Document ID: SEC-2010-0005-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Approving Proposed Rule Change Amending the FINRA Rule 9550 Series (Expedited Proceedings)
Posted Date: 2010-01-04T05:00Z

[Federal Register Volume 75, Number 1 (Monday, January 4, 2010)]
[Notices]
[Pages 167-168]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-31160]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61242; File No. SR-FINRA-2009-076]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Order Approving Proposed Rule Change Amending the 
FINRA Rule 9550 Series (Expedited Proceedings)

December 28, 2009.
    On November 5, 2009, Financial Industry Regulatory Authority, Inc. 
(``FINRA'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change amending the FINRA Rule 9550 Series (Expedited 
Proceedings). On November 17, 2009, FINRA filed Amendment No. 1. The 
proposed rule change would make the following changes:
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.

--Shorten the time within which a hearing must be held from the current 
60 days after a hearing request to 30 days after the request in 
relation to FINRA rules Rule 9551 (Failure to Comply with Public 
Communication Standards), Rule 9552 (Failure to Provide Information or 
Keep Information Current), Rule 9553 (Failure to Pay FINRA Dues, Fees 
and Other Charges), Rule 9554 (Failure to Comply with an Arbitration 
Award or Related Settlement), and Rule 9555 (Failure to Meet the 
Eligibility or Qualification Standards or Prerequisites for Access to 
Services);
--Amend Rule 9552 to shorten the period before a suspension 
automatically turns into an expulsion or bar from six months to three 
months;
--Amend Rule 9554, to explicitly allow FINRA to take expedited action 
against firms or associated persons who fail to pay restitution to a 
third party (usually investors who have been harmed);
--Harmonize the remedy for an individual's failure to pay an 
arbitration award in Rule 9554 with the remedy for the same misconduct 
in the FINRA By-Laws (limiting the remedy against individuals in such 
cases to suspension, and eliminating any reference to barring 
individuals).

    The proposed rule change, as modified by Amendment No. 1, was 
published for comment in the Federal Register on November 25, 2009.\3\ 
The Commission received one comment on the proposal.\4\ This order 
approves the proposed rule change as modified by Amendment No. 1.
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    \3\ See Securities Exchange Act Release No. 61026 (November 18, 
2009) 74 FR 61727.
    \4\ See December 15, 2009 letter to Elizabeth M. Murphy, 
Secretary, Commission, from Scott R. Shewan, President, Public 
Investors Arbitration Bar Association (``PIABA Letter'') in support 
of the proposed rule change. PIABA states ``FINRA has proposed 
equitable amendments and should be commended for the thoughtful 
treatment of the restitution issue in particular * * * the 
Commission should approve the amendments without delay.'' PIABA 
Letter at 2.
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    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities association.\5\ In 
particular, the Commission finds that the proposed rule change is 
consistent with the provisions of Section 15A(b)(6) of the Act,\6\ 
which requires, among other things, that FINRA's rules 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. The proposal also is consistent with 
Section 15A(b)(7) of the Act,\7\ which provides that FINRA members and 
associated persons must be appropriately disciplined for violations of 
provisions of the Act or FINRA rules. The Commission believes the 
proposed rule change is consistent with these purposes because it is 
designed to promote a reasonable, fair and efficient disciplinary 
process. FINRA's amendments make the timing of hearings more consistent 
with other hearings in the series of rules. FINRA stated that the 
changes to these rules are based on FINRA's experience over the last 
five years administering the rules.
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    \5\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. 15 U.S.C. 78c(f).
    \6\ 15 U.S.C. 78o-3(b)(6).
    \7\ 15 U.S.C. 78o-3(b)(7).

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[[Page 168]]

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\8\ that the proposed rule change (SR-FINRA-2009-076), as modified 
by Amendment No. 1, be, and it hereby is, approved.
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    \8\ 15 U.S.C. 78s(b)(2).

    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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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-31160 Filed 12-31-09; 8:45 am]
BILLING CODE 8011-01-P