44410 Federal Register / Vol. 74, No. 166 / Friday, August 28, 2009 / Notices 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 60066 

(June 8, 2009), 74 FR 28308 (‘‘Notice’’). 

4See letter from Pamela Ziermann, Dougherty 

and Company LLC to Elizabeth M. Murphy, 

Secretary, Commission, dated June 30, 2009 

(‘‘Dougherty Letter’’). 

5See letter from Patricia Albrecht, Assistant 

General Counsel, FINRA, to Elizabeth M. Murphy, 

Secretary, Commission, dates July 24, 2009. 

6 In Amendment No. 1, FINRA would revise 

proposed FINRA Rule 4370 to require that only one 

of a member’s two designated emergency contact 

persons must be a member of senior management 

and a registered principal of the firm. 

7 In approving this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

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

8 15 U.S.C. 78o-3(b)(6). 

SECURITIES AND EXCHANGE 

COMMISSION 

Proposed Collection; Comment 

Request 

Upon written request, copies available 

from: Securities and Exchange 

Commission, Office of Investor 

Education and Advocacy, 

Washington, DC 20549–0213. 

Extension: Form 1–E, Regulation E; SEC File 

No. 270–221; OMB Control No. 3235– 

0232. 

Notice is hereby given that, pursuant 

to the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501 et seq.), the Securities 

and Exchange Commission (the 

‘‘Commission’’) is soliciting comments 

on the collection of information 

summarized below. The Commission 

plans to submit this existing collection 

of information of the Office of 

Management and Budget for extension 

and approval. 

Form 1–E (17 CFR 239.200) under the 

Securities Act of 1933 (15 U.S.C. 77a et 

seq.) (‘‘Securities Act’’) is the form that 

a small business investment company 

(‘‘SBIC’’) or business development 

company (‘‘BDC’’) uses to notify the 

Commission that it is claiming an 

exemption under Regulation E from 

registering its securities under the 

Securities Act. Rule 605 of Regulation E 

(17 CFR 230.605) under the Securities 

Act requires an SBIC or BDC claiming 

such an exemption to file an offering 

circular with the Commission that must 

also be provided to persons to whom an 

offer is made. Form 1–E requires an 

issuer to provide the names and 

addresses of the issuer, its affiliates, 

directors, officers, and counsel; a 

description of events which would 

make the exemption unavailable; the 

jurisdictions in which the issuer intends 

to offer the securities; information about 

unregistered securities issued or sold by 

the issuer within one year before filing 

the notification on Form 1–E; 

information as to whether the issuer is 

presently offering or contemplating 

offering any other securities; and 

exhibits, including copies of the rule 

605 offering circular and any 

underwriting contracts. 

The Commission uses the information 

provided in the notification on Form 1– 

E and the offering circular to determine 

whether an offering qualifies for the 

exemption under Regulation E. It is 

estimated that approximately six issuers 

file eight notifications, together with 

attached offering circulars, on Form 1– 

E with the Commission annually. The 

Commission estimates that the total 

burden hours for preparing these 

notifications would be 800 hours in the 

aggregate. Estimates of the burden hours 

are made solely for the purposes of the 

PRA, and are not derived from a 

comprehensive or even a representative 

survey or study of the costs of SEC rules 

and forms. 

Written comments are invited on: (a) 

Whether the proposed collection of 

information is necessary for the proper 

performance of the functions of the 

agency, including whether the 

information will have practical utility; 

(b) the accuracy of the agency’s estimate 

of the burden of the collection of 

information; (c) ways to enhance the 

quality, utility, and clarity of the 

information collected; and (d) ways to 

minimize the burden of the collection of 

information on respondents, including 

through the use of automated collection 

techniques or other forms of information 

technology. Consideration will be given 

to comments and suggestions submitted 

in writing within 60 days of this 

publication. 

Please direct your written comments 

to Charles Boucher, Director/CIO, 

Securities and Exchange Commission, 

C/O Shirley Martinson, 6432 General 

Green Way, Alexandria, VA 22312; or 

send an e-mail to: 

PRA_Mailbox@sec.gov. 

Dated: August 21, 2009. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–20705 Filed 8–27–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60534; File No. SR–FINRA– 

2009–036] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of 

Amendment No. 1 and Order Granting 

Accelerated Approval to a Proposed 

Rule Change, as Modified by 

Amendment No. 1, To Adopt FINRA 

Rules 2124 (Net Transactions With 

Customers), 2220 (Options 

Communications), 4370 (Business 

Continuity Plans and Emergency 

Contact Information) and 5250 

(Payment for Market Making) in the 

Consolidated FINRA Rulebook 

August 19, 2009. 

I. Introduction 

On May 21, 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 NASD Rules 2220 

(Options Communications), 2441 (Net 

Transactions with Customers), 2460 

(Payment for Market Making), 3510 

(Business Continuity Plans) and 3520 

(Emergency Contact Information) as 

FINRA Rules in the consolidated FINRA 

rulebook (‘‘Consolidated FINRA 

Rulebook’’). The proposed rule change 

would renumber NASD Rule 2220 as 

FINRA Rule 2220, NASD Rule 2441 as 

FINRA Rule 2124, and NASD Rule 2460 

as FINRA Rule 5250 and would 

combine NASD Rules 3510 and 3520 as 

FINRA Rule 4370 in the consolidated 

FINRA Rulebook. The proposed rule 

change was published for comment in 

the Federal Register on June 15, 2009.3

The Commission received one comment 

letter on the proposed rule change.4

FINRA submitted a letter responding to 

the commenter 5 and on July 24, 2009, 

filed Amendment No. 1 to the proposed 

rule change.6

II. Discussion and Commission 

Findings 

After careful review of the proposed 

rule change, the comment letter, and 

FINRA’s response, 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.7 In particular, the 

Commission finds that the proposed 

rule change is consistent with Section 

15A(b)(6) of the Act,8 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. 


hsrobinson on DSK69SOYB1PROD with NOTICES
Federal Register / Vol. 74, No. 166 / Friday, August 28, 2009 / Notices 44411 

9See Securities Exchange Act Release No. 58738 

(October 6, 2008), 73 FR 60371 (October 10, 2008) 

(order approving File No. SR–FINRA–2008–013). 

10See Regulatory Notice 08–73 (December 2008) 

(SEC Approves Amendments to NASD Rule 2220 to 

Update the Standards for Options 

Communications). There is no longer a comparable 

Incorporated NYSE Rule. FINRA previously deleted 

substantially similar Incorporated NYSE Rule 791 

(Communications to Customers) as part of a rule 

change that, among other things, reduced regulatory 

duplication for Dual Members during the interim 

period before the completion of the Consolidated 

FINRA Rulebook. See Securities Exchange Act 

Release No. 58533 (September 12, 2008), 73 FR 

54652 (September 22, 2008) (order approving File 

No. SR–FINRA–2008–036). 

11A ‘‘net’’ transaction is a principal transaction 

in which a market maker, after having received an 

order to buy (sell) an equity security, purchases 

(sells) the equity security at one price (from (to) 

another broker-dealer or another customer) and 

then sells to (buys from) the customer at a different 

price. 

12See Securities Exchange Act Release No. 54088 

(June 30, 2006), 71 FR 38950 (July 10, 2006) (order 

approving File No. SR–NASD–2004–135). 

13See Securities Exchange Act Release No. 38812 

(July 3, 1997), 62 FR 37105 (July 10, 1997) (order 

approving File No. SR–NASD–97–29). 

14There is no longer a comparable Incorporated 

NYSE Rule to NASD Rules 3510 and 3520. FINRA 

previously deleted from the Transitional Rulebook 

NYSE Rule 446 (Business Continuity and 

Contingency Plans), which contained substantially 

similar requirements as the two NASD rules, as part 

of the rule change to reduce regulatory duplication 

for Dual Members during the period before 

completion of the Consolidated FINRA Rulebook. 

See Securities Exchange Act Release No. 58533 

(September 12, 2008), 73 FR 54652 (September 22, 

2008) (order approving File No. SR–FINRA–2008– 

036). 

15See proposed FINRA Rule 4370. 

16See Dougherty Letter, supra note 4. 

17 Id. 

A. Proposed FINRA Rule 2220 

FINRA is proposing to adopt NASD 

Rule 2220 (Options Communications) 

without substantive change into the 

Consolidated FINRA Rulebook as 

FINRA Rule 2220. NASD Rule 2220 sets 

forth a member’s obligations with 

respect to its options communications 

with the public. In 2008, the 

Commission approved FINRA’s 

proposed revisions to NASD Rule 2220 

to make it more consistent with FINRA’s 

general rules on communications with 

the public and the options 

communications rules of other selfregulatory organizations (‘‘SROs’’).9 The 

amended rule became effective on 

March 4, 2009.10 As amended, NASD 

Rule 2220, among other things: (1) Uses, 

to the extent appropriate, the same 

terminology and definitions as in 

FINRA’s general rules on 

communications with the public; (2) 

makes the requirements for principal 

review of correspondence concerning 

options the same as for correspondence 

generally; and (3) updates the standards 

on the content of communications that 

precede the delivery of the options 

disclosure document (ODD). The 

Commission believes that it is 

appropriate to transfer NASD Rule 2220 

into the Consolidated FINRA Rulebook 

as FINRA Rule 2220 with the nonsubstantive changes proposed by 

FINRA. 

B. Proposed FINRA Rule 2124 

FINRA is proposing to adopt NASD 

Rule 2441 (Net Transactions with 

Customers) without substantive change 

into the Consolidated FINRA Rulebook 

as FINRA Rule 2124. NASD Rule 2441 

requires members to provide disclosure 

and obtain consent when trading on a 

‘‘net’’ basis with customers.11 The 

Commission approved NASD Rule 2441 

in 2006.12 With respect to noninstitutional customers, the member 

must obtain the customer’s written 

consent on an order-by-order basis prior 

to executing the transaction and such 

consent must evidence the customer’s 

understanding of the terms and 

conditions of the order. With respect to 

institutional customers, a member must 

obtain the customer’s consent prior to 

executing the transaction and such 

consent may be obtained by either: (1) 

Use of a negative consent letter; (2) oral 

disclosure and consent on an order-byorder basis; or (3) written consent on an 

order-by-order basis. The Commission 

believes that it is appropriate to transfer 

NASD Rule 2441 into the Consolidated 

FINRA Rulebook as FINRA Rule 2124 

with the non-substantive changes 

proposed by FINRA. 

C. Proposed FINRA Rule 5250 

FINRA is proposing to adopt NASD 

Rule 2460 (Payment for Market Making) 

without substantive change into the 

Consolidated FINRA Rulebook as 

FINRA Rule 5250. The Commission 

approved NASD Rule 2460 in 1997.13

NASD Rule 2460 prohibits any 

payments by an issuer or an issuer’s 

affiliates and promoters, directly or 

indirectly, to a member or person 

associated with a member for publishing 

a quotation, acting as a market maker, or 

submitting an application in connection 

therewith. The rule contains two 

exceptions that permit a member to 

accept: (1) Payment for bona fide 

services, including, but not limited to, 

investment banking services; and (2) 

reimbursement for registration or listing 

fees. The Commission believes that it is 

appropriate to transfer NASD Rule 2460 

into the Consolidated FINRA Rulebook 

as FINRA Rule 5250 with the nonsubstantive changes proposed by 

FINRA. 

D. Proposed FINRA Rule 4370 

FINRA is proposing to adopt NASD 

Rule 3510 (Business Continuity Plans) 

and NASD Rule 3520 (Emergency 

Contact Information) into the 

Consolidated FINRA Rulebook and 

combine the rules as FINRA Rule 4370 

(Business Continuity Plans and 

Emergency Contact Information). NASD 

Rule 3510 requires members to create 

and maintain a written business 

continuity plan identifying procedures 

relating to an emergency or significant 

business disruption and enumerates the 

minimum elements that a member’s 

business continuity plan must address, 

to the extent those elements are 

applicable and necessary to the 

member’s business. NASD Rule 3510 

further requires members to update their 

business continuity plans upon any 

material change and, at a minimum, 

conduct an annual review of their plans. 

Each member also must disclose to its 

customers how its business continuity 

plan addresses the possibility of a future 

significant business disruption and how 

the member plans to respond to events 

of varying scope. Each member must 

make this disclosure, at a minimum, in 

writing to customers at account 

opening, by posting it on the member’s 

Web site (if the member maintains a 

Web site), and by mailing it to 

customers upon request. 

NASD Rule 3510 is one part of the 

NASD Rule 3500 Series (Emergency 

Preparedness), which requires members 

to establish emergency preparedness 

plans and procedures. NASD Rule 3520, 

which comprises the remainder of the 

NASD Rule 3500 Series, requires 

members to designate two emergency 

contact persons and provide this 

information to FINRA via electronic 

process.14

The Dougherty Letter generally 

supported the proposal, but 

recommended one change in the area of 

emergency contact information. The 

proposed rule, as is the case today in 

NASD Rule 3510, originally required 

that each member report to FINRA two 

emergency contact persons and that 

each person be a member of senior 

management and a registered principal 

of the firm.15 The Dougherty Letter 

stated that ‘‘[t]here may be situations 

where perhaps the best contact person 

may not be a registered principal but 

rather a Financial and Operations 

Principal or a technology manager.’’ 16

The Dougherty Letter emphasized that 

the ‘‘purpose of this rule is for FINRA 

to be able to contact individuals for 

business continuity purposes.’’ 17 The 

commenter pointed out that ‘‘the person 

most knowledgeable on computer 


hsrobinson on DSK69SOYB1PROD with NOTICES
44412 Federal Register / Vol. 74, No. 166 / Friday, August 28, 2009 / Notices 

18 Id. 

19See Amendment No. 1, supra note 6. 

20 Id. 

21 Id. 

22 Id. 

23 15 U.S.C. 78s(b)(2). 

24FINRA noted that it proposes to announce the 

implementation date of the proposed rule change in 

a Regulatory Notice to be published no later than 

90 days following Commission approval. 25 15 U.S.C. 78o–3(b)(6). 

26 15 U.S.C. 78s(b)(2). 

27 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(1). 

4 17 CFR 240.19b–4. 

systems and business continuity issues 

may be someone other than a registered 

principal.’’ 18

In response, FINRA proposes to revise 

FINRA Rule 4370 to require that only 

one of a member’s two designated 

emergency contact persons must be a 

member of senior management and a 

registered principal of the firm.19 The 

proposed rule change, however, would 

require that someone designated as a 

second emergency contact person who 

is not a registered principal must be a 

member of senior management who has 

knowledge of the member’s business 

operations.20 The proposed rule change 

also would clarify that each emergency 

contact person must be an associated 

person of the member.21 In addition, 

FINRA proposes to amend FINRA Rule 

4370 to codify existing guidance that in 

the case of a member with only one 

associated person (e.g., a sole 

proprietorship without any other 

associated persons), the second 

emergency contact person may be an 

individual, either registered with 

another firm or nonregistered, who has 

knowledge of the member’s business 

operations, such as the member’s 

attorney, accountant, or clearing firm 

contact.22 The Commission believes that 

transferring and combining NASD Rules 

3510 and 3520 into the Consolidated 

FINRA Rulebook will help ensure that 

members are prepared in the event of a 

significant business disruption. 

The Commission finds good cause, 

pursuant to Section 19(b)(2) of the 

Act,23 for approving the proposed rule 

change, as modified, prior to the 

thirtieth day after the date of 

publication of notice in the Federal 

Register. FINRA’s proposed changes, 

with the exception of the proposed 

revisions contained in Amendment No. 

1, were published for comment by the 

Commission.24 The Commission 

believes that Amendment No. 1 

provides greater clarity regarding the 

designation of emergency contact 

persons and is consistent with a 

purpose of this rule, which is to provide 

FINRA with a means to contact a 

member in the event of a significant 

business disruption. 

Accordingly, the Commission finds 

that there is good cause, consistent with 

Section 15A(b)(6) of the Act,25 to 

approve the proposed rule change, as 

modified by Amendment No. 1, on an 

accelerated basis. 

III. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change, as modified by Amendment No. 

1, 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–2009–036 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–2009–036. 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 the 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– 

2009–036 and should be submitted on 

or before September 18, 2009. 

V. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,26 that the 

proposed rule change (SR–FINRA– 

2009–036), as modified by Amendment 

No. 1, be, and hereby is, approved on an 

accelerated basis. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.27

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–20704 Filed 8–27–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60547; File No. SR–Phlx– 

2009–70] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX, Inc.; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Eliminate 

Late Charges and Provide for 

Suspension or Termination for Failure 

To Pay Dues, Fees, or Assessments 

Owed 

August 20, 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 August 

12, 2009, NASDAQ OMX PHLX, Inc. 

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

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. 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 

NASDAQ OMX PHLX, Inc., pursuant 

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

Exchange Act of 1934 (‘‘Act’’) 3 and Rule 

19b–4 thereunder,4 proposes to amend 

Exchange By-Law 14–1 to eliminate the 

reference to late charges for failure to 

pay any fees, dues or charges owed to 

the Exchange. The Exchange also 

proposes to amend Exchange By-Law 

14–5 to dispose of the foreign currency 

options participation of a member, 

member organization, participant or 

participant organization if monies due 


hsrobinson on DSK69SOYB1PROD with NOTICES