34728 Federal Register / Vol. 87, No. 109 / Tuesday, June 7, 2022 / Notices 

27 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Exchange Act Release No. 93215 (September 30, 

2021), 86 FR 55641 (October 6, 2021) (File No. SR– 

FINRA–2021–024) (‘‘Notice’’). 

4 Id. 

5See letter from Sarah Kwak, Associate General 

Counsel, Office of General Counsel, FINRA, to 

Daniel Fisher, Branch Chief, Office of Chief 

Counsel, Division of Trading and Markets, 

Commission, dated November 9, 2021. 

6See letter from Sarah Kwak, Associate General 

Counsel, Office of General Counsel, FINRA, to 

Vanessa Countryman, Secretary, Commission, dated 

January 4, 2022 (‘‘FINRA Response Letter’’); see 

also Exchange Act Release No. 93897, 87 FR 1201 

(January 10, 2022) (‘‘OIP and Amendment No. 1’’). 

7 15 U.S.C. 78s(b)(2)(B). 

8See OIP and Amendment No. 1. 

9FINRA Rule 2231(d)(2) defines a ‘‘general 

securities member’’ as any FINRA member ‘‘that 

conducts a general securities business and is 

required to calculate its net capital pursuant to the 

provisions of [Exchange Act] Rule 15c3–1(a)’’ 

except members that do not carry customer 

accounts or hold customer funds or securities. 

10See Notice, 86 FR at 55649. 

11As part of the process of completing a 

consolidated FINRA rulebook, FINRA adopted, 

without substantive changes, the remaining legacy 

NASD rules as FINRA rules in the consolidated 

FINRA rulebook and the NYSE Rules and NYSE 

Rule Interpretations in the consolidated FINRA 

rulebook as a separate Temporary Dual FINRA– 

NYSE Member Rules Series. These NYSE rules and 

their corresponding interpretations now bear a ‘‘T’’ 

modifier after the rule and interpretation number to 

denote their placement in the Temporary Dual 

FINRA–NYSE Member Rules Series. The 

Temporary Dual FINRA–NYSE Member Rules 

Series apply only to FINRA members that are also 

members of the NYSE. The FINRA rules apply to 

all FINRA members, unless such rules have a more 

limited application by their terms. Among the 

remaining NASD rules was NASD Rule 2340 

(Customer Account Statements), which was 

adopted, without substantive changes, as FINRA 

Rule 2231. NYSE Rule 409 (Statements of Accounts 

to Customers) and Incorporated NYSE Rule 

Interpretation 409 (Statements of Accounts to 

Customers) were adopted, without substantive 

changes, under the Temporary Dual FINRA–NYSE 

Rules Series as Rule 409T and Interpretation 409T, 

respectively. See Exchange Act Release No. 85589 

(April 10, 2019), 84 FR 15646 (April 16, 2019) 

(Notice of Filing and Immediate Effectiveness of 

File No. SR–FINRA–2019–009). For convenience, 

the rules and interpretations under the Temporary 

Dual FINRA–NYSE Member Rules Series are 

referred to as ‘‘NYSE Rule’’ and ‘‘NYSE Rule 

Interpretation,’’ as appropriate. See Notice, 86 FR at 

note 3. 

12See Notice, 86 FR at 55646. 

13See Notice, 86 FR at 55643. 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–DTC– 

2022–005 and should be submitted on 

or before June 28, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.27

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–12168 Filed 6–6–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–95018; File No. SR–FINRA– 

2021–02] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Order Approving a 

Proposed Rule Change To Amend 

FINRA Rule 2231 (Customer Account 

Statements), as Modified by 

Amendment No. 1 

June 1, 2022. 

I. Introduction 

On September 29, 2021, the Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’) 

the proposed rule change SR–FINRA– 

2021–024 pursuant to Section 19(b)(1) 

of the Securities Exchange Act of 1934 

(‘‘Exchange Act’’) 1 and Rule 19b–4 2

thereunder to amend FINRA Rule 2231 

(Customer Account Statements) to add 

new supplementary materials, 

incorporate specified provisions from 

dual FINRA–NYSE temporary rules, and 

delete those temporary rules.3 The 

proposed rule change was published for 

public comment in the Federal Register 

on September 30, 2021.4 On November 

9, 2021, FINRA consented to an 

extension of the time period to January 

4, 2022, in which the Commission must 

approve the proposed rule change, 

disapprove the proposed rule change, or 

institute proceedings to determine 

whether to approve or disapprove the 

proposed rule change.5 On January 4, 

2022, FINRA responded to the comment 

letters received in response to the 

Notice and filed an amendment to 

modify the proposed rule change 

(‘‘Amendment No. 1’’).6 On January 4, 

2022, the Commission published notice 

of Amendment No. 1 and instituted 

proceedings pursuant to Section 

19(b)(2)(B) of the Act 7 to determine 

whether to approve or disapprove the 

proposed rule change.8 This order 

approves the proposed rule change, as 

modified by Amendment No. 1. 

II. Description of the Proposed Rule 

Change 

A. Background 

As discussed in the Notice, Rule 2231 

and NYSE Rule 409T govern the 

obligation of FINRA members and 

member organizations to deliver 

customer account statements to 

customers. Specifically, Rule 2231 and 

NYSE Rule 409T generally require a 

general securities member 9 to, at least 

once each calendar quarter, send 

account statements to customers 

containing a description of any 

securities positions, money balances or 

account activity in the accounts since 

the prior account statements were sent, 

except if carried on a Delivery Versus 

Payment/Receive Versus Payment 

basis.10 Rule 2231 does not currently 

contain any supplementary materials. 

FINRA stated that at the time it 

adopted Rule 2231, along with NYSE 

Rule 409T and NYSE Rule 

Interpretation 409T (together, ‘‘NYSE 

Provisions’’), into the consolidated 

FINRA rulebook, it would continue to 

review the substance of such rules and 

expected to propose substantive changes 

to some or all of the rules as part of 

future rulemakings.11 As a result of that 

review, FINRA proposed amending Rule 

2231 to incorporate several existing 

provisions from the NYSE Provisions 

into the FINRA rulebook and proposed 

deleting the NYSE Provisions in their 

entirety.12

Specifically, FINRA’s proposed rule 

change would: (1) amend Rule 2231 to 

(a) add new Supplementary Materials 

.01 (Compliance with Rule 4311 

(Carrying Agreements)), .02 

(Transmission of Customer Account 

Statements to Other Persons or Entities), 

.03 (Use of Electronic Media to Satisfy 

Delivery Obligations), and .04 

(Compliance with Rule 3150 (Holding of 

Customer Mail)) and (b) incorporate 

provisions derived from NYSE Rule 

Interpretation 409T, without substantive 

changes, as Supplementary Materials 

.05 (Information to be Disclosed on 

Statement), .06 (Assets Externally Held), 

.07 (Use of Logos, Trademarks, etc.), and 

.08 (Use of Summary Statements); (2) 

delete Temporary Dual FINRA–NYSE 

Rule 409T (Statements of Accounts to 

Customers) and Temporary Dual 

FINRA–NYSE Rule Interpretation 409T; 

and (3) make other non-substantive and 

technical changes in Rule 2231 and to 

other FINRA rules due to this proposed 

rule change. As a result of these 

changes, FINRA members that are not 

NYSE members would be required to 

comply with provisions that previously 

only applied to NYSE members. In 

addition to the specific points below, as 

a general matter, FINRA stated that 

harmonizing the NYSE provisions into 

Rule 2231 would provide greater clarity 

and regulatory efficiency to all FINRA 

member firms.13 Further, FINRA stated 

that with respect to proposed 

Supplementary Materials .01 and .03 

through .08, the proposed rule change 

would not impose additional material 

burdens on firms as it is substantially 


jspears on DSK121TN23PROD with NOTICES1
Federal Register / Vol. 87, No. 109 / Tuesday, June 7, 2022 / Notices 34729 

14See Notice, 86 FR at 55648. 

15See Proposed Supplementary Material .01. 

16 17 CFR 240.15c3–3. 

17See Notice, 86 FR at 55643. 

18See NYSE Rule 409T(b); see also Notice, 86 FR 

at 55643. 

19See Notice, 86 FR at 55643. 

20See Proposed Supplementary Material .02(a). 

21See Proposed Supplementary Material .02(b). 

22See Proposed Supplementary Material .02(c). 

23See Notice, 86 FR at 55644. 

24See Proposed Supplementary Material .03; see 

also Notice, 86 FR at 55644 (citing Securities Act 

Release No. 7233 (October 6, 1995); 60 FR 53458 

(October 13, 1995); Securities Act Release No. 7288 

(May 9, 1996); 61 FR 24644 (May 15, 1996); 

Securities Act Release No. 7856 (April 28, 2000); 65 

FR 25843, 25854 (May 4, 2000)). 

25See Notice, 86 FR at 55644 (citing Notice to 

Members 98–3 (January 1998)). 

26See Proposed Supplementary Material .04. 

27See Notice, 86 FR at 55644. 

28Subject to limitations, SIPC protects against the 

loss of cash and securities—such as stocks and 

bonds—held by a customer at a financially-troubled 

SIPC-member brokerage firm. See SIPC’s website, 

available at https://www.sipc.org/for-investors/ 

what-sipc-protects. 

29See NYSE Rule Interpretation 409T(a)/02. 

similar to existing rules or otherwise 

consistent with current guidance.14

B. Proposed Supplementary Materials as 

Modified by Amendment No. 1 

1. New Supplementary Material .01 

(Compliance With Rule 4311) 

FINRA’s proposed rule change would 

amend Rule 2231 by adding new 

Supplementary Material .01, which 

would remind firms of their obligations 

under FINRA Rule 4311 (Carrying 

Agreements), including specifically the 

rights and obligations of carrying firms 

under Rule 4311(c)(2).15 Rule 4311 

generally governs the requirements 

applicable to FINRA members when 

entering into agreements for the carrying 

of any customer accounts in which 

securities transactions can be effected. 

In general, Rule 4311(c) requires each 

carrying agreement pursuant to which 

accounts are to be carried on a fully 

disclosed basis to specify the 

responsibilities of each party to the 

agreement, including at a minimum the 

allocation of the responsibilities set 

forth in paragraphs 4311(c)(1)(A) 

through (I) and (c)(2). Among those 

responsibilities, Rule 4311(c)(2) requires 

each carrying agreement pursuant to 

which accounts are to be carried on a 

fully disclosed basis to expressly 

allocate to the carrying firm 

responsibility for safeguarding funds 

and securities under Exchange Act Rule 

15c3–3 (Customer protection—reserves 

and custody of securities) 16 and for 

preparing and transmitting account 

statements to customers. 

FINRA stated that reminding firms of 

their obligations under Rule 4311 in 

proposed Supplementary Material .01 

would emphasize the importance of 

ensuring the accuracy and integrity of 

customer account statements.17

2. New Supplementary Material .02 

(Transmission of Customer Account 

Statements to Other Persons or Entities) 

Rule 2231 does not currently address 

the transmission of customer account 

statements to third parties. In contrast, 

NYSE Rule 409T(b) prohibits, without 

NYSE’s consent, the delivery of 

confirmations, statements, or other 

communications to a nonmember 

customer: (1) in care of a person holding 

power of attorney (‘‘POA’’) over the 

customer’s account unless either (a) the 

customer has provided written 

instructions to the member organization 

to send such confirmations, statements, 

or other communications in care of such 

person, or (b) duplicate copies are sent 

to the customer at some other address 

designated in writing by the customer; 

or (2) at the address of any member, 

member organization, or in care of a 

partner, stockholder who is actively 

engaged in the member corporation’s 

business, or employee of any member 

organization.18

Proposed Supplementary Material .02 

would address the transmission of 

customer account statements to third 

parties in a manner similar, but not 

identical to, NYSE Rule 409T.19

Specifically, proposed Supplementary 

Material .02 to Rule 2231 would 

prohibit member firms from sending 

customer account statements to third 

parties unless: (1) the customer 

provided written instructions to the 

member to send statements to such third 

parties; and (2) the member sends 

duplicate account statements directly to 

the customer either in paper format or 

electronically.20 Proposed 

Supplementary Material .02 would add 

that a FINRA member may cease 

sending duplicate account statements to 

a customer where a court of competent 

jurisdiction has appointed a guardian, 

conservator, trustee, personal 

representative or other person with legal 

authority to act on a customer’s behalf, 

and such court-appointed fiduciary 

provides written instructions to the 

member and furnishes to the member an 

official copy of the court appointment 

that establishes authority over the 

customer’s accounts.21 Under proposed 

Supplementary Material .02, a member 

would continue to be able to provide 

duplicate customer account statement(s) 

to third parties as required for 

compliance with FINRA Rules 2070 

(Transactions Involving FINRA 

Employees) and 3210 (Accounts at 

Other Broker-Dealers and Financial 

Institutions) or other similar applicable 

federal securities laws, rules and 

regulations.22

FINRA stated it believes proposed 

Supplementary Material .02 achieves 

the appropriate balance between 

ensuring customers receive their 

account statements so that they may 

monitor their account activity and 

recognizing there are special 

circumstances where firms may stop 

delivery of account statements to 

customers.23

3. New Supplementary Material .03 (Use 

of Electronic Media To Satisfy Delivery 

Obligations) 

FINRA’s proposed rule change would 

add new Supplementary Material .03 to 

FINRA Rule 2231, which would allow 

FINRA members to satisfy their Rule 

2231 delivery obligations using 

electronic media, subject to compliance 

with standards established by the 

Commission on the use of electronic 

media for delivery purposes.24 FINRA 

stated this provision would be 

consistent with prior FINRA guidance 

on the use of electronic media to satisfy 

delivery obligations.25

4. New Supplementary Material .04 

(Compliance With Rule 3150) 

FINRA’s proposed rule change would 

add new Supplementary Material .04 to 

Rule 2231, which would permit FINRA 

members to hold customer mail, 

including customer account statements 

or other communications relating to a 

customer’s account, subject to the 

requirements of FINRA Rule 3150 

(Holding of Customer Mail).26 In 

general, Rule 3150 allows FINRA 

members to hold customer mail for a 

specific time period in accordance with 

the customer’s written instructions if 

the member meets specified 

conditions.27

5. New Supplementary Material .05 

(Information To Be Disclosed on 

Statement) 

NYSE Rule Interpretation 409T(a)/02 

requires the front of a customer account 

statement to disclose: (1) the identity of 

introducing and carrying organizations, 

and their respective phone numbers for 

service; (2) that the carrying 

organization is a member of the 

Securities Investor Protection 

Corporation (‘‘SIPC’’); 28 and (3) the 

opening and closing account balances.29

Note 1 to NYSE Rule Interpretation 

409T(a)/02 provides that the 

Commission ‘‘has stated that under the 


jspears on DSK121TN23PROD with NOTICES1
34730 Federal Register / Vol. 87, No. 109 / Tuesday, June 7, 2022 / Notices 

30 17 CFR 240.15c3–1(a)(2)(iv). 

31See NYSE Rule Interpretation 409T(a)/02 at 

note 1 (citing Exchange Act Release No. 31511 

(November 24, 1992)). 

32See Proposed Supplementary Material .05. 

33See Notice, 86 FR at 55644 and 55655. 

34See NYSE Rule Interpretation 409T(a)/04. 

35 Id. 

36See Proposed Supplementary Material .06. 

37See Proposed Supplementary Material .06(a)– 

(c). 

38See NYSE Rule Interpretation 409T(a)/05. 

39See Proposed Supplementary Material .07; see 

also Notice, 86 FR at 55645. 

40 Id.; see also FINRA Rule 2210(d)(1)(B). 

41See Notice, 86 FR at 55645. FINRA stated that, 

in general, a summary statement reflects 

information from entities that are part of a financial 

services ‘‘group’’ or ‘‘family’’ or where a firm carries 

accounts for another broker-dealer that is part of 

such group or family. FINRA stated that a summary 

statement provides an overview of a customer’s 

accounts at separate entities and is supported by 

and derived from the detail on the separate 

underlying respective account statements. Id. 

[Exchange Act] Rule 15c3–1(a)(2)(iv),30

certain carrying firms must issue 

customer account statements, and the 

account statements must contain the 

name and telephone number of a person 

at the carrying firm who the customer 

can contact with inquiries regarding the 

account. The phone number of the 

carrying organization may appear on the 

back of the statement. If it does, it must 

be in ‘bold’ or ‘highlighted’ letters.’’ 31

FINRA’s proposed rule change would 

incorporate NYSE Rule Interpretation 

409T(a)/02, including note 1, without 

substantive changes, as Supplementary 

Material .05 to FINRA Rule 2231. 

Proposed Supplementary Material .05 

would require the following information 

to be clearly and prominently disclosed 

on the front of customer account 

statements: (1) the identity of the 

introducing firm and carrying firm, if 

different, and their respective contact 

information for customer service; 

however, the identity of the carrying 

firm and its contact information for 

customer service may appear on the 

back of the statement provided such 

information is in ‘‘bold’’ or 

‘‘highlighted’’ letters; (2) that the 

carrying firm is a SIPC member; and (3) 

the opening and closing balances for the 

account.32

FINRA stated that proposed 

Supplementary Material .05 would 

incorporate NYSE Rule Interpretation 

409T(a)/02 without substantive changes. 

FINRA also stated that proposed 

Supplementary Material .05 would give 

member firms adequate guidance and 

flexibility in providing the specified 

information while also ensuring that 

SIPC status of the clearing firm is 

disclosed on the front of the 

statement.33

6. New Supplementary Material .06 

(Assets Externally Held) 

Rule 2231 does not currently address 

how FINRA members should disclose 

assets they do not carry on behalf of 

customers and that are not included on 

the firms’ books and records. In 

contrast, NYSE Rule Interpretation 

409T(a)/04 provides that where a 

statement of account includes assets as 

to which a member organization does 

not have fiduciary responsibility, does 

not have access to, and which are not 

included on the member organization’s 

books and records, such assets must be 

clearly and distinguishably separated on 

the statement.34 In addition, the 

statement must clearly indicate that: (1) 

such externally held assets are included 

on the statement solely as a courtesy to 

the customer; (2) that information 

(including valuation) is derived from 

the customer or other external source for 

which the member organization is not 

responsible; and (3) such externally 

held assets are not covered by SIPC.35

FINRA’s proposed rule change would 

incorporate the requirements of NYSE 

Rule Interpretation 409T(a)/04, without 

substantive changes, as Supplementary 

Material .06 to Rule 2231. Proposed 

Supplementary Material .06 would 

require that where a customer account 

statement includes assets that the 

member firm does not carry on behalf of 

the customer and that are not included 

on the member firm’s books and 

records, such assets must be clearly and 

distinguishably separated on the 

statement.36 In such cases, proposed 

Supplementary Material .06 would 

require FINRA members to: (1) clearly 

indicate that such externally held assets 

are included on the statement solely as 

a courtesy to the customer; (2) disclose 

that information, including valuation, 

for such externally held assets included 

on the statement is derived from the 

customer or other external source for 

which the member is not responsible; 

and (3) identify that such externally 

held assets may not be covered by 

SIPC.37

7. New Supplementary Material .07 (Use 

of Logos, Trademarks, etc.) 

Rule 2231 does not currently address 

how logos, trademarks, or the 

identification of persons other than 

introducing or carrying firms should 

appear on customer account statements. 

In contrast, NYSE Rule Interpretation 

409T(a)/05 requires that where a logo, 

trademark, or other identification of a 

person other than the introducing firm 

or carrying firm appears on an account 

statement, the identity of such person 

and the relationship to the introducing, 

carrying, or other organization included 

on the statement must be provided and 

may not be misleading or confusing to 

customers.38

FINRA’s proposed rule change would 

incorporate, without substantive 

changes, NYSE Rule Interpretation 

409T(a)/05 as proposed Supplementary 

Material .07 to Rule 2231.39 Proposed 

Supplementary Material .07 would 

require that where the logo, trademark 

or other similar identification of a 

person (other than the introducing firm 

or carrying firm) appears on a customer 

account statement, the identity of such 

person(s) and the relationship to the 

introducing, carrying or other firm 

included on the statement must be 

provided and may not be used in a 

manner that is misleading or causes 

customer confusion. FINRA stated that 

proposed Supplementary Material .07 

would be consistent with the general 

requirements of FINRA Rule 2210 

(Communications with the Public), 

which, among other things, prohibits 

FINRA members from publishing, 

circulating, or distributing 

communications that they know or have 

reason to know contain any untrue 

statement of material fact or are 

otherwise false or misleading.40

8. New Supplementary Material .08 (Use 

of Summary Statements) 

Rule 2231 does not currently address 

FINRA member obligations where the 

member holds a customer’s account and 

another person, who separately offers 

related financial products or services to 

the same customer, jointly provide their 

respective customer account statements 

together with a statement summarizing 

or combining assets held in different 

accounts (‘‘summary statements’’).41 In 

contrast, NYSE Rule Interpretation 

409T(a)/06 states that where a member 

organization carrying a customer’s 

account and another person(s) who 

separately offers financial related 

products/services to the same customer 

seek to jointly formulate and/or 

distribute their respective customer 

account statements together with a 

summary statement, the summary 

statement must: (1) indicate that it is 

provided for informational purposes 

and includes assets held at different 

entities; (2) identify each entity from 

which information is provided or assets 

are being held are included, their 

relationship to each other, and their 

respective functions (e.g., introducing or 

carrying brokerage firms, fund 

distributor, banking or insurance 

product providers, etc.); (3) clearly 

distinguish between assets held by each 

entity by use of columns, coloring or 


jspears on DSK121TN23PROD with NOTICES1
Federal Register / Vol. 87, No. 109 / Tuesday, June 7, 2022 / Notices 34731 

42See NYSE Rule Interpretation 409T(a)/06. 

43See Notice, 86 FR at 55645. 

44See Proposed Supplementary Material 

.08(a)(1)–(6). 

45See Proposed Supplementary Material .08(b). 

46See Proposed Supplementary Material .08(c). 

47See Proposed Supplementary Material .08(d). 

48See Proposed Supplementary Material .08(e). 

49See Notice, 86 FR at 55645. 

50See Notice, 86 FR at 55646. 

51See NYSE Rule 409T(b); see also Notice, 86 FR 

at 55653. 

52See Notice, 86 FR at 55643. 

53See Notice, 86 FR at 55646. 54 17 CFR 240.10b–10. 55See Notice, 86 FR at 55646. 56See Notice, 86 FR at 55651. 57See Supplementary Material .10 to NYSE Rule 

409T. 

other distinct form of demarcation; (4) 

identify the customer’s account number 

at each entity; (5) provide a telephone 

number for customer service at each 

entity; (6) disclose which entity carries 

each of the different assets or categories 

of assets included on the summary 

statement; and (7) identify each entity 

that is a SIPC member.42

FINRA’s proposed rule change would 

incorporate the requirements of NYSE 

Rule Interpretation 409T(a)/06, with 

some revisions, as proposed 

Supplementary Material .08 to Rule 

2231.43 Proposed Supplementary 

Material .08 would state that where a 

member holds a customer’s account and 

another person(s) who separately offers 

financial related products or services to 

the same customer (e.g., mutual fund 

sales and custodial services, banking 

products and services, insurance 

products and services, securities 

products and services, etc.) seek to 

jointly provide their respective 

customer account statements together 

with a summary statement the member 

is required to: (1) indicate that the 

summary statement is provided for the 

customer’s convenience and includes 

assets that may not be held by the 

broker-dealer; (2) indicate that the 

summary statement does not replace 

any other statement(s) the customer may 

receive from other financial institutions 

that hold the customer’s assets; (3) 

identify each entity from which 

information is provided or assets being 

held are included, their relationship 

with each other (e.g., parent, subsidiary, 

or affiliated organization), and their 

respective functions (introducing firm, 

carrying firm, fund distributor, banking 

or insurance product provider, etc.); (4) 

clearly distinguish between assets held 

or categories of assets held by each 

entity included in the summary; (5) 

identify the customer’s account number 

at each entity and provide contact 

information for customer service at each 

entity (if the customer’s account number 

and customer service contact 

information at each entity are included 

on their respective account statements, 

then such information need not be 

included on the summary statement); 

and (6) identify each entity that is a 

SIPC member.44 Proposed 

Supplementary Material .08 would also 

require FINRA members to: (1) ensure 

that when summary statements 

aggregate the values of the accounts 

summarized or portions thereof, such 

aggregation is recognizable as having 

been arithmetically derived from the 

separately stated totals or their 

components; 45 (2) distinguish the 

beginning and end of each separate 

statement by color, pagination or other 

distinct form of demarcation; 46 (3) 

ensure that there is a written agreement 

between the clearing firm and each 

other person jointly providing its 

respective customer account statements 

attesting that each such person has 

developed procedures and controls for 

reviewing and testing the accuracy of 

the information included on its 

respective statements; 47 and (4) ensure 

the summary statement complies with 

Rule 2231.48

FINRA stated these requirements 

would help ensure customer account 

statements clearly identify the 

respective entities involved in a 

summary statement and distinguish 

brokerage assets from non-brokerage 

assets on such statements.49

C. NYSE Provisions To Be Deleted and 

Not Harmonized With Rule 2231 

The proposed rule change would 

delete NYSE Rule 409T and NYSE Rule 

Interpretation 409T in their entirety on 

the basis that the underlying concepts in 

these provisions will have been 

included in Rule 2231, are duplicative 

of other rules, or are outdated.50 The 

following describes portions of the 

NYSE Provisions that would not be 

incorporated into Rule 2231. 

1. NYSE Rule 409T(b) (Confirmations or 

Other Communications) 

As stated above, NYSE Rule 409T(b) 

currently allows a customer to instruct 

a firm to direct account statements, 

confirmations or other communications 

to a third party holding a POA over the 

account where the customer either 

provided the firm written instructions 

or the firm continued to send the 

customer duplicate copies of the 

statements, confirmations or other 

communications.51 Proposed 

Supplementary Material .02 would 

address the transmission of customer 

account statements to third parties in a 

manner similar, but not identical, to 

NYSE Rule 409T.52 FINRA stated that 

the scope of proposed Supplementary 

Material .02 would be limited to 

customer account statements, and 

would not apply to confirmations or 

other communications.53 FINRA stated 

that the delivery requirements of 

confirmations are already governed by 

Exchange Act Rule 10b–10 

(Confirmation of transactions) 54 and 

FINRA Rule 2232 (Customer 

Confirmations).55 Further, FINRA stated 

that including the term ‘‘other 

communications’’ would 

inappropriately capture unintended 

operational communications with third 

parties (e.g., custodians, transfer agents, 

and counterparties) where firms need to 

send ‘‘communications’’ about a 

customer’s account in order to provide 

a service requested for the customer.56

2. Supplementary Material .10(1)–(6) to 

NYSE Rule 409T (Exceptions to NYSE 

Rule 409T(b)) 

Supplementary Material .10 to NYSE 

Rule 409T establishes exceptions to 

NYSE Rule 409T(b). Specifically, 

Supplementary Material .10 to NYSE 

Rule 409T states that notwithstanding 

NYSE Rule 409T(b), a NYSE member 

organization may address confirmations, 

statements or other communications to 

certain nonmember customers (e.g., 

trust accounts, when a partner, 

stockholder or employee of a member 

organization is a trustee and has been 

duly authorized by all other trustees to 

receive communications covering the 

account).57 In light of the proposed 

elimination of NYSE Rule 409T, the 

proposed rule change would also 

eliminate the exceptions found in 

Supplementary Material .10(1)–(6) of 

NYSE Rule 409T. 

3. NYSE Rule 409T(e)(1) (Legend on 

Account Statements Pertaining to Firm’s 

Financial Statements) 

NYSE Rule 409T(e)(1) currently 

requires the inclusion of a legend on all 

account statements that: (1) notifies 

customers that a financial statement of 

the organization is available for 

inspection at its offices or a copy can be 

mailed upon request; (2) advises 

customers (a) to report promptly any 

inaccuracy or discrepancy in that 

person’s account to their brokerage firm 

and (b) if a customer’s account is subject 

to a clearing agreement pursuant to 

Exchange Rule 382, that such 

notification be sent to both the 

introducing firm and the clearing firm; 

and (3) advises the customer that any 

oral communications with either the 

introducing firm or the clearing firm 

should be reconfirmed in writing in 


jspears on DSK121TN23PROD with NOTICES1
34732 Federal Register / Vol. 87, No. 109 / Tuesday, June 7, 2022 / Notices 

58See NYSE Rule 409T(e). 

59See 17 CFR 240.17a–5(c) (Customer 

Statements). 

60See Notice, 86 FR at 55646. 

61See Notice, 86 FR at 55649. 

62See Notice, 86 FR at 55646. 

63See Supplementary Material .10(7) to NYSE 

Rule 409T. 

64See Notice, 86 FR at 55646. 

65See NYSE Rule Interpretation 409T(a)/03. 

66 Id. 

67See Notice, 86 FR at note 29 (citing Notice to 

Members 05–48 (July 2005) (describing a member’s 

responsibilities when outsourcing activities to third 

party service providers)), and accompanying text. 

68See NYSE Rule Interpretation 409T(b)/01. 

69See Notice, 86 FR at 55646. 

70See Notice, 86 FR at 55646–7. 

71See Notice, 86 FR at 55647. 

72 Id. 

73See OIP and Amendment No. 1, 87 FR at 1202. 

order to further protect the customer’s 

rights under the Securities Investor 

Protection Act (SIPA).58 FINRA stated 

the proposed rule change would 

eliminate this requirement in light of 

existing requirements under: (1) 

Exchange Act Rule 17a–5(c) (Reports to 

be Made by Certain Brokers and 

Dealers),59 which generally requires 

broker-dealers that carry customer 

accounts to provide statements of the 

broker-dealer’s financial condition to 

their customers; (2) FINRA Rule 2261 

(Disclosure of Financial Condition), 

which requires a member to make 

information relative to a FINRA 

member’s financial condition available 

for inspection by customers, upon 

request; 60 and (3) Rule 2231(a), which 

requires a general securities member to 

include in the account statement a 

statement advising a customer to report 

promptly any inaccuracy or discrepancy 

in that person’s account to the member 

firm, and that any oral communication 

to the member firm should be 

reconfirmed in writing to further protect 

the customer’s rights, including rights 

under SIPA.61

4. NYSE Rule 409T(g) (Duplicate Copies 

of Monthly Statements to Guarantors) 

NYSE Rule 409T(g) provides that 

member organizations carrying margin 

accounts for customers should send 

duplicate copies of monthly statements 

of guaranteed accounts to the respective 

guarantors unless the guarantors have 

specifically provided in writing that 

they do not want such statements sent 

to them. FINRA stated the substance of 

NYSE Rule 409T(g) is consistent with 

the general requirement in proposed 

Supplementary Material .02 to obtain 

written instructions from customers to 

send account statements to third 

parties.62 Accordingly, the proposed 

rule change would eliminate NYSE Rule 

409T(g). 

5. Supplementary Material .10(7) to 

NYSE Rule 409T (Holding Customer 

Mail) 

Supplementary Material .10(7) to 

NYSE Rule 409T states that under 

certain circumstances, a member 

organization may hold mail for 

customers who will not be at their usual 

address for the period of their absence.63

FINRA stated the proposed rule change 

would eliminate the concept of holding 

customer mail set forth in 

Supplementary Material .10(7) to NYSE 

Rule 409T. FINRA also stated that 

FINRA members’ obligations concerning 

this activity are addressed in FINRA 

Rule 3150 (Holding of Customer Mail), 

and that proposed Supplementary 

Material .04 to Rule 2231 would 

expressly permit members to hold 

customer mail consistent with Rule 

3150.64

6. NYSE Rule Interpretation 409T(a)/03 

(Use of Third Party Agents) 

NYSE Rule Interpretation 409T(a)/03 

states that prior to utilizing a third party 

agent to prepare and/or transmit 

statements of accounts to customers, an 

NYSE member organization must 

represent/undertake in writing to NYSE 

that: (1) the third party is acting as an 

agent for the member organization; (2) 

the member organization retains 

responsibility for compliance with 

NYSE Rule 409T(a); (3) the member 

organization has developed procedures/ 

controls for reviewing and testing the 

accuracy of account statements prepared 

and/or transmitted by the third party 

agent; and (4) the member organization 

will retain copies of all such account 

statements in accordance with 

applicable books and records 

requirements.65 In addition, NYSE Rule 

Interpretation 409T(a)/03 states that the 

allocation of responsibilities for the 

preparation and/or transmission of 

statements to any person other than a 

carrying organization pursuant to an 

agreement approved by the NYSE in 

accordance with Exchange Rule 382 

(Carrying Agreements) is deemed to be 

utilization of a third party agent; and 

provides that an introducing 

organization that is a provider of 

services included in a member 

organization’s statements of accounts 

may not function as a third party agent 

and may not itself prepare and/or 

transmit such statements.66 FINRA 

stated the proposed rule change would 

eliminate NYSE Rule Interpretation 

409T(a)/03 because such arrangements 

are addressed in FINRA Rule 4311 

(Carrying Agreements) and other 

relevant guidance.67

7. NYSE Rule Interpretation 409T(b)/01 

(Standards for Holding Mail for Foreign 

Customers—NYSE Rule 409T(b)(2) 

Waivers) 

NYSE Rule Interpretation 409T(b)/01 

currently provides detailed 

requirements for a member organization 

requesting that NYSE agree to let it hold 

a foreign customer’s confirmations, 

statements, and broker-dealer financial 

statements.68 FINRA stated the 

proposed rule change would eliminate 

this interpretation because FINRA 

member obligations with respect to 

holding customer mail are already 

addressed by FINRA Rule 3150 (Holding 

of Customer Mail), which is referenced 

in proposed Supplementary Material .04 

to Rule 2231.69

D. Technical Changes and Amendment 

No. 1 

Interpretative Material (‘‘IM’’)–1013–1 

(Membership Waive-In Process for 

Certain New York Stock Exchange 

Member Organizations) and IM–1013–2 

(Membership Waive-In Process for 

Certain NYSE American LLC Member 

Organizations) describe a waive-in 

membership application process for 

some member organizations of the 

NYSE and NYSE American LLC.70

FINRA stated that, subject to specified 

terms set forth in these interpretative 

materials, firms admitted to FINRA 

membership through either of these 

provisions (i.e., ‘‘waived-in firms’’) are 

not subject to the remaining FINRA 

rules that have yet to be harmonized 

with their corresponding NYSE rules or 

interpretations under the Temporary 

Dual FINRA–NYSE Member Rule 

Series.71 Currently, these rules are Rule 

2231 and the NYSE Provisions. The 

proposed rule change would amend IM– 

1013–1 and IM–1013–2 to remove the 

reference to Rule 2231 as all waived-in 

firms will become subject to Rule 2231, 

as amended herein.72

FINRA also proposed Amendment 

No. 1 to make technical changes to the 

proposed rule change by changing the 

term ‘‘clearing firm’’ to ‘‘carrying firm’’ 

in the following places: (1) proposed 

Rule 2231(a); (2) proposed 

Supplementary Material .05(a)–(b) to 

Rule 2231; (3) proposed Supplementary 

Material .07 to Rule 2231; and (4) 

proposed Supplementary Material .08(d) 

to Rule 2231.73 FINRA stated that 

changing the term ‘‘clearing firm’’ to 

‘‘carrying firm’’ would maintain 


jspears on DSK121TN23PROD with NOTICES1
Federal Register / Vol. 87, No. 109 / Tuesday, June 7, 2022 / Notices 34733 

74 Id. 

75See Notice, 86 FR at 55647. 

76See Notice, 86 FR at 55654. 

77See Notice, 86 FR at note 73 (stating that the 

proposed rule change is not intended to impact 

preexisting agreements that use third party agents 

if they comport with applicable FINRA rules and 

guidance). 

78See letters from Bernard V. Canepa, Vice 

President and Assistant General Counsel, Securities 

Industry and Financial Markets Association 

(‘‘SIFMA’’) to Vanessa A. Countryman, Secretary, 

Commission, dated October 27, 2021 (‘‘SIFMA 

Letter’’) (stating that ‘‘SIFMA understands and fully 

supports FINRA in its effort to protect sensitive 

customer information from unauthorized persons’’); 

Clifford Kirsch and Eric Arnold, Eversheds 

Sutherland LLP, on behalf of Committee of Annuity 

Insurers (‘‘CAI’’) to Secretary, Commission, dated 

October 27, 2021 (‘‘CAI Letter’’) (stating that CAI is 

‘‘generally supportive of the proposed changes’’); 

and letter from Emily Micale, Director, Federal 

Regulatory Affairs, Insured Retirement Institute, 

Inc. (‘‘IRI’’) to Vanessa A. Countryman, Secretary, 

Commission, dated October 27, 2021 (‘‘IRI Letter’’) 

(stating that it ‘‘supports SIFMA’s comments with 

respect to its requests and recommendations 

regarding FINRA’s Customer Account Statement 

Proposal’’); see also letter from Anonymous, dated 

October 28, 2021. Anonymous stated that FINRA 

should also consider amending FINRA Rule 3210 

(Accounts at Other Broker-Dealers and Financial 

Institutions) to consider whether the Commission’s 

Consolidated Audit Trail could be leveraged to 

eliminate the operational burden associated with 

complying with Rule 3210. In response, FINRA 

stated that while it appreciates Anonymous’ 

comments, it considers them to be outside the scope 

of the proposed rule change. See FINRA Response 

Letter, at 5. 

79 In approving this rule change, the Commission 

has considered the rule’s impact on efficiency, 

competition, and capital formation. See 15 U.S.C. 

78c(f). 

80 15 U.S.C. 78o–3(b)(6). 

81See Notice, 86 FR at 55643. 

82See SIFMA Letter, at 1 (‘‘Of greatest concern to 

SIFMA is Supplemental Material .02’s proposed 

requirement to continue to send duplicate account 

statements to customers in contravention to their 

express wishes’’); see SIFMA Letter, at 2–3 (‘‘the 

inability to stop delivery of account statements to 

incapacitated or vulnerable customers, particularly 

those living in assisted-living facilities, nursing 

homes, or at home where non-family, paid 

caregivers regularly have access to sensitive 

customer information and are as likely [to] 

perpetuate fraud against the customer should be 

just as concerning’’); see also IRI Letter, at 1 (‘‘IRI 

expresses its support for SIFMA’s specific 

comments presenting recommendations, 

clarifications, and proposals as detailed in 

[SIFMA’s] comment letter’’). 

83See SIFMA Letter and IRI Letter. 

84See SIFMA Letter and IRI Letter (both stating 

that requiring the delivery of duplicate account 

statements to vulnerable customers is just as likely 

to result in fraud as allowing POA holders to cease 

delivery because those living in assisted-living 

facilities, nursing homes, or at home, where nonfamily, paid caregivers regularly have access to 

sensitive customer information are just as likely 

perpetuate fraud as POA holders. Moreover, these 

commenters stated customers often cannot provide 

the consent required to establish electronic delivery 

of account statements because their agents or 

attorneys-in-fact do not contact the member firm 

until the customer becomes incapacitated.). 

85See SIFMA Letter and IRI Letter (both stating 

that POAs are an integral part of modern estate 

plans and provide the benefit of not having to go 

to court to have a fiduciary appointed, which can 

be costly, time-consuming, and public). 

consistency given the proposed 

supplementary materials are derived 

largely from their corresponding NYSE 

provisions, which use the term 

‘‘carrying organization.’’ 74

E. Effective Date 

If the Commission approves the 

proposed rule change, FINRA will 

announce the effective date of the 

proposed rule change in a regulatory 

notice to be published no later than 365 

days following Commission approval.75

FINRA also stated that the proposed 

rule change would apply 

prospectively.76 For example, FINRA 

stated that a member firm with a 

customer having a preexisting 

arrangement to deliver account 

statements to a third party that was 

established before the effective date of 

the proposed rule change would not be 

subject to the requirements of proposed 

Supplementary Material .02 to Rule 

2231 solely with respect to such account 

until that pre-existing third party 

delivery arrangement is modified in any 

manner; further, where any existing or 

new customer of the firm seeks to 

establish a third party delivery 

arrangement on or after the effective 

date of the proposed rule change, the 

firm would be subject to the terms of the 

new rule.77

III. Discussion and Commission 

Findings 

After careful review of the proposed 

rule change, the comment letters,78 and 

FINRA’s response to the comments, the 

Commission finds that the proposed 

rule change is consistent with the 

requirements of the Exchange Act and 

the rules and regulations thereunder 

that are applicable to national securities 

associations.79 Specifically, the 

Commission finds the proposed rule 

change is consistent with Section 

15A(b)(6) of the Exchange Act, which 

requires, among other things, that 

FINRA rules be designed to prevent 

fraudulent and manipulative acts and 

practices, promote just and equitable 

principles of trade, and protect investors 

and the public interest.80

A. Proposed Supplementary Materials 

.01 (Compliance With Rule 4311) 

As stated above, proposed 

Supplementary Material .01 would 

remind firms of their obligations under 

Rule 4311, which governs the 

requirements applicable to member 

firms when entering into agreements for 

the carrying of any customer accounts in 

which securities transactions can be 

effected. FINRA stated that proposed 

Supplementary Material .01 would 

emphasize the importance of ensuring 

the accuracy and integrity of customer 

account statements.81 We received no 

comments on this provision. 

Reminding firms of their obligations 

under Rule 4311 in Supplementary 

Material .01 to Rule 2231 would help 

firms comply with their regulatory 

obligations under Rule 4311, which 

were designed to protect their 

customers. Accordingly, the 

Commission finds that proposed 

Supplementary Material .01 to Rule 

2231 is designed to protect investors 

and is in the public interest. 

B. Proposed Supplementary Material .02 

(Transmission of Customer Account 

Statements to Other Persons or Entities) 

As stated above, proposed 

Supplementary Material .02 would 

prohibit FINRA members from sending 

customer account statements to third 

parties unless the customer provides a 

member written instructions to do so, 

and the member sends duplicate 

account statements directly to the 

customer either in paper format or 

electronically. Proposed Supplementary 

Material .02 would allow FINRA 

members to cease sending duplicate 

account statements to the customer 

when a court appoints a guardian, 

conservator, trustee, personal 

representative or other person with legal 

authority to act on a customer’s behalf, 

and such court-appointed fiduciary 

provides the member written 

instructions to cease sending duplicate 

statements to the customer and an 

official copy of the court appointment 

that establishes authority over the 

customer’s accounts. 

Multiple commenters stated that the 

proposed Supplementary Material .02 

would improperly balance investor 

protection against investor 

preferences.82 In particular, commenters 

stated the requirement to send duplicate 

account statements to customers even 

when customers request otherwise 

through an agent or attorney-in-fact 

appointed under a valid POA would 

undermine the customer’s intent for 

naming the POA.83 Commenters stated 

also that having the proposed exception 

only available to court-appointed 

fiduciaries and the proposed electronic 

delivery option are insufficient.84 The 

commenters, therefore, recommended 

that the proposed exception to the 

continuous delivery requirement should 

be expanded to include agents or 

attorneys-in-fact appointed under a 

valid durable or springing POA who 

provide written instructions to cease 

sending statements to customers.85


jspears on DSK121TN23PROD with NOTICES1
34734 Federal Register / Vol. 87, No. 109 / Tuesday, June 7, 2022 / Notices 

86See FINRA Response Letter, at 3. FINRA also 

stated that the proposed rule change would 

establish other protections such as proposed 

Supplementary Material .03, which would allow a 

customer that is concerned about the delivery of 

account statements in paper format to elect to 

receive such statements electronically. See Notice, 

86 FR at 55648. 87See FINRA Response Letter, at 3 88 Id. 89 Id. 90See FINRA Response Letter, at 9. 

91The Commission reminds broker-dealers that 

nothing in Rule 2231 affects a broker-dealer’s 

obligations with respect to delivery of trade 

confirmations, which remain governed by Exchange 

Act Rule 10b–10 and FINRA Rule 2232. 

92See supra note 24 and accompanying text. 

93 Id. 

94See supra note 25. 

95See Notice, 86 FR at 55655. 

96See Notice, 86 FR at 55648. 

97 Id. 

In response, FINRA stated that it 

appreciated the concerns commenters 

raised about customers for whom their 

agent or attorney-in-fact may have a 

protective reason to instruct a firm to 

stop the delivery of account statements, 

particularly for customers who still 

receive account statements in paper 

format.86 Nonetheless, FINRA stated 

also that the ability to review account 

statements, in paper format or 

electronically, is a way that customers 

may discover inaccuracies or 

discrepancies in their accounts, and, 

potentially, unauthorized transactions 

or financially exploitative activities that 

have occurred in their accounts. FINRA 

stated that this ability must be preserved 

in all but compelling circumstances.87

FINRA also stated that fraud or 

financially exploitative or abusive 

activity may manifest in a variety of 

ways, including misuse of a POA.88

Further, FINRA stated that courts 

appoint fiduciaries based on their 

objective review of the facts and 

circumstances of a case. Thus, limiting 

the exception to where a courtappointed fiduciary seeks the cessation 

of the delivery of account statements to 

a customer would appropriately balance 

the investor protection functions of 

ensuring customers’ ability to monitor 

and verify transactions occurring in 

their accounts, by limiting a firm’s 

ability to cease delivery of unwanted 

duplicate account statements only in the 

kinds of exigent circumstances requiring 

a court-appointed fiduciary.89 For these 

reasons, FINRA declined to amend the 

proposed rule change in response to the 

commenters’ concerns.90

Rule 2231’s statement delivery 

requirement provides customers with 

the ability to monitor and verify the 

transactions occurring in their accounts. 

The ability to review information 

regarding one’s own securities account 

is a critical tool for customers to identify 

inaccuracies, and to detect and report 

potential fraud and financial 

exploitation involving their accounts on 

a timely basis. In some instances, 

however, the risk of receiving an 

account statement, particularly in 

physical form, may be higher than the 

risks associated with being unable to 

review them. Accordingly, while we 

acknowledge the general importance of 

customers receiving their account 

statements, there is also a potential risk, 

in certain cases, of having them 

delivered. 

Permitting a court-appointed 

fiduciary to request the suppression of 

duplicate account statement delivery to 

a customer whom the fiduciary serves is 

a reasonable exception to Rule 2231’s 

general requirements.91 This exception 

to the requirement to continuously 

provide a customer account statement 

strikes a reasonable balance between the 

investor protection goals served by a 

customer’s receipt of the statement on a 

continuous basis and the ability to 

suppress delivery in exigent 

circumstances where a court-appointed 

fiduciary requests the customer’s 

broker-dealer to cease delivery. Further, 

proposed Supplementary Material .02 

would not change the ability of firms to 

send account statements to customers 

electronically, consistent with prior 

Commission guidance.92

Accordingly, for the reasons set forth 

above, the Commission finds that 

proposed Supplementary Material .02 to 

Rule 2231 is designed to protect 

investors and is in the public interest. 

C. Proposed Supplementary Material .03 

(Use of Electronic Media To Satisfy 

Delivery Obligations) 

As stated above, proposed 

Supplementary Material .03 would 

allow member firms to satisfy their 

delivery obligations under Rule 2231 by 

using electronic media subject to 

compliance with standards established 

by the Commission on the use of 

electronic media for delivery 

purposes.93 FINRA stated that this 

proposed supplementary material 

would be consistent with prior guidance 

FINRA has issued on the use of 

electronic media to satisfy delivery 

obligations.94 FINRA also stated that 

proposed Supplementary Material .03 

would not impose any new delivery 

obligations beyond existing 

requirements.95 We received no 

comments on this provision. 

Allowing member firms to satisfy 

their delivery obligations under Rule 

2231 by using electronic media subject 

to compliance with standards 

established by the Commission on the 

use of electronic media for delivery 

purposes would help firms comply with 

Rule 2231 by providing an alternative to 

mail for delivering customer account 

statements. In addition, proposed 

Supplementary Material would help 

ensure that customers continue to 

receive their account statements using 

their expressed desired delivery 

method. Accordingly, the Commission 

finds that proposed Supplementary 

Material .03 to Rule 2231 is designed to 

protect investors and is in the public 

interest. 

D. Proposed Supplementary Material .04 

(Compliance With Rule 3150) 

As stated above, proposed 

Supplementary Material .04 would 

emphasize that member firms are 

permitted to hold customer mail, 

including customer account statements 

or other communications relating to a 

customer’s account, subject to the 

requirements of Rule 3150, which sets 

forth the requirements applicable to 

member firms when they agree to hold 

a customer’s mail. FINRA stated that 

proposed Supplementary Material .04 

reminds firms of existing obligations 

and would not impose any additional 

burden.96 We received no comments on 

this provision. 

Reminding firms of their obligations 

under Rule 3150 when they agree to 

hold a customer’s mail would help firms 

comply with their regulatory obligations 

under Rule 3150. Accordingly, for the 

reasons set forth above, the Commission 

finds that proposed Supplementary 

Material .04 to Rule 2231 is designed to 

protect investors and is in the public 

interest. 

E. Proposed Supplementary Material .05 

(Information To Be Disclosed on 

Statement) 

As stated above, proposed 

Supplementary Material .05 would 

specify the information that must be 

clearly and prominently disclosed on 

the front of a customer account 

statement, such as, the identity of the 

introducing and carrying organizations, 

that the carrying organization is a 

member of SIPC, and the opening and 

closing account balances for the 

customer’s account. FINRA stated that 

proposed Supplementary Material .05 

would incorporate without substantive 

changes NYSE Rule Interpretation 

409T(a)/02.97 Deleting the NYSE rule in 

favor of a global FINRA rule would 

expand the coverage of these 

requirements to all FINRA members 

rather than just NYSE members. 

Proposed Supplementary Material .05 


jspears on DSK121TN23PROD with NOTICES1
Federal Register / Vol. 87, No. 109 / Tuesday, June 7, 2022 / Notices 34735 

98See CAI Letter. 

99 Id. 

100See FINRA Response Letter, at 5–6. 

101See FINRA Response Letter, at 5. 

102See FINRA Response Letter, at 9. 

103See Notice, 86 FR at 55645. 

104 Id. 

105See supra note 11. 

106See SIFMA Letter and IRI Letter. Specifically, 

commenters stated that proposed Supplementary 

Material .08 states that where a member firm holds 

a customer’s account and another person(s) who 

separately offers financial related products or 

services to the same customer seek to jointly 

provide their respective customer account 

statements together with a summary statement, the 

firm must, among other things ‘‘ensure that there is 

a written agreement between the clearing firm and 

each other person jointly providing its respective 

customer account statements attesting that each 

such person has developed procedures and controls 

for reviewing and testing the accuracy of the 

information included on its respective statements’’ 

(emphasis added). In the Notice, however, FINRA 

describes proposed Supplementary Material .08 as 

requiring ‘‘a written agreement between the parties 

jointly formulating or distributing combined 

statements with the summary attesting that each 

entity has developed procedures and controls for 

testing the accuracy of its own information 

included on the statements’’ (emphasis added). Id. 

would provide customers with 

important information about their 

financial professionals and investments 

to help them evaluate their customer 

account statements. Accordingly, for the 

reasons set forth above, the Commission 

finds that proposed Supplementary 

Material .05 to Rule 2231 is designed to 

protect investors and is in the public 

interest. 

F. Proposed Supplementary Material .06 

(Assets Externally Held) 

As stated above, proposed 

Supplementary Material .06 to Rule 

2231 would incorporate without 

substantive changes NYSE Rule 

Interpretation 409T(a)/04, which 

provides that where a customer account 

statement includes assets the member 

organization does not have access to and 

which are not included on the member 

organization’s books and records, such 

assets must be clearly and 

distinguishably separated on the 

account statement. Proposed 

Supplementary Material .06 would also 

require customer account statements to: 

(1) clearly indicate that externally held 

assets are included on the statement 

solely as a courtesy to the customer; (2) 

disclose that information (including 

valuation) for externally held assets 

included on a statement is derived from 

the customer or other external sources 

for which the FINRA member is not 

responsible; and (3) identify that such 

externally held assets may not be 

covered by SIPC. 

One commenter requested that FINRA 

clarify whether variable annuity or other 

registered annuity contracts would be 

deemed ‘‘externally held’’ under 

proposed Supplementary Material .06 

when such contracts are held by the 

issuing insurance company.98 The 

commenter stated that it would be most 

appropriate for these contracts to be 

deemed ‘‘externally held’’ and subject to 

proposed Supplementary Material .06.99

In response, FINRA stated proposed 

Supplementary Material .06 is not 

intended to alter the substantive terms 

or existing guidance pertaining to the 

NYSE’s current interpretation for the 

required disclosures on account 

statements for externally held assets as 

promulgated in NYSE Rule 

Interpretation 409T(a). Accordingly, 

proposed Supplementary Material .06 

should not impact how firms currently 

treat variable annuity or other registered 

annuity contracts when such contracts 

are held by the issuing insurance 

company for purposes of interpreting 

‘‘externally held.’’ 100 Nevertheless, 

FINRA stated that it would address 

scenarios regarding the application of 

the new supplementary materials, 

including new Supplementary Material 

.06, through its interpretive process on 

a case-by-case basis or through future 

rulemaking, as appropriate.101

Accordingly, FINRA declined to amend 

the proposed rule change in response to 

the comment.102

Requiring all FINRA members’ (and 

not just NYSE members’) customer 

account statements to disclose how 

information, including valuation, for 

externally held assets is derived and 

identifying that such assets may not be 

covered by SIPC would provide useful 

information to a firm’s customers when 

reviewing their investments. 

Supplementary Material .06 is 

reasonably designed to distinguish, on 

the customer account statement, assets 

the member firm does not carry on 

behalf of a customer, and are not 

included on the member’s books and 

records, from those that are. 

Accordingly, for the foregoing reasons, 

the Commission finds that proposed 

Supplementary Material .06 to Rule 

2231 is designed to protect investors 

and is in the public interest. The 

Commission also acknowledges 

FINRA’s commitment to provide 

interpretations about the applicability of 

the rule, including about its 

applicability to specific products, as 

appropriate. 

G. Proposed Supplementary Material .07 

(Use of Logos, Trademarks, etc.) 

As stated above, proposed 

Supplementary Material .07 would 

address a firm’s use of logos, trademarks 

and other similar identification of a 

person on a customer account 

statement. 

FINRA stated that proposed 

Supplementary Material .07 would 

incorporate without substantive changes 

NYSE Rule Interpretation 409T(a)/05.103

FINRA also stated that the proposed 

Supplementary Material .07 would be 

consistent with the general 

requirements of Rule 2210 

(Communications with the Public).104

We received no comments on this 

provision. 

Proposed Supplementary Material .07 

is substantively similar to rules the 

statutory basis for which the 

Commission has already considered,105

and is consistent with FINRA Rule 

2210. Further, proposed Supplementary 

Material .07 would provide greater 

clarity and regulatory efficiency to all 

FINRA member firms. Accordingly, for 

the reasons set forth above, the 

Commission finds that proposed 

Supplementary Material .07 to Rule 

2231 is designed to protect investors 

and is in the public interest. 

H. Proposed Supplementary Material 

.08 (Use of Summary Statements) 

As stated above, proposed 

Supplementary Material .08 to Rule 

2231 would incorporate without 

substantive changes NYSE Rule 

Interpretation 409T(a)/06, establishing 

obligations where a FINRA member 

holding a customer’s account and 

another person who separately offers 

related financial products or services to 

the same customer jointly provide their 

respective account statements together 

with a statement summarizing or 

combining assets held in different 

accounts. 

Commenters stated that FINRA’s 

description of proposed Supplementary 

Material .08(d) in the Notice differs from 

the text of proposed Supplementary 

Material .08 and expressed concern that 

this wording difference between the 

proposed rule text and FINRA’s 

description would create confusion for 

firms determining with whom to enter 

an agreement when preparing a joint 

statement and requested clarification.106


jspears on DSK121TN23PROD with NOTICES1
34736 Federal Register / Vol. 87, No. 109 / Tuesday, June 7, 2022 / Notices 

107See FINRA Response Letter, at 6. 

108 Id.; see also Paragraph 4 of NYSE Rule 

Interpretation 409T(a)/06. 

109See FINRA Response Letter, at 7. 

110 Id. 

111For example, NYSE Rule 409T(b) and 

Supplementary Material .10 to NYSE Rule 409T 

allow for the suppression of trade confirmations, 

and NYSE Rule 409T(g) provides that members 

organizations carrying margin accounts for 

customers should send duplicate copies of monthly 

statements of guaranteed accounts to the respective 

guarantors unless the guarantors have specifically 

declared in writing that they do not want such 

statements sent to them. Because the delivery 

requirements of confirmations are governed by 

Exchange Act Rule 10b–10 (Confirmation of 

Transactions) and FINRA Rule 2232 (Customer 

Confirmations), and the general requirements of 

proposed Supplementary Material .02 cover 

duplicate delivery issues, FINRA is not 

incorporating these provisions into Supplementary 

Material .02. Moreover, NYSE Rule 409T(e)(1) 

requires a legend on account statements notifying 

customers that this member organization’s financial 

statements are available for inspection upon 

request. Because Exchange Act Rule 17a–5(c) 

(Reports to be Made by Certain Brokers and Dealers) 

and FINRA Rule 2261 (Disclosure of Financial 

Condition) contain similar provisions, FINRA is not 

incorporating these provisions. Additionally, 

Supplementary Material .01(7) to NYSE Rule 409T 

states that upon the written instructions of a 

customer and with the written approval of a 

member or supervisor of a member organization, a 

member organization may, under certain 

circumstances, hold mail for a customer who will 

not be at his usual address for the period of his 

absence, and NYSE Rule Interpretation 409T(b)/01 

provides guidelines for holding confirmations, 

statements, and broker-dealer financial statements 

for foreign customers. FINRA members’ obligations 

concerning these activities are addressed in FINRA 

Rule 3150 (Holding of Customer Mail) and, thus, 

FINRA would not incorporate these provisions. 

NYSE Rule Interpretation 409T(a)/03 addresses the 

allocation of responsibilities when using third 

parties to prepare and transmit account to 

customers statements. These arrangements are 

addressed in FINRA Rule 4311 (Carrying 

Agreements) and other FINRA guidance, and, thus, 

would also not be incorporated. See Notice, 86 FR 

at 55646. 

112For example, NYSE Rule 409T.10(1) through 

(6) provide exceptions to the requirements of NYSE 

Rule 409T(b) for persons having powers of attorney. 

As described above, proposed Supplementary 

Material .02 would provide a narrower exception 

for court-appointed fiduciaries. FINRA is therefore 

not incorporating these NYSE terms into 

Supplementary Material .02. See Notice, 86 FR at 

55646. 

113See Notice, 86 FR at 55646. 

114 15 U.S.C. 78s(b)(2). 

115 17 CFR 200.30–3(a)(12). 

FINRA stated that proposed 

Supplementary Material .08 is not 

intended to alter the substantive terms 

or existing guidance pertaining to the 

current NYSE requirements governing 

the use of summary statements.107

Accordingly, proposed Supplementary 

Material .08 would not impact how 

firms currently comply with the 

supplemental obligations.108 FINRA 

also stated that its description of 

proposed Supplementary Material .08 in 

the Notice does not change the proposed 

requirements of that supplementary 

material.109 Accordingly, FINRA stated 

that similar to NYSE Rule Interpretation 

409T(a)/06, under proposed 

Supplementary Material .08, a ‘‘clearing 

firm’’ must be a party to a written 

agreement with each other person 

jointly providing its respective customer 

account statements.110

Proposed Supplementary Material .08 

would establish summary statement 

disclosure requirements for all FINRA 

members (rather than just NYSE 

members). These summary statement 

disclosure requirements (e.g., that the 

summary statement is provided for the 

customer’s convenience, does not 

replace other statements, identifies 

where assets are held, and which 

entities are SIPC members) would 

protect investors by clarifying key 

information about the investors’ assets 

to help them evaluate their investments. 

Accordingly, for the reasons set forth 

above, the Commission finds that 

proposed Supplementary Material .08 is 

designed to protect investors and is in 

the public interest. 

I. Proposed Deletion of NYSE Rule 409T 

and NYSE Rule Interpretation 409T 

FINRA stated that the proposed rule 

change would delete the NYSE 

Provisions in their entirety on the basis 

that they are duplicative of other 

existing rules,111 are outdated,112 or the 

underlying concepts in these provisions 

will have been included in the proposed 

Supplementary Materials to Rule 

2231.113 As discussed more fully above, 

the Commission finds that maintaining 

two versions of substantially similar 

rules could cause confusion and 

undermine firm compliance with their 

obligations regarding providing account 

statements to their customers, which 

could erode investor protections. For 

the reasons set forth above, the 

Commission finds that the proposed 

deletion of the NYSE Provisions is 

designed to protect investors and is in 

the public interest. 

IV. Conclusion 

It is therefore ordered pursuant to 

Section 19(b)(2) of the Exchange Act 114

that the proposed rule change (SR– 

FINRA–2021–024), 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.115

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–12169 Filed 6–6–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[SEC File No. 270–447, OMB Control No. 

3235–0504] 

Proposed Collection; Comment 

Request; Extension: Rule 19b–4(e) and 

Form 19b–4(e) 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 

100 F Street, NE, Washington, DC 

20549–2736. 

Notice is hereby given that, pursuant 

to the Paperwork Reduction Act of 1995 

(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the 

Securities and Exchange Commission 

(‘‘Commission’’) is soliciting comments 

on the existing collection of information 

provided for in Rule 19b–4(e) (17 CFR 

240.19b–4(e)) under the Securities 

Exchange Act of 1934 (15 U.S.C. 78a et 

seq.) (the ‘‘Act’’). The Commission plans 

to submit this existing collection of 

information to the Office of 

Management and Budget (‘‘OMB’’) for 

extension and approval. 

Rule 19b–4(e) permits a selfregulatory organization (‘‘SRO’’) to list 

and trade a new derivative securities 

product without submitting a proposed 

rule change pursuant to Section 19(b) of 

the Act (15 U.S.C. 78s(b)), so long as 

such product meets the criteria of Rule 

19b–4(e) under the Act. However, in 

order for the Commission to maintain an 

accurate record of all new derivative 

securities products traded on the SROs, 

Rule 19b–4(e) requires an SRO to file a 

summary form, Form 19b–4(e), to notify 

the Commission when the SRO begins 

trading a new derivative securities 

product that is not required to be 

submitted as a proposed rule change to 

the Commission. Form 19b–4(e) should 

be submitted within five business days 

after an SRO begins trading a new 

derivative securities product that is not 

required to be submitted as a proposed 

rule change. In addition, Rule 19b–4(e) 

requires an SRO to maintain, on-site, a 

copy of Form 19b–4(e) for a prescribed 

period of time. 

This collection of information is 

designed to allow the Commission to 

maintain an accurate record of all new 

derivative securities products traded on 

the SROs that are not deemed to be 

proposed rule changes and to determine 

whether an SRO has properly availed 

itself of the permission granted by Rule 

19b–4(e). The Commission reviews SRO 

compliance with Rule 19b–4(e) through 

its routine inspections of the SROs. 

The respondents to the collection of 

information are SROs (as defined by the 

Act), all of which are national securities 


jspears on DSK121TN23PROD with NOTICES1