41470 Federal Register / Vol. 74, No. 157 / Monday, August 17, 2009 / Notices 

17See supra note 7. 

18 15 U.S.C. 78f(b)(5). 

19 15 U.S.C. 78s(b)(2). 

20 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The uniform registration forms are Form BD 

(Uniform Application for Broker-Dealer 

Registration), Form BDW (Uniform Request for 

Broker-Dealer Withdrawal), Form U4 (Uniform 

Application for Securities Industry Registration or 

Transfer), Form U5 (Uniform Termination Notice 

for Securities Industry Registration), and Form U6 

(Uniform Disciplinary Action Reporting Form). 

4Because the information disclosed through 

BrokerCheck is derived from the CRD System, 

BrokerCheck will only disclose information 

regarding regulatory actions that have been reported 

to CRD via a uniform registration form. 

5A final regulatory action would not include any 

action limited to the revocation or suspension of an 

individual’s authorization to act as an attorney, 

accountant or federal contractor (current Form U4 

Question 14F). 

6FINRA staff also will review responses to all 

Regulatory Action Disclosure questions and 

Disclosure Review Pages on the Forms U4 and U5 

(including the predecessor questions in this area), 

as well as information filed on Form U6 to 

determine whether a former associated person is 

subject to a final regulatory action and should 

therefore be included in BrokerCheck pursuant to 

the proposed rule change. Under the proposed rule 

change, FINRA may disclose a final action that is 

reported by a regulator on a Form U6 even if that 

action has not been reported by an individual on 

a Form U4 because, for example, the individual was 

not registered at the time the final regulatory action 

was reported. 

ETP Holders deliver a prospectus to 

investors purchasing newly issued 

Shares prior to or concurrently with the 

confirmation of a transaction; and (f) 

trading information. 

(4) The Fund will be in compliance 

with Rule 10A–3 under the Act.17

(5) Except for Underlying ETPs that 

may hold non-U.S. issues, the Fund will 

not otherwise invest in non-U.S. issues. 

This approval order is based on the 

Exchange’s representations. 

For the foregoing reasons, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act 18 and the rules and 

regulations thereunder applicable to a 

national securities exchange. 

III. Conclusion 

It is therefore ordered, pursuant to 

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

proposed rule change (SR–NYSEArca– 

2009–55) be, and it hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.20

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–19570 Filed 8–14–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60462; File No. SR–FINRA– 

2009–050] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of 

Proposed Rule Change Relating to 

FINRA Rule 8312 (FINRA BrokerCheck 

Disclosure) 

August 7, 2009. 

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 July 24, 

2009, 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, II, 

and III below, which Items have been 

prepared by FINRA. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

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) to retain and make publicly 

available in BrokerCheck certain 

information about former associated 

persons of a member who were the 

subject of a final regulatory action as 

defined in Form U4 that has been 

reported to the Central Registration 

Depository (‘‘CRD®’’ or ‘‘CRD System’’) 

via a uniform registration form.3

The text of the proposed rule change 

is available on FINRA’s Web site at 

http://www.finra.org, at the principal 

office of FINRA and at the 

Commission’s Public Reference Room. 

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 8312 governs the 

information FINRA releases to the 

public via BrokerCheck. FINRA 

established BrokerCheck (then known as 

the Public Disclosure Program) in 1988 

to provide the public with information 

on the professional background, 

business practices, and conduct of 

FINRA members and their associated 

persons. Via BrokerCheck, FINRA 

releases to the public certain 

information reported on uniform 

registration forms to the CRD System. 

The primary purpose of BrokerCheck is 

to help investors make informed choices 

about the individuals and firms with 

which they may wish to do business. 

Currently, as described in FINRA Rule 

8312, BrokerCheck provides information 

regarding current and former members, 

as well as current associated persons 

and persons who were associated with 

a member within the preceding two 

years. The proposed rule change would 

expand BrokerCheck with respect to 

former associated persons to provide 

public access to certain information 

about such persons, regardless of when 

they were associated with a member, if 

they were the subject of any final 

regulatory action as defined in Form U4 

that has been reported to CRD via a 

uniform registration form.4 For purposes 

of the proposed rule change, a final 

regulatory action as defined in Form U4 

may include any final action, including 

any action that is on appeal, by the SEC, 

Commodity Futures Trading 

Commission, a federal banking agency, 

the National Credit Union 

Administration, another federal 

regulatory agency, a state regulatory 

agency, a foreign financial regulatory 

authority, or a self-regulatory 

organization (as those terms are used in 

Form U4).5 To illustrate, actions that are 

delineated in current Form U4 

Questions 14C, 14D, or 14E would be 

considered ‘‘final regulatory actions.’’ 

Similarly, actions that are detailed in 

current Form U5 Question 7D, and have 

a status of ‘‘final’’ or ‘‘on appeal,’’ 

would be considered ‘‘final regulatory 

actions’’ as such actions are also 

addressed in Form U4.6

The proposed rule change would 

allow the public access to information 

about formerly registered persons who, 

although no longer in the securities 

industry in a registered capacity, may 

work in other investment-related 

industries or attain other positions of 

trust and about whom investors may 

wish to learn relevant disciplinary 

information. Specifically, FINRA would 

disclose through BrokerCheck 

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Federal Register / Vol. 74, No. 157 / Monday, August 17, 2009 / Notices 41471 

7For prudential reasons, FINRA did not convert 

into the Web CRD format the data for all individuals 

whose FINRA registrations were terminated prior to 

November 1996 (‘‘Legacy CRD individuals’’); 

instead, these records were moved to Web CRD in 

their Legacy CRD data format. As a result of the 

different data formats, and certain technical and 

operational challenges associated with providing 

information on eligible Legacy CRD individuals, 

FINRA expects to implement the expanded program 

in two phases. Eligible individuals whose records 

are in the Web CRD format will be available in the 

first phase; eligible individuals whose records are 

in the Legacy format will be available in the second 

phase. 

8 During the existence of the Legacy CRD system, 

FINRA removed from the system administrative 

data for individuals who had ceased being 

registered for a period of time to free up storage 

space on the system. As a result, this data was not 

moved to Web CRD (in either Legacy or Web CRD 

format) and is not available for display in 

BrokerCheck. 

9See, e.g., Securities Exchange Act Release No. 

42402 (February 7, 2000), 65 FR 7582 (February 15, 

2000) (Order Approving SR–NASD–99–45). 

10See, e.g., Securities Exchange Act Release No. 

42402 (February 7, 2000), 65 FR 7582 (February 15, 

2000) (Order Approving SR–NASD–99–45). 

information concerning any final 

regulatory action(s), as well as certain 

administrative information (e.g., 

employment and registration history) 

and information as to qualification 

examinations, if available, regarding 

these formerly registered individuals. 

FINRA also would provide the most 

recently submitted comment, if any, 

provided by the subject person, 

presuming the comment is in the form 

and in accordance with the procedures 

established by FINRA and relates to the 

information provided through 

BrokerCheck. The proposed rule change 

would not expand access to other 

information that may be part of the CRD 

System regarding the former registered 

person, such as customer complaints, 

bankruptcies, liens, criminal events or 

arbitration claims. 

FINRA notes that the amount and 

format of information made available for 

this expanded category of individuals 

will depend in part on when such 

individuals left the securities industry, 

and whether their CRD data is available 

in Web-based format. Since FINRA 

launched its Web-based CRD system 

(‘‘Web CRD’’) in 1999, it has used the 

information in the Web CRD database to 

generate BrokerCheck reports. The Web 

CRD database contains information 

regarding all persons that have been 

registered with FINRA since the 

implementation of the Legacy CRD 

system in 1981. The majority of those 

records contain administrative and 

disclosure information and are in the 

Web CRD format. However, two 

conditions apply to a small percentage 

of individuals who were no longer 

registered at the time Web CRD was 

established in 1999. First, not all of 

these individuals’ records are available 

in the Web CRD format; instead, their 

records exist in the Legacy CRD format.7

Second, for a very small percentage of 

individuals, certain administrative 

information is unavailable in either the 

Web or Legacy CRD format.8

Consequently, FINRA expects that, for 

the large majority of the individuals 

who will be subject to BrokerCheck as 

a result of the proposed expansion, all 

of the information proposed to be 

disclosed (i.e., information regarding 

final regulatory actions, employment 

and registration history, qualification 

examinations, and most recent 

comment) will be made available to the 

public. FINRA recognizes, however, that 

for a limited number of individuals 

whose registration with FINRA ceased 

prior to 1999, not all of the 

administrative data and qualification 

information will be available. In such 

situations, only the individual’s name, 

information about any final regulatory 

actions, and the most recent comment, 

if any, will be disclosed through 

BrokerCheck. 

With respect to individuals whose 

records exist in the Legacy CRD format, 

FINRA staff will manually prepare the 

BrokerCheck report (upon request), 

convert the report to an electronic 

format, and make the report available 

through BrokerCheck to a requester. 

FINRA staff will endeavor to respond 

promptly to requests for information 

regarding these persons. This protocol 

also will allow FINRA staff to review 

the information to determine if the 

content is in the form and in accordance 

with the procedures established by 

FINRA prior to making the information 

available through BrokerCheck.9 Upon 

identifying or being made aware of the 

inclusion in a BrokerCheck report of 

potentially inappropriate information, 

including customer names, confidential 

account information or possibly 

offensive or potentially defamatory 

language, FINRA will continue to 

employ a balancing test to weigh the 

value of the language in controversy for 

regulatory and investor protection 

purposes against the objector’s asserted 

privacy rights and/or potential 

defamation claims. Based on this 

balancing, FINRA could determine to 

redact the controversial language from 

BrokerCheck reports on a case-by-case 

basis.10

FINRA believes this measured 

expansion of BrokerCheck strikes a 

balance between, on the one hand, 

investor protection interests, and on the 

other hand, personal privacy and 

fairness to former registered persons. In 

this regard, FINRA notes that much of 

the information that would be subject to 

release pursuant to the proposed rule 

change (i.e., information concerning 

certain final regulatory actions) may be 

available through other public sources. 

For example, FINRA provides 

information about its disciplinary 

actions involving current and formerly 

registered persons on its Web site; 

information about other actions that 

would be considered final regulatory 

actions may be available through other 

public sources, such as online search 

engines, regulators’ Web sites, and feebased services such as Lexis or Westlaw. 

Further, final regulatory actions are 

subject to procedures that allow an 

opportunity for the subject person to 

present arguments to a fact-finder about 

the allegations prior to the final 

disposition of the matter. In addition, 

final regulatory actions may be relevant 

or material to investors wishing to find 

out disciplinary information about a 

formerly registered person. As a result, 

providing this information through 

BrokerCheck would provide the public 

with a useful method to discover 

information about former registered 

persons without undue burden on 

formerly registered persons. As 

mentioned above, the former registered 

person has the opportunity to submit a 

comment for publication in 

BrokerCheck in response to information 

provided through BrokerCheck, 

provided the comment is in the form 

and in accordance with the procedures 

established by FINRA and relates to the 

information provided through 

BrokerCheck. 

In further recognition of FINRA’s 

attempt to strike a balance between 

personal privacy and investor protection 

concerns, as noted above, FINRA is not 

proposing to expand access to other 

information that may be part of the CRD 

System regarding former registered 

persons who have not been registered 

with a member for more than two years, 

such as bankruptcies, liens, criminal 

events or arbitration claims. In that 

regard, FINRA believes that these other 

categories of information are more 

relevant to an investor or potential 

customer when the individual is 

registered or was recently registered 

(i.e., within two years). FINRA also 

notes that, unlike final regulatory 

actions, arbitration claims may not be 

subject to procedures that allow an 

opportunity for the subject person to 

present arguments to a fact-finder about 

the allegations prior to final disposition 

(including, e.g., arbitration claims filed 

at or near the time the subject person 

left the industry). Further, a firm may 

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41472 Federal Register / Vol. 74, No. 157 / Monday, August 17, 2009 / Notices 

11 15 U.S.C. 78o–3(b)(6). 

12 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

choose to settle an arbitration claim 

(e.g., for business reasons) 

notwithstanding the desire of a subject 

person to contest the claim. In addition, 

both criminal charges and convictions 

that are reported subsequently may have 

a different disposition, which may 

significantly change the meaning of the 

matter as originally reported (for 

example, such charges or convictions 

may be dismissed or expunged). Finally, 

FINRA does not view reportable 

financial matters (e.g., bankruptcies and 

liens) as having the same degree of 

materiality as final regulatory actions 

such that they should continue to be 

disclosed on a permanent basis. 

FINRA will announce the effective 

date of the proposed rule change in a 

Regulatory Notice to be published no 

later than 60 days following 

Commission approval. 

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. The proposed rule 

change, among other things, would 

enhance investor protection by 

providing access through the 

BrokerCheck program to certain 

information about former associated 

persons of a member who were the 

subject of a final regulatory action as 

defined in Form U4 that has been 

reported to CRD on a uniform 

registration form. 

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–2009–050 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–2009–050. 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 inspection and copying 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–2009–050 and 

should be submitted on or before 

September 8, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–19571 Filed 8–14–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60461; File No. SR–Phlx2009–66] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX, Inc.; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Relating to Fee 

Waivers 

August 7, 2009. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b-4 thereunder,3

notice is hereby given that, on July 31, 

2009, NASDAQ OMX PHLX, Inc. 

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

the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the selfregulatory organization. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend the 

NASDAQ OMX PHLX Fee Schedule to 

adopt, on a pilot basis, a waiver of the 

Phlx XL II Options Routing PassThrough Fees for customer orders that 

are routed by the Exchange’s enhanced 

electronic trading platform for options, 

Phlx XL II to away markets for 

execution. 

The proposed fee waiver pilot would 

apply to transactions settling on or after 

July 1, 2009, and extend through 

December 31, 2009. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http:// 

nasdaqomxphlx.cchwallstreet.com/ 

NASDAQOMXPHLX/Filings/, at the 

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