Document ID: SEC-2009-1701-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of Proposed Rule Change To Amend the Deficient Claims Rules of the Codes of Arbitration
Posted Date: 2009-12-02T05:00Z

[Federal Register: December 2, 2009 (Volume 74, Number 230)]
[Notices]               
[Page 63167-63169]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02de09-59]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61060 File No. SR-FINRA-2009-072]

 
Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing of Proposed Rule Change To Amend the 
Deficient Claims Rules of the Codes of Arbitration Procedure for 
Customer and Industry Disputes

November 24, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

[[Page 63168]]

(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on October 28, 2009 Financial Industry Regulatory Authority, Inc. 
(``FINRA'') (f/k/a National Association of Securities Dealers, Inc. 
(``NASD'')) filed with the Securities and Exchange Commission (the 
``Commission'') a proposed rule change to amend Rule 12307 of the Code 
of Arbitration for Customer Disputes (the ``Customer Code'') and Rule 
13307 of the Code of Arbitration for Industry Disputes (the ``Industry 
Code'') (collectively, ``the Codes'') to clarify the date of filing of 
an arbitration claim once a deficiency is corrected, as described in 
Items I, II, and III below, which Items have been substantially 
prepared by FINRA. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to amend Rules 12307(b) and 13307(b) of the 
Customer Code and for the Industry Code, respectively, to clarify the 
date of filing of an arbitration claim once a deficiency is corrected.
    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
    When parties initiate arbitration claims in FINRA's arbitration 
forum, they must file a signed and dated submission agreement and a 
statement of claim explaining the facts and outlining the remedies 
requested.\3\ Parties must also pay all required filing fees at the 
time they file their claims.\4\ If a party's claims do not meet the 
criteria for filing a claim under the Codes or otherwise do not comply 
with the Codes, the claims are considered deficient. A claim may be 
deficient because, for example, the party failed to file a properly 
signed and dated submission agreement, failed to pay all required 
filing fees, or failed to file the correct number of copies of the 
submission agreement, statement of claim or other supporting documents.
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    \3\ Rule 12302(a)(1) of the Customer Code and Rule 13302(a)(1) 
of the Industry Code.
    \4\ Id.
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    Currently, Rule 12307 of the Customer Code and Rule 13307 of the 
Industry Code, which address deficient claims (hereinafter, ``deficient 
claims rules''), state that the Director of FINRA Dispute Resolution 
(``Director'') will not serve a claim that is deficient. The deficient 
claims rules permit a party to correct all deficiencies. Under the 
current rules, if all deficiencies are not corrected within 30 days 
from the time a party receives notice of a deficiency, the Director 
will close the case without serving the claim and refund part of the 
filing fee.\5\ However, the rules are silent on the date that the 
Director will use as the date of filing if a party corrects a deficient 
claim within 30 days of receiving notice of a deficiency.
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    \5\ Rule 12307(b) of the Customer Code and Rule 13307(b) of the 
Industry Code.
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    FINRA has received inquiries from constituents on how the 
arbitration forum determines the date of filing of a claim that was 
deficient when filed, but is later corrected. Thus, FINRA is proposing 
to amend Rules 12307(b) and 13307(b) of the Codes to clarify the 
arbitration forum's procedure concerning the date of filing of a 
deficient claim when the deficiency is corrected within the 30-day 
deficiency period. So amended, the rules would provide that if the 
deficiency is corrected within 30 days from the time the party receives 
notice of a deficiency, the claim will be considered filed on the date 
the initial statement of claim was filed.
    FINRA believes the proposal would clarify the date that the forum 
uses to determine the filing date of the claim, which should help 
resolve issues concerning whether a claim is eligible for submission to 
arbitration under the Codes,\6\ and whether statutes of limitation, if 
applicable, should apply. Moreover, FINRA believes that adding this 
existing policy to the rules will eliminate confusion for parties 
concerning deficient claims, provide transparency concerning forum 
practice, and enhance the efficiency of case administration.
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    \6\ Under the Codes, no claim shall be eligible for submission 
to arbitration where six years have elapsed from the occurrence or 
event giving rise to the claim. See Rule 12206(a) of the Customer 
Code and Rule 13206(a) of the Industry Code.
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2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\7\ which require, 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 the proposed rule change is consistent 
with FINRA's statutory obligations under the Act to protect investors 
and the public interest because the proposal would eliminate confusion 
for parties concerning deficient claims, provide transparency 
concerning forum practice, and enhance the efficiency of case 
administration.
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    \7\ 15 U.S.C. 78o-3(b)(6).
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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, as amended.

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 by FINRA.

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,

[[Page 63169]]

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 rule-comments@sec.gov. Please include 
File Number SR-FINRA-2009-072 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-2009-072. 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-2009-072 and should be 
submitted on or before December 23, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. E9-28741 Filed 12-1-09; 8:45 am]

BILLING CODE 8011-01-P