[Federal Register Volume 81, Number 137 (Monday, July 18, 2016)]
[Notices]
[Pages 46730-46731]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-16866]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78300; File No. 4-701]


Self-Regulatory Organizations; Investors Exchange LLC; Notice of 
Filing of Proposed Minor Rule Violation Plan

July 12, 2016.
    Pursuant to Section 19(d)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19d-1(c)(2) thereunder,\2\ notice is hereby 
given that on July 11, 2016, Investors' Exchange LLC (``IEX'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed minor rule violation plan (``MRVP'') with 
sanctions not exceeding $2,500 which would not be subject to the 
provisions of Rule 19d-1(c)(1) of the Act \3\ requiring that a self-
regulatory organization (``SRO'') promptly file notice with the 
Commission of any final disciplinary action taken with respect to any 
person or organization.\4\ In accordance with Rule 19d-1(c)(2) under 
the Act,\5\ the Exchange proposed to designate certain specified rule 
violations as minor rule violations, and requested that it be relieved 
of the prompt reporting requirements regarding such violations, 
provided it gives notice of such violations to the Commission on a 
quarterly basis.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(d)(1).
    \2\ 17 CFR 240.19d-1(c)(2).
    \3\ 17 CFR 240.19d-1(c)(1).
    \4\ The Commission adopted amendments to paragraph (c) of Rule 
19d-1 to allow SROs to submit for Commission approval plans for the 
abbreviated reporting of minor disciplinary infractions. See 
Securities Exchange Act Release No. 21013 (June 1, 1984), 49 FR 
23828 (June 8, 1984). Any disciplinary action taken by an SRO 
against any person for violation of a rule of the SRO which has been 
designated as a minor rule violation pursuant to such a plan filed 
with and declared effective by the Commission is not considered 
``final'' for purposes of Section 19(d)(1) of the Act if the 
sanction imposed consists of a fine not exceeding $2,500 and the 
sanctioned person has not sought an adjudication, including a 
hearing, or otherwise exhausted his administrative remedies.
    \5\ 17 CFR 240.19d-1(c)(2).
---------------------------------------------------------------------------

    The Exchange proposes to include in its MRVP the procedures 
included in Exchange Rule 9.216(b) (``Procedure for Violation Under 
Plan Pursuant to Exchange Act Rule 19d-1(c)(2)'') and violations to be 
included in Exchange Rule 9.218 (``Violations Appropriate for 
Disposition Under Plan Pursuant to Exchange Act Rule 19d-1(c)(2)'').\6\ 
According to the Exchange's MRVP, under Rule 9.216(b), the Exchange may 
impose a fine (not to exceed $2,500) and/or a censure on any Member or 
associated person with respect to any rule listed in IEX Rule 9.218. If 
the Financial Industry Regulatory Authority (``FINRA'') Department of 
Enforcement or the Department of Market Regulation, on behalf of the 
Exchange, has reason to believe a violation has occurred and if the 
Member or associated person does not dispute the violation, the 
Department of Enforcement or the Department of Market Regulation may 
prepare and request that the Member or associated person execute a 
minor rule violation plan letter accepting a finding of violation, 
consenting to the imposition of sanctions, and agreeing to waive such 
Member's or associated person's right to a hearing before a Hearing 
Panel or, if applicable, an Extended Hearing Panel, and any right of 
appeal to the IEX Appeals Committee, the Board, the SEC, and the 
courts, or to otherwise challenge the validity of the letter, if the 
letter is accepted. The letter shall describe the act or practice 
engaged in or omitted, the rule, regulation, or statutory provision 
violated, and the sanction or sanctions to be imposed. Unless the 
letter states otherwise, the effective date of any sanction(s) imposed 
will be a date to be determined by IEX Regulation staff. In the event 
the letter is not accepted by the Member or associated person, or is 
rejected by the Office of Disciplinary Affairs, the matter can proceed 
in accordance with the Exchange's disciplinary rules already approved 
by the Commission, which include hearing rights for formal disciplinary 
proceedings.\7\
---------------------------------------------------------------------------

    \6\ The Exchange received its grant of registration on June 17, 
2016, which included approving the rules that govern the Exchange. 
See Securities Exchange Act Release No. 78101 (June 17, 2016), 81 FR 
41141 (June 23, 2016) (File No. 10-222). The Exchange anticipates, 
upon effectiveness of its MRVP, to file a rule proposal pursuant to 
Section 19(b)(1) of the Act, and Rule 19b-4 thereunder, to amend 
Rule 9.218 to specify the violations to be subject to the MRVP. 
Exhibit A includes the entirety of Rule 9.216(b) and anticipated 
changes to Rule 9.218.
    \7\ See, Chapter 9 generally.
---------------------------------------------------------------------------

    The Exchange proposes that, as set forth in Exchange Rule 9.218, 
violations of the following rules would be appropriate for disposition 
under the MRVP: Rule 2.160(p)--Continuing Education Requirements; Rule 
4.511 (General Requirements related to books and records requirements); 
Rule 4.540 (Furnishing of records); Rule 5.110 (Supervision); Rule 
8.220 (Automated submission of trading data requested); Rule 
11.151(a)(1) (Market Maker two-sided quotation requirement); Rule 
11.290 (Short sales); Rule 11.310 (Locking or crossing quotations in 
NMS stocks); and Rule 11.420 (Order audit trail system requirements).
    Upon the Commission's declaration of effectiveness of the MRVP, the 
Exchange will provide to the Commission a quarterly report for any 
actions taken on minor rule violations under the MRVP. The quarterly 
report will include: The Exchange's internal file number for the case, 
the name of the individual and/or organization, the nature of the 
violation, the specific rule provision violated, the sanction imposed, 
the number of times the rule violation occurred, and the date of the 
disposition.

[[Page 46731]]

    Additionally, the Exchange proposes that, going forward, to the 
extent that there are any changes to the rules applicable to the 
Exchange's MRVP, the Exchange hereby requests that the Commission deem 
such changes to be modifications to the Exchange's MRVP.

I. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the Exchange's proposed MRVP, including whether 
the proposed MRVP 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 4-701 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number 4-701. 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 MRVP that are filed with the 
Commission, and all written communications relating to the proposed 
MRVP 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., Washington, DC 
20549 on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the proposed MRVP also will be available for 
inspection and copying at the principal office of the Exchange. 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 4-701, and should be submitted 
on or before August 2, 2016.

II. Date of Effectiveness of the Proposed Minor Rule Violation Plan and 
Timing for Commission Action

    Pursuant to Section 19(d)(1) of the Act and Rule 19d-1(c)(2) 
thereunder,\8\ after August 2, 2016, the Commission may, by order, 
declare the Exchange proposed MRVP effective if the plan is consistent 
with the public interest, the protection of investors, or otherwise in 
furtherance of the purposes of the Act. The Commission in its order may 
restrict the categories of violations to be designated as minor rule 
violations and may impose any other terms or conditions to the proposed 
MRVP, File No. 4-701, and to the period of its effectiveness, which the 
Commission deems necessary or appropriate in the public interest, for 
the protection of investors or otherwise in furtherance of the purposes 
of the Act.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(d)(1); 17 CFR 240.19d-1(c)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
---------------------------------------------------------------------------

    \9\ 17 CFR 200.30-3(a)(44).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-16866 Filed 7-15-16; 8:45 am]
 BILLING CODE 8011-01-P