Document ID: SEC-2008-0038-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations: Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Posted Date: 2008-01-08T05:00Z

[Federal Register: January 8, 2008 (Volume 73, Number 5)]
[Notices]               
[Page 1375-1377]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08ja08-89]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57081; File No. SR-FINRA-2007-031]

 
Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change Relating to Revisions to the Series 62 Examination 
Program

December 31, 2007.
    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 December 12, 2007, 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'') the proposed rule change as described in Items I, 
II, and III below, which Items have been prepared substantially by 
FINRA. FINRA has designated this proposal as constituting a stated 
policy, practice, or interpretation with respect to the meaning, 
administration, or enforcement of an existing rule of the self-
regulatory organization pursuant to section 19(b)(3)(A)(i) of the Act 
\3\ and Rule 19b-4(f)(1) thereunder,\4\ which renders the proposal 
effective upon filing with 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\ 15 U.S.C. 78s(b)(3)(A)(i).
    \4\ 17 CFR 240.19b-4(f)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is filing revisions to the study outline and selection 
specifications for the Limited Representative--Corporate Securities 
(Series 62) examination program.\5\ The proposed revisions update the 
material to reflect changes to the laws, rules and regulations covered 
by the examination and to better reflect the duties and 
responsibilities of a Limited Representative--Corporate Securities. 
FINRA is not proposing any textual changes to the By-Laws, Schedules to 
the By-Laws, or Rules of FINRA.
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    \5\ FINRA also is proposing corresponding revisions to the 
Series 62 question bank, but based upon instruction from the 
Commission staff, FINRA is submitting SR-FINRA-2007-031 for 
immediate effectiveness pursuant to Section 19(b)(3)(A) of the Act 
and Rule 19b-4(f)(1) thereunder, and is not filing the question bank 
for Commission review. See Letter to Alden S. Adkins, Senior Vice 
President and General Counsel, NASD Regulation, from Belinda Blaine, 
Associate Director, Division of Market Regulation, SEC, dated July 
24, 2000, attached as Exhibit 3c to the proposed rule change. The 
question bank is available for Commission review.
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    The text of the proposed rule change is available at http://www.finra.org, 

the principal offices of FINRA, and the Commission's Public Reference 
Room. The Series 62 selection specifications have been submitted to the 
Commission under separate cover with a request for confidential 
treatment pursuant to Rule 24b-2 under the Act.\6\
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    \6\ 17 CFR 240.24b-2.
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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
    Section 15A(g)(3) of the Act \7\ requires FINRA to prescribe 
standards of training, experience, and competence for persons 
associated with FINRA members. In accordance with that provision, 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. FINRA periodically reviews the 
content of the examinations to determine whether revisions are 
necessary or appropriate in view of changes pertaining to the subject 
matter covered by the examinations.
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    \7\ 15 U.S.C. 78o-3(g)(3).
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    Pursuant to NASD Rule 1032(e), each associated person of a member 
who is included within the definition of representative in NASD Rule 
1031(b) may register with FINRA as a Limited Representative--Corporate 
Securities if: (1) The individual's activities in the investment 
banking and securities business of the member are limited solely to the 
solicitation, purchase and sale of a ``security,'' as that term is 
defined in section 3(a)(10) of the Act; (2) the individual does not 
engage in any

[[Page 1376]]

activities relating to the following securities: Municipal securities 
as defined in section 3(a)(29) of the Act; option securities as defined 
in NASD Rule 2860; redeemable securities of companies registered 
pursuant to the Investment Company Act of 1940 (except for money market 
funds); variable contracts of insurance companies registered pursuant 
to the Securities Act of 1933; and direct participation program 
securities as defined in NASD Rule 1022(e); and (3) the individual 
passes the Series 62 qualification examination.
    A committee of industry representatives, together with FINRA staff, 
recently undertook a review of the Series 62 examination program. As a 
result of this review, FINRA is proposing to make revisions to the 
study outline to reflect changes to the laws, rules, and regulations 
covered by the examination and to better reflect the duties and 
responsibilities of a Limited Representative--Corporate Securities.
    Among other revisions, FINRA is proposing to revise the references 
to the FINRA and The NASDAQ Stock Market LLC (``NASDAQ'') rules in the 
study outline to reflect NASDAQ's separation from FINRA (then known as 
NASD). In addition, FINRA is proposing to add sections on exchange-
traded funds, hedge funds, unit investment trusts, SEC Regulation M-A 
(Mergers and Acquisitions), SEC Regulation S-K, SEC Regulation S-X, SEC 
Regulation NMS, SEC Regulation SHO and SEC Rule 405 (Definitions of 
Terms). FINRA also is proposing to add sections on NASD IM-2110-7 
(Interfering With the Transfer of Customer Accounts in the Context of 
Employment Disputes), IM-2440-2 (Additional Mark-Up Policy For 
Transactions in Debt Securities, Except Municipal Securities) and IM-
2210-6 (Requirements for the Use of Investment Analysis Tools), as well 
as on NASD Rules 2111 (Trading Ahead of Customer Market Orders), 2370 
(Borrowing From or Lending to Customers) and 2441 (Net Transactions 
with Customers).
    FINRA is proposing to change the title of section 1 of the study 
outline from ``Characteristics of Corporate Securities'' to ``Types and 
Characteristics of Securities and Investments,'' the title of section 3 
from ``Valuing Corporate Securities'' to ``Evaluation of Securities and 
Investments,'' and the title of section 4 from ``Handling Customer 
Accounts'' to ``Handling Customer Accounts and Securities Industry 
Regulations.'' Further, as a result of the revisions discussed above, 
the number of questions on each section of the study outline was 
modified as follows: Types and Characteristics of Securities and 
Investments, decreased from 28 to 25 questions; The Market for 
Corporate Securities, increased from 31 to 40 questions; Evaluation of 
Securities and Investments, no changes to the number of questions 
(remains at 14 questions); and Handling Customer Accounts and 
Securities Industry Regulations, decreased from 42 to 36 questions.
    FINRA is proposing similar changes to the Series 62 selection 
specifications and question bank. The number of questions on the Series 
62 examination will remain at 115, and candidates will continue to have 
2\1/2\ hours to complete the exam. Also, each question will continue to 
count one point, and each candidate must correctly answer 70 percent of 
the questions to receive a passing grade.
2. Statutory Basis
    FINRA believes that the proposed revisions to the Series 62 
examination program are consistent with the provisions of sections 
15A(b)(6) \8\ and 15A(g)(3) of the Act,\9\ which authorize FINRA to 
prescribe standards of training, experience, and competence for persons 
associated with FINRA members.
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    \8\ 15 U.S.C. 78o-3(b)(6).
    \9\ 15 U.S.C. 78o-3(g)(3).
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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

    The proposed rule change has become effective pursuant to section 
19(b)(3)(A)(i) of the Act \10\ and Rule 19b-4(f)(1) thereunder,\11\ in 
that the proposed rule change constitutes a stated policy, practice, or 
interpretation with respect to the meaning, administration, or 
enforcement of an existing rule of the self-regulatory organization. 
FINRA proposes to implement the revised Series 62 examination program 
on February 12, 2008. FINRA will announce the implementation date in a 
Regulatory Notice to be published on December 12, 2007, the date FINRA 
filed SR-FINRA-2007-31 with the Commission.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(i).
    \11\ 17 CFR 240.19b-4(f)(1).
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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 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-2007-031 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-FINRA-2007-031. 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

[[Page 1377]]

information from submissions. You should submit only information that 
you wish to make publicly available. All submissions should refer to 
File Number SR-FINRA-2007-031 and should be submitted on or before 
January 29, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-94 Filed 1-7-08; 8:45 am]

BILLING CODE 8011-01-P