54610 Federal Register / Vol. 74, No. 203 / Thursday, October 22, 2009 / Notices 

25See letter from Elizabeth K. King, Associate 

Director, Division of Trading and Markets, 

Commission, to Maura A. Looney, Associate Vice 

President. NASDAQ OMX BX, Inc., dated August 

28, 2009 (granting the Exchange’s request under 

Rule 608(e) of Regulation NMS for a Temporary 

Exemption from Certain Provisions of the Options 

Order Protection and Locked/Crossed Market Plan) 

(‘‘Exemption Letter’’). 

26See SR–BX–2009–066, Item 7. 

27See Exemption Letter, supra note 25. 

28See, e.g., supra note 24. 

29 15 U.S.C. 78s(b)(2). 

30 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: (1) 

FINRA Rules; (2) NASD Rules; and (3) rules 

incorporated from NYSE (‘‘Incorporated NYSE 

Rules’’) (together, the NASD Rules and Incorporated 

NYSE Rules are referred to as the ‘‘Transitional 

Rulebook’’). While the NASD Rules generally apply 

to all FINRA members, the Incorporated NYSE 

Rules apply only to those members of FINRA that 

are also members of the NYSE (‘‘Dual Members’’). 

The FINRA Rules apply to all FINRA members, 

unless such rules have a more limited application 

by their terms. For more information about the 

rulebook consolidation process, see Information 

Notice, March 12, 2008 (Rulebook Consolidation 

Process). 

4SEA Rule 14b–1(b)(2) requires that brokerdealers must forward proxy and other specified 

materials no later than five business days after 

receipt. 

5Under paragraph (e) of the rule, a member’s duty 

under Rule 2260(a) applies provided the member: 

is furnished with sufficient copies of the material 

(e.g., annual reports, information statements or 

other material sent to security holders) by the 

issuer, stockholder or trustee; is requested by the 

issuer, stockholder or trustee to forward the 

Decentralized Plan and BOX Rules. The 

Exchange also states that accelerated 

approval will allow BOX to be fully 

compliant with the Decentralized Plan 

and no longer rely on a Commissiongranted exemption 25 from Rule 608(c) 

of Regulation NMS, which requires BOX 

to comply with, and enforce compliance 

by its members with, certain provisions 

of the Decentralized Plan.26 The 

exemption is currently set to expire on 

October 31, 2009.27 The Commission 

finds good cause for approving the 

proposed rule change before the 

thirtieth day after the date of 

publication of notice of filing thereof in 

the Federal Register. The Commission 

notes that the Exchange’s proposal is 

consistent with rules approved for other 

national securities exchanges.28 Also, 

approval on an accelerated basis will 

allow BOX an opportunity to comply 

with the terms of the Decentralized Plan 

prior to the expiration of its exemption, 

while the proposed pilot period will 

allow interested parties an opportunity 

to comment on the proposal before 

permanent approval. Accordingly, the 

Commission finds good cause, 

consistent with Section 19(b)(2) of the 

Act,29 to approve the proposed rule 

change on an accelerated basis for a 

pilot period expiring January 15, 2010. 

V. Conclusion 

It is therefore ordered, pursuant to 

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

proposed rule change (SR–BX–2009– 

066) is hereby approved on an 

accelerated basis for a pilot period to 

expire on January 15, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.30

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–25338 Filed 10–21–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60824; File No. SR–FINRA– 

2009–066] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of 

Proposed Rule Change To Adopt 

FINRA Rule 2251 (Forwarding of Proxy 

and Other Issuer-Related Materials) in 

the Consolidated FINRA Rulebook 

October 14, 2009. 

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

Securities Exchange Act of 1934 (‘‘Act’’ 

or ‘‘SEA’’) 1 and Rule 19b–4 

thereunder,2 notice is hereby given that 

on October 2, 2009, Financial Industry 

Regulatory Authority, Inc. (‘‘FINRA’’) (f/ 

k/a National Association of Securities 

Dealers, Inc. (‘‘NASD’’)) 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 adopt without 

material change NASD Rule 2260 

(Forwarding of Proxy and Other 

Materials) and NASD IM–2260 

(Approved Rates of Reimbursement) in 

the consolidated FINRA rulebook. The 

proposed rule change would combine 

NASD Rule 2260 and NASD IM–2260 

into a single rule that would be 

renumbered as FINRA Rule 2251 in the 

consolidated FINRA rulebook. 

The text of the proposed rule change 

is available on FINRA’s Web site at 

http://www.finra.org, at the principal 

office of FINRA and at the 

Commission’s Public Reference Room. 

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 

As part of the process of developing 

a new consolidated rulebook 

(‘‘Consolidated FINRA Rulebook’’),3

FINRA is proposing to adopt without 

material change NASD Rule 2260 

(Forwarding of Proxy and Other 

Materials) and NASD Interpretive 

Material (‘‘IM’’) 2260 (Approved Rates 

of Reimbursement) in the Consolidated 

FINRA Rulebook. The proposed rule 

change would combine NASD Rule 

2260 and NASD IM–2260 into a single 

rule that would be renumbered as 

FINRA Rule 2251 in the Consolidated 

FINRA Rulebook. 

(A) Background 

NASD Rule 2260 sets forth certain 

requirements with respect to the 

transmission of proxy materials and 

other communications to beneficial 

owners of securities and the limited 

circumstances in which members are 

permitted to vote proxies without 

instructions from those beneficial 

owners. NASD IM–2260 regulates the 

reimbursement that members are 

entitled to receive in connection with 

forwarding proxy materials and other 

communications. 

(1) NASD Rule 2260 

NASD Rule 2260(a) sets forth the 

general obligation of members to 

transmit proxy and related materials. 

The rule provides that members must, 

in connection with an equity security, 

forward promptly 4 or, in connection 

with a debt security, make reasonable 

efforts to forward promptly certain 

information to the beneficial owner,5 or 


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Federal Register / Vol. 74, No. 203 / Thursday, October 22, 2009 / Notices 54611 

material to security holders; and receives 

satisfactory assurance that it will be reimbursed by 

the issuer, stockholder or trustee for all out-ofpocket expenses, including reasonable clerical 

expenses. Rule 2260(e)(2) provides that paragraph 

(e) does not apply to beneficial owners residing 

outside the U.S. The rule states that members may 

voluntarily comply with the rule’s provisions with 

respect to such persons if they wish. 

6The term ‘‘designated investment adviser’’ is 

defined in paragraph (f) of the rule. 

7The phrase ‘‘national securities exchange to 

which the member is also responsible’’ refers to a 

national securities exchange to which the member 

belongs. See Securities Exchange Act Release No. 

35681 (May 5, 1995), 60 FR 25749 (May 12, 1995) 

(Order Approving Proposed Rule Change; File No. 

SR–NASD–95–06); see also Notice to Members 95– 

45 (June 1995). 

8FINRA notes that, with respect to compliance by 

Dual Members, the SEC recently approved 

amendments to non-Incorporated NYSE Rules (i.e., 

NYSE Rules that were not incorporated by FINRA 

into its rulebook) that eliminate discretionary 

voting by brokers under certain circumstances. See 

Securities Exchange Act Release No. 60215 (July 1, 

2009), 74 FR 33293 (July 10, 2009) (Order 

Approving Proposed Rule Change; File No. SR– 

NYSE–2006–92). 

9See Securities Exchange Act Release No. 47392 

(February 21, 2003), 68 FR 9730 (February 28, 2003) 

(Notice of Filing and Immediate Effectiveness of 

Proposed Rule Change; File No. SR–NASD–2003– 

019). 

10 IM–2260(a)(1) through (5) specify the charges 

for: (1) initial proxy and/or annual report mailings; 

(2) proxy follow-up mailings; (3) providing 

beneficial ownership information; (4) interim 

report, post meeting report and other material 

mailings; and (5) incentive fees (fees with respect 

to each account where the member has eliminated 

the need to send materials in paper format through 

the mails). 

11NASD Rule 2430 provides, among other things, 

that charges for services performed must be 

‘‘reasonable’’ and ‘‘not unfairly discriminatory 

between customers.’’ (FINRA will address Rule 

2430 at a later phase in the rulebook consolidation 

process.) 

12NASD IM–2260 would be redesignated as 

Supplementary Material within proposed FINRA 

Rule 2251. 

13For example, the language in NASD Rule 

2260(a) stating that a member ‘‘has an inherent 

duty’’ to forward materials would be revised to state 

that a member ‘‘shall’’ forward such materials. 

Further, the proposed rule change would move the 

footnoted provisions defining the terms ‘‘ERISA’’ 

and ‘‘state’’ to the rule text, and the footnoted 

provision regarding verification of investment 

advisers would be redesignated as Supplementary 

Material. 

14See note 7 supra. 

the beneficial owner’s designated 

investment adviser,6 if the member 

carries the account in which the 

security is held for the beneficial owner 

and the security is registered in a name 

other than the name of the beneficial 

owner (i.e., the member holds the 

security in ‘‘street name’’). 

With respect to proxy materials, 

NASD Rule 2260(c)(1) generally requires 

that whenever an issuer or stockholder 

of the issuer soliciting proxies timely 

furnishes to a member sufficient copies 

of all soliciting material, as well as 

satisfactory assurance that it will 

reimburse the member for all out-ofpocket expenses, the member must 

transmit promptly to each beneficial 

owner of stock of the issuer that is in its 

possession or control all the material 

furnished. The rule addresses what 

must be included with the proxy 

materials and incorporates by reference 

certain recordkeeping requirements 

under SEA Rule 17a–4. 

NASD Rule 2260(b) generally 

prohibits a member from giving a proxy 

to vote stock that is registered in its 

name unless the member is the 

beneficial owner of the stock (i.e., the 

rule generally bars members from giving 

proxies to vote without instructions 

from the beneficial owner). However, 

the rule sets forth certain exceptions. 

Rule 2260(c)(2) provides that a member 

may give a proxy to vote any stock 

pursuant to the rules of any national 

securities exchange to which the 

member is also responsible 7 provided 

that the records of the member clearly 

indicate the procedure it is following.8

(Similar to Rule 2260(e)(2), Rule 

2260(c)(3) provides that the rule’s proxy 

transmission requirements do not apply 

to beneficial owners residing outside the 

U.S. The rule states that members may 

voluntarily comply with the rule’s 

provisions with respect to such persons 

if they wish.) Rule 2260(d)(1) provides 

that a member may give a proxy to vote 

any stock registered in its name if the 

member holds the stock as executor, 

administrator, guardian, trustee, or in a 

similar representative or fiduciary 

capacity with authority to vote. Rule 

2260(d)(3) generally permits any 

member designated by a named 

Employee Retirement Income Security 

Act of 1974 (as amended) (‘‘ERISA’’) 

Plan fiduciary as the investment 

manager of stock held as assets of the 

ERISA Plan to vote the proxies in 

accordance with the ERISA Plan 

fiduciary responsibilities, subject to 

certain conditions. Further, the rule 

permits designated investment advisers 

to vote the proxies. 

(2) NASD IM–2260 

IM–2260 addresses the rates of 

reimbursement that are considered 

reasonable for purposes of Rule 2260 in 

connection with the rule’s forwarding 

obligations. The IM has been amended 

a number of times, most recently in 

2003 for the purpose of aligning the IM’s 

requirements with the fee structures 

adopted by the NYSE and Amex.9

Broadly, the IM addresses three areas: 

• IM–2260(a) provides that members, 

in addition to charges specified in IM– 

2260(a)(1) through (5),10 also are 

entitled to receive reimbursement for 

certain postage and stationery costs, as 

well as certain communication expenses 

incurred in receiving voting returns 

either telephonically or electronically; 

• IM–2260(b) reminds members that 

NASD Rule 2430 requires that any 

charges must be reasonable.11 The IM 

provides that members may request 

reimbursement of expenses at less than 

the approved rates; however, no 

member may seek reimbursement at 

rates higher than the approved rates or 

for items or services not specifically 

listed in the IM without the prior 

notification to and consent of the person 

soliciting proxies or the company; 

• IM–2260(c) generally permits 

members to avoid transmitting multiple 

copies of materials to beneficial owners 

having more than one account or 

sharing the same address, provided 

members comply with applicable SEC 

rules. 

(B) Proposal 

FINRA believes that NASD Rule 2260 

and IM–2260 provide effective 

protection to investors. Accordingly, 

FINRA proposes to combine the two 

rules, without material change, into a 

single rule that would be renumbered as 

FINRA Rule 2251 in the Consolidated 

FINRA Rulebook.12 The proposed rule 

change would make minor clarifying 

changes and other changes primarily to 

reflect the new formatting and 

terminology conventions of the 

Consolidated FINRA Rulebook.13 In 

addition, because a number of 

requirements set forth by the rule also 

are addressed by the SEC’s proxy rules, 

the proposed rule change would add 

language where appropriate to remind 

members that they are obligated to 

comply both with the FINRA rule and 

applicable SEC rules and/or guidance. 

With respect to the requirement set forth 

in NASD Rule 2260(a) that members 

forward those materials that are 

properly furnished to the member, the 

proposed rule change would clarify that 

firms are required to forward the 

materials subject to paragraphs (c) and 

(e) of the rule, as applicable. With 

respect to NASD Rule 2260(c)(2)’s 

provisions allowing a member to give a 

proxy to vote any stock pursuant to the 

rules of ‘‘any national securities 

exchange to which the member is also 

responsible,’’ proposed FINRA Rule 

2251 would read ‘‘any national 

securities exchange of which it is a 

member.’’ FINRA believes the latter 

expression is clearer and reflects 

FINRA’s longstanding interpretation of 

the rule language.14

FINRA will announce the 

implementation date of the proposed 


dcolon on DSK2BSOYB1PROD with NOTICES
54612 Federal Register / Vol. 74, No. 203 / Thursday, October 22, 2009 / Notices 

15 15 U.S.C. 78o–3(b)(6). 16 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4 15 U.S.C. 78s(b)(3)(A). 

5 17 CFR 240.19b–4(f)(2). 

rule change in a Regulatory Notice to be 

published no later than 90 days 

following Commission approval. 

2. Statutory Basis 

FINRA believes that the proposed rule 

change is consistent with the provisions 

of Section 15A(b)(6) of the Act,15 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, as part of 

the Consolidated FINRA Rulebook, the 

proposed rule change will protect 

investors and the public interest by 

addressing the forwarding of proxy and 

other issuer-related materials. 

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–2009–066 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Florence E. Harmon, Deputy 

Secretary, Securities and Exchange 

Commission, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–FINRA–2009–066. 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–2009–066 and 

should be submitted on or before 

November 12, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.16

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–25427 Filed 10–21–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60834; File No. SR– 

NYSEArca–2009–88] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Amending Its Schedule of 

Fees and Charges for Exchange 

Services 

October 16, 2009. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on 

September 30, 2009, NYSE Arca, Inc. 

(‘‘NYSE Arca’’ or the ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the selfregulatory organization. NYSE Arca 

filed the proposal pursuant to Section 

19(b)(3)(A) 4 of the Act and Rule 19b– 

4(f)(2) 5 thereunder. 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 the 

section of its Schedule of Fees and 

Charges for Exchange Services (the 

‘‘Schedule’’). While changes to the 

Schedule pursuant to this proposal will 

be effective upon filing, the changes will 

become operative on October 1, 2009. A 

copy of this filing is available on the 

Exchange’s Web site at http:// 

www.nyse.com, at the Exchange’s 

principal office and at the Commission’s 

Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization 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 those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 


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