Federal Register / Vol. 75, No. 37 / Thursday, February 25, 2010 / Notices 8771 

7 15 U.S.C. 78o–3(b)(6). 8 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 of 1934 Release No. 

61253 (December 29, 2009), 75 FR 0475. 

4The current FINRA rulebook consists of 

(1) FINRA Rules; (2) NASD Rules; and (3) rules 

incorporated from NYSE (‘‘Incorporated NYSE 

Rules’’) (together, the NASD Rules and Incorporated 

NYSE Rules are referred to as the ‘‘Transitional 

Rulebook’’). While the NASD Rules generally apply 

to all FINRA members, the Incorporated NYSE 

Rules apply only to those members of FINRA that 

are also members of the NYSE (‘‘Dual Members’’). 

The FINRA Rules apply to all FINRA members, 

unless such rules have a more limited application 

by their terms. For more information about the 

rulebook consolidation process, see Information 

Notice, March 12, 2008 (Rulebook Consolidation 

Process). 

5For purposes of the rule, ‘‘customer’’ means any 

person who, in the regular course of such member’s 

business, has cash or securities in the possession of 

such member. 

of Section 15A(b)(6) of the Act,7 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 the 

proposed rule change will streamline 

and improve FINRA’s rulebook by 

eliminating a rule that contains terms 

that are not clearly defined and may 

raise potential investor protection 

concerns. 

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. 

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 

Within 35 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the self-regulatory 

organization consents, the Commission 

will: 

(A) By order approve such proposed 

rule change, or 

(B) Institute proceedings to determine 

whether the proposed rule change 

should be 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 (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–FINRA–2010–005 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–FINRA–2010–005. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street, NE., 

Washington, DC 20549, on official 

business days between the hours of 10 

a.m. and 3 p.m. Copies of such filing 

also will be available for inspection and 

copying at the principal office of 

FINRA. All comments received will be 

posted without change; the Commission 

does not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–FINRA–2010–005 and 

should be submitted on or before March 

18, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.8

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–3780 Filed 2–24–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–61540; File No. SR–FINRA– 

2009–081] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Order Approving 

Proposed Rule Change To Adopt 

FINRA Rule 2261 (Disclosure of 

Financial Condition) in the 

Consolidated FINRA Rulebook 

February 18, 2010. 

On November 18, 2009, the Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) (f/k/a National Association of 

Securities Dealers, Inc. (‘‘NASD’’)) 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 adopt FINRA Rule 2261 

(Disclosure of Financial Condition) in 

the Consolidated FINRA Rulebook. The 

proposed rule change was published for 

comment in the Federal Register on 

January 5, 2010.3 The Commission 

received no comments on the proposal. 

This order approves the proposed rule 

change. 

As part of the process of developing 

a new consolidated rulebook 

(‘‘Consolidated FINRA Rulebook’’),4

FINRA proposed adopting NASD Rule 

2270 (Disclosure of Financial Condition 

to Customers) and NASD Rule 2910 

(Disclosure of Financial Condition to 

Other Members), subject to certain 

amendments, as FINRA Rule 2261 in the 

Consolidated FINRA Rulebook. 

NASD Rule 2270 requires members to 

make available for inspection, upon the 

request of any bona fide regular 

customer,5 the information relative to 

such member’s financial condition as 

disclosed in its most recent balance 

sheet prepared either in accordance 


jlentini on DSKJ8SOYB1PROD with NOTICES
8772 Federal Register / Vol. 75, No. 37 / Thursday, February 25, 2010 / Notices 

6 17 CFR 240.17a–5(c). 

7SEC Rule 17a–5(c)(5) contains a conditional 

exemption from the requirement that broker-dealers 

semi-annually send customers a full balance sheet. 

Under the exemption, a broker-dealer can semiannually send its customers summary information 

regarding its net capital, as long as it also provides 

customers with a toll-free number to call for a free 

copy of its full balance sheet, makes its full balance 

sheet available to customers on its Web site, and 

meets other specified requirements. See Securities 

Exchange Act Release No. 48272 (August 1, 2003), 

68 FR 46446 (August 6, 2003). 

8 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

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

9 15 U.S.C. 78o–3(b)(6). 

10 15 U.S.C. 78s(b)(2). 

11 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The current FINRA rulebook consists of 

(1) FINRA Rules; (2) NASD Rules; and (3) rules 

incorporated from NYSE (‘‘Incorporated NYSE 

Rules’’) (together, the NASD Rules and Incorporated 

NYSE Rules are referred to as the ‘‘Transitional 

Rulebook’’). While the NASD Rules generally apply 

to all FINRA members, the Incorporated NYSE 

Rules apply only to those members of FINRA that 

are also members of the NYSE (‘‘Dual Members’’). 

The FINRA Rules apply to all FINRA members, 

unless such rules have a more limited application 

by their terms. For more information about the 

rulebook consolidation process, see Information 

Notice, March 12, 2008 (Rulebook Consolidation 

Process). 

4See Securities Exchange Act Release No. 61302 

(January 6, 2010), 75 FR 1672 (January 12, 2010). 

with such member’s usual practice or as 

required by any State or Federal 

securities laws, or any rule or regulation 

thereunder. 

FINRA proposed amending the 

requirements of NASD Rule 2270 to 

provide an alternative means of 

satisfying the requirement that members 

make balance sheet information 

available to bona fide regular customers. 

Currently, the rule requires that 

members ‘‘make available to inspection 

by any bona fide regular customer, upon 

request, the information relative to such 

member’s financial condition as 

disclosed in its most recent balance 

sheet * * *.’’ FINRA proposed 

providing members with the option of 

delivering their balance sheet, in paper 

or electronic form, to customers who 

request it. With respect to electronic 

delivery, the requesting customer must 

consent to receive the balance sheet in 

electronic form to ensure that such 

information is accessible to the 

customer. FINRA did not propose 

requiring members to deliver their 

balance sheet to all customers (instead 

of making them available to inspection 

or delivering them upon request) 

because Rule 17a–5(c) under the Act 6

generally requires a broker-dealer that 

carries customer accounts to send its 

full balance sheet and certain other 

financial information to each of its 

customers twice a year.7 NASD Rule 

2270 provides customers with 

additional access to their broker’s 

balance sheet information by requiring 

that members permit customers to 

inspect or obtain a copy of a member’s 

most recent balance sheet at any time 

upon request. 

NASD Rule 2910 requires any 

member that is a party to an open 

transaction or who has on deposit cash 

or securities of another member to 

furnish, upon the written request of the 

other member, a statement of its 

financial condition as disclosed in its 

most recently prepared balance sheet. 

FINRA proposed amending the 

provisions of NASD Rule 2910 to 

require, consistent with NASD Rule 

2270, that members provide to other 

members the balance sheet that was 

‘‘prepared either in accordance with 

such member’s usual practice or as 

required by any State or Federal 

securities laws, or any rule or regulation 

thereunder.’’ In addition, FINRA 

proposed that members be permitted to 

provide their balance sheet to other 

members in paper or electronic form. 

However, unlike the proposed 

amendments to NASD Rule 2270, 

FINRA did not propose requiring 

members to obtain the consent of other 

members to electronically deliver the 

balance sheet. FINRA believes that other 

members, unlike all customers, will be 

equipped to receive electronic delivery. 

FINRA believes that the requirements 

of NASD Rule 2270 and NASD Rule 

2910 continue to provide access to 

important information by allowing 

customers and other members to have 

access to a copy of a member’s most 

recent balance sheet at any time upon 

request and should be transferred, as 

amended, to the Consolidated FINRA 

Rulebook as FINRA Rule 2261. 

FINRA will announce the 

implementation date of the proposed 

rule change in a Regulatory Notice to be 

published no later than 90 days 

following Commission approval. 

The Commission finds that the 

proposed rule change is consistent with 

the requirements of the Act and the 

rules and regulations thereunder 

applicable to a national securities 

association.8 In particular, the 

Commission finds that the proposal is 

consistent with Section 15A(b)(6) of the 

Act,9 which requires, among other 

things, that FINRA’s 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. The Commission 

believes that the proposed rule change 

will further the purposes of the Act by, 

among other things, ensuring that basic, 

current information regarding the 

financial condition of members with 

which customers and other members 

conduct business is available upon 

request. The Commission therefore 

believes that it is appropriate and 

consistent with the Act for FINRA to 

Adopt FINRA Rule 2261 (Disclosure of 

Financial Condition) in the 

Consolidated FINRA Rulebook. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,10 that the 

proposed rule change (SR–FINRA– 

2009–081) is approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–3778 Filed 2–24–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–61537; File No. SR–FINRA– 

2009–095] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Order Approving 

Proposed Rule Change To Adopt 

FINRA Rule 3240 (Borrowing From or 

Lending to Customers) in the 

Consolidated FINRA Rulebook 

February 18, 2010. 

I. Introduction 

On December 31, 2009, Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) (f/k/a National Association of 

Securities Dealers, Inc. (‘‘NASD’’)) filed 

with the Securities and Exchange 

Commission (‘‘SEC’’ or ‘‘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 adopt NASD 

Rule 2370 (Borrowing From or Lending 

to Customers) as FINRA Rule 3240 

(Borrowing From or Lending to 

Customers) in the Consolidated FINRA 

Rulebook 3 with certain changes and to 

delete Incorporated NYSE Rules 352(e) 

(Limitations on Borrowing From or 

Lending to Customers), (f) (Loan 

Procedures) and (g). The proposed rule 

change would also add a Supplementary 

Material section regarding record 

retention requirements to proposed 

FINRA Rule 3240. The proposed rule 

change was published for comment in 

the Federal Register on January 12, 

2010.4 The Commission received no 


jlentini on DSKJ8SOYB1PROD with NOTICES