Document ID: SEC-2008-0039-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations: Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Posted Date: 2008-01-08T05:00Z

[Federal Register: January 8, 2008 (Volume 73, Number 5)]
[Notices]               
[Page 1373-1375]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08ja08-88]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57074; File No. SR-FINRA-2007-027]

 
Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change Relating to Revisions to the Series 23 Examination 
Program

December 31, 2007.
    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 December 12, 2007, 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 substantially by 
FINRA. FINRA has designated this proposal as constituting a stated 
policy, practice, or interpretation with respect to the meaning, 
administration, or enforcement of an existing rule of the self-
regulatory organization pursuant to section 19(b)(3)(A)(i) of the Act 
\3\ and Rule 19b-4(f)(1) thereunder,\4\ which renders the proposal 
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)(i).
    \4\ 17 CFR 240.19b-4(f)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is filing revisions to the study outline and selection 
specifications for the General Securities Principal Sales Supervisor 
Module (Series 23) examination program.\5\ The proposed revisions 
update the material to reflect changes to the laws, rules and 
regulations covered by the examination and to better reflect the duties 
and responsibilities of individuals taking the examination. FINRA is 
not proposing any textual changes to the By-Laws, Schedules to the By-
Laws, or Rules of FINRA.
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    \5\ FINRA also is proposing corresponding revisions to the 
Series 23 question bank, but based upon instruction from the 
Commission staff, FINRA is submitting SR-FINRA-2007-027 for 
immediate effectiveness pursuant to Section 19(b)(3)(A) of the Act 
and Rule 19b-4(f)(1) thereunder, and is not filing the question bank 
for Commission review. See Letter to Alden S. Adkins, Senior Vice 
President and General Counsel, NASD Regulation, from Belinda Blaine, 
Associate Director, Division of Market Regulation, SEC, dated July 
24, 2000, attached as Exhibit 3c to the proposed rule change. The 
question bank is available for Commission review.
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    The text of the proposed rule change is available at http://www.finra.org
, the principal offices of FINRA, and the Commission's 

Public Reference Room. The Series 23 selection specifications have been 
submitted to the Commission under separate cover with a request for 
confidential treatment pursuant to Rule 24b-2 under the Act.\6\
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    \6\ 17 CFR 240.24b-2.
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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.

[[Page 1374]]

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Section 15A(g)(3) of the Act \7\ requires FINRA to prescribe 
standards of training, experience, and competence for persons 
associated with FINRA members. In accordance with that provision, FINRA 
has developed examinations, and administers examinations developed by 
other self-regulatory organizations, that are designed to establish 
that persons associated with FINRA members have attained specified 
levels of competence and knowledge. FINRA periodically reviews the 
content of the examinations to determine whether revisions are 
necessary or appropriate in view of changes pertaining to the subject 
matter covered by the examinations.
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    \7\ 15 U.S.C. 78o-3(g)(3).
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    The Series 23 examination is a limited qualification examination 
that tests a candidate's knowledge of securities industry rules and 
regulations pertaining to the supervision of investment banking, 
securities markets and trading as well as financial responsibility 
requirements. The Series 23 examination, in combination with the 
General Securities Sales Supervisor (Series 9/10) examination, is an 
acceptable qualification alternative to the General Securities 
Principal (Series 24) examination for associated persons who are 
required to register and qualify as a General Securities Principal with 
FINRA. The Series 23 examination covers material from the Series 24 
examination not otherwise covered under the Series 9/10 examination.
    A committee of industry representatives, together with FINRA staff, 
recently undertook a review of the Series 23 examination program. As a 
result of this review, FINRA is proposing to make revisions to the 
study outline to reflect changes to the laws, rules and regulations 
covered by the examination and to better reflect the duties and 
responsibilities of individuals taking the examination.
    Among other revisions, FINRA is proposing to revise the references 
to the FINRA and The NASDAQ Stock Market LLC (``NASDAQ'') rules in the 
study outline to reflect NASDAQ's separation from FINRA (then known as 
NASD). In addition, FINRA is proposing to add sections on SEC 
Regulation M-A (Mergers and Acquisitions), SEC Regulation S-K, SEC 
Regulation S-X, SEC Regulation NMS, SEC Regulation SHO, the Sarbanes-
Oxley Act, SEC Rule 3a4-1 (Associated Persons of an Issuer Deemed Not 
to Be Brokers), SEC Rule 405 (Definitions of Terms), the NASDAQ Initial 
Public Offering Process (NASDAQ Head Trader Alert 2005-096) and NYSE 
Rule 392 (Notification Requirements for Offerings of Listed 
Securities). FINRA also is proposing to add sections on NASD IM-2110-7 
(Interfering With the Transfer of Customer Accounts in the Context of 
Employment Disputes) and IM-2210-6 (Requirements for the Use of 
Investment Analysis Tools), as well as on NASD Rules 2111 (Trading 
Ahead of Customer Market Orders), 2290 (Fairness Opinions), 2370 
(Borrowing From or Lending to Customers), 2441 (Net Transactions with 
Customers) and 5110 (Transactions Related to Initial Public Offerings).
    FINRA is proposing to change the title of section 1 of the study 
outline from ``Supervision of Investment Banking Activities'' to 
``Supervision of Investment Banking, Underwriting Activities and 
Research'' and the title of section 4 from ``Sales Supervision; General 
Supervision of Employees; Regulatory Framework of NASD'' to ``Sales 
Supervision and General Supervision of Employees.'' Further, as a 
result of the revisions discussed above, the number of questions on 
each section of the study outline were modified as follows: Supervision 
of Investment Banking, Underwriting Activities and Research, increased 
from 25 to 30 questions; Supervision of Trading and Market Making 
Activities, decreased from 29 to 24 questions; Supervision of Brokerage 
Office Operations, decreased from 16 to 12 questions; Sales Supervision 
and General Supervision of Employees, increased from 19 to 23 
questions; and Compliance with Financial Responsibility Rules, no 
changes to the number of questions (remains at 11 questions).
    FINRA is proposing similar changes to the Series 23 selection 
specifications and question bank. The number of questions on the Series 
23 examination will remain at 100, and candidates will continue to have 
2\1/2\ hours to complete the exam. Also, each question will continue to 
count one point, and each candidate must correctly answer 70 percent of 
the questions to receive a passing grade.
2. Statutory Basis
    FINRA believes that the proposed revisions to the Series 23 
examination program are consistent with the provisions of sections 
15A(b)(6) \8\ and 15A(g)(3) of the Act,\9\ which authorize FINRA to 
prescribe standards of training, experience, and competence for persons 
associated with FINRA members.
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    \8\ 15 U.S.C. 78o-3(b)(6).
    \9\ 15 U.S.C. 78o-3(g)(3).
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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 proposed rule change has become effective pursuant to section 
19(b)(3)(A)(i) of the Act \10\ and Rule 19b-4(f)(1) thereunder,\11\ in 
that the proposed rule change constitutes a stated policy, practice, or 
interpretation with respect to the meaning, administration, or 
enforcement of an existing rule of the self-regulatory organization. 
FINRA proposes to implement the revised Series 23 examination program 
on February 12, 2008. FINRA will announce the implementation date in a 
Regulatory Notice to be published on December 12, 2007, the date FINRA 
filed SR-FINRA-2007-27 with the Commission.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(i).
    \11\ 17 CFR 240.19b-4(f)(1).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate 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.

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 e-mail to rule-comments@sec.gov. Please include 

File

[[Page 1375]]

Number SR-FINRA-2007-027 on the subject line.

Paper Comments:

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.

    All submissions should refer to File Number SR-FINRA-2007-027. This 
file number should be included on the subject line if e-mail 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 inspection 
and copying in the Commission's Public Reference Room, 100 F Street, 
NE., 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 publicly available. All 
submissions should refer to File Number SR-FINRA-2007-027 and should be 
submitted on or before January 29, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-88 Filed 1-7-08; 8:45 am]

BILLING CODE 8011-01-P