Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Statutory Disqualification Application Fees, 22107-22110 [2018-10039]

Download as PDF Federal Register / Vol. 83, No. 92 / Friday, May 11, 2018 / Notices sradovich on DSK3GMQ082PROD with NOTICES Rockville Pike, Room T–2B3, Rockville, Maryland 20852. The meetings will be open to public attendance with the exception of portions that may be closed to protect information that is proprietary pursuant to 5 U.S.C. 552b(c)(4). The agenda for the subject meeting shall be as follows: Monday, May 15, 2018—8:30 a.m. Until 12:00 p.m. The Subcommittee will have a briefing with NRC’s Office of Nuclear Regulatory Research on the Confirmatory Analysis supporting the Brunswick Steam Electric Plant Maximum Extended Load Line Limit Analysis Plus (MELLLA+) submittal. The Subcommittee will hear presentations by and hold discussions with the NRC staff, and other interested persons regarding this matter. The Subcommittee will gather information, analyze relevant issues and facts, and formulate proposed positions and actions, as appropriate, for deliberation by the Full Committee. Members of the public desiring to provide oral statements and/or written comments should notify the Designated Federal Official (DFO), Zena Abdullahi (Telephone 301–415–8716 or Email: Zena.Abdullahi@nrc.gov) five days prior to the meeting, if possible, so that appropriate arrangements can be made. Thirty-five hard copies of each presentation or handout should be provided to the DFO thirty minutes before the meeting. In addition, one electronic copy of each presentation should be emailed to the DFO one day before the meeting. If an electronic copy cannot be provided within this timeframe, presenters should provide the DFO with a CD containing each presentation at least thirty minutes before the meeting. Electronic recordings will be permitted only during those portions of the meeting that are open to the public. Detailed procedures for the conduct of and participation in ACRS meetings were published in the Federal Register on October 4, 2017 (82 FR 46312). Detailed meeting agendas and meeting transcripts are available on the NRC website at https://www.nrc.gov/readingrm/doc-collections/acrs. Information regarding topics to be discussed, changes to the agenda, whether the meeting has been canceled or rescheduled, and the time allotted to present oral statements can be obtained from the website cited above or by contacting the identified DFO. Moreover, in view of the possibility that the schedule for ACRS meetings may be adjusted by the Chairman as necessary to facilitate the conduct of the meeting, VerDate Sep<11>2014 19:21 May 10, 2018 Jkt 244001 persons planning to attend should check with these references if such rescheduling would result in a major inconvenience. If attending this meeting, please enter through the One White Flint North building, 11555 Rockville Pike, Rockville, Maryland. After registering with Security, please contact Mr. Theron Brown (Telephone 301–415– 6702 or 301–415–8066) to be escorted to the meeting room. Dated: May 7, 2018. Mark L. Banks, Chief, Technical Support Branch, Advisory Committee on Reactor Safeguards. [FR Doc. 2018–09999 Filed 5–10–18; 8:45 am] BILLING CODE 7590–01–P NUCLEAR REGULATORY COMMISSION Advisory Committee on Reactor Safeguards (ACRS) Meeting of the ACRS Subcommittee on Regulatory Policies & Practices; Notice of Meeting The ACRS Subcommittee on Regulatory Policies and Practices will hold a meeting on May 15, 2018, at 11545 Rockville Pike, Room T–2B1, Rockville, Maryland 20852. This meeting will be open to public attendance. The agenda for the subject meeting shall be as follows: Tuesday, May 15, 2018—8:30 a.m. Until 12:00 p.m. The Subcommittee will review selected sections (Geography & Demography (2.1); Nearby Industrial, Transportation and Military Facilities (2.2); Aircraft Hazards (3.5.1.6); and Accident Analysis (15.1)) of the Early Site Permit for Clinch River and will hear presentations by and hold discussions with the NRC staff and other interested persons regarding this matter. The Subcommittee will gather information, analyze relevant issues and facts, and formulate proposed positions and actions, as appropriate, for deliberation by the Full Committee. Members of the public desiring to provide oral statements and/or written comments should notify the Designated Federal Official (DFO), Quynh Nguyen (Telephone 301–415–5844 or Email Quynh.Nguyen@nrc.gov) five days prior to the meeting, if possible, so that appropriate arrangements can be made. Thirty-five hard copies of each presentation or handout should be provided to the DFO thirty minutes before the meeting. In addition, one electronic copy of each presentation should be emailed to the DFO one day before the meeting. If an electronic copy PO 00000 Frm 00111 Fmt 4703 Sfmt 4703 22107 cannot be provided within this timeframe, presenters should provide the DFO with a CD containing each presentation at least thirty minutes before the meeting. Electronic recordings will be permitted only during those portions of the meeting that are open to the public. Detailed procedures for the conduct of and participation in ACRS meetings were published in the Federal Register on October 4, 2017 (82 FR 46312). Detailed meeting agendas and meeting transcripts are available on the NRC website at https://www.nrc.gov/readingrm/doc-collections/acrs. Information regarding topics to be discussed, changes to the agenda, whether the meeting has been canceled or rescheduled, and the time allotted to present oral statements can be obtained from the website cited above or by contacting the identified DFO. Moreover, in view of the possibility that the schedule for ACRS meetings may be adjusted by the Chairman as necessary to facilitate the conduct of the meeting, persons planning to attend should check with these references if such rescheduling would result in a major inconvenience. If attending this meeting, please enter through the One White Flint North building, 11555 Rockville Pike, Rockville, Maryland 20852. After registering with Security, please contact Mr. Theron Brown (Telephone 301– 415–6702) to be escorted to the meeting room. Dated: May 7, 2018. Mark L. Banks, Chief, Technical Support Branch, Advisory Committee on Reactor Safeguards. [FR Doc. 2018–09998 Filed 5–10–18; 8:45 am] BILLING CODE 7590–01–P SECURITIES AND EXCHANGE COMMISSION [Release No 34–83181; File No. SR–FINRA– 2018–018] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Statutory Disqualification Application Fees May 7, 2018. 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 April 30, 2018, Financial Industry Regulatory 1 15 2 17 U.S.C. 78s(b)(1). CFR 240.19b–4. E:\FR\FM\11MYN1.SGM 11MYN1 22108 Federal Register / Vol. 83, No. 92 / Friday, May 11, 2018 / Notices Authority, Inc. (‘‘FINRA’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by FINRA. FINRA has designated the proposed rule change as ‘‘establishing or changing a due, fee or other charge’’ under Section 19(b)(3)(A)(ii) of the Act 3 and Rule 19b– 4(f)(2) thereunder,4 which renders the proposal effective upon receipt of this filing by the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change FINRA is proposing to amend Section 12 to Schedule A of the FINRA ByLaws, regarding statutory disqualification application fees. The text of the proposed rule change is available on FINRA’s website 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 sradovich on DSK3GMQ082PROD with NOTICES 1. Purpose FINRA is proposing to increase the fee to file an application for an eligibility proceeding under the Rule 9520 Series (Eligibility Proceedings) for the first time since 1994.5 Pursuant to Article III, Section 3 of the FINRA By-Laws, a member is ineligible for continuance in membership where the member associates with a person who is subject 3 15 U.S.C. 78s(b)(3)(A)(ii). CFR 240.19b–4(f)(2). 5 See Securities Exchange Act Release No. 34897 (October 26, 1994), 59 FR 54648 (November 1, 1994) (Order Approving File No. SR–NASD–94–57) (increasing the SD Application Fee from $1,000 to $1,500). 4 17 VerDate Sep<11>2014 19:21 May 10, 2018 Jkt 244001 to a ‘‘statutory disqualification’’ (‘‘SD’’) 6 or the member itself is subject to an SD. The Rule 9520 Series sets forth procedures for a person to become or remain associated with a member, notwithstanding the existence of an SD, and for a current member or person associated with a member to obtain relief from the eligibility or qualification requirements of the FINRA By-Laws and rules. A member or person associated with a member may request relief from the eligibility requirements by filing an application with FINRA (‘‘SD Application’’).7 Currently, Section 12 to Schedule A of the By-Laws (Application and Annual Fee for Member Firms with Statutorily Disqualified Individuals) provides that a member must pay to FINRA a fee of $1,500 to file an SD Application (‘‘SD Application Fee’’) when it seeks to employ or continue to employ as an associated person any individual who is subject to an SD (Form MC–400). In contrast, FINRA currently does not require a member to pay a fee to file an SD Application where the member itself is subject to an SD (Form MC–400A). Since 1994, FINRA has not made any adjustments to the SD Application Fee. SD Applications take significant staff time and resources to research and review, as each application is assessed on a case-by-case basis. While the number of SD Applications has remained relatively constant and the SD Application Fee has remained unchanged, the complexity of the applications and the time needed to investigate them through, for example, public records searches, discussions with federal and state regulators, and contacts with state and federal courts, has increased. Moreover, even in 1994, the SD Application Fee of $1,500 was insufficient to cover the average costs associated with the processing and review of SD Applications.8 In order to offset more of the costs associated with FINRA staff’s thorough assessment of SD Applications, the proposed rule change would amend Section 12 to Schedule A of the FINRA By-Laws by increasing from $1,500 to $5,000 the SD Application Fee for filing a Form MC–400. In addition, the 6 Article III, Section 4 of the FINRA By-Laws incorporates the definition of ‘‘statutory disqualification’’ under Section 3(a)(39) of the Act. 7 Rule 9520 Series sets forth eligibility proceedings under which FINRA may allow a member, person associated with a member, potential member, or potential associated person subject to an SD to enter or remain in the securities industry. 8 See supra note 5, 59 FR at 54649 (noting that the average costs associated with the processing and review of SD Applications was more than $1,500 in 1994). PO 00000 Frm 00112 Fmt 4703 Sfmt 4703 proposed rule change would impose, for the first time, an SD Application Fee of $5,000 on SD Applications for filing a Form MC–400A where the member itself is the subject of the SD. Specifically, Section 12 to Schedule A of the FINRA By-Laws would be revised to require any member firm, or applicant for membership under NASD Rule 1013 that is subject to a disqualification as set forth in Article III, Section 4 of the By-Laws of the Corporation that seeks to enter, or be continued in, membership to pay FINRA a fee of $5,000. FINRA has filed the proposed rule change for immediate effectiveness. The implementation date will be May 30, 2018. 2. Statutory Basis FINRA believes that the proposed rule change is consistent with the provisions of Section 15A(b)(5) of the Act,9 which requires, among other things, that FINRA rules provide for the equitable allocation of reasonable dues, fees and other charges among members and issuers and other persons using any facility or system that FINRA operates or controls. FINRA believes that the proposed rule change more equitably allocates among member firms the costs incurred for time and resources needed to thoroughly review and assess SD Applications. B. Self-Regulatory Organization’s Statement on Burden on Competition FINRA does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. FINRA has undertaken an economic impact assessment, as set forth below, to analyze the regulatory need for the proposed rulemaking and its potential economic impacts, including anticipated costs and benefits. 1. Economic Impact Assessment a. Regulatory Need As discussed above, SD Applications take significant FINRA staff time and resources to research and review; due to the unique facts and circumstances of each SD matter, each application is assessed on a case-by-case basis. The current SD Application Fee for Form MC–400 applications is insufficient to cover the costs associated with the review of these applications. Further, FINRA currently does not require a member firm to pay a fee for the review of Form MC–400A applications, but FINRA still must commit resources to 9 15 U.S.C. 78o–3(b)(5). E:\FR\FM\11MYN1.SGM 11MYN1 Federal Register / Vol. 83, No. 92 / Friday, May 11, 2018 / Notices review these applications. As a result, the current SD Application Fee is even less sufficient to cover the current costs associated with the staff’s assessment of all SD Applications, requiring a significant portion of costs to conduct these assessments to be borne indirectly by non-SD applicant member firms. The proposed rule change serves as an economic transfer of some of the costs associated with the review from unrelated parties to the immediate parties seeking the relief. b. Economic Baseline The economic baseline used to evaluate the impact of the proposed amendments is the current regulatory framework. This baseline serves as the primary point of comparison for assessing the economic impacts, including the incremental benefits and costs of the proposed rule change. FINRA reviewed the SD Applications that were filed during 2013–2016 (‘‘review period’’). Based on this review, FINRA estimates that there were 167 SD Applications filed by 135 member firms during the review period. Of the 167 SD Applications, FINRA identified 122 Form MC–400 applications and 45 Form MC–400A applications.10 FINRA further estimates that approximately 50% of these applications were filed by small firms, 17% by mid-sized firms and 33% by large firms.11 sradovich on DSK3GMQ082PROD with NOTICES c. Economic Impacts FINRA examined the time required of its staff to review all SD Applications filed during the review period and the reviewing staff’s compensation associated with the review of these SD Applications. Based on that analysis, FINRA determined that the current SD Application Fee of $1,500 for Form MC– 400 applications is insufficient to cover the costs associated with FINRA’s review of such applications and even 10 Approximately 84% of the filing member firms submitted one SD Application, whereas the remaining 16% of the filing member firms submitted two or more SD Applications during the review period. Further, the total number of SD Applications for the review period excludes 52 MC–400A applications filed in 2015 and 12 in 2016 in connection with the SEC’s Municipalities Continuing Disclosure Cooperation (MCDC) Initiative. Applications filed in connection with the MCDC Initiative are excluded from the calculation for the review period because they were the result of an industry-wide settlement and, as such, would disproportionately impact the review numbers outside the normal course. See https://www.sec.gov/ divisions/enforce/municipalities-continuingdisclosure-cooperation-initiative.shtml. 11 Based on FINRA By-Laws, Article I (Definitions), member firms with 150 or fewer registered persons are classified as small, member firms with 151–499 registered persons are classified as mid-size, and member firms with 500 or more registered persons are classified as large. VerDate Sep<11>2014 19:21 May 10, 2018 Jkt 244001 less sufficient to cover the costs associated with FINRA’s review of all SD Applications. The impact of this proposal would be to help shift more of the costs associated with reviewing SD Applications to the member firms that file Form MC–400 or Form MC–400A applications. As noted above, FINRA identified 122 Form MC– 400 and 45 Form MC–400A applications during the review period. Based on the proposed increase in the SD Application Fee for both Form MC–400 and Form MC–400A applications to $5,000, FINRA estimates that the total cost to all SD applicants would increase by $163,000 on average each year, if applications remain at their historical levels. For the set of member firms that submitted SD Applications during the review period, the proposed fee increase would have led to an annual increased cost of $3,500–$13,500 per firm, with a median increased cost of $3,500 per member firm.12 Shifting more of the burden of the costs associated with the review of SD Applications to the SD applicants also may affect their behavior. For instance, increasing the SD Application Fee may dissuade some member firms from seeking to employ or continuing to employ statutorily disqualified individuals. The increased fees also may cause some member firms to be more selective in instances where they might decide to employ such individuals. In general, some member firms that today may submit an SD Application at little or no cost, may determine that it is no longer in their best interest to do so. These impacts would likely be higher for smaller firms, cash constrained firms, and firms that anticipate that the likelihood of the application being accepted is low ex ante. Any reduction in the number of SD Applications would lead to less FINRA staff time and resources spent on the review of SD Applications, decreasing the costs associated with the review of such applications and further reducing the aggregate economic transfer to SD applicants. 12 The incremental costs are calculated on an annual, per firm basis. For each member firm submitting a Form MC–400 or Form MC–400A application, FINRA assigned an incremental cost of $3,500 for each Form MC–400 application filed and $5,000 for each Form MC–400A application filed in that year. The range represents the total aggregate incremental cost per submitting firm, per year. Thus, $3,500 represents the cost of a member firm that submitted only one Form MC–400 in a given year and $13,500 reflects the cost of a member firm that submitted two Form MC–400A applications and one Form MC–400 application in that year. PO 00000 Frm 00113 Fmt 4703 Sfmt 4703 22109 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 The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 13 and paragraph (f)(2) of Rule 19b–4 thereunder.14 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–2018–018 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–2018–018. 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 website (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 13 15 14 17 E:\FR\FM\11MYN1.SGM U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). 11MYN1 22110 Federal Register / Vol. 83, No. 92 / Friday, May 11, 2018 / Notices 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 website 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 filing also will be available for inspection and copying at the principal office of FINRA. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–FINRA–2018–018 and should be submitted on or before June 1, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.15 Eduardo Aleman, Assistant Secretary. [FR Doc. 2018–10039 Filed 5–10–18; 8:45 am] BILLING CODE 8011–01–P SMALL BUSINESS ADMINISTRATION [Disaster Declaration #15512 and #15513; Indiana Disaster Number IN–00062] Presidential Declaration of a Major Disaster for the State of Indiana U.S. Small Business Administration. ACTION: Notice. AGENCY: This is a Notice of the Presidential declaration of a major disaster for the State of Indiana (FEMA– 4363–DR), dated 05/05/2018. Incident: Severe Storms and Flooding. Incident Period: 02/14/2018 through 03/04/2018. DATES: Issued on 05/05/2018. Physical Loan Application Deadline Date: 07/05/2018. Economic Injury (EIDL) Loan Application Deadline Date: 02/05/2019. ADDRESS: Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street SW, Suite 6050, Washington, DC 20416, (202) 205–6734. sradovich on DSK3GMQ082PROD with NOTICES SUMMARY: 15 17 19:21 May 10, 2018 Jkt 244001 1.813 7.160 For Physical Damage: Homeowners with Credit Available Elsewhere ...................... Homeowners without Credit Available Elsewhere .............. Businesses with Credit Available Elsewhere ...................... Businesses without Credit Available Elsewhere .............. Non-Profit Organizations with Credit Available Elsewhere ... Non-Profit Organizations without Credit Available Elsewhere ..................................... For Economic Injury: Businesses & Small Agricultural Cooperatives without Credit Available Elsewhere .............. Non-Profit Organizations without Credit Available Elsewhere ..................................... Purpose 3.625 The purpose of the meeting is to discuss the following issues pertaining to the SBDC Program: 2.500 • SBA Update • Annual Meetings 2.500 • Board Assignments • Member Roundtable 3.580 James Rivera, Associate Administrator for Disaster Assistance. [FR Doc. 2018–10031 Filed 5–10–18; 8:45 am] BILLING CODE 8025–01–P SMALL BUSINESS ADMINISTRATION National Small Business Development Centers Advisory Board; Meeting Small Business Administration. Fmt 4703 Sfmt 4703 John Woodard, White House Liaison. [FR Doc. 2018–10072 Filed 5–10–18; 8:45 am] 2.500 (Catalog of Federal Domestic Assistance Number 59008) Frm 00114 SUMMARY: 3.580 The number assigned to this disaster for physical damage is 155126 and for economic injury is 155130. PO 00000 Notice of open Federal Advisory Committee meeting. ACTION: The SBA is issuing this notice to announce the location, date, time and agenda for the May 2018 meeting of the Federal Advisory Committee for the Small Business Development Centers Program. The meeting will be open to the public; however, advance notice of attendance is required. DATES: Tuesday, May 15, 2018 1:00 p.m. EST—Teleconference. ADDRESSES: The Tuesday, May 15, 2018 meeting will be held via conference call. FOR FURTHER INFORMATION CONTACT: Anne Reim, Office of Small Business Development Centers, U.S. Small Business Administration, 409 Third Street SW, Washington, DC 20416; anne.reim@sba.gov; 202–205–9565. If anyone wishes to be a listening participant or would like to request accommodations, please contact Anne Reim at the information above. SUPPLEMENTARY INFORMATION: Pursuant to section 10(a) of the Federal Advisory Committee Act (5 U.S.C. Appendix 2), the SBA announces the meetings of the National SBDC Advisory Board. This Board provides advice and counsel to the SBA Administrator and Associate Administrator for Small Business Development Centers. Percent AGENCY: CFR 200.30–3(a)(12). VerDate Sep<11>2014 Notice is hereby given that as a result of the President’s major disaster declaration on 05/05/2018, applications for disaster loans may be filed at the address listed above or other locally announced locations. The following areas have been determined to be adversely affected by the disaster: Primary Counties (Physical Damage and Economic Injury Loans): Carroll, Clark, Elkhart, Floyd, Harrison, Jefferson, Lake, Marshall, St Joseph Contiguous Counties (Economic Injury Loans Only): Indiana: Cass, Clinton, Crawford, Fulton, Howard, Jasper, Jennings, Kosciusko, La Porte, Lagrange, Newton, Noble, Porter, Pulaski, Ripley, Scott, Starke, Switzerland, Tippecanoe, Washington, White Illinois: Cook, Kankakee, Will Kentucky: Carroll, Hardin, Jefferson, Meade, Oldham, Trimble Michigan: Berrien, Cass, Saint Joseph The Interest Rates are: SUPPLEMENTARY INFORMATION: BILLING CODE P SMALL BUSINESS ADMINISTRATION [Disaster Declaration #15514 and #15515; Indiana Disaster Number IN–00063] Presidential Declaration of a Major Disaster for Public Assistance Only for the State of Indiana U.S. Small Business Administration. ACTION: Notice. AGENCY: This is a Notice of the Presidential declaration of a major disaster for Public Assistance Only for the State of Indiana (FEMA–4363–DR), dated 05/05/2018. Incident: Severe Storms and Flooding. SUMMARY: E:\FR\FM\11MYN1.SGM 11MYN1

Agencies

[Federal Register Volume 83, Number 92 (Friday, May 11, 2018)]
[Notices]
[Pages 22107-22110]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-10039]


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SECURITIES AND EXCHANGE COMMISSION

[Release No 34-83181; File No. SR-FINRA-2018-018]


Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change Relating to Statutory Disqualification Application 
Fees

May 7, 2018.
    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 April 30, 2018, Financial Industry Regulatory

[[Page 22108]]

Authority, Inc. (``FINRA'') filed with the Securities and Exchange 
Commission (``SEC'' or ``Commission'') the proposed rule change as 
described in Items I, II, and III below, which Items have been prepared 
by FINRA. FINRA has designated the proposed rule change as 
``establishing or changing a due, fee or other charge'' under Section 
19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ 
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.
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    \1\ 15 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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to amend Section 12 to Schedule A of the FINRA 
By-Laws, regarding statutory disqualification application fees.
    The text of the proposed rule change is available on FINRA's 
website 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 is proposing to increase the fee to file an application for 
an eligibility proceeding under the Rule 9520 Series (Eligibility 
Proceedings) for the first time since 1994.\5\ Pursuant to Article III, 
Section 3 of the FINRA By-Laws, a member is ineligible for continuance 
in membership where the member associates with a person who is subject 
to a ``statutory disqualification'' (``SD'') \6\ or the member itself 
is subject to an SD. The Rule 9520 Series sets forth procedures for a 
person to become or remain associated with a member, notwithstanding 
the existence of an SD, and for a current member or person associated 
with a member to obtain relief from the eligibility or qualification 
requirements of the FINRA By-Laws and rules. A member or person 
associated with a member may request relief from the eligibility 
requirements by filing an application with FINRA (``SD 
Application'').\7\
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    \5\ See Securities Exchange Act Release No. 34897 (October 26, 
1994), 59 FR 54648 (November 1, 1994) (Order Approving File No. SR-
NASD-94-57) (increasing the SD Application Fee from $1,000 to 
$1,500).
    \6\ Article III, Section 4 of the FINRA By-Laws incorporates the 
definition of ``statutory disqualification'' under Section 3(a)(39) 
of the Act.
    \7\ Rule 9520 Series sets forth eligibility proceedings under 
which FINRA may allow a member, person associated with a member, 
potential member, or potential associated person subject to an SD to 
enter or remain in the securities industry.
---------------------------------------------------------------------------

    Currently, Section 12 to Schedule A of the By-Laws (Application and 
Annual Fee for Member Firms with Statutorily Disqualified Individuals) 
provides that a member must pay to FINRA a fee of $1,500 to file an SD 
Application (``SD Application Fee'') when it seeks to employ or 
continue to employ as an associated person any individual who is 
subject to an SD (Form MC-400). In contrast, FINRA currently does not 
require a member to pay a fee to file an SD Application where the 
member itself is subject to an SD (Form MC-400A). Since 1994, FINRA has 
not made any adjustments to the SD Application Fee.
    SD Applications take significant staff time and resources to 
research and review, as each application is assessed on a case-by-case 
basis. While the number of SD Applications has remained relatively 
constant and the SD Application Fee has remained unchanged, the 
complexity of the applications and the time needed to investigate them 
through, for example, public records searches, discussions with federal 
and state regulators, and contacts with state and federal courts, has 
increased. Moreover, even in 1994, the SD Application Fee of $1,500 was 
insufficient to cover the average costs associated with the processing 
and review of SD Applications.\8\
---------------------------------------------------------------------------

    \8\ See supra note 5, 59 FR at 54649 (noting that the average 
costs associated with the processing and review of SD Applications 
was more than $1,500 in 1994).
---------------------------------------------------------------------------

    In order to offset more of the costs associated with FINRA staff's 
thorough assessment of SD Applications, the proposed rule change would 
amend Section 12 to Schedule A of the FINRA By-Laws by increasing from 
$1,500 to $5,000 the SD Application Fee for filing a Form MC-400. In 
addition, the proposed rule change would impose, for the first time, an 
SD Application Fee of $5,000 on SD Applications for filing a Form MC-
400A where the member itself is the subject of the SD. Specifically, 
Section 12 to Schedule A of the FINRA By-Laws would be revised to 
require any member firm, or applicant for membership under NASD Rule 
1013 that is subject to a disqualification as set forth in Article III, 
Section 4 of the By-Laws of the Corporation that seeks to enter, or be 
continued in, membership to pay FINRA a fee of $5,000.
    FINRA has filed the proposed rule change for immediate 
effectiveness. The implementation date will be May 30, 2018.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(5) of the Act,\9\ which requires, among 
other things, that FINRA rules provide for the equitable allocation of 
reasonable dues, fees and other charges among members and issuers and 
other persons using any facility or system that FINRA operates or 
controls. FINRA believes that the proposed rule change more equitably 
allocates among member firms the costs incurred for time and resources 
needed to thoroughly review and assess SD Applications.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78o-3(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    FINRA does not believe that the proposed rule change will result in 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. FINRA has undertaken an 
economic impact assessment, as set forth below, to analyze the 
regulatory need for the proposed rulemaking and its potential economic 
impacts, including anticipated costs and benefits.
1. Economic Impact Assessment
a. Regulatory Need
    As discussed above, SD Applications take significant FINRA staff 
time and resources to research and review; due to the unique facts and 
circumstances of each SD matter, each application is assessed on a 
case-by-case basis. The current SD Application Fee for Form MC-400 
applications is insufficient to cover the costs associated with the 
review of these applications. Further, FINRA currently does not require 
a member firm to pay a fee for the review of Form MC-400A applications, 
but FINRA still must commit resources to

[[Page 22109]]

review these applications. As a result, the current SD Application Fee 
is even less sufficient to cover the current costs associated with the 
staff's assessment of all SD Applications, requiring a significant 
portion of costs to conduct these assessments to be borne indirectly by 
non-SD applicant member firms. The proposed rule change serves as an 
economic transfer of some of the costs associated with the review from 
unrelated parties to the immediate parties seeking the relief.
b. Economic Baseline
    The economic baseline used to evaluate the impact of the proposed 
amendments is the current regulatory framework. This baseline serves as 
the primary point of comparison for assessing the economic impacts, 
including the incremental benefits and costs of the proposed rule 
change. FINRA reviewed the SD Applications that were filed during 2013-
2016 (``review period''). Based on this review, FINRA estimates that 
there were 167 SD Applications filed by 135 member firms during the 
review period. Of the 167 SD Applications, FINRA identified 122 Form 
MC-400 applications and 45 Form MC-400A applications.\10\ FINRA further 
estimates that approximately 50% of these applications were filed by 
small firms, 17% by mid-sized firms and 33% by large firms.\11\
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    \10\ Approximately 84% of the filing member firms submitted one 
SD Application, whereas the remaining 16% of the filing member firms 
submitted two or more SD Applications during the review period. 
Further, the total number of SD Applications for the review period 
excludes 52 MC-400A applications filed in 2015 and 12 in 2016 in 
connection with the SEC's Municipalities Continuing Disclosure 
Cooperation (MCDC) Initiative. Applications filed in connection with 
the MCDC Initiative are excluded from the calculation for the review 
period because they were the result of an industry-wide settlement 
and, as such, would disproportionately impact the review numbers 
outside the normal course. See https://www.sec.gov/divisions/enforce/municipalities-continuing-disclosure-cooperation-initiative.shtml.
    \11\ Based on FINRA By-Laws, Article I (Definitions), member 
firms with 150 or fewer registered persons are classified as small, 
member firms with 151-499 registered persons are classified as mid-
size, and member firms with 500 or more registered persons are 
classified as large.
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c. Economic Impacts
    FINRA examined the time required of its staff to review all SD 
Applications filed during the review period and the reviewing staff's 
compensation associated with the review of these SD Applications. Based 
on that analysis, FINRA determined that the current SD Application Fee 
of $1,500 for Form MC-400 applications is insufficient to cover the 
costs associated with FINRA's review of such applications and even less 
sufficient to cover the costs associated with FINRA's review of all SD 
Applications.
    The impact of this proposal would be to help shift more of the 
costs associated with reviewing SD Applications to the member firms 
that file Form MC-400 or Form MC-400A applications. As noted above, 
FINRA identified 122 Form MC-400 and 45 Form MC-400A applications 
during the review period. Based on the proposed increase in the SD 
Application Fee for both Form MC-400 and Form MC-400A applications to 
$5,000, FINRA estimates that the total cost to all SD applicants would 
increase by $163,000 on average each year, if applications remain at 
their historical levels. For the set of member firms that submitted SD 
Applications during the review period, the proposed fee increase would 
have led to an annual increased cost of $3,500-$13,500 per firm, with a 
median increased cost of $3,500 per member firm.\12\
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    \12\ The incremental costs are calculated on an annual, per firm 
basis. For each member firm submitting a Form MC-400 or Form MC-400A 
application, FINRA assigned an incremental cost of $3,500 for each 
Form MC-400 application filed and $5,000 for each Form MC-400A 
application filed in that year. The range represents the total 
aggregate incremental cost per submitting firm, per year. Thus, 
$3,500 represents the cost of a member firm that submitted only one 
Form MC-400 in a given year and $13,500 reflects the cost of a 
member firm that submitted two Form MC-400A applications and one 
Form MC-400 application in that year.
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    Shifting more of the burden of the costs associated with the review 
of SD Applications to the SD applicants also may affect their behavior. 
For instance, increasing the SD Application Fee may dissuade some 
member firms from seeking to employ or continuing to employ statutorily 
disqualified individuals. The increased fees also may cause some member 
firms to be more selective in instances where they might decide to 
employ such individuals. In general, some member firms that today may 
submit an SD Application at little or no cost, may determine that it is 
no longer in their best interest to do so.
    These impacts would likely be higher for smaller firms, cash 
constrained firms, and firms that anticipate that the likelihood of the 
application being accepted is low ex ante. Any reduction in the number 
of SD Applications would lead to less FINRA staff time and resources 
spent on the review of SD Applications, decreasing the costs associated 
with the review of such applications and further reducing the aggregate 
economic transfer to SD applicants.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \13\ and paragraph (f)(2) of Rule 19b-4 
thereunder.\14\ 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.
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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 [email protected]. Please include 
File Number SR-FINRA-2018-018 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-2018-018. 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 website (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

[[Page 22110]]

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 website 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 filing also will be available for inspection and copying at the 
principal office of FINRA. All comments received will be posted without 
change. Persons submitting comments are cautioned that we do not redact 
or edit personal identifying information from comment submissions. You 
should submit only information that you wish to make available 
publicly.
    All submissions should refer to File Number SR-FINRA-2018-018 and 
should be submitted on or before June 1, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Eduardo Aleman,
Assistant Secretary.
[FR Doc. 2018-10039 Filed 5-10-18; 8:45 am]
 BILLING CODE 8011-01-P
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