Document ID: SEC-2008-0558-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2008-04-11T04:00Z

[Federal Register: April 11, 2008 (Volume 73, Number 71)]
[Notices]               
[Page 19916-19918]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11ap08-118]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57622; File No. SR-FINRA-2008-012]

 
Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change Relating to Technical Amendments to Incorporated 
NYSE Rule Interpretation 344/02

April 4, 2008.
    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 April 4, 2008, 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'') a proposed rule change as described in Items I and 
II below, which items have been prepared substantially 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 
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.
    \3\ 17 CFR 240.19b-4(f)(6).
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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 Incorporated NYSE Rule Interpretation 
344/02 (Research Analysts and Supervisory Analysts) (the 
``Interpretation'') to make a non-substantive, technical change to the 
Interpretation text.\4\
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    \4\ As part of the consolidation of NASD and NYSE Member 
Regulation, FINRA incorporated into its rulebook certain NYSE rules 
related to member firm conduct (``Incorporated NYSE Rules''). As a 
result, the current FINRA rulebook consists of two sets of rules: 
(1) NASD Rules and (2) the Incorporated NYSE Rules. While the NASD 
Rules generally apply to all FINRA members, the Incorporated NYSE 
Rules apply only to members of both FINRA and the NYSE, referred to 
as Dual Members.
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    Below is the text of the proposed rule change. Proposed deletions 
are in [brackets].
* * * * *
Rule 344 Research Analysts and Supervisory Analysts
    /01 No Change.
    /02 Foreign Research Analysts

Exemption

    No change.

Supervisory Review

    No Change.

Disclosure

    In publishing or otherwise distributing globally branded research 
reports partially or entirely prepared by a foreign research analyst, a 
member organization must prominently disclose:
    (1) each affiliate contributing to the research report;
    (2) the names of the foreign research analysts employed by each 
contributing affiliate;
    (3) that such research analysts are not registered/qualified as 
research analysts with the NYSE and/or NASD; and
    (4) that such research analysts may not be associated persons of 
the member organization and therefore may not be subject to the NYSE 
Rule 472 restrictions on communications with a subject company, public 
appearances and trading securities [company, public appearances and 
trading securities] held by a research analyst account.
    The disclosures required by this Rule must be presented on the 
front page of the research report or the front page must refer to the 
page on which the disclosures can be found. In electronic research 
reports, a member may hyperlink to the disclosures. References and 
disclosures must be clear, comprehensive and prominent.

[[Page 19917]]

Record Keeping

    No change.

Application of the Federal Securities Laws, Rules and Regulations and 
Self-Regulatory Organization Rules

    No change.

Effect of Exemption on Associated Person Status

    No change.

Globally-Branded Research Report

    No change.

Mixed-Team Research Report

    No change.

Affiliate

    No change.
    /03-/04 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 is proposing a non-substantive, technical rule change to 
Incorporated NYSE Rule Interpretation 344/02 (Research Analysts and 
Supervisory Analysts) to delete superfluous language from the 
Interpretation that should not be part of the text. The Interpretation 
was approved by the Commission on February 6, 2008,\5\ and is scheduled 
to become effective upon publication of a Regulatory Notice announcing 
the approval. The superfluous language was inadvertently included in 
the rule text of the original proposed rule change.\6\
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    \5\ See Securities Exchange Act Release No. 57278 (February 6, 
2008); 73 FR 8086 (February 12, 2008); Notice of Filing of Amendment 
No. 1 and Order Granting Accelerated Approval of Proposed Rule 
Change as Modified by Amendment No. 1 to Amend an Exemption to NASD 
Rule 1050 and NYSE Rule Interpretation 344/02 for Certain Research 
Analysts Employed By a Member's Foreign Affiliate Who Contribute to 
the Preparation of a Member's Research Report; File No. SR-FINRA-
2007-010.
    \6\ See id.
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    FINRA has filed the proposed rule change for immediate 
effectiveness. The effective date and the implementation date will be 
the date of filing, April 4, 2008.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A of the Act, including Section 15A(b)(6) of 
the Act,\7\ in that it is designed to prevent fraudulent and 
manipulative acts and practices, promote just and equitable principles 
of trade and, in general, to protect investors and the public interest. 
FINRA believes that the proposed rule change will clarify the 
Interpretation by removing unnecessary language from the text.
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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.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act\8\ and Rule 19b-
4(f)(6) thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under 19b-4(f)(6) normally may not 
become operative prior to 30 days after the date of the filing.\10\ 
However, Rule 19b-4(f)(6)(iii)\11\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. FINRA has requested that the 
Commission waive the 30-day pre-operative delay and designate the 
proposed rule change to become operative upon filing.
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    \10\ 17 CFR 240.19b-4(f)(6)(iii). Pursuant to Rule 19b-
4(f)(6)(iii) under the Act, FINRA is required to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
FINRA has requested that the Commission waive the five-day pre-
filing notice requirement. The Commission has determined to waive 
this requirement to allow FINRA to file the proposed technical 
amendment without delay.
    \11\ Id.
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    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because the amendment merely removes duplicative language from the 
Interpretation that was inadvertently included in the February 2008 
order. This duplicative language could only serve to confuse parties in 
attempting to comply with the Interpretation. Thus, the Commission 
designates the proposal to become operative upon filing.\12\
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    \12\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the impact of the proposed rule on 
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in the furtherance of the purposes of the Act.

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 rule-comments@sec.gov. Please include 
File Number SR-FINRA-2008-012 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-FINRA-2008-012. 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

[[Page 19918]]

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-2008-012 and 
should be submitted on or before May 2, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-7655 Filed 4-10-08; 8:45 am]

BILLING CODE 8011-01-P