Federal Register / Vol. 75, No. 32 / Thursday, February 18, 2010 / Notices 7297 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 61057 

(Nov. 24, 2009), 74 FR 62855 (‘‘Notice’’). 

4See letter from William A. Jacobson, Esq. and 

Kelly Cardin, Cornell Law School, to Elizabeth M. 

Murphy, Secretary, Commission, dated December 

16, 2009 (‘‘Cornell Letter’’); letter from Scott R. 

Shewan, President, Public Investors Arbitration Bar 

Association, to Elizabeth M. Murphy, Secretary, 

Commission, dated December 21, 2009 (‘‘PIABA 

Letter’’). 

5See letter from Mignon McLemore, FINRA 

Dispute Resolution, to Elizabeth M. Murphy, 

Secretary, Commission, dated January 29, 2010 

(‘‘FINRA Response’’). 

III. Ordering Paragraphs 

It is ordered: 

1. The Commission establishes Docket 

No. CP2010–23 for consideration of 

matters raised by the Postal Service’s 

Notice. 

2. Comments by interested persons in 

these proceedings are due no later than 

February 19, 2010. 

3. Pursuant to 39 U.S.C. 505, Paul 

Harrington is appointed to serve as the 

officer of the Commission (Public 

Representative) to represent the 

interests of the general public in these 

proceedings. 

4. The Secretary shall arrange for 

publication of this order in the Federal 

Register. 

By the Commission. 

Shoshana M. Grove, 

Secretary. 

[FR Doc. 2010–3061 Filed 2–17–10; 8:45 am] 

BILLING CODE 7710–FW–S 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meeting 

Notice is hereby given, pursuant to 

the provisions of the Government in the 

Sunshine Act, Public Law 94–409, that 

the Securities and Exchange 

Commission will hold a Closed Meeting 

on Thursday, February 18, 2010 at 2 

p.m. 

Commissioners, Counsel to the 

Commissioners, the Secretary to the 

Commission, and recording secretaries 

will attend the Closed Meeting. Certain 

staff members who have an interest in 

the matters also may be present. 

The General Counsel of the 

Commission, or his designee, has 

certified that, in his opinion, one or 

more of the exemptions set forth in 5 

U.S.C. 552b(c)(3), (5), (7), 9(B) and (10) 

and 17 CFR 200.402(a)(3), (5), (7), 9(ii) 

and (10), permit consideration of the 

scheduled matters at the Closed 

Meeting. 

Commissioner Walter, as duty officer, 

voted to consider the items listed for the 

Closed Meeting in a closed session, and 

determined that no earlier notice thereof 

was possible. 

The subject matter of the Closed 

Meeting scheduled for Thursday, 

February 18, 2010 will be: 

Institution and settlement of injunctive 

actions; 

Institution and settlement of 

administrative proceedings; 

An adjudicatory matter; 

Amicus consideration; and 

Other matters relating to enforcement 

proceedings. 

At times, changes in Commission 

priorities require alterations in the 

scheduling of meeting items. 

For further information and to 

ascertain what, if any, matters have been 

added, deleted or postponed, please 

contact: 

The Office of the Secretary at (202) 

551–5400. 

Dated: February 12, 2010. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–3138 Filed 2–16–10; 11:15 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meeting 

Notice is hereby given, pursuant to 

the provisions of the Government in the 

Sunshine Act, Public Law 94–409, that 

the Securities and Exchange 

Commission Investor Advisory 

Committee will hold an Open Meeting 

on Monday, February 22, 2010, in the 

Multipurpose Room, L–006. The 

meeting will begin at 9 a.m. and will be 

open to the public, with seating on a 

first-come, first-served basis. Doors will 

open at 8:30 a.m. Visitors will be subject 

to security checks. 

On February 2, 2010, the Commission 

published notice of the Committee 

meeting (Release No. 33–9104), 

indicating that the meeting is open to 

the public and inviting the public to 

submit written comments to the 

Committee. This Sunshine Act notice is 

being issued because a majority of the 

Commission may attend the meeting. 

The agenda for the meeting includes 

consideration of a Committee recusal 

policy, a report from the Education 

Subcommittee, including a presentation 

on the National Financial Capability 

Survey, a report from the Investor as 

Purchaser Subcommittee, including a 

discussion of fiduciary duty and 

mandatory arbitration, a report from the 

Investor as Owner Subcommittee, 

including recommendations for the 

Committee on Regulation FD and proxy 

voting transparency, as well as reports 

on a work plan for environmental, 

social, and governance disclosure and 

on financial reform legislation, and 

discussion of next steps and closing 

comments. 

For further information, please 

contact the Office of the Secretary at 

(202) 551–5400. 

Dated: February 12, 2010. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2010–3196 Filed 2–16–10; 11:15 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–61505; File No. SR–FINRA– 

2009–075] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Order Approving 

Proposed Rule Change To Amend the 

Postponement Fee and Hearing 

Session Fee Rules of the Codes of 

Arbitration Procedure for Customer 

and Industry Disputes 

February 4, 2010. 

I. Introduction 

On November 4, 2009, Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’), 

pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a 

proposed rule change to amend Rules 

12601(b) and 12902(a) of the Code of 

Arbitration Procedure for Customer 

Disputes (‘‘Customer Code’’) and Rules 

13601(b) and 13902(a) of the Code of 

Arbitration Procedure for Industry 

Disputes (‘‘Industry Code’’) (together, the 

‘‘Codes’’) to clarify the applicability of 

the fee waiver provision of the 

postponement rule and to codify the 

hearing session fee for an unspecified 

damages claim heard by one arbitrator. 

The proposed rule change was 

published for comment in the Federal 

Register on December 1, 2009.3 The 

Commission received two comment 

letters on the proposal.4 FINRA 

submitted a response to these comments 

on January 29, 2010.5 This order 

approves the proposed rule change. 

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7298 Federal Register / Vol. 75, No. 32 / Thursday, February 18, 2010 / Notices 

6See Rules 12601(a)(1) and 13601(a)(1). 

7See Rules 12601(a)(2) and 13601(a)(2). 

8See Rules 12601(b)(1) and 13601(b)(1). 

9See Rules 12601(b)(2) and 13601(b)(2). 

10See Rules 12601(b)(3) and 13601(b)(3). 

11A hearing session can either be an arbitration 

hearing or a prehearing conference. Rule 12100(n) 

and Rule 13100(n). 

12See Rules 12902(a)(1) and Rule 13902(a)(1). 

13 Id. 

14See Rules 12902(a)(2) and 13902(a)(2). 

15For hearing sessions involving three arbitrators 

in which parties request damages ranging from 

$25,000.01 to over $500,000, the amount for each 

hearing session can range from $600 to $1200. 

16See Rules 12902(a)(1) and Rule 13902(a)(1). 

17See Rules 12902(a)(2) and 13902(a)(2). 

18See supra, note 4. 

19See Cornell Letter at 2. 

20 Id. 

21See PIABA Letter at 1. 

22See PIABA Letter at 2. 

23 Id. 

24See FINRA Response at 2–3. 

25 Id. at 3. 

26 Id. 

II. Description of the Proposal 

Proposed Amendment to Rules 

12601(b)(3) and 13601(b)(3) 

The rules of the Codes require 

arbitration hearings to be postponed if 

the parties agree.6 Hearings may also be 

postponed by the Director of FINRA 

Dispute Resolution (‘‘Director’’), by the 

arbitration panel in its own discretion, 

or by the panel on a motion of a party.7

If a hearing is postponed, the panel will 

assess a postponement fee against one or 

more of the parties, which is typically 

equivalent to the applicable hearing 

session fee that would have been 

assessed had the hearing been held.8 If 

parties request and are granted a hearing 

postponement within three business 

days of a scheduled hearing session (i.e., 

a late postponement request), the 

Director will assess a late postponement 

fee of $100 per arbitrator.9

While the Codes provide for instances 

in which a postponement fee is not 

assessed against the parties, such as if 

the parties agree to submit a matter to 

mediation at FINRA,10 such provisions 

do not apply to late postponement fees. 

Nevertheless, FINRA has received 

complaints from arbitrators that parties 

are misusing the fee waiver provisions. 

Specifically, parties who have made late 

postponement requests contend that, if 

they agree to mediate their dispute 

through FINRA, they should not be 

assessed a late postponement fee 

because Rules 12601(b)(3) and 

12601(b)(3) waive the postponement fee 

if the parties agree to mediate through 

FINRA. 

The proposed rule change amends 

Rules 12601(b)(3) and 13601(b)(3) of the 

Codes to provide that no postponement 

fee will be charged if a hearing is 

postponed because the parties agree to 

submit the matter to mediation 

administered through FINRA, except 

that the parties shall pay the additional 

fees described in Rule 12601(b)(2) or 

13601(b)(2), respectively, for late 

postponement requests. 

Proposed Amendment to Rules 

12902(a)(1) and 13902(a)(1) 

In FINRA’s arbitration forum, if the 

parties and the arbitrator(s) meet to 

discuss the issues giving rise to the 

arbitration dispute, the meeting is called 

a ‘‘hearing session.’’ 11 The Codes 

authorize FINRA to assess hearing 

session fees against the parties for each 

hearing session.12 The total amount 

charged for each hearing session is 

based on the amount in dispute.13 For 

claims that do not request or specify 

money damages (i.e., an unspecified 

damages claim), however, the Codes 

give the Director the discretion to 

determine the amount of the hearing 

session fee, not to exceed $1,200.14

Currently, the hearing session fee 

charged for each hearing session in an 

unspecified damages claim heard by 

three arbitrators is $1,000.15 However, 

for an unspecified damages claim heard 

by one arbitrator, the rules list the 

hearing session fee as not applicable 

(‘‘N/A’’).16 While the Codes give the 

Director the discretion to determine the 

amount of the hearing session fee for an 

unspecified damages claim, FINRA’s 

current practice is to charge parties $450 

per hearing session for an unspecified 

damages claim heard by one arbitrator. 

The proposed rule change amends 

Rules 12902(a)(1) and 13902(a)(1) of the 

Codes to codify FINRA’s current 

practice of charging $450 per hearing 

session for an unspecified damages 

claim heard by one arbitrator by 

changing the current amount for an 

unspecified damages claim heard by one 

arbitrator from N/A to $450. However, 

while the proposal would codify a fee 

for an unspecified damages claim heard 

by one arbitrator, the Codes would 

continue to authorize the Director to 

determine whether the hearing session 

fee should be more or less than the 

amount specified in the fee schedule of 

the rule.17

III. Summary of Comments 

The Commission received two 

comments on the proposed rule 

change.18 The comments, as well as 

FINRA’s response, are discussed below. 

The Cornell Letter supported the 

proposed amendments to Rules 

12601(b)(3) and 12902(a)(1) of the 

Customer Code. With respect to the 

proposed amendments to Rule 

12601(b)(3), the Cornell Letter stated 

that the fee would compensate 

arbitrators for their time and any 

inconvenience resulting from a late 

hearing postponement, and could also 

provide an incentive for parties to 

resolve or settle their claims earlier in 

the process.19 With respect to the 

proposed amendment to Rule 

12902(a)(1), the Cornell Letter stated 

that codifying the hearing session fee for 

unspecified damage claims heard by one 

arbitrator will assist customers in 

understanding the fee structure prior to 

filing a claim.20

In contrast, the PIABA Letter 

generally opposed both of the proposed 

amendments to the Codes. Specifically, 

the PIABA Letter argued that the 

amendments to the fee waiver 

provisions of the postponement rules 

(Rules 12601(b)(3) and 13601(b)(3)) 

would improperly link the amounts 

arbitrators are paid with whether the 

litigants comply with FINRA 

timelines.21 The PIABA Letter further 

contended that the amendments would 

create an impediment to settlement, 

stating that if late postponement fees are 

imposed at all, they should be assessed 

against the industry respondent.22

Additionally, the PIABA Letter 

maintained that postponement fees in 

general impose an unfair burden on the 

parties to a proceeding and should be 

abolished altogether.23

In response, FINRA noted that the fee 

waiver provision amendments are 

necessary to achieve the purposes of the 

late postponement fee rule, which are to 

both provide arbitrators with 

compensation in the event that a 

scheduled hearing is postponed at the 

last minute, and to curtail delays in 

arbitration proceedings by minimizing 

late postponement requests through the 

imposition of additional fees for such 

requests.24 With respect to assessing the 

fees against the industry respondent, 

FINRA explained that the Codes allow 

arbitrators to allocate all or a portion of 

the late postponement fee to the nonrequesting party or parties if it is 

determined the party or parties caused 

or contributed to the need for the 

postponement.25 FINRA also stated that 

the arbitrators are in the best position to 

determine how the fee should be 

allocated.26

With respect to the proposed 

amendments regarding the hearing 

session fees, the PIABA Letter 

challenged the reasonableness of the fee 

charged for an unspecified damages 

claim before one arbitrator compared to 

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Federal Register / Vol. 75, No. 32 / Thursday, February 18, 2010 / Notices 7299 

27See PIABA Letter at 2 (noting that if the 

proposed amendments were adopted, a hearing 

session fee of $450 would be charged for an 

unspecified damage claim heard by one arbitrator, 

but that a hearing session fee of $1,000 would apply 

for an unspecified damage claim heard by three 

arbitrators). 

28See FINRA Response at 3–4. 

29 Id. at 4. 

30 Id. 

31 Id. 

32See PIABA Letter at 1. 

33See FINRA Response at 4. 

34 Id. 

35 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

formation. See 15 U.S.C. 78c(f). 

36 15 U.S.C. 78o–3(b)(6). 

37 15 U.S.C. 78o–3(b)(5). 

38 15 U.S.C. 78s(b)(2). 

39 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 61005 

(November 16, 2009), 74 FR 61398 (‘‘Notice’’). 

4See Securities and Exchange Act Release No. 

59135 (December 22, 2008); 73 FR 79954 (December 

30, 2008) (SR–ISE–2008–85) (relating to a corporate 

transaction in which: (1) ISE Holdings purchased an 

ownership interest in Direct Edge by contributing 

cash and the marketplace then operated by ISE 

Stock Exchange, LLC for the trading of U.S. cash 

equity securities; and (2) Direct Edge’s whollyowned subsidiary, Maple Merger Sub LLC became 

the operator of the marketplace as a facility of ISE. 

5The Commission published the Form 1 

Applications, as modified by Amendment No. 1, on 

September 17, 2009. See Securities Exchange Act 

Release No. 60651 (September 11, 2009), 74 FR 179 

(File No. 10–193 and 10–194). 

the fee charged for an unspecified 

damages claim before three arbitrators.27

FINRA disagreed with this assertion, 

explaining that the hearing session fee 

is used to not only cover arbitrator 

honoraria, but also to address certain 

fixed costs that are incurred in 

scheduling a hearing, regardless of the 

amount in dispute or the number of 

arbitrators.28 Moreover, FINRA noted 

that the Codes authorize the Director to 

determine whether the hearing session 

fee for an unspecified damages claim 

should be more or less than the amount 

specified in the fee schedule.29

Therefore, FINRA indicated that the 

proposed amendments would not 

change its practice of reducing or 

waiving the fees in documented cases of 

financial hardship.30 FINRA also noted 

that the proposed fee for such 

unspecified damage claims is the same 

as the fee charged for hearing sessions 

heard by one arbitrator involving claims 

of $10,000.01 to over $500,000, thus 

providing case administration with a 

uniform fee structure that is easy to 

apply.31

Finally, the PIABA Letter also 

asserted that both of the proposed 

amendments would result in higher fees 

to the customer in a FINRA arbitration 

proceeding.32 In its response, FINRA 

noted that the fees contemplated by the 

proposed amendments are not new and 

do not represent an increase in the fees 

currently charged.33 FINRA stated that 

the proposed amendments clarify the 

fees applicable in these situations.34

IV. Discussion and Commission 

Findings 

After carefully reviewing the 

proposed rule change, the comments 

and FINRA’s response, the Commission 

finds that the proposal is consistent 

with the requirements of the Act and the 

rules and regulations thereunder 

applicable to a national securities 

exchange.35 In particular, the 

Commission finds that the proposed 

rule change is consistent with Section 

15A(b)(6) of the Act,36 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. 

More specifically, the Commission 

believes clarifying the applicability of 

the fee waiver provision of the 

postponement rule will assist in 

FINRA’s efficient administration of the 

arbitration process by ensuring that 

arbitrators receive some compensation 

in the event that a scheduled hearing 

session is postponed as a result of a late 

postponement request, and may serve as 

an incentive to parties to settle their 

disputes earlier to avoid the imposition 

of additional fees. 

The Commission also believes 

codifying the hearing session fee for an 

unspecified damages claim heard by one 

arbitrator will ensure consistent 

assessment of fees in FINRA’s 

arbitration forum, will provide more 

transparency in FINRA’s fee structure, 

and will enhance the efficiency of the 

forum by making the rules easier to 

understand and apply. 

Further, the Commission believes that 

the proposed amendments are 

consistent with Section 15A(b)(5) of the 

Act, which requires that a national 

securities association have rules that 

provide for the equitable allocation of 

reasonable dues, fees, and other charges 

among its members and other persons 

using its facilities.37

For the reasons discussed above, the 

Commission finds that the rule change 

is consistent with the Act and the rules 

and regulations thereunder. 

V. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,38 that the 

proposed rule change (SR–FINRA– 

2009–075) be, and it hereby is, 

approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.39

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–3075 Filed 2–17–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–61498; File No. SR–ISE– 

2009–90] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Order Approving Proposed Rule 

Change Relating to Changes to the 

U.S. Exchange Holdings, Inc. 

Corporate Documents and 

International Securities Exchange 

Trust Agreement 

February 4, 2010. 

On November 9, 2009, the 

International Securities Exchange, LLC 

(‘‘ISE’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’),1 and Rule 19b-4 

thereunder,2 a proposed rule change 

relating to the U.S. Exchange Holdings, 

Inc. (‘‘U.S. Exchange Holdings’’) 

Corporate Documents (as defined below) 

and the ISE Trust Agreement (as defined 

below). The proposed rule change was 

published for comment in the Federal 

Register on November 24, 2009.3 The 

Commission received no comment 

letters on the proposed rule change. 

This order approves the proposed rule 

change. 

I. Background 

U.S. Exchange Holdings wholly owns 

ISE Holdings, Inc. (‘‘ISE Holdings’’). ISE 

Holdings wholly owns ISE, as well as a 

31.54% interest in Direct Edge 

Holdings, LLC (‘‘Direct Edge’’). Direct 

Edge currently owns and operates a 

facility of the Exchange.4 In addition, on 

May 7, 2009, Direct Edge’s direct 

subsidiaries, EDGA Exchange, Inc. 

(‘‘EDGA’’) and EDGX Exchange, Inc. 

(‘‘EDGX’’), each filed a Form 1 

Application 5 (as amended, the ‘‘Form 1 

Applications’’) with the Commission, to 

own and operate a registered national 

securities exchange. 

WReier-Aviles on DSKGBLS3C1PROD with NOTICES