[Federal Register Volume 89, Number 131 (Tuesday, July 9, 2024)]
[Notices]
[Pages 56462-56467]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-14974]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100458; File No. SR-FINRA-2024-010]


Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Amend FINRA Rule 8312 (FINRA BrokerCheck 
Disclosure)

July 2, 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 June 27, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to amend FINRA Rule 8312 (FINRA BrokerCheck 
Disclosure), which governs the information FINRA releases to the public 
via FINRA's BrokerCheck[supreg] tool, to exclude from release through 
BrokerCheck the street address of a registered location that is 
reported and identified to FINRA as a private residence.\4\ The 
proposed rule change would help address privacy and safety concerns 
raised by broker-dealer firms and their associated persons about the 
release through BrokerCheck of the full address of an associated 
person's private residential registered location.\5\
---------------------------------------------------------------------------

    \4\ A private residence that meets the office of supervisory 
jurisdiction (``OSJ'') or branch office definitions under Rule 
3110(f)(1) and Rule 3110(f)(2), respectively, must register with 
FINRA through the use of Form BR (Uniform Branch Office Registration 
Form) (``Form BR''); provided, however, a private residence that 
qualifies for an exclusion from the ``branch office'' definition 
under Rule 3110(f)(2) or is eligible to be designated as a 
Residential Supervisory Location (``RSL'') under Rule 3110.19 would 
not have to be registered with FINRA. Rule 3110.19 became effective 
on June 1, 2024, and allows member firms to designate as an RSL the 
private residence of an associated person of a member firm at which 
they engage in specified supervisory activities, subject to certain 
safeguards and limitations, as a non-branch location. See Regulatory 
Notice 24-02 (January 2024) (``Notice 24-02''). For purposes of the 
proposed rule change, an OSJ or branch office will be collectively 
referred to as a ``registered location'' and a registered location 
that is also a private residence will be referred to as a ``private 
residential registered location.'' For purposes of the proposed rule 
change, the street address would consist of the house number (and 
apartment or unit number, as applicable), street name, and for U.S. 
locations, the postal code (``street address'').
    \5\ As noted below, BrokerCheck displays certain information 
regarding (i) current or former FINRA member firms (``member 
firms'') and current or former associated persons of such member 
firms (``associated persons of member firms'') and (ii) current or 
former broker-dealers that are members of a self-regulatory 
organization (``SRO''), other than FINRA, that uses the Central 
Registration Depository (``CRD[supreg]'') for registration purposes 
(``non-member firms''), and current or former associated persons of 
such non-member firms (``associated persons of non-member firms''). 
For purposes of the proposed rule change, associated persons of 
member firms and associated persons of non-member firms will be 
collectively referred to as ``associated persons,'' and member firms 
and non-member firms will be collectively referred to as ``broker-
dealer firms.''
---------------------------------------------------------------------------

    Below is the text of the proposed rule change. Proposed new 
language is in italics; proposed deletions is in brackets.
* * * * *
8300. SANCTIONS
* * * * *
8312. FINRA BrokerCheck Disclosure
    (a) through (f) No Change.
    (g) FINRA shall not release:
    (1) information reported as a Social Security number, residential 
history, [or] physical description, the street address of a registered 
location identified as a private residence, information that FINRA is 
otherwise prohibited from releasing under Federal law, or information 
that is provided solely for use by regulators. FINRA reserves the right 
to exclude, on a case-by-case basis, information that contains 
confidential customer information, offensive or potentially defamatory 
language or information that raises significant identity theft, 
personal safety or privacy concerns that are not outweighed by investor 
protection concerns;
    (2) through (7) No Change.
   Supplementary Material: ------------
.01 through .03 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
a. Background
i. FINRA's BrokerCheck Tool
    BrokerCheck is a free tool available on FINRA's website that is 
designed to help investors make informed choices about the associated 
persons and broker-dealer firms with which they conduct or may conduct 
business.\6\ The information that FINRA releases to the public through 
BrokerCheck is derived from CRD, the central licensing and registration 
system that FINRA operates for the benefit of FINRA, the SEC, other 
SROs, state securities regulators and broker-dealer firms. The 
information maintained in the CRD system is reported by broker-dealer 
firms, associated persons and regulatory authorities in response to 
questions on the uniform registration forms.\7\ These forms are used to 
collect registration information about broker-dealer firms and 
associated persons, including, among other things, registrations 
currently held, office locations, ownership information, and 
administrative, regulatory, criminal history, financial and other 
information.
---------------------------------------------------------------------------

    \6\ BrokerCheck is available at http://www.brokercheck.finra.org.
    \7\ The uniform registration forms are Form BD (Uniform 
Application for Broker Dealer Registration), Form BDW (Uniform 
Request for Broker-Dealer Withdrawal), Form BR, Form U4, Form U5 and 
Form U6 (Uniform Disciplinary Action Reporting Form).

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

[[Page 56463]]

    The dissemination and accessibility of registration information 
maintained in the CRD system serves three important purposes. First, 
the CRD system provides securities regulators with a critical 
regulatory tool to oversee the activities of broker-dealer firms and 
associated persons and to detect regulatory problems. Second, broker-
dealer firms use information in the CRD system to help them make 
informed employment decisions.\8\ Finally, to comply with the Exchange 
Act, FINRA makes a subset of the data maintained in the CRD system 
available through BrokerCheck so that the investing public can obtain 
information about associated persons and broker-dealer firms with which 
they conduct or may conduct business.\9\
---------------------------------------------------------------------------

    \8\ As of December 31, 2023, over 67 million registrations for 
associated persons and investment adviser representatives have been 
processed through the CRD system over a period spanning more than 20 
years.
    \9\ 15 U.S.C. 78a et seq.
---------------------------------------------------------------------------

    Rule 8312 specifies which registration information FINRA must 
release to the public through BrokerCheck.\10\ Subject to specified 
exceptions described below,\11\ investors are able to obtain 
information about broker-dealer firms and associated persons who are 
currently or were formerly registered with such broker-dealer firms, 
including the full address of any registered location where an 
associated person conducts business, even if the location is a private 
residence.\12\ FINRA notes that BrokerCheck generally does not release 
the address of an unregistered location (i.e., a non-branch location) 
and this practice would not be impacted by the proposed rule 
change.\13\
---------------------------------------------------------------------------

    \10\ Other aspects of Rule 8312 include, in general, 
establishing a process to dispute the accuracy of certain 
information released through BrokerCheck; and permitting FINRA to 
provide, upon written request, a compilation of information about 
broker-dealer firms, subject to specified terms and conditions.
    \11\ See generally Rule 8312(g).
    \12\ BrokerCheck also displays information already publicly 
disseminated through the Investment Adviser Public Disclosure 
(``IAPD[supreg]'') database about individuals that are currently 
associated persons of a broker-dealer firm who are, or were, 
licensed as investment adviser representatives. See Rule 8312(d).
    \13\ See generally Rule 3110(f)(2) (listing the locations, 
including the residential locations, excluded from the branch office 
definition).
---------------------------------------------------------------------------

    Rule 8312 also specifies information that FINRA does not release 
through BrokerCheck.\14\ For example, FINRA does not release through 
BrokerCheck information regarding examination scores or failed 
examinations,\15\ information reported as a Social Security number, 
residential history, or physical description, information that FINRA is 
otherwise prohibited from releasing under Federal law, or information 
that is provided solely for use by regulators.\16\
---------------------------------------------------------------------------

    \14\ See note 11, supra.
    \15\ See Rule 8312(b)(2)(E).
    \16\ See Rule 8312(g)(1).
---------------------------------------------------------------------------

    While the Form U4 and Form BR historically have included a 
``Private Residence Check Box'' to identify private residential 
registered locations, this information has been collected for the 
purpose of enabling regulators to appropriately prepare for and staff 
onsite examinations that are scheduled at a private residence (which 
may differ from those examinations taking place at a commercial 
office). Accordingly, FINRA had historically determined to display 
through BrokerCheck the full address of a registered location or 
private residential registered location, irrespective of whether such 
location is reported and identified as a private residence. However, in 
recent years, especially after the significant increase in work-from-
home and hybrid working arrangements since the pandemic, broker-dealer 
firms and their associated persons have raised privacy and safety 
concerns to FINRA about the release through BrokerCheck of the full 
address of an associated person's private residential registered 
location.
    As a result, FINRA undertook an assessment of Rule 8312 to take 
into consideration such privacy and safety concerns. This assessment, 
as described below, is consistent with periodic assessments that FINRA 
conducts regarding the information it provides to the public through 
BrokerCheck. Based on such periodic assessments, FINRA has previously 
made numerous changes to strengthen BrokerCheck, including changes that 
have made BrokerCheck information easier to access \17\ and have 
expanded the types of information available.\18\
---------------------------------------------------------------------------

    \17\ At the outset of FINRA's public disclosure program, FINRA 
responded to all inquiries (made in writing or via a toll-free 
telephone number) by mailing or faxing a summary of an associated 
person's or broker-dealer firm's public information to the 
requestor. The request and delivery methods of such information 
eventually moved towards further electronic means by releasing some 
information on FINRA's website and providing information in the form 
of an automated report. See generally Notice to Members 97-78 
(November 1997) (referencing FINRA responding to inquiries made in 
writing, electronically, and telephonically); Special Notice to 
Members 98-71 (August 1998) (referencing public disclosure of some 
information on FINRA's website); and Notice to Members 00-16 (March 
2000) (announcing the ability to generate automated reports that 
draw disclosure information from CRD).
    \18\ See, e.g., Securities Exchange Act Release No. 88760 (April 
28, 2020), 86 FR 26502 (May 4, 2020) (Notice of Filing and Immediate 
Effectiveness of File No. SR-FINRA-2020-012) (amending Rule 8312 to 
allow the dissemination through BrokerCheck of information already 
publicly disseminated through IAPD about individuals that are 
currently associated persons of broker-dealer firms who are, or 
were, licensed as investment adviser representatives).
---------------------------------------------------------------------------

ii. Temporary Relief From Registration
    In early response to the pandemic, many private and government 
employers closed their offices and their employees continued with their 
work from alternative locations such as private residences. The 
pandemic prompted FINRA and other regulators to provide temporary 
relief to member firms from certain regulatory requirements to address 
the public health crisis, including the Form BR Relief.\19\
---------------------------------------------------------------------------

    \19\ See Regulatory Notice 20-08 (March 2020) (``Notice 20-08'') 
(describing pandemic-related business continuity planning, guidance 
and regulatory relief that included the temporary suspension of the 
requirement that member firms submit Form BR for any newly opened 
temporary office locations or space-sharing arrangements established 
as a result of the pandemic (``Form BR Relief'')). The Form BR 
Relief expired on May 31, 2024, thus triggering the requirement 
under Article IV, Section 8 of the FINRA By-Laws that a member firm 
``shall promptly advise [FINRA] . . . of the opening, closing, 
relocation, change in designated supervisor, or change in designated 
activities of any branch office of such member not later than 30 
days after the effective date of such change.'' See Notice 24-02.
---------------------------------------------------------------------------

    The pandemic also prompted many broker-dealer firms to adopt a 
blended or hybrid work model, whereby associated persons work sometimes 
on-site in a commercial office setting and other times remotely in an 
alternative location such as a private residence. Based on feedback 
from broker-dealer firms received through various pandemic-related 
initiatives and other industry outreach,\20\ FINRA believes that this 
model will endure. As noted above, starting on June 1, 2024, member 
firms, particularly those that have been relying on the Form BR Relief, 
must resume the obligation to, among other things, submit or update 
branch office applications on Form BR, as applicable, for those 
locations, including private residences, that do not otherwise meet an 
exclusion from branch office registration under Rule 3110(f)(2) or Rule 
3110.19.\21\
---------------------------------------------------------------------------

    \20\ See generally FINRA's Key Topic: COVID-19/Coronavirus 
(referencing, among other things, Frequency Asked Questions, 
temporary amendments to FINRA rules, and Regulatory Notices), 
located at: https://www.finra.org/rules-guidance/key-topics/covid-19.
    \21\ See notes 4 and 19, supra.
---------------------------------------------------------------------------

b. Proposed Amendments to Rule 8312(g)(1)
    As noted above, Rule 8312(g)(1) currently provides that FINRA shall 
not release information reported as a Social Security number, 
residential history, or physical description, information that

[[Page 56464]]

FINRA is otherwise prohibited from releasing under Federal law, or 
information that is provided solely for use by regulators. In light of 
the privacy and safety concerns raised by broker-dealer firms and 
associated persons regarding the release through BrokerCheck of the 
full address of an associated person's private residential registered 
location, coupled with the potentially significant change to the number 
of private residences that member firms may be required to register 
through Form BR following the expiration of the Form BR Relief,\22\ 
FINRA is proposing to amend Rule 8312(g)(1) to also exclude from 
release through BrokerCheck the street address of a private residential 
registered location that a broker-dealer firm has reported and 
identified to FINRA. To operationalize the proposed rule change, FINRA 
would implement a technology enhancement that would exclude from 
release on BrokerCheck the street address information of a private 
residential registered location when a broker-dealer firm selects the 
``Private Residence Check Box'' on Form BR.\23\
---------------------------------------------------------------------------

    \22\ See note 19, supra. At this time, an estimate of such 
change to the number of private residences that member firms may be 
required to register is difficult to ascertain because of member 
firm reliance on the Form BR Relief and the potential use of RSLs in 
accordance with Rule 3110.19. See note 4, supra.
    \23\ FINRA does not believe that any changes to the uniform 
registration forms are necessary to conform with the proposed rule 
change. A broker-dealer firm establishes a registered location 
through the use of Form BR, which includes a ``Private Residence 
Check Box'' that a broker-dealer firm must select to report and 
identify to FINRA a private residential registered location. See 
``Specific Instructions for Completing Form BR'' (which provide, in 
part, that applicants ``[c]heck [the ``Private Residence Check 
Box''] if this [registered location] is also a private 
residence.''). Under the proposed rule change, FINRA expects that 
the release of the street address of a private residential 
registered location on BrokerCheck would be controlled by the 
identification of such location as a private residence through the 
``Private Residence Check Box'' on Form BR. Accordingly, where a 
private residential registered location is reported and identified 
to FINRA through the ``Private Residence Check Box'' on Form BR, 
BrokerCheck would release only the city and state, and for such a 
location outside the United States, the city and country. Similarly, 
under the proposed rule change, for an associated person located at 
an unregistered location, BrokerCheck would release only the city 
and state of the associated person's ``Supervised From'' address 
where such ``Supervised From'' location is a private residential 
registered location has been reported and identified to FINRA as a 
private residence through the ``Private Residence Check Box'' on 
Form BR. However, in some instances, reports or other aggregated 
information contained on other uniform registration forms and that 
is aggregated in CRD and released through BrokerCheck may 
nevertheless include the street address of a private residential 
registered location, even where such location is reported and 
identified to FINRA through the ``Private Residence Check Box'' on 
Form BR. For example, a broker-dealer firm's main address, as 
identified on Form BD, regardless of whether such location is also 
reported and identified to FINRA through the ``Private Residence 
Check Box'' on Form BR, would continue to be released through 
BrokerCheck.
---------------------------------------------------------------------------

    FINRA believes that the proposed rule change would address privacy 
and safety concerns raised by broker-dealer firms and associated 
persons regarding the release through BrokerCheck of the full address 
of an associated person's private residential registered location in a 
manner that would not significantly affect the protection of investors 
or the public interest in two principal ways. First, the proposed rule 
change would address the physical privacy and safety concerns raised to 
FINRA by excluding the street address of an associated person's private 
residential registered location from release on, and prevent potential 
bad actors from accessing this information through, BrokerCheck.\24\ 
Second, the proposed rule change would address the digital privacy and 
safety of associated persons by excluding from public release on 
BrokerCheck a piece of personal information that has been linked to 
identity theft.\25\
---------------------------------------------------------------------------

    \24\ FINRA believes that the proposed rule change would also 
help address specific safety concerns raised by broker-dealer firms 
and associated persons regarding associated persons whose immediate 
family members work in certain public service roles (e.g., judges or 
other public officials) and reside in the same residence as the 
associated person, or associated persons who have obtained 
restraining orders or orders of protection against third parties.
    \25\ An associated person's home address information could be 
used by a bad actor in connection with an identity theft scheme. See 
generally What to Know About Identity Theft, Federal Trade 
Commission (April 2021), https://consumer.ftc.gov/articles/what-know-about-identity-theft.
---------------------------------------------------------------------------

    Furthermore, widespread changes in workplace models in the 
financial industry, coupled with a broader adoption by customers of 
digital means of interacting with broker-dealer firms, appear to place 
less relevance on the street address of an associated person's private 
residential registered location as a necessary data point in order for 
investors to engage in securities activities with an associated person 
or broker-dealer firm. In this regard, investors now commonly open 
accounts and place trades through online platforms, and associated 
persons and broker-dealer firms communicate with customers through 
email, video or meetings programs (e.g., WebEx, Zoom) in lieu of 
visiting a broker-dealer firm's physical offices.\26\
---------------------------------------------------------------------------

    \26\ Many customers now expect their primary mode of interaction 
with their broker-dealer firm to be digital. In a study to learn 
about investors who, during the year 2020, entered into the markets 
using taxable, non-retirement investment accounts, FINRA found that 
nearly half (48%) of ``new investors,'' investors who opened a non-
retirement investment account during 2020, indicated that they 
accessed their account primarily through a mobile app, and three-
quarters (75%) of ``holdover account owners,'' investors who 
maintained a taxable investment account opened before year 2020, 
indicated they accessed their account primarily through a website. 
See generally FINRA Investor Education Foundation & NORC, Consumer 
Insights: Money & Investing, Investing 2020: New Accounts and the 
People Who Opened Them at 11 (February 2021), https://www.finrafoundation.org/sites/finrafoundation/files/investing-2020-new-accounts-and-the-people-who-opened-them_1_0.pdf.
---------------------------------------------------------------------------

    As a result, FINRA believes that the proposed rule change would not 
significantly affect the protection of investors or the public interest 
as it would not impact the information on BrokerCheck that informs an 
investor's ability to make decisions about the associated person and 
broker-dealer firm with which the investor conducts or may conduct 
business, such as disciplinary history (e.g., certain customer 
complaints, regulatory actions and criminal or civil judicial 
proceedings); disclosure events (e.g., bankruptcies or liens); 
registration history; direct and indirect ownership information; 
affiliate and executive officer information; employment history and 
other business activities. In addition, FINRA notes that the proposed 
rule change would align with the approach in IAPD with respect to 
private residential address suppression, as IAPD currently excludes 
from release the house number (and apartment or unit number, as 
applicable), street name, and for U.S. locations, the postal code of a 
registered location that is reported and identified as a private 
residence on the relevant uniform investment adviser registration 
form.\27\
---------------------------------------------------------------------------

    \27\ See Investment Advisers Act Release No. 1897 (September 12, 
2000), 65 FR 57438, 57439 (September 22, 2000) (Final Rule). The 
proposed rule change would therefore align IAPD's and BrokerCheck's 
treatment of the street address of a registered location that is 
reported and identified to FINRA as a private residence through the 
relevant uniform registration form (i.e., by excluding from release 
through BrokerCheck certain street address information regarding a 
private residential registered location that is reported and 
identified to FINRA through the ``Private Residence Check Box'' on 
Form BR).
---------------------------------------------------------------------------

    In addition, FINRA does not believe that the proposed rule change 
would significantly affect the protection of investors or the public 
interest as there are other regulatory requirements that would continue 
to provide customers with the necessary broker-dealer firm contact 
information for the purposes of submitting inquiries or complaints.\28\

[[Page 56465]]

For example, among other obligations, broker-dealer firms would still 
be required to provide customers with periodic customer account 
statements that must clearly and prominently disclose the identity of 
the introducing firm and carrying firm (if different) and their 
respective contact information for customer service.\29\ BrokerCheck 
would also continue to display the street address of a broker-dealer 
firm's main office, even where such address is a private residence.\30\ 
Thus, a mailing address would be available if necessary.
---------------------------------------------------------------------------

    \28\ See, e.g., Exchange Act Rule 17a-3(a)(18)(ii) (which 
requires broker-dealer firms to maintain a record indicating that 
each of the broker-dealer firms' customers has been provided with a 
notice containing the address and telephone number of the department 
of the broker-dealer firm to which any complaints as to the 
customers' accounts may be directed).
    \29\ See FINRA Rule 2231.05 (Customer Account Statements, 
Information to be Disclosed on Statement).
    \30\ See note 23, supra.
---------------------------------------------------------------------------

    FINRA also recognizes that some associated persons or broker-dealer 
firms may elect to ``hold out'' a private residential registered 
location that has been reported and identified to FINRA through the 
``Private Residence Check Box'' on Form BR and disclose the street 
address of such private residential registered location to existing or 
prospective customers through their websites, stationery or otherwise. 
FINRA notes that the proposed rule change would not preclude an 
associated person or broker-dealer firm from holding out such private 
residential registered location to the public using such disclosure 
methods. The proposed rule change would govern only FINRA's release of 
this specified personal information on BrokerCheck.
    Moreover, the full address of an associated person's private 
residential registered location that is reported and identified to 
FINRA through the ``Private Residence Check Box'' on Form BR would 
remain available to FINRA, the SEC, SROs, and state securities 
regulators through the CRD system.
    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, so FINRA can implement the proposed rule change on 
June 27, 2024. As member firms work to submit or update branch office 
registrations or information on Form BR within the timeframes set forth 
in Notice 24-02, FINRA believes that a waiver would efficiently match 
the timing of the proposed rule change with such efforts and thereby 
address the privacy and safety concerns of broker-dealer firms and 
their associated persons relating to the release through BrokerCheck of 
the full address of an associated person's private residential 
registered location in a manner that would not significantly affect the 
protection of investors or the public interest. Among those timeframes 
are May 31, 2024, the date on which the Form BR Relief expired, and 
June 1, 2024, the date on which member firms that have been relying on 
the Form BR Relief must resume the obligation to, among other things, 
submit or update branch office applications on Form BR for any space-
sharing arrangements or office locations, including private residential 
locations, that were established as a result of the pandemic that have 
not otherwise been registered or updated with FINRA through Form BR as 
prescribed in Article IV, Section 8 of the FINRA By-Laws.\31\ In 
resuming this obligation, FINRA expects member firms will need to 
submit or update Form BRs for applicable locations and a waiver would 
allow member firms to report and identify private residential 
registered locations through the use of the ``Private Residence Check 
Box'' as part of a single process when updating such Form BRs and thus 
address the privacy and safety concerns of broker-dealer firms and 
their associated persons relating to the release through BrokerCheck of 
the full address of an associated person's private residential 
registered location.
---------------------------------------------------------------------------

    \31\ See note 19, supra.
---------------------------------------------------------------------------

2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\32\ which requires, among 
other things, that FINRA rules 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 would help 
address privacy and safety concerns raised by broker-dealer firms and 
associated persons regarding the release of an associated person's 
street address on BrokerCheck in a manner that would not significantly 
affect the protection of investors or the public interest. As noted 
above, widespread changes in workplace models, coupled with a broader 
adoption by customers of digital means of interacting with broker-
dealer firms and associated persons, appear to place less relevance on 
the street address of an associated person's private residential 
registered location as a necessary data point in order for investors to 
engage in securities activities with associated persons or broker-
dealer firms.\33\ Given the other information that would remain on 
BrokerCheck, FINRA believes that excluding from release the street 
address, while continuing to display the city and state (or city and 
country), of a private residential registered location that is reported 
and identified to FINRA through the ``Private Residence Check Box'' on 
Form BR would not significantly affect an investor's ability to make 
informed decisions about an associated person or broker-dealer firm 
with which the investor conducts or may wish to conduct business. In 
addition, FINRA believes that the proposed rule change would not 
significantly affect the ability of an investor to contact their 
broker-dealer firm to raise concerns or complaints as there exist other 
regulatory requirements that would continue to provide customers with 
the necessary broker-dealer firm contact information.\34\ The proposed 
rule change also would not impose appreciable costs on broker-dealer 
firms because the proposed rule change does not impose any new 
obligation on broker-dealer firms.\35\ In addition, the proposed rule 
change would not preclude an associated person or broker-dealer firm 
from electing to ``hold out'' a private residential registered location 
that has been reported and identified to FINRA through the ``Private 
Residence Check Box'' on Form BR and disclose the street address of 
such private residential registered location to existing or prospective 
customers through their websites, stationery or otherwise.
---------------------------------------------------------------------------

    \32\ 15 U.S.C. 78o-3(b)(6).
    \33\ See note 26, supra.
    \34\ See notes 28 and 29, supra.
    \35\ See Article IV, Sec. 8(b) of the FINRA By-Laws 
(Registration of Branch Offices), which requires that member firms 
notify FINRA (via Form BR) of, among other things, the ``opening, 
closing or relocation . . . of a branch office location.'' This 
requirement would apply to the identification and disclosure of a 
private residential registered location that is reported and 
identified to FINRA through the use of the ``Private Residence Check 
Box'' on Form BR.
---------------------------------------------------------------------------

    Further, FINRA believes that the proposed rule change would not 
impact the efficiency with which broker-dealer firms report information 
to the CRD system, or the completeness of information available to 
FINRA, the SEC, SROs, and state regulators through the CRD system as 
the full address of an associated person's private residential 
registered location that is also reported and identified to FINRA 
through the ``Private Residence Check Box'' on Form BR would remain 
accessible to regulators.

B. Self-Regulatory Organization's Statement on Burden on Competition

    FINRA does not believe that the proposed rule change will result in 
any

[[Page 56466]]

burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, as discussed below.
Economic Impact Assessment
1. Regulatory Need
    BrokerCheck is a free online tool that allows investors to research 
the background and qualifications of associated persons and broker-
dealer firms with which they conduct or may conduct business. Excluding 
from release through BrokerCheck the street address of a private 
residential registered location that is reported and identified to 
FINRA through the ``Private Residence Check Box'' on Form BR would help 
address the privacy and safety concerns raised by broker-dealer firms 
and associated persons about the release of such information through 
BrokerCheck. The proposed rule change would not significantly affect 
the protection of investors or the public interest as it would not 
impact the information on BrokerCheck that informs an investor's 
ability to make decisions about the broker-dealer firms or associated 
persons with which they conduct or may conduct business.
2. Economic Baseline
    The economic baseline for the proposed rule change is the current 
regulatory framework, the information currently available through 
BrokerCheck and current investor use of BrokerCheck.
    As of December 31, 2023, FINRA's membership included 3,300 active 
member firms with 148,452 registered locations,\36\ of which 20,109 
were reported and identified on Form BR as private residences, 
accounting for about 22,038 associated persons of member firms.\37\ 
Approximately 900 member firms have private residential registered 
locations (about 28% of FINRA's membership), and the top five member 
firms making the greatest use of private residential registered 
locations account for approximately 34% of all such locations. These 
data may not fully reflect the number of private residential registered 
locations due to temporary regulatory relief, including the Form BR 
Relief.\38\
---------------------------------------------------------------------------

    \36\ This count excludes broker-dealers with FINRA membership 
pending approval and withdrawn or terminated from FINRA membership.
    \37\ The number of registered locations and private residential 
registered locations are derived from information provided by 
broker-dealer firms on Form BR. Under the proposed rule change, for 
associated persons located at an unregistered location, BrokerCheck 
would release the city and state of the associated person's 
``Supervised From'' address where such ``Supervised From'' location 
is a private residential registered location that has been reported 
and identified to FINRA through the ``Private Residence Check Box'' 
on Form BR. See note 23, supra. FINRA estimates that approximately 
6,300 associated persons of member firms working in unregistered 
locations are supervised from private residential registered 
locations that are reported and identified to FINRA through the 
``Private Residence Check Box'' on Form BR.
    \38\ See note 22, supra.
---------------------------------------------------------------------------

    In 2023, BrokerCheck users conducted approximately 18.3 million 
searches of broker-dealer firms and associated persons. Street address 
information concerning existing private residential registered 
locations that could be excluded from release under the proposed rule 
change (i.e., those that are reported and identified to FINRA through 
the ``Private Residence Check Box'' on Form BR) may persist in the 
public domain through other sources that retrieved information from 
BrokerCheck before the proposed change is implemented.
3. Economic Impacts
    Due to the expiration of the Form BR Relief, many broker-dealer 
firms are likely to register additional private residential locations 
to accommodate hybrid workforce arrangements.\39\ The proposed rule 
change would help to safeguard the privacy of the street addresses of 
associated persons' private residential registered locations where such 
locations are reported and identified to FINRA through the ``Private 
Residence Check Box'' on Form BR, and thereby make broker-dealer firms 
and associated person more willing to register private residential 
locations with FINRA through Form BR, as applicable. FINRA expects that 
the competitive effects of not releasing the street address of a 
private residential registered location on BrokerCheck would be 
negligible; broker-dealer firms that currently use such locations may 
be more likely to expand their use.
---------------------------------------------------------------------------

    \39\ See note 22, supra.
---------------------------------------------------------------------------

    For those private residential registered locations newly 
established after the proposed rule change would go into effect, the 
street address would be excluded from release through BrokerCheck where 
the ``Private Residence Check Box'' on Form BR is selected.\40\ As 
previously noted, street address information concerning existing 
private residential registered locations that would be excluded from 
release under the proposed rule change might be available to the public 
through other channels that sourced BrokerCheck data prior to the 
effectiveness of the proposed rule change.
---------------------------------------------------------------------------

    \40\ See note 23, supra.
---------------------------------------------------------------------------

    The proposed rule change would not impose appreciable costs on 
broker-dealer firms, nor would it significantly affect the protection 
of investors or the public interest. In addition, the proposed rule 
change would not preclude an associated person or broker-dealer firm 
from electing to ``hold out'' a private residential registered location 
that has been reported and identified to FINRA through the ``Private 
Residence Check Box'' and disclose the street address of such private 
residential registered location to existing or prospective customers 
through their websites, stationery or otherwise. FINRA notes that the 
proposed rule change would not prohibit distributing such street 
address information selectively, but if doing so is costly, a broker-
dealer firm could (as noted above) put the information on its website 
or not distribute it at all.
    FINRA believes that the proposed rule change would not 
significantly affect the protection of investors or the public 
interest. Given the other information that would remain on BrokerCheck, 
FINRA does not believe that excluding the street address from release 
through BrokerCheck, while continuing to display the city and state (or 
city and country), of a private residential registered location that is 
reported and identified to FINRA through the ``Private Residence Check 
Box'' on Form BR would significantly affect the ability of an investor 
to make an informed decision about an associated person or broker-
dealer firm with which the investor conducts or may conduct business. 
In particular, the disciplinary histories of a broker-dealer firm and 
its associated persons that are currently released through BrokerCheck 
would continue to be made available to the public. Excluding from 
release through BrokerCheck the street address of a private residential 
registered location that is reported and identified through the 
``Private Residence Check Box'' on Form BR also would not significantly 
affect the ability of an investor to raise concerns or make complaints 
about the conduct of a broker-dealer firm or associated person.\41\ The 
proposed rule change would have no impact on investors' continued 
access to the main address of a broker-dealer firm, even if the 
location is also reported and identified to FINRA as a private 
residence through the ``Private Residence Check Box'' on Form BR.\42\
---------------------------------------------------------------------------

    \41\ See notes 28 and 29, supra.
    \42\ See note 23, supra.
---------------------------------------------------------------------------

    The proposed rule change would have no impact on broker-dealer 
firms' registration requirements or supervision requirements. FINRA, 
the SEC, SROs, and state securities regulators would

[[Page 56467]]

continue to have access to the full street addresses of all registered 
locations through the CRD system.
4. Alternatives Considered
    No significant alternatives to these requirements were considered.

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 as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \43\ and Rule 19b-
4(f)(6) thereunder.\44\
---------------------------------------------------------------------------

    \43\ 15 U.S.C. 78s(b)(3)(A).
    \44\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative prior to 30 days after the date of the filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\45\ the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. FINRA has requested 
that the Commission waive the 30-day operative delay requirement so 
that the proposed rule change may become operative on June 27, 2024. 
The Commission hereby grants the request. During the pandemic, FINRA 
temporarily suspended the requirement that member firms submit Form BR 
for any newly opened temporary office locations or space-sharing 
arrangements established as a result of the pandemic. This Form BR 
Relief expired on May 31, 2024, triggering a requirement for some of 
these offices to register with FINRA. As a result, FINRA expects that 
broker-dealer firms will register a potentially significant number of 
offices, including a potentially significant number of associated 
persons' private residences. The proposed rule change would exclude 
from release through BrokerCheck the street address of a private 
residential registered location that a broker-dealer firm has reported 
and identified to FINRA, helping address privacy and safety concerns 
raised by broker-dealer firms and their associated persons. Extending 
these protections upon filing of the proposed rule change and without a 
30-day operative delay would help ensure that they would apply to 
private residential registered locations immediately and align the 
timing of the proposed rule change with the resumption of the 
obligation to register certain offices following the pandemic, thereby 
minimizing potential disruptions to the registration process. For these 
reasons, the Commission believes that waiver of the 30-day operative 
delay for this proposed rule change is consistent with the protection 
of investors and the public interest. Accordingly, the Commission 
hereby waives the 30-day operative delay and designates the proposed 
rule change operative upon filing.
---------------------------------------------------------------------------

    \45\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    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-2024-010 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-2024-010. 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-2024-010 and should be submitted 
on or before July 30, 2024.
---------------------------------------------------------------------------

    \46\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\46\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-14974 Filed 7-8-24; 8:45 am]
BILLING CODE 8011-01-P