Document ID: SEC-2022-0858-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2022-06-29T04:00Z

[Federal Register Volume 87, Number 124 (Wednesday, June 29, 2022)]
[Notices]
[Pages 38803-38806]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-13816]

[[Page 38803]]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95147; File No. SR-FINRA-2022-009]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Order Approving a Proposed Rule Change To Amend 
Certain FINRA Rules To Permit, and in Some Instances Require, 
Electronic Service and Filing of Documents in Disciplinary and Other 
Proceedings and Appeals

June 23, 2022.

I. Introduction

    On April 6, 2022, the Financial Industry Regulatory Authority, Inc. 
(``FINRA'') filed with the Securities and Exchange Commission (``SEC'' 
or ``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Exchange Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to amend FINRA Rules 1012, 1015, 
6490, 9132, 9133, 9135, 9146, 9321, 9341, 9349, 9351, 9522, 9524, 9525, 
9559 and 9630 to permit, and in some instances require, electronic 
service and filing of documents in disciplinary and other proceedings 
and appeals. The proposed rule change was published for comment in the 
Federal Register on April 14, 2022.\3\ On May 25, 2022, FINRA consented 
to extend until July 13, 2022, the time period in which the Commission 
must approve the proposed rule change, disapprove the proposed rule 
change, or institute proceedings to determine whether to approve or 
disapprove the proposed rule change.\4\ This order approves the 
proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Exchange Act Release No. 94654 (April 8, 2022), 87 FR 
22264 (April 14, 2022) (File No. SR-FINRA-2022-009) (``Notice''). 
The Commission received one comment letter in connection with the 
Notice, which does not relate to the substance of the proposed rule 
change.
    \4\ See Letter from Ilana Reid, Assistant General Counsel, OGC 
Regulatory Practice and Policy, FINRA (May 25, 2022) available at 
https://www.finra.org/sites/default/files/2022-05/sr-finra-2022-009-extension1.pdf.
---------------------------------------------------------------------------

II. Description of the Proposed Rule Change

A. Background

    As discussed in the Notice, the FINRA Rule 1000, 6400, 9100, 9300, 
9520, 9550, and 9600 Series contain, among other things, rules 
regarding the method of service and filing of documents in disciplinary 
and other proceedings and appeals, as well as other procedural 
requirements.\5\ Several of FINRA's rules regarding the method of 
service and filing have been amended temporarily to permit, and in some 
instances require, electronic filing and service during the period in 
which FINRA's operations have been impacted by the COVID-19 pandemic 
\6\ (the ``temporary amendments'').\7\ The temporary amendments pertain 
to disciplinary proceedings before the Office of Hearing Officers 
(``OHO''), to appeals before the National Adjudicatory Council 
(``NAC''), as well as to other types of administrative proceedings.\8\ 
FINRA stated that the temporary amendments allowed, and in some cases 
required, FINRA (in its capacity as an Adjudicator) to serve certain 
documents on parties by electronic mail (``email'') and required 
parties to file or serve documents by email, unless the parties agreed 
to an alternative method of service.\9\ FINRA's proposed rule change 
would make the temporary amendments regarding electronic service and 
filing permanent, with some modifications.\10\ More specifically, the 
proposed rule change would allow, and in some instances require, 
electronic service and filing unless another method of service is 
ordered by the Adjudicator.\11\ This approach differs from the 
temporary amendments, which required email service unless the parties 
agreed to an alternative method of service.\12\ As set forth in the 
Notice, FINRA has observed that it would be more effective to require 
email service unless the Adjudicator orders otherwise.\13\ 
Nevertheless, the proposed rule change would allow all parties who lack 
the ability to use or access email to request relief to use an 
alternative method of service upon a showing of good cause.\14\ But, 
unlike what had been permitted under the temporary amendments, the 
parties' agreement to use an alternative method of service would be 
insufficient unless the parties also obtained an order from the 
Adjudicator permitting use of the alternative method of service.\15\
---------------------------------------------------------------------------

    \5\ See Notice at 22265.
    \6\ See id. at 22264. See also 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); 
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); Securities Exchange Act Release No. 
89423 (July 29, 2020), 84 FR 47278 (August 4, 2020) (Notice of 
Filing and Immediate Effectiveness of File No. SR-FINRA-2020-022); 
Securities Exchange Act Release No. 90619 (December 9, 2020), 85 FR 
81250 (December 15, 2020) (Notice of Filing and Immediate 
Effectiveness of File No. SR-FINRA-2020-042); Securities Exchange 
Act Release No. 91495 (April 7, 2021), 86 FR 19306 (April 13, 2021) 
(Notice of Filing and Immediate Effectiveness of File No. SR-FINRA-
2021-006); Securities Exchange Act Release No. 93758 (December 13, 
2021), 86 FR 71695 (December 17, 2021) (Notice of Filing and 
Immediate Effectiveness of File No. SR-FINRA-2021-031); and 
Securities Exchange Act Release No. 94430 (March 16, 2022), 87 FR 
16262 (March 22, 2022) (Notice of Filing and Immediate Effectiveness 
of File No. SR-FINRA-2022-004).
    \7\ For ease of reference, and to be consistent with the 
language FINRA used in its filing, the pre-pandemic rules will be 
referred to herein as the ``original rules'' and, as noted above, 
the temporary changes to the original rules will be referred to as 
the ``temporary amendments.'' See Notice at 22265 n.7. Some of the 
original rules were amended while the temporary amendments were in 
effect. See, e.g., FINRA Rule 9321 (amended by SR-FINRA-2020-011, 
eff. April 15, 2021). As such, any prior amendments to the original 
rules have already been incorporated into the rule text of this 
proposed rule change, which is available on FINRA's website. See 
FINRA website, File No. SR-FINRA-2022-009 (Exhibit 5), available at 
https://www.finra.org/rules-guidance/rule-filings/sr-finra-2022-009.
    \8\ See Notice at 22265.
    \9\ See id. See also note 6 supra. As discussed in the Notice, 
FINRA's temporary amendments did not permit electronic service of an 
initial complaint on a respondent due to what FINRA viewed as 
heightened fair process concerns. As such, FINRA states that the 
proposed rule change would also not permit electronic service of 
initial complaints. Under FINRA's existing rule, the only 
permissible methods of serving the initial complaint are by hand, 
mail, or courier. See Notice at 22264-65. See also FINRA Rule 
9134(a).
    \10\ See Notice at 22265.
    \11\ See id.
    \12\ See id. See also FINRA Rules 6490(e), 9133(b), 9146(l), 
9524(a)(3), and 9559(h).
    \13\ See Notice at 22265.
    \14\ See id.
    \15\ See id.
---------------------------------------------------------------------------

    The temporary amendments also provided extensions of time to FINRA 
staff, respondents, and other parties in connection with certain 
adjudicatory and review processes that are not being adopted in this 
proposed rule change.\16\ For example, under the original rules, the 
time to appeal under FINRA Rule 6490(e) was seven calendar days, and a 
subcommittee was required to convene once each calendar month to 
consider all appeals received during the prior month.\17\ Under the 
temporary amendments to FINRA Rule 6490(e), the time to appeal was 
temporarily extended to 30 calendar days, and the time for the 
subcommittee to convene was temporarily extended to once every 90 
calendar days.\18\ As discussed in the Notice, the timing requirements 
in FINRA Rule 6490(e) that were extended by the temporary amendments 
are not being adopted permanently by FINRA in this proposed rule 
change.\19\ Therefore, when this proposed rule change becomes 
effective, the timing requirements in FINRA Rule 6490(e) will revert 
back to the original rule.\20\
---------------------------------------------------------------------------

    \16\ See id. at 22264, n.4.
    \17\ See id.
    \18\ See id.
    \19\ See id.
    \20\ See id.

---------------------------------------------------------------------------

[[Page 38804]]

    In an effort to support the transition to email service and filing, 
the proposed rule change also would require parties in OHO proceedings 
to include their current email address and contact information at the 
first occurrence of filing a complaint, answer, or other paper, and to 
file and serve any change in email address or contact information on 
all other parties during the course of the proceeding as well as file 
it with the Adjudicator.\21\
---------------------------------------------------------------------------

    \21\ See id. at 22265. See also proposed Rule 9135(d).
---------------------------------------------------------------------------

B. Proposed Rule Change To Allow or Require Email Filing and Service

    FINRA stated that the original rules, with few exceptions, do not 
provide for service by email.\22\ However, in response to the COVID-19 
pandemic, FINRA filed temporary amendments to permit, and in some 
instances require, electronic filing and service during the period in 
which FINRA's operations have been impacted by the pandemic.\23\ FINRA 
stated that the proposed rule change is intended to make these 
temporary amendments, with some modifications, permanent considering 
FINRA's positive experience with operating while the temporary 
amendments have been in effect, since May of 2020.\24\ As detailed more 
fully below, FINRA stated that technological advancements and their 
widespread use have made filing and service more efficient under the 
temporary amendments than under the original rules.\25\ The proposed 
rule change would permit, and in some instances require, FINRA to serve 
documents,\26\ other than an initial complaint,\27\ by email and to 
provide that service by email is deemed complete upon sending.\28\ 
Further, FINRA stated that if it has knowledge that the address used 
for service is not current or is not functional (i.e., FINRA receives a 
bounce-back or other message indicating there was a failure to deliver 
the email), FINRA will use other permissible methods of service until 
it can verify the party's email address.\29\
---------------------------------------------------------------------------

    \22\ See Notice at 22265. FINRA also stated that, prior to the 
temporary amendments, FINRA permitted service by email under some of 
its original rules. For example, FINRA Rule 6490(d)(5) (Processing 
of Company-Related Actions; Procedures for Reviewing Submissions; 
Notice Issuance) permits a notice under the provision to be issued 
by facsimile or email, or pursuant to FINRA Rule 9134. As FINRA 
indicated in the Notice, FINRA Rule 9134 permits service on parties 
using the following methods: (1) personal service, (2) mail, or (3) 
courier. See id. at 22266.
    \23\ See id. at 22264.
    \24\ See id. at 22267.
    \25\ See id. at 22267.
    \26\ FINRA stated that it sometimes serves documents in its 
capacity as the Adjudicator, but FINRA may be a party in other 
instances, such as in its capacity as the Department of Enforcement. 
See id. at n.12.
    \27\ See note 9 supra. As FINRA set forth in the Notice, when 
the FINRA Department of Enforcement files an initial complaint on a 
respondent, the Notice of Complaint tells the respondent how to file 
the answer and other documents with the OHO. See Notice at 22265, 
n.14.
    \28\ See Notice at 22265. In addition to email, FINRA stated 
that various other methods of service would still be permitted, such 
as personal service, mail, and courier. See id. FINRA also stated 
that, as indicated in the proposed rule text, FINRA will consider 
service by email complete upon sending of the relevant document or 
other information. According to FINRA, this is consistent with the 
treatment of service by mail under the original rules and service by 
email under the temporary amendments. FINRA further stated that in 
most cases, it will already have information regarding the relevant 
party, or their counsel's, preferred method of service since FINRA 
and the relevant party, or their counsel, will have already engaged 
in communications prior to service of documents or other 
information. See id.
    \29\ See id.
---------------------------------------------------------------------------

    As set forth in the Notice, FINRA believes that the proposed rule 
change will improve and modernize FINRA's operations.\30\ Additionally, 
FINRA stated that, to the extent an applicant, respondent, or other 
party lacks the ability to use or access technology needed to file, 
serve, or accept service by email, FINRA intends to provide reasonable 
accommodations to them.\31\ According to FINRA, the process for 
requesting an alternative method of service or filing will be posted to 
FINRA's website, as well as explained in the Notice of Complaint and in 
the Code and Guide letter.\32\ If a party shows good cause, the 
Adjudicator will order that filing or service occur by hard copy.\33\ 
In addition, FINRA stated that electronic methods of service and filing 
are common practice in the courts and with other regulatory agencies, 
noting that the Commission also amended its rules in November 2020 to 
require electronic filing and service of documents in its 
administrative proceedings.\34\
---------------------------------------------------------------------------

    \30\ See id.
    \31\ See id.
    \32\ See id. According to FINRA, once OHO receives an initial 
complaint, it sends a Code and Guide letter to each respondent to 
notify them of the complaint, along with instructions on how to file 
with OHO. See id. at n.14.
    \33\ See id.
    \34\ See id. at 22265, 22267. See also Amendments to the 
Commission's Rules of Practice, Securities Exchange Act Release No. 
90442 (Nov. 17, 2020), 85 FR 86464 (File No. S7-18-15) (December 30, 
2020) (codified at 17 CFR 201 (2020)).
---------------------------------------------------------------------------

    According to FINRA, the proposed rule change to amend the FINRA 
Rule 1000, 6400, 9100, 9300, 9520, 9550, and 9600 Series is 
substantially the same as the temporary amendments currently in effect 
unless otherwise noted below.
FINRA Rule 1000 Series
    The FINRA Rule 1000 Series (Member Application and Associated 
Person Registration) governs, among other things, the process for (i) 
applying for FINRA membership; (ii) FINRA members seeking approval of a 
change in ownership, control, or business operations, and (iii) an 
applicant requesting that FINRA's appellate body, the NAC, review a 
FINRA decision rendered under the Rule 1000 Series.\35\ As FINRA 
stated, applicants and FINRA are, in connection with these processes, 
required under the original rules to file or serve certain documents 
using the prescribed methods set forth in FINRA Rule 1012(a), which do 
not include email.\36\ The proposed rule change would amend Rule 
1012(a)(4) to permit FINRA to serve documents under the Rule 1000 
Series by email and amend Rule 1015(f)(1),\37\ which requires the NAC 
to serve a notice of a hearing before the NAC by facsimile or overnight 
courier, to also allow service of the notice by email.\38\ The proposed 
rule change would amend Rule 1015(a) to eliminate the requirement that 
the applicant also file, by first-class mail, a copy of the request for 
review to the district office where the applicant filed its 
application.\39\ FINRA indicated that it was proposing to eliminate 
this requirement from Rule 1015(a) in an effort to streamline processes 
and avoid duplication.\40\
---------------------------------------------------------------------------

    \35\ See Notice at 22265. See also FINRA Rule 1000 Series.
    \36\ See Notice at 22265. See also FINRA Rule 1012(a), which 
governs the filing and service requirements for the Rule 1000 
Series. See Notice at 22265, n.15.
    \37\ See Notice at 22265. See also FINRA Rule 1015(f).
    \38\ See Notice at 22265.
    \39\ See id. at n.17.
    \40\ See id.
---------------------------------------------------------------------------

    The proposed rule change would also amend Rule 1012(a)(3) to 
require applicants to file an application or any document or 
information requested under the Rule 1000 Series by email except where 
FINRA has otherwise prescribed an alternative filing process, or as the 
FINRA Department of Enforcement and the Applicant otherwise agree.\41\
---------------------------------------------------------------------------

    \41\ See id. at 22266. See also FINRA Rule 1012(a). FINRA is 
additionally proposing a non-substantive change to delete the word 
``electronic'' from the description of the ``alternative filing 
process'' because it is superfluous. See Notice at 22266, n.18.
---------------------------------------------------------------------------

FINRA Rule 6400 Series
    FINRA Rule 6490 sets forth the requirements for issuers of a class 
of publicly traded securities to provide timely notice to FINRA, 
pursuant to requirements Exchange Act Rule 10b-

[[Page 38805]]

17, of certain corporate actions.\42\ FINRA stated that it reviews 
related documentation accompanying such notifications and, under 
certain circumstances, the documentation may not be processed if it is 
deemed deficient, with Rule 6490(e) setting forth the process for 
appealing such a determination.\43\ As set forth in the Notice, the 
proposed rule change would, among other things,\44\ require a party 
appealing a deficiency determination to file the appeal by email unless 
an alternative method of service is ordered by the Adjudicator.\45\
---------------------------------------------------------------------------

    \42\ See FINRA Rule 6490. For example, certain corporate actions 
that would require timely notice under this rule include dividend or 
other distribution of cash or securities, a stock split or reverse 
stock split, and rights or subscription offerings. See Notice at 
22266.
    \43\ See Notice at 22266. See also FINRA Rule 6490(e).
    \44\ See Notice at 22266. FINRA has also proposed several non-
substantive, technical changes including, for instance, deleting the 
parenthetical references to the numerals ``3'' and ``7,'' which 
originally followed the words ``three'' and ``seven'' in FINRA Rule 
6490(e). See id. at n.20. See also FINRA Rule 6490(e). Additionally, 
the time frames under the proposed rule change are reverting back to 
their original form, so the time to appeal and for appellate review 
under the proposed rule change are the same as they were under the 
original rule. See notes 6-7 supra. See also Notice at 22266 n.20.
    \45\ See Notice at 22266.
---------------------------------------------------------------------------

FINRA Rule 9100 Series
    The FINRA Rule 9100 Series is of general applicability to all 
proceedings set forth in the FINRA Rule 9000 Series,\46\ unless a rule 
specifically provides otherwise.\47\ More specifically, the FINRA Rule 
9100 Series sets forth, among other things, requirements pertaining to 
service of orders, notices, and decisions under the FINRA Rule 9000 
Series, as well as requirements for filing of various papers, motions, 
and other related issues.\48\ As stated in the Notice, FINRA Rules 
9132(b), 9133(b), and 9146(l) provide that the documents and other 
information governed by those rules must be served pursuant to FINRA 
Rule 9134, which permits service on the parties using the following 
methods: (1) personal service, (2) mail, or (3) courier.\49\ Since 
FINRA Rule 9134 does not permit service by email, the proposed rule 
change would amend FINRA Rule 9132(b) to allow FINRA to serve relevant 
documents or information by email, and amend FINRA Rules 9133(b) and 
9146(l) to require parties to serve documents by email, unless an 
alternative method of service is ordered by the Adjudicator.\50\
---------------------------------------------------------------------------

    \46\ The FINRA Rule 9000 Series, among other things, sets forth 
the procedure for FINRA proceedings for disciplining a member, 
associated person, or formerly associated person. See id.
    \47\ See id.
    \48\ See FINRA Rule 9100 Series.
    \49\ See FINRA Rules 9132(b), 9133(b), and 9146(l).
    \50\ See FINRA Rule 9134. See also Notice at 22266.
---------------------------------------------------------------------------

    In addition, in an effort to support the transition to email 
service and filing, the proposed rule change would amend FINRA Rule 
9135 to add paragraph (d), which would require parties in OHO 
proceedings to file and serve the parties with their current email 
address and contact information at the first occurrence of filing a 
complaint, answer, or other paper, and to file and serve any changes in 
email address or contact information on all other parties during the 
course of the proceeding and file this information with the 
Adjudicator.\51\ This aspect of the proposed rule change was not part 
of the temporary amendments, but FINRA stated that it should help 
ensure that all documents are successfully sent from and received at a 
valid email address, while simultaneously helping to ensure that FINRA, 
applicants, respondents, and any other parties all have accurate 
contact information for each other.\52\
---------------------------------------------------------------------------

    \51\ See Notice at 22266.
    \52\ See id.
---------------------------------------------------------------------------

FINRA Rule 9300 Series
    The FINRA Rule 9300 Series sets forth the procedures for review of 
disciplinary proceedings by the NAC and FINRA Board and for 
applications for review of a final disciplinary action by the 
Commission.\53\ As stated in the Notice, FINRA Rules 9321, 9341(c), 
9349(c), and 9351(e) require that FINRA serve documents in connection 
with proceedings under those rules pursuant to FINRA Rule 9134.\54\ 
While FINRA Rule 9134 permits various methods of service,\55\ it is 
silent on email. The proposed rule change would amend FINRA Rule 9321, 
9341(c), 9349(c), and 9351(e) to allow for email as a method of service 
in connection with those specific rules.\56\
---------------------------------------------------------------------------

    \53\ See FINRA Rule 9300 Series. See also Notice at 22266.
    \54\ See FINRA Rules 9321, 9341(c), 9349(c), and 9351(e). See 
also Notice at 22266.
    \55\ See FINRA Rule 9134. As FINRA indicated in the Notice, 
FINRA Rule 9134 permits service on parties using the following 
methods: (1) personal service, (2) mail, or (3) courier. See Notice 
at 22266.
    \56\ See FINRA Rule 9134. See also Notice at 22266.
---------------------------------------------------------------------------

FINRA Rule 9520 Series
    The FINRA Rule 9520 Series sets forth the procedures for 
eligibility proceedings and review of those proceedings by the NAC and 
FINRA Board.\57\ As set forth in the Notice, FINRA Rules 9522(a)(4), 
9524(a)(3)(A) and (B), 9524(b)(3), and 9525(e) require FINRA to serve 
documents in connection with those proceedings, but do not allow for 
email as a method of service.\58\ The proposed rule change would amend 
those rules to allow for email as a method of service, as well as 
amending FINRA Rule 9524(a)(3)(A) and (B) such that the disqualified 
member or sponsoring member under those rules would be required to 
serve documents and any exhibit and witness lists by email unless an 
alternative method of service is ordered by the Adjudicator.\59\
---------------------------------------------------------------------------

    \57\ See FINRA Rule 9520 Series. See also Notice at 22266.
    \58\ See FINRA Rules 9522(a)(4), 9524(a)(3)(A) and (B), 
9524(b)(3), and 9525(e). See also Notice at 22266.
    \59\ See Notice at 22266. FINRA is also making a non-
substantive, technical change to replace the numeral ``10'' with the 
word ``ten'' in FINRA Rule 9524(a)(3)(B).
---------------------------------------------------------------------------

FINRA Rule 9550 Series
    The FINRA Rule 9550 Series sets forth the rules that govern certain 
expedited actions, and the ability of the NAC to call for review of a 
proposed decision prepared under the FINRA Rule 9550 Series.\60\ As set 
forth in the Notice, FINRA Rule 9559(h)(2) sets forth the timing and 
method of service requirements for the parties' exchange of proposed 
exhibit and witness lists in advance of an expedited proceeding.\61\ 
Even though FINRA Rule 9559(h)(2) allows for email as a method of 
service, the proposed rule change would amend FINRA Rule 9559(h)(2) to 
require FINRA to serve its exhibit and witness lists exclusively by 
email, unless an alternative method of service is ordered by the 
Adjudicator.\62\ The Notice and FINRA's Rulebook also sets forth that 
FINRA Rule 9559(q)(2) requires the NAC to serve its decision when it 
issues one under the FINRA Rule 9550 Series, and FINRA Rule 9559(q)(5) 
requires the NAC to serve that decision on all the parties and all 
members with which the respondent is associated.\63\ Since FINRA Rules 
9559(q)(2) and (5) do not allow for email as a method of service, the 
proposed rule change would amend these rules to allow for email as a 
method of service.\64\
---------------------------------------------------------------------------

    \60\ See the FINRA Rule 9550 Series. See also Notice at 22266.
    \61\ See FINRA Rule 9559(h)(2). See also Notice at 22266.
    \62\ See Notice at 22266. As set forth in the Notice, and 
described above in the context of the proposed rule change to amend 
FINRA Rule 1015(a), FINRA is also proposing to amend FINRA Rule 
9559(h) to eliminate the requirements in 9559(h)(1) and (2) that, if 
the specified documents are served by facsimile or email, they must 
also be served by either overnight courier or personal delivery. See 
id. at n.34.
    \63\ See FINRA Rules 9559(q)(2) and (5). See also Notice at 
22266.
    \64\ See Notice at 22266.

---------------------------------------------------------------------------

[[Page 38806]]

FINRA Rule 9600 Series
    The FINRA Rule 9600 Series sets forth the procedures related to 
exemptive relief from a variety of FINRA rules, including appeals 
stemming from decisions under FINRA Rule 9620.\65\ As stated in the 
Notice and as set forth in FINRA's Rulebook, FINRA Rules 9630(e)(1) and 
(2) require the NAC to serve its decision as to an appeal issued under 
FINRA Rule 9620 pursuant to FINRA Rule 9134.\66\ Since FINRA Rule 9134 
does not allow for email as a method of service, the proposed rule 
change would amend FINRA Rule 9630(e) to allow for email as a method of 
service.\67\
---------------------------------------------------------------------------

    \65\ See FINRA Rule 9600 Series. See also Notice at 22266.
    \66\ See FINRA Rules 9630(e)(1) and (2). See also Notice at 
22266.
    \67\ See FINRA Rule 9134. See also Notice at 22266.
---------------------------------------------------------------------------

Purpose of the Proposed Rule Change
    FINRA stated that the proposed rule change to amend the FINRA Rule 
1000, 6400, 9100, 9300, 9520, 9550, and 9600 Series would modernize the 
rules and make service and filing more efficient and effective.\68\ 
Specifically, FINRA stated that adopting permanent rules on electronic 
service and filing should, among other things, reduce reliance on paper 
documents in favor of more efficient electronic formats and may benefit 
member firms if there are situations where access to physical office 
locations is limited or otherwise restricted.\69\ FINRA also stated 
that its experience operating under the temporary amendments since May 
of 2020 has demonstrated that electronic service and filing is 
beneficial for parties, OHO panelists, and FINRA staff.\70\
---------------------------------------------------------------------------

    \68\ See Notice at 22266-67.
    \69\ See id. at 22267-68.
    \70\ See id. at 22265.
---------------------------------------------------------------------------

C. Effective Date

    If the Commission approves the proposed rule change, FINRA will 
announce the effective date of the proposed rule change in a Regulatory 
Notice to be published by FINRA. FINRA stated that it intends to avoid 
or, at least, minimize any gap between the expiration of the temporary 
amendments on electronic service and filing and the implementation date 
of this proposed rule change.\71\ However, FINRA also stated that if 
the temporary amendments are set to expire before the effective date, 
it may seek to extend the temporary amendments so that FINRA can 
provide continuity and avoid any lapse in the temporary amendments 
during the period before the effective date of the proposal.
---------------------------------------------------------------------------

    \71\ See id. at 22267, n.38.
---------------------------------------------------------------------------

III. Discussion and Commission Findings

    After careful review of the proposed rule change, and considering 
that the Commission did not receive any comments that relate to the 
substance of the proposed rule change \72\ or to the relevant aspects 
of the temporary amendments that are being made permanent in this 
proposal, the Commission finds that the proposed rule change is 
consistent with the requirements of the Exchange Act and the rules and 
regulations thereunder that are applicable to a national securities 
association.\73\ Specifically, the Commission finds that the proposed 
rule change is consistent with Section 15A(b)(6) of the Exchange 
Act,\74\ which requires, among other things, that FINRA 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.
---------------------------------------------------------------------------

    \72\ See note 3 supra (explaining that the Commission received 
one comment letter in connection with the Notice, which does not 
relate to the substance of the proposed rule change).
    \73\ In approving this rule change, the Commission has 
considered the rule's impact on efficiency, competition, and capital 
formation. See 15 U.S.C. 78c(f).
    \74\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

    As discussed in greater detail in the Notice and outlined in 
Section II above, the FINRA Rule 1000, 6400, 9100, 9300, 9520, 9550, 
and 9600 Series contain filing, service and other procedural 
requirements, as described above. Since May of 2020, temporary 
amendments have been in effect that permit, and in some instances 
require, electronic filing and service connected to disciplinary 
proceedings before the OHO, appeal proceedings before the NAC, and 
other types of administrative proceedings. As noted above, the 
Commission has not received any comments in response to the notices 
issued in connection with the temporary amendments, and the extensions 
of the same, that address electronic service and filing.\75\ The 
proposed rule change would make the electronic service and filing 
aspects of the temporary amendments permanent, with some modifications, 
as also described above. As a result, the proposed rule change would 
permit, and in some instances require, FINRA to serve documents (other 
than an initial complaint by FINRA) by email and would also provide 
that service by email is deemed complete upon sending. The proposed 
rule change would also require parties to file or serve documents by 
email, unless the parties obtain an order from an Adjudicator 
permitting the use of an alternative method of service.
---------------------------------------------------------------------------

    \75\ See note 6 supra.
---------------------------------------------------------------------------

    The use of widely-available electronic methods of service and 
filing--like FINRA's proposal to use email to serve and file certain 
documents--is common practice in the courts and at other regulatory 
agencies, including the Commission.\76\ The proposed rule change, among 
other things, is reasonably designed to protect investors and the 
public interest as it should make service and filing of certain 
documents in disciplinary and other proceedings and appeals more 
efficient and effective.\77\ In turn, the proposed rule change should 
help facilitate FINRA's important role in sanctioning misconduct and 
preventing customer harm.\78\ Furthermore, the proposed rule change 
reasonably addresses issues of fairness and notice in connection with 
FINRA's disciplinary and other proceedings and appeals by providing a 
mechanism for persons who lack the ability to use or access email or 
other necessary technology to request relief from their use and by 
continuing to require service of FINRA's initial complaint by hand, 
mail, or courier.
---------------------------------------------------------------------------

    \76\ See Notice at 22267. See also note 34 supra and appended 
text.
    \77\ See Notice at 22267-68.
    \78\ See id.
---------------------------------------------------------------------------

    For these reasons, the Commission finds the proposed rule change is 
consistent with the protection of investors and in the public interest.

IV. Conclusion

    It is therefore ordered pursuant to Section 19(b)(2) of the 
Exchange Act \79\ that the proposed rule change (SR-FINRA-2022-009) be, 
and hereby is, approved.
---------------------------------------------------------------------------

    \79\ 15 U.S.C. 78s(b)(2).

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-13816 Filed 6-28-22; 8:45 am]
BILLING CODE 8011-01-P