.4 (stating that FINRA ``keeps all documents
and information in DR case files confidential except for arbitration
awards. FINRA publishes every award in the Arbitration Awards Online
Database on FINRA's Web site'').
\18\ See Notice, 79 FR at 11492.
---------------------------------------------------------------------------

In addition, FINRA has published guidance recommending that parties
to an arbitration and their counsel take steps to protect confidential
information.\19\ FINRA's Protecting PCI Notice states, among other
things, that parties and their counsel can safeguard confidential
information by redacting such information from pleadings, exhibits, and
other documents upon agreement of the parties.\20\ For example, parties
may agree not to use, or to redact, Social Security, account, or driver
license numbers and, where such data must be referenced, parties can
use only the last few digits of these numbers or similar
information.\21\
---------------------------------------------------------------------------

\19\ FINRA Notice to Parties, Protecting Personal Confidential
Information, available at https://www.finra.org/ArbitrationAndMediation/Arbitration/Rules/NoticestoArbitratorsParties/NoticestoParties/P123999 (``Protecting
PCI Notice''); see also id.
\20\ See Notice, 79 FR at 11492 (discussing FINRA's Protecting
PCI Notice).
\21\ See id.
---------------------------------------------------------------------------

FINRA believes that while these efforts have enhanced the security
of parties' confidential information, the risks associated with the
loss of PCI (e.g., identity theft) remain as long as parties continue
to file with DR pleadings and attachments containing PCI.\22\
Accordingly, FINRA is proposing to amend the Customer Code and the
Industry Code to require parties to redact specified PCI from documents
that parties file with DR. Specifically, FINRA is proposing to amend
Rule 12300 (Filing and Serving Documents) \23\ and Rule 12307
(Deficient Claims) \24\ of the Customer Code and Rule 1330 (Filing and
Serving Documents) \25\ and Rule 13307 (Deficient Claims) \26\ of the
Industry Code as described below.
---------------------------------------------------------------------------

\22\ See id.
\23\ See proposed FINRA Rule 12300(g)(1)-(3); see also Notice,
79 FR at 11492.
\24\ See proposed FINRA Rule 12307(a)-(c); see also Notice, 79
FR at 11492.
\25\ See proposed FINRA Rule 13300(g)(1)-(3); see also Notice,
79 FR at 11492.
\26\ See proposed FINRA Rule 13307(a)-(c); see also Notice, 79
FR at 11492.
---------------------------------------------------------------------------

Given that the proposed amendments to Rules 13300 and 13307 of the
Industry Code are identical to the proposed amendments to Rules 12300
and 12307 of the Customer Code, the description below only refers to
Rules 12300 and 12307 of the Customer Code. FINRA stated that its
rationale is the same for both sets of rules.\27\
---------------------------------------------------------------------------

\27\ See Notice, 79 FR at 11492.
---------------------------------------------------------------------------

Proposed Amendments to FINRA Rule 12300

FINRA is proposing to amend Rule 12300 to provide that any document
that a party files with DR that contains an individual's Social
Security number, taxpayer identification number, or financial account
number must be redacted to include only the last four digits of any of
these numbers.\28\ As proposed, the rule would specify that a party
shall not include the full numbers.\29\
---------------------------------------------------------------------------

\28\ See proposed FINRA Rule 12300(g)(1); see also Notice, 79 FR
at 11492.
\29\ See proposed FINRA Rule 12300(g)(1).
---------------------------------------------------------------------------

Under the proposed rule, if DR receives a claim, including
supporting documents, with a full Social Security, taxpayer
identification, or financial account number, it would deem the filing
deficient under Rule 12307 and request that the party refile the
document, without the PCI, within 30 days of receiving notice of non-
compliance from DR.\30\ In addition, if a party files a document with
PCI that is not covered by Rule 12307 (a document other than a claim,
such as a motion), FINRA would deem the filing to be improper and would
request that the party refile the document, with the required
redaction, within 30 days.\31\ If the party refiles the document within
the prescribed 30 days in compliance with the rule, FINRA would
consider the document to be filed on the date the party initially filed
it (i.e., the non-complying document) with DR.\32\
---------------------------------------------------------------------------

\30\ See proposed FINRA Rule 12307; see also Notice, 79 FR at
11492 n.7 (stating that ``[t]he term ``claim'' means an allegation
or request for relief and includes counterclaims, cross claims and
third party claims'').
\31\ See Notice, 79 FR at 11492.
\32\ See proposed FINRA Rule 12307(c); see also Notice, 79 FR at
11492.
---------------------------------------------------------------------------

Two Exemptions to the Proposed Amendments to FINRA Rule 12300

The proposed rule change would include two exemptions: (1) For
documents that parties exchange with each other (not with DR) or submit
to the arbitrators at a hearing on the merits; \33\ and (2) for cases
administered under the Simplified Arbitration rules.\34\
---------------------------------------------------------------------------

\33\ See proposed FINRA Rule 12300(g)(2); see also Notice, 79 FR
at 11492.
\34\ See proposed FINRA Rule 12300(g)(3); see also Notice, 79 FR
at 11492.
---------------------------------------------------------------------------

As explained above, FINRA believes that its greatest risk of
misdirecting PCI occurs when DR staff is transmitting pleadings and
documents to parties and arbitrators (e.g., serving pleadings).\35\
Therefore, FINRA is proposing to exempt documents that parties exchange
with each other or submit as exhibits during a hearing in order to
minimize the burden of the new requirements.\36\ FINRA stated, however,
that parties can always agree to measures that protect PCI in documents
they exchange with each other or submit or use at a hearing and DR
staff would not be at risk of transmitting PCI.\37\ Similarly, FINRA
stated that parties typically only bring hard copies of exhibits to
hearings, as opposed to transmitting them via email, and can safely
dispose of them by using secure shredding services.\38\ FINRA believes
that its proposal represents a balanced approach to protecting PCI
while minimizing the burden on parties.\39\
---------------------------------------------------------------------------

\35\ See supra note 13 (``The greatest risk of DR staff
misdirecting PCI occurs when DR staff serves pleadings on a party .
. . at an incorrect/outdated address.'').
\36\ See proposed FINRA Rule 12300(g)(2); see also Notice, 79 FR
at 11493.
\37\ See Notice, 79 FR at 11493; see also supra note 19
(discussing FINRA's Protecting PCI Notice).
\38\ See Notice, 79 FR at 11493.
\39\ See Notice, 79 FR at 11493.
---------------------------------------------------------------------------

The second exemption relates to claims administered under FINRA's
Simplified Arbitration rules.\40\ Generally, a single arbitrator
decides these claims based solely on the parties' written submissions.
FINRA noted that many claimants who initiate claims under its
Simplified Arbitration rules are not represented by counsel (i.e., pro
se parties).\41\ FINRA believes that the redaction requirements in the
proposed rule change may prove difficult for pro se parties.\42\
Therefore, FINRA is proposing to exempt from this proposed rule all
claims administered under the Simplified Arbitration rules.
---------------------------------------------------------------------------

\40\ See proposed FINRA Rule 12300(g)(3); see also Notice, 79 FR
at 11493.
\41\ See Notice, 79 FR at 11493.
\42\ See id. (noting that pro se parties may not be familiar
with the practice of redacting documents).
---------------------------------------------------------------------------

Proposed Amendments to FINRA Rule 12307

FINRA Rule 12307 states that the DR Director will not serve any
claim that is deficient, and identifies many reasons why a claim may be
deficient, including that the claims does not name all the parties.\43\
FINRA is proposing to make conforming changes to FINRA Rule 12307(a) to
include as a claim that is deficient failure to ``comply with the
restrictions on filings with personal confidential information under
Rule

[[Page 32005]]

12300(g).'' \44\ The proposal would also amend Rule 12307(c) to clarify
that if the submitting party corrects any deficiency within 30 days,
the claim would be considered filed on the date the deficient claim was
filed initially with FINRA.\45\ FINRA would also amend Rule 12307(c) to
correct a typographical error by deleting the word ``the'' (indicated
by brackets below) in the sentence that currently reads: ``The Director
will notify the party making the counterclaim, cross claim or third
party claim of [the] any deficiencies in writing.'' \46\
---------------------------------------------------------------------------

\43\ See proposed FINRA Rule 12307; see also Notice, 79 FR at
11493.
\44\ See proposed FINRA Rule 12307(a).
\45\ See proposed FINRA Rule 12307(c).
\46\ See id.
---------------------------------------------------------------------------

III. Summary of Comments, FINRA's Response, and Proposed Amendment No.
1

Overview

As noted above, the Commission received six comment letters on the
proposed rule change \47\ and a response letter from FINRA.\48\ Five of
the six commenters expressed support, in whole or in part, for FINRA's
proposal.\49\ Each of these five commenters, however, raised specific
concerns about certain aspects of the proposed rule change as discussed
in more detail below.\50\ The sixth commenter, although not expressing
a general view of support for or opposition to the proposal, questioned
what event triggers the 30-day deadline to correct a non-compliant
document that is included in the proposed rule change.\51\
---------------------------------------------------------------------------

\47\ See supra note 4.
\48\ See supra note 6.
\49\ See Caruso Letter; Georgia State Letter; PIABA Letter; St.
John's Letter; and Pace Letter.
\50\ See supra note 49.
\51\ See Aderant Letter
---------------------------------------------------------------------------

A. Deadline for Correcting Non-Compliant Documents and Amendment No. 1

Under the proposed rule change, if FINRA finds a document to be
deficient because a party did not comply with the redaction
requirement, the filing party has 30 days to correct the
submission.\52\ One commenter affirmatively supported the proposed 30-
day cure period.\53\ Two other commenters, however, suggested
amendments to FINRA's proposal.\54\ One commenter suggested that FINRA
should give parties an additional 15 days to submit compliant documents
after the proposed 30-day period expired.\55\ Specifically, this
commenter suggested that if a party does not resubmit a compliant
document within the original 30-day cure period, FINRA should send the
party a second notice granting an additional 15 days in which to
comply.\56\ Another commenter requested that FINRA clarify what event
triggers the 30-day deadline for a non-complying party to correct a
deficiency.\57\ This commenter stated that, as drafted, the proposed
rule is ambiguous and could be read to begin either: 30 days from the
date FINRA deems the filing improper, 30 days from the date of FINRA's
written notice of the deficiency, or 30 days from the date of the
party's receipt of the notice.\58\
---------------------------------------------------------------------------

\52\ See proposed FINRA Rule 12307(c).
\53\ See PIABA Letter at 2.
\54\ See Aderant Letter and Georgia State Letter.
\55\ See Georgia State Letter.
\56\ See id.
\57\ See Aderant Letter.
\58\ See id. at 1-2.
---------------------------------------------------------------------------

In response to the comment suggesting that FINRA provide parties an
additional 15 days to correct non-complaint submissions, FINRA noted
that its existing deficient claim Rules 12307(b) and 13307(b) provide a
30-day deadline to correct other claim deficiencies.\59\ FINRA also
stated that it believes that the 30-day deadline for correcting any
deficient claim, whether for non-compliance with redaction obligations
or otherwise, should be consistent under FINRA's rules.\60\ For this
reason, FINRA believes that the proposed 30-day cure period is
appropriate.\61\
---------------------------------------------------------------------------

\59\ See FINRA Response Letter at 4.
\60\ See id.
\61\ See id. (``FINRA staff believes that the deadline for all
non-compliance should be . . . consistent, and that 30 days is
sufficient.'').
---------------------------------------------------------------------------

In response to the comment recommending that FINRA clarify what
event triggers the 30-day deadline to correct a deficiency, FINRA noted
that its existing Deficient Claims Rules 12307(b) and 13307(b) provide
that if the claimant corrects the deficiency ``within 30 days from the
time the claimant receives notice,'' FINRA would consider the claim to
be filed on the date the initial statement of claim was filed.\62\
FINRA also stated that it believes the deadline to submit compliant
documents should be consistent under its rules.\63\ Therefore, FINRA
proposed Amendment No. 1 to the proposed rule change to clarify that
the triggering event for the deadline to submit compliant documents is
30 days ``from the time a party receives notice'' of non-compliance
from the Director of FINRA arbitration.\64\
---------------------------------------------------------------------------

\62\ See id.
\63\ See id.
\64\ See id. at 4-6 (reflecting the text of FINRA's Amendment
No. 1 to the proposed rule).
---------------------------------------------------------------------------

B. Exemptions From FINRA's Proposed Redaction Requirements

As noted above, the proposed rule change would include two
exemptions: (1) For documents that parties exchange with each other
(not with DR) or submit to the arbitrators at a hearing on the merits;
\65\ and (2) for cases administered under the Simplified Arbitration
rules.\66\ Four commenters either raised concerns about or recommended
changes to the proposed exemptions.\67\
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\65\ See proposed FINRA Rule 12300(g)(2); see also Notice, 79 FR
at 11492.
\66\ See proposed FINRA Rule 12300(g)(3); see also Notice, 79 FR
at 11492.
\67\ See Georgia State Letter; PIABA Letter; St. John's Letter;
and Pace Letter.
---------------------------------------------------------------------------

One commenter suggested that the proposal should be more
comprehensive.\68\ In particular, the commenter suggested that FINRA
require parties to redact PCI from all documents submitted or exchanged
in all stages, and in every type, of arbitration proceeding regardless
of whether the documents are submitted to DR, another party, or an
arbitrator.\69\ The same commenter reasoned that investors face the
same potential harm regardless of the method of submission (e.g.,
electronically or on paper), the type of proceeding (including
simplified arbitration), whether the submitting party is pro se or
represented by counsel, or to whom the documents are provided.\70\
---------------------------------------------------------------------------

\68\ See Georgia State Letter.
\69\ See id.
\70\ See id.
---------------------------------------------------------------------------

Similarly, another commenter suggested that FINRA not exempt from
the redaction obligations documents submitted to DR by pro se
parties.\71\ Specifically, this commenter stated that even if FINRA is
concerned that many claimants in simplified arbitration are pro se
parties who, in the absence of counsel, may have difficulty with the
redaction process, ``that concern is soundly outweighed by far greater
concerns over identity theft.'' \72\ The commenter also suggested that
instead of exempting pro se investors, FINRA should assist those pro se
parties with the redaction process, if needed.\73\ Alternatively, this
commenter stated that if indeed FINRA believes that pro se parties
might have difficulty

[[Page 32006]]

complying with the proposed redaction obligations, then the simplified
arbitration exemption should be amended to exempt all pro se parties
and not just all claims under the Simplified Arbitration rules. If
FINRA decides to adopt an exception for pro se parties, the commenter
stated that FINRA should explain to pro se parties the importance of
protecting confidential information and strongly encourage them to
redact PCI from the documents they file with FINRA.\74\
---------------------------------------------------------------------------

\71\ See Pace Letter.
\72\ Id. (stating that ``[i]f anything, pro se investors need
more protection from the possibility of identity theft, not less'').
\73\ See id.; see also Georgia State Letter at 2-3 (recommending
that FINRA inform parties about the redaction process by (1)
``creating a guide outlining the process and offering tips for
compliance'' and (2) providing instructions, in both the Submission
Agreement and the notices of non-compliance, on how to redact
documents and the risks associated with non-compliance).
\74\ Id.
---------------------------------------------------------------------------

Two other commenters recommended that FINRA exempt all pro se
parties from complying with the proposed redaction requirements, and
not just those filing simplified arbitration claims, noting that pro se
claims may be heard in both arbitration and simplified arbitration.\75\
One of these commenters also suggested that FINRA should not exempt
represented parties in simplified arbitration as many claimants in
simplified arbitration are represented by counsel.\76\
---------------------------------------------------------------------------

\75\ See PIABA Letter and St. John's Letter.
\76\ See St. John's Letter.
---------------------------------------------------------------------------

In its response, FINRA stated that the exemption for documents
parties exchange with each other or submit to arbitrators at a hearing
is appropriate because it ``would reduce the burden of the redaction
requirements on the parties and would not raise the risk of DR staff
transmitting PCI.'' \77\ FINRA also noted that currently parties can
agree to measures to help protect PCI in documents they share (e.g.,
parties can agree to use secure shredding facilities to dispose of
documents used at a hearings).\78\ In addition, as a practical matter,
FINRA does not receive copies of the documents parties exchange with
each other during discovery, which would make policing that exchange
more difficult.\79\ Moreover, FINRA explained that if it instructed
arbitrators to reject documents with PCI at a hearing, the rejection
could disrupt the hearing, resulting in significant delays in
completing a case.\80\ FINRA also stated that given the current
precautions in place it believes that, by adopting this exemption, ``it
is taking a balanced approach to protecting PCI and minimizing burden
on parties.'' \81\
---------------------------------------------------------------------------

\77\ See FINRA Response Letter at 2 (claiming that ``[t]he
number and size of documents produced during discovery or submitted
at a hearing can be voluminous, and the burden of redaction can be
onerous'').
\78\ See id. at 2-3.
\79\ See id. at 3 n.6.
\80\ See id. at 3.
\81\ See id.
---------------------------------------------------------------------------

FINRA also believes that the exemption for cases administered under
the Simplified Arbitration rules is appropriate because, in part, ``the
risk of FINRA, the parties, or arbitrators misdirecting or losing
documents with PCI is reduced'' in simplified arbitration because,
among other things, a single arbitrator resolves the dispute and
hearings are not generally held in simplified arbitration.\82\ In
addition, FINRA also stated that there is a large concentration of pro
se parties in cases administered under the Simplified Arbitration rules
and, as previously noted, those parties may have greater difficulty
with the redaction process than parties represented by counsel.\83\
Finally, FINRA acknowledged that while not every simplified arbitration
proceeding involves a pro se party and not every other type of
arbitration proceeding involves represented parties, as a practical
matter, ``having a clear distinction between cases administered under
the Simplified Arbitration rules and all other cases makes application
of the exemption more straight forward for FINRA staff administering
cases.'' \84\
---------------------------------------------------------------------------

\82\ See id.
\83\ See id.; see also Notice, 79 FR at 11493 (noting that pro
se parties may not be familiar with the practice of redacting
documents).
\84\ See FINRA Response Letter at 3.
---------------------------------------------------------------------------

For the reasons stated above, FINRA declined to amend the two
exemptions from its proposed redaction requirements.\85\ FINRA also
stated, however, that in order to respond to the concerns raised by
commenters about the proposed exemption for cases administered under
the Simplified Arbitration rules, FINRA would add a discussion to its
Web page alerting pro se parties to the potential for identity theft
associated with the disclosure of PCI and emphasizing the importance of
excluding and/or redacting PCI from documents filed with FINRA.\86\
FINRA believes that this is a practical approach to alerting pro se
parties to the importance of protecting PCI. FINRA also noted that its
staff answers parties' questions about the arbitration process on a
regular basis, and that FINRA staff would explain the redaction process
if asked by a party, pro se or otherwise.\87\
---------------------------------------------------------------------------

\85\ See id. at 3.
\86\ See id. (explaining that FINRA's Web site provides
resources to pro se parties in arbitration and mediation such as a
section on its Web site entitled ``Resources for Investors
Representing Themselves in FINRA Arbitrations and Mediations'').
\87\ See id.
---------------------------------------------------------------------------

C. Additional Redaction Requested by Certain Commenters

Two commenters requested that FINRA amend the proposal to require
the redaction of additional confidential information.\88\ One commenter
recommended that FINRA also require parties to redact the day and month
of birth from documents filed with FINRA, noting that this would be
consistent with the Federal Rules of Civil Procedure, Criminal
Procedure, and Bankruptcy Procedure, and ``should not place an
unreasonable burden on the parties.'' \89\ The second commenter
recommended that FINRA amend the proposal to require parties to redact
the entire Social Security number and taxpayer identification number,
stating that full redaction would provide the parties with more
protection and would not be any more burdensome than partial
redaction.\90\ This second commenter also noted that FINRA's Discovery
Guide already requires full redaction of these numbers for certain
items set forth in the Document Production Lists.\91\
---------------------------------------------------------------------------

\88\ See Georgia State Letter and PIABA Letter.
\89\ Georgia State Letter at 2.
\90\ See PIABA Letter.
\91\ See id.; see also Georgia State Letter (claiming that
FINRA's proposal ``would take away some investor protections that
are already in place, since the FINRA Discovery Guide requires
certain redactions on documents parties exchange in the discovery
process'').
---------------------------------------------------------------------------

In response, FINRA stated that during the development of the
proposed rule change, FINRA identified Social Security numbers,
taxpayer identification numbers, and financial account numbers as the
types of confidential information ``most commonly found in arbitration
documents'' filed with DR and, as such, FINRA's constituents raised
concerns only about those numbers.\92\ Accordingly, FINRA declined to
amend the proposal to require the redaction of an individual's date of
birth at this time. FINRA also stated, however, that if the Commission
approves the proposal, FINRA would ``consider whether it makes sense to
propose additional redaction requirements after it evaluates the
efficacy of the amendments.'' \93\ In addition, FINRA stated that it
would update and reissue its Protecting PCI Notice \94\ to include a
reference to birth dates.\95\
---------------------------------------------------------------------------

\92\ See FINRA Response Letter at 3.
\93\ Id.
\94\ See supra note 19.
\95\ See FINRA Response Letter at 3-4.
---------------------------------------------------------------------------

In its response, FINRA also stated that it believes that the last
four digits of an individual's Social Security numbers, taxpayer
identification numbers, and financial account numbers provide a useful
way to identify parties and their accounts during an arbitration
proceeding.\96\ In addition, FINRA

[[Page 32007]]

explained that the Federal Rules of Civil Procedure allow parties to
include the last four digits of the Social Security number and taxpayer
identification number in filings made with the court.\97\ For these
reasons, FINRA declined to amend the proposal to require the redaction
of individuals' entire Social Security numbers, taxpayer identification
numbers, and financial account numbers.\98\
---------------------------------------------------------------------------

\96\ See id. at 4 (FINRA also explained that its Discovery
Guide, which requires full redaction for certain items in the
Document Production Lists, applies only to customer cases over
$50,000, whereas the context of this proposed rule change is much
broader).
\97\ See id.
\98\ See id.
---------------------------------------------------------------------------

IV. Solicitation of Comments on Amendment No. 1

Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change, as amended by Amendment No. 1, 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-2014-008 on the subject line.

Paper Comments

Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-FINRA-2014-008. 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-2014-008 and should be
submitted on or before June 24, 2014.

V. Discussion and Commission Findings

After carefully considering the proposed rule change, as modified
by Amendment No. 1, the comments submitted, and FINRA's response to the
comments, the Commission finds that the proposed rule change, as
modified by Amendment No. 1, is consistent with the requirements of the
Act and the rules and regulations thereunder applicable to a national
securities association.\99\ In particular, the Commission finds that
the proposed rule change is consistent with Section 15A(b)(6) of the
Act,\100\ which requires, among other things, that FINRA's rules be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, and, in general, to
protect investors and the public interest.
---------------------------------------------------------------------------

\99\ In approving the proposed rule change, the Commission has
also considered the rule change's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\100\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

As discussed above, FINRA proposes to amend the Customer Code and
the Industry Code to provide that any document that a party files with
FINRA that contains an individual's Social Security number, taxpayer
identification number, or financial account number must be redacted to
include only the last four digits of any of these numbers.\101\
Pursuant to the proposal, the proposed redaction requirements would not
apply to documents (1) that parties exchange with each other or submit
to the arbitrators at a hearing on the merits \102\ or (2) related to
cases administered under its Simplified Arbitration rules.\103\
---------------------------------------------------------------------------

\101\ See proposed FINRA Rules 12300(g)(1) and 13300(g)(1); see
also Notice, 79 FR at 11492.
\102\ See proposed FINRA Rules 12300(g)(2) and 13300(g)(2); see
also Notice, 79 FR at 11492.
\103\ See proposed FINRA Rules 12300(g)(3) and 13300(g)(3); see
also Notice, 79 FR at 11492.
---------------------------------------------------------------------------

The Commission believes that the proposed rule change would further
the purposes of the Act as it is reasonably designed to protect
investors and the public interest. In particular, the Commission agrees
with FINRA's assessment that prohibiting parties from submitting
documents with PCI would help ``reduce the risk to forum users of
identity theft.'' \104\ The Commission also agrees with FINRA's
assessment that given the processes FINRA already has in place,\105\
the proposed redaction requirements should enhance FINRA's ongoing
efforts to protect forum users' PCI and that the proposed exemptions to
those redaction requirements provide relief from the burden of
redaction at minimal risk to the parties.\106\ The Commission also
notes FINRA's representations, made in response to various commenters,
to: (1) Amend its Web site to alert pro se parties to the potential for
identity theft associated with the disclosure of PCI and emphasize the
importance of excluding and/or redacting PCI from documents filed with
FINRA; \107\ (2) explain the redaction process to any pro se party
seeking guidance; \108\ (3) consider whether to propose additional
redaction requirements after it evaluates the efficacy of the
amendments; \109\ and (4) update and reissue its 2010 Protecting PCI
Notice to include a reference to birth dates.\110\
---------------------------------------------------------------------------

\104\ See FINRA Response Letter at 2; see also Notice, 79 FR at
11493.
\105\ See FINRA Response Letter at 2 (explaining that, as a
general matter, FINRA has procedures in place to guide its staff on
how to keep confidential information safe, maintains an Information
Privacy and Protection Policy, and administers Information Privacy
and Protection training to all FINRA staff annually. FINRA also
noted that DR has its own procedures for protecting confidential
information).
\106\ See FINRA Response Letter at 2; see also Notice, 79 FR at
11493.
\107\ See FINRA Response Letter at 3.
\108\ See id.
\109\ See id.
\110\ See id. at 3-4.
---------------------------------------------------------------------------

In addition, the Commission also believes that the clarification
provided in Amendment No. 1 is also consistent with the Act. In
response to FINRA's initial proposal, one commenter suggested that, as
drafted, the proposed rule was ambiguous as to what event triggers the
30-day deadline for a non-complying party to correct a deficiency.\111\
FINRA responded by partially amending its proposed rule to clarify that
FINRA intends the deadline for correcting non-compliant documents to be
30 days from the time the party receives notice of non-compliance from
FINRA.\112\ The Commission agrees with FINRA's assessment that this
trigger event is consistent with other trigger events used in its
rules.\113\ Accordingly,

[[Page 32008]]

the Commission believes that Amendment No. 1 is consistent with the
Act.
---------------------------------------------------------------------------

\111\ See Aderant Letter.
\112\ See FINRA Response Letter at 4-6 (reflecting the text of
FINRA's Amendment No. 1 to the proposed rule change).
\113\ See id. at 4 (stating that FINRA believes that the
deadline for all non-compliance should be consistent under FINRA's
deficient claim rules).
---------------------------------------------------------------------------

VI. Accelerated Approval

The Commission finds good cause, pursuant to Section 19(b)(2) of
the Act,\114\ for approving the proposed rule change, as amended by
Amendment No. 1 thereto, prior to 30th day after publication of
Amendment No. 1 in the Federal Register. As discussed above, Amendment
No. 1 responds to one concern raised by a commenter by partially
amending FINRA's proposed rule change to clarify that FINRA intends the
deadline for correcting non-compliant documents to be 30 days from the
time the party receives notice of non-compliance from FINRA. The scope
of the amendment adds clarity to one aspect of the proposal, and does
not raise any novel regulatory concerns. Furthermore, accelerated
approval would allow FINRA to institute the proposed rule change, as
amended by Amendment No. 1, without delay. Accordingly, the Commission
finds that good cause exists to approve the proposed rule change, as
modified by Amendment No. 1, on an accelerated basis.
---------------------------------------------------------------------------

\114\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

VII. Conclusion

It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\115\ that the proposed rule change (SR-FINRA-2014-008), as
modified by Amendment No. 1, be and hereby is approved on an
accelerated basis.
---------------------------------------------------------------------------

\115\ Id.
\116\ 17 CFR 200.30-3(a)(12).

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\116\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-12771 Filed 6-2-14; 8:45 am]
BILLING CODE 8011-01-P

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