36548 Federal Register / Vol. 87, No. 117 / Friday, June 17, 2022 / Notices 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 94388 

(March 9, 2022), 87 FR 14589 (‘‘Notice’’). 

4 15 U.S.C. 78s(b)(2). 

5See Securities Exchange Act Release No. 94795, 

87 FR 25689 (May 2, 2022). The Commission 

designated June 13, 2022, as the date by which the 

Commission shall approve or disapprove, or 

institute proceedings to determine whether to 

disapprove, the proposed rule change, as modified 

by Amendment No. 1. 

6 15 U.S.C. 78s(b)(2)(B). 

7See NYSE LCM Section 312.03(b)(i). 8See id. ‘‘Minimum Price’’ means a price that is 

the lower of: (i) the Official Closing Price 

immediately preceding the signing of the binding 

agreement; or (ii) the average Official Closing Price 

for the five trading days immediately preceding the 

signing of the binding agreement. See NYSE LCM 

Section 312.04(h). ‘‘Official Closing Price’’ of the 

issuer’s common stock means the official closing 

price on the Exchange as reported to the 

Consolidated Tape immediately preceding the 

signing of a binding agreement to issue the 

securities. See NYSE LCM Section 312.04(i). 

9See Notice, supra note 3, at 14590; NYSE LCM 

Section 312.03(b)(ii). 

Week of June 20, 2022 

There are no meetings scheduled for 

the week of June 20, 2022. 

Week of June 27, 2022—Tentative 

There are no meetings scheduled for 

the week of June 27, 2022. 

Week of July 4, 2022—Tentative 

There are no meetings scheduled for 

the week of July 4, 2022. 

Week of July 11, 2022—Tentative 

There are no meetings scheduled for 

the week of July 11, 2022. 

Week of July 18, 2022—Tentative 

Thursday, July 21, 2022 

9:00 a.m. Update on 10 CFR part 53 

Licensing and Regulation of 

Advanced Nuclear Reactors 

(Contact: Greg Oberson: 301–415– 

2183) 

Additional Information: The meeting 

will be held in the Commissioners’ 

Conference Room, 11555 Rockville Pike, 

Rockville, Maryland. The public is 

invited to attend the Commission’s 

meeting in person or watch live via 

webcast at the web address—https://

video.nrc.gov/. 

Week of July 25, 2022—Tentative 

There are no meetings scheduled for 

the week of July 25, 2022. 

CONTACT PERSON FOR MORE INFORMATION: 

For more information or to verify the 

status of meetings, contact Wesley Held 

at 301–287–3591 or via email at 

Wesley.Held@nrc.gov. 

The NRC is holding the meetings 

under the authority of the Government 

in the Sunshine Act, 5 U.S.C. 552b. 

Dated: June 15, 2022. 

For the Nuclear Regulatory Commission. 

Wesley W. Held, 

Policy Coordinator, Office of the Secretary. 

[FR Doc. 2022–13227 Filed 6–15–22; 4:15 pm] 

BILLING CODE 7590–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–95093; File No. SR–NYSE– 

2022–11] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Order 

Instituting Proceedings To Determine 

Whether To Approve or Disapprove a 

Proposed Rule Change, as Modified by 

Amendment No. 1, To Amend the 

NYSE Listed Company Manual To 

Provide a Limited Exemption From the 

Shareholder Approval Requirements 

for Closed-End Management 

Investment Companies With Equity 

Securities Listed Under Section 102.04 

of the Listed Company Manual 

June 13, 2022. 

I. Introduction 

On February 23, 2022, New York 

Stock Exchange LLC (‘‘Exchange’’ or 

‘‘NYSE’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’), 

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

Securities Exchange Act of 1934 (‘‘Act’’ 

or ‘‘Exchange Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

amend Section 312.03 of the NYSE 

Listing Company Manual (‘‘LCM’’ or 

‘‘Manual’’) to provide an exemption 

from certain shareholder approval 

requirements of that rule for listed 

registered closed-end management 

investment companies (‘‘closed-end 

funds’’) and business development 

companies (‘‘BDCs’’) under certain 

circumstances. On March 8, 2022, the 

Exchange filed Amendment No. 1 to the 

proposed rule change, which amended 

and replaced the proposed rule change 

in its entirety. The proposed rule 

change, as amended by Amendment No. 

1, was published for comment in the 

Federal Register on March 15, 2022.3

The Commission has received no 

comments on the proposed rule change. 

On April 26, 2022, pursuant to Section 

19(b)(2) of the Exchange Act,4 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.5 This order 

institutes proceedings pursuant to 

Section 19(b)(2)(B) of the Exchange Act 6

to determine whether to approve or 

disapprove the proposed rule change, as 

modified by Amendment No. 1. 

II. Description of the Proposal, as 

Modified by Amendment No. 1 

Section 312.03(b)(i) of the Manual 

requires listed issuers to obtain 

shareholder approval prior to the 

issuance of common stock, or of 

securities convertible into or exercisable 

for common stock, in any transaction or 

series of related transactions, to a 

director, officer or substantial security 

holder of the company (each a ‘‘Related 

Party’’) if the number of shares of 

common stock to be issued, or if the 

number of shares of common stock into 

which the securities may be convertible 

or exercisable, exceeds either one 

percent of the number of shares of 

common stock or one percent of the 

voting power outstanding before the 

issuance.7 However, shareholder 

approval will not be required if such 

transaction is a cash sale for a price that 

is at least the Minimum Price.8

According to the Exchange, Section 

312.03(b)(ii) of the Manual provides that 

shareholder approval is also required 

prior to the issuance of common stock, 

or of securities convertible into or 

exercisable for common stock, where 

such securities are issued as 

consideration in a transaction or series 

of related transactions in which a 

Related Party has a five percent or 

greater interest (or such persons 

collectively have a ten percent or greater 

interest), directly or indirectly, in the 

company or assets to be acquired or in 

the consideration to be paid in the 

transaction or series of related 

transactions and the present or potential 

issuance of common stock, or securities 

convertible into common stock, could 

result in an issuance that exceeds either 

five percent of the number of shares of 

common stock or five percent of the 

voting power outstanding before the 

issuance.9

The Exchange further states that 

Section 312.03(b)(iii) of the Manual 

provides that any sale of stock to an 


lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 87, No. 117 / Friday, June 17, 2022 / Notices 36549 

10See Notice, supra note 3, at 14590; NYSE LCM 

Section 312.03(b)(iii). 

11See id. Consequently, the company would be 

required to either: (i) obtain shareholder approval 

of such sale, or (ii) issue such shares under an 

equity compensation plan that had previously been 

approved by shareholders and for which 

shareholder approval under Section 303A.08 of the 

Manual is not otherwise required. Moreover, 

shareholder approval is required if any of the 

subparagraphs of Section 312.03 require such 

approval, notwithstanding the fact that the 

transaction does not require approval under Section 

312.03(b) or one or more of the other subparagraphs 

of Section 312.03. See NYSE LCM Section 

312.03(b)(iii). 

12See Notice, supra note 3, at 14590; NYSE LCM 

Section 312.03(c). However, shareholder approval 

will not be required for any such issuance 

involving: any public offering for cash; or any other 

financing (that is not a public offering for cash) in 

which the company is selling securities for cash, if 

such financing involves a sale of common stock, or 

securities convertible into or exercisable for 

common stock, at a price at least as great as the 

Minimum Price, provided that if the securities in 

such financing are issued in connection with an 

acquisition of the stock or assets of another 

company, shareholder approval will be required if 

the issuance of such securities alone or when 

combined with any other present or potential 

issuance of common stock, or securities convertible 

into common stock in connection with such 

acquisition, is equal to or exceeds either 20 percent 

of the number of shares of common stock or 20 

percent of the voting power outstanding before the 

issuance. See NYSE LCM Section 312.03(c). 

13See NYSE LCM Section 102.04 (providing 

minimum numerical standards for closed-end 

management investment companies registered 

under the Investment Company Act of 1940 (‘‘1940 

Act’’) and closed-end management investment 

companies that have filed an election to be treated 

as a BDC under the 1940 Act). 

14 17 CFR 270.17a–8. 

15See Notice, supra note 3, at 14590; proposed 

NYSE LCM Section 312.03(f). 

16See Notice, supra note 3, at 14590. 

17See 15 U.S.C. 80a–17(a)(1)–(2). See also the 

definition of ‘‘affiliated person’’ in the 1940 Act, 15 

U.S.C. 80a–2(a)(3). 

18Section 57(i) of the 1940 Act makes Rule 17a– 

8 applicable to BDCs. See 15 U.S.C. 80a–56(i) 

(providing that ‘‘. . . the rules and regulations of 

the Commission under subsections (a) and (d) of 

section 17 applicable to registered closed-end 

investment companies shall be deemed to apply to 

transactions subject to subsections (a) and (d) of this 

section’’); see also Investment Company Act Release 

No. 26520 (July 27, 2004), 69 FR 46378 at nn. 9 & 

27 (noting that certain rules, including Rule 17a– 

8, ‘‘apply to investment companies, including 

registered investment companies and business 

development companies, if they rely on these 

rules’’). 

19 17 CFR 270.17a–8(a)(2). 

20 17 CFR 270.17a–8(a)(3). 

21See Notice, supra note 3, at 14590. 

22See id. 

23See id. at 14591. 

24See id. at 14591, n.10 (citing Investment 

Company Act Release No. 25666 (July 18, 2002), 67 

FR 48512 (July 24, 2002) at n.18). 

25 15 U.S.C. 78s(b)(2)(B). 

26 Id. 

employee, director or service provider is 

also subject to the equity compensation 

rules in Section 303A.08 of the 

Manual.10 For example, according to the 

Exchange, a sale of stock to any such 

parties at a discount to the then market 

price would be treated as equity 

compensation under Section 303A.08 

notwithstanding that shareholder 

approval may not be required under 

Section 312.03(b) or 312.03(c) of the 

Manual.11

According to the Exchange, Section 

312.03(c) of the Manual also requires 

listed issuers to obtain shareholder 

approval prior to the issuance of 

common stock, or of securities 

convertible into or exercisable for 

common stock, in any transaction or 

series of related transactions if: (1) the 

common stock has, or will have upon 

issuance, voting power equal to or in 

excess of 20 percent of the voting power 

outstanding before the issuance of such 

stock or of securities convertible into or 

exercisable for common stock; or (2) the 

number of shares of common stock to be 

issued is, or will be upon issuance, 

equal to or in excess of 20 percent of the 

number of shares of common stock 

outstanding before the issuance of the 

common stock or of securities 

convertible into or exercisable for 

common stock.12

The Exchange states that it proposes 

to exempt closed-end funds and BDCs 

with equity securities listed under 

Section 102.04 of the Manual 13 from 

having to comply with the shareholder 

approval requirements in Sections 

312.03(b) and (c) of the Manual in 

connection with the acquisition of the 

stock or assets of an affiliated registered 

investment company in a transaction 

that complies with Rule 17a–8 under 

the 1940 Act (‘‘Rule 17a–8’’) 14 and does 

not otherwise require shareholder 

approval under the 1940 Act or the rules 

thereunder or any other Exchange 

rule.15 In support of its proposal, the 

Exchange states it believes Rule 17a–8 

provides protections that obviate the 

need for a shareholder approval 

requirement in these circumstances.16

Sections 17(a)(1) and (2) of the 1940 

Act prohibit, among other things, 

certain transactions between registered 

investment companies and affiliated 

persons.17 Rule 17a–8 18 provides an 

exemption from Sections 17(a)(1) and 

(2) of the 1940 Act for certain mergers 

of affiliated companies, provided, 

among other things, the board of 

directors of each investment company, 

including a majority of the directors that 

are not interested persons of the 

respective investment company or of 

any other company or series 

participating in the transaction, must 

determine that (i) participation in the 

merger is in the best interests of its 

respective investment company, and (ii) 

the interests of the company’s existing 

shareholders will not be diluted as a 

result of the transaction.19 In addition, 

under Rule 17a–8, an affiliated merger 

must be approved by a majority of the 

outstanding voting securities of the 

merging company that is not the 

surviving company unless certain 

conditions are met.20 The Exchange 

states in its filing that Rule 17a–8 does 

not require the surviving company to 

obtain shareholder approval in 

connection with the merger of an 

affiliated company.21

The Exchange asserts that, because 

the board of each merging company 

must make an affirmative decision that 

the transaction is in the best interest of 

its respective company and that the 

transaction will not result in dilution for 

existing shareholders, the Exchange 

believes the provisions of Rule 17a–8 

protect against dilution and also provide 

safeguards for existing shareholders 

when the transaction involves a 

director, officer, or substantial 

shareholder of the listed company that 

has a significant interest in the company 

or assets to be acquired or the 

consideration to be paid and therefore 

may benefit from the transaction.22

Notwithstanding the proposed 

exemption, the Exchange states that if 

other provisions of Exchange rules and 

the 1940 Act and the rules thereunder 

require shareholder approval, those will 

still apply.23 The Exchange also states 

that the adopting release for Rule 17a– 

8 specifically noted that nothing in Rule 

17a–8 relieves a fund of its obligation to 

obtain shareholder approval as may be 

required by state law or a fund’s 

organizational documents.24

III. Proceedings To Determine Whether 

To Approve or Disapprove SR–NYSE– 

2022–11, as Modified by Amendment 

No. 1, and Grounds for Disapproval 

Under Consideration 

The Commission is instituting 

proceedings pursuant to Section 

19(b)(2)(B) of the Exchange Act 25 to 

determine whether the proposed rule 

change, as modified by Amendment No. 

1, should be approved or disapproved. 

Institution of such proceedings is 

appropriate at this time in view of the 

legal and policy issues raised by the 

proposed rule change, as modified by 

Amendment No. 1. Institution of 

proceedings does not indicate that the 

Commission has reached any 

conclusions with respect to any of the 

issues involved. 

Pursuant to Section 19(b)(2)(B) of the 

Exchange Act,26 the Commission is 

providing notice of the grounds for 

disapproval under consideration. The 


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36550 Federal Register / Vol. 87, No. 117 / Friday, June 17, 2022 / Notices 

27 15 U.S.C. 78f(b)(5). 

28The Commission previously approved NYSE 

Arca, Inc.’s proposal to exempt issuers of Unit 

Investment Trusts, Investment Company Units, 

Exchange-Traded Fund Shares, Portfolio Depositary 

Receipts, Managed Fund Shares, Active Proxy 

Portfolio Shares, and Managed Portfolio Shares 

from the requirement to obtain shareholder 

approval prior to the issuance of securities in 

connection with certain acquisitions of the stock or 

assets of an affiliated registered investment 

company in a transaction that complies with Rule 

17a–8. See Securities Exchange Act Release No. 

91901 (May 14, 2021), 86 FR 27487 (May 20, 2021). 

29See id. at n.18. 

30 15 U.S.C. 78f(b)(5). 

31Rule 700(b)(3), Commission Rules of Practice, 

17 CFR 201.700(b)(3). 

32See id. 

33See id. 

34 15 U.S.C. 78s(b)(2)(B). 

35Section 19(b)(2) of the Exchange Act, as 

amended by the Securities Act Amendments of 

1975, Public Law 94–29 (June 4, 1975), grants the 

Commission flexibility to determine what type of 

proceeding—either oral or notice and opportunity 

for written comments—is appropriate for 

consideration of a particular proposal by a selfregulatory organization. See Securities Act 

Amendments of 1975, Senate Comm. on Banking, 

Housing & Urban Affairs, S. Rep. No. 75, 94th 

Cong., 1st Sess. 30 (1975). 

36See Notice, supra note 3. 

Commission is instituting proceedings 

to allow for additional analysis of the 

proposed rule change’s consistency with 

the Exchange Act, and, in particular, 

with Section 6(b)(5) of the Exchange 

Act, which requires, among other 

things, that the rules of a national 

securities exchange be designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, to remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general, to protect investors and the 

public interest and not be designed to 

permit unfair discrimination between 

customers, issuers, brokers, or dealers.27

As discussed above, the Exchange is 

proposing to exempt closed-end funds 

and BDCs from the requirement to 

obtain shareholder approval prior to 

issuances of securities in connection 

with the acquisition of stock or assets of 

an affiliated company, provided that the 

transaction complies with Rule 17a–8, 

which requires, among other things, that 

the board of directors of each company 

participating in such a merger 

determines that participation in the 

merger is in the best interests of the 

company and that the interests of the 

company’s shareholders will not be 

diluted as a result of the merger. 

Although the Commission previously 

approved a similar exemption for 

exchange-traded funds (‘‘ETFs’’),28 there 

are differences between ETFs and 

closed-end funds and BDCs. Shares of 

closed-end funds and BDCs often trade 

at prices that are less than, or at a 

‘‘discount’’ to, the fund’s net asset value 

per share. In contrast, ETFs may trade 

at a discount but often to a much lesser 

degree than closed-end funds and BDCs. 

Due to these circumstances, 

shareholders of closed-end funds and 

BDCs may have an interest in expressing 

their views on a proposal by 

management to merge the closed-end 

fund or BDC into an affiliated fund. In 

addition, unlike shareholders of ETFs,29

shareholders of closed-end funds and 

BDCs typically participate in annual 

shareholder meetings with respect to the 

election of directors and other matters. 

The Exchange’s proposal therefore 

raises questions as to whether the 

elimination of the current ability of 

shareholders of closed-end funds and 

BDCs to vote on mergers with affiliated 

companies is consistent with Section 

6(b)(5) of the Exchange Act, which 

requires the rules of the Exchange to, 

among other relevant provisions, protect 

investors and the public interest.30

Under the Commission’s Rules of 

Practice, the ‘‘burden to demonstrate 

that a proposed rule change is 

consistent with the Exchange Act and 

the rules and regulations thereunder 

. . . is on the self-regulatory 

organization [‘SRO’] that proposed the 

rule change.’’ 31 The description of a 

proposed rule change, its purpose and 

operation, its effect, and a legal analysis 

of its consistency with applicable 

requirements must all be sufficiently 

detailed and specific to support an 

affirmative Commission finding,32 and 

any failure of an SRO to provide this 

information may result in the 

Commission not having sufficient basis 

to make an affirmative finding that a 

proposed rule change is consistent with 

the Exchange Act and the applicable 

rule and regulations.33

For these reasons, the Commission 

believes it is appropriate to institute 

proceedings pursuant to Section 

19(b)(2)(B) of the Exchange Act 34 to 

determine whether the proposal should 

be approved or disapproved. 

IV. Procedure: Request for Written 

Comments 

The Commission requests that 

interested persons provide written 

submissions of their views, data, and 

arguments with respect to the issues 

identified above, as well as any other 

concerns they may have with the 

proposal. In particular, the Commission 

invites the written views of interested 

persons concerning whether the 

proposed rule change, as modified by 

Amendment No. 1, is consistent with 

Section 6(b)(5) or any other provision of 

the Exchange Act, or the rules and 

regulations thereunder. Although there 

do not appear to be any issues relevant 

to approval or disapproval that would 

be facilitated by an oral presentation of 

views, data, and arguments, the 

Commission will consider, pursuant to 

Rule 19b–4, any request for an 

opportunity to make an oral 

presentation.35

Interested persons are invited to 

submit written data, views, and 

arguments regarding whether the 

proposed rule change, as modified by 

Amendment No. 1, should be approved 

or disapproved by July 8, 2022. Any 

person who wishes to file a rebuttal to 

any other person’s submission must file 

that rebuttal by July 22, 2022. 

The Commission asks that 

commenters address the sufficiency of 

the Exchange’s statements in support of 

the proposal, which are set forth in 

Notice,36 in addition to any other 

comments they may wish to submit 

about the proposed rule change. 

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– 

NYSE–2022–11 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–NYSE–2022–11. 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, 


lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 87, No. 117 / Friday, June 17, 2022 / Notices 36551 

37 17 CFR 200.30–3(a)(57). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 92525 

(July 30, 2021), 86 FR 42925 (August 5, 2021) 

(Order Approving File No. SR–FINRA–2020–041, as 

Modified by Amendment Nos. 1 and 2) (‘‘SEC 

Order’’); see also Securities Exchange Act Release 

No. 92525 (July 30, 2021), 86 FR 49589 (September 

3, 2021) (Order Approving File No. SR–FINRA– 

2020–041) (Correction). 

4See Rule 4111(i)(15) (definition of ‘‘Restricted 

Deposit Requirement’’). A firm subject to a 

Restricted Deposit Requirement will be required to 

establish a Restricted Deposit Account and deposit 

in that account cash or qualified securities with an 

aggregate value that is not less than the member’s 

Restricted Deposit Requirement. See Rule 4111(a); 

4111(i)(14) (definition of ‘‘Restricted Deposit 

Account’’). 

5See SEC Order, 86 FR 42925, 42932. Firms 

designated as Restricted Firms will have 

significantly higher levels of risk-related disclosures 

as compared to firms of similar sizes. See SEC 

Order, 86 FR 42925, 42926. There are numeric 

thresholds for seven firm-size categories, based on 

the number of Registered Persons In-Scope. See 

Rule 4111(i)(11); see also Rule 4111(i)(13) 

(definition of ‘‘Registered Persons In-Scope’’). 

6See SEC Order, 86 FR 42925, 42926. 

7See SEC Order, 86 FR 42925, 42926, 42932. 

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–NYSE–2022–11 and should 

be submitted on or before July 8, 2022. 

Rebuttal comments should be submitted 

by July 22, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.37

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–13042 Filed 6–16–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–95092; File No. SR–FINRA– 

2022–015] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of a 

Proposed Rule Change To Amend 

FINRA Rule 8312 (FINRA BrokerCheck 

Disclosure) To Release Information on 

BrokerCheck® Relating to Firm 

Designation as a Restricted Firm 

June 13, 2022. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on June 3, 

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. 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 Rule 

8312 (FINRA BrokerCheck Disclosure) 

to release information on BrokerCheck®

as to whether a particular member firm 

or former member firm is currently 

designated as a ‘‘Restricted Firm’’ 

pursuant to Rule 4111 (Restricted Firm 

Obligations) and Rule 9561 (Procedures 

for Regulating Activities Under Rule 

4111). 

Below is the text of the proposed rule 

change. Proposed new language is in 

italics; proposed deletions are in 

brackets. 

* * * * * 

8000. INVESTIGATIONS AND 

SANCTIONS 

* * * * * 

8300. SANCTIONS 

* * * * * 

8312. FINRA BrokerCheck Disclosure 

(a) No Change. 

(b)(1) No Change. 

(2) The following information shall be 

released pursuant to this paragraph (b): 

(A) through (F) No Change. 

(G) Historic Complaints (i.e., the 

information last reported on 

Registration Forms relating to customer 

complaints that are more than two (2) 

years old and that have not been settled 

or adjudicated, and customer 

complaints, arbitrations or litigations 

that have been settled for an amount 

less than $10,000 prior to May 18, 2009 

or an amount less than $15,000 on or 

after May 18, 2009 and are no longer 

reported on a Registration Form), 

provided that any such matter became a 

Historic Complaint on or after August 

16, 1999; [and] 

(H) the name and succession history 

for current or former BrokerCheck 

Firms[.]; and 

(I) information as to whether a 

particular current or former member is 

currently designated as a Restricted 

Firm pursuant to Rules 4111 and 9561. 

(c) through (g) No Change. 

••• Supplementary Material: 

.01 through .03 No Change. 

* * * * * 

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 

On July 30, 2021, the SEC issued an 

order approving proposed rule changes 

concerning firms with a significant 

history of misconduct.3 The new rules 

include new Rule 4111 (Restricted Firm 

Obligations), new Rule 9561 

(Procedures for Regulating Activities 

Under Rule 4111), and amendments to 

Rule 9559 (Hearing Procedures for 

Expedited Proceedings Under the Rule 

9550 Series). 

Rule 4111 establishes an annual 

process to designate as ‘‘Restricted 

Firms’’ member firms that present a 

high degree of risk to the investing 

public, based on numeric thresholds of 

firm-level and individual-level 

disclosure events, and then impose on 

such firms a ‘‘Restricted Deposit 

Requirement’’ 4 or, in addition or in the 

alternative, conditions or restrictions on 

the member firm’s operations that are 

necessary or appropriate to protect 

investors and the public interest.5

Rule 4111 is designed to protect 

investors and the public interest by 

strengthening tools available to FINRA 

to address the risks posed by member 

firms with a significant history of 

misconduct.6 The rule will create 

incentives for firms to change behaviors 

and activities, either to avoid being 

designated or re-designated as a 

Restricted Firm, to mitigate FINRA’s 

concerns.7

New Rules 4111 and 9561, and the 

amendments to Rule 9559, were 


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