Document ID: SEC-2009-0552-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Approving a Proposed Rule Change Relating to a New Limited Representative Registration Category for Investment Banking Professionals
Posted Date: 2009-04-21T04:00Z

[Federal Register: April 21, 2009 (Volume 74, Number 75)]
[Notices]               
[Page 18268-18269]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21ap09-97]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59757; File No. SR-FINRA-2009-006]

 
Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Order Approving a Proposed Rule Change Relating to a 
New Limited Representative Registration Category for Investment Banking 
Professionals

April 13, 2009.

I. Introduction

    On February 17, 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 Section19(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 1032(i), which defines a new 
limited registration category for investment banking professionals, and 
sets forth the registration requirements for principals who supervise 
investment banking activities. The proposed rule change was published 
for comment in the Federal Register on March 10, 2009.\3\ The 
Commission received six comment letters regarding the proposal.\4\ This 
order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 59484 (March 2, 
2009); 74 FR 10317 (``Notice'').
    \4\ See letters from Gregory M. LeNeave, Anderson LeNeave Co., 
dated March 12, 2009 (``Anderson LeNeave Letter''); Bryan Emerson, 
Managing Member, Starlight Investments, LLC, dated March 17, 2009 
(``Starlight Investments Letter''); Michael B. Ribet, Member of the 
Board of Directors, Midwest Business Brokers and Intermediaries 
Association, to Elizabeth M. Murphy, Secretary, Commission, dated 
March 27, 2009 (``MBBI Letter''); Michael Adhikari, Advisory Board 
President, Alliance of Merger & Acquisitions Advisors, to Elizabeth 
M. Murphy, Secretary, Commission, dated March 30, 2009 (``AM&AA 
Letter''); Brian A. Wendler, President, Institute of Certified 
Business Counselors, to Elizabeth M. Murphy, Secretary, Commission, 
dated March 31, 2009 (``ICBC Letter''); and Daniel E. Hall, 
Chairman, The M&A Source, to Elizabeth M. Murphy, Secretary, 
Commission, dated March 31, 2009 (``M&A Source Letter'').
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II. Description of the Proposed Rule Change

    Any person associated with a member firm who is engaged in the 
securities business of the firm must register with FINRA. As part of 
the registration process, securities professionals must pass a 
qualification examination to determine competence in each area in which 
they intend to work. FINRA has developed examinations and administers 
examinations developed by other self-regulatory organizations that are 
designed to establish that persons associated with FINRA members have 
attained specified levels of competence and knowledge.
    Pursuant to NASD Rule 1032, a person who functions as a registered 
representative must pass the General Securities Representative (Series 
7) examination or certain equivalent examinations, unless the person's 
activities are so limited as to qualify him for a limited 
representative category which has an examination associated with it. 
The proposed rule, NASD Rule 1032(i), creates a new limited 
representative category--Limited

[[Page 18269]]

Representative-Investment Banking--which will have an examination 
tailored for associated persons whose activities are limited to 
investment banking.\5\ The proposed rule change also sets forth the 
registration requirements for principals who supervise investment 
banking activities.
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    \5\ FINRA is in the process of developing an accompanying 
qualification examination that will provide a more targeted 
assessment of the job functions performed by the individuals that 
would fall within the proposed registration category. The 
examination itself, including the content outline and test 
specifications, and fees associated with it will be the subject of a 
separate proposed rule change.
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III. Summary of Comments

    The Commission received letters from six commenters in response to 
the proposed rule change.\6\ All of the commenters supported the 
proposal.\7\ The commenters commended FINRA's acknowledgment of the 
specialized obligations of investment banking professionals. One 
commenter noted that this new category of limited registration will 
allow investment banking employees to become better trained in the 
rules and regulations applicable to the profession.\8\
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    \6\ Supra note 4.
    \7\ Four of the six commenters raised the issue of a proposal 
previously made to the Division of Trading & Markets (the 
``Division'') that would create a Federal registration exemption and 
simplified system of regulation for merger and acquisition 
intermediaries. See AM&AA Letter; ICBC Letter; M&A Source Letter; 
MBBI Letter. The proposal is not germane to this proposed rule 
change and is being considered separately by the Division.
    \8\ See Starlight Investments Letter.
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IV. Discussion and Commission's Findings

    After careful consideration of the proposal and the comments 
submitted, 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.\9\ In particular, the Commission finds that the proposed 
rule change is consistent with Section 15A(g)(3) of the Act,\10\ which 
requires FINRA to prescribe standards of training, experience, and 
competence for persons associated with FINRA members. The Commission 
believes that the proposal is consistent with the provisions of the Act 
noted above because it allows FINRA members to more efficiently 
allocate resources in order to better train their specialized 
personnel, which should result in improved compliance by principals and 
the employees they supervise.
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    \9\ 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).
    \10\ 15 U.S.C. 78o-3(g)(3).
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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\11\ that the proposed rule change (SR-FINRA-2009-006) be, and 
hereby is, approved.
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    \11\ 15 U.S.C. 78s(b)(2).
    \12\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-9057 Filed 4-20-09; 8:45 am]

BILLING CODE 8010-01-P