Document ID: SEC-2015-0486-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2015-03-20T04:00Z

[Federal Register Volume 80, Number 54 (Friday, March 20, 2015)]
[Notices]
[Pages 15041-15042]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-06360]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74512; File No. SR-FINRA-2015-005]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Extend the Expiration Date of the Refund 
Program Under FINRA Rule 3110.15 (Temporary Program To Address 
Underreported Form U4 Information)

March 16, 2015.
    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 March 3, 2015, Financial Industry Regulatory Authority, Inc. 
(``FINRA'') 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 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to amend FINRA Rule 3110.15 (Temporary Program 
to Address Underreported Form U4 Information) to extend the expiration 
date of the refund program under that rule, which currently is July 31, 
2015, until December 1, 2015.
    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
    On December 30, 2014, the SEC approved FINRA Rule 3110.15, which 
establishes a temporary refund program whereby FINRA will issue a 
refund to members of Late Disclosure Fees assessed for the late filing 
of responses to Question 14M (relating to unsatisfied judgments or 
liens) on the Form U4 (Uniform Application for Securities Industry 
Registration or Transfer), subject to specified conditions.\4\ The 
refund program under FINRA Rule 3110.15 is intended to incentivize 
members to disclose underreported information and save FINRA the time 
and regulatory resources expended in contacting firms and requesting 
that such information be reported. The refund program has a retroactive 
effective date of April 24, 2014,\5\ and it is currently scheduled to 
expire on July 31, 2015. FINRA understands that, following SEC approval 
of the rule, some firms have undertaken a wholesale review of their 
registrants to identify judgments and liens that may have been 
unreported, including those that meet the parameters of the refund 
program. Based on FINRA's experience to date, FINRA believes that a 
four-month extension of the program will more effectively achieve its 
intended purpose. Therefore, FINRA is proposing to amend FINRA Rule 
3110.15 to extend the sunset date of the refund program until December 
1, 2015, which will give firms adequate time to identify and report 
information to FINRA. FINRA is not proposing any changes to the other 
parameters of the refund program.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 73966 (December 30, 
2014), 80 FR 546 (January 6, 2015) (Order Approving File No. SR-
FINRA-2014-038).
    \5\ See FINRA Board Approves Amendment to Supervision Rule 
Requiring Firms to Conduct Background Checks on Registration 
Applicants, FINRA News Release, April 24, 2014, available at http://www.finra.org/Newsroom/NewsReleases/2014/P493588.
---------------------------------------------------------------------------

    As proposed, FINRA Rule 3110.15 will provide that FINRA will issue 
a refund to firms of Late Disclosure Fees assessed for the late filing 
of responses to Form U4 Question 14M (unsatisfied judgments or liens) 
if the Form U4 amendment is filed between April 24, 2014, and December 
1, 2015, and one of the following conditions is met:
    (1) The judgment or lien has been satisfied, and at the time it was 
unsatisfied, it was under $5,000, and the date the judgment or lien was 
filed with a court (as reported on Form U4 Judgment/Lien DRP, Question 
4A) was on or before August 13, 2012; \6\ or
---------------------------------------------------------------------------

    \6\ See Information Notice August 17, 2012 (Late Disclosure Fee 
Related to Reporting of Judgment/Lien Events), available at http://www.finra.org/web/groups/industry/@ip/@reg/@notice/documents/notices/p152106.pdf.
---------------------------------------------------------------------------

    (2) the unsatisfied judgment or lien was satisfied within 30 days 
after the individual learned of the judgment or lien (as reported on 
Form U4 Judgment/Lien DRP, Question 4.B.).
    The refund program will continue to have a retroactive effective 
date of April 24, 2014, but it will automatically sunset on December 1, 
2015, as proposed. Thus, firms will not be able to obtain a refund 
pursuant to the parameters established under the program after December 
1, 2015. While the program is in effect, FINRA will initially assess 
firms a Late Disclosure Fee and subsequently refund the fee in the 
firm's FINRA Flex-Funding Account if the firm can establish, or if 
FINRA otherwise determines, that the conditions of the program have 
been satisfied.
    FINRA has filed the proposed rule change for immediate 
effectiveness. The implementation date of the proposed

[[Page 15042]]

rule change will be July 31, 2015, which is the current expiration date 
of FINRA Rule 3110.15. The proposed rule change extends the expiration 
date of FINRA Rule 3110.15 until December 1, 2015. As proposed, FINRA 
Rule 3110.15 will have a retroactive effective date of April 24, 2014, 
and it will automatically expire on December 1, 2015.
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 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. FINRA believes that the temporary refund program under 
FINRA Rule 3110.15 incentivizes members to disclose underreported 
information relating to judgments and liens and saves FINRA the time 
and regulatory resources expended in contacting firms and requesting 
that such information be reported and that extending the expiration 
date of the refund program will more effectively achieve that purpose.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

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.
    The temporary refund program under FINRA Rule 3110.15 encourages 
members to comply with their existing reporting obligations and allows 
them to receive a refund of Late Disclosure Fees if the conditions 
specified in FINRA Rule 3110.15 are satisfied. As such, FINRA does not 
believe that extending the expiration date of the temporary refund 
program will result in any burden on members.

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\
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend 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. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

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 email to rule-comments@sec.gov. Please include 
File Number SR-FINRA-2015-005 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-FINRA-2015-005. This 
file number should be included on the subject line if email 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 Web site viewing and 
printing 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-2015-005 and should be 
submitted on or before April 10, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
---------------------------------------------------------------------------

    \10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Brent J. Fields,
Secretary.
[FR Doc. 2015-06360 Filed 3-19-15; 8:45 am]
 BILLING CODE 8011-01-P