Federal Register / Vol. 73, No. 192 / Thursday, October 2, 2008 / Notices 57391 

14Telephone conversation between Marija 

Willen, Vice President and Associate General 

Counsel, Amex, and Steve Kuan, Special Counsel, 

Commission, on September 25, 2008. 

15 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

and traded on another national 

securities exchange. As such, 

transparent last sale information will 

continue to be disseminated on the 

securities on an uninterrupted basis. 

Further, this requirement will ensure 

other protections for trading a security 

on a national securities exchange will 

remain in place, such as the periodic 

reporting obligations under the Act. 

Further, the Commission finds that 

the deletion of the restatements of Rule 

18 and Rule 12d2–2 in the Amex 

Company Guide is consistent with the 

requirements of the Act. The rules of 

Amex and the Commission are equally 

available on the Internet, and are 

updated when changed. As such, the 

restatements in the Company Guide are 

no longer necessary. The Exchange 

rules, however, will continue to 

reference Rule 12d2–2 to ensure issuers 

know they must comply with that rule, 

as well as the Exchange’s requirements, 

to delist. 

Finally, as noted above, the new rule 

will only be implemented upon the 

closing of the Exchange Acquisition. 

The Exchange has represented that, 

upon closing of the merger, it will notify 

applicable issuers that the rule has 

become effective.14

IV. Conclusion 

It is therefore ordered, pursuant to 

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

proposed rule change (SR–Amex–2008– 

65) be, and it hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–23194 Filed 10–1–08; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58651; File No. SR–FINRA– 

2008–047] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of 

Proposed Rule Change Relating to 

Amendments to the Codes of 

Arbitration Procedure To Raise the 

Amount in Controversy Heard by a 

Single Chair-Qualified Arbitrator to 

$100,000 

September 25, 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 

September 18, 2008, the 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 substantially 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 NASD 

Rule 12401 of the Code of Arbitration 

Procedure for Customer Disputes 

(‘‘Customer Code’’) and NASD Rule 

13401 of the Code of Arbitration 

Procedure for Industry Disputes 

(‘‘Industry Code’’) to raise the amount in 

controversy that will be heard by a 

single chair-qualified arbitrator to 

$100,000. Below is the text of the 

proposed rule change. Proposed new 

language is in italics; proposed 

deletions are in brackets. 

* * * * * 

12401. Number of Arbitrators 

(a) Claims of $25,000 or Less 

If the amount of a claim is $25,000 or 

less, exclusive of interest and expenses, 

the panel will consist of one arbitrator 

and the claim is subject to the 

simplified arbitration procedures under 

Rule 12800. 

(b) Claims of More Than $25,000 Up To 

[$50,000] $100,000 

If the amount of a claim is more than 

$25,000 but not more than [$50,000] 

$100,000, exclusive of interest and 

expenses, the panel will consist of one 

arbitrator [unless any party requests a 

panel of three arbitrators in its initial 

pleading] unless the parties agree in 

writing to three arbitrators. 

(c) Claims of More Than [$50,000] 

$100,000; Unspecified or Non-Monetary 

Claims 

If the amount of a claim is more than 

[$50,000] $100,000, exclusive of interest 

and expenses, or is unspecified, or if the 

claim does not request money damages, 

the panel will consist of three 

arbitrators, unless the parties agree in 

writing to one arbitrator. 

13401. Number of Arbitrators 

(a) Claims of $25,000 or Less 

If the amount of a claim is $25,000 or 

less, exclusive of interest and expenses, 

the panel will consist of one arbitrator 

and the claim is subject to the 

simplified arbitration procedures under 

Rule 13800. 

(b) Claims of More Than $25,000 Up To 

[$50,000] $100,000 

If the amount of a claim is more than 

$25,000 but not more than [$50,000] 

$100,000, exclusive of interest and 

expenses, the panel will consist of one 

arbitrator [unless any party requests a 

panel of three arbitrators in its initial 

pleading] unless the parties agree in 

writing to three arbitrators. 

(c) Claims of More Than [$50,000] 

$100,000; Unspecified or Non-Monetary 

Claims 

If the amount of a claim is more than 

[$50,000] $100,000, exclusive of interest 

and expenses, or is unspecified, or if the 

claim does not request money damages, 

the panel will consist of three 

arbitrators, unless the parties agree in 

writing to one arbitrator. 

* * * * * 

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. 

mstockstill on PROD1PC66 with NOTICES

57392 Federal Register / Vol. 73, No. 192 / Thursday, October 2, 2008 / Notices 

3See proposed amendments to Rules 12401(b) 

and13401(b). 

4 Id. 

5See proposed amendments to Rules 12401(c) 

and 13401(c). 

6See Rules 12401 and 13401. The current 

threshold for appointing one or three arbitrators has 

been in effect since 1998. See Securities Exchange 

Act Release No. 38635 (May 14, 1997), 62 FR 27819 

(May 21, 1997) (SR–NASD–97–22) (approval order) 

and NASD Notice to Members 98–90. Customer 

disputes are resolved by a single, chair-qualified 

public arbitrator or a majority-public panel 

consisting of a public arbitrator, a chair-qualified 

public arbitrator, and a non-public arbitrator. 

Industry disputes are resolved by a public panel or 

a non-public panel depending upon the parties to 

the controversy and the nature of the claims 

asserted (see Rules 13402 and 13802). 

7See proposed amendments to Rules 12401(b) 

and 13401(b). 

8For example, for customer cases, if the panel 

consists of one arbitrator, the Neutral List Selection 

System (‘‘the System’’) generates a list of eight 

public arbitrators from the chairperson roster. If the 

panel consists of three arbitrators, the System 

generates a list of eight public arbitrators from the 

chairperson roster; a list of eight arbitrators from the 

public roster; and a list of eight arbitrators from the 

non-public roster. FINRA sends the lists to the 

parties along with each arbitrator’s employment 

history for the prior 10 years and other background 

information (see Rules 12403 and 13403). 

9The term ‘‘hearing session’’ means any meeting 

between the parties and arbitrator(s) of four hours 

or less, including a hearing or a pre-hearing 

conference. (see Rules 12100(n) and 13100(n)). For 

full day hearings, the savings would be $300 for 

claims between $25,000.01 and $50,000, and $600 

for claims between $50,000.01 and $100,000. 

10See Rules 12902 and 13902. 

11 15 U.S.C. 78o–3(b)(6). 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

FINRA is proposing to amend its 

Customer Code and Industry Code to 

raise the amount in controversy that 

would be heard by a single arbitrator to 

$100,000, exclusive of interest and 

expenses.3 The arbitrator would be 

selected from the roster of arbitrators 

who are qualified to serve as 

chairpersons. This means that investors’ 

claims for up to $100,000 would be 

heard by a public, chair-qualified 

arbitrator. 

Under the proposal, parties would be 

permitted to request a panel of three 

arbitrators for claims of more than 

$25,000, but not more than $100,000, if 

all parties agreed in writing to the 

request.4 Claims of more than $100,000 

would continue to be heard by three 

arbitrators unless the parties agree in 

writing to one arbitrator.5

Currently, if the amount of a claim is 

$25,000 or less, a single arbitrator is 

appointed to resolve the matter. If the 

amount of a claim is more than $25,000, 

but not more than $50,000, a single 

arbitrator is appointed, unless a party 

asks for three arbitrators in its initial 

pleading. Claims for over $50,000 are 

heard by a panel of three arbitrators.6

FINRA is also proposing to remove 

the current option for one party 

unilaterally to require three arbitrators 

in cases with claims for more than 

$25,000.7 FINRA believes this is not an 

efficient use of resources, as it requires 

other parties to incur higher hearing 

session costs and additional delays 

caused by scheduling three arbitrators 

instead of one. Therefore, the proposed 

rule would mandate a single arbitrator 

in all such cases unless all parties agree, 

in writing, to request a three person 

panel. 

Raising the threshold for claims heard 

by a single arbitrator would increase 

efficiencies and decrease costs for 

parties and FINRA. Parties would 

experience reduced case processing 

times because of the flexibility 

associated with scheduling conference 

calls and hearing dates with one 

arbitrator as opposed to three. Parties 

would save time in the arbitrator 

selection process because they would 

receive only one list of eight names from 

which to choose their arbitrator, rather 

than three lists of eight names.8 This 

means they would only research the 

disclosures and histories of eight 

proposed arbitrators instead of 24. 

Parties would also benefit from 

reduced hearing session fees. For claims 

between $25,000.01 and $50,000, parties 

would save $150 per hearing session 9

by reducing fees from $600 (for a 

hearing with three arbitrators) to $450 

(for a hearing with one arbitrator).10 For 

claims between $50,000.01 and 

$100,000, the savings would be $300 per 

hearing session by reducing fees from 

$750 (for a hearing with three 

arbitrators) to $450 (for a hearing with 

one arbitrator). The parties’ cost for 

photocopying pleadings and exhibits 

would be reduced by two-thirds. FINRA 

would benefit from a more efficient use 

of its arbitrator roster since cases for 

$100,000 or less would use only one 

arbitrator instead of three. FINRA’s 

photocopying costs and mailing 

expenses would also be reduced. 

2. Statutory Basis 

FINRA believes that the proposed rule 

change is consistent with the provisions 

of Section 15A(b)(6) of the Act,11 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 further the 

purposes of the Act because it would 

make arbitration more expeditious and 

efficient, and would decrease users’ 

forum fees and related expenses. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

FINRA does not believe that the 

proposed rule change will result in any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the 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–2008–047 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–2008–047. 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 

mstockstill on PROD1PC66 with NOTICES

Federal Register / Vol. 73, No. 192 / Thursday, October 2, 2008 / Notices 57393 

12 17 CFR 200.30–3(a)(12). 

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 (hereinafter, ‘‘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. 

For more information about the rulebook 

consolidation process, see FINRA Information 

Notice, March 12, 2008 (Rulebook Consolidation 

Process). 

4See Securities Exchange Act Release No. 34– 

58308 (August 5, 2008); 73 FR 46664 (Aug. 11, 

2008) (notice). 

5See letter from Amal Aly, Managing Director 

and Associate General Counsel, Securities Industry 

and Financial Markets Association, dated Sept. 2, 

2008 (‘‘SIFMA letter’’). 

6See NASD Notice to Members 93–8 (February 

1993) (SEC Approval of Amendment Relating to the 

Payment of Gratuities or Anything of Value by 

Members to Others); see also Securities Exchange 

Act Release No. 21074 (June 20, 1984), 49 FR 26330 

(June 27, 1984) (SR–NASD–84–8) (approval order). 

7 In addition, NYSE Rule 350(a)(1) prohibits any 

member from employing or compensating any 

person for services rendered except with the prior 

consent of that person’s employer. FINRA proposed 

to delete this provision, even though it does not 

pertain to gifts, because a substantively identical 

provision exists in NYSE Rule 346(b). FINRA 

intends to review NYSE Rule 346(b) as part of a 

later phase of the rulebook consolidation process. 

8See NASD Notice to Members 06–69 (December 

2006) (Gifts and Gratuities). 

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–2008–047 and 

should be submitted on or before 

October 23, 2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–23195 Filed 10–1–08; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58660; File No. SR–FINRA– 

2008–027] 

Self-Regulatory Organizations: 

Financial Industry Regulatory 

Authority, Inc.; Order Approving 

Proposed Rule Change Relating to the 

Adoption of FINRA Rule 3220 

(Influencing or Rewarding Employees 

of Others) and FINRA Rule 2070 

(Transactions Involving FINRA 

Employees) in the Consolidated FINRA 

Rulebook 

September 26, 2008. 

I. Introduction 

On July 18, 2008, the Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) (f/k/a National Association 

of Securities Dealers, Inc. (‘‘NASD’’)) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) pursuant 

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

Exchange Act of 1934 (‘‘Act’’)1 and Rule 

19b–4 thereunder,2 a proposed rule 

relating to the adoption of FINRA Rule 

3220 (Influencing or Rewarding 

Employees of Others) and FINRA Rule 

2070 (Transactions Involving FINRA 

Employees) in the new consolidated 

FINRA rulebook (‘‘Consolidated FINRA 

Rulebook’’).3 The proposed rule change 

was published for comment in the 

Federal Register on August 11, 2008.4

The Commission received one comment 

letter in response to the proposed rule 

change.5 This order approves the 

proposed rule change. 

II. Description of the Proposed Rule 

Change 

As part of the process of developing 

the Consolidated FINRA Rulebook, 

FINRA proposed to transfer without 

material change NASD Rules 3060 

(Influencing or Rewarding Employees of 

Others) and 3090 (Transactions 

Involving Association and American 

Stock Exchange Employees) into the 

Consolidated FINRA Rulebook and to 

delete the corresponding provisions in 

Incorporated NYSE Rules 350, 350.10, 

407(a), 407.10 and NYSE Rule 

Interpretations 350/01 through 350/03. 

The proposed rule change would 

renumber NASD Rule 3060 as FINRA 

Rule 3220 and NASD Rule 3090 as 

FINRA Rule 2070 in the Consolidated 

FINRA Rulebook, and would delete 

NASD Rules 3060 and 3090 in their 

entirety from the Transitional Rulebook. 

(A) Proposed FINRA Rule 3220 

(1) Background 

NASD Rule 3060 (Influencing or 

Rewarding Employees of Others) 

currently states that no member or 

associated person shall give gifts or 

gratuities to an agent or employee of 

another person in excess of $100 per 

year where the gift or gratuity is in 

relation to the business of the employer 

of the recipient. The rule, which 

protects against improprieties that may 

arise when members or their associated 

persons give gifts or gratuities to 

employees of a customer, has been in 

effect in its current form since 1969, 

with changes only to the dollar 

amounts, rising from $25 to $50 to 

$100.6 The rule requires each member to 

maintain a separate record of all gifts or 

gratuities. The rule also contains an 

express exclusion for payments made 

pursuant to bona fide, written 

employment contracts. 

NYSE Rule 350 (Compensation or 

Gratuities to Employees of Others) 

reaches similar conduct in prohibiting, 

absent prior written consent of the 

recipient’s employer, any member or 

member organization from giving any 

gratuity in excess of $100 per person per 

year to any principal, officer, or 

employee of another member or member 

organization, financial institution, news 

or financial information media, or nonmember broker or dealer in securities, 

commodities or money instruments.7

NYSE Rule 350 has specific provisions 

addressing compensation to operations 

employees of members (e.g., NYSE Floor 

personnel). In addition, NYSE Rule 350 

requires that records of all such 

gratuities and compensation be retained 

for at least three years. 

(2) Proposal 

FINRA proposed to transfer NASD 

Rule 3060 into the Consolidated FINRA 

Rulebook without material change and 

renumbered as FINRA Rule 3220. One 

of the advantages of the existing 

regulatory standard is the clarity of the 

rule’s application—it prevents gifts in 

excess of a fixed amount, currently 

$100. Both the NASD and NYSE rules 

have a $100 limitation on gifts. 

FINRA believes that NASD Rule 3060 

generally is well understood by 

members. FINRA recently issued 

additional guidance on NASD Rule 3060 

in Notice to Members 06–69.8 Among 

the issues addressed in that Notice was 

the fact that NASD Rule 3060 does not 

apply to gifts of de minimis value, or to 

promotional items of nominal value 

mstockstill on PROD1PC66 with NOTICES