Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Reporting Requirements of FINRA Rule 4530(a)(1)(H), 28740-28742 [2015-12030]

Download as PDF 28740 Federal Register / Vol. 80, No. 96 / Tuesday, May 19, 2015 / Notices designate if it finds such longer period to be appropriate and publishes its reasons for so finding or as to which the self-regulatory organization consents, the Commission shall either approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether the proposed rule change should be disapproved. The 45th day for this filing is May 21, 2015. The Commission is extending the 45day time period for Commission action on the proposed rule change. The Commission finds that it is 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, pursuant to Section 19(b)(2) of the Act 5 and for the reasons stated above, the Commission designates July 5, 2015, as the date by which the Commission should either approve or disapprove, or institute proceedings to determine whether to disapprove, the proposed rule change. 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. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.6 Robert W. Errett, Deputy Secretary. 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. [FR Doc. 2015–12031 Filed 5–18–15; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34- 74953; File No. SR–FINRA– 2015–011] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Reporting Requirements of FINRA Rule 4530(a)(1)(H) tkelley on DSK3SPTVN1PROD with NOTICES May 13, 2015. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on May 5, 2015, 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 1. Purpose FINRA Rule 4530 requires members to report to FINRA specified events, such as statutory disqualifications, and quarterly statistical and summary information regarding written customer complaints.4 FINRA uses the information for regulatory purposes to identify and initiate investigations of firms, offices and associated persons that may pose a risk. FINRA Rule 4530(a)(1)(H) requires a member to report whenever the member itself or an associated person of the member is subject to a ‘‘statutory CFR 240.19b–4(f)(6). specified events and customer complaint information must be electronically reported to FINRA via an application on FINRA’s Firm Gateway. U.S.C. 78s(b)(2). CFR 200.30–3(a)(31). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 4 The 6 17 16:53 May 18, 2015 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 3 17 5 15 VerDate Sep<11>2014 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change FINRA is proposing to amend FINRA Rule 4530 (Reporting Requirements) to provide an exception from the requirements of paragraph (a)(1)(H) of the rule for dealings with a member or associated person subject to statutory disqualification, if that member or associated person has been approved (or is otherwise permitted pursuant to FINRA rules and the federal securities laws) to be a member or to be associated with a member. 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. Jkt 235001 PO 00000 Frm 00162 Fmt 4703 Sfmt 4703 disqualification’’ as defined in the Act. The rule also requires a member to report whenever the member or an associated person of the member is involved in the sale of any financial instrument, the provision of any investment advice or the financing of any such activities with any person that is subject to a ‘‘statutory disqualification’’ as defined in the Act. The report must include the name of the person subject to the statutory disqualification and details concerning the disqualification. In addition, the report must be submitted to FINRA within 30 calendar days after the member knows or should have known of the event. The definition of ‘‘statutory disqualification’’ under the Act includes, among other events, findings by the SEC, Commodity Futures Trading Commission or a self-regulatory organization that a person: (1) Willfully violated the federal securities or commodities laws, or the Municipal Securities Rulemaking Board rules; (2) willfully aided, abetted, counseled, commanded, induced or procured such violations; or (3) failed to supervise another person who commits violations of such laws or rules.5 Thus, for instance, a member is currently required to report under FINRA Rule 4530(a)(1)(H) each time the member is involved in the sale of any financial instrument, such as participating in a selling syndicate or selling group, with a member that has been found to have willfully violated the federal securities laws. This would be true even if the member that is subject to the willful violation has been approved, or is otherwise permitted pursuant to FINRA rules and the federal securities laws, to continue in membership notwithstanding the disqualification.6 For the following reasons, FINRA believes that there is no regulatory value 5 See 15 U.S.C. 78c(a)(39). general, persons subject to a statutory disqualification would be required to obtain approval from FINRA to enter or remain in the securities industry. A firm seeking to continue in membership, notwithstanding the existence of such a disqualification, generally would be required to file an MC–400A application with FINRA. Similarly, a firm seeking to sponsor (i.e., employ or associate with) a disqualified person generally would be required to file an MC–400 application with FINRA. However, as described in Regulatory Notice 09–19 (April 2009), a firm would not be required to file an application for approval for specific disqualifying events. For instance, a firm that is subject to a statutory disqualification based on a willful violation of the federal securities laws would not be required to file an MC–400A application with FINRA if the sanction is no longer in effect. Such a firm would be permitted to continue in membership notwithstanding the disqualification and without having to file an application with FINRA for approval. 6 In E:\FR\FM\19MYN1.SGM 19MYN1 Federal Register / Vol. 80, No. 96 / Tuesday, May 19, 2015 / Notices in requiring a firm to report dealings with a disqualified member or associated person that has been approved or is otherwise permitted to be a member or associated with a member. First, FINRA is aware of the statutory disqualification status of such members and associated persons. Second, disqualified members and associated persons that have been approved to be members or associated with members typically are subject to special supervisory conditions, and FINRA periodically examines them to ensure compliance with the supervisory conditions and to monitor for other problems. Therefore, FINRA is proposing to amend Rule 4530(a)(1)(H) to exclude activities with a disqualified member or associated person that has been approved (or is otherwise permitted pursuant to FINRA rules and the federal securities laws) to be a member or associated with a member. FINRA has filed the proposed rule change for immediate effectiveness. The implementation date of the proposed rule change will be the date of filing. tkelley on DSK3SPTVN1PROD with NOTICES 2. Statutory Basis FINRA believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,7 which requires, among other things, that FINRA rules must be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest. FINRA believes that the proposed rule change will further these purposes by eliminating unnecessary reporting of information to FINRA and allowing FINRA to use its resources more efficiently. FINRA also believes that the proposed rule change will serve to reduce potential compliance burdens on firms without compromising the regulatory information available to FINRA. 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. The proposed rule change would reduce potential compliance burdens on firms by eliminating the requirement under FINRA Rule 4530(a)(1)(H) to report to FINRA each instance where a firm or an associated person is involved in a financial activity with a disqualified member or associated 7 15 U.S.C. 78o–3(b)(6). VerDate Sep<11>2014 16:53 May 18, 2015 Jkt 235001 person that has been approved or is otherwise permitted to be a member or associated with a member. 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, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 8 and Rule 19b–4(f)(6) thereunder.9 A proposed rule change filed pursuant to Rule 19b–4(f)(6) under the Act 10 normally does not become operative for 30 days after the date of its filing. However, Rule 19b–4(f)(6)(iii)11 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. FINRA requested the Commission to waive the 30-day operative delay so it can implement the proposed rule change immediately. FINRA stated that waiver of the operative delay would eliminate unnecessary reporting requirements relating to dealings with members or associated persons that are subject to a statutory disqualification where FINRA already has access to information regarding the status of such persons and they have either been approved or are otherwise permitted to be a member or associated with a member. The Commission believes the waiver of the operative delay is consistent with the protection of investors and the public interest. Therefore, the Commission hereby waives the operative delay and designates the proposal operative upon filing.12 8 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 provide the Commission with written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. FINRA has fulfilled this requirement. 10 17 CFR 240.19b–4(f)(6). 11 17 CFR 240.19b–4(f)(6)(iii). 12 For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule’s impact on 9 17 PO 00000 Frm 00163 Fmt 4703 Sfmt 4703 28741 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–2015–011 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–2015–011. 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 efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). E:\FR\FM\19MYN1.SGM 19MYN1 28742 Federal Register / Vol. 80, No. 96 / Tuesday, May 19, 2015 / Notices 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– 2015–011 and should be submitted on or before June 9, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.13 Robert W. Errett, Deputy Secretary. [FR Doc. 2015–12030 Filed 5–18–15; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–74950; File No. SR–EDGX– 2015–22] Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use of EDGX Exchange, Inc. May 13, 2015. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on April 30, 2015, EDGX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘EDGX’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II and III below, which Items have been prepared by the Exchange. The Exchange has designated the proposed rule change as one establishing or changing a member due, fee, or other charge imposed by the Exchange under Section 19(b)(3)(A)(ii) of the Act 3 and Rule 19b–4(f)(2) thereunder,4 which renders the proposed rule change effective upon filing with 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 The Exchange filed a to amend its fees and rebates applicable to Members 5 of tkelley on DSK3SPTVN1PROD with NOTICES 13 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(ii). 4 17 CFR 240.19b–4(f)(2). 5 The term ‘‘Member’’ is defined as ‘‘any registered broker or dealer, or any person associated with a registered broker or dealer [sic], that has been admitted to membership in the Exchange. A Member will have the status of a ‘‘member’’ of the 1 15 VerDate Sep<11>2014 16:53 May 18, 2015 Jkt 235001 the Exchange pursuant to EDGX Rule 15.1(a) and (c) (‘‘Fee Schedule’’) to: (i) decrease the rebate for orders yielding fee code BY, which routes to the BATS Y-Exchange, Inc. (‘‘BYX’’) and removes liquidity using routing strategies Destination Specific (‘‘DIRC’’), ROUC, or ROUE; 6 (ii) decrease the standard rate charged for removing liquidity from the Exchange from $0.0030 per share to $0.0029 per share; and (iii) make a few non-substantive clarifying changes. Changes to the fee schedule pursuant to this proposal are effective upon filing. The text of the proposed rule change is available at the Exchange’s Web site at www.batstrading.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. fee code BY to $0.00150 per share in securities priced at or above $1.00.7 The proposed change represents a pass through of the rate BATS Trading, Inc. (‘‘BATS Trading’’), the Exchange’s affiliated routing broker-dealer, is provided for routing orders to BYX that remove liquidity. The proposed change is in response to BYX’s May 2015 fee change where BYX decreased its rebate from $0.00160 per share to $0.00150 per share for orders in securities priced at or above $1.00.8 When BATS Trading routes to and removes liquidity from BYX, it will now receive a standard rebate of $0.00150 per share. BATS Trading will pass through the rebate provided by BYX to the Exchange and the Exchange, in turn, will pass through this rate to its Members. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant parts of such statements. Standard Removal Rate Change (A) Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to: (i) Decrease the rebate for orders yielding fee code BY, which routes to BYX and removes liquidity using routing strategies DIRC, ROUC, or ROUE; (ii) decrease the standard rate charged for removing liquidity from the Exchange from $0.0030 per share to $0.0029 per share; and (iii) make a few nonsubstantive clarifying changes. Fee Code BY In securities priced at or above $1.00, the Exchange currently provides a rebate of $0.00160 per share for Members’ orders that yield fee code BY, which routes to BYX and removes liquidity using routing strategies DIRC, ROUC, or ROUE. The Exchange proposes to amend its Fee Schedule to decrease the rebate for orders that yield Exchange as that term is defined in Section 3(a)(3) of the Act.’’ See Exchange Rule 1.5(n). 6 The DIRC, ROUC, and ROUE routing strategies are set forth in Exchange Rule 11.11(g). PO 00000 Frm 00164 Fmt 4703 Sfmt 4703 In securities priced at or above $1.00, the Exchange currently charges a fee or $0.0030 per share when removing liquidity. The Exchange now proposes to decrease the standard rate charged for removing liquidity from the Exchange from $0.0030 per share to $0.0029 per share in securities priced at or above $1.00.9 The standard removal rate applies unless a Member’s transaction is assigned a fee code other than a standard fee code. If a Member’s transaction is assigned a fee code other than a standard fee code, the rates listed in the Fee Codes table of the Fee Schedule will apply. The standard rate for removing liquidity from the Exchange will be $0.0029 per share and no lower fees will be available if a Member qualifies for a tier included in footnote 1 of the Fee Schedule. Therefore, the Exchange proposes to make a series of changes to the Fee Schedule as a result of decreasing the standard rate to $0.0029 per share. First, the Exchange proposes to amend footnote 1 to remove references to reduced fees for removing or routing liquidity from the Exchange. Under footnote 1, if a Member satisfies the respective tier’s criteria, they would be charged a reduced fee of: (i) $0.0029 per share under Mega Tier 1; (ii) $0.0029 per share under Mega Tier 2; or (iii) $$0.00295 per share under Mega 7 The Exchange does not propose to amend its fee for orders that yield fee code BY in securities priced below $1.00. 8 See BYX Exchange Fee Schedule Changes Effective May 1, 2015 available at https:// cdn.batstrading.com/resources/fee_schedule/2015/ BATS-BYX-Exchange-BZX-Exchange-EDGAExchange-and-EDGX-Exchange-Fee-ScheduleChanges-Effective-May-1-2015.pdf. 9 The Exchange does not propose to amend its standard rate for orders in securities priced below $1.00. E:\FR\FM\19MYN1.SGM 19MYN1

Agencies

[Federal Register Volume 80, Number 96 (Tuesday, May 19, 2015)]
[Notices]
[Pages 28740-28742]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-12030]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34- 74953; File No. SR-FINRA-2015-011]


Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change Relating to the Reporting Requirements of FINRA 
Rule 4530(a)(1)(H)

May 13, 2015.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on May 5, 2015, 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 FINRA Rule 4530 (Reporting 
Requirements) to provide an exception from the requirements of 
paragraph (a)(1)(H) of the rule for dealings with a member or 
associated person subject to statutory disqualification, if that member 
or associated person has been approved (or is otherwise permitted 
pursuant to FINRA rules and the federal securities laws) to be a member 
or to be associated with a member.
    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 4530 requires members to report to FINRA specified 
events, such as statutory disqualifications, and quarterly statistical 
and summary information regarding written customer complaints.\4\ FINRA 
uses the information for regulatory purposes to identify and initiate 
investigations of firms, offices and associated persons that may pose a 
risk.
---------------------------------------------------------------------------

    \4\ The specified events and customer complaint information must 
be electronically reported to FINRA via an application on FINRA's 
Firm Gateway.
---------------------------------------------------------------------------

    FINRA Rule 4530(a)(1)(H) requires a member to report whenever the 
member itself or an associated person of the member is subject to a 
``statutory disqualification'' as defined in the Act. The rule also 
requires a member to report whenever the member or an associated person 
of the member is involved in the sale of any financial instrument, the 
provision of any investment advice or the financing of any such 
activities with any person that is subject to a ``statutory 
disqualification'' as defined in the Act. The report must include the 
name of the person subject to the statutory disqualification and 
details concerning the disqualification. In addition, the report must 
be submitted to FINRA within 30 calendar days after the member knows or 
should have known of the event.
    The definition of ``statutory disqualification'' under the Act 
includes, among other events, findings by the SEC, Commodity Futures 
Trading Commission or a self-regulatory organization that a person: (1) 
Willfully violated the federal securities or commodities laws, or the 
Municipal Securities Rulemaking Board rules; (2) willfully aided, 
abetted, counseled, commanded, induced or procured such violations; or 
(3) failed to supervise another person who commits violations of such 
laws or rules.\5\ Thus, for instance, a member is currently required to 
report under FINRA Rule 4530(a)(1)(H) each time the member is involved 
in the sale of any financial instrument, such as participating in a 
selling syndicate or selling group, with a member that has been found 
to have willfully violated the federal securities laws. This would be 
true even if the member that is subject to the willful violation has 
been approved, or is otherwise permitted pursuant to FINRA rules and 
the federal securities laws, to continue in membership notwithstanding 
the disqualification.\6\
---------------------------------------------------------------------------

    \5\ See 15 U.S.C. 78c(a)(39).
    \6\ In general, persons subject to a statutory disqualification 
would be required to obtain approval from FINRA to enter or remain 
in the securities industry. A firm seeking to continue in 
membership, notwithstanding the existence of such a 
disqualification, generally would be required to file an MC-400A 
application with FINRA. Similarly, a firm seeking to sponsor (i.e., 
employ or associate with) a disqualified person generally would be 
required to file an MC-400 application with FINRA. However, as 
described in Regulatory Notice 09-19 (April 2009), a firm would not 
be required to file an application for approval for specific 
disqualifying events. For instance, a firm that is subject to a 
statutory disqualification based on a willful violation of the 
federal securities laws would not be required to file an MC-400A 
application with FINRA if the sanction is no longer in effect. Such 
a firm would be permitted to continue in membership notwithstanding 
the disqualification and without having to file an application with 
FINRA for approval.
---------------------------------------------------------------------------

    For the following reasons, FINRA believes that there is no 
regulatory value

[[Page 28741]]

in requiring a firm to report dealings with a disqualified member or 
associated person that has been approved or is otherwise permitted to 
be a member or associated with a member. First, FINRA is aware of the 
statutory disqualification status of such members and associated 
persons. Second, disqualified members and associated persons that have 
been approved to be members or associated with members typically are 
subject to special supervisory conditions, and FINRA periodically 
examines them to ensure compliance with the supervisory conditions and 
to monitor for other problems.
    Therefore, FINRA is proposing to amend Rule 4530(a)(1)(H) to 
exclude activities with a disqualified member or associated person that 
has been approved (or is otherwise permitted pursuant to FINRA rules 
and the federal securities laws) to be a member or associated with a 
member.
    FINRA has filed the proposed rule change for immediate 
effectiveness. The implementation date of the proposed rule change will 
be the date of filing.
 2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\7\ which requires, among 
other things, that FINRA rules must be designed to prevent fraudulent 
and manipulative acts and practices, to promote just and equitable 
principles of trade, and, in general, to protect investors and the 
public interest. FINRA believes that the proposed rule change will 
further these purposes by eliminating unnecessary reporting of 
information to FINRA and allowing FINRA to use its resources more 
efficiently. FINRA also believes that the proposed rule change will 
serve to reduce potential compliance burdens on firms without 
compromising the regulatory information available to FINRA.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    FINRA does not believe that the proposed rule change will result in 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.
    The proposed rule change would reduce potential compliance burdens 
on firms by eliminating the requirement under FINRA Rule 4530(a)(1)(H) 
to report to FINRA each instance where a firm or an associated person 
is involved in a financial activity with a disqualified member or 
associated person that has been approved or is otherwise permitted to 
be a member or associated with a member.

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, the proposed rule change has become effective 
pursuant to Section 19(b)(3)(A) of the Act \8\ and Rule 19b-4(f)(6) 
thereunder.\9\
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to provide the Commission 
with written notice of its intent to file the proposed rule change, 
along with a brief description and text of the proposed rule change, 
at least five business days prior to the date of filing of the 
proposed rule change, or such shorter time as designated by the 
Commission. FINRA has fulfilled this requirement.
---------------------------------------------------------------------------

    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \10\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii)\11\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. FINRA 
requested the Commission to waive the 30-day operative delay so it can 
implement the proposed rule change immediately. FINRA stated that 
waiver of the operative delay would eliminate unnecessary reporting 
requirements relating to dealings with members or associated persons 
that are subject to a statutory disqualification where FINRA already 
has access to information regarding the status of such persons and they 
have either been approved or are otherwise permitted to be a member or 
associated with a member. The Commission believes the waiver of the 
operative delay is consistent with the protection of investors and the 
public interest. Therefore, the Commission hereby waives the operative 
delay and designates the proposal operative upon filing.\12\
---------------------------------------------------------------------------

    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 17 CFR 240.19b-4(f)(6)(iii).
    \12\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    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-2015-011 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-2015-011. 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

[[Page 28742]]

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-2015-011 and should be submitted 
on or before June 9, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-12030 Filed 5-18-15; 8:45 am]
 BILLING CODE 8011-01-P
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