[Federal Register Volume 76, Number 250 (Thursday, December 29, 2011)]
[Notices]
[Pages 82014-82016]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-33488]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-66049; File No. SR-FINRA-2011-035]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing of Amendment No. 2 to Proposed Rule
Change, as Modified by Amendment No. 1, To Adopt FINRA Rules 2210
(Communications With the Public), 2212 (Use of Investment Companies
Rankings in Retail Communications), 2213 (Requirements for the Use of
Bond Mutual Fund Volatility Ratings), 2214 (Requirements for the Use of
Investment Analysis Tools), 2215 (Communications With the Public
Regarding Security Futures), and 2216 (Communications With the Public
About Collateralized Mortgage Obligations (CMOs)) in the Consolidated
FINRA Rulebook
December 23, 2011.
I. Introduction
On July 14, 2011, the Financial Industry Regulatory Authority, Inc.
(``FINRA'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Exchange Act'' or ``Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to adopt NASD Rules 2210 and 2211
and NASD Interpretive Materials 2210-1 and 2210-3 through 2210-8 as
FINRA Rules 2210 and 2212 through 2216, and to delete paragraphs
(a)(1), (i), (j) and (l) of Incorporated NYSE Rule 472, Incorporated
NYSE Rule Supplementary Material 472.10(1), (3), (4) and (5) and
472.90, and Incorporated NYSE Rule Interpretations 472/01 and 472/03
through 472/11. The proposed rule change was published for comment
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in the Federal Register on August 3, 2011.\3\ The Commission received
nine comment letters in response to the proposed rule change.\4\ On
October 31, 2011, FINRA filed Amendment No. 1 to the proposed rule
change and a letter responding to comments.\5\ The proposed Amendment
No. 1 was published for comment along with an order instituting
proceedings pursuant to Section 19(b)(2)(B) of the Act, to determine
whether to approve or disapprove the proposed rule change, as modified
by Amendment No. 1, in the Federal Register on November 7, 2011.\6\ The
comment period closed on December 7, 2011 and FINRA's rebuttal period
closed on December 22, 2011. The Commission received seven comment
letters in response to the Notice and Proceedings Order.\7\ On December
22, 2011, FINRA filed Amendment No. 2 to the proposed rule change and a
letter responding to comments.\8\ The text of Amendment No. 2 and
FINRA's Rebuttal Letter are available on FINRA's Web site at http://www.finra.org, at the principal office of FINRA and at the Commission's
Public Reference Room. FINRA's Rebuttal Letter is also available on the
Commission's Web site at http://www.sec.gov.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 64984 (July 28,
2011), 76 FR 46870 (August 3, 2011).
\4\ Comment letters are available at www.sec.gov.
\5\ See letter from Joseph P. Savage, FINRA, to Elizabeth
Murphy, Secretary, SEC, dated October 31, 2011 (``Response
Letter''). The text of proposed Amendment No. 1 and FINRA's Response
Letter are available on FINRA's Web site at http://www.finra.org, at
the principal office of FINRA and at the Commission's Public
Reference Room. FINRA's Response Letter is also available on the
Commission's Web site at http://www.sec.gov.
\6\ See Securities Exchange Act Release No. 65663 (November 1,
2011), 76 FR 68800 (November 7, 2011) (Notice of Filing of Amendment
No. 1 and Order Instituting Proceedings SR-FINRA-2011-035) (``Notice
and Proceedings Order''). The comment period closed on December 7,
2011 and FINRA's rebuttal period closed on December 22, 2011.
\7\ See letter from Melissa Callison, Vice President,
Compliance, Charles Schwab & Co., Inc., dated December 7, 2011
(``Schwab''); letter from Alexander C. Gavis, Vice President &
Associate General Counsel, Fidelity Investments, dated December 7,
2011 (``Fidelity''); letter from David T. Bellaire, General Counsel
and Director of Government Affairs, Financial Services Institute,
dated December 7, 2011 (``FSI''); letter from Dorothy M. Donohue,
Senior Associate Counsel, Investment Company Institute, dated
December 7, 2011 (``ICI''); letter from John Polanin and Claire
Santaniello, Co-Chairs, Compliance and Regulatory Policy Committee
of the Securities Industry and Financial Markets Association
(``SIFMA''); letter from Sandra J. Burke, Principal, Vanguard, dated
December 7, 2011 (``Vanguard''); and letter from Jeremiah McGair,
Attorney, Wolverine Execution Services, LLC, dated December 7, 2011
(``Wolverine''). Comment letters are available at www.sec.gov.
\8\ See letter from Joseph P. Savage, FINRA, to Elizabeth M.
Murphy, Secretary, SEC, dated December 22, 2011 (``Rebuttal
Letter'').
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II. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Amendment
First, FINRA is proposing to amend proposed FINRA Rule 2210 to
exclude from the definition of ``institutional communication'' a
member's internal communications used to train or educate registered
persons about the products or services of the member. In this regard,
FINRA proposes to delete proposed Supplementary Material 2210.01 in its
entirety. FINRA also proposes to revise proposed FINRA Rule 2210(a)(3)
as set forth below. Proposed new language is in italics.
(3) ``Institutional communication'' means any written (including
electronic) communication that is distributed or made available only to
institutional investors, but does not include a member's internal
communications.
Second, FINRA is proposing to amend proposed FINRA Rule 2210 to
allow a member that is subject to the new member pre-use filing
requirements to file a broker-prepared free writing prospectus within
10 business days of first use, rather than at least 10 business days
prior to first use. In this regard, FINRA proposes to replace proposed
FINRA Rule 2210(c)(1)(A) with the following:
(A) For a period of one year beginning on the date reflected in the
Central Registration Depository (CRD[supreg]) system as the date that
FINRA membership became effective, the member must file with the
Department at least 10 business days prior to first use any retail
communication that is published or used in any electronic or other
public media, including any generally accessible Web site, newspaper,
magazine or other periodical, radio, television, telephone or audio
recording, video display, signs or billboards, motion pictures, or
telephone directories (other than routine listings). To the extent any
retail communication that is subject to this filing requirement is a
free writing prospectus that has been filed with the SEC pursuant to
Securities Act Rule 433(d)(1)(ii), the member may file such retail
communication within 10 business days of first use rather than at least
10 business days prior to first use.
Third, in response to comments received by the Commission, FINRA is
proposing to amend proposed FINRA Rule 2210 to exclude from the filing
requirements retail communications that are posted on an online
interactive electronic forum. FINRA also is proposing to amend FINRA
Rule 2210 to exclude from the filing requirements press releases issued
by closed-end investment companies that are listed on the New York
Stock Exchange (``NYSE'') pursuant to section 202.06 of the NYSE Listed
Company Manual (or any successor provision). In this regard, FINRA
proposes to insert the following new sub-paragraphs (M) and (N) at the
end of paragraph (c)(7) of proposed FINRA Rule 2210:
(M) Retail communications that are posted on an online interactive
electronic forum.
(N) Press releases issued by closed-end investment companies that
are listed on the New York Stock Exchange (NYSE) pursuant to section
202.06 of the NYSE Listed Company Manual (or any successor provision).
III. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the filing as
amended by Amendments 1 and 2 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 email to [email protected]. Please include
File Number SR-FINRA-2011-035 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-FINRA-2011-035. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (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 Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
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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; 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-2011-035 and should be
submitted on or before January 18, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-33488 Filed 12-28-11; 8:45 am]
BILLING CODE 8011-01-P