27214 Federal Register / Vol. 74, No. 108 / Monday, June 8, 2009 / Notices 

14 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 59160 

(December 23, 2008), 74 FR 152 (‘‘Notice’’). 

4See letter to the Commission from Richard 

Sacks, Investors Recovery Service, dated January 6, 

2009 (‘‘IRS Letter’’), and letter to Florence E. 

Harmon, Acting Secretary, Commission, from John 

S. Watts, Senior Vice President & Chief Counsel, 

PFS Investments Inc., dated January 26, 2009 (‘‘PFS 

Letter’’). 

5See letter to Elizabeth M. Murphy, Secretary, 

Commission, from Erika L. Lazar, Senior Attorney, 

FINRA, Office of General Counsel, dated April 28, 

2009 (‘‘Response to Comments’’). 

6These member firms would be required to 

comply with the rule and provide the disclosures 

at least once every calendar year. To the extent such 

firms are parties to a carrying agreement and the 

member firm that carries the accounts complies on 

their behalf, these firms would be excepted from the 

requirements of the proposed rule. 

7E.g., does not provide account statements or 

trade confirmations. 

8 In addition, the proposed rule would include 

references to ‘‘BrokerCheck’’ rather than the ‘‘Public 

Disclosure Program;’’ reference the FINRA Web site 

address rather than the NASD Regulation Web site 

address; and clarify that the information required 

under the rule may be provided electronically to 

customers. 

9See supra, note 4. 

10See IRS Letter. 

11See Response to Comments at 2. 

12See PFS Letter, supra, note 4. 

13 Id. 

14See Response to Comments at 2. 

15See Response to Comments at 2, citing the 

NASD Regulation, Inc. Regulatory and Compliance 

Alert (Summer 1999) at 24. See Amendment No. 1 

which also made non-substantive changes to the 

rule. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–13207 Filed 6–5–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60012; File No. SR–FINRA– 

2008–062] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of 

Amendment No. 1 and Order Granting 

Accelerated Approval of a Proposed 

Rule Change, as Modified by 

Amendment No. 1, To Adopt FINRA 

Rule 2267 (Investor Education and 

Protection) in the Consolidated FINRA 

Rulebook 

May 29, 2009. 

I. Introduction 

On December 11, 2008, the Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) (f/k/a the 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 require member 

firms, with certain exceptions, to 

provide customers with FINRA’s Web 

site address and information regarding 

FINRA’s BrokerCheck program at least 

once every calendar year. The proposed 

rule change was published for comment 

in the Federal Register on January 2, 

2009.3 The Commission received two 

comment letters regarding the 

proposal.4 On April 28, 2009, FINRA 

responded to comments,5 and on April 

29, 2009, FINRA filed Amendment No. 

1 to the proposal. This order provides 

notice of the proposed rule change as 

modified by Amendment No. 1 and 

approves the proposed rule change, as 

amended, on an accelerated basis. 

II. Description of the Proposal 

FINRA proposed to adopt a rule based 

on NASD Rule 2280 (Investor Education 

and Protection), which requires member 

firms, with certain exceptions, to 

provide customers with FINRA’s Web 

site address and information regarding 

FINRA’s BrokerCheck program at least 

once every calendar year. 

NASD Rule 2280 currently applies to 

member firms that carry customer 

accounts and hold customer funds or 

securities and requires each member 

firm to provide its customers with the 

following information in writing not 

less than once every calendar year: (1) 

The ‘‘Public Disclosure Program’’ 

hotline number; (2) the NASD 

Regulation Web site address; and (3) a 

statement regarding the availability of 

an investor brochure that includes 

information describing the ‘‘Public 

Disclosure Program.’’ 

As initially proposed, FINRA Rule 

2267 would have applied to all member 

firms, with two general exceptions: a 

firm that does not have customers, and 

an introducing firm that is party to a 

carrying agreement where the carrying 

member firm complies with the rule. 

FINRA stated that FINRA Rule 2267 

would be broader in scope than NASD 

Rule 2280 and would apply to member 

firms that conduct a limited business 

with customers, such as mutual fund 

distributors and member firms that deal 

solely with direct participation 

programs (‘‘DPPs’’).6 In Amendment No. 

1, FINRA modified its proposal in 

response to the comments to permit a 

member whose contact with customers 

is limited to introducing customer 

accounts that will be held at an entity 

other than a FINRA member, and 

thereafter does not carry customer 

accounts or hold customer funds or 

securities,7 to furnish a customer with 

the information required by the rule at 

or before the time of the customer’s 

initial purchase, in lieu of once every 

calendar year.8

FINRA stated in the Notice that it 

would announce the implementation 

date of the proposed rule change in a 

Regulatory Notice to be published no 

later than ninety days following 

Commission approval. 

III. Summary of Comments and 

Amendment No. 1 

The Commission received two 

comment letters on the proposed rule 

change.9 One commenter expressed 

concern that, without the inclusion of 

additional disclosure noting that 

information in BrokerCheck may have 

been dismissed or expunged, customers 

may be mislead into believing a broker 

or other financial professional has not 

been involved in customer 

complaints.10 FINRA responded that it 

believed this comment was outside the 

scope of the proposal, and also noted 

that its Web site describes the contents 

of a BrokerCheck report and the type of 

information that is not disclosed 

through BrokerCheck.11

Another commenter stated that the 

proposed FINRA rule would place a 

significant burden on member firms, 

such as itself, that conduct a limited 

business where customer accounts are 

introduced to a non-FINRA member 

product issuer and have no direct 

contact with the customers after the 

initial transaction.12 The commenter 

stated that these firms do not carry 

customer accounts or hold customer 

funds or securities after the initial 

transaction. The commenter argued that 

because these firms do not send 

statements or trade confirmations, they 

do not have an easy method to provide 

information to customers, and a special 

annual mailing for the purposes of 

complying with the rule as initially 

proposed could be burdensome and 

substantial.13

FINRA responded that it would 

amend the proposal to clarify the 

application of Rule 2267.14 Specifically, 

FINRA stated it would codify the 

interpretive guidance regarding current 

NASD Rule 2280, which requires these 

firms to provide the requisite 

disclosures to customers only at the 

time of the initial transaction.15


cprice-sewell on PRODPC61 with NOTICES
Federal Register / Vol. 74, No. 108 / Monday, June 8, 2009 / Notices 27215 

16 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

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

17 15 U.S.C. 78o–3(b)(6). 

18See Securities Exchange Act Release No. 39043 

(September 10, 1997), 62 FR 48689 (September 16, 

1997)(Order Approving Proposed Rule Change and 

Notice of Filing and Order Granting Accelerated 

Approval of Amendment No. 1 to the Proposed 

Rule Change by the National Association of 

Securities Dealers, Inc. Relating to the Distribution 

of Information Concerning the Availability of the 

NASD’s Public Disclosure Program). 

19 15 U.S.C. 78s(b)(2). 

20Pursuant to Section 19(b)(2) of the Act, 15 

U.S.C. 78s(b)(2), the Commission may not approve 

any proposed rule change, or amendment thereto, 

prior to the thirtieth day after the date of 

publication of the notice thereof, unless the 

Commission finds good cause for so doing. 

21 15 U.S.C. 78s(b)(2). 

22 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 17 CFR 240.19b–4(f)(6). 

IV. Discussion and Commission 

Findings 

After careful review of the proposed 

rule change, the comment letters, and 

FINRA’s response to comments, the 

Commission finds that the proposal is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities association.16 In particular, 

the Commission finds that the proposed 

rule change is consistent with Section 

15A(b)(6) of the Act,17 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. 

Requiring broker-dealers that carry 

customer accounts to provide customers 

at least once each calendar year, or, for 

certain broker-dealers that are 

introducing firms as described in the 

proposed rule, once at the time of initial 

purchase, with written information 

regarding the BrokerCheck hotline 

number, FINRA’s Web site address, and 

a statement regarding the availability of 

an investor brochure describing 

BrokerCheck, publicizes the availability 

of information that helps investors 

determine whether to conduct, or to 

continue to conduct, business with a 

FINRA member or associated person of 

the member. In addition, the 

Commission has found NASD Rule 

2280, on which the proposed rule is 

based, to be consistent with the 

requirements of the Act and the rules 

and regulations thereunder applicable to 

a national securities association.18

The Commission finds good cause, 

pursuant to Section 19(b)(2) of the 

Act,19 for approving the proposal, as 

modified by Amendment No. 1, prior to 

the thirtieth day after the date of 

publication of notice of filing of 

Amendment No. 1 in the Federal 

Register.20 Amendment No. 1 

responded to the comments by tailoring 

the requirement for firms whose contact 

with customers is limited to introducing 

customer accounts to be held directly at 

an entity other than a FINRA member 

and thereafter do not carry customer 

accounts or hold customer funds but 

that the customer, at the outset, still 

receives the information. In addition, 

the firms afforded the exception 

proposed in Amendment No. 1 do not 

have any obligation under current 

NASD Rule 2280, so customers will still 

be receiving more information than they 

do presently. Therefore, the 

Commission believes that it is in the 

public interest to approve the proposal, 

as modified by Amendment No. 1, on an 

expedited basis. 

V. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposal, as 

modified by Amendment No. 1, 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 

No. SR–FINRA–2008–062 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–2008–062. 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–2008–062 and 

should be submitted on or before June 

29, 2009. 

VI. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,21 that the 

proposed rule change (SR–FINRA– 

2008–062), as modified by Amendment 

No. 1, be, and hereby is, approved on an 

accelerated basis. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.22

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–13253 Filed 6–5–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60008; File No. SR–FINRA– 

2009–033] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Rule CrossReferences in FINRA Rules 

May 29, 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 May 13, 

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 and 

II below, which Items have been 

prepared by FINRA. FINRA has 

designated the proposed rule change as 

constituting a ‘‘non-controversial’’ rule 

change under paragraph (f)(6) of Rule 

19b–4 under the Act,3 which renders 

the proposal effective upon receipt of 

this filing by the Commission. The 

Commission is publishing this notice to 


cprice-sewell on PRODPC61 with NOTICES