45258 Federal Register / Vol. 73, No. 150 / Monday, August 4, 2008 / Notices 

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

2 17 CFR 240.19b–4. 

3The current FINRA rulebook consists of two sets 

of rules: (1) NASD Rules and (2) rules incorporated 

from NYSE (‘‘Incorporated NYSE Rules’’) (together 

referred to as the ‘‘Transitional Rulebook’’). The 

Incorporated NYSE Rules apply only to those 

members of FINRA that are also members of the 

NYSE (‘‘Dual Members’’). Dual Members also must 

comply with NASD Rules. From more information 

about the rulebook consolidation process, see 

FINRA Information Notice, March 12, 2008 

(‘‘Rulebook Consolidation Process’’). 

roundtable to discuss International 

Financial Reporting Standards (‘‘IFRS’’) 

and to update the Commission on IFRS 

developments, including the experience 

with use of IFRS during the recent 

period of market turmoil. The 

roundtable will be organized as two 

panels. The panels will include 

investors, issuers, auditors, and other 

parties with experience in IFRS 

reporting. Additionally, representatives 

from the Financial Accounting 

Standards Board and the International 

Accounting Standards Board will be 

present as observers. 

The roundtable will be held in the 

auditorium of SEC headquarters at 100 

F Street, NE., Washington, DC. The 

roundtable will be open to the public 

with seating on a first-come, first-served 

basis. The roundtable discussions also 

will be available via webcast on the 

SEC’s Web site at http://www.sec.gov. 

The roundtable agenda and other 

materials related to the roundtable, 

including a list of participants and 

moderators, will be accessible at 

http://www.sec.gov/spotlight/ 

ifrsroadmap.htm. The Commission 

welcomes feedback regarding any of the 

topics to be addressed at the roundtable. 

DATES: Comments should be received on 

or before August 11, 2008. 

ADDRESSES: Comments may be 

submitted by any of the following 

methods: 

Electronic Comments 

• Use the Commission’s Internet 

submission form (http://www.sec.gov/ 

rules/other.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number 4–564 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Florence Harmon, Acting Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

No. 4–564. This file number should be 

included on the subject line if e-mail is 

used. To help us process and review 

your comments more efficiently, please 

use only one method. The Commission 

will post all comments on the 

Commission’s Internet Web site (http:// 

www.sec.gov/rules/other.shtml). 

Comments also will be available for 

public inspection and copying in the 

Commission’s Public Reference Room, 

100 F Street, NE., Washington, DC 

20549, on official business days 

between the hours of 10 a.m. and 3 p.m. 

All comments received will be posted 

without change; we do not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. 

FOR FURTHER INFORMATION CONTACT: Liza 

McAndrew Moberg, Professional 

Accounting Fellow, at (202) 551–5300, 

Office of the Chief Accountant, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–6561. 

SUPPLEMENTARY INFORMATION: The 

Commission welcomes feedback 

regarding any of the topics to be 

addressed at the roundtable. The panel 

discussions will focus on: 

• An update on IFRS developments 

• Experience with the use of IFRS in 

practice, including during the recent 

period of market turmoil, more 

specifically: 

• Applying IFRS in the preparation of 

financial statements 

• Working with financial statements 

prepared pursuant to IFRS 

By the Commission. 

Dated: July 29, 2008. 

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–17763 Filed 8–1–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58244; File No. SR–FINRA–

2008–029] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of a 

Proposed Rule Change as Modified by 

Amendment No. 1 Thereto To Repeal 

NASD Rule 1130 and Incorporated 

NYSE Rules 405A, 440F, 440G and 477 

as Part of the Process of Developing 

the Consolidated FINRA Rulebook 

July 29, 2008. 

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 16, 

2008, Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) (f/k/a 

National Association of Securities 

Dealers, Inc. (‘‘NASD’’)) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by FINRA. On July 15, 2008, 

FINRA filed Amendment No. 1 to the 

proposed rule change. The Commission 

is publishing this notice to solicit 

comments on the proposed rule change, 

as amended, from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

FINRA proposes a rule change to 

repeal NASD Rule 1130 (Reliance on 

Current Membership List) and 

incorporated NYSE Rules 405A (NonManaged Fee-Based Account 

Programs—Disclosure and Monitoring), 

440F (Public Short Sale Transactions 

Effected on the Exchange), 440G 

(Transactions in Stocks and Warrants 

for the Accounts of Members, Allied 

Members and Member Organizations) 

and 477 (Retention of Jurisdiction—

Failure to Cooperate) as part of the 

process of developing the consolidated 

FINRA rulebook. The text of the 

proposed rule change is available at 

FINRA, the Commission’s Public 

Reference Room, and http:// 

www.finra.org. 

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 

As part of the process of developing 

the new consolidated rulebook 

(‘‘Consolidated FINRA Rulebook’’),3

FINRA is proposing a rule change to 

repeal NASD Rule 1130 (Reliance on 

Current Membership List) and 

incorporated NYSE Rules 405A (NonManaged Fee-Based Account 

Programs—Disclosure and Monitoring), 

440F (Public Short Sale Transactions 


pwalker on PROD1PC71 with NOTICES
Federal Register / Vol. 73, No. 150 / Monday, August 4, 2008 / Notices 45259 

4Additionally, information about membership 

suspensions and cancellations is available to firms 

and the public through BrokerCheck and 

announced to members in a monthly report of 

disciplinary actions. 

5See Financial Planning Ass’n v. SEC, 375 U.S. 

App. D.C. 389, 482 F.3d 481 (D.C. Cir. 2007) 

Effected on the Exchange), 440G 

(Transactions in Stocks and Warrants 

for the Accounts of Members, Allied 

Members and Member Organizations) 

and 477 (Retention of Jurisdiction—

Failure to Cooperate) to eliminate 

duplicative provisions and remove 

requirements that are specific to the 

NYSE marketplace. 

Proposal 

NASD Rule 1130 (Reliance on Current 

Membership List) 

The proposed rule change would 

repeal NASD Rule 1130, which provides 

that the Secretary of FINRA shall 

furnish every member a list of all 

members of FINRA, and shall currently 

keep every member advised, by 

amendments to the list or otherwise, of 

all new members and of all suspensions 

and cancellations of membership. The 

rule also requires that each member 

provide such information to its offices 

and associated persons as appropriate, 

and entitles members to rely on the 

information provided by FINRA for the 

purpose of complying with the rules. 

FINRA is proposing to repeal NASD 

Rule 1130 because the requirement to 

furnish a membership list is 

substantially similar to provisions in 

Article IV, Section 4 of the FINRA ByLaws, which require the Secretary of 

FINRA to keep a currently accurate and 

complete membership roll, which shall 

at all times be available to all members, 

governmental authorities and the 

general public.4

NYSE Rule 405A (Non-Managed FeeBased Account Programs—Disclosure 

and Monitoring) 

The proposed rule change would 

repeal Incorporated NYSE Rule 405A, 

which prescribes certain requirements 

in connection with placing a customer 

in a fee-based brokerage account. 

Among other things, the rule requires a 

member to provide the customer, in 

advance of opening such an account, a 

detailed disclosure document that must 

include, at a minimum: A description of 

the services provided, eligible assets, 

fees charged, an explanation of how 

costs will be computed and/or the 

provision of cost estimates based on 

hypothetical portfolios, any conditions 

or restrictions imposed and a summary 

of the program’s advantages and 

disadvantages. The rule also requires 

that the member make a determination 

that the program is appropriate for the 

customer, as well as ongoing monitoring 

of transactional activity by customers 

and procedures to follow up with 

customers whose account activity may 

be inappropriate in the context of the 

fee-based program. 

Incorporated NYSE Rule 405A 

essentially codifies, in a more 

prescriptive fashion, guidance regarding 

the applicability of NASD Rule 2110 

(Standards of Commercial Honor and 

Principles of Trade) to fee-based 

programs set forth in NASD Notice to 

Members 03–68. In general, the Notice 

requires members to have reasonable 

grounds to believe that a fee-based 

account is appropriate for a particular 

customer, taking into account the 

services provided, cost and customer 

preferences. The Notice further explains 

that a member must implement 

supervisory procedures to require a 

periodic review of fee-based accounts to 

determine whether they remain 

appropriate for their respective 

customers. 

As a practical matter, these 

requirements may have little or no 

current applicability to brokerage 

accounts in light of a recent court 

holding that fee-based compensation 

constitutes ‘‘special compensation’’ that 

triggers the requirements of the 

Investment Advisers Act of 1940.5 As a 

result of the court’s decision, firms 

generally have converted fee-based 

brokerage accounts into advisory 

accounts or altered the compensation 

practices for such accounts (e.g. 

charging transaction-based commissions 

rather than a fixed fee or percentage of 

assets under management). However, 

both the Notice and Incorporated NYSE 

Rule 405A are aimed at fee-based 

accounts that do not constitute advisory 

accounts. 

To the extent fee-based programs may 

continue to exist in some form in 

brokerage accounts, FINRA believes the 

Notice provides the necessary guidance 

for members to conform their conduct in 

accordance with the just and equitable 

principles of trade mandated by NASD 

Rule 2110, and further provides firms 

with the flexibility to adopt policies and 

procedures to achieve that compliance 

in a manner consistent with their 

business structure and practices. 

NYSE Rules 440F (Public Short Sale 

Transactions Effected on the Exchange) 

and 440G (Transactions in Stocks and 

Warrants for the Accounts of Members, 

Allied Members and Member 

Organizations) 

The proposed rule change would 

repeal Incorporated NYSE Rules 440F 

and 440G. Incorporated NYSE Rule 

440F requires members to report on 

Form SS20 round-lot short sale 

transactions in stocks or warrants 

effected on the NYSE floor for public 

customers. Incorporated NYSE Rule 

440G requires members to report on 

Form 121 round-lot purchases or sales 

of stocks or warrants effected on the 

NYSE floor for members, allied 

members or member organizations. 

FINRA is proposing to repeal these rules 

as they are specific to the NYSE 

marketplace and relate solely to 

exchange transactions. 

NYSE Rule 477 (Retention of 

Jurisdiction—Failure to Cooperate) 

Both FINRA’s By-Laws and 

Incorporated NYSE Rule 477 provide for 

retained jurisdiction over former 

members and associated persons for 

initiating disciplinary actions. Under 

Article IV, Section 6 and Article V, 

Section 4 of the FINRA By-Laws, a 

former member or former associated 

person, respectively, remains subject to 

the filing of a FINRA complaint for two 

years after termination based on 

conduct that commenced prior to the 

termination. In the case of former 

associated persons, the FINRA By-Laws 

also provide that the two-year period 

recommences if an amendment to a 

notice of termination filed within the 

original two-year period discloses 

possible misconduct. Incorporated 

NYSE Rule 477 provides for retained 

jurisdiction over a member or a 

member’s employee for an unspecified 

time if, prior to termination or within 

one year following termination, NYSE 

serves written notice on such member or 

person that it is making inquiry into 

matters that occurred prior to 

termination. 

Under the proposed rule change, 

FINRA would continue to use the 

retention of jurisdiction provisions set 

forth in the FINRA By-Laws and would 

repeal the corresponding provisions in 

Incorporated NYSE Rule 477. 

FINRA will announce the 

implementation date of the proposed 

rule change in a Regulatory Notice to be 

published no later than 60 days 

following Commission approval. 

2. Statutory Basis 

FINRA believes that the proposed rule 

change is consistent with the provisions 


pwalker on PROD1PC71 with NOTICES
45260 Federal Register / Vol. 73, No. 150 / Monday, August 4, 2008 / Notices 

6 15 U.S.C. 78o–3(b)(6). 7 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A). 

4 17 CFR 240.19b–4(f)(6). 

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

requires, among other things, that 

FINRA rules must be designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, and, in 

general, to protect investors and the 

public interest. FINRA believes that the 

proposed rule change would eliminate 

duplicative and unnecessary rules and 

advance the development of a more 

efficient and effective Consolidated 

FINRA Rulebook. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

FINRA does not believe that the 

proposed rule change will impose any 

burden on competition not necessary or 

appropriate in furtherance of the 

purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 35 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the self-regulatory 

organization consents, the Commission 

will: 

(A) by order approve such proposed 

rule change; or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–FINRA–2008–029 on the 

subject line. 

Paper comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–FINRA–2008–029. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for inspection and copying in 

the Commission’s Public Reference 

Room, 100 F Street, NE., Washington, 

DC 20549, on official business days 

between the hours of 10 a.m. and 3 p.m. 

Copies of such filing also will be 

available for inspection and copying at 

the principal office of FINRA. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–FINRA–2008–029 and 

should be submitted on or before 

August 25, 2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.7

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–17788 Filed 8–1–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58237; File No. SR–ISE–

2008–61] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change Relating to Non-Customer 

Options Orders 

July 29, 2008. 

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 July 23, 

2008, the International Securities 

Exchange, LLC (‘‘ISE’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by ISE. The 

Exchange has filed the proposal as a 

‘‘non-controversial’’ rule change 

pursuant to Section 19(b)(3)(A) of the 

Act 3 and Rule 19b–4(f)(6) thereunder,4

which renders it effective upon filing 

with the Commission. The Commission 

is publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend its 

rules regarding non-customer options 

orders. The text of the proposed rule 

change is as follows, with deletions in 

[brackets] and additions in italics: 

Rule 717. Limitations on Orders 

(a) Reserved. [Market Orders and 

Marketable Limit Orders. 

Electronic Access Members shall not 

enter into the System, as principal or 

agent, Non-Customer market orders. 

Non-Customer limit orders that cross 

the market and that cannot be executed 

within two (2) minimum variations 

below the best bid or above the best 

offer cannot be executed on the 

Exchange. Such limit orders will be 

canceled by the System.] 

(b) through (g) no change. 

Supplemental Material to Rule 717 

.01 through .02 no change. 

* * * * * 

Rule 805. Market Maker Orders 

(a) Options Classes to Which 

Appointed. Market makers may not 


pwalker on PROD1PC71 with NOTICES