[Federal Register Volume 73, Number 249 (Monday, December 29, 2008)]
[Notices]
[Pages 79525-79527]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-30785]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-59108; File No. SR-FINRA-2008-063]
Self-Regulatory Organizations: Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of
Proposed Rule Change Relating to Adoption of NASD Rules 12805 and 13805
as FINRA Rules in the New Consolidated FINRA Rulebook
December 16, 2008.
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 December 15, 2008, the Financial Industry Regulatory Authority, Inc.
(``FINRA'') (f/k/a National Association of Securities Dealers, Inc.
(``NASD'')) filed with the Securities and Exchange Commission (``SEC''
or ``Commission'') the proposed rule change as described in Items I,
II, and III below, which Items have been prepared by FINRA. FINRA has
designated the proposed rule change as concerned solely with the
administration of the self-regulatory organization under Section
19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(3) thereunder,\4\ which
renders the proposal effective upon receipt of this filing by the
Commission. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(3).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
FINRA is proposing to adopt Rule 12805 of the NASD Code of
Arbitration Procedure for Customer Disputes (``Customer Code'') and
Rule 13805 of the NASD Code of Arbitration Procedure for Industry
Disputes (``Industry Code'') (collectively, the ``NASD Codes'') as
FINRA rules into a new consolidated rulebook. Below is the text of
Rules 12805 and 13805. FINRA is not proposing any changes to the rule
text.
* * * * *
Customer Code
12805. Expungement of Customer Dispute Information under Rule 2130
In order to grant expungement of customer dispute information under
Rule 2130, the panel must:
[[Page 79526]]
(a) Hold a recorded hearing session (by telephone or in person)
regarding the appropriateness of expungement. This paragraph will apply
to cases administered under Rule 12800 even if a customer did not
request a hearing on the merits.
(b) In cases involving settlements, review settlement documents and
consider the amount of payments made to any party and any other terms
and conditions of a settlement.
(c) Indicate in the arbitration award which of the Rule 2130
grounds for expungement serve(s) as the basis for its expungement order
and provide a brief written explanation of the reason(s) for its
finding that one or more Rule 2130 grounds for expungement applies to
the facts of the case.
(d) Assess all forum fees for hearing sessions in which the sole
topic is the determination of the appropriateness of expungement
against the parties requesting expungement relief.
* * * * *
Industry Code
13805. Expungement of Customer Dispute Information under Rule 2130
In order to grant expungement of customer dispute information under
Rule 2130, the panel must:
(a) Hold a recorded hearing session (by telephone or in person)
regarding the appropriateness of expungement. This paragraph will apply
to cases administered under Rule 13800 even if a claimant did not
request a hearing on the merits.
(b) In cases involving settlements, review settlement documents and
consider the amount of payments made to any party and any other terms
and conditions of a settlement.
(c) Indicate in the arbitration award which of the Rule 2130
grounds for expungement serve(s) as the basis for its expungement order
and provide a brief written explanation of the reason(s) for its
finding that one or more Rule 2130 grounds for expungement applies to
the facts of the case.
(d) Assess all forum fees for hearing sessions in which the sole
topic is the determination of the appropriateness of expungement
against the parties requesting expungement relief.
* * * * *
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, FINRA included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. FINRA has prepared summaries, set forth in sections A,
B, and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
FINRA is in the process of developing the new consolidated rulebook
(``Consolidated FINRA Rulebook'').\5\ That process involves FINRA
submitting to the Commission for approval a series of proposed rule
changes over time to adopt rules in the Consolidated FINRA Rulebook.
The phased adoption and implementation of those rules necessitates
periodic amendments to update rule cross-references and other non-
substantive technical changes in the Consolidated FINRA Rulebook.
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\5\ The current FINRA rulebook includes, in addition to FINRA
Rules, (1) NASD Rules and (2) rules incorporated from NYSE
(``Incorporated NYSE Rules'') (together, the NASD Rules and
Incorporated NYSE Rules are referred to as the ``Transitional
Rulebook''). While the NASD Rules generally apply to all FINRA
members, the Incorporated NYSE Rules apply only to those members of
FINRA that are also members of the NYSE (``Dual Members''). For more
information about the rulebook consolidation process, see FINRA
Information Notice, March 12, 2008 (Rulebook Consolidation Process).
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On September 25, 2008, the Commission approved, among other
matters, a proposed rule change to adopt the NASD Codes as FINRA rules
into a new consolidated rulebook.\6\ Those rules will be implemented on
December 15, 2008.\7\
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\6\ See Securities Exchange Act Release No. 58643 (September 25,
2008), 73 FR 57174 (October 1, 2008) (Order Approving File No. SR-
FINRA-2008-021).
\7\ See FINRA Regulatory Notice 08-57 (October 2008) (FINRA
Announces SEC Approval and Effective Date for New Consolidated FINRA
Rules).
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The Commission approved new Rules 12805 and 13805 of the NASD
Codes, which FINRA has not yet made effective.\8\ In a Regulatory
Notice to be issued on December 15, 2008, FINRA will announce the
effective date for new Rules 12805 and 13805. The proposed rule change
would permit FINRA to include new Rules 12805 and 13805 with the rules
that will be implemented in the Consolidated FINRA Rulebook on December
15, 2008.
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\8\ See Securities Exchange Act Release No. 58886 (October 30,
2008), 73 FR 66086 (November 6, 2008) (Order Approving File No. SR-
FINRA-2008-010).
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2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\9\ which requires, among
other things, that FINRA rules must be designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest. FINRA believes the proposed rule change will provide
greater clarity to members and the public regarding FINRA's rules.
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\9\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition
FINRA does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \10\ and paragraph (f)(3) of Rule 19b-4
thereunder.\11\ At any time within 60 days of the filing of the
proposed rule change, the Commission may summarily abrogate 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.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(3).
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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 (http://www.sec.gov/rules/sro.shtml); or
Send an e-mail to [email protected]. Please include
File Number SR-FINRA-2008-063 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.
[[Page 79527]]
All submissions should refer to File Number SR-FINRA-2008-063. 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 Web site (http://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 inspection
and copying in the Commission's Public Reference Room 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; the Commission
does not edit personal identifying information from submissions. You
should submit only information that you wish to make available
publicly. All submissions should refer to File Number SR-FINRA-2008-063
and should be submitted on or before January 20, 2009.
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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Florence Harmon,
Acting Secretary.
[FR Doc. E8-30785 Filed 12-24-08; 8:45 am]
BILLING CODE 8011-01-P