Document ID: SEC-2020-1234-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2020-08-04T04:00Z

[Federal Register Volume 85, Number 150 (Tuesday, August 4, 2020)]
[Notices]
[Pages 47278-47280]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-16875]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-89423; File No. SR-FINRA-2020-022]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Further Extend the Expiration Date of the 
Temporary Amendments Set Forth in SR-FINRA-2020-015

July 29, 2020.
    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 July 27, 2020, Financial Industry Regulatory Authority, Inc. 
(``FINRA'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the self-regulatory 
organization. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to extend the expiration date of the temporary 
amendments in SR-FINRA-2020-015 from July 31, 2020, to a date to be 
specified in a public notice issued by FINRA, which date will be at 
least two weeks from the date of the notice, and no later than December 
31, 2020.
    The text of the proposed rule change is available on FINRA's 
website 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.

[[Page 47279]]

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    On May 8, 2020, FINRA filed with the Commission a proposed rule 
change for immediate effectiveness, SR-FINRA-2020-015, to temporarily 
amend some timing, method of service and other procedural requirements 
in FINRA rules during the period in which FINRA's operations are 
impacted by the outbreak of COVID-19 (the ``May 8 Filing''). The 
Commission published its notice of filing and immediate effectiveness 
for the May 8 Filing on May 20, 2020.\3\ The temporary amendments, as 
originally proposed in the May 8 Filing, would have expired on June 15, 
2020, absent another proposed rule change filing by FINRA. On June 10, 
2020, FINRA filed SR-FINRA-2020-017 to extend the expiration date of 
the temporary amendments set forth in the May 8 Filing from June 15, 
2020, to July 31, 2020 (the ``June 10 Filing''). The Commission 
published its notice of filing and immediate effectiveness for the June 
10 Filing on June 12, 2020.\4\
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    \3\ See Securities Exchange Act Release No. 88917 (May 20, 
2020), 85 FR 31832 (May 27, 2020) (Notice of Filing and Immediate 
Effectiveness of File No. SR-FINRA-2020-015).
    \4\ See Securities Exchange Act Release No. 89055 (June 12, 
2020), 85 FR 36928 (June 18, 2020) (Notice of Filing and Immediate 
Effectiveness of File No. SR-FINRA-2020-017).
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    FINRA proposed, and subsequently extended, the temporary amendments 
set forth in the May 8 Filing to address the substantial impacts of the 
COVID-19 outbreak on FINRA's operations.\5\ Among other things, the 
need for FINRA staff, with limited exceptions, to work remotely and 
restrict in-person activities--consistent with the recommendations of 
public health officials--made it challenging to meet certain procedural 
requirements and perform certain functions required under FINRA rules. 
The temporary amendments in the proposed rule change addressed these 
concerns by easing logistical and other issues and providing FINRA with 
needed flexibility for its operations during the COVID-19 outbreak.
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    \5\ As noted in the May 8 Filing and June 10 Filing, the 
temporarily amended FINRA rules will revert back to their original 
state at the conclusion of the temporary relief period and any 
extension thereof.
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    The COVID-19 conditions necessitating the temporary amendments in 
the May 8 Filing--and the extension of that relief provided for in the 
June 10 Filing--persist. FINRA continues to face the same logistical 
and other challenges stemming from the COVID-19-related public health 
risks for in-person activities and the continued need for FINRA staff, 
with few exceptions, to work remotely to protect their health and 
safety. Working remotely makes it difficult to, among other things, 
send and receive hard copy documents and conduct in-person oral 
arguments.
    FINRA has established a COVID-19 task force that is working with 
outside health experts to develop a data-driven, staged plan for FINRA 
staff to safely return to working in FINRA office locations and resume 
other in-person activities. In developing its plan, FINRA will consider 
numerous data points and criteria, including, among others, public 
health considerations such as trends in COVID-19 cases, government 
orders addressing COVID-19, and the availability of, and risks 
associated with, public transportation. With COVID-19 transmission 
rates, orders and other localized considerations in a state of flux, 
and numerous states experiencing negative trends, FINRA must remain 
flexible in order to protect the health and safety of its staff and 
other stakeholders.
    In light of those considerations and its assessment of current 
COVID-19 conditions, FINRA anticipates its staff continuing to work 
remotely and otherwise restricting in-person activities--to the extent 
possible--for at least several months. Accordingly, FINRA proposes to 
extend the expiration date of the temporary rule amendments in the May 
8 Filing from July 31, 2020, to a date to be specified in a public 
notice issued by FINRA, which date will be at least two weeks from the 
date of the notice, and no later than December 31, 2020.\6\ The 
extension of these temporary amendments will help minimize the impact 
of the COVID-19 outbreak on FINRA's operations, allowing FINRA to 
continue critical adjudicatory and review processes in a reasonable and 
fair manner and meet its critical investor protection goals, while also 
following best practices with respect to the health and safety of its 
staff.
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    \6\ FINRA is closely monitoring the impact of COVID-19 on its 
operations. If the temporary relief from the rule requirements 
identified in the May 8 Filing is necessary beyond the December 31, 
2020 sunset provision, FINRA will submit a separate rule filing to 
extend the expiration date of the temporary relief under those 
rules. In addition, if conditions improve such that the temporary 
relief is no longer necessary prior to December 31, 2020, the 
proposed rule change would allow FINRA to set an earlier expiration 
date for the temporary relief.
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    FINRA has filed the proposed rule change for immediate 
effectiveness and has requested that the SEC waive the requirement that 
the proposed rule change not become operative for 30 days after the 
date of the filing, so FINRA can implement the proposed rule change 
immediately.
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 proposed rule change is also 
consistent with Section 15A(b)(8) of the Act,\8\ which requires, among 
other things, that FINRA rules provide a fair procedure for the 
disciplining of members and persons associated with members.
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    \7\ 15 U.S.C. 78o-3(b)(6).
    \8\ 15 U.S.C. 78o-3(b)(8).
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    The proposed rule change to extend the expiration date of the 
temporary amendments to FINRA rules set forth in the May 8 Filing will 
continue to provide FINRA, and in some cases another party to a 
proceeding, temporary modifications to its procedural requirements in 
order to allow FINRA to maintain fair processes and protect investors 
while operating in a remote work environment and with corresponding 
restrictions on its activities. It is in the public interest, and 
consistent with the Act's purpose, for FINRA to operate pursuant to 
this temporary relief. The temporary amendments allow FINRA to specify 
filing and service methods, extend certain time periods, and modify the 
format of oral argument for FINRA disciplinary and eligibility 
proceedings and other review processes in order to cope with the 
current pandemic conditions. In addition, extending this temporary 
relief will further support FINRA's disciplinary and eligibility 
proceedings and other review processes that serve a critical role in 
providing investor protection and maintaining fair and orderly markets.

B. Self-Regulatory Organization's Statement on Burden on Competition

    FINRA does not believe that the temporary proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. FINRA believes 
that the proposed rule change, which extends the expiration date of the 
temporary rule amendments in the May 8 Filing to a date to be specified 
in a public notice issued by FINRA, and no later than December 31,

[[Page 47280]]

2020, will prevent unnecessary impediments to FINRA's operations and 
FINRA's investor protection goals that would otherwise result if the 
temporary amendments were to expire on July 31, 2020. FINRA does not 
believe that the proposed rule change will have any material negative 
effect on members and will not impose any new costs.

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) \10\ thereunder.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
FINRA has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative for 30 days after the date of filing. However, 
pursuant to Rule 19b-4(f)(6)(iii), the Commission may designate a 
shorter time if such action is consistent with the protection of 
investors and the public interest. As FINRA requested in connection 
with its May 8 Filing and June 10 Filing, FINRA has also asked the 
Commission to waive the 30-day operative delay so that this proposed 
rule change may become operative immediately upon filing. As in both 
its May 8 Filing and June 10 Filing, FINRA has reiterated that the 
requested relief in this proposed rule change will help minimize the 
impact of the COVID-19 outbreak on FINRA's operations, allowing FINRA 
to continue critical adjudicatory and review processes in a reasonable 
and fair manner and meet its critical investor protection goals, while 
also following best practices with respect to the health and safety of 
its employees.\11\ We also note that this proposal, like FINRA's May 8 
Filing and June 10 Filing, provides only temporary relief from, as 
FINRA states, the timing, method of service and other procedural 
requirements, described more fully in FINRA's May 8 Filing, during the 
period in which FINRA's operations are impacted by COVID-19. As 
proposed, these changes would be in place through a date to be 
specified in a public notice issued by FINRA, which date will be at 
least two weeks from the date of the notice, and no later than December 
31, 2020.\12\ For these reasons, the Commission believes that waiver of 
the 30-day operative delay is consistent with the protection of 
investors and the public interest. Accordingly, the Commission hereby 
waives the 30-day operative delay and designates the proposal operative 
upon filing.\13\
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    \11\ See May 8 Filing, 85 FR at 31833.
    \12\ As noted above, see supra note 6, FINRA states that if the 
temporary relief from the rule requirements identified in the May 8 
Filing is necessary beyond December 31, 2020, FINRA will submit a 
separate rule filing to extend the expiration date of the temporary 
relief under those rules. In addition, if conditions improve such 
that the temporary relief is no longer necessary prior to December 
31, 2020, the proposed rule change would allow FINRA to set an 
earlier expiration date for the temporary relief.
    \13\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule change's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    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-2020-022 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-FINRA-2020-022. 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 website (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 website viewing and printing in 
the Commission's Public Reference Room, on business days between the 
hours of 10:00 a.m. and 3:00 p.m., located at 100 F Street NE, 
Washington, DC 20549. 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. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-FINRA-2020-022 and should be submitted 
on or before August 25, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-16875 Filed 8-3-20; 8:45 am]
BILLING CODE 8011-01-P