31592 Federal Register / Vol. 87, No. 100 / Tuesday, May 24, 2022 / Notices 

12 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 17 CFR 240.19b–4(f)(6). 

4Ending Forced Arbitration of Sexual Assault and 

Sexual Harassment Act of 2021, Public Law 117– 

90, 136 Stat. 26 (2022). The Act applies with respect 

to any dispute or claim that arises or accrues on or 

after the date of enactment of the Act. 

5 9 U.S.C. 2. 

6The Act also permits persons alleging conduct 

constituting a sexual assault dispute or sexual 

harassment dispute to elect not to enforce 

predispute joint-action waivers in cases that relate 

to those disputes. The Act defines ‘‘predispute 

joint-action waiver’’ as an agreement that ‘‘would 

prohibit, or waive the right of, one of the parties to 

the agreement to participate in a joint, class, or 

collective action in a judicial, arbitral, 

administrative, or other forum, concerning a 

dispute that has not yet arisen at the time of the 

making of the agreement.’’ See supra note 4. FINRA 

rules are consistent with this provision of the Act 

because FINRA rules provide that class action and 

statutory collective action claims may not be 

arbitrated under the Code. See FINRA Rule 13204. 

7See H.R. Rep. No. 117–234, at 18 (2022) (‘‘The 

Committee states that pursuant to clause 3(c)(4) of 

House Rule XIII, H.R. 4445 improves access to 

justice for survivors of sexual assault and 

harassment by allowing these parties to elect 

arbitration after a dispute has arisen’’). The 

applicability of the Act to an agreement to arbitrate 

and the validity and enforceability of an agreement 

to which the Act applies shall be determined by a 

court, rather than an arbitrator, irrespective of 

whether the party resisting arbitration challenges 

the arbitration agreement specifically or in 

conjunction with other terms of the contract 

containing such agreement, and irrespective of 

whether the agreement purports to delegate such 

determinations to an arbitrator. See supra note 4. 

8FINRA Rule 13100(bb) provides that ‘‘[t]he term 

‘statutory employment discrimination claim’ means 

a claim alleging employment discrimination, 

including a sexual harassment claim, in violation of 

a statute.’’ FINRA rules do not explicitly address 

the treatment of sexual assault claims. 

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 website 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 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–MIAX–2022–21, and 

should be submitted on or before June 

14, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–11063 Filed 5–23–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94942; File No. SR–FINRA– 

2022–012] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend FINRA Rule 

13000 Series (Code of Arbitration 

Procedure for Industry Disputes) To 

Align the Code With the Ending Forced 

Arbitration of Sexual Assault and 

Sexual Harassment Act of 2021 

May 18, 2022. 

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

Securities Exchange Act of 1934 

(‘‘Exchange Act’’) 1 and Rule 19b–4 

thereunder,2 notice is hereby given that 

on May 13, 2022, the 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. FINRA 

has designated the proposed rule change 

as constituting a ‘‘non-controversial’’ 

rule change under paragraph (f)(6) of 

Rule 19b–4 under the Exchange Act,3

which renders the proposed rule change 

effective upon receipt of this filing by 

the Commission. 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 the 

Code of Arbitration Procedure for 

Industry Disputes (‘‘Code’’) to align the 

Code with the Ending Forced 

Arbitration of Sexual Assault and 

Sexual Harassment Act of 2021 (‘‘Act’’). 

The proposed rule change would also 

make a conforming amendment to 

FINRA Rule 2263. 

The text of the proposed rule change 

is available on FINRA’s website 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 

Background 

The Act was signed into law on 

March 3, 2022, and took effect 

immediately.4 The Act amends Title 9 

of the Federal Arbitration Act 5 by 

providing in relevant part: 

Notwithstanding any other provision of 

this title, at the election of the person 

alleging conduct constituting a sexual 

harassment dispute or sexual assault dispute, 

or the named representative of a class or in 

a collective action alleging such conduct, no 

predispute arbitration agreement or 

predispute joint-action waiver shall be valid 

or enforceable with respect to a case which 

is filed under Federal, Tribal, or State law 

and relates to the sexual assault dispute or 

the sexual harassment dispute. 

The Act prohibits mandatory 

arbitration of sexual assault and sexual 

harassment claims by permitting 

persons alleging conduct constituting a 

sexual assault dispute or sexual 

harassment dispute to elect not to 

enforce predispute arbitration 

agreements in cases that relate to those 

disputes.6 However, the Act does not 

prohibit parties from agreeing to 

arbitrate such claims after a dispute has 

arisen.7

FINRA Rule 13201 relates to the 

arbitration at FINRA Dispute Resolution 

Services’ (‘‘DRS’’) forum of statutory 

employment discrimination claims (‘‘SD 

claims’’).8 Specifically, FINRA Rule 

13201(a) provides that ‘‘[an SD claim] is 

not required to be arbitrated under the 

Code. Such a claim may be arbitrated 

only if the parties have agreed to 

arbitrate it either before or after the 

dispute arose.’’ Although FINRA rules 

do not require arbitration of SD claims 

under the Code, in practice, 

employment agreements may require 


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Federal Register / Vol. 87, No. 100 / Tuesday, May 24, 2022 / Notices 31593 

9The proposed rule change would apply to all 

members, including members that are funding 

portals or have elected to be treated as capital 

acquisition brokers (‘‘CABs’’), given that the 

funding portal and CAB rule sets incorporate the 

impacted FINRA rules by reference. 

10Under FINRA Rule 13100(e), ‘‘[t]he term ‘claim’ 

means an allegation or request for relief.’’ Under 

FINRA Rule 13100(n), ‘‘[t]he term ‘dispute’ means 

a dispute, claim or controversy. A dispute may 

consist of one or more claims.’’ 

11The proposed rule change would also remove 

the reference to ‘‘sexual harassment’’ from the 

definition of SD claim in FINRA Rule 13100(bb). 

See supra note 8. 

12The proposed rule change would also amend 

the title of FINRA Rule 13201 to clarify that the rule 

applies to sexual assault claims and sexual 

harassment claims. 

13FINRA Rule 13802 sets forth requirements as to 

the number of arbitrators on the panel, the 

composition of the panel, the filing fee, the relief 

available, and the availability of attorneys’ fees. 

FINRA is proposing to amend FINRA Rule 13802 

to add the terms ‘‘sexual assault claim’’ and ‘‘sexual 

harassment claim’’ to the title and throughout the 

rule to clarify that it also applies to these types of 

claims. 

14Under FINRA Rule 13803, if an associated 

person files an SD claim in court and asserts related 

claims in DRS’s arbitration forum, a respondent 

who is named in both proceedings may bring a 

motion to compel the related arbitration claims to 

the same court proceeding. If the respondent does 

so, the respondent must assert all related claims it 

has against the associated person in the same court 

proceeding. FINRA Rule 13803 also permits the 

respondent to compel arbitration of related claims 

that are subject to mandatory arbitration. This 

provision applies where the respondent has not 

exercised its option to combine all claims in court. 

15Similarly, FINRA proposes to add the terms 

‘‘sexual assault claim’’ and ‘‘sexual harassment 

claim’’ to other rules in the Code that reference SD 

claims to ensure that sexual assault and sexual 

harassment claims are administered consistently 

with how SD claims are currently administered in 

DRS’s arbitration forum. See FINRA Rules 13402 

(Composition of Arbitration Panels in Cases Not 

Involving a Statutory Discrimination Claim), 13510 

(Depositions); Part VIII (Simplified Arbitration; 

Default Proceedings; Statutory Employment 

Discrimination Claims; and Injunctive Relief). 16 15 U.S.C. 78o–3(b)(6). 

associated persons to arbitrate such 

claims. 

In light of the changes set forth in the 

Act, FINRA is proposing amendments to 

its rules to align the rules to the Act and 

make other conforming changes.9

Proposed Amendments to FINRA Rule 

13100 

FINRA is proposing to amend FINRA 

Rule 13100 to add definitions of ‘‘sexual 

assault claim’’ and ‘‘sexual harassment 

claim’’ that are consistent with the 

definitions of ‘‘sexual assault dispute’’ 

and ‘‘sexual harassment dispute’’ in the 

Act.10 Specifically, proposed FINRA 

Rule 13100(aa) would provide that 

‘‘[t]he term ‘sexual assault claim’ means 

a claim involving a nonconsensual 

sexual act or sexual contact, as such 

terms are defined in section 2246 of title 

18 of the United States Code or similar 

applicable Tribal or State law, including 

when the victim lacks capacity to 

consent.’’ In addition, proposed FINRA 

Rule 13100(bb) would provide that 

‘‘[t]he term ‘sexual harassment claim’ 

means a claim relating to conduct that 

is alleged to constitute sexual 

harassment under applicable Federal, 

Tribal, or State law.’’ 11

Proposed Amendments to FINRA Rule 

13201 

FINRA is proposing to amend FINRA 

Rule 13201 to align it with the Act by 

adding new paragraph (c) to provide 

that a party alleging a sexual assault or 

sexual harassment claim that has agreed 

to arbitrate before the dispute arose may 

elect post dispute not to arbitrate the 

claim under the Code.12 Proposed 

paragraph (c) would also provide that 

the claim may be arbitrated if the parties 

agreed to arbitrate it after the dispute 

arose. Further, paragraph (c) would 

provide that sexual assault and sexual 

harassment claims would be 

administered in the forum under FINRA 

Rule 13802, which establishes the 

procedural requirements for 

administering SD claims in DRS’s 

arbitration forum today.13

Proposed Amendments to FINRA Rule 

13803 

FINRA is proposing amendments to 

FINRA Rule 13803 to ensure that sexual 

assault and sexual harassment claims 

are administered consistently with how 

SD claims are currently administered in 

DRS’s arbitration forum.14 Under the 

current framework, sexual harassment 

and sexual assault claims would be 

administered under FINRA Rule 13803 

to the extent such claims constitute SD 

claims. The proposed rule change 

would add the terms ‘‘sexual assault 

claim’’ and ‘‘sexual harassment claim’’ 

to the title of FINRA Rule 13803 and 

throughout the rule to make explicit that 

it applies to the coordination of sexual 

assault and sexual harassment claims 

filed in court and other related claims 

that may be filed at DRS’s arbitration 

forum.15

Proposed Amendments to FINRA Rule 

2263 

FINRA is proposing a conforming 

amendment to FINRA Rule 2263 to 

incorporate the language in proposed 

FINRA Rule 13201(c) into the written 

statement a member firm must provide 

to an associated person regarding the 

predispute arbitration clause in Form 

U4. Thus, firms would be required to 

disclose to the associated person that a 

party alleging a sexual assault or sexual 

harassment claim that has agreed to 

arbitrate before the dispute arose may 

elect post dispute not to arbitrate such 

a claim under the Code, and that such 

a claim may be arbitrated if the parties 

have agreed to arbitrate it after the 

dispute arose. 

FINRA has filed the proposed rule 

change for immediate effectiveness and 

has requested that the Commission 

waive the requirement that the proposed 

rule change not become operative for 30 

days after the date of the filing. The 

operative date will be the date of the 

filing 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 Exchange 

Act,16 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 

serves to align FINRA rules with the 

Act, which prohibits mandatory 

arbitration of sexual assault and sexual 

harassment claims. The proposed rule 

change would create parity between 

FINRA rules and the Act as to the 

circumstances under which sexual 

assault and sexual harassment claims 

may be arbitrated at DRS’s forum. The 

proposed conforming amendments 

would also make clear that when such 

claims are arbitrated at DRS’s forum, 

they will be processed like SD claims. 

Thus, the proposed rule change will 

enable DRS to continue to administer a 

fair dispute resolution forum and meet 

its investor protection goals in a manner 

consistent with the Act. 

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 Exchange Act. 

The proposed rule change aligns FINRA 

rules with other requirements to which 

firms are subject and would not have 

additional economic impacts on firms or 

associated persons. 

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. 


jspears on DSK121TN23PROD with NOTICES1
31594 Federal Register / Vol. 87, No. 100 / Tuesday, May 24, 2022 / Notices 

17 15 U.S.C. 78s(b)(3)(A). 

18 17 CFR 240.19b–4(f)(6). 

19 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. 94265 

(February 16, 2022), 87 FR 10265 (February 23, 

2022) (‘‘Notice’’). 

4 Id. 

5 15 U.S.C. 78s(b)(2). 

6See Securities Exchange Act Release No. 94471 

(March 18, 2022), 87 FR 16778 (March 24, 2022). 

The Commission designated May 24, 2022, as the 

date by which the Commission shall approve or 

disapprove, or institute proceedings to determine 

whether to disapprove, the proposed rule change. 

7Under proposed Rule 5702(d), if an issuer also 

lists its common stock, voting preferred stock, or 

their equivalent on Nasdaq, the corporate 

governance requirements under the Nasdaq 5600 

Rule Series would apply. See Notice, supra note 3, 

n. 8. 

8Rule 5702 contains the initial and continued 

listing standards for non-convertible bonds, as well 

as disclosure requirements for companies that list 

non-convertible bonds. 

9Rule 5630 requires certain companies to 

conduct an appropriate review and oversight of all 

related party transactions for potential conflict of 

interest situations on an ongoing basis. 

10Rule 5635 sets forth the circumstances under 

which shareholder approval is required prior to an 

issuance of securities in connection with: (i) The 

acquisition of the stock or assets of another 

company; (ii) equity-based compensation of 

officers, directors, employees, or consultants; (iii) a 

change of control; and (iv) transactions other than 

public offerings. 

11Rule 5640 states that voting rights of existing 

shareholders of publicly traded common stock 

registered under Section 12 of the Act cannot be 

disparately reduced or restricted through any 

corporate action or issuance. 

12See Notice, supra note 3, at 10266. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Exchange Act 17 and 

Rule 19b–4(f)(6) thereunder.18

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend 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 Exchange Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or 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 Exchange 

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 email to rule-comments@

sec.gov. Please include File Number SR– 

FINRA–2022–012 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–2022–012. This file 

number should be included on the 

subject line if email 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 website (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 website 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 

10:00 a.m. and 3:00 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. Persons 

submitting comments are cautioned that 

we do not redact or edit personal 

identifying information from comment 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–FINRA– 

2022–012 and should be submitted on 

or before June 14, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–11062 Filed 5–23–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94941; File No. SR– 

NASDAQ–2022–015] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Order 

Instituting Proceedings To Determine 

Whether To Approve or Disapprove a 

Proposed Rule Change To Exempt 

Non-Convertible Bonds Listed Under 

Rule 5702 From Certain Corporate 

Governance Requirements 

May 18, 2022. 

I. Introduction 

On February 4, 2022, The Nasdaq 

Stock Market LLC (‘‘Nasdaq’’ or 

‘‘Exchange’’) 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 

exempt non-convertible bonds listed 

under Rule 5702 from certain corporate 

governance requirements.3 The 

proposed rule change was published for 

comment in the Federal Register on 

February 23, 2022.4 On March 18, 2022, 

pursuant to Section 19(b)(2) of the Act,5

the Commission designated a longer 

period within which to approve the 

proposed rule change, disapprove the 

proposed rule change, or institute 

proceedings to determine whether to 

disapprove the proposed rule change.6

The Commission received no comment 

letters regarding the proposed rule 

change. This order institutes 

proceedings under Section 19(b)(2)(B) of 

the Act to determine whether to approve 

or disapprove the proposed rule change. 

II. Description of the Proposed Rule 

Change 

Generally, Nasdaq proposes to exempt 

issuers listing non-convertible bonds 

under Rule 5702 from certain corporate 

governance requirements.7 Specifically, 

Nasdaq proposes to amend Nasdaq Rule 

5702 8 to exempt these issuers from the 

requirements relating to Review of 

Related Party Transactions (Nasdaq Rule 

5630),9 Shareholder Approval (Nasdaq 

Rule 5635),10 and Voting Rights (Nasdaq 

Rule 5640).11 According to Nasdaq, it is 

appropriate to exempt these issuers 

from governance requirements because 

the interests of bond holders are 

protected contractually through the trust 

indenture, and therefore, ‘‘holders of 

non-convertible bonds do not expect to 

have governance rights the way equity 

investors may.’’ 12


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