Document ID: SEC-2015-1436-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2015-08-31T04:00Z

[Federal Register Volume 80, Number 168 (Monday, August 31, 2015)]
[Notices]
[Pages 52530-52532]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-21405]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75757; File No. SR-FINRA-2015-030]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Adopt FINRA Rule 3280 (Private Securities 
Transactions of an Associated Person) in the Consolidated FINRA 
Rulebook

August 25, 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 August 20, 2015, Financial Industry Regulatory Authority, Inc. 
(``FINRA'') filed with the Securities and Exchange Commission 
(``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 proposal as constituting a ``non-
controversial'' proposed rule change pursuant to section 19(b)(3)(A) of 
the Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ which renders it 
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).
    \4\ 17 CFR 240.19b-4(f)(6).
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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 adopt NASD Rule 3040 (Private Securities 
Transactions of an Associated Person) as FINRA Rule 3280 (Private 
Securities Transactions of an Associated Person) in the consolidated 
FINRA rulebook without any substantive changes. FINRA also proposes to 
update cross-references within other FINRA rules accordingly.
    The text of the proposed rule change is available at the principal 
office of FINRA, on FINRA's Web site at http://www.finra.org, 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
    As part of the process of developing a new consolidated rulebook 
(``Consolidated FINRA Rulebook''),\5\ FINRA is proposing to transfer 
NASD Rule 3040 (Private Securities Transactions of an Associated 
Person) into the Consolidated FINRA Rulebook as FINRA Rule 3280 
(Private Securities Transactions of an Associated Person) without any 
substantive changes. As with NASD Rule 3040, proposed FINRA Rule 3280 
states that, prior to participating in any private securities 
transaction, any person associated with a FINRA member must provide 
written

[[Page 52531]]

notice to the member with which he or she is associated. The written 
notice must describe the transaction and the associated person's role, 
and disclose whether the associated person has received or may receive 
selling compensation in connection with the transaction. If the 
associated person has received or may receive selling compensation, the 
FINRA member must advise the individual in writing whether it approves 
or disapproves the associated person's participation in the 
transaction. If the member disapproves the associated person's 
participation in the transaction, the associated person may not 
directly or indirectly participate in the transaction in any manner. If 
the member approves the associated person's participation in the 
transaction, then the transaction must be recorded on the member's 
books and records, and the member must supervise the associated 
person's participation as if the transaction were executed on behalf of 
the member. If the associated person has not received and will not 
receive any selling compensation, the member must provide the 
associated person with written acknowledgement of the notice and, at 
its discretion, may impose conditions on the associated person's 
participation in the transaction. In addition, proposed FINRA Rule 3280 
includes definitions of the terms ``private securities transaction'' 
and ``selling compensation'' that are substantively identical to the 
definitions in NASD Rule 3040.
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    \5\ The current FINRA rulebook consists of: (1) FINRA Rules; (2) 
NASD Rules; and (3) rules incorporated from New York Stock Exchange 
LLC (``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. 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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    Proposed FINRA Rule 3280 closely tracks the language of NASD Rule 
3040 and makes only non-substantive, technical changes to the text of 
the NASD rule by, for instance, replacing the reference to a legacy 
NASD rule with the applicable FINRA rule.\6\
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    \6\ FINRA previously solicited comment on a proposal to move 
NASD Rule 3040 to the Consolidated FINRA Rulebook with substantive 
changes and make it part of FINRA's supervision rule, but determined 
to address NASD Rule 3040 as a separate proposal. See Regulatory 
Notice 08-24 (May 2008); see also Exchange Act Release No. 64736 
(June 23, 2011), 76 FR 38245 (June 29, 2011) (Notice of Filing File 
No. SR-FINRA-2011-028) (withdrawn on September 27, 2011)). Given 
that FINRA would like to proceed with the rulebook consolidation 
process expeditiously to provide greater clarity and regulatory 
efficiency to FINRA members, FINRA is proposing to move NASD Rule 
3040 to the Consolidated FINRA Rulebook without substantive changes 
at this time, but FINRA may consider proposing substantive changes 
to the rule in the future.
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    The proposed rule change would also replace all references to NASD 
Rule 3040 in FINRA Rules 0150 (Application of Rules to Exempted 
Securities Except Municipal Securities), 2150.04 (Applicability of 
Other Rules to Sharing Arrangements), 3270 (Outside Business Activities 
of Registered Persons), and 6630 (Applicability of FINRA Rules to 
Securities Previously Designated as PORTAL Securities) with references 
to proposed FINRA Rule 3280 accordingly.
    FINRA has filed the proposed rule change for immediate 
effectiveness.
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, which 
does not substantively change the rule, is consistent with the Act 
because it is being undertaken pursuant to the rulebook consolidation 
process, which is designed to provide additional clarity and regulatory 
efficiency to FINRA members by consolidating the applicable NASD, 
Incorporated NYSE, and FINRA rules into one rule set.
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    \7\ 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. As noted above, the proposed 
rule change will not substantively change either the text or 
application of the rule. FINRA would like to proceed with the rulebook 
consolidation process expeditiously, which it believes will provide 
additional clarity and regulatory efficiency to 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 with respect 
to the proposed rule change to transfer NASD Rule 3040 into the 
Consolidated FINRA Rulebook without any substantive changes.\8\
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    \8\ But see supra note 6.
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III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange has designated the proposed rule change as non-
controversial under section 19(b)(3)(A) of the Act \9\ and Rule 19b-
4(f)(6) thereunder.\10\ 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 if consistent with 
the protection of investors and the public interest, it has become 
effective pursuant to section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6) thereunder.
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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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    In accordance with Rule 19b-4(f)(6),\11\ FINRA submitted 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, or such shorter time as the 
Commission may designate, as specified in Rule 19b-4(f)(6)(iii) under 
the Act.\12\
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    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
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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: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) 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-2015-030 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-2015-030. 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/

[[Page 52532]]

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 10:00 a.m. and 3:00 p.m. Copies of the 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-
030, and should be submitted on or before September 21, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-21405 Filed 8-28-15; 8:45 am]
BILLING CODE 8011-01-P