Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Declaration of Effectiveness of the Fingerprint Plan of the Financial Industry Regulatory Authority, Inc., 61801-61804 [2021-24327]
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Federal Register / Vol. 86, No. 213 / Monday, November 8, 2021 / Notices
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IEX–2021–13 on the subject line.
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November 29, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.26
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–24324 Filed 11–5–21; 8:45 am]
BILLING CODE 8011–01–P
26 17
CFR 200.30–3(a)(12).
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–93511]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Declaration of
Effectiveness of the Fingerprint Plan of
the Financial Industry Regulatory
Authority, Inc.
November 2, 2021.
On October 28, 2021, the Financial
Industry Regulatory Authority, Inc.
(‘‘FINRA’’) filed with the Securities and
Exchange Commission (‘‘Commission’’
or ‘‘SEC’’) a new fingerprint plan
(‘‘Plan’’) 1 pursuant to Rule 17f–2(c) 2
under the Securities Exchange Act of
1934 (‘‘Exchange Act’’ or ‘‘Act’’).3 The
Plan supersedes and replaces FINRA’s
current fingerprint plan, which was
declared effective for the Commission
by the Division of Trading and Markets,
pursuant to delegated authority, on May
2, 2006 (‘‘FINRA’s 2006 Plan’’).4
FINRA states that it is adopting the
Plan due to the age of FINRA’s current
fingerprint processing platform, and the
availability of more modern alternatives
offered by private vendors approved by
the Federal Bureau of Investigation
(‘‘FBI’’) to channel fingerprints.5
Therefore, as discussed in more detail
below, FINRA states that in order to
continue to facilitate compliance with
the fingerprinting requirement in
Section 17(f)(2) of the Exchange Act, it
is transitioning to a new fingerprinting
process for broker-dealer personnel (of
both FINRA members and other brokerdealers) and for FINRA personnel using
the services of an FBI-approved
channeler (‘‘FBI-Approved Channel
Partner’’).6 FINRA will continue at this
1 Attached hereto as Exhibit A. See also Letter
from Richard Pullano, Vice President and Associate
General Counsel, FINRA, to Devin Ryan, Assistant
Director, Office of Chief Counsel, Division of
Trading and Markets, dated October 28, 2021
(‘‘FINRA Letter’’), available at https://
www.finra.org/sites/default/files/2021-11/
fingerprint-plan.pdf.
2 17 CFR 240.17f–2(c).
3 15 U.S.C. 78a et seq.
4 See Exchange Act Release No. 53751 (May 2,
2006), 71 FR 27299 (May 10, 2006) (Declaration of
Effectiveness of the Fingerprint Plan of the National
Association of Securities Dealers, Inc.). FINRA will
continue to channel fingerprints for these personnel
consistent with the 2006 Fingerprint Plan until the
new fingerprinting process set forth in the Plan is
fully implemented.
5 See FINRA Letter at 1.
6 See also infra Section 2. The FBI-Approved
Channel Partner is one of a limited number of
entities approved by the FBI to submit fingerprints
to the FBI and receive the results on behalf of an
organization using that information for authorized
non-criminal justice purposes (e.g., employment
suitability, licensing determinations, etc.). The FBI
reviews and approves all outsourced channeling
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61801
time its current role as the channeler for
processing fingerprints of transfer agent
and clearing agency personnel that are
submitted to FINRA.7
For the reasons discussed below, the
Commission finds that, pursuant to Rule
17f–2(c) of the Exchange Act, the Plan
is not inconsistent with the public
interest and the protection of investors
and, therefore, declares the Plan to be
effective.
1. Applicable Standard
Section 17(f)(2) of the Act provides, in
pertinent part, that every member of a
national securities exchange, broker,
dealer, registered transfer agent and
registered clearing agency, and national
securities association (as well as others),
shall require that each of its partners,
directors, officers, and employees be
fingerprinted and shall submit such
fingerprints, or cause the same to be
submitted, to the Attorney General of
the United States for identification and
appropriate processing.8 However, in
accordance with Exchange Act Rule
17f–2(c), the fingerprinting requirement
of Section 17(f)(2) may be satisfied by
submitting appropriate and complete
fingerprint cards to, among others, a
registered national securities association
(such as FINRA) which, pursuant to a
plan filed with and declared effective
by, the Commission, forwards such
fingerprint cards to the Attorney
General of the United States (‘‘Attorney
General’’) or its designee for
identification and appropriate
processing.9 Under Rule 17f–2(c), such
fingerprinting plans—like FINRA’s 2006
Plan and this Plan—shall not become
effective unless it is declared effective
relationships consistent with its outsourcing
standards and protocols. As outlined in the
September 28, 2021 letter from the FBI’s National
Crime Prevention and Privacy Compact Council
Office (‘‘CCO Letter’’), the FBI has reviewed and
conditionally granted permission to FINRA to use
a specified FBI-Approved Channel Partner
contingent upon FINRA filing a fingerprint plan
with the Commission and the Commission
declaring that fingerprint plan effective. See FINRA
Letter at 2, n.4 (discussing the CCO Letter, available
at https://www.finra.org/sites/default/files/2021-11/
fingerprint-plan.pdf). The terms of the CCO Letter
are incorporated by reference in the Plan. See
Exhibit A at 1, n. 3.
7 See also infra Section 3. FINRA notes that it is
seeking to identify an alternative approach that
would enable transfer agents and clearing agencies
to efficiently fulfill their obligations to fingerprint
their personnel, but would not involve FINRA
acting in a channeler role. FINRA notes that, for the
last two years, transfer agent and clearing agency
personnel have accounted for less than two percent
of the fingerprints processed by FINRA. FINRA
intends to work with the Commission, FBI and the
transfer agent and clearing agency communities to
identify this alternative approach. See FINRA Letter
at 1.
8 15 U.S.C. 78q(f)(2).
9 17 CFR 240.17f–2(c).
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Federal Register / Vol. 86, No. 213 / Monday, November 8, 2021 / Notices
by the Commission, which requires the
Commission to find that the plan is ‘‘not
inconsistent with the public interest or
the protection of investors.’’ 10
FINRA states that the purpose of the
Plan is to facilitate compliance with
Section 17(f)(2) of the Act and Rule 17f–
2 thereunder by providing a program for
FINRA members,11 other broker-dealers,
transfer agents, clearing agencies and
FINRA to have the fingerprints of their
partners, directors, officers, and
employees processed by the Attorney
General.12
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2. FINRA Members and Other BrokerDealers
Under FINRA’s 2006 Plan, FINRA
accepts fingerprints and identifying
information from member firms and
other securities industry participants
required to be fingerprinted under Rule
17f–2.13 FINRA then transmits these
fingerprints and identifying information
to the FBI, which the Attorney General
has designated to identify and process
such fingerprints, consistent with
protocols and requirements established
by the Attorney General.14 However, as
set forth in the Plan, FINRA is
partnering with an FBI-Approved
Channel Partner to process fingerprints
and other identifying information from
personnel of FINRA members and other
broker-dealers required to be
fingerprinted pursuant to Section
17(f)(2).15 Under the Plan, FINRA
members or other broker-dealers will
work with the FBI-Approved Channel
Partner to fingerprint such personnel or
accept fingerprints from such personnel
(either in electronic or hard copy
format), and the FBI-Approved Channel
Partner will submit such fingerprints to
the Attorney General for processing
consistent with the protocols and
requirements established by the
Attorney General.16 The FBI-Approved
10 See id. The Commission may also impose any
terms and conditions relating to the provisions of
the plan and the period of its effectiveness as it may
deem necessary or appropriate in the public
interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act. See id.
11 For purposes of the Plan, the term ‘‘members’’
included Capital Acquisition Brokers, Funding
Portals and applicants for FINRA membership.
12 See Exhibit A.
13 See FINRA Letter at 1, n. 2. FINRA’s current
platform uses a customized application that include
software licensed from a vendor, and specialized
equipment (to scan, digitize and transmit
fingerprints in accordance with FBI requirements).
The vendor has discontinued the software used in
the customized application and ceased providing
support for it in July 2021. As a result, the
customized application, while still fully
operational, is currently supported only by FINRA
technology resources. See id. at 1.
14 See supra note 4, 71 FR at 27299–300.
15 See Exhibit A at 1.
16 See id.
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Channel Partner will offer state-of-theart fingerprint services to broker-dealers
that include collecting fingerprints at
locations nationwide and leasing
fingerprint equipment to broker-dealers
that wish to fingerprint personnel inhouse.17
Also under the terms of the Plan, at
least the following three key aspects of
FINRA’s 2006 Plan will remain
unchanged.18 First, FINRA will
continue to receive results after the
fingerprints have been processed by the
Attorney General and FINRA will
continue to make those results available
to authorized recipients (i.e., to a
member or other broker-dealer that
submitted the fingerprints and to
regulators, as appropriate, for licensing,
registration and other regulatory
purposes), consistent with protocols and
requirements established by the
Attorney General.19 Second, members
and other broker-dealers will continue
to be able to view the status and results
of the processed fingerprints, including
any relevant criminal history
information, through FINRA systems.20
Third, FINRA will continue to review
the fingerprint results to fulfill its
regulatory responsibilities, store those
results in the CRD or FPRD systems and
make them available to other regulators
that are authorized to view the results.21
3. Transfer Agents and Clearing
Agencies
Under the Plan, FINRA, rather than
the FBI-Approved Channel Partner
discussed above, will continue to use its
current fingerprint processing platform
to accept fingerprints and identifying
information from transfer agent and
clearing agency personnel who are
required to be fingerprinted pursuant to
Rule 17f–2 and who submit fingerprints
to FINRA for processing.22 FINRA will
also continue to transmit fingerprints
from such personnel to the Attorney
General for identification and
processing consistent with protocols
17 See
FINRA Letter at 2.
id. at 2–3. See also Exhibit A at 2.
19 See Exhibit A at 2.
20 These systems include the Central Registration
Depository (‘‘CRD’’) and the Funding Portal
Registration Depository (‘‘FPRD’’). See Exhibit A at
2.
21 FINRA explains that it reviews fingerprint
results to ensure that applicants for registration
have reported appropriately information responsive
to the questions on Form U4 (the Uniform
Application for Securities Industry Registration or
Transfer) relating to criminal history and to identify
whether any broker-dealer personnel required to be
fingerprinted is subject to a statutory
disqualification under the Exchange Act based
upon a criminal conviction. See FINRA Letter at 3.
22 See FINRA Letter at 3.
18 See
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and requirements established by the
Attorney General.23
4. FINRA Personnel
The FBI-Approved Channel Partner
will also process fingerprints and
identifying information from FINRA
personnel who are required to be
fingerprinted under Section 17(f)(2) of
the Act and consistent with its Policy to
Conduct Fingerprint-Based Background
Checks (‘‘Fingerprint Policy’’).24 The
FBI-Approved Channel Partner will also
transmit these fingerprints and
identifying information to the Attorney
General for identification and
processing consistent with protocols
and requirements established by the
Attorney General and securely make the
results available to FINRA after the
fingerprints have been processed.25
FINRA will evaluate such results and
take any appropriate action in
accordance with the terms of its
Fingerprint Policy.26
5. Commission’s Declaration of
Effectiveness of the Plan
In accordance with Rule 17f–2(c) of
the Act, the Commission has reviewed
the procedures detailed in the Plan and
believes that the Plan is not inconsistent
with the public interest and the
protection of investors.
The Commission observes that most
of FINRA’s 2006 Plan, which the
Commission found previously to be
consistent with the public interest and
the protection of investors,27 will
remain largely unchanged.28 As a result,
the Commission has no reason to revisit
its prior finding with respect to those
unchanged provisions.
With respect to FINRA’s decision to
partner with a new FBI-Approved
23 FINRA also explains that, because transfer
agents and clearing agencies do not use the CRD
system for registration purposes, FINRA is unable
to disseminate the fingerprint statuses and results
through that system (as it does for broker-dealer
personnel). See FINRA Letter at 3.
24 Securities Exchange Act Release No. 50157
(August 5, 2004), 69 FR 49924 (August 12, 2004)
(Notice of Filing and Immediate Effectiveness of
File No. SR–NASD–2004–095). See Exhibit A at 3.
25 See id.
26 See id.
27 See supra note 4 and accompanying text.
28 For example, and as discussed above in section
2, at least three key aspects of FINRA’s 2006 Plan
will remain unchanged for FINRA members and
other broker-dealers. See supra note 18 and
accompanying text. FINRA also states that its
customized application for processing fingerprints
will remain fully operational, although it will be
supported only by FINRA technology resources. See
FINRA Letter at 1, n. 1. With respect to transfer
agent and clearing agent personnel, the Plan simply
memorializes FINRA’s existing procedures for
processing fingerprints and other identifying
information for these personnel who are required to
be fingerprinted pursuant to Section 17(f)(2). See id.
at 3–4.
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Channel Partner 29 to be the central
point of intake and to process
fingerprints and identifying information
from its members, other broker-dealers
and FINRA personnel, rather than doing
so itself, the Commission observes the
following representations made by
FINRA. FINRA states that the FBIApproved Channel Partner will offer
state-of-the-art fingerprint services that
include collecting fingerprints at
locations nationwide and leasing
fingerprint equipment to broker-dealers
that wish to print personnel in-house.30
Notably, FINRA believes that the
partnership with the FBI-Approved
Channel Partner will enable FINRA to
continue to reliably facilitate
fingerprinting of the personnel of
broker-dealers as required under Section
17(f)(2) of the Exchange Act.31 FINRA
also believes this partnership will
enable FINRA to continue to fulfill its
critical regulatory and investor
protection responsibilities, including
the identification of broker-dealer
personnel required to be fingerprinted
who may be subject to a statutory
disqualification based on a criminal
conviction.32 Similarly, FINRA states
that the partnership will enable it to
continue to fulfill its Exchange Act
requirement to perform fingerprintbased background checks on covered
FINRA personnel.33
The Commission agrees with FINRA
that these statutorily-mandated
fingerprint-based background checks—
whether performed by FINRA itself
under the 2006 Plan or by an FBIApproved Channel Partner under this
Plan—will continue to help protect
investors and serve the public interest.
Based on the foregoing, the Commission
finds that, pursuant to Rule 17f–2(c) of
the Exchange Act, the Plan is not
inconsistent with the public interest and
the protection of investors and,
therefore, declares the Plan to be
effective.
29 See supra note 6 (discussing the FBI’s
conditional approval of FINRA using a specified
FBI-Approved Channel Partner). See also Exhibit A
at 1, n. 3.
30 See FINRA Letter at 2.
31 See id at 4.
32 See id.
33 See id.
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.34
J. Matthew DeLesDernier,
Assistant Secretary.
Exhibit A
Financial Industry Regulatory
Authority; Fingerprint Plan
The Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) submits this
fingerprint plan (‘‘Plan’’) pursuant to
Rule 17f–2(c) under the Securities
Exchange Act of 1934 (‘‘Exchange Act’’).
This Plan supersedes and replaces
FINRA’s current fingerprint plan, which
was declared effective by the Securities
and Exchange Commission
(‘‘Commission’’) on May 2, 2006 (the
‘‘2006 Fingerprint Plan’’).35
The purpose of this Plan is to
facilitate compliance with Section
17(f)(2) of the Exchange Act by
providing a program for FINRA
members,36 other broker-dealers,
transfer agents, clearing agencies, and
FINRA to have the fingerprints of their
partners, directors, officers, and
employees processed by the Attorney
General of the United States or its
designee (hereinafter ‘‘Attorney
General’’).
1. Members and Other Broker-Dealers
FINRA is partnering with an FBIapproved private channeler (‘‘FBIApproved Channel Partner’’) 37 to
process fingerprints and identifying
34 17
CFR 200.30–3(a)(17)(iii).
Exchange Act Release No. 53751
(May 2, 2006), 71 FR 27299 (May 10, 2006)
(Declaration of Effectiveness of the Fingerprint Plan
of the National Association of Securities Dealers,
Inc.). Pursuant to the 2006 Fingerprint Plan, FINRA
channels fingerprints for, among others, FINRA
members, other broker-dealers and FINRA
personnel. FINRA will continue to channel
fingerprints for these personnel consistent with the
2006 Fingerprint Plan until the new fingerprinting
process set forth in the Plan is fully implemented.
36 For purposes of the Plan, the term ‘‘members’’
includes Capital Acquisition Brokers, Funding
Portals and applicants for FINRA membership.
37 The FBI-Approved Channel Partner is one of a
limited number of entities approved by the FBI to
submit fingerprints to the FBI and receive the
results on behalf of an organization using that
information for authorized non-criminal justice
purposes (e.g., employment suitability, licensing
determinations, etc.). The FBI reviews and approves
all outsourced channeling relationships consistent
with its outsourcing standards and protocols. As
outlined in the September 28, 2021 letter from the
FBI’s National Crime Prevention and Privacy
Compact Council Office (‘‘CCO Letter’’), the FBI has
reviewed and conditionally granted permission to
FINRA to use a specified FBI-Approved Channel
Partner contingent upon FINRA filing a fingerprint
plan with the Commission and the Commission
declaring that fingerprint plan effective. See CCO
Letter, available at https://www.finra.org/
registration-exams-ce/classic-crd/fingerprints. The
terms of the CCO Letter are incorporated by
reference in the Plan.
35 Securities
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information from personnel of members
and other broker-dealers required to be
fingerprinted pursuant to Exchange Act
Section 17(f)(2) and Rule 17f–2
thereunder. The FBI-Approved Channel
Partner fingerprints such personnel or
accepts fingerprints of such personnel
(either in electronic or hard copy
format) and submits such fingerprints to
the Attorney General for processing
consistent with protocols and
requirements established by the
Attorney General.38
FINRA receives results from the FBIApproved Channel Partner after the
fingerprints have been processed by the
Attorney General and makes those
results available to authorized recipients
(i.e., to a member or other broker-dealer
that submitted the fingerprints and to
regulators, as appropriate, for licensing,
registration and other regulatory
purposes), consistent with protocols and
requirements established by the
Attorney General. With respect to
members and other broker-dealers,
FINRA also reviews any Criminal
History Record Information returned by
the Attorney General to identify persons
who may be subject to statutory
disqualification under the Exchange Act
and to take action, as appropriate, with
respect to such persons.
FINRA maintains copies of fingerprint
processing results received from the
Attorney General with respect to
fingerprints submitted by the FBIApproved Channel Partner pursuant to
this Plan in accordance with FINRA’s
records policy.39 Any maintenance of
fingerprint records by FINRA shall be
for FINRA’s own administrative
purposes; FINRA is not undertaking to
maintain fingerprint records on behalf
of FINRA members pursuant to
Exchange Act Rule 17f–2(d)(2). FINRA
records in FINRA systems the status of
fingerprints of personnel of members
and other broker-dealers submitted to
the Attorney General.40 Through these
systems, FINRA makes available to a
member or other broker-dealer that has
submitted fingerprints the status and
results of such fingerprints after
submission to the Attorney General.
38 On its website, FINRA informs its members and
other broker-dealers of the availability of fingerprint
services and any fees charged by FINRA in
connection with those services and the processing
of fingerprints pursuant to this Plan. See https://
www.finra.org/registration-exams-ce/classic-crd/
fingerprints.
39 FINRA’s records policy is to maintain all
records for at least five years.
40 These systems include the Central Registration
Depository (CRD®) and the Funding Portal
Registration Depository (FPRD®).
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2. Transfer Agents and Clearing
Agencies
SECURITIES AND EXCHANGE
COMMISSION
FINRA accepts fingerprints and
identifying information from transfer
agent personnel and clearing agency
personnel who are required to be
fingerprinted pursuant to Exchange Act
Section 17(f)(2) and Rule 17f–2
thereunder. FINRA accepts fingerprints
of such personnel in hard copy format
and transmits fingerprints to the
Attorney General for identification and
processing consistent with protocols
and requirements established by the
Attorney General.41 After receiving the
processed results, FINRA transmits
them to the submitting transfer agent or
clearing agency (i.e., an authorized
recipient of the results). FINRA informs
transfer agents and clearing agencies of
its fingerprint processing services and
the fees associated with those services.
3. FINRA Personnel
FINRA partners with the FBIApproved Channel Partner to obtain
fingerprints and identifying information
from FINRA personnel who are required
to be fingerprinted under Exchange Act
Section 17(f)(2) and consistent with its
Policy to Conduct Fingerprint-Based
Background Checks (‘‘Fingerprint
Policy’’).42 The FBI-Approved Channel
Partner transmits fingerprints to the
Attorney General for identification and
processing consistent with protocols
and requirements established by the
Attorney General and securely makes
the results available to FINRA after the
fingerprints have been processed.
FINRA evaluates the fingerprint results
and takes any appropriate action in
accordance with the terms of the
Fingerprint Policy.
[FR Doc. 2021–24327 Filed 11–5–21; 8:45 am]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change To List and Trade Shares
of Grayscale Bitcoin Trust (BTC) Under
NYSE Arca Rule 8.201–E
November 2, 2021.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on October
19, 2021, NYSE Arca, Inc. (‘‘NYSE
Arca’’ or the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. 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 proposes to list and
trade shares of the following under
NYSE Arca Rule 8.201–E: Grayscale
Bitcoin Trust (BTC) (the ‘‘Trust’’).4 The
proposed change is available on the
Exchange’s website at www.nyse.com, at
the principal office of the Exchange, 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, the
self-regulatory organization 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 those 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.
BILLING CODE 8011–01–P
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[Release No. 34–93504; File No. SR–
NYSEArca–2021–90]
1 15
41 FINRA
is channeling transfer agent and
clearing agency fingerprints and not using the FBIApproved Channel Partner for this purpose.
42 Securities Exchange Act Release No. 50157
(August 5, 2004), 69 FR 49924 (August 12, 2004)
(Notice of Filing and Immediate Effectiveness of
File No. SR–NASD–2004–095).
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18:37 Nov 05, 2021
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U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
4 The Trust was previously named Bitcoin
Investment Trust, whose name was changed
pursuant to a Certificate of Amendment to the
Certificate of Trust of Bitcoin Investment Trust filed
with the Delaware Secretary of State on January 11,
2019.
2 15
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Under NYSE Arca Rule 8.201–E, the
Exchange may propose to list and/or
trade pursuant to unlisted trading
privileges ‘‘Commodity-Based Trust
Shares.’’ 5 The Exchange proposes to list
and trade shares (‘‘Shares’’) 6 of the
Trust pursuant to NYSE Arca Rule
8.201–E.7
5 Commodity-Based Trust Shares are securities
issued by a trust that represent investors’ discrete
identifiable and undivided beneficial ownership
interest in the commodities deposited into the
Trust.
6 The Shares are expected to be listed under the
ticker symbol ‘‘BTC.’’
7 On March 22, 2016, the Trust confidentially
filed its draft registration statement on Form 10
under the Securities Act of 1933 (15 U.S.C. 77a) (the
‘‘Securities Act’’) (File No. 377–01289) (the ‘‘Draft
Registration Statement on Form S–1’’). On May 31,
2016, the Trust confidentially filed Amendment No.
1 to the Draft Registration Statement on Form S–1.
On July 29, 2016, the Trust confidentially filed
Amendment No. 2 to the Draft Registration
Statement on Form S–1. On November 2, 2016, the
Trust confidentially filed Amendment No. 3 to the
Draft Registration Statement on Form S–1. The
Jumpstart Our Business Startups Act (the ‘‘JOBS
Act’’), enacted on April 5, 2012, added Section 6(e)
to the Securities Act. Section 6(e) of the Securities
Act provides that an ‘‘emerging growth company’’
may confidentially submit to the Commission a
draft registration statement for confidential, nonpublic review by the Commission staff prior to
public filing, provided that the initial confidential
submission and all amendments thereto shall be
publicly filed not later than 21 days before the date
on which the issuer conducts a road show, as such
term is defined in Securities Act Rule 433(h)(4). An
emerging growth company is defined in Section
2(a)(19) of the Securities Act as an issuer with less
than $1,000,000,000 total annual gross revenues
during its most recently completed fiscal year. The
Trust meets the definition of an emerging growth
company and consequently submitted its Draft
Registration Statement on Form S–1 to the
Commission on a confidential basis.
On January 20, 2017, the Trust filed its
registration statement on Form S–1 under the
Securities Act (File No. 333–215627) (the
‘‘Registration Statement on Form S–1’’). On March
24, 2017, the Trust filed Amendment No. 1 to the
Registration Statement on Form S–1. On May 4,
2017, the Trust filed Amendment No. 2 to the
Registration Statement on Form S–1. On October
25, 2017, the Trust requested the withdrawal of the
Registration Statement on Form S–1.
On October 3, 2018, the Trust confidentially filed
its draft registration statement on Form 10 under
the Securities Act (File No. 377–02297) (the ‘‘Draft
Registration Statement on Form 10’’). On December
6, 2018, the Trust confidentially filed Amendment
No. 1 to the Draft Registration Statement on Form
10. On February 25, 2019 the Trust confidentially
filed Amendment No. 2 to the Draft Registration
Statement on Form 10. On April 15, 2019, the Trust
confidentially filed Amendment No. 3 to the Draft
Registration Statement on Form 10. On September
9, 2019, the Trust confidentially filed Amendment
No. 4 to the Draft Registration Statement on Form
10. As noted above, the Trust meets the definition
of an emerging growth company under the JOBS
Act and consequently submitted its Draft
Registration Statement on Form 10 to the
Commission on a confidential basis.
E:\FR\FM\08NON1.SGM
08NON1
]]>Agencies
[Federal Register Volume 86, Number 213 (Monday, November 8, 2021)]
[Notices]
[Pages 61801-61804]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-24327]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93511]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Declaration of Effectiveness of the Fingerprint Plan
of the Financial Industry Regulatory Authority, Inc.
November 2, 2021.
On October 28, 2021, the Financial Industry Regulatory Authority,
Inc. (``FINRA'') filed with the Securities and Exchange Commission
(``Commission'' or ``SEC'') a new fingerprint plan (``Plan'') \1\
pursuant to Rule 17f-2(c) \2\ under the Securities Exchange Act of 1934
(``Exchange Act'' or ``Act'').\3\ The Plan supersedes and replaces
FINRA's current fingerprint plan, which was declared effective for the
Commission by the Division of Trading and Markets, pursuant to
delegated authority, on May 2, 2006 (``FINRA's 2006 Plan'').\4\
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\1\ Attached hereto as Exhibit A. See also Letter from Richard
Pullano, Vice President and Associate General Counsel, FINRA, to
Devin Ryan, Assistant Director, Office of Chief Counsel, Division of
Trading and Markets, dated October 28, 2021 (``FINRA Letter''),
available at https://www.finra.org/sites/default/files/2021-11/fingerprint-plan.pdf.
\2\ 17 CFR 240.17f-2(c).
\3\ 15 U.S.C. 78a et seq.
\4\ See Exchange Act Release No. 53751 (May 2, 2006), 71 FR
27299 (May 10, 2006) (Declaration of Effectiveness of the
Fingerprint Plan of the National Association of Securities Dealers,
Inc.). FINRA will continue to channel fingerprints for these
personnel consistent with the 2006 Fingerprint Plan until the new
fingerprinting process set forth in the Plan is fully implemented.
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FINRA states that it is adopting the Plan due to the age of FINRA's
current fingerprint processing platform, and the availability of more
modern alternatives offered by private vendors approved by the Federal
Bureau of Investigation (``FBI'') to channel fingerprints.\5\
Therefore, as discussed in more detail below, FINRA states that in
order to continue to facilitate compliance with the fingerprinting
requirement in Section 17(f)(2) of the Exchange Act, it is
transitioning to a new fingerprinting process for broker-dealer
personnel (of both FINRA members and other broker-dealers) and for
FINRA personnel using the services of an FBI-approved channeler (``FBI-
Approved Channel Partner'').\6\ FINRA will continue at this time its
current role as the channeler for processing fingerprints of transfer
agent and clearing agency personnel that are submitted to FINRA.\7\
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\5\ See FINRA Letter at 1.
\6\ See also infra Section 2. The FBI-Approved Channel Partner
is one of a limited number of entities approved by the FBI to submit
fingerprints to the FBI and receive the results on behalf of an
organization using that information for authorized non-criminal
justice purposes (e.g., employment suitability, licensing
determinations, etc.). The FBI reviews and approves all outsourced
channeling relationships consistent with its outsourcing standards
and protocols. As outlined in the September 28, 2021 letter from the
FBI's National Crime Prevention and Privacy Compact Council Office
(``CCO Letter''), the FBI has reviewed and conditionally granted
permission to FINRA to use a specified FBI-Approved Channel Partner
contingent upon FINRA filing a fingerprint plan with the Commission
and the Commission declaring that fingerprint plan effective. See
FINRA Letter at 2, n.4 (discussing the CCO Letter, available at
https://www.finra.org/sites/default/files/2021-11/fingerprint-plan.pdf). The terms of the CCO Letter are incorporated by reference
in the Plan. See Exhibit A at 1, n. 3.
\7\ See also infra Section 3. FINRA notes that it is seeking to
identify an alternative approach that would enable transfer agents
and clearing agencies to efficiently fulfill their obligations to
fingerprint their personnel, but would not involve FINRA acting in a
channeler role. FINRA notes that, for the last two years, transfer
agent and clearing agency personnel have accounted for less than two
percent of the fingerprints processed by FINRA. FINRA intends to
work with the Commission, FBI and the transfer agent and clearing
agency communities to identify this alternative approach. See FINRA
Letter at 1.
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For the reasons discussed below, the Commission finds that,
pursuant to Rule 17f-2(c) of the Exchange Act, the Plan is not
inconsistent with the public interest and the protection of investors
and, therefore, declares the Plan to be effective.
1. Applicable Standard
Section 17(f)(2) of the Act provides, in pertinent part, that every
member of a national securities exchange, broker, dealer, registered
transfer agent and registered clearing agency, and national securities
association (as well as others), shall require that each of its
partners, directors, officers, and employees be fingerprinted and shall
submit such fingerprints, or cause the same to be submitted, to the
Attorney General of the United States for identification and
appropriate processing.\8\ However, in accordance with Exchange Act
Rule 17f-2(c), the fingerprinting requirement of Section 17(f)(2) may
be satisfied by submitting appropriate and complete fingerprint cards
to, among others, a registered national securities association (such as
FINRA) which, pursuant to a plan filed with and declared effective by,
the Commission, forwards such fingerprint cards to the Attorney General
of the United States (``Attorney General'') or its designee for
identification and appropriate processing.\9\ Under Rule 17f-2(c), such
fingerprinting plans--like FINRA's 2006 Plan and this Plan--shall not
become effective unless it is declared effective
[[Page 61802]]
by the Commission, which requires the Commission to find that the plan
is ``not inconsistent with the public interest or the protection of
investors.'' \10\
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\8\ 15 U.S.C. 78q(f)(2).
\9\ 17 CFR 240.17f-2(c).
\10\ See id. The Commission may also impose any terms and
conditions relating to the provisions of the plan and the period of
its effectiveness as it may deem necessary or appropriate in the
public interest, for the protection of investors, or otherwise in
furtherance of the purposes of the Act. See id.
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FINRA states that the purpose of the Plan is to facilitate
compliance with Section 17(f)(2) of the Act and Rule 17f-2 thereunder
by providing a program for FINRA members,\11\ other broker-dealers,
transfer agents, clearing agencies and FINRA to have the fingerprints
of their partners, directors, officers, and employees processed by the
Attorney General.\12\
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\11\ For purposes of the Plan, the term ``members'' included
Capital Acquisition Brokers, Funding Portals and applicants for
FINRA membership.
\12\ See Exhibit A.
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2. FINRA Members and Other Broker-Dealers
Under FINRA's 2006 Plan, FINRA accepts fingerprints and identifying
information from member firms and other securities industry
participants required to be fingerprinted under Rule 17f-2.\13\ FINRA
then transmits these fingerprints and identifying information to the
FBI, which the Attorney General has designated to identify and process
such fingerprints, consistent with protocols and requirements
established by the Attorney General.\14\ However, as set forth in the
Plan, FINRA is partnering with an FBI-Approved Channel Partner to
process fingerprints and other identifying information from personnel
of FINRA members and other broker-dealers required to be fingerprinted
pursuant to Section 17(f)(2).\15\ Under the Plan, FINRA members or
other broker-dealers will work with the FBI-Approved Channel Partner to
fingerprint such personnel or accept fingerprints from such personnel
(either in electronic or hard copy format), and the FBI-Approved
Channel Partner will submit such fingerprints to the Attorney General
for processing consistent with the protocols and requirements
established by the Attorney General.\16\ The FBI-Approved Channel
Partner will offer state-of-the-art fingerprint services to broker-
dealers that include collecting fingerprints at locations nationwide
and leasing fingerprint equipment to broker-dealers that wish to
fingerprint personnel in-house.\17\
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\13\ See FINRA Letter at 1, n. 2. FINRA's current platform uses
a customized application that include software licensed from a
vendor, and specialized equipment (to scan, digitize and transmit
fingerprints in accordance with FBI requirements). The vendor has
discontinued the software used in the customized application and
ceased providing support for it in July 2021. As a result, the
customized application, while still fully operational, is currently
supported only by FINRA technology resources. See id. at 1.
\14\ See supra note 4, 71 FR at 27299-300.
\15\ See Exhibit A at 1.
\16\ See id.
\17\ See FINRA Letter at 2.
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Also under the terms of the Plan, at least the following three key
aspects of FINRA's 2006 Plan will remain unchanged.\18\ First, FINRA
will continue to receive results after the fingerprints have been
processed by the Attorney General and FINRA will continue to make those
results available to authorized recipients (i.e., to a member or other
broker-dealer that submitted the fingerprints and to regulators, as
appropriate, for licensing, registration and other regulatory
purposes), consistent with protocols and requirements established by
the Attorney General.\19\ Second, members and other broker-dealers will
continue to be able to view the status and results of the processed
fingerprints, including any relevant criminal history information,
through FINRA systems.\20\ Third, FINRA will continue to review the
fingerprint results to fulfill its regulatory responsibilities, store
those results in the CRD or FPRD systems and make them available to
other regulators that are authorized to view the results.\21\
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\18\ See id. at 2-3. See also Exhibit A at 2.
\19\ See Exhibit A at 2.
\20\ These systems include the Central Registration Depository
(``CRD'') and the Funding Portal Registration Depository (``FPRD'').
See Exhibit A at 2.
\21\ FINRA explains that it reviews fingerprint results to
ensure that applicants for registration have reported appropriately
information responsive to the questions on Form U4 (the Uniform
Application for Securities Industry Registration or Transfer)
relating to criminal history and to identify whether any broker-
dealer personnel required to be fingerprinted is subject to a
statutory disqualification under the Exchange Act based upon a
criminal conviction. See FINRA Letter at 3.
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3. Transfer Agents and Clearing Agencies
Under the Plan, FINRA, rather than the FBI-Approved Channel Partner
discussed above, will continue to use its current fingerprint
processing platform to accept fingerprints and identifying information
from transfer agent and clearing agency personnel who are required to
be fingerprinted pursuant to Rule 17f-2 and who submit fingerprints to
FINRA for processing.\22\ FINRA will also continue to transmit
fingerprints from such personnel to the Attorney General for
identification and processing consistent with protocols and
requirements established by the Attorney General.\23\
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\22\ See FINRA Letter at 3.
\23\ FINRA also explains that, because transfer agents and
clearing agencies do not use the CRD system for registration
purposes, FINRA is unable to disseminate the fingerprint statuses
and results through that system (as it does for broker-dealer
personnel). See FINRA Letter at 3.
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4. FINRA Personnel
The FBI-Approved Channel Partner will also process fingerprints and
identifying information from FINRA personnel who are required to be
fingerprinted under Section 17(f)(2) of the Act and consistent with its
Policy to Conduct Fingerprint-Based Background Checks (``Fingerprint
Policy'').\24\ The FBI-Approved Channel Partner will also transmit
these fingerprints and identifying information to the Attorney General
for identification and processing consistent with protocols and
requirements established by the Attorney General and securely make the
results available to FINRA after the fingerprints have been
processed.\25\ FINRA will evaluate such results and take any
appropriate action in accordance with the terms of its Fingerprint
Policy.\26\
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\24\ Securities Exchange Act Release No. 50157 (August 5, 2004),
69 FR 49924 (August 12, 2004) (Notice of Filing and Immediate
Effectiveness of File No. SR-NASD-2004-095). See Exhibit A at 3.
\25\ See id.
\26\ See id.
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5. Commission's Declaration of Effectiveness of the Plan
In accordance with Rule 17f-2(c) of the Act, the Commission has
reviewed the procedures detailed in the Plan and believes that the Plan
is not inconsistent with the public interest and the protection of
investors.
The Commission observes that most of FINRA's 2006 Plan, which the
Commission found previously to be consistent with the public interest
and the protection of investors,\27\ will remain largely unchanged.\28\
As a result, the Commission has no reason to revisit its prior finding
with respect to those unchanged provisions.
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\27\ See supra note 4 and accompanying text.
\28\ For example, and as discussed above in section 2, at least
three key aspects of FINRA's 2006 Plan will remain unchanged for
FINRA members and other broker-dealers. See supra note 18 and
accompanying text. FINRA also states that its customized application
for processing fingerprints will remain fully operational, although
it will be supported only by FINRA technology resources. See FINRA
Letter at 1, n. 1. With respect to transfer agent and clearing agent
personnel, the Plan simply memorializes FINRA's existing procedures
for processing fingerprints and other identifying information for
these personnel who are required to be fingerprinted pursuant to
Section 17(f)(2). See id. at 3-4.
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With respect to FINRA's decision to partner with a new FBI-Approved
[[Page 61803]]
Channel Partner \29\ to be the central point of intake and to process
fingerprints and identifying information from its members, other
broker-dealers and FINRA personnel, rather than doing so itself, the
Commission observes the following representations made by FINRA. FINRA
states that the FBI-Approved Channel Partner will offer state-of-the-
art fingerprint services that include collecting fingerprints at
locations nationwide and leasing fingerprint equipment to broker-
dealers that wish to print personnel in-house.\30\ Notably, FINRA
believes that the partnership with the FBI-Approved Channel Partner
will enable FINRA to continue to reliably facilitate fingerprinting of
the personnel of broker-dealers as required under Section 17(f)(2) of
the Exchange Act.\31\ FINRA also believes this partnership will enable
FINRA to continue to fulfill its critical regulatory and investor
protection responsibilities, including the identification of broker-
dealer personnel required to be fingerprinted who may be subject to a
statutory disqualification based on a criminal conviction.\32\
Similarly, FINRA states that the partnership will enable it to continue
to fulfill its Exchange Act requirement to perform fingerprint-based
background checks on covered FINRA personnel.\33\
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\29\ See supra note 6 (discussing the FBI's conditional approval
of FINRA using a specified FBI-Approved Channel Partner). See also
Exhibit A at 1, n. 3.
\30\ See FINRA Letter at 2.
\31\ See id at 4.
\32\ See id.
\33\ See id.
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The Commission agrees with FINRA that these statutorily-mandated
fingerprint-based background checks--whether performed by FINRA itself
under the 2006 Plan or by an FBI-Approved Channel Partner under this
Plan--will continue to help protect investors and serve the public
interest. Based on the foregoing, the Commission finds that, pursuant
to Rule 17f-2(c) of the Exchange Act, the Plan is not inconsistent with
the public interest and the protection of investors and, therefore,
declares the Plan to be effective.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\34\
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\34\ 17 CFR 200.30-3(a)(17)(iii).
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J. Matthew DeLesDernier,
Assistant Secretary.
Exhibit A
Financial Industry Regulatory Authority; Fingerprint Plan
The Financial Industry Regulatory Authority, Inc. (``FINRA'')
submits this fingerprint plan (``Plan'') pursuant to Rule 17f-2(c)
under the Securities Exchange Act of 1934 (``Exchange Act''). This Plan
supersedes and replaces FINRA's current fingerprint plan, which was
declared effective by the Securities and Exchange Commission
(``Commission'') on May 2, 2006 (the ``2006 Fingerprint Plan'').\35\
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\35\ Securities Exchange Act Release No. 53751 (May 2, 2006), 71
FR 27299 (May 10, 2006) (Declaration of Effectiveness of the
Fingerprint Plan of the National Association of Securities Dealers,
Inc.). Pursuant to the 2006 Fingerprint Plan, FINRA channels
fingerprints for, among others, FINRA members, other broker-dealers
and FINRA personnel. FINRA will continue to channel fingerprints for
these personnel consistent with the 2006 Fingerprint Plan until the
new fingerprinting process set forth in the Plan is fully
implemented.
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The purpose of this Plan is to facilitate compliance with Section
17(f)(2) of the Exchange Act by providing a program for FINRA
members,\36\ other broker-dealers, transfer agents, clearing agencies,
and FINRA to have the fingerprints of their partners, directors,
officers, and employees processed by the Attorney General of the United
States or its designee (hereinafter ``Attorney General'').
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\36\ For purposes of the Plan, the term ``members'' includes
Capital Acquisition Brokers, Funding Portals and applicants for
FINRA membership.
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1. Members and Other Broker-Dealers
FINRA is partnering with an FBI-approved private channeler (``FBI-
Approved Channel Partner'') \37\ to process fingerprints and
identifying information from personnel of members and other broker-
dealers required to be fingerprinted pursuant to Exchange Act Section
17(f)(2) and Rule 17f-2 thereunder. The FBI-Approved Channel Partner
fingerprints such personnel or accepts fingerprints of such personnel
(either in electronic or hard copy format) and submits such
fingerprints to the Attorney General for processing consistent with
protocols and requirements established by the Attorney General.\38\
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\37\ The FBI-Approved Channel Partner is one of a limited number
of entities approved by the FBI to submit fingerprints to the FBI
and receive the results on behalf of an organization using that
information for authorized non-criminal justice purposes (e.g.,
employment suitability, licensing determinations, etc.). The FBI
reviews and approves all outsourced channeling relationships
consistent with its outsourcing standards and protocols. As outlined
in the September 28, 2021 letter from the FBI's National Crime
Prevention and Privacy Compact Council Office (``CCO Letter''), the
FBI has reviewed and conditionally granted permission to FINRA to
use a specified FBI-Approved Channel Partner contingent upon FINRA
filing a fingerprint plan with the Commission and the Commission
declaring that fingerprint plan effective. See CCO Letter, available
at https://www.finra.org/registration-exams-ce/classic-crd/fingerprints. The terms of the CCO Letter are incorporated by
reference in the Plan.
\38\ On its website, FINRA informs its members and other broker-
dealers of the availability of fingerprint services and any fees
charged by FINRA in connection with those services and the
processing of fingerprints pursuant to this Plan. See https://www.finra.org/registration-exams-ce/classic-crd/fingerprints.
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FINRA receives results from the FBI-Approved Channel Partner after
the fingerprints have been processed by the Attorney General and makes
those results available to authorized recipients (i.e., to a member or
other broker-dealer that submitted the fingerprints and to regulators,
as appropriate, for licensing, registration and other regulatory
purposes), consistent with protocols and requirements established by
the Attorney General. With respect to members and other broker-dealers,
FINRA also reviews any Criminal History Record Information returned by
the Attorney General to identify persons who may be subject to
statutory disqualification under the Exchange Act and to take action,
as appropriate, with respect to such persons.
FINRA maintains copies of fingerprint processing results received
from the Attorney General with respect to fingerprints submitted by the
FBI-Approved Channel Partner pursuant to this Plan in accordance with
FINRA's records policy.\39\ Any maintenance of fingerprint records by
FINRA shall be for FINRA's own administrative purposes; FINRA is not
undertaking to maintain fingerprint records on behalf of FINRA members
pursuant to Exchange Act Rule 17f-2(d)(2). FINRA records in FINRA
systems the status of fingerprints of personnel of members and other
broker-dealers submitted to the Attorney General.\40\ Through these
systems, FINRA makes available to a member or other broker-dealer that
has submitted fingerprints the status and results of such fingerprints
after submission to the Attorney General.
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\39\ FINRA's records policy is to maintain all records for at
least five years.
\40\ These systems include the Central Registration Depository
(CRD[supreg]) and the Funding Portal Registration Depository
(FPRD[supreg]).
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[[Page 61804]]
2. Transfer Agents and Clearing Agencies
FINRA accepts fingerprints and identifying information from
transfer agent personnel and clearing agency personnel who are required
to be fingerprinted pursuant to Exchange Act Section 17(f)(2) and Rule
17f-2 thereunder. FINRA accepts fingerprints of such personnel in hard
copy format and transmits fingerprints to the Attorney General for
identification and processing consistent with protocols and
requirements established by the Attorney General.\41\ After receiving
the processed results, FINRA transmits them to the submitting transfer
agent or clearing agency (i.e., an authorized recipient of the
results). FINRA informs transfer agents and clearing agencies of its
fingerprint processing services and the fees associated with those
services.
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\41\ FINRA is channeling transfer agent and clearing agency
fingerprints and not using the FBI-Approved Channel Partner for this
purpose.
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3. FINRA Personnel
FINRA partners with the FBI-Approved Channel Partner to obtain
fingerprints and identifying information from FINRA personnel who are
required to be fingerprinted under Exchange Act Section 17(f)(2) and
consistent with its Policy to Conduct Fingerprint-Based Background
Checks (``Fingerprint Policy'').\42\ The FBI-Approved Channel Partner
transmits fingerprints to the Attorney General for identification and
processing consistent with protocols and requirements established by
the Attorney General and securely makes the results available to FINRA
after the fingerprints have been processed. FINRA evaluates the
fingerprint results and takes any appropriate action in accordance with
the terms of the Fingerprint Policy.
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\42\ Securities Exchange Act Release No. 50157 (August 5, 2004),
69 FR 49924 (August 12, 2004) (Notice of Filing and Immediate
Effectiveness of File No. SR-NASD-2004-095).
[FR Doc. 2021-24327 Filed 11-5-21; 8:45 am]
BILLING CODE 8011-01-P
