[Federal Register Volume 89, Number 92 (Friday, May 10, 2024)]
[Notices]
[Pages 40520-40522]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-10196]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100067; File No. SR-FINRA-2024-006]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend FINRA Rule 1240.01 To Reopen the Period
by Which Certain Participants in the Maintaining Qualifications Program
May Complete Their Prescribed Continuing Education Content
May 6, 2024.
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 April 30, 2024, 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 and
II below, which Items have been prepared by FINRA. FINRA has designated
the proposed rule change as constituting a ``non-controversial'' rule
change under paragraph (f)(6) of Rule 19b-4 under the Act,\3\ 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\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
FINRA is proposing to amend FINRA Rule 1240.01 (Eligibility of
Other Persons to Participate in the Continuing Education Program
Specified in Paragraph (c) of this Rule) to reopen the period by which
certain participants in the Maintaining Qualifications Program
(``MQP'') will be able to complete their prescribed 2022 and 2023
continuing education (``CE'') content.
Below is the text of the proposed rule change. Proposed new
language is italicized; proposed deletions are in brackets.
* * * * *
1200. REGISTRATION AND QUALIFICATION
* * * * *
1240. Continuing Education
This Rule prescribes requirements regarding the continuing
education of registered persons. The requirements shall consist of a
Regulatory Element and a Firm Element as set forth below. This Rule
also sets forth continuing education programs through which
specified persons may maintain their qualification in a
representative or principal registration category following the
termination of that registration category.
(a) through (c) No Change.
Supplementary Material:------
.01 Eligibility of Other Persons to Participate in the
Continuing Education Program Specified in Paragraph (c) of this
Rule. A person registered in a representative or principal
registration category with FINRA within two years immediately
preceding March 15, 2022 shall be eligible to participate in the
continuing education program under paragraph (c) of this Rule,
provided that he or she satisfies the conditions set forth in
paragraphs (c)(1) and (c)(3) through (c)(6) of this Rule. In
addition, a person participating in the Financial Services Affiliate
Waiver Program under Rule 1210.09 immediately preceding March 15,
2022 shall be eligible to participate in the continuing education
program under paragraph (c) of this Rule, provided that he or she
satisfies the conditions set forth in paragraphs (c)(3), (c)(5) and
(c)(6) of this Rule. Persons eligible under this Supplementary
Material .01 shall make their election to participate in the
continuing education program under paragraph (c) of this Rule either
(1) between January 31, 2022, and March 15, 2022; or (2) between
March 15, 2023, and December 31, 2023. If such persons elect to
participate in the continuing education program, their participation
period shall also be for a period of five years following the
termination of their registration categories, as with other
participants under paragraph (c) of this Rule. [In addition,
eligible persons who elect to participate in the continuing
education program between March 15, 2023, and December 31, 2023,
must complete any prescribed 2022 and 2023 continuing education
content by March 31, 2024.] Individuals enrolled in the continuing
education program under this Supplementary Material .01 in both 2022
and 2023 who did not complete their prescribed 2022 and 2023
continuing education content as of March 31, 2024, shall be able to
complete such content between May 22, 2024, and July 1, 2024, to be
eligible to continue their participation in the continuing education
program. In addition, any such individuals who will have completed
their prescribed 2022 and 2023 continuing education content between
March 31, 2024, and May 22, 2024, shall be deemed to have completed
such content by July 1, 2024, for purposes of this Supplementary
Material .01.
.02 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
FINRA Rule 1240.01 extended the option to participate in the MQP to
individuals who: (1) were registered as a representative or principal
within two years immediately prior to March 15, 2022 (the
implementation date of the
[[Page 40521]]
MQP); and (2) individuals who were participating in the Financial
Services Affiliate Waiver Program (``FSAWP'') under FINRA Rule 1210.09
(Waiver of Examinations for Individuals Working for a Financial
Services Industry Affiliate of a Member) immediately prior to March 15,
2022 (collectively, ``Look-Back Individuals'').\4\ The rule provided
two open enrollment periods for Look-Back Individuals to participate in
the MQP.\5\ FINRA provided all Look-Back Individuals who had enrolled
in the MQP until March 31, 2024, to complete any prescribed 2022 and
2023 CE content.\6\ Look-Back Individuals who are enrolled in the MQP,
similar to other MQP participants, are able to complete any prescribed
CE and renew their annual MQP participation through their FINRA
Financial Professional Gateway (``FinPro'') accounts.
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\4\ The FSAWP is a waiver program for eligible individuals who
have left a member firm to work for a foreign or domestic financial
services affiliate of a member firm. FINRA stopped accepting new
participants for the FSAWP beginning on March 15, 2022; however,
individuals who were already participating in the FSAWP prior to
that date had the option of continuing in the FSAWP.
\5\ In March 2023, FINRA amended Rule 1240.01 to provide Look-
Back Individuals with a second opportunity to participate in the
MQP. See Securities Exchange Act Release No. 97184 (March 22, 2023),
88 FR 18359 (March 28, 2023) (Notice of Filing and Immediate
Effectiveness of File No. SR-FINRA-2023-005).
\6\ FINRA determined to treat the individuals who enrolled
during the first period (between January 31, 2022, and March 15,
2022) the same as those who enrolled during the second period
(between March 15, 2023, and December 31, 2023) for purposes of the
March 31, 2024, deadline for completion of prescribed 2022 and 2023
CE content. This is because those who had enrolled in the MQP during
the first period satisfied all of the eligibility criteria for
enrollment during the second period and would have been able to
complete their prescribed CE content by March 31, 2024, had they
chosen to enroll during the second period instead of enrolling
during the first period.
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On March 16, 2024, FINRA sent an email to Look-Back Individuals who
had enrolled in the MQP but had not completed their prescribed CE to
remind them of the March 31, 2024, deadline.\7\ In the week leading up
to the deadline, however, FINRA noticed that several thousand of those
individuals were renewing their participation in the MQP for 2024
instead of completing their prescribed CE.\8\ FINRA believes that some
of those individuals may have been confused by the layout of their
FinPro accounts. Specifically, if they selected the 2024 renewal
banner, which was prominently displayed on their FinPro accounts, and
completed the renewal process, they would not have been automatically
redirected to complete any prescribed CE. Therefore, individuals may
have inadvertently assumed that completion of the renewal process alone
would have satisfied all of the necessary requirements to continue
their participation in the MQP.\9\
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\7\ FINRA had sent multiple reminders prior to March 16, 2024,
but the March 16, 2024, email was the last reminder that was sent
prior to the March 31, 2024, deadline for completion of any
prescribed 2022 and 2023 CE content.
\8\ Look-Back Individuals who enrolled in the MQP have until
December 31, 2024, to renew their participation in the MQP for 2024,
provided that they complete their prescribed CE by the stated
deadline.
\9\ A number of these individuals contacted FINRA to confirm
whether they were required to satisfy any additional requirements
other than completing the 2024 renewal. To provide FINRA with
additional time to assess the situation, FINRA temporarily changed
the March 31, 2024, due date for CE completion in its systems. This
may have compounded the confusion because any Look-Back Individual
who may have logged into their FinPro account during this time would
have seen an interim CE completion date and would have been able to
complete their prescribed CE content based on that interim CE
completion date.
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For these reasons, FINRA is proposing to amend Rule 1240.01 to
provide Look-Back Individuals enrolled in the MQP in both 2022 and 2023
who did not complete their prescribed 2022 and 2023 CE content as of
March 31, 2024, the opportunity to complete such content between May
22, 2024, and July 1, 2024, to be eligible to continue their
participation in the MQP.\10\ FINRA is also proposing to amend the rule
to provide that any such individuals who will have completed their
prescribed 2022 and 2023 CE content between March 31, 2024, and May 22,
2024, will be deemed to have completed such content by July 1, 2024,
for purposes of the rule. FINRA plans to reach out to all impacted
individuals and inform them of the new CE completion period. FINRA has
made changes, and is also considering future changes, to the layout of
FinPro to more effectively communicate the necessary steps that
individuals must take to satisfy their MQP obligations.
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\10\ This would include any Look-Back Individuals who were still
in the process of completing their prescribed CE content as of March
31, 2024.
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FINRA has filed the proposed rule change for immediate
effectiveness and has requested that the SEC waive the requirement that
the proposed rule change not become operative for 30 days after the
date of the filing. The operative date will be the date of filing of
the proposed rule change, if the SEC grants the waiver.
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 acts and practices, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest. FINRA believes that reopening the period by which
Look-Back Individuals will be able to complete their prescribed 2022
and 2023 CE content is appropriate under the circumstances. FINRA
believes that Look-Back Individuals who had enrolled in the MQP in 2022
and 2023 but had not completed their prescribed 2022 and 2023 CE
content by the March 31, 2024, deadline may have been confused, as
described above. FINRA continues to believe that participation in the
MQP reduces unnecessary impediments to requalification without
diminishing investor protection.\12\ In addition, the MQP promotes
other goals, such as diversity and inclusion in the securities industry
by attracting and retaining a broader and diverse group of
professionals. The MQP also allows the industry to retain expertise
from skilled individuals, providing investors with the advantage of
greater experience among the individuals working in the industry. FINRA
believes that reopening the CE completion period, as proposed, will
further these goals and objectives.
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\11\ 15 U.S.C. 78o-3(b)(6).
\12\ As of April 15, 2024, approximately 31,000 individuals,
including approximately 20,000 Look-Back Individuals, have enrolled
in the MQP, of which approximately 1,400 individuals have used the
MQP to return to the industry without having to go through
requalification.
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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. Further, FINRA provided an
extensive economic impact assessment relating to the MQP as part of the
rule filing that proposed the adoption of the MQP.\13\
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\13\ See Securities Exchange Act Release No. 92183 (June 15,
2021), 86 FR 33427 (June 24, 2021) (Notice of Filing of File No. SR-
FINRA-2021-015).
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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
Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time
[[Page 40522]]
as the Commission may designate, it has become effective pursuant to
Section 19(b)(3)(A) of the Act \14\ and Rule 19b-4(f)(6)
thereunder.\15\
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\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
FINRA has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \16\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b4(f)(6)(iii),\17\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. FINRA has asked the
Commission to waive the 30-day operative delay so that the proposed
rule change may become operative upon filing. As outlined above, FINRA
states that it plans to reach out to all impacted individuals and
inform them of the new CE completion period established by this rule
change. FINRA has indicated that the immediate operation of the
proposed rule change is appropriate so that FINRA can communicate the
rule change to impacted individuals promptly. FINRA also believes that
immediate operation of the proposed rule change is appropriate because
it would provide clarity to impacted individuals without unnecessary
delay. For these reasons, the Commission believes that waiving the 30-
day operative delay is consistent with the protection of investors and
the public interest. Therefore, the Commission hereby waives the
operative delay and designates the proposal operative upon filing.\18\
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\16\ 17 CFR 240.19b-4(f)(6).
\17\ 17 CFR 240.19b-4(f)(6)(iii).
\18\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the 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 to
determine whether the proposed rule 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:
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-2024-006 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-2024-006. 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
a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal office of FINRA. Do not include
personal identifiable information in submissions; you should submit
only information that you wish to make available publicly. We may
redact in part or withhold entirely from publication submitted material
that is obscene or subject to copyright protection. All submissions
should refer to File Number SR-FINRA-2024-006 and should be submitted
on or before May 31, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-10196 Filed 5-9-24; 8:45 am]
BILLING CODE 8011-01-P