Document ID: SEC-2008-1710-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2008-12-22T05:00Z

[Federal Register: December 22, 2008 (Volume 73, Number 246)]
[Notices]
[Page 78412-78414]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22de08-142]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59097; File No. SR-FINRA-2008-057]

Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of
Proposed Rule Change to Update Rule Cross-References and Make Other
Various Non-Substantive Technical Changes to FINRA Rules00

December 12, 2008.
    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 3, 2008, Financial Industry Regulatory Authority, Inc.
(``FINRA'') (f/k/a National Association of Securities Dealers, Inc.
(``NASD'')) 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 FINRA. FINRA designated the
proposed rule change as ``non-controversial'' under Section
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) 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)(iii).
    \4\ 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 update rule cross-references and make other
various non-substantive technical changes to FINRA rules that have been
adopted in the consolidated FINRA rulebook but not yet implemented.
    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
    FINRA is in process of developing a new consolidated rulebook
(``Consolidated FINRA Rulebook'').\5\ That process involves FINRA
submitting to the Commission for approval a series of proposed rule
changes over time to adopt rules in the Consolidated FINRA Rulebook.
The phased adoption and implementation of those rules necessitates
periodic amendments to update rule cross-references and other non-
substantive technical changes in the Consolidated FINRA Rulebook. The
proposed rule change would effectuate those amendments in certain rules
that have been approved by the Commission but not yet implemented in
the Consolidated FINRA Rulebook.
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    \5\ The current FINRA rulebook includes, in addition to FINRA
Rules, (1) NASD Rules and (2) 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''). For more
information about the rulebook consolidation process, see FINRA
Information Notice, March 12, 2008 (Rulebook Consolidation Process).
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    During the months of August and September 2008, the Commission
approved nine FINRA proposed rule changes (``Phase 1 Rules'').\6\ Those
rules

[[Page 78413]]

will be implemented on December 15, 2008.\7\ The proposed rule change
generally would make several types of changes to those approved rules.
First, it would update rule cross-references. For example, references
to NASD rules would be changed to reference the new corresponding FINRA
rules. In addition, the proposed rule change would update FINRA Rule
7410(g) to reference New York Stock Exchange Rule 132B, rather than
Rule 80A, pursuant to a previously approved New York Stock Exchange
rule filing.\8\
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    \6\ See Securities Exchange Act Release No. 58421 (August 25,
2008), 73 FR 51032 (August 29, 2008) (Order Approving File No. SR-
FINRA-2008-025); Securities Exchange Act Release No. 58461
(September 4, 2008), 73 FR 52710 (September 10, 2008) (Order
Approving File No. SR-FINRA-2008-033); Securities Exchange Act
Release No. 58514 (September 11, 2008), 73 FR 54190 (September 18,
2008) (Order Approving File No. SR-FINRA-2008-039); Securities
Exchange Act Release No. 58643 (September 25, 2008), 73 FR 57174
(October 1, 2008) (Order Approving File Nos. SR-FINRA-2008-021; SR-
FINRA-2008-022; SR-FINRA-2008-026; SR-FINRA-2008-028 and SR-FINRA-
2008-029); Securities Exchange Act Release No. 58660 (September 26,
2008), 73 FR 57393 (October 2, 2008) (Order Approving File No. SR-
FINRA-2008-027); Securities Exchange Act Release No. 58661
(September 26, 2008), 73 FR 57395 (October 2, 2008) (Order Approving
File No. SR-FINRA-2008-030).
    \7\ See FINRA Regulatory Notice 08-57 (October 2008) (FINRA
Announces SEC Approval and Effective Date for New Consolidated FINRA
Rules).
    \8\ See Securities Exchange Act Release No. 56726 (October 31,
2007), 72 FR 62719 (November 6, 2007) (Notice of Filing and
Immediate Effectiveness of File No. SR-NYSE-2007-96).
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    Second, the proposed rule change would adopt into the Consolidated
FINRA Rulebook without material change new NASD rules that were
approved after the Phase 1 Rules were submitted to the Commission: NASD
Rules 12905 and 13905.\9\ It would also update the Consolidated FINRA
Rulebook to account for amendments to NASD and Incorporated NYSE Rules
that were approved after the Phase I Rules were submitted to the
Commission. Those affected rules are FINRA Rules 6220, 6275, 6540, 6560
(since deleted), 6622, 6730 and 9217.\10\
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    \9\ See Securities Exchange Act Release No. 58739 (October 6,
2008), 73 FR 60738 (October 14, 2008) (Order Approving File No. SR-
FINRA-2008-005).
    \10\ See Securities Exchange Act Release No. 55351 (February 26,
2007), 72 FR 9810 (March 5, 2007) (Order Approving File No. SR-NASD-
2005-146); Securities Exchange Act Release No. 58532 (September 12,
2008), 73 FR 54649 (September 22, 2008) (Order Approving File No.
SR-NASD-2007-041); Securities Exchange Act Release No. 58331 (August
8, 2008), 73 FR 47990 (August 15, 2008) (Order Approving File No.
SR-FINRA-2008-016); Securities Exchange Act Release No. 58514
(September 11, 2008), 73 FR 54190 (September 18, 2008) (Order
Approving File No. SR-FINRA-2008-039); Securities Exchange Act
Release No. 58533 (September 12, 2008), 73 FR 54652 (September 22,
2008) (Order Approving File No. SR-FINRA-2008-036); Securities
Exchange Act Release No. 58520 (September 11, 2008), 73 FR 54193
(September 18, 2008) (Order Approving File No. SR-FINRA-2008-040).
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    Third, the proposed rule change would delete a reference in FINRA
Rule 5110 to ``SEC Regulation B'', which previously was rescinded.\11\
In that same FINRA rule, the proposed rule change would add language
that inadvertently was left out of the existing NASD rule when that
NASD rule was adopted without material change into the Consolidated
FINRA Rulebook.\12\ The proposed rule change also would delete in FINRA
Rule 6440 references to certain subparagraphs of SEA Rule 15c2-11 that
no longer exist.
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    \11\ See Securities Exchange Act Release No. 37262 (May 31,
1996), 61 FR 30397 (June 14, 1996) (File No. S7-6-96).
    \12\ See Securities Exchange Act Release No. 58514 (September
11, 2008), 73 FR 54190 (September 18, 2008) (Order Approving File
No. SR-FINRA-2008-039, which failed to include language adopted in
SR-NASD-2001-046).
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    Fourth, the proposed rule change would replace references to the
SEC's Electronic Data Gathering and Retrieval (``EDGAR'') System with
its new name, the Interactive Data Electronic Applications (``IDEA'')
System. Finally, the proposed rule change would update FINRA Rules 4560
and 5110 to reflect a change in FINRA style convention when referencing
SEC rules and regulations.
    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, such that FINRA can implement the proposed rule
change on December 15, 2008, the date on which the previously approved
rule changes will also be implemented.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\13\ 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 the proposed rule change will provide
greater clarity to members and the public regarding FINRA's rules.
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    \13\ 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 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 after the date of filing, or such shorter time as the Commission
may designate if consistent with the protection of investors and the
public interest, the proposed rule change has become effective pursuant
to Section 19(b)(3)(A) of the Act \14\ and subparagraph (f)(6) of Rule
19b-4 thereunder.\15\ As required under Rule 19b-4(f)(6)(iii),\16\
FINRA provided the Commission with 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
filing of the proposed rule change.
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6).
    \16\ 17 CFR 240.19b-4(f)(6)(iii).
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    A proposed rule change filed under Rule 19b-4(f)(6) normally may
not become operative prior to the 30th day after the date of
filing.\17\ However, Rule 19b-4(f)(6)(iii) \18\ permits the Commission
to designate a shorter time if such action is consistent with the
protection of investors and the public interest. FINRA requested that
the Commission waive the 30-day operative delay and designate the
proposed rule change to become operative upon filing so that FINRA can
implement the proposed rule change on December 15, 2008, the same date
on which the previously approved rule changes relating the Consolidated
FINRA Rulebook will be implemented. The Commission believes that
waiving the 30-day operative delay is consistent with the protection of
investors and the public interest. In particular, the Commission does
not believe that the proposed rule change presents any novel issues.
The proposed rule change makes non-substantive changes to update FINRA
rules in the Consolidated FINRA Rulebook to reflect changes to FINRA
rules previously published for comment by the Commission. Accordingly,
the Commission designates the proposed rule change to be operative upon
filing with the Commission.\19\
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    \17\ See id.
    \18\ Id.
    \19\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule'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 may summarily abrogate the rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors,

[[Page 78414]]

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-2008-057 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-2008-057. 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-2008-057 and should be
submitted on or before January 12, 2009.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-30319 Filed 12-19-08; 8:45 am]

BILLING CODE 8011-01-P