Document ID: SEC-2011-2035-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2011-12-29T05:00Z

[Federal Register Volume 76, Number 250 (Thursday, December 29, 2011)]
[Notices]
[Pages 82014-82016]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-33488]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66049; File No. SR-FINRA-2011-035]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing of Amendment No. 2 to Proposed Rule 
Change, as Modified by Amendment No. 1, To Adopt FINRA Rules 2210 
(Communications With the Public), 2212 (Use of Investment Companies 
Rankings in Retail Communications), 2213 (Requirements for the Use of 
Bond Mutual Fund Volatility Ratings), 2214 (Requirements for the Use of 
Investment Analysis Tools), 2215 (Communications With the Public 
Regarding Security Futures), and 2216 (Communications With the Public 
About Collateralized Mortgage Obligations (CMOs)) in the Consolidated 
FINRA Rulebook

December 23, 2011.

I. Introduction

    On July 14, 2011, 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'' or ``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to adopt NASD Rules 2210 and 2211 
and NASD Interpretive Materials 2210-1 and 2210-3 through 2210-8 as 
FINRA Rules 2210 and 2212 through 2216, and to delete paragraphs 
(a)(1), (i), (j) and (l) of Incorporated NYSE Rule 472, Incorporated 
NYSE Rule Supplementary Material 472.10(1), (3), (4) and (5) and 
472.90, and Incorporated NYSE Rule Interpretations 472/01 and 472/03 
through 472/11. The proposed rule change was published for comment

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in the Federal Register on August 3, 2011.\3\ The Commission received 
nine comment letters in response to the proposed rule change.\4\ On 
October 31, 2011, FINRA filed Amendment No. 1 to the proposed rule 
change and a letter responding to comments.\5\ The proposed Amendment 
No. 1 was published for comment along with an order instituting 
proceedings pursuant to Section 19(b)(2)(B) of the Act, to determine 
whether to approve or disapprove the proposed rule change, as modified 
by Amendment No. 1, in the Federal Register on November 7, 2011.\6\ The 
comment period closed on December 7, 2011 and FINRA's rebuttal period 
closed on December 22, 2011. The Commission received seven comment 
letters in response to the Notice and Proceedings Order.\7\ On December 
22, 2011, FINRA filed Amendment No. 2 to the proposed rule change and a 
letter responding to comments.\8\ The text of Amendment No. 2 and 
FINRA's Rebuttal Letter are 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. FINRA's Rebuttal Letter is also available on the 
Commission's Web site at http://www.sec.gov.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 64984 (July 28, 
2011), 76 FR 46870 (August 3, 2011).
    \4\ Comment letters are available at www.sec.gov.
    \5\ See letter from Joseph P. Savage, FINRA, to Elizabeth 
Murphy, Secretary, SEC, dated October 31, 2011 (``Response 
Letter''). The text of proposed Amendment No. 1 and FINRA's Response 
Letter are 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. FINRA's Response Letter is also available on the 
Commission's Web site at http://www.sec.gov.
    \6\ See Securities Exchange Act Release No. 65663 (November 1, 
2011), 76 FR 68800 (November 7, 2011) (Notice of Filing of Amendment 
No. 1 and Order Instituting Proceedings SR-FINRA-2011-035) (``Notice 
and Proceedings Order''). The comment period closed on December 7, 
2011 and FINRA's rebuttal period closed on December 22, 2011.
    \7\ See letter from Melissa Callison, Vice President, 
Compliance, Charles Schwab & Co., Inc., dated December 7, 2011 
(``Schwab''); letter from Alexander C. Gavis, Vice President & 
Associate General Counsel, Fidelity Investments, dated December 7, 
2011 (``Fidelity''); letter from David T. Bellaire, General Counsel 
and Director of Government Affairs, Financial Services Institute, 
dated December 7, 2011 (``FSI''); letter from Dorothy M. Donohue, 
Senior Associate Counsel, Investment Company Institute, dated 
December 7, 2011 (``ICI''); letter from John Polanin and Claire 
Santaniello, Co-Chairs, Compliance and Regulatory Policy Committee 
of the Securities Industry and Financial Markets Association 
(``SIFMA''); letter from Sandra J. Burke, Principal, Vanguard, dated 
December 7, 2011 (``Vanguard''); and letter from Jeremiah McGair, 
Attorney, Wolverine Execution Services, LLC, dated December 7, 2011 
(``Wolverine''). Comment letters are available at www.sec.gov.
    \8\ See letter from Joseph P. Savage, FINRA, to Elizabeth M. 
Murphy, Secretary, SEC, dated December 22, 2011 (``Rebuttal 
Letter'').
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II. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Amendment

    First, FINRA is proposing to amend proposed FINRA Rule 2210 to 
exclude from the definition of ``institutional communication'' a 
member's internal communications used to train or educate registered 
persons about the products or services of the member. In this regard, 
FINRA proposes to delete proposed Supplementary Material 2210.01 in its 
entirety. FINRA also proposes to revise proposed FINRA Rule 2210(a)(3) 
as set forth below. Proposed new language is in italics.
    (3) ``Institutional communication'' means any written (including 
electronic) communication that is distributed or made available only to 
institutional investors, but does not include a member's internal 
communications.
    Second, FINRA is proposing to amend proposed FINRA Rule 2210 to 
allow a member that is subject to the new member pre-use filing 
requirements to file a broker-prepared free writing prospectus within 
10 business days of first use, rather than at least 10 business days 
prior to first use. In this regard, FINRA proposes to replace proposed 
FINRA Rule 2210(c)(1)(A) with the following:
    (A) For a period of one year beginning on the date reflected in the 
Central Registration Depository (CRD[supreg]) system as the date that 
FINRA membership became effective, the member must file with the 
Department at least 10 business days prior to first use any retail 
communication that is published or used in any electronic or other 
public media, including any generally accessible Web site, newspaper, 
magazine or other periodical, radio, television, telephone or audio 
recording, video display, signs or billboards, motion pictures, or 
telephone directories (other than routine listings). To the extent any 
retail communication that is subject to this filing requirement is a 
free writing prospectus that has been filed with the SEC pursuant to 
Securities Act Rule 433(d)(1)(ii), the member may file such retail 
communication within 10 business days of first use rather than at least 
10 business days prior to first use.
    Third, in response to comments received by the Commission, FINRA is 
proposing to amend proposed FINRA Rule 2210 to exclude from the filing 
requirements retail communications that are posted on an online 
interactive electronic forum. FINRA also is proposing to amend FINRA 
Rule 2210 to exclude from the filing requirements press releases issued 
by closed-end investment companies that are listed on the New York 
Stock Exchange (``NYSE'') pursuant to section 202.06 of the NYSE Listed 
Company Manual (or any successor provision). In this regard, FINRA 
proposes to insert the following new sub-paragraphs (M) and (N) at the 
end of paragraph (c)(7) of proposed FINRA Rule 2210:
    (M) Retail communications that are posted on an online interactive 
electronic forum.
    (N) Press releases issued by closed-end investment companies that 
are listed on the New York Stock Exchange (NYSE) pursuant to section 
202.06 of the NYSE Listed Company Manual (or any successor provision).

III. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the filing as 
amended by Amendments 1 and 2 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-2011-035 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-2011-035. 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/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.,

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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-2011-035 and should be 
submitted on or before January 18, 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. 2011-33488 Filed 12-28-11; 8:45 am]
BILLING CODE 8011-01-P