Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of a Proposed Rule Change To Amend FINRA Rule 1011(p) (“Specified Risk Event”), 28405-28407 [2021-11077]

Download as PDF 28405 Federal Register / Vol. 86, No. 100 / Wednesday, May 26, 2021 / Notices competition among market participants on the Exchange. Intermarket Competition. The Exchange operates in a highly competitive market in which market participants can readily choose to send their orders to other exchange and offexchange venues if they deem fee levels at those other venues to be more favorable. In such an environment, the Exchange must continually adjust its fees and rebates to remain competitive with other exchanges and with offexchange venues. Because competitors are free to modify their own fees and credits in response, and because market participants may readily adjust their order routing practices, the Exchange does not believe its proposed fee change can impose any burden on intermarket competition. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A) 28 of the Act and subparagraph (f)(2) of Rule 19b–4 29 thereunder, because it establishes a due, fee, or other charge imposed by the Exchange. At any time within 60 days of the filing of such 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 under Section 19(b)(2)(B) 30 of the Act to determine whether the proposed rule change 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: U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). 30 15 U.S.C. 78s(b)(2)(B). 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– NYSE–2021–33 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–NYSE–2021–33. 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 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 the filing also will be available for inspection and copying at the principal office of the Exchange. 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–NYSE–2021–33 and should be submitted on or before June 16, 2021. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.31 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2021–11082 Filed 5–25–21; 8:45 am] BILLING CODE 8011–01–P 28 15 29 17 VerDate Sep<11>2014 20:00 May 25, 2021 31 17 Jkt 253001 PO 00000 CFR 200.30–3(a)(12). Frm 00077 Fmt 4703 Sfmt 4703 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–91959; File No. SR–FINRA– 2021–011] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of a Proposed Rule Change To Amend FINRA Rule 1011(p) (‘‘Specified Risk Event’’) May 20, 2021. 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 12, 2021, the Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by FINRA. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change FINRA is proposing to amend FINRA Rule 1011(p) (‘‘specified risk event’’), to correct an inadvertent drafting error and clarify the ‘‘final regulatory actions’’ that are included in the ‘‘specified risk event’’ definition for purposes of the Rule 1000 Series (Member Application and Associated Person Registration). Rule 1011(p) was among the rules approved in File No. SR–FINRA–2020– 011.3 Below is the text of the proposed rule change. Proposed new language is in italics; proposed deletions are in brackets. * * * * * FINRA Rules * * * * * 1000. MEMBER APPLICATION AND ASSOCIATED PERSON REGISTRATION * * * * * 1011. Definitions Unless otherwise provided, terms used in the Rule 1000 Series shall have the meaning as defined in Rule 0160. 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 90635 (December 10, 2020), 85 FR 81540 (December 16, 2020) (Order Approving File No. SR–FINRA–2020– 011) (‘‘SEC Order’’). FINRA announced the effective dates of the rule change in Regulatory Notice 21– 09 (March 2021). 2 17 E:\FR\FM\26MYN1.SGM 26MYN1 28406 Federal Register / Vol. 86, No. 100 / Wednesday, May 26, 2021 / Notices (a) through (o) No Change. (p) ‘‘specified risk event’’ The term ‘‘specified risk event’’ means any one of the following events that are disclosed, or are or were required to be disclosed, on an applicable Uniform Registration Form: (1) through (3) No Change. (4) a final regulatory action where: (A) the total monetary sanctions (including civil and administrative penalties or fines, disgorgement, monetary penalties other than fines, or restitution) were ordered for a dollar amount at or above $15,000; or (B) the sanction against the person was a bar (permanently or temporarily), expulsion, rescission, revocation, or suspension[ from associating with a member]. (q) through (r) No Change. * * * * * 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 On December 10, 2020, the Commission approved a proposed rule change concerning brokers with a significant history of misconduct.4 The SEC Order approved, in pertinent part, the amendment of the Rule 1000 Series (Member Application and Associated Person Registration) to require a member firm to submit a written request to FINRA’s Department of Member Regulation (‘‘Member Regulation’’), through the Membership Application Group (‘‘MAP Group’’), seeking a materiality consultation and approval of a continuing membership application, if required, when a natural person seeking to become an owner, control person, principal, or registered person of the member broker-dealer has, in the prior five years, one or more ‘‘final criminal matters’’ or two or more ‘‘specified risk events.’’ 5 The amendments to the Rule 4 See 5 See SEC Order, supra note 3. SEC Order, supra note 3, at 81541. VerDate Sep<11>2014 20:00 May 25, 2021 Jkt 253001 1000 Series will become effective on September 1, 2021.6 The rules approved in the SEC Order relating to SR–FINRA–2020–011 included Rule 1011(p), which defines ‘‘specified risk event’’ to mean ‘‘any one of the . . . events’’ described in Rule 1011(p) ‘‘that are disclosed, or are or were required to be disclosed, on an applicable Uniform Registration Form.’’ The events described in Rule 1011(p) include, among others, a ‘‘final regulatory action’’ as set forth in Rule 1011(p)(4). Specifically, Rule 1011(p)(4) describes ‘‘a final regulatory action’’ to include final regulatory actions ‘‘where (A) the total monetary sanctions (including civil and administrative penalties or fines, disgorgement, monetary penalties other than fines, or restitution) were ordered for a dollar amount at or above $15,000; or (B) the sanction against the person was a bar (permanently or temporarily), expulsion, rescission, revocation, or suspension from associating with a member.’’ The proposed rule change would delete from Rule 1011(p)(4) the phrase ‘‘from associating with a member,’’ which appears after the word ‘‘suspension.’’ Including ‘‘from associating with a member’’ in Rule 1011(p)(4) was an inadvertent drafting error that may suggest incorrectly that it narrows the ‘‘final regulatory actions’’ that are included in the ‘‘specified risk event’’ definition. For example, the current rule text may suggest that the ‘‘specified risk event’’ definition does not include final SEC and CFTC regulatory actions where the sanction against the person was a suspension other than a suspension from associating with a member. However, as evidenced by other provisions in Rule 1011(p), FINRA did not intend to narrow the scope of ‘‘final regulatory actions’’ that are included in the ‘‘specified risk event’’ definition in this manner. Rule 1011(p)(4) is intended to be consistent with Rule 1011(p)(3), which describes the ‘‘final investmentrelated civil actions’’ that are included in the ‘‘specified risk event’’ definition. Rule 1011(p)(3) includes final investment-related civil actions that result in a ‘‘suspension,’’ and does not limit the suspensions to suspensions from associating with a member. Moreover, FINRA’s intent to include ‘‘final regulatory actions’’ beyond those resulting in suspensions ‘‘from associating with a member’’ in the ‘‘specified risk event’’ definition is further evidenced by the mapping exhibits that FINRA provided in SR– 6 See PO 00000 Regulatory Notice 21–09 (March 2021). Frm 00078 Fmt 4703 Sfmt 4703 FINRA–2020–011, which showed how the ‘‘final regulatory actions’’ included within the scope of the ‘‘specified risk event’’ definition included final regulatory actions disclosed on the Uniform Registration Forms that resulted in a ‘‘suspension.’’ 7 Those mapping exhibits, in turn, were and are consistent with how the relevant sanctions-related questions on the Uniform Registration Forms require the reporting of regulatory actions initiated by numerous regulators and selfregulatory organizations—not just FINRA—and include data fields for ‘‘suspension.’’ 8 By correcting the inadvertent drafting error and clarifying the ‘‘final regulatory actions’’ that are included in the ‘‘specified risk event’’ definition, the proposed rule change will ensure that the rules approved in SR–FINRA–2020–011 fully serve their intended investor-protection purposes.9 If the Commission approves the proposed rule change, FINRA expects that the effective date will be September 1, 2021, the same effective date for the amendments to Rule 1000 Series that FINRA announced in Regulatory Notice 21–09.10 2. Statutory Basis FINRA believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,11 which requires, among other things, that FINRA rules must be designed to prevent fraudulent and manipulative 7 See Form 19b–4, Exs. 3a and 3b, File No. SR– FINRA–2020–011, available at https:// www.finra.org/sites/default/files/2020-04/SRFINRA-2020-011.pdf. 8 See Uniform Application for Securities Industry Registration or Transfer (Form U4), Regulatory Action Disclosure Reporting Page, Questions 1 (requesting information about which regulator initiated the regulatory action) and 13 (Sanction Detail); Uniform Application for Broker-Dealer Registration (Form BD), Regulatory Action Disclosure Reporting Page, Part II, Questions 1 (requesting information about which regulator initiated the regulatory action) and Question 2 (Principal Sanction). FINRA also notes that the data that FINRA provided in SR–FINRA–2020–011 concerning the regulatory action disclosures included regulatory actions that resulted in any suspension, not just suspensions from associating with a member. 9 See SEC Order, supra note 3, at 81546 (explaining that the rules approved in SR–FINRA– 2020–011 ‘‘further promote investor protection by applying additional safeguards and disclosure obligations for a broker-dealer’s continuing membership with FINRA and for changes to a current member broker-dealer’s ownership, control, or business operations,’’ where those changes involve persons with a significant history of misconduct). 10 FINRA notes that the proposed rule change would apply to all members, including members that have elected to be treated as capital acquisition brokers (‘‘CABs’’), given that the CAB rule set incorporates FINRA Rule 1011 by reference. 11 15 U.S.C. 78o–3(b)(6). E:\FR\FM\26MYN1.SGM 26MYN1 Federal Register / Vol. 86, No. 100 / Wednesday, May 26, 2021 / Notices 28407 acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest. FINRA believes that, by amending Rule 1011(p)(4) to correct an inadvertent drafting error, and fully and accurately describe the ‘‘final regulatory actions’’ that the definition of ‘‘specified risk event’’ includes, the proposed rule change will provide greater clarity to members and the public and serve the intended investor-protection purposes of the rules approved in SR–FINRA– 2020–011. (A) By order approve or disapprove such proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be disapproved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12 J. Matthew DeLesDernier, Assistant Secretary. 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: [FR Doc. 2021–11077 Filed 5–25–21; 8:45 am] B. Self-Regulatory Organization’s Statement on Burden on Competition FINRA does not believe that the proposed rule change is associated with any material economic impacts or 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 is not designed to address any competitive issues but rather to correct an inadvertent drafting error in Rule 1011(p)(4) that resulted in a narrower scope for the ‘‘final regulatory actions’’ that are included in the ‘‘specified risk event’’ definition than FINRA intended. The aspect of the economic impact assessment undertaken in File No. SR– FINRA–2020–011 that pertained to the amendments to the Rule 1000 Series was based on the broader scope for the ‘‘final regulatory actions’’ that are included in the ‘‘specified risk event’’ definition that FINRA is proposing here. Consistent with FINRA’s initial intent, the broader scope for the ‘‘final regulatory actions’’ that are included in the ‘‘specified risk event’’ definition includes, for example, final SEC and CFTC regulatory actions where the sanction against the person was a suspension other than a suspension from associating with a member. 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–2021–011 on the subject line. Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Order Disapproving a Proposed Rule Change, as Modified by Amendment No. 1, To Amend Listing Rules Applicable to Special Purpose Acquisition Companies Whose Business Plan Is To Complete One or More Business Combinations C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: VerDate Sep<11>2014 20:00 May 25, 2021 Jkt 253001 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–2021–011. This file number should be included on the subject line if e-mail 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 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 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of FINRA. All comments received will be posted without change. 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–2021–011 and should be submitted on or before June 16, 2021. PO 00000 Frm 00079 Fmt 4703 Sfmt 4703 BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–91961; File No. SR– NASDAQ–2020–062] May 20, 2021. I. Introduction On September 3, 2020, The Nasdaq Stock Market LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Exchange Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to amend its listing rules to permit companies whose business plan is to complete one or more business combinations (‘‘SPACs’’ or ‘‘Acquisition Companies’’) 15 calendar days following the closing of a business combination to demonstrate that the SPAC has satisfied the applicable round lot shareholder requirement. The proposed rule change was published for comment in the Federal Register on September 22, 2020.3 On November 4, 2020, pursuant to Section 19(b)(2) of the Exchange Act,4 the Commission designated a longer period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to disapprove the proposed rule change.5 12 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 89897 (September 16, 2020), 85 FR 59574 (‘‘Notice’’). Comments received on the proposal are available on the Commission’s website at: https://www.sec.gov/ comments/sr-nasdaq-2020-062/srnasdaq2020062. htm. See also, infra, note 8. 4 15 U.S.C. 78s(b)(2). 5 See Securities Exchange Act Release No. 90340, 85 FR 71704 (November 10, 2020). The Commission designated December 21, 2020, as the date by which it should approve, disapprove, or institute 1 15 E:\FR\FM\26MYN1.SGM Continued 26MYN1

Agencies

[Federal Register Volume 86, Number 100 (Wednesday, May 26, 2021)]
[Notices]
[Pages 28405-28407]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-11077]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91959; File No. SR-FINRA-2021-011]


Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing of a Proposed Rule Change To Amend 
FINRA Rule 1011(p) (``Specified Risk Event'')

May 20, 2021.
    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 12, 2021, the Financial Industry Regulatory Authority, Inc. 
(``FINRA'') filed with the Securities and Exchange Commission (``SEC'' 
or ``Commission'') the proposed rule change as described in Items I, 
II, and III below, which Items have been prepared by FINRA. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to amend FINRA Rule 1011(p) (``specified risk 
event''), to correct an inadvertent drafting error and clarify the 
``final regulatory actions'' that are included in the ``specified risk 
event'' definition for purposes of the Rule 1000 Series (Member 
Application and Associated Person Registration). Rule 1011(p) was among 
the rules approved in File No. SR-FINRA-2020-011.\3\
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 90635 (December 10, 
2020), 85 FR 81540 (December 16, 2020) (Order Approving File No. SR-
FINRA-2020-011) (``SEC Order''). FINRA announced the effective dates 
of the rule change in Regulatory Notice 21-09 (March 2021).
---------------------------------------------------------------------------

    Below is the text of the proposed rule change. Proposed new 
language is in italics; proposed deletions are in brackets.
* * * * *

FINRA Rules

* * * * *

1000. MEMBER APPLICATION AND ASSOCIATED PERSON REGISTRATION

* * * * *

1011. Definitions

    Unless otherwise provided, terms used in the Rule 1000 Series shall 
have the meaning as defined in Rule 0160.

[[Page 28406]]

(a) through (o) No Change.

    (p) ``specified risk event''
    The term ``specified risk event'' means any one of the following 
events that are disclosed, or are or were required to be disclosed, on 
an applicable Uniform Registration Form:
    (1) through (3) No Change.
    (4) a final regulatory action where: (A) the total monetary 
sanctions (including civil and administrative penalties or fines, 
disgorgement, monetary penalties other than fines, or restitution) were 
ordered for a dollar amount at or above $15,000; or (B) the sanction 
against the person was a bar (permanently or temporarily), expulsion, 
rescission, revocation, or suspension[ from associating with a member].
    (q) through (r) No Change.
* * * * *

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
    On December 10, 2020, the Commission approved a proposed rule 
change concerning brokers with a significant history of misconduct.\4\ 
The SEC Order approved, in pertinent part, the amendment of the Rule 
1000 Series (Member Application and Associated Person Registration) to 
require a member firm to submit a written request to FINRA's Department 
of Member Regulation (``Member Regulation''), through the Membership 
Application Group (``MAP Group''), seeking a materiality consultation 
and approval of a continuing membership application, if required, when 
a natural person seeking to become an owner, control person, principal, 
or registered person of the member broker-dealer has, in the prior five 
years, one or more ``final criminal matters'' or two or more 
``specified risk events.'' \5\ The amendments to the Rule 1000 Series 
will become effective on September 1, 2021.\6\
---------------------------------------------------------------------------

    \4\ See SEC Order, supra note 3.
    \5\ See SEC Order, supra note 3, at 81541.
    \6\ See Regulatory Notice 21-09 (March 2021).
---------------------------------------------------------------------------

    The rules approved in the SEC Order relating to SR-FINRA-2020-011 
included Rule 1011(p), which defines ``specified risk event'' to mean 
``any one of the . . . events'' described in Rule 1011(p) ``that are 
disclosed, or are or were required to be disclosed, on an applicable 
Uniform Registration Form.'' The events described in Rule 1011(p) 
include, among others, a ``final regulatory action'' as set forth in 
Rule 1011(p)(4). Specifically, Rule 1011(p)(4) describes ``a final 
regulatory action'' to include final regulatory actions ``where (A) the 
total monetary sanctions (including civil and administrative penalties 
or fines, disgorgement, monetary penalties other than fines, or 
restitution) were ordered for a dollar amount at or above $15,000; or 
(B) the sanction against the person was a bar (permanently or 
temporarily), expulsion, rescission, revocation, or suspension from 
associating with a member.''
    The proposed rule change would delete from Rule 1011(p)(4) the 
phrase ``from associating with a member,'' which appears after the word 
``suspension.'' Including ``from associating with a member'' in Rule 
1011(p)(4) was an inadvertent drafting error that may suggest 
incorrectly that it narrows the ``final regulatory actions'' that are 
included in the ``specified risk event'' definition. For example, the 
current rule text may suggest that the ``specified risk event'' 
definition does not include final SEC and CFTC regulatory actions where 
the sanction against the person was a suspension other than a 
suspension from associating with a member.
    However, as evidenced by other provisions in Rule 1011(p), FINRA 
did not intend to narrow the scope of ``final regulatory actions'' that 
are included in the ``specified risk event'' definition in this manner. 
Rule 1011(p)(4) is intended to be consistent with Rule 1011(p)(3), 
which describes the ``final investment-related civil actions'' that are 
included in the ``specified risk event'' definition. Rule 1011(p)(3) 
includes final investment-related civil actions that result in a 
``suspension,'' and does not limit the suspensions to suspensions from 
associating with a member. Moreover, FINRA's intent to include ``final 
regulatory actions'' beyond those resulting in suspensions ``from 
associating with a member'' in the ``specified risk event'' definition 
is further evidenced by the mapping exhibits that FINRA provided in SR-
FINRA-2020-011, which showed how the ``final regulatory actions'' 
included within the scope of the ``specified risk event'' definition 
included final regulatory actions disclosed on the Uniform Registration 
Forms that resulted in a ``suspension.'' \7\ Those mapping exhibits, in 
turn, were and are consistent with how the relevant sanctions-related 
questions on the Uniform Registration Forms require the reporting of 
regulatory actions initiated by numerous regulators and self-regulatory 
organizations--not just FINRA--and include data fields for 
``suspension.'' \8\ By correcting the inadvertent drafting error and 
clarifying the ``final regulatory actions'' that are included in the 
``specified risk event'' definition, the proposed rule change will 
ensure that the rules approved in SR-FINRA-2020-011 fully serve their 
intended investor-protection purposes.\9\
---------------------------------------------------------------------------

    \7\ See Form 19b-4, Exs. 3a and 3b, File No. SR-FINRA-2020-011, 
available at https://www.finra.org/sites/default/files/2020-04/SR-FINRA-2020-011.pdf.
    \8\ See Uniform Application for Securities Industry Registration 
or Transfer (Form U4), Regulatory Action Disclosure Reporting Page, 
Questions 1 (requesting information about which regulator initiated 
the regulatory action) and 13 (Sanction Detail); Uniform Application 
for Broker-Dealer Registration (Form BD), Regulatory Action 
Disclosure Reporting Page, Part II, Questions 1 (requesting 
information about which regulator initiated the regulatory action) 
and Question 2 (Principal Sanction). FINRA also notes that the data 
that FINRA provided in SR-FINRA-2020-011 concerning the regulatory 
action disclosures included regulatory actions that resulted in any 
suspension, not just suspensions from associating with a member.
    \9\ See SEC Order, supra note 3, at 81546 (explaining that the 
rules approved in SR-FINRA-2020-011 ``further promote investor 
protection by applying additional safeguards and disclosure 
obligations for a broker-dealer's continuing membership with FINRA 
and for changes to a current member broker-dealer's ownership, 
control, or business operations,'' where those changes involve 
persons with a significant history of misconduct).
---------------------------------------------------------------------------

    If the Commission approves the proposed rule change, FINRA expects 
that the effective date will be September 1, 2021, the same effective 
date for the amendments to Rule 1000 Series that FINRA announced in 
Regulatory Notice 21-09.\10\
---------------------------------------------------------------------------

    \10\ FINRA notes that the proposed rule change would apply to 
all members, including members that have elected to be treated as 
capital acquisition brokers (``CABs''), given that the CAB rule set 
incorporates FINRA Rule 1011 by reference.
---------------------------------------------------------------------------

2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\11\ which requires, among 
other things, that FINRA rules must be designed to prevent fraudulent 
and manipulative

[[Page 28407]]

acts and practices, to promote just and equitable principles of trade, 
and, in general, to protect investors and the public interest. FINRA 
believes that, by amending Rule 1011(p)(4) to correct an inadvertent 
drafting error, and fully and accurately describe the ``final 
regulatory actions'' that the definition of ``specified risk event'' 
includes, the proposed rule change will provide greater clarity to 
members and the public and serve the intended investor-protection 
purposes of the rules approved in SR-FINRA-2020-011.
---------------------------------------------------------------------------

    \11\ 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 is associated 
with any material economic impacts or 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 is not designed to 
address any competitive issues but rather to correct an inadvertent 
drafting error in Rule 1011(p)(4) that resulted in a narrower scope for 
the ``final regulatory actions'' that are included in the ``specified 
risk event'' definition than FINRA intended.
    The aspect of the economic impact assessment undertaken in File No. 
SR-FINRA-2020-011 that pertained to the amendments to the Rule 1000 
Series was based on the broader scope for the ``final regulatory 
actions'' that are included in the ``specified risk event'' definition 
that FINRA is proposing here. Consistent with FINRA's initial intent, 
the broader scope for the ``final regulatory actions'' that are 
included in the ``specified risk event'' definition includes, for 
example, final SEC and CFTC regulatory actions where the sanction 
against the person was a suspension other than a suspension from 
associating 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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove such proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-FINRA-2021-011 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-2021-011. This 
file number should be included on the subject line if e-mail 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 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 a.m. and 3 p.m. Copies of such filing also will be 
available for inspection and copying at the principal office of FINRA. 
All comments received will be posted without change. 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-2021-011 and 
should be submitted on or before June 16, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-11077 Filed 5-25-21; 8:45 am]
BILLING CODE 8011-01-P
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