1738 Federal Register / Vol. 74, No. 8 / Tuesday, January 13, 2009 / Notices 

11 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3Amendment No. 1 to SR–FINRA–2008–045 

replaced and superseded the original rule filing 

submitted to the Commission on September 8, 2008. 4The text of the proposed rule change to the 

FINRA Rule 9520 Series as set forth in Exhibit 5 

reflects amendments adopted pursuant to proposed 

rule change SR–FINRA–2008–021, which was 

approved by the Commission. See Securities 

Exchange Act Release No. 58643 (September 25, 

2008), 73 FR 57174 (October 1, 2008) (SR–FINRA– 

2008–021) (approval order). The FINRA Rule 9520 

Series, as set forth in SR–FINRA–2008–021, became 

effective on December 15, 2008. See FINRA 

Regulatory Notice 08–57 (SEC Approves New 

Consolidated FINRA Rules) (October 2008). 5FINRA would issue the proposed Regulatory 

Notice upon the Commission’s approval of the 

proposed rule change; the Regulatory Notice is 

written in a manner that assumes such approval. 6See Securities Exchange Act Release No. 55495 

(March 20, 2007), 72 FR 14149 (March 26, 2007) 

(SR–NASD–2007–023) (notice). See also Securities 

Exchange Act Release No. 56145 (July 26, 2007), 72 

FR 42169 (August 1, 2007) (SR–NASD–2007–023) 

(approval order), as amended by Securities 

Exchange Act Release No. 56145A (May 30, 2008), 

73 FR 32377 (June 6, 2008). See also NASD, SEC 

No-Action Letter, 2007 SEC No-Act. LEXIS 540 

(July 27, 2007). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–461 Filed 1–12–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59208; File No. SR–FINRA– 

2008–045] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of 

Proposed Rule Change and 

Amendment No. 1 Thereto, To Amend 

the FINRA Rule 9520 Series Regarding 

Eligibility Procedures for Persons 

Subject to Certain Disqualifications 

January 6, 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 

September 8, 2008, 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’’) and amended 

on December 11, 2008,3 the proposed 

rule change as described in Items I, II, 

and III below, which Items have been 

substantially prepared by FINRA. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change, as amended, from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

FINRA is proposing to amend the 

FINRA Rule 9520 Series, which governs 

the eligibility procedures for persons 

subject to certain disqualifications, to 

comport with the amended definition of 

disqualification in the FINRA By-Laws. This Amendment No. 1 to SR– 

FINRA–2008–045 makes technical 

changes to the original filing filed on 

September 8, 2008. The text of the 

proposed rule change is attached as 

Exhibit 5 to this filing.4 Amendment No. 

1 replaces and supersedes the proposed 

rule change filed on September 8, 2008, 

in its entirety, except with regard to 

Exhibit 2, a proposed Regulatory Notice 

that details the proposed related 

eligibility procedures.5

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 

In light of FINRA’s obligation to 

enforce the federal securities laws, and 

as part of the consolidation of the 

member firm regulatory functions of 

NASD and NYSE Regulation, Inc., and 

the formation of FINRA, FINRA adopted 

by Board and membership vote a 

revised By-Law definition of 

disqualification that is consistent with 

the federal securities laws, such that any 

person subject to a statutory 

disqualification under Section 3(a)(39) 

of the Act also is subject to 

disqualification under Article III, 

Section 4 of the FINRA By-Laws.6

Consequently, as further detailed in the 

proposed Regulatory Notice (see Exhibit 

2), FINRA’s revised definition of 

disqualification incorporates three 

additional categories of statutory 

disqualification, including willful 

violations of the federal securities or 

commodities laws, grounds for statutory 

disqualification that were enacted in the 

Sarbanes-Oxley Act, and associations 

with certain other persons subject to 

disqualification. 

Absent the proposed rule change, all 

persons subject to any of the added 

categories of disqualification would be 

required to obtain approval from FINRA 

to enter or remain in the securities 

industry. The proposed rule change 

would both amend the text of the 

FINRA Rule 9520 Series generally to 

reflect the amended definition of 

disqualification in the By-Laws, as well 

as include the proposed Regulatory 

Notice that outlines in detail the 

applicable eligibility procedures. The 

amended FINRA Rule 9520 Series 

would incorporate by reference the 

procedures set forth in the Regulatory 

Notice. As further detailed in the 

Regulatory Notice, the need for a 

member to file an application with 

FINRA for approval notwithstanding the 

disqualification would depend on (1) 

The type of the disqualification; (2) the 

date of the disqualification; and (3) 

whether the firm or individual is 

seeking admission, readmission or 

continuation in the securities industry. 

The proposed rule change would 

amend FINRA Rule 9522 to address the 

initiation of eligibility proceedings and 

the authority of FINRA’s Department of 

Member Regulation (‘‘Member 

Regulation’’) to approve applications 

relating to a disqualification, where the 

disqualification arises from findings or 

orders specified in Section 15(b)(4)(D), 

(E) or (H) of the Act or arises under 

Section 3(a)(39)(E) of the Act (i.e., the 

added categories of disqualification). 

Currently, FINRA Rule 9522(a)(1) 

provides, among other things, that if 

FINRA staff has reason to believe that a 

disqualification exists, FINRA staff will 

issue a written notice to the member or 

applicant for membership under NASD 

Rule 1013, specifying the grounds for 

such disqualification. The proposed 

amendments to FINRA Rule 9522(a)(1) 

provide that FINRA staff would issue 

such written notice with respect to the 

added categories of disqualification only 

when the member or applicant is 

required to file an application pursuant 

to the Regulatory Notice. Similarly, the 

proposed rule change would amend 

FINRA Rule 9522(b) to require a 

member to file an application with 

FINRA with respect to the added 

categories of disqualification only when 

instructed to submit one by the 

Regulatory Notice. 

Moreover, under the current rules, 

Member Regulation is responsible for 

evaluating applications for relief from a 

disqualification filed by a disqualified 

member or sponsoring member. In 

certain circumstances, Member 

Federal Register / Vol. 74, No. 8 / Tuesday, January 13, 2009 / Notices 1739 

7See FINRA Rule 9523(b)(1) (to be renumbered to 

FINRA Rule 9523(a)(1)). 8 15 U.S.C. 78o–3(b)(6). 

Regulation is authorized to approve the 

application, while in other cases, 

Member Regulation must make a 

recommendation to either approve or 

deny the applications to the National 

Adjudicatory Council (‘‘NAC’’). The 

proposed amendments to FINRA Rule 

9522 would authorize Member 

Regulation to approve applications 

based on the added categories of 

disqualification. In the event Member 

Regulation does not approve these 

applications, the disqualified member or 

sponsoring member would have the 

right to have the matter decided by the 

NAC after a hearing and consideration 

by the Statutory Disqualification 

Committee under FINRA Rule 9524. 

In addition, if Member Regulation 

determines that an application relating 

to a disqualification that arises from 

findings or orders specified in Section 

15(b)(4)(D), (E), or (H) of the Act or 

arises under Section 3(a)(39)(E) of the 

Act should be approved, but with 

specific supervisory requirements that 

have the consent of the disqualified 

member, sponsoring member and/or 

disqualified person, then proposed 

FINRA Rule 9523(b) would authorize 

Member Regulation to approve a 

supervisory plan, without submitting a 

recommendation to the Chairman of the 

Statutory Disqualification Committee, 

acting on behalf of the NAC. Consistent 

with the current rule regarding the 

submission of supervisory plans,7

proposed FINRA Rule 9523(b)(1) would 

provide that, by submitting an executed 

letter consenting to a supervisory plan, 

a disqualified member, sponsoring 

member and/or disqualified person 

waive the following (in summary): 

(a) The right to a hearing and any 

right of appeal to challenge the validity 

of the supervisory plan; 

(b) The right to claim bias or 

prejudgment by Member Regulation or 

the General Counsel regarding the 

supervisory plan; and 

(c) The right to claim a violation of 

the ex parte prohibitions or the 

separation of functions provisions of 

FINRA Rules 9143 and 9144, 

respectively, in connection with 

participation in the supervisory plan. 

If the supervisory plan is rejected, the 

disqualified member, sponsoring 

member and/or disqualified person 

would have the right to proceed under 

FINRA Rule 9524. 

The proposed rule change also would 

make several technical amendments. 

For example, the proposed rule change 

would amend FINRA Rule 9522(c) to 

allow a member that has filed a 

statutory disqualification application to 

withdraw that application after the start 

of a hearing but prior to the issuance of 

a decision by the NAC by filing a 

written notice with FINRA’s Department 

of Registration and Disclosure and 

FINRA’s Office of General Counsel. In 

addition, for purposes of clarity and 

consistency, the proposed rule change 

would amend FINRA Rule 9522(e) to 

replace references that Member 

Regulation ‘‘may grant’’ or ‘‘may 

approve’’ certain matters with ‘‘is 

authorized to approve’’ such matters. 

The effective date will be 90 days 

following Commission approval of the 

proposed rule change. 

2. Statutory Basis 

FINRA believes that the proposed rule 

change is consistent with the provisions 

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

FINRA believes that the proposed rule 

change is consistent with the provisions 

of the Act noted above because it should 

allow FINRA to integrate filings 

mandated by the revised definition of 

disqualification into established 

programs that monitor subject persons 

and allow FINRA and the Commission 

to focus resources on filings that raise 

important 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–2008–045 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–2008–045. 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–2008–045 and 

should be submitted on or before 

February 3, 2009. 

1740 Federal Register / Vol. 74, No. 8 / Tuesday, January 13, 2009 / Notices 

9 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. 78f. 

4 15 U.S.C. 78f(b)(4). 

5 15 U.S.C. 78s(b)(3)(A). 

6 17 CFR 19b–4(f)(2). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–438 Filed 1–12–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59201; File No. SR–ISE– 

2008–101] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by 

International Securities Exchange, LLC 

Relating to Amending the Fee 

Schedule 

January 6, 2009. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on December 

31, 2008, the International Securities 

Exchange, LLC (the ‘‘Exchange’’ or the 

‘‘ISE’’) filed with the Securities and 

Exchange Commission the proposed 

rule change as described in Items I, II, 

and III below, which items have been 

prepared by the self-regulatory 

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 is proposing to amend 

its Schedule of Fees with respect to 

equity transactions. The text of the 

proposed rule change is available on the 

Exchange’s Internet Web site at http:// 

www.ise.com. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization 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. 

The self-regulatory organization 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 

Purpose—Currently, the Exchange’s 

Schedule of Fees for equity transactions 

consists of a tiered rebate structure for 

securities priced at or above $1.00 

across all Tapes, averaged across an 

entire month, where the first five 

million maker shares executed on an 

average daily volume (ADV) basis 

receive a rebate of $0.0032 per share, 

with an increase in the rebate to $0.0035 

for each maker share executed above 

five million ADV. 

The Exchange now proposes to 

rescind the tiered rebate structure and 

implement a flat rebate, irrespective of 

ADV. The Exchange is amending the fee 

schedule in an effort to increase order 

flow in securities that are reported to 

Tape B. Accordingly, the Exchange 

proposes to adopt a fee structure for 

transactions in securities priced at or 

above $1.00 (excluding both order 

delivery and MidPoint Match orders) 

whereby the maker receives a per share 

rebate of $0.0035 for transactions in 

securities that are reported to Tape B 

and a per share rebate of $0.0029 for 

transactions in securities that are 

reported to Tape A and Tape C. The 

aforementioned fee changes will become 

operative on January 2, 2009. 

The execution fee for orders that 

remove liquidity for securities, across 

all tapes, that trade at or above $1.00 

will remain unchanged at $0.003. The 

execution fee for orders that remove 

liquidity for securities, across all tapes, 

priced under $1.00 remains unchanged, 

at 0.3% of trade value with no rebates 

for adding liquidity in such securities. 

Basis—The Exchange believes that the 

proposed rule change is consistent with 

the objectives of Section 6 of the Act,3

in general, and furthers the objectives of 

Section 6(b)(4),4 in particular, in that it 

is designed to provide for the equitable 

allocation of reasonable dues, fees and 

other charges among its members and 

other persons using its facilities. In 

particular, raising the rebate in Tape B 

securities may provide incentive to 

members to send order flow to the ISE 

for securities reported to Tape B. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The proposed rule change does not 

impose 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 

The Exchange has not solicited, and 

does not intend to solicit, comments on 

this proposed rule change. The 

Exchange has not received any 

unsolicited written comments from 

members or other interested parties. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act 5 and Rule 19b–4(f)(2) 6

thereunder. At any time within 60 days 

of the filing of such proposed rule 

change, the Commission may summarily 

abrogate 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. 

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–ISE–2008–101 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–ISE–2008–101. 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