Document ID: SEC-2010-0285-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2010-02-25T05:00Z

[Federal Register: February 25, 2010 (Volume 75, Number 37)]
[Notices]               
[Page 8768-8769]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25fe10-139]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61542; File No. SR-FINRA-2009-093]

 
Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Order Approving Proposed Rule Change To Repeal NASD 
Rule 2450 (Installment or Partial Sales), NASD Interpretive Material 
2830-2 (``IM-2830-2'') (Maintaining the Public Offering Price) and 
Incorporated NYSE Rule 413 (Uniform Forms) as Part of the Process of 
Developing a Consolidated FINRA Rulebook

February 18, 2010.
    On December 23, 2009, the Financial Industry Regulatory Authority, 
Inc. (``FINRA'') (f/k/a National Association of Securities Dealers, 
Inc. (``NASD'')) filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to repeal NASD Rule 2450 (Installment or Partial 
Sales), NASD Interpretive Material 2830-2 (``IM-2830-2'') (Maintaining 
the Public Offering Price), and Incorporated NYSE Rule 413 (Uniform 
Forms), as part of the process of developing a consolidated FINRA 
rulebook. The proposed rule change was published for comment in the 
Federal Register on January 19, 2010.\3\ The Commission received no 
comments on the proposal. This order approves the proposed rule change.
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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. 61319 (January 8, 
2010), 75 FR 2897 (``Notice'').
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    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities association.\4\ In 
particular, the Commission finds that the proposed rule change is 
consistent with the provisions of Section 15A(b)(6) of the Act,\5\ 
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.
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    \4\ In approving this proposal, the Commission has considered 
the proposed rule's impact on efficiency, competition and capital 
formation. See 15 U.S.C. 78c(f).
    \5\ 15 U.S.C. 78o-3(b)(6).
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    The Commission believes that the proposed rule change is 
appropriate to eliminate confusion and reduce regulatory overlap by 
eliminating rules that are outdated, duplicative of other FINRA rules, 
or addressed by the Federal rules or regulations. As further described 
in the Notice, FINRA stated that NASD Rule 2450 should be repealed in 
light of the explicit provisions in Regulation T requiring the deposit 
of sufficient funds within the specified payment period. FINRA also 
stated that the hypothecation prohibition in NASD Rule 2450 should be 
repealed because it would no longer be relevant as it is predicated on 
a partial or installment payment under the rule. In addition, FINRA 
noted that, since the adoption of NASD IM-2830-2, the laws governing 
broker-dealers have changed, and today virtually all broker-dealers 
doing business with the public are FINRA members. FINRA also noted that 
NASD IM-2830-2 largely duplicates the requirement in Section 22(d) of 
the Investment Company Act to sell mutual fund shares to investors at 
the current public offering price. As a

[[Page 8769]]

result, FINRA stated that NASD IM-2830-2 no longer serves any useful 
purpose, and proposed not to incorporate its content into the 
consolidated FINRA rulebook. Furthermore, FINRA proposed to repeal 
Incorporated NYSE Rule 413, which requires members to adopt such 
uniform forms as the NYSE may prescribe to facilitate the orderly flow 
of transactions within the financial community. FINRA stated that its 
By-Laws contain several provisions by which FINRA may prescribe 
processes for members' activities, including the use of uniform forms. 
Thus, FINRA stated that Incorporated NYSE Rule 413 is duplicative of 
these provisions and should be repealed. In approving this proposed 
rule change, the Commission notes that FINRA members and their 
associated persons are required to comply with all applicable Federal 
securities laws and that FINRA, as a self-regulatory organization, has 
the obligation to have the capacity to enforce compliance by its 
members and their associated persons with the Act and the rules and 
regulations thereunder.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\6\ that the proposed rule change (SR-FINRA-2009-093) be, and it 
hereby is, approved.
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    \6\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-3779 Filed 2-24-10; 8:45 am]
BILLING CODE 8011-01-P