23462 Federal Register / Vol. 74, No. 95 / Tuesday, May 19, 2009 / Notices 

20 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 59672 

(April 1, 2009), 74 FR 15806 (April 7, 2009). 

4See letters from: (1) Seth E. Lipner, Professor of 

Law, Zicklin School of Business, Baruch College, 

dated April 3, 2009 (‘‘Lipner letter’’); (2) Joseph M. 

Licare, St. John’s University School of Law, 

Securities Arbitration Clinic, to Elizabeth M. 

Murphy, Secretary, Commission, dated April 28, 

2009 (‘‘Securities Arbitration Clinic letter’’); (3) 

Brian N. Smiley, Esquire, President, Public 

Investors Arbitration Bar Association, to Elizabeth 

M. Murphy, Secretary, Commission, dated April 28, 

2009 (‘‘PIABA letter’’); (4) Steven B. Caruso, 

Maddox Hargett & Caruso, P.C., dated April 29, 

2009 (‘‘Caruso letter’’); and 5) Scot Bernstein, dated 

May 1, 2009 (‘‘Bernstein letter’’). 

5FINRA describes the eligibility rule using the 

rule number from the Customer Code for simplicity. 

However, the proposal also applies to the identical 

eligibility rule of the Industry Code. See Rule 

13206. 

6See also Rule 13206(c) of the Industry Code. 

7 64 F. Supp. 2d 338 (S.D.N.Y. 1999). The case 

involved claims under Section 10(b) of the Act. 

8Rule 10307(a) (Tolling of Time Limitation(s) for 

the Institution of Legal Proceedings and Extension 

of Time Limitation(s) for Submission to Arbitration) 

states in relevant part that: 

Where permitted by applicable law, the time 

limitations which would otherwise run or accrue 

for the institution of legal proceedings shall be 

tolled where a duly executed Submission 

Agreement is filed by the Claimant(s). The tolling 

shall continue for such period as the Association 

shall retain jurisdiction upon the matter submitted. 

(A) By order approve the 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–BX–2009–021 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–BX–2009–021. 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 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; 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–BX–2009–021 and should 

be submitted on or before June 8, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.20

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–11609 Filed 5–18–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59906; File No. SR–FINRA– 

2009–013] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Order Granting 

Approval of Proposed Rule Change To 

Amend the Tolling Provisions in Rules 

12206 and 13206 of the Codes of 

Arbitration Procedure for Customer 

and Industry Disputes 

May 12, 2009. 

On March 11, 2009, Financial 

Industry Regulatory Authority, Inc. 

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

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

filed with the Securities and Exchange 

Commission (‘‘Commission’’) a 

proposed rule change pursuant to 

Section 19(b)(1) of the Securities 

Exchange Act of 1934 (‘‘Act’’),1 and 

Rule 19b–4 thereunder.2 The proposed 

rule change was published for comment 

in the Federal Register on April 7, 

2009.3 The Commission received five 

comments on the proposed rule 

change.4 This order approves the 

proposed rule change. 

I. Description of the Proposed Rule 

Change 

FINRA proposed to amend the tolling 

provisions in Rules 12206 and 13206 of 

the Code of Arbitration Procedure for 

Customer Disputes (‘‘Customer Code’’) 

and for Industry Disputes (‘‘Industry 

Code’’), respectively, to clarify that the 

rules toll the applicable statutes of 

limitation when a person files an 

arbitration claim with FINRA. 

Currently, Rule 12206, the ‘‘eligibility 

rule,’’ provides that, ‘‘no claim shall be 

eligible for submission to arbitration 

under the Code where six years have 

elapsed from the occurrence or event 

giving rise to the claim.’’ 5 The 

eligibility rule does not extend 

applicable statutes of limitation, but 

Rule 12206(c) does provide that, ‘‘where 

permitted by applicable law, when a 

claimant files a statement of claim in 

arbitration, any time limits for the filing 

of the claim in court will be tolled while 

FINRA retains jurisdiction of the 

claim.’’ 6 This means that, where 

permitted by applicable law, state 

statutes of limitation will be tolled (i.e., 

temporarily suspended) when a person 

files an arbitration claim with FINRA. 

For many years, FINRA has 

interpreted the rule to mean that any 

applicable statutes of limitation would 

be tolled in all cases when a person files 

an arbitration claim with FINRA. In 

Friedman v. Wheat First Securities, Inc., 

however, the court found that the 

phrase ‘‘where permitted by applicable 

law,’’ means that state or federal law, as 

applicable, must permit tolling 

expressly, or the period will not be 

tolled.7 In light of the court’s 

interpretation of the phrase and the 

negative effect it could have on 

investors’ arbitration claims, FINRA 

proposed to remove the phrase, ‘‘where 

permitted by applicable law,’’ from 

Rules 12206(c) and 13206(c) to make 

tolling automatic as part of the 

arbitration agreement. 

The Friedman court granted the 

defendant’s request to dismiss the 

plaintiff’s complaint on statute of 

limitations grounds. In arguing against 

dismissal, the plaintiff sought to rely on 

old Rule 10307(a) 8 of the Code of 

Arbitration Procedure, which was 

updated and is currently designated as 

Rules 12206(c) and 13206(c) of the 

Customer Code and Industry Code, 

respectively, to support his position that 

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Federal Register / Vol. 74, No. 95 / Tuesday, May 19, 2009 / Notices 23463 

9 64 F. Supp. 2d at 343. 

10 Id. 

11 Id. at 347. 

12 1998 U.S. App. Lexis 12618. 

13On July 26, 2007, the Commission approved a 

proposed rule change filed by NASD to amend 

NASD’s Certificate of Incorporation to reflect its 

name change to FINRA in connection with the 

consolidation of the member firm regulatory 

functions of NASD and NYSE Regulation, Inc. See 

Securities Exchange Act Release No. 56146 (July 26, 

2007), 72 FR 42190 (August 1, 2007) (SR–NASD– 

2007–053). 

14 Id. 

15 2004 U.S. Dist. Lexis 5031. The case also 

involved claims under Section 10(b) of the 

Securities Exchange Act of 1934. 

16 Id. In this case, the plaintiff filed an arbitration 

claim against the defendants at the New York Stock 

Exchange, Inc. (‘‘NYSE’’). The plaintiff argued that 

the limitations period should have been tolled 

under New York law for the period during which 

the arbitration was pending, and cited NYSE Rule 

606(a), which is similar to old Rule 10307(a), and 

states in pertinent part: 

Where permitted by law, the time limitation(s) 

which would otherwise run or accrue for the 

institution of legal proceedings, shall be tolled 

when a duly executed Submission Agreement is 

filed by the claimants. 

17The rule states that ‘‘dismissal of a claim under 

this rule does not prohibit a party from pursuing the 

claim in court. By filing a motion to dismiss a claim 

under this rule, the moving party agrees that if the 

panel dismisses a claim under this rule, the nonmoving party may withdraw any remaining related 

claims without prejudice and may pursue all of the 

claims in court.’’ See also Rule 13206(b). 

18See Securities Exchange Act Release No. 50714 

(November 22, 2004), 69 FR 69971 (December 1, 

2004) (SR–NASD–2001–101). 

19Friedman, 64 F. Supp. 2d 338, 343 n.4 (1999). 

The court indicates that it likely would accept the 

amended language as representing an agreement of 

the parties: 

The precise meaning of Rule 10307(a) is not 

entirely clear. If the phrase ‘‘where permitted by 

applicable law’’ did not precede the remainder of 

the paragraph, the rule would simply be read as an 

explicit agreement between the parties to toll the 

limitations period, regardless of what the applicable 

state or federal tolling principles provide. However, 

by including the phrase the drafters seemed to limit 

tolling to situations in which tolling is expressly 

permitted by applicable law, thereby making an 

explicit agreement between the parties unnecessary. 

20Supra note 4. 

21See PIABA letter. One commenter, while 

supporting the proposed rule change, suggested that 

the words ‘‘and for thirty days thereafter’’ should 

be added to the proposed rule amendment so that 

the final sentence of Rule 13206(c) would read: 

‘‘* * * any time limits for the filing of the claim 

in court will be tolled while FINRA retains 

jurisdiction of the claim and for thirty days 

thereafter.’’ See Bernstein letter. FINRA declined to 

make that change, stating that it believes the 

suggested amendment to the proposed rule change 

would contradict the rule, as currently drafted, by 

extending applicable statutes of limitations by 30 

days. The proposed rule change was intended to 

clarify FINRA’s interpretation of Rule 12206(c) that 

any applicable statute of limitations would be tolled 

in all cases when a person files an arbitration claim 

with FINRA. However, FINRA did not intend to 

extend the tolling protection beyond the completion 

of the arbitration case. For these reasons, FINRA 

declines to amend the proposal as suggested. Email 

from Mignon McLemore, FINRA (May 12, 2009). 

22See Caruso letter. See also the Securities 

Arbitration Clinic letter (the proposed changes will 

ensure that the intent of the rule is respected), and 

the Lipner letter (investors who submit to 

arbitration should benefit for the tolling of the 

statute of limitations in the event that the claim is 

non-arbitrable and must later be heard in court). 

23 In approving this proposed rule change, the 

Commission has considered the proposed rule 

change’s impact on efficiency, competition, and 

capital formation. See 15 U.S.C. 17c(f). 

24 15 U.S.C. 78o-3(b)(6). 

filing an arbitration claim tolls the 

applicable statute of limitations.9 The 

court determined, however, that the 

language of old Rule 10307(a) does not 

toll the statute of limitations unless 

such tolling is ‘‘permitted by applicable 

law.’’ 10 After further analysis, the court 

found that no federal or state statute 

tolled the applicable statute of 

limitations and granted the defendant’s 

dismissal request.11

Other courts have reached the same 

conclusion in interpreting old Rule 

10307(a) and the phrase ‘‘where 

permitted by law.’’ In Individual 

Securities v. Ross,12 the plaintiff, in 

appealing a judgment of a New York 

district court that dismissed the 

complaint as time-barred, claimed that 

the statute of limitations was tolled 

while his matter was in arbitration with 

then-NASD.13 The court cited old Rule 

10307(a) and noted that the ‘‘where 

permitted by law’’ language referred to 

the applicable law in New York, which 

prevented tolling of the limitations 

period.14 In Rampersad v. Deutsche 

Bank Securities, Inc.,15 the court, citing 

Friedman, determined that, used in a 

similar context, the phrase meant that 

federal law, not state law, governs the 

availability of tolling the limitations 

period in a Section 10(b) cause of 

action.16

FINRA is concerned that courts may 

begin citing this interpretation to 

dismiss claims that would otherwise be 

permitted under the eligibility rule.17

FINRA does not believe this outcome 

would be consistent with the original 

intent of the tolling provision or of 

amendments to the eligibility rule that 

allow customers to take their claims to 

court if their claims are dismissed in 

arbitration on eligibility grounds.18

Rather, FINRA believes that, in such a 

situation, the rule should be read to 

provide that a firm or associated person 

has implicitly agreed to suspend any 

statute of limitations defense for the 

time period that the matter was in 

FINRA’s jurisdiction. Amending the 

eligibility rule is intended to make this 

clear. 

Moreover, FINRA is concerned that 

the Friedman interpretation could limit 

or foreclose customers’ access to other 

judicial forums to address their 

disputes, which would be an unfair 

result. Most brokerage firms require 

customers to arbitrate their disputes, a 

process that can take more than a year. 

Customers may be disadvantaged in a 

subsequent court proceeding if the 

panel dismisses the arbitration case on 

eligibility grounds and the statute of 

limitations is not tolled for the period of 

time that the customers were in 

arbitration. In addition to being an 

unfair result, FINRA believes this would 

undermine the intent of the eligibility 

rule, which gives customers the option 

of taking their claims to court when a 

case is dismissed on eligibility grounds. 

Therefore, FINRA proposed to delete 

the phrase ‘‘where permitted by 

applicable law’’ from Rules 12206(c) 

and 13206(c). FINRA noted that the 

Friedman interpretation suggests that, 

but for the phrase, the rule would be 

read as an explicit agreement between 

the parties to toll the statute of 

limitations period.19 FINRA stated that 

it believes that the proposed rule change 

would leave the parties in the same 

position in court as they were at the 

start of the arbitration with regard to any 

statutes of limitation: the time period 

before the claim was filed in arbitration 

would not be extended by the proposed 

changes, but applicable statutes of 

limitation would not run while the 

matter was in arbitration. 

II. Summary of Comments 

The Commission received five 

comments in response to the proposed 

rule change, all of which supported the 

proposal.20 One commenter stated that 

FINRA has proposed equitable 

amendments and should be commended 

for its thoughtful treatment of the tolling 

issues, and that the Commission should 

approve the amendments as written and 

without delay.21 Another commenter 

noted that an automatic tolling of the 

applicable statute of limitations, if any, 

will protect the public interest and 

preserve fairness in the arbitration 

process.22

III. Discussion and Findings 

After careful review of the proposed 

rule change, the Commission finds that 

the proposed rule change is consistent 

with the rules and regulations 

thereunder that are applicable to a 

national securities association 23 and in 

particular, with Section 15A(b)(6) of the 

Act,24 in that it is designed to promote 

just and equitable principles of trade, 

facilitate transactions in securities, 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and 

protect investors and the public interest. 

The Commission believes that the 

proposal is consistent with Section 

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23464 Federal Register / Vol. 74, No. 95 / Tuesday, May 19, 2009 / Notices 

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

26 17 CFR 200.30–3(a)(12). 

1The rule-making associated with the T–100 

program can be found on the Federal Docket 

Management System (FDMS) at http:// 

www.regulations.gov, in Docket DOT–OST–1998– 

4043. Information regarding burden hours is on file 

in the Office of Aviation Analysis (X–50). 

2The Office of Aviation Analysis (X–50) 

estimated that small carriers would require 1 

burden hour per report, and large carriers would 

require 3 burden hours per report to analyze and 

report T–100 program data. Considering that the 

data required in this information collection can be 

derived from data already collected, we have taken 

an average of the estimated time required, and 

conservatively shortened the time by 45 minutes 

because no new data entry will be required. 

15A(b)(6) of the Act because the 

proposed rule change will preserve 

fairness in the arbitration process by 

ensuring that investors maintain their 

right to have their claims heard in court 

if their arbitration cases are dismissed 

on eligibility grounds by tolling the 

applicable statutes of limitation while 

their disputes are in arbitration. 

IV. Conclusion 

It is therefore ordered, pursuant to 

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

proposed rule change (SR–FINRA– 

2009–013) be, and hereby is, 

approved.25

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.26

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–11608 Filed 5–18–09; 8:45 am] 

BILLING CODE 8010–01–P 

DEPARTMENT OF STATE 

[Public Notice 6620] 

Waiver of Restriction on Assistance to 

the Central Government of Lebanon 

Pursuant to section 7088(c)(2) of the 

Department of State, Foreign 

Operations, and Related Programs 

Appropriations Act, 2009 (Division H, 

Pub. L. 111–8) (‘‘the Act’’), and 

Department of State Delegation of 

Authority Number 245–1, I hereby 

determine that it is important to the 

national interest of the United States to 

waive the requirements of section 

7088(c)(1) of the Act with respect to the 

Government of Lebanon, and I hereby 

waive such restriction. 

This determination shall be reported 

to the Congress, and published in the 

Federal Register. 

Dated: May 7, 2009. 

Jacob L. Lew, 

Deputy Secretary of State, Department of 

State. 

[FR Doc. E9–11641 Filed 5–18–09; 8:45 am] 

BILLING CODE 4710–31–P 

DEPARTMENT OF TRANSPORTATION 

Office of the Secretary 

[DOT–OST–2008–0371] 

Agency Information Collection Activity 

for OMB Review: Foreign Air Carrier 

Application for Statement of 

Authorization, ICR–2106–0036 

AGENCY: Department of Transportation 

(DOT), Office of the Secretary (OST). 

ACTION: Notice. 

SUMMARY: In compliance with the 

Paperwork Reduction Act of 1995, 

PublicLaw 104–13, this notice 

announces that the Information 

Collection Request, abstracted below, is 

being forwarded to the Office of 

Management and Budget for extension 

of approval of currently approved ICR– 

2106–0036, Foreign Air Carrier 

Application for Statement of 

Authorization. Earlier, a Federal 

Register Notice with a 60-day comment 

period was published (73 FR 74223, 

December 5, 2008). The agency did not 

receive any comments to its previous 

notice. 

DATES: Written comments should be 

submitted by June 18, 2009. 

FOR FURTHER INFORMATION CONTACT: 

George Wellington, (202) 366–2391, 

Office of International Aviation, U.S. 

Department of Transportation, 1200 

New Jersey Avenue, SE., Room W86– 

125, Washington, DC 20590. Office 

hours are from 8:30 a.m. to 5 p.m., 

Monday through Friday, except Federal 

holidays. 

Comments: Comments should be sent 

to OMB: Attention DOT/OST Desk 

Officer, Office of Information and 

Regulatory Affairs, Office of 

Management and Budget, Docket 

Library, Room 10102, 725 17th Street, 

NW., Washington, DC 20503, or 

oira_submission@omb.eop.gov and 

should identify the associated OMB 

Approval Number 2106–0035 and 

Docket DOT–OST–2008–0374. 

SUPPLEMENTARY INFORMATION: 

OMB Approval No.: 2106–0035. 

Title: Foreign Air Carrier Application 

for Statement of Authorization. 

Form No.: Form OST 4540. 

Type of Review: Extension of a 

currently approved collection. 

Respondents: Foreign Air Carriers. 

Number of Respondents: 

approximately 100. 

Estimated Time per Response: 2.25 

hours per application. 

Total Annual Burden: 1,000 hours. 

Abstract: Applicants use Form OST 

4540 to request statements of 

authorization to conduct numerous 

types of operations authorized under 

Title 14, CFR Part 212. The form 

requires basic information regarding the 

carrier(s) conducting the operation, the 

party filing the form, the operations 

being conducted, the number of thirdand fourth-freedom flights conducted in 

the last twelve-month period, and 

certification of reciprocity from the 

carrier’s homeland government. DOT 

analysts will use the information 

collected to determine if applications 

for fifth-freedom operations meet the 

public interest requirements necessary 

to authorize such applications. 

Burden Statement: We estimate that 

the industry-wide total hour burden for 

this collection to be approximately 

1,000 hours or approximately 2.25 hours 

per application. Conservatively, we 

estimate the compilation of background 

information will require 1.75 hours, and 

the completion and submission of OST 

Form 4540 will require thirty (30) 

minutes. 

Reporting the number of third- and 

fourth-freedom operations conducted by 

an applicant carrier will require 

collection of flight data, and detailed 

analysis to determine which flights 

conducted by the carrier are third- and 

fourth-freedom. Applicants should be 

able to use data collected for the 

Department’s T–100 program to provide 

this information (under this program, 

carriers are required periodically to 

compile and report certain traffic data to 

the Department, as more fully described 

in the Docket referenced in footnote 1 

below). The Bureau of Transportation 

Statistics (BTS) provide carriers with a 

computer program that allows them to 

compile and monitor, among other 

things, flight origin and destination 

data, to be used in making the carriers’ 

T–100 submissions.1 We estimated that 

carriers will require 1.25 hours per 

application 2 to compile and analyze the 

data necessary to disclose the number of 

third- and fourth-freedom flights 

conducted within the twelve-month 

period preceding the filing of an 

application. 

Foreign carriers will also have to 

provide evidence that their homeland 

mstockstill on PROD1PC66 with NOTICES