Document ID: SEC-2012-1012-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2012-06-28T04:00Z

[Federal Register Volume 77, Number 125 (Thursday, June 28, 2012)]
[Notices]
[Pages 38692-38694]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-15851]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67239; File No. SR-FINRA-2012-028]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change To Adjust Fees for Review of Advertising Material 
Filed With FINRA

June 22, 2012.
    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 June 8, 2012, the 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 by FINRA. FINRA has 
designated the proposed rule change as ``establishing or changing a 
due, fee or other charge'' under Section 19(b)(3)(A)(ii) of the Act\3\ 
and Rule 19b-4(f)(2) thereunder,\4\ 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\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    FINRA is proposing to amend Section 13 of Schedule A to the FINRA 
By-Laws (``Section 13'') governing the review charges for 
advertisements, sales literature, and other such material filed with or 
submitted to FINRA's Advertising Regulation Department (the 
``Department'').
    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.

[[Page 38693]]

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
    The Department evaluates member firms' advertisements, sales 
literature and other communications for compliance with applicable 
rules of FINRA, the SEC, the Municipal Securities Rulemaking Board and 
the Securities Investors Protection Corporation. These public 
communications include print, television and radio advertisements, and 
electronic communications, including Web sites and social media. They 
also include brochures, form letters, mailers and telemarketing 
scripts. Pursuant to NASD Rule 2210 and Interpretations issued 
thereunder, the Department helps to ensure that all FINRA member firms' 
communications are based on principles of fair dealing and good faith, 
are fair and balanced, and provide a sound basis for evaluating the 
facts in regard to any particular security or type of security, 
industry or service.\5\ Among other things, FINRA rules prohibit member 
communications from including false, exaggerated, unwarranted, or 
misleading statements or claims.
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    \5\ We note that the Commission recently approved new 
consolidated FINRA communications with the public rules, including 
new FINRA Rule 2210, which maintains these principles. See 
Securities Exchange Act Release No. 66681 (March 29, 2012), 77 FR 
20452 (April 4, 2012) (Order Approving File No. SR-FINRA-2011-035). 
FINRA will announce the effective date of the new rules in a 
Regulatory Notice to be published not later than June 27, 2012.
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    The purpose of the proposed rule change is to amend Section 13 to 
raise the fee that may be charged by the Department for reviewing each 
and every item of advertisement, sales literature, and other such 
material, whether in printed, video or other form, filed with or 
submitted to FINRA (except for items that are filed or submitted in 
response to a written request from the Department issued pursuant to 
the spot check procedures set forth in FINRA rules).
    Despite rising costs to administer the filings program, FINRA has 
not adjusted since 2005 the fees charged in connection with the review 
of advertisements, sales literature, and other such material. The 
volume of filings has increased substantially over that period. From 
2004 to 2011, for example, the number of regular filings increased 19 
percent from 77,983 to 92,879 and the number of expedited filings rose 
29 percent from 5,474 to 7,047. In 2011, firms submitted 95 percent of 
filings electronically. Since 2004, FINRA has upgraded its technology 
and hired additional staff to maintain the program's effectiveness and 
ensure reasonable turnaround times, particularly given firms' increased 
use of technology to submit filings. FINRA anticipates a continued 
increase in the volume of filings in future years. Based on these 
operational demands, FINRA proposes to raise the fee charged for the 
review of printed material and video or audio media from $100 to $125. 
The surcharge for lengthy materials would remain unchanged. FINRA 
further proposes to increase the fee for expedited review from $500 to 
$600 per item, and the fee for pages in excess of 10 to $50 per page 
from $25.
    FINRA has filed the proposed rule change for immediate 
effectiveness. FINRA is proposing that the implementation date of the 
proposed rule change will be July 2, 2012.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(5) of the Act,\6\ which requires, among 
other things, that FINRA rules provide for the equitable allocation of 
reasonable dues, fees and other charges among members and issuers and 
other persons using any facility or system that FINRA operates or 
controls. FINRA believes that the rule change is consistent with 
Section 15A(b)(5) of the Act in that the proposed review fee is 
reasonable based on the Department's increasing operational costs. The 
proposed review fee also contributes to the general funding of FINRA's 
overall regulatory program and serves to ensure that FINRA is 
sufficiently capitalized to meet its regulatory responsibilities. 
Moreover, the proposed fee is equitably allocated among all members 
that file or submit advertisements, sales literature, and other such 
material, whether in printed, video or other form.
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    \6\ 15 U.S.C. 78o-3(b)(5).
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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 foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \7\ and paragraph (f)(2) of Rule 19b-4 
thereunder.\8\ 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.] 
[sic]
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(2).
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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-2012-028 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-2012-028. 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,

[[Page 38694]]

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 on official business 
days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such 
filing also will be available for inspection and copying at the 
principal offices 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-2012-028, and should be submitted on or before 
July 19, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-15851 Filed 6-27-12; 8:45 am]
BILLING CODE 8011-01-P