Document ID: SEC-2009-1683-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Granting Approval of Proposed Rule Change To Adopt FINRA Rule 2251 (Forwarding of Proxy and Other Issuer-Related Materials)
Posted Date: 2009-12-01T05:00Z

[Federal Register: December 1, 2009 (Volume 229, Number 74)]
[Notices]               
[Page 62857]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01de09-144]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61052; File No. SR-FINRA-2009-066]

 
Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Order Granting Approval of Proposed Rule Change To 
Adopt FINRA Rule 2251 (Forwarding of Proxy and Other Issuer-Related 
Materials) in the Consolidated FINRA Rulebook

November 23, 2009.
    On October 2, 2009, Financial Industry Regulatory Authority, Inc. 
(``FINRA'') (f/k/a National Association of Securities Dealers, Inc. 
(``NASD'')) filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change pursuant to Section 19(b)(1) of 
the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ to adopt without material change NASD Rule 2260 
(Forwarding of Proxy and Other Materials) and NASD IM-2260 (Approved 
Rates of Reimbursement) in the consolidated FINRA rulebook.\3\ The 
proposed rule change would combine NASD Rule 2260 and NASD IM-2260 into 
a single rule that would be renumbered as FINRA Rule 2251 in the 
consolidated FINRA rulebook. Notice of the proposal was published for 
comment in the Federal Register on October 22, 2009.\4\ The Commission 
received no comments on the proposed rule change. 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\ The current FINRA rulebook consists of: (1) FINRA Rules; (2) 
NASD Rules; and (3) rules incorporated from NYSE (``Incorporated 
NYSE Rules'') (together, the NASD Rules and Incorporated NYSE Rules 
are referred to as the ``Transitional Rulebook''). While the NASD 
Rules generally apply to all FINRA members, the Incorporated NYSE 
Rules apply only to those members of FINRA that are also members of 
the NYSE (``Dual Members''). The FINRA Rules apply to all FINRA 
members, unless such rules have a more limited application by their 
terms. For more information about the rulebook consolidation 
process, see Information Notice, March 12, 2008 (Rulebook 
Consolidation Process).
    \4\ See Securities Exchange Act Release No. 60824 (Oct. 14, 
2009), 74 FR 54610.
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I. Description of the Proposal

    NASD Rule 2260 sets forth certain requirements with respect to the 
transmission of proxy materials and other communications to beneficial 
owners of securities and the limited circumstances in which members are 
permitted to vote proxies without instructions from those beneficial 
owners. NASD IM-2260 regulates the reimbursement that members are 
entitled to receive in connection with forwarding proxy materials and 
other communications.
    FINRA proposes to combine the two rules, without material change, 
into a single rule that would be renumbered as FINRA Rule 2251 in the 
consolidated FINRA rulebook.\5\ FINRA proposed making clarifying 
changes and other changes primarily to reflect the new formatting and 
terminology conventions of the consolidated FINRA rulebook.\6\ In 
addition, the proposed rule change would add language where appropriate 
to remind members that they are obligated to comply both with the FINRA 
rule and applicable Commission rules and/or guidance. With respect to 
NASD Rule 2260(c)(2)'s provisions allowing a member to give a proxy to 
vote any stock pursuant to the rules of ``any national securities 
exchange to which the member is also responsible,'' proposed FINRA Rule 
2251 would clarify that a ``member may give a proxy to vote any stock 
pursuant to the rules of any national securities exchange of which it 
is a member. * * *''
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    \5\ NASD IM-2260 would be redesignated as Supplementary Material 
within proposed FINRA Rule 2251.
    \6\ For example, the language in NASD Rule 2260(a) stating that 
a member ``has an inherent duty'' to forward materials would be 
revised to state that a member ``shall'' forward such materials. 
Further, the proposed rule change would move the footnoted 
provisions defining the terms ``ERISA'' and ``State'' to the rule 
text, and the footnoted provision regarding verification of 
investment advisers would be redesignated as Supplementary Material. 
The proposed rule change would also add internal cross-references 
within the rule.
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    FINRA stated that it will announce the implementation date of the 
proposed rule change in a Regulatory Notice to be published no later 
than 90 days following Commission approval.

II. Discussion and Commission's Findings

    After careful review, 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.\7\ In particular, the Commission finds that the proposed 
rule change is consistent with the provisions of section 15A(b)(6) of 
the Act,\8\ 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.
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    \7\ In approving this rule proposal, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \8\ 15 U.S.C. 78o-3(b)(6).
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    The Commission believes that the proposed rule change will continue 
to provide FINRA members with guidance on the forwarding of proxy and 
other issuer-related materials, as well as applicable rates of 
reimbursement. The Commission notes that the consolidation of these 
rules does not result in any substantive changes to the existing 
requirements.

III. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\9\ that the proposed rule change (SR-FINRA-2009-066) be, and 
hereby is, approved.
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    \9\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. E9-28679 Filed 11-30-09; 8:45 am]

BILLING CODE 8011-01-P