54614 Federal Register / Vol. 74, No. 203 / Thursday, October 22, 2009 / Notices 

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

2 17 CFR 240.19b–4. 

3See FINRA By-Laws, Article V, Section 4(a) 

(Retention of Jurisdiction). 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60836; File No. SR–FINRA– 

2009–060] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of 

Proposed Rule Change To Amend 

FINRA Rule 8210 (Provision of 

Information and Testimony and 

Inspection and Copying of Books) 

October 16, 2009. 

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 10, 2009, Financial Industry 

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

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 amend FINRA 

Rule 8210 to clarify the scope of the rule 

and to clarify certain issues with regard 

to service of requests made pursuant to 

the rule. 

The text of the proposed rule change 

is below. Proposed new language is in 

italics; proposed deletions are in 

brackets. 

* * * * * 

8200. INVESTIGATIONS 

8210. Provision of Information and 

Testimony and Inspection and Copying 

of Books 

(a) Authority of Adjudicator and 

FINRA Staff 

For the purpose of an investigation, 

complaint, examination, or proceeding 

authorized by the FINRA By-Laws or 

rules, an Adjudicator or FINRA staff 

shall have the right to: 

(1) Require a member, person 

associated with a member, or any other 

person subject to FINRA’s jurisdiction 

to provide information orally, in 

writing, or electronically (if the 

requested information is, or is required 

to be, maintained in electronic form) 

and to testify at a location specified by 

FINRA staff, under oath or affirmation 

administered by a court reporter or a 

notary public if requested, with respect 

to any matter involved in the 

investigation, complaint, examination, 

or proceeding; and 

(2) Inspect and copy the books, 

records, and accounts of such member 

or person with respect to any matter 

involved in the investigation, 

complaint, examination, or proceeding 

that is in such member’s or person’s 

possession, custody or control. 

(b) through (c) No Change. 

(d) Notice 

A notice under this Rule shall be 

deemed received by the member or 

currently or formerly registered person 

to whom it is directed by mailing or 

otherwise transmitting the notice to the 

last known business address of the 

member or the last known residential 

address of the person as reflected in the 

Central Registration Depository. With 

respect to a person who is currently 

associated with a member in an 

unregistered capacity, a notice under 

this Rule shall be deemed received by 

the person by mailing or otherwise 

transmitting the notice to the last known 

business address of the member as 

reflected in the Central Registration 

Depository. With respect to a person 

subject to FINRA’s jurisdiction who was 

formerly associated with a member in 

an unregistered capacity, a notice under 

this Rule shall be deemed received by 

the person upon personal service, as set 

forth in Rule 9134(a)(1). 

If the Adjudicator or FINRA staff 

responsible for mailing or otherwise 

transmitting the notice to the member or 

person has actual knowledge that the 

address in the Central Registration 

Depository is out of date or inaccurate, 

then a copy of the notice shall be mailed 

or otherwise transmitted to: 

(1) The last known business address 

of the member or the last known 

residential address of the person as 

reflected in the Central Registration 

Depository; and 

(2) Any other more current address of 

the member or the person known to the 

Adjudicator or FINRA staff who is 

responsible for mailing or otherwise 

transmitting the notice. 

If the Adjudicator or FINRA staff 

responsible for mailing or otherwise 

transmitting the notice to the member or 

person knows that the member or 

person is represented by counsel 

regarding the investigation, complaint, 

examination, or proceeding that is the 

subject of the notice, then the notice 

shall be served upon counsel by mailing 

or otherwise transmitting the notice to 

the counsel in lieu of the member or 

person, and any notice served upon 

counsel shall be deemed received by the 

member or person. 

(e) through (f) No Change. 

* * * * * 

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 

FINRA Rule 8210 (Provision of 

Information and Testimony and 

Inspection and Copying of Books) 

confers on FINRA staff the authority to 

compel a member, person associated 

with a member, or other person over 

whom FINRA has jurisdiction, to 

produce documents, provide testimony, 

or supply written responses or 

electronic data in connection with an 

investigation, complaint, examination or 

adjudicatory proceeding. The proposed 

rule change would clarify the scope of 

FINRA’s authority in this regard, specify 

the method of service for certain 

unregistered persons under the rule, and 

authorize service on attorneys who are 

representing clients, as described more 

fully below. 

The rule applies to all members, 

associated persons, and other persons 

over which FINRA has jurisdiction, 

including former associated persons 

subject to FINRA’s jurisdiction as 

described in the FINRA By-Laws.3

FINRA Rule 8210(c) provides that a 

member’s or associated person’s failure 

to provide information or testimony or 

to permit an inspection and copying of 

books, records, or accounts is a violation 

of the rule. 

Information in a Member’s or Person’s 

Possession, Custody or Control 

FINRA Rule 8210(a)(2) currently 

provides that FINRA staff shall have the 

right to inspect and copy the books, 

records and accounts of all applicable 

members and persons with respect to 

any matter involved in the investigation, 

complaint, examination or proceeding. 

The proposed rule change would clarify 


dcolon on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 74, No. 203 / Thursday, October 22, 2009 / Notices 54615 

4 In using the word ‘‘control,’’ in addition to 

possession and custody, FINRA intends to require 

members or persons covered by the rule to provide, 

for example, records that they have the legal right, 

authority, or ability to obtain upon demand. See 

Camden Iron & Metal v. Marubeni Am. Corp., 138 

F.R.D. 438, 441 (D.N.J. 1991) (‘‘Federal courts 

construe ‘control’ very broadly under [Federal] Rule 

[of Civil Procedure] 34.’’). Moreover, the proposed 

addition of ‘‘possession, custody or control’’ will 

address questions that have arisen in litigation 

regarding the scope of the rule. See, e.g., In re: Jay 

Alan Ochanpaugh, Securities Exchange Act Release 

No. 54363 (August 25, 2006). 

5See Fed. R. Civ. P. 34 and 35. 

6 Indeed, members and registered persons have an 

affirmative duty to update CRD with their current 

address for at least two years after they have had 

their registration terminated. See Notice to Members 

99–77 (noting that FINRA requests for information 

and disciplinary complaints issued during the 

period of FINRA’s retained jurisdiction will be 

mailed to a person’s last address in FINRA’s 

records). 

7 In some limited instances, CRD may contain 

information concerning unregistered associated 

persons who were required to submit information, 

including fingerprint information, to CRD in 

connection with their employment. 

8Persons associated with a member who are 

unregistered may include persons exempt from 

registration, e.g., those whose functions are solely 

and exclusively clerical or ministerial; those whose 

functions are related solely and exclusively to the 

member’s need for nominal corporate officers or for 

capital participation; and those whose functions are 

related solely and exclusively to transactions in 

municipal securities, transactions in commodities, 

or transactions in security futures (provided they 

are registered with a registered futures association). 

See, e.g., NASD Rule 1060(a). For purposes of 

FINRA Rule 8210, unregistered persons associated 

with a member may also include direct owners and 

executive officers listed in Schedule A of Form BD 

of a member whose job functions do not otherwise 

require them to register with FINRA. See FINRA ByLaws, Article I(rr) (definition of ‘‘person associated 

with a member’’). 

9FINRA Rule 9134(a)(1) provides as follows: 

Personal service may be accomplished by 

handing a copy of the papers to the person required 

to be served; leaving a copy at the person’s office 

with an employee or other person in charge thereof; 

or leaving a copy at the person’s dwelling or usual 

place of abode with a person of suitable age and 

discretion then residing therein. 

10See, e.g., American Bar Association model Rule 

of Professional Conduct 4.2 (‘‘ABA Rule 4.2’’). ABA 

Rule 4.2 provides as follows: 

[i]n representing a client, a lawyer shall not 

communicate about the subject of the 

representation with a person the lawyer knows to 

be represented by another lawyer in the matter, 

unless the lawyer has the consent of the other 

lawyer or is authorized to do so by law or a court 

order. 

Many states have rules regarding communication 

with a person represented by counsel that are based 

on ABA Rule 4.2. 

11 15 U.S.C. 78o–3(b)(6). 

12 In re: Charles C. Fawcett, IV, Securities 

Exchange Act Release No. 56770 (November 8, 

2007). 

that the information must be in the 

member’s or person’s ‘‘possession, 

custody or control.’’ 4 This language 

parallels the Federal Rules of Civil 

Procedure regarding document requests 

and subpoenas for documents.5

Notice to Associated but Unregistered 

Persons 

FINRA Rule 8210 addresses the legal 

concept of service of a written request 

by using the term ‘‘notice’’ of a request. 

Currently, FINRA Rule 8210(d) states 

that notice shall be deemed received by 

the member or associated person when 

a copy of the notice is mailed or 

otherwise transmitted to the last known 

relevant address as reflected in the 

Central Registration Depository 

(‘‘CRD®’’). The CRD system contains 

information concerning registered 

members and persons,6 but in most 

instances it does not contain 

information concerning unregistered 

persons who are or were associated with 

a member.7

Although not routine, some 

investigations require FINRA examiners 

or investigators to request information 

from persons currently or formerly 

associated with a member in an 

unregistered capacity.8 The current rule 

is unclear as to what would constitute 

proper notice on such persons for whom 

information is not available in CRD. The 

proposed rule change would explicitly 

address the methods by which notice 

will be deemed received by persons 

currently or formerly associated with a 

member in an unregistered capacity. 

With respect to unregistered persons 

currently associated with a member, the 

proposed rule change would provide 

that notice shall be deemed received by 

mailing or otherwise transmitting the 

notice to the last known business 

address of the member as reflected in 

CRD. In addition, the proposed rule 

change would retain the provision that, 

if FINRA staff responsible for 

transmitting the notice has actual 

knowledge that the member’s address 

provided through CRD is out of date or 

inaccurate, then a copy of the notice 

must be transmitted to both the address 

provided through CRD, as well as any 

more current address known to FINRA 

staff. 

With respect to unregistered persons 

formerly associated with a member, the 

proposed rule change would provide 

that notice shall be deemed received 

upon personal service, which is defined 

as set forth in FINRA Rule 9134(a)(1).9

FINRA Rule 9134(a)(1) is based on 

traditional concepts for serving a 

summons under Rule 4 of the Federal 

Rules of Civil Procedure. 

Notice to Members and Persons 

Represented by Counsel 

The proposed rule change would 

amend FINRA Rule 8210 to explicitly 

address issues of service on members or 

persons that are known to be 

represented by counsel. Currently, the 

rule does not explicitly permit FINRA 

staff to serve notice on a member’s or 

person’s counsel in situations in which 

FINRA staff knows that the member or 

person is represented by counsel 

regarding the matter in question. The 

proposed rule change would allow 

FINRA staff to recognize that counsel 

can act as an authorized agent on behalf 

of a member or person. It would provide 

that, if FINRA staff knows that a 

member or person is represented by 

counsel regarding the matter in 

question, then notice shall be provided 

to counsel rather than to the member or 

person. The proposed rule change 

would harmonize FINRA’s rule in this 

regard with Codes of Professional 

Conduct in many states regarding 

service on counsel.10

FINRA will announce the effective 

date of the proposed rule change in a 

Regulatory Notice to be published no 

later than 60 days following 

Commission approval. The effective 

date will be 30 days following 

publication of the Regulatory Notice 

announcing 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,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. Vigorous enforcement of 

the rule has been described as ‘‘help[ing 

to] ensure the continued strength of the 

self-regulatory system—and thereby 

enhanc[ing] the integrity of the 

securities markets and protect[ing] 

investors.’’ 12 FINRA believes that the 

proposed rule change will clarify the 

scope of its authority regarding requests 

pursuant to FINRA Rule 8210, and 

explicitly provide FINRA staff with a 

method to effectively serve notice on 

persons currently or formerly associated 

with a member in an unregistered 

capacity, as well as to members and 

persons represented by counsel. Thus, 

FINRA believes the proposed rule 

change will benefit its enforcement 

program by providing clarity regarding 

both scope of requests and service of 

requests pursuant to FINRA Rule 8210, 

consistent with the statutory provisions 

noted above. 

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 


dcolon on DSK2BSOYB1PROD with NOTICES
54616 Federal Register / Vol. 74, No. 203 / Thursday, October 22, 2009 / Notices 

13 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. 60613 

(September 2, 2009), 74 FR 46814. 

4 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). 

5 15 U.S.C. 78o–3(b)(6). 

6See e-mail from Racquel L. Russell, Assistant 

General Counsel, FINRA, to Mia Zur, Special 

Counsel, and Steve Varholik, Special Counsel, 

Division of Trading and Markets, Commission, 

October 13, 2009. 

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–2009–060 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–FINRA–2009–060. 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–2009–060 and 

should be submitted on or before 

November 12, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–25431 Filed 10–21–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60835; File No. SR–FINRA– 

2009–055] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Order Approving 

Proposed Rule Change To Adopt 

FINRA Rules 5210 (Publication of 

Transactions and Quotations) and 

5220 (Offers at Stated Prices) Into the 

Consolidated Rulebook 

October 16, 2009. 

On August 18, 2009, 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 

change to adopt NASD Rule 3310 

(Publication of Transactions and 

Quotations), NASD Rule 3320 (Offers at 

Stated Prices), IM–3310 (Manipulative 

and Deceptive Quotations) and IM–3320 

(firmness of Quotations) as FINRA rules 

in the consolidated FINRA rulebook 

without material changes. The proposed 

rule change would combine NASD Rule 

3310 and IM–3310 into FINRA Rule 

5210 and would combine NASD Rule 

3320 and IM–3320 into FINRA Rule 

5220 in the consolidated FINRA 

rulebook. The proposed rule change was 

published for comment in the Federal 

Register on September 11, 2009.3 The 

Commission received no comments on 

the proposal. This order approves the 

proposed rule change. 

The Commission finds that the 

proposed rule change is consistent with 

the requirements of the Act and the 

rules and regulations thereunder 

applicable to a national securities 

association.4 In particular, the 

Commission finds that the proposed 

rule change is consistent with the 

provisions of Section 15A(b)(6) of the 

Act,5 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 believes that the 

proposed rule change is designed to 

protect investors and promote the 

maintenance of fair, orderly and 

efficient markets by prohibiting a 

member from publishing a report of any 

transaction unless the member believes 

that it was a bona fide purchase or sale 

of the security and from ‘‘backing away’’ 

from its quotations. In approving the 

proposed rule change, the Commission 

notes that FINRA is adopting NASD 

Rule 3310 (Publication of Transactions 

and Quotations), NASD Rule 3320 

(Offers at Stated Prices), IM–3310 

(Manipulative and Deceptive 

Quotations) and IM–3320 (firmness of 

Quotations) as FINRA rules in the 

consolidated FINRA rulebook without 

material changes. The Commission also 

notes FINRA’s representation that it will 

remind its members of their obligation 

to have in place a supervisory system 

and written procedures reasonably 

designed to ensure the accuracy and 

integrity of information entered into 

order-routing execution systems, as 

further addressed in its Notice to 

Members 04–66, in a regulatory notice 

announcing the approval of the 

proposed rule change.6


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