Federal Register / Vol. 74, No. 24 / Friday, February 6, 2009 / Notices 6335 

16 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 apply only to those 

members of FINRA that are also members of the 

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

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. 59119 

(December 18, 2008), 73 FR 79527. 

5NASD Rule 2110 requires members to ‘‘observe 

high standards of commercial honor and just and 

equitable principles of trade.’’ On September 25, 

2008, the Commission approved adopting NASD 

Rule 2110 into the Consolidated FINRA Rulebook 

as FINRA Rule 2010 without substantive change. 

See Securities Exchange Act Release No. 58643 

(September 25, 2008), 73 FR 57174 (October 1, 

2008). That rule change took effect on December 15, 

2008. See FINRA Regulatory Notice 08–57 (October 

2008). 

6 In approving this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition and capital formation. See 

15 U.S.C. 78c(f). 

7 15 U.S.C. 78o–3(b)(6). 

8See In the Matter of National Association of 

Securities Dealers, Inc., Administrative Proceeding 

File No. 3–9056, Securities Exchange Act Release 

No. 37538 (August 8, 1996). 

9See Securities Exchange Act Release No. 38845 

(July 17, 1997), 62 FR 39564 (July 23, 1997). 

Although FINRA is not making material changes to 

the rule, one of the minor changes made by FINRA 

is to add the phrase ‘‘or other person’’ to paragraphs 

(a)(1) and (a)(3) of the rule to clarify that 

coordination with or intimidation of a non-FINRA 

member is covered by the rule. 

10 15 U.S.C. 78s(b)(2). 

11 17 CFR 200.30–3(a)(12). 

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 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 publicly available. All 

submissions should refer to File 

Number SR–CBOE–2009–003 and 

should be submitted on or before 

February 27, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.16

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–2528 Filed 2–5–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59335; File No. SR–FINRA– 

2008–061] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Order Approving 

Proposed Rule Change To Adopt 

FINRA Rule 5240 (Anti-Intimidation/ 

Coordination) in the Consolidated 

FINRA Rulebook 

February 2, 2009. 

On December 11, 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’’ or ‘‘SEC’’), 

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

Securities Exchange Act of 1934 

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

proposed rule change to adopt NASD 

IM–2110–5 as FINRA Rule 5240 in the 

consolidated FINRA rulebook 

(‘‘Consolidated FINRA Rulebook’’) 3

without material change. The proposed 

rule change was published for comment 

in the Federal Register on December 29, 

2008.4 The Commission received no 

comment letters in response to the 

proposed rule change. This order 

approves the proposed rule change. 

NASD IM–2110–5 currently identifies 

three general types of conduct that are 

inconsistent with just and equitable 

principles of trade: 5 (1) Coordinating 

activities by members involving 

quotations, prices, trades, and trade 

reporting (e.g., agreements to report 

trades inaccurately or maintain certain 

minimum spreads); (2) ‘‘directing or 

requesting’’ another member to alter 

prices or quotations; and (3) engaging in 

conduct that threatens, harasses, 

coerces, intimidates, or otherwise 

attempts improperly to influence 

another member or person associated 

with a member. The IM also sets forth 

seven specific exclusions that identify 

bona fide commercial activity that is 

permitted (e.g., bona fide negotiations 

and unilateral decisions regarding 

spreads). The proposed rule change 

would renumber NASD IM–2110–5 as 

FINRA Rule 5240 in the Consolidated 

FINRA Rulebook. 

After careful review, the Commission 

finds that the proposed rule change is 

consistent with the requirements of the 

Act, and the rules and regulations 

thereunder that are applicable to a 

national securities association,6 and in 

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

Act,7 which requires, among other 

things, that FINRA rules 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. The Commission notes 

that FINRA originally adopted NASD 

IM–2110–5 to fulfill part of its 1996 

settlement agreement 8 with the SEC.9

FINRA’s adoption of NASD IM–2110–5 

as FINRA Rule 5240 in the Consolidated 

FINRA Rulebook provides notice to 

members of behavior that violates just 

and equitable principles of trade. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,10 that the 

proposed rule change (SR–FINRA– 

2008–061) be, and hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–2530 Filed 2–5–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59340; File No. SR–FINRA– 

2008–047] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Order Approving 

Proposed Rule Change To Amend the 

Codes of Arbitration Procedure To 

Raise the Amount in Controversy 

Heard by a Single Chair-Qualified 

Arbitrator to $100,000 

February 2, 2009. 

I. Introduction 

The 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’’) on September 

18, 2008, pursuant to Section 19(b)(1) of 

the Securities Exchange Act of 1934 


dwashington3 on PROD1PC60 with NOTICES
6336 Federal Register / Vol. 74, No. 24 / Friday, February 6, 2009 / Notices 

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

2 17 CFR 240.19b–4. 

3The former NASD Rule 12000 Series (Customer 

Code) and 13000 Series (Industry Code) have been 

adopted as the FINRA 12000 Series (Customer 

Code) and 13000 Series (Industry Code) in the new 

consolidated rulebook pursuant to SR–FINRA– 

2008–021, which was approved by the Commission. 

See Securities Exchange Act Release No. 58643 

(September 25, 2008), 73 FR 57174 (October 1, 

2008) (SR–FINRA–2008–021) (approval order). The 

FINRA Rule 12000 Series (Customer Code) and 

13000 Series (Industry Code), as set forth in SR– 

FINRA–2008–021, became effective on December 

15, 2008. See FINRA Regulatory Notice 08–57 (SEC 

Approves New Consolidated FINRA Rules) (October 

2008). 

4See Securities Exchange Act Release No. 58651 

(September 25, 2008), 73 FR 57391 (October 2, 

2008) (SR–FINRA–2008–047) (‘‘Rulemaking 

Notice’’). 

5See Stephen B. Caruso, Esq., dated October 9, 

2008 (‘‘Caruso Letter’’); Barry D. Estell, Esq., dated 

October 20, 2008 (‘‘Estell Letter’’); Laurence S. 

Schultz, Esq., Public Investors Arbitration Bar 

Association, dated October 20, 2008 (‘‘PIABA 

Letter’’); David P. Neuman, Esq., dated October 23, 

2008 (‘‘Neuman Letter’’); William A. Jacobsen, Esq. 

and Seth M. Nadler, Cornell Securities Law Clinic, 

dated October 23, 2008 (‘‘Cornell Securities Law 

Clinic Letter’’); Gregory M. Scanlon, Esq., Charles 

Schwab & Co., Inc., dated October 23, 2008 

(‘‘Charles Schwab Letter’’); and Jill Gross, Esq. and 

Stephanie Myers, John Jay Legal Services, Inc., 

dated October 23, 2008 (‘‘John Jay Legal Services 

Letter’’). 

6See proposed amendments to Rules 12401(b) 

and 13401(b). 

7 Id. 

8See proposed amendments to Rules 12401(c) 

and 13401(c). 

9See 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). 

10See proposed amendments to Rules 12401(b) 

and 13401(b). 

11For 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). 12The 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. 

13See Rules 12902 and 13902. 

14Letter from Margo A. Hassan, FINRA, dated 

December 2, 2008 (‘‘FINRA Letter’’). 

15Caruso, PIABA, Neuman, Cornell Securities 

Law Clinic, and John Jay Legal Services Letters. 

16See Estell Letter. 

17See Charles Schwab Letter. 

18See Caruso, Estell, PIABA, Neuman, Cornell 

Securities Law Clinic, and John Jay Legal Services 

Letters. 

19See PIABA, Cornell Securities Law Clinic, John 

Jay Legal Services and Neuman Letters. 

20See Estell, PIABA, and Cornell Securities Law 

Clinic Letters. 

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

proposed rule change to amend the 

Code of Arbitration Procedure for 

Customer Disputes (‘‘Customer Code’’) 

and the Code of Arbitration Procedure 

for Industry Disputes (‘‘Industry Code,’’ 

and together with the Customer Code, 

the ‘‘Codes’’) to raise the amount in 

controversy that will be heard by a 

single chair-qualified arbitrator to 

$100,000.3 The proposed rule change 

was published for comment in the 

Federal Register on October 2, 2008.4

The Commission received seven 

comments in response to the proposed 

rule change.5 This order approves the 

proposed rule change. 

II. Description of the Proposed Rule 

Change 

FINRA proposed 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.6 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.7 Claims of more than $100,000, 

or claims that do not specify any 

amount in controversy, would continue 

to be heard by three arbitrators unless 

the parties agree in writing to one 

arbitrator.8

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, or 

claims that do not specify any amount 

in controversy, are heard by a panel of 

three arbitrators.9

FINRA also proposed to remove the 

current option for one party unilaterally 

to require three arbitrators in certain 

cases with claims for more than 

$25,000.10 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. 

In FINRA’s view, 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.11 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 12

because hearing session fees would be 

reduced from $600 (for a hearing with 

three arbitrators) to $450 (for a hearing 

with one arbitrator).13 For claims 

between $50,000.01 and $100,000, the 

savings would be $300 per hearing 

session because hearing session fees 

would be reduced 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 twothirds. 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. 

III. Comment Letters 

The Commission received seven 

comments on the proposal, as well as 

FINRA’s response to comments 14, all of 

which are discussed below. 

Most commenters, particularly 

securities claimants’ attorneys and legal 

clinics representing claimants, generally 

supported the proposal.15 Some 

commenters supported the proposal in 

part.16 One commenter, a registered 

broker-dealer, opposed the entire 

proposal.17 Six commenters 18

supported increasing the monetary 

threshold under which disputes would 

be heard by a single arbitrator; four 

commenters 19 supported requiring the 

consent of all parties for a threearbitrator panel for claims under 

$100,000; and three commenters 20

opposed requiring single arbitrators to 


dwashington3 on PROD1PC60 with NOTICES
Federal Register / Vol. 74, No. 24 / Friday, February 6, 2009 / Notices 6337 

21See Caruso Letter. 

22See Caruso, Estell, PIABA, Neuman, Cornell 

Securities Law Clinic, and John Jay Legal Services 

Letters. 

23See Caruso, PIABA, Neuman, and Cornell 

Securities Law Clinic Letters. 

24See John Jay Legal Services Letter. 

25See Caruso and PIABA Letters. The PIABA 

Letter supported raising the amount in controversy 

at the option of the investor. 

26See Charles Schwab Letter. 

27 Id. 

28See FINRA Letter. 

29See PIABA, Cornell Securities Law Clinic, and 

John Jay Legal Services Letters. 

30See Neuman Letter. 

31See Cornell Securities Law Clinic Letter. 

32 Id. 

33See FINRA Letter. 

34See Estell, PIABA, and Cornell Securities Law 

Clinic Letters. 

35See PIABA Letter. FINRA Rule 13400 requires 

an arbitrator to have served in a minimum number 

of cases to be eligible to be chair-qualified. 

36See Cornell Securities Law Clinic Letter. 

37See Estell Letter. 

38See Estell Letter. 

39See FINRA Letter. 

be chair-qualified. One commenter 

noted that the proposed rule change did 

not mention any change to the filing 

fees that investors would pay to bring an 

arbitration claim.21

Detailed Discussion of Comments and 

FINRA Response 

Increasing the Monetary Threshold 

Under Which Disputes Would Be Heard 

by a Single Arbitrator 

Proposed amendments to Rules 

12401(b) and 13401(b) would raise the 

amount in controversy that would be 

heard by a single arbitrator to $100,000, 

exclusive of interest and expenses. Most 

commenters supported increasing the 

monetary threshold under which 

disputes would be heard by a single 

arbitrator.22 These commenters 

generally agreed with statements in the 

Rulemaking Notice that the increased 

threshold would reduce arbitration costs 

and increase efficiency for arbitration 

participants by saving them time and 

money.23 Some commenters suggested 

increasing the threshold for onearbitrator panels to $200,000 24 or 

$250,000.25 One commenter opposed 

expanding the availability of singlearbitrator panels, stating that the 

maximum savings of $600 per day of 

hearings estimated by FINRA (or $300 

per party per day) are insufficient to 

justify the rule change.26 This 

commenter also stated that smaller 

hearing panels will degrade the decision 

making process for FINRA awards, 

because, under the current rule, 

decision making is a collaborative 

process in which all arbitrators benefit 

from one another’s viewpoints. 

Moreover, this commenter opined that 

in some cases, one arbitrator’s 

inaccurate view can be nullified by the 

arbitrator’s colleagues’ majority ruling.27

FINRA responded to these comments 

by indicating that it believes that the 

proposal, as filed, strikes the right 

balance between offering users an 

efficient and cost effective forum and 

providing three-arbitrator panels for 

disputes that involve greater amounts in 

controversy or that do not specify an 

amount in controversy. By raising the 

threshold as proposed, FINRA would be 

restoring the proportion of cases heard 

by a single arbitrator—roughly a third— 

to what it was when the single arbitrator 

threshold was last increased in 1998. In 

particular, FINRA expects that the 

proposal would double the percentage 

of single-arbitrator cases from 

approximately 17 percent to 34 percent. 

In addition, by eliminating the option 

for one party unilaterally to request 

three arbitrators in cases with claims of 

more than $25,000, FINRA stated that 

all parties will benefit by increased 

efficiencies and cost savings. For these 

reasons, FINRA declined to amend the 

proposed single arbitrator threshold.28

Consent of All Parties for a ThreeArbitrator Panel for Claims Under 

$100,000 

Proposed amendments to Rules 

12401(b) and 13401(b) would provide 

that a panel of three arbitrators would 

hear claims of more than $25,000, but 

not more than $100,000, if all parties 

agreed in writing to the request. Most 

commenters either specifically 

supported requiring the consent of all 

parties for a three-arbitrator panel for 

claims under $100,000,29 or implicitly 

supported it by expressing support for 

the entire proposed rule change.30 One 

commenter supported this provision, 

and to guarantee its effectiveness, urged 

FINRA to clarify that a party may only 

unilaterally procure a three-arbitrator 

panel if at least one of the parties asserts 

aggregate claims in excess of 

$100,000.31 This commenter also 

expressed concern that the proposed 

rule could be interpreted to permit a 

single party to compel a three-arbitrator 

panel if multiple parties’ claims exceed 

$100,000 when aggregated, even if no 

single party’s claims exceed $100,000.32

FINRA responded that it does not 

intend to change its current practice 

with respect to aggregating claims. 

Currently, upon receipt of a statement of 

claim and an answer thereto, FINRA 

staff determines the total amount 

claimed by claimants and the total 

amount claimed by respondents, and 

appoints the number of arbitrators 

required by Rules 12401 and 13401. In 

doing so, FINRA staff only aggregates a 

claimant’s claim with another 

claimant’s claim, or a respondent’s 

claim with another respondent’s claim. 

FINRA staff does not aggregate all of the 

parties’ claims (e.g., claimants’ claims 

with respondents’ claims). FINRA stated 

that it will explain in the Regulatory 

Notice announcing the rule change how 

the $100,000 threshold will be applied 

and declined to revise the proposal as 

requested.33

Requiring Single Arbitrators To Be 

Chair-Qualified 

Several commenters opposed the 

requirement that single arbitrators be 

chair-qualified.34 One commenter noted 

that the chair-qualification requirement 

would make it more difficult for 

arbitrators to get the required ‘‘service’’ 

to become chair-qualified, and would 

reduce the pool of available chairqualified arbitrators.35 Another 

commenter posited that this 

requirement would produce a small, 

insulated pool of repeat arbitrators and 

undercut efforts to ensure non-biased 

hearings through random selection of 

arbitrators.36 One commenter called this 

requirement ‘‘a further erosion of 

investor rights,’’ and expressed concern 

that chair-qualified arbitrators may be 

biased towards member firms.37 The 

commenter also estimated, without 

explanation, that under the proposed 

rule change, it could take ten or more 

years for an otherwise qualified neutral 

arbitrator to become chair-qualified.38

FINRA responded by noting that it is 

not proposing to amend the rules 

relating to the chairperson rosters or the 

composition of arbitration panels. 

FINRA stated that it understands that 

raising the threshold for a single chairqualified arbitrator will result in fewer 

arbitrators serving on certain cases. 

FINRA believes that appointing chairqualified arbitrators to resolve claims up 

to $100,000 would ensure that parties 

have experienced arbitrators resolving 

their disputes. FINRA also noted that, in 

addition to completing FINRA’s 

chairperson training, chair-qualified 

arbitrators must either (i) have a law 

degree and have served as an arbitrator 

through award on at least two cases, or 

(ii) have served as an arbitrator through 

award on at least three cases.39

Filing Fees That Investors Would Pay To 

Bring an Arbitration Claim 

One commenter noted that the 

proposed rule change did not mention 

any change to the filing fees that 

investors would pay to bring an 


dwashington3 on PROD1PC60 with NOTICES
6338 Federal Register / Vol. 74, No. 24 / Friday, February 6, 2009 / Notices 

40See Caruso Letter. 

41 Id. 

42See FINRA Letter. 

43 In approving this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition and capital formation. See 

15 U.S.C. 78c(f). 

44 15 U.S.C. 78o–3(b)(6). 

45 15 U.S.C. 78s(b)(2). 

46 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. 59146 

(December 22, 2008), 73 FR 80504. 

arbitration claim.40 This commenter 

suggested that the economic benefits 

that will inure to FINRA from reduced 

arbitration costs should be passed 

through to public investors in terms of 

reduced filing fees.41

FINRA responded by stating that it 

considered the effect of the proposal on 

all fees imposed by the forum. FINRA 

indicated that the significant cost 

savings for hearing sessions with a 

single arbitrator represent the greatest 

impact of the proposal to users of the 

forum. For example, under the proposal 

the forum fees for a dispute involving 

$75,000 will decrease from $750 to $450 

per four-hour hearing session. FINRA 

has not proposed to amend the initial 

filing fees, which are already based on 

the amount in dispute, and which may 

be reallocated by the panel at the end of 

the case. The Codes will continue to 

provide that the Director of Arbitration 

may defer payment of all or part of the 

filing fee if a claimant has demonstrated 

a financial hardship. Moreover, parties 

will continue to be able to request that 

the panel consider assessing all or part 

of any filing fee on other parties in the 

case. For these reasons, FINRA declined 

to revise the forum’s filing fees.42

IV. Discussion and Findings 

After careful review of the proposed 

rule change, the comments, and 

FINRA’s response to the comments, the 

Commission finds that the proposed 

rule change is consistent with the 

requirements of the Act, and the rules 

and regulations thereunder that are 

applicable to a national securities 

association.43 In particular, the 

Commission believes the proposed rule 

change is consistent with the provisions 

of Section 15A(b)(6) of the Act,44 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. The Commission 

believes that the proposed rule change 

will reduce costs for participants in 

FINRA arbitration proceedings with 

claims of greater than $25,000 but no 

more than $100,000 who have their 

matters heard before a single arbitrator, 

while preserving the parties’ ability to 

agree to have their case heard by a panel 

of three arbitrators. 

The Commission believes that FINRA 

has responded adequately to the 

comments regarding increasing the 

monetary threshold under which 

disputes would be heard by a single 

arbitrator. The Commission agrees that 

the proposal, as filed, balances offering 

users an efficient and cost-effective 

forum for disputes of $100,000 or less 

and providing three-arbitrator panels for 

disputes that involve greater amounts or 

that do not specify an amount in 

controversy. The Commission also 

agrees that parties in these cases will 

experience reduced case processing 

times because of the flexibility 

associated with scheduling conference 

calls and hearing dates with one 

arbitrator rather than three, and that 

FINRA would benefit from a more 

efficient use of its arbitrator roster. 

The Commission also believes that 

FINRA has adequately responded to 

comments regarding the aggregation of 

claims in calculating whether the 

$100,000 threshold has been met. The 

Commission notes that FINRA is not 

changing its current practice with 

respect to aggregating claims, and 

clarifying this practice in the Regulatory 

Notice announcing the rule change 

should help to resolve any ambiguity 

about how FINRA will determine 

whether a matter may be heard by a 

single arbitrator. 

The Commission also believes that 

FINRA has adequately responded to 

comments regarding the requirement 

that single arbitrators be chair-qualified 

arbitrators. The Commission agrees that 

appointing chair-qualified arbitrators to 

resolve claims up to $100,000 would 

ensure that parties have experienced 

arbitrators resolving their disputes. 

The Commission also believes that 

FINRA has adequately responded to 

comments regarding filing fees that 

investors would pay to bring a claim. 

The Commission agrees that parties will 

realize cost savings for hearing sessions 

with a single arbitrator. 

V. Conclusions 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,45 that the 

proposed rule change (SR–FINRA– 

2008–047) be, and hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.46

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–2531 Filed 2–5–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59332; File No. SR– 

NYSEArca–2008–136] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Order Approving Proposed 

Rule Change Amending NYSE Arca 

Equities Rule 5.2(j)(6) Relating to the 

Initial Listing Standards for Equity 

Index-Linked Securities, CommodityLinked Securities, Currency-Linked 

Securities, Fixed Income Index-Linked 

Securities, Futures-Linked Securities 

and Multifactor Index-Linked Securities 

January 30, 2009. 

I. Introduction 

On December 10, 2008, NYSE Arca, 

Inc. (‘‘NYSE Arca’’ or ‘‘Exchange’’) 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 

change to amend NYSE Arca Equities 

Rule 5.2(j)(6), which sets forth listing 

standards for Equity Index-Linked 

Securities, Commodity-Linked 

Securities, Currency-Linked Securities, 

Fixed Income Index-Linked Securities, 

Futures-Linked Securities and 

Multifactor Index-Linked Securities 

(‘‘Index-Linked Securities’’). The 

proposed rule change was published in 

the Federal Register on December 31, 

2008.3 The Commission received no 

comments on the proposal. This order 

approves the proposed rule change. 

II. Description of the Proposal 

The Exchange proposes to amend one 

of the requirements of NYSE Arca 

Equities Rule 5.2(j)(6), which sets forth 

the listing standards for Index-Linked 

Securities. Rule 5.2(j)(6) permits the 

Exchange to consider for listing and 

trading Index-Linked Securities 

pursuant to Rule 19b–4(e) under the 

Act, provided that, among other things, 

in no event will a loss or negative 

payment at maturity be accelerated by a 

multiple that exceeds twice the 

performance of an underlying Reference 

Asset. The Exchange proposes to amend 

Rule 5.2(j)(6)(A)(d) to provide that in no 

event will a loss or negative payment at 

maturity be accelerated by a multiple 

that exceeds three times the 

performance of an underlying Reference 

Asset. The Exchange proposes this 

change to allow it to list and trade 

Index-Linked Securities that employ 


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