Document ID: SEC-2012-1034-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2012-07-02T04:00Z

[Federal Register Volume 77, Number 127 (Monday, July 2, 2012)]
[Notices]
[Pages 39313-39314]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-16129]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67257; File No. SR-FINRA-2012-033]

 Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change To Make Non-Substantive Technical Changes to the 
Supplemental Statement of Income Required To Be Filed Pursuant to FINRA 
Rule 4524 (Supplemental FOCUS Information)

June 26, 2012.
    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 June 26, 2012, Financial Industry Regulatory Authority, Inc. 
(``FINRA'') filed with the Securities and Exchange Commission (``SEC'' 
or ``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by FINRA. FINRA has designated 
the proposed rule change as constituting a ``non-controversial'' rule 
change under paragraph (f)(6) of Rule 19b-4 under the Act,\3\ which 
renders the proposal effective upon receipt of this filing by 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\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing a rule change to make non-substantive technical 
changes to the Supplemental Statement of Income (``SSOI'') required to 
be filed pursuant to FINRA Rule 4524 (Supplemental FOCUS Information).
    The text of the proposed rule change is 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.

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
    On February 9, 2012, the Commission adopted FINRA Rule 4524 
(Supplemental FOCUS Information), which requires each firm, as FINRA 
shall designate, to file such additional financial or operational 
schedules or reports as FINRA may deem necessary or appropriate for the 
protection of investors or in the public interest as a supplement to 
the FOCUS Report. FINRA has previously adopted one such schedule, the 
SSOI, as a supplement to the Statement of Income (Loss) page of the 
FOCUS Report.\4\ FINRA is proposing to make non-substantive technical 
changes to the SSOI in order to provide more clarity, reduce 
unnecessary duplication, and reflect a renumbering change to the 
Securities Act of 1933 (``Securities Act'') as a result of the Dodd-
Frank Wall Street Reform and Consumer Protection Act (``Dodd-Frank 
Act'').\5\
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    \4\ See Securities Exchange Act Release No. 66364 (February 9, 
2012), 77 FR 8938 (February 15, 2012) (Order Granting Accelerated 
Approval of a Proposed Rule Change, as Modified by Amendment No. 2; 
File No. SR-FINRA-2011-064).
    \5\ See Dodd-Frank Wall Street Reform and Consumer Protection 
Act, Pub. L. No. 111-203, 124 Stat. 1376 (2010).
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    The proposed rule change would amend the title of line 13935 
(Equities, ETFs and Closed End Funds) to clarify that the commissions 
reported are for listed equities, ETFs and closed end funds executed on 
an exchange. The proposed rule change would also amend the 
instructions: (1) To clarify that all revenue and expense items must be 
reported in accordance with U.S. generally accepted accounting 
principles; (2) to clarify that line 13940 (Total Commissions) will 
equal line 3940 (Total securities commissions) of Part II and IIA of 
the FOCUS Report if the firm did not have commissions from foreign 
exchange transactions during the reporting period; and (3) to clarify 
that line 14075 (Total Interest and Dividend Expenses) will equal line 
4075 (Interest expense) of the FOCUS Report only if the firm did not 
have dividend expense. Further, the proposed rule would add 
instructions for line 13939 (All Other Securities Commissions) to 
clarify that commissions for unlisted equities should be included.
    FINRA is also proposing to delete line 11299 (Total Net Income) 
because it is duplicative of line 14230 (Net income (loss) after 
Federal income taxes and extraordinary item). The proposed rule change 
would also delete the word ``Forms'' in front of Part II, Part IIA or 
Part II CSE in the first paragraph of the instructions.
    In an effort to provide greater clarity, FINRA is also proposing to 
delete: (1) The instructions that state line 13950 (Total Net Gains or 
Losses on Principal Trades) must equal line 3950 (Total gains or 
(losses)) of Part II CSE and Part II or line 3950 (Total gain (loss)) 
of Part IIA of the FOCUS Report as depending on the facts and 
circumstances, the lines may not be equal; (2) the instructions for 
line 13937 (Exchange Listed Equity Securities Executed OTC) as they are 
unwarranted because the title of line 13937 provides sufficient clarity 
for what needs to be reported; and (3) the instructions for line 14100 
(Other Expenses) that reference the inclusion of 12b-1 service and 
distribution fees and other expenses not otherwise provided for in the 
SSOI because Line 11211 (12b-1 Fees) captures 12b-1 fees paid to other 
broker-dealers or institutions.
    In addition, the Dodd-Frank Act renumbered Securities Act Section 
4(6) to Securities Act Section 4(5).\6\ Accordingly, FINRA is 
renumbering Securities Act Section 4(6) to Securities Act Section 4(5) 
in Item D (Federal Exemptions and Exclusions Claimed) of the 
Operational Page. Moreover, FINRA is proposing to clarify Item D by 
adding an ``Other'' line because Item D is designed to capture all 
federal exemptions and exclusions claimed for an unregistered offering.
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    \6\ See Dodd-Frank Act Section 944.
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    FINRA has filed the proposed rule change for immediate 
effectiveness and has requested that the Commission waive the 
requirement that the proposed rule change not become operative for 30 
days after the date of the filing. This would allow FINRA to provide 
more time to firms to prepare before the October 26, 2012, due date of 
the initial SSOI.

[[Page 39314]]

2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act, 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.\7\ FINRA believes that the proposed rule change will 
provide greater clarity to members and the public regarding its rules, 
as well as ensure a more efficient reporting process for the SSOI.
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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.

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

    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, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \8\ and Rule 19b-
4(f)(6) thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6).
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    FINRA has asked the Commission to waive the 30-day operative delay 
so that the proposal may become operative immediately upon filing. In 
accordance with Rule 19b-4(f)(6),\10\ 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.\11\ The first reporting period covered by the initial SSOI 
commences on July 1, 2012. FINRA has stated that it wishes the 
Commission to waive the operative delay so that FINRA may give as much 
time as possible for member firms to prepare prior to the October 26, 
2012 due date of the initial SSOI. Accordingly, FINRA would like the 
SSOI to be in final form and fully operative as of the start of the 
first reporting period on July 1.
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    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 17 CFR 240.19b-4(f)(6)(iii).
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    Given FINRA's desire to provide member firms with a final and 
completed SSOI at the outset of the initial SSOI reporting period, the 
Commission believes that FINRA's request is reasonable and believes 
that waiver of the operative delay is consistent with the protection of 
investors and the public interest, and therefore designates the 
proposal operative upon filing.\12\
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    \12\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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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 necessary or 
appropriate in the public interest, for the protection of investors, or 
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-2012-033 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-2012-033. 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., 
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-2012-033 
and should be submitted on or before July 23, 2012.
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    \13\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-16129 Filed 6-29-12; 8:45 am]
BILLING CODE 8011-01-P