12166 Federal Register / Vol. 74, No. 54 / Monday, March 23, 2009 / Notices 

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

replaced and superseded the original rule filing 

submitted to the Commission on September 8, 2008. 

2 15 U.S.C. 78s(b)(1). 

3 17 CFR 240.19b–4. 

4See Securities Exchange Act Release No. 59208 

(January 6, 2009), 74 FR 1738 (January 13, 2009) 

(SR–FINRA–2008–045) (notice). 

5See 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). 

The subject matter of the Closed 

Meeting scheduled for Thursday, March 

26, 2009 will be: 

• Institution and settlement of 

injunctive actions; 

• Institution and settlement of 

administrative proceedings of an 

enforcement nature; 

• 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: March 19, 2009. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. E9–6434 Filed 3–19–09; 4:15 pm] 

BILLING CODE 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59586; File No. SR–FINRA– 

2008–045] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Order Approving 

Proposed Rule Change, as Modified by 

Amendment No. 1 Thereto, To Amend 

the FINRA Rule 9520 Series Regarding 

Eligibility Procedures for Persons 

Subject to Certain Disqualifications 

March 17, 2009. 

I. Introduction 

The 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, 2008,1 pursuant to 

Section 19(b)(1) of the Securities 

Exchange Act of 1934 (‘‘Act’’) 2 and Rule 

19b–4 thereunder,3 a proposed rule 

change relating to amendments to 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. 

The proposed rule change was 

published for comment in the Federal 

Register on January 13, 2009.4 The 

Commission received no comments on 

the proposed rule change. This order 

approves the proposed rule change, as 

modified by Amendment No. 1. 

II. Description of the Proposed Rule 

Change 

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.5

Consequently, as further detailed in the 

proposed Regulatory Notice (filed with 

the Commission as Exhibit 2 to SR– 

FINRA–2008–045), 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 

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 


dwashington3 on PROD1PC60 with NOTICES
Federal Register / Vol. 74, No. 54 / Monday, March 23, 2009 / Notices 12167 

6See FINRA Rule 9523(b)(1) (to be renumbered as 

FINRA Rule 9523(a)(1)). 

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). 

9 15 U.S.C. 78s(b)(2). 

10 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. 54959 

(December 18, 2006), 71 FR 77842 (‘‘Notice’’). 

4Amendment No. 2 replaced Amendment No. 1, 

which was withdrawn. In Amendment No. 2, 

Nasdaq proposed to re-number the new rule from 

Rule 7038 to Rule 7047, as rule number 7038 has 

since been used for a subsequent rule. Nasdaq also 

clarified that the Service will only be available with 

respect to data feeds that contain non-core market 

data. Nasdaq also listed the current data feeds 

which can be customized through the Service. 

Because Amendment No. 2 is technical in nature, 

it is not subject to notice and comment. 

5See letter from Melissa MacGregor, Assistant 

Vice President and Assistant General Counsel, 

SIFMA, to Nancy M. Morris, Secretary, 

Commission, dated January 17, 2007. 

6 Id. at 1. 

7 Id. 

8 Id. at 2. 

9 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). 

10 15 U.S.C. 78f(b)(4). 

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,6

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. 

III. Discussion and Findings 

After careful review of the proposed 

rule change, the Commission finds that 

the proposed rule change is consistent 

with the requirements of the Act, and 

the rules and regulations thereunder 

that are applicable to a national 

securities association.7 In particular, the 

Commission believes 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 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 Commission 

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. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,9 that the 

proposed rule change (SR–FINRA– 

2008–045), as modified by Amendment 

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

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–6208 Filed 3–20–09; 8:45 am] 

BILLING CODE 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59579; File No. SR– 

NASDAQ–2006–056] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Order 

Approving Proposed Rule Change as 

Modified by Amendment No. 2 Thereto 

To Establish Nasdaq Custom Data 

Feeds 

March 13, 2009. 

On December 12, 2006, The NASDAQ 

Stock Market LLC (‘‘Nasdaq’’) 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 establish a data filtration 

service called Nasdaq Custom Data 

Feeds (‘‘Service’’). The Service would 

permit entities to request and receive 

customized data feeds containing data 

elements from Nasdaq’s current data 

feeds. The proposed rule change was 

published in the Federal Register on 

December 27, 2006.3 On March 9, 2009, 

Nasdaq filed Amendment No. 1 to the 

proposed rule change. On March 10, 

2009, Nasdaq filed Amendment No. 2 to 

the proposed rule change.4

The Commission received one 

comment on the proposal from the 

Securities Industry and Financial 

Markets Association (‘‘SIFMA’’).5

SIFMA believes that the proposed rule 

change does not meet the requirements 

of the Act because ‘‘there is no costbased analysis or justification for the 

service in the release.’’ 6 SIFMA also 

asserts that the proposed rule change 

‘‘raises problems regarding how the 

proposed fee was calculated.’’ 7 Finally, 

SIFMA questions if competitors will be 

disadvantaged by the proposal as 

Nasdaq will have processed the raw 

data into a customized data feed when 

the data is released, and if a commercial 

service should be provided by Nasdaq 

or if it should instead ‘‘be offered by an 

affiliate on the condition that the terms 

under which that affiliate receives the 

underlying market data are offered to 

other vendors so as to assure 

competition and prevent commercial 

conflicts of interest.’’ 8

The Commission has reviewed 

carefully the proposed rule change and 

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 exchange 9 and, in particular, 

Section 6(b)(4) of the Act,10 which 

requires, among other things, that 

Nasdaq’s rules provide for the equitable 

allocation of reasonable dues, fees and 

other charges among members and 


dwashington3 on PROD1PC60 with NOTICES