Document ID: SEC-2010-1818-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2010-12-01T05:00Z

[Federal Register: December 1, 2010 (Volume 75, Number 230)]
[Notices]               
[Page 74766-74768]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01de10-98]                         

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63373; File No. SR-FINRA 2010-057]

 
Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change to Permit a One-Time Waiver of Late Fees 
Assessable Pursuant to FINRA Rule 6490

November 24, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on November 12, 2010, Financial Industry Regulatory Authority, 
Inc. (``FINRA'') filed with the Securities and Exchange Commission (the 
``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\ The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is filing the proposed rule change to grant a one-time waiver 
of certain late fees under FINRA Rule 6490. The proposed rule change 
would not make any changes to the text of FINRA Rule 6490.

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

    In its filing with the Commission, the self-regulatory organization 
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 those 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 parts 
of such statements.

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

1. Purpose
    On September 27, 2010, FINRA Rule 6490 (Processing of Company-
Related Actions) (the ``Rule'') became effective.\4\ The Rule codifies 
in the FINRA rulebook a requirement that exists under Rule 10b-17 of 
the Act.\5\ Specifically, Rule 10b-17 of the Act requires that issuers 
of a class of publicly traded securities provide timely notice to FINRA 
of certain corporate actions (``Company-Related Action Notice'') 
including, among other things, notice of dividends or other 
distributions of cash or securities, stock splits or reverse splits or 
rights or subscription offerings. The Rule clarifies the scope of 
FINRA's regulatory authority and discretionary power when processing 
documents related to announcements of company-related actions for non-
exchange-listed equity and debt securities, and implements fees for 
these services. Issuers must complete the necessary forms and pay the 
applicable fees

[[Page 74767]]

within the required time periods or they will be subject to late fees 
and delayed processing of documents to announce corporate actions.
---------------------------------------------------------------------------

    \4\ See Exchange Act Release No. 62434 (July 1, 2010; 75 FR 
39603 (July 9, 2010); SR-FINRA-2009-089 (Order Approving Proposed 
FINRA Rule 6490 (Processing of Company-Related Actions) to Clarify 
the Scope of FINRA's Authority When Processing Documents Related to 
Announcements for Company-Related Actions for Non-Exchange Listed 
Securities and To Implement Fees for Such Services).
    \5\ 17 CFR 240.10b-17.
---------------------------------------------------------------------------

    FINRA is filing the proposed rule change to grant a one-time waiver 
of certain late fees under FINRA Rule 6490. Specifically, between 
September 27, 2010 and December 31, 2010 (``the waiver period''), the 
first late Company-Related Action Notice submitted by an issuer to 
FINRA will not be subject to the Rule's late fees.\6\ Instead, the 
issuer will be charged $200 (the timely submission fee) per Company-
Related Action Notice filed with FINRA.
---------------------------------------------------------------------------

    \6\ This one-time waiver will apply to the first late submission 
by an issuer for one (or more) class of securities on a single day 
during the waiver period. For example, if an issuer submits a late 
Company-Related Action Notice with respect to three separate classes 
of securities on a single day during the waiver period, the late fee 
will be waived for each class. However, if an issuer has already 
received a waiver with respect to one or more classes of securities 
during the waiver period and, on a different day during the waiver 
period, submits a late Company-Related Action Notice with respect to 
any class of its securities, another waiver will not be granted.
---------------------------------------------------------------------------

    Notwithstanding the significant industry outreach undertaken by 
FINRA in advance of implementation of the new rule, some issuers (who 
are not FINRA members) have reported to FINRA that they were not aware 
that Rule 6490 became effective on September 27, 2010.\7\ However, 
FINRA notes that issuers are obligated directly by Rule 10b-17 of the 
Act to provide FINRA with notice of certain company-related actions and 
are obligated under that rule to do so in a timely fashion. 
Nonetheless, FINRA has determined to provide issuers with the proposed 
one-time waiver of late fees in the instant case. FINRA expects to 
notify an issuer that submits a late Company-Related Action Notice that 
its submission is late and that it has received a one-time waiver of 
applicable late fees pursuant to Rule 6490.
---------------------------------------------------------------------------

    \7\ FINRA notes that the rule filing proposing the adoption of 
FINRA Rule 6490 was published in the Federal Register for notice and 
comment. See supra note 4. Following Commission approval, FINRA 
published Regulatory Notice 10-038 announcing approval of Rule 6490 
and the September 27, 2010 effective date. In addition, FINRA 
engaged in extensive outreach regarding the new Rule, including by 
sending out letters to numerous industry groups involved in issuer 
corporate actions, sending out alerts via electronic platforms used 
by market participants, and holding conference calls with relevant 
parties. FINRA expects that the percentage of late notifications 
will decline over time.
---------------------------------------------------------------------------

    FINRA has filed the proposed rule change for immediate 
effectiveness and has requested that the SEC waive the requirement that 
the proposed rule change not become operative for 30 days after the 
date of the filing, so that FINRA can implement the proposed rule 
change immediately.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(5) of the Act,\8\ which requires, among 
other things, that FINRA rules provide for the equitable allocation of 
reasonable dues, fees and other charges among members and issuers and 
other persons using any facility or system that FINRA operates or 
controls. FINRA believes that the proposed rule change granting issuers 
a one-time waiver of Company-Related Action Notice late fees under 
FINRA Rule 6490 promotes fairness by providing issuers an additional 
opportunity to understand their obligations under Rule 6490, while 
preserving the deterrent effect intended by adoption of the late fees 
generally.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78o-3(b)(5).
---------------------------------------------------------------------------

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 significantly 
affect the protection of investors or the public interest, does not 
impose any significant burden on competition, and, by its terms, does 
not 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 \9\ and Rule 19b-
4(f)(6) thereunder.\10\
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the self-regulatory organization to submit to the 
Commission 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 of 
the proposed rule change, or such shorter time as designated by the 
Commission. FINRA has satisfied this requirement.
---------------------------------------------------------------------------

    FINRA has requested that the Commission waive the 30-day operative 
delay because the proposed rule change establishes a one-time waiver of 
certain late fees under FINRA Rule 6490 and waiver of the 30 days would 
allow FINRA to apply the fee waiver immediately. The Commission 
believes that waiver of the operative delay is consistent with the 
protection of investors and the public interest because the proposal 
would promote fairness by providing issuers an additional opportunity 
during the waiver period to understand their obligations under Rule 
6490 before being subject to late fees. Therefore, the Commission 
designates the proposal operative upon filing.\11\
---------------------------------------------------------------------------

    \11\ 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).
---------------------------------------------------------------------------

    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.

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 Number SR-FINRA-2010-057 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-2010-057. 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

[[Page 74768]]

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 the 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-2010-057 and should be 
submitted on or before December 22, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

    \12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-30228 Filed 11-30-10; 8:45 am]
BILLING CODE 8011-01-P