Document ID: SEC-2009-1750-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Adopt FINRA Rule 2330
Posted Date: 2009-12-11T05:00Z

[Federal Register: December 11, 2009 (Volume 74, Number 237)]
[Notices]               
[Page 65816-65817]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11de09-97]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61122; File No. SR-FINRA-2009-083]

 
Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change To Adopt FINRA Rule 2330 (Members' 
Responsibilities Regarding Deferred Variable Annuities) in the 
Consolidated FINRA Rulebook

December 7, 2009.
    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 November 20, 2009 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 substantially 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.
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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 adopt NASD Rule 2821 into the Consolidated 
FINRA Rulebook,\4\ as FINRA Rule 2330, without any substantive changes. 
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.
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    \4\ See infra note 5.
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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
    As part of the process of developing a new consolidated rulebook 
(``Consolidated FINRA Rulebook''),\5\ FINRA is proposing to transfer 
NASD Rule 2821 into the Consolidated FINRA Rulebook as FINRA Rule 2330. 
NASD Rule 2821 establishes sales practice standards regarding 
recommended purchases and exchanges of deferred variable annuities. The 
rule has six main sections. First, the rule addresses general 
considerations, such as the rule's applicability. Second, the rule has 
requirements governing broker recommendations, including suitability 
and disclosure obligations. Third, the rule includes various principal 
review and approval obligations. Fourth, the rule requires members to 
establish and maintain supervisory procedures reasonably designed to 
achieve compliance with the standards set forth in the rule. Fifth, the 
rule has a training component. Sixth, the rule has a supplementary 
material section that addresses a variety of issues ranging from the 
handling of customer funds and checks to information gathering and 
sharing.
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    \5\ 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).
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    FINRA seeks to transfer this important sales-practice rule, which 
the Commission only recently approved,\6\ into the Consolidated FINRA 
Rulebook as FINRA Rule 2330 without any substantive changes. Moving the 
rule into the Consolidated FINRA Rulebook ensures that the rule's 
requirements will continue to protect investors and does not impose any 
significant burden on competition. FINRA notes that FINRA Rule 2330 
will apply to broker-dealers

[[Page 65817]]

in the same manner and to the same extent as NASD Rule 2821.
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    \6\ See Securities Exchange Act Release No. 59772 (April 15, 
2009), 74 FR 18419 (April 22, 2009) (approval order); Regulatory 
Notice 09-32 (June 2009). See also Securities Exchange Act Release 
No. 56375 (September 7, 2007), 72 FR 52403 (September 13, 2007) 
(approval order).
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    FINRA has filed the proposed rule change for immediate 
effectiveness. The implementation date for FINRA Rule 2330 will be 
February 8, 2010.\7\
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    \7\ See Securities Exchange Act Release No. 59772 (April 15, 
2009), 74 FR 18419 (April 22, 2009) (approval order); Regulatory 
Notice 09-32 (June 2009) (announcing SEC approval of amendments to 
NASD Rule 2821 governing purchases and exchanges of deferred 
variable annuities and an effective date for those amendments of 
February 8, 2010).
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2. Statutory Basis
    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's 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. Transferring the rule to the Consolidated FINRA 
Rulebook is consistent with FINRA's obligations under the Act because 
the rule enhances members' compliance and supervisory systems and 
provides more comprehensive and targeted protection to investors in 
deferred variable annuities.
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    \8\ 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 \9\ and Rule 19b-
4(f)(6) thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
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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-2009-083 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-FINRA-2009-083. 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 information from submissions. You should submit 
only information that you wish to make available publicly. All 
submissions should refer to File Number SR-FINRA-2009-083 and should be 
submitted on or before January 4, 2010.
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    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-29526 Filed 12-10-09; 8:45 am]

BILLING CODE 8011-01-P