Document ID: SEC-2014-1749-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2014-10-17T04:00Z

[Federal Register Volume 79, Number 201 (Friday, October 17, 2014)]
[Notices]
[Pages 62489-62492]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-24681]

[[Page 62489]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73339; File No. SR-FINRA-2014-006]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Order Approving Proposed Rule Change, as Modified by 
Amendment No. 1, Relating to Per Share Estimated Valuations for 
Unlisted DPP and REIT Securities

October 10, 2014.

I. Introduction

    On January 31, 2014, 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''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to amend provisions in the NASD 
and FINRA rulebooks addressing per share estimated valuations for 
unlisted direct participation program (``DPP'') and real estate 
investment trust (``REIT'') securities. In particular, FINRA proposes 
revising NASD Rule 2340 (Customer Account Statements) to modify the 
requirements relating to the inclusion of a per share estimated value 
for unlisted DPP and REIT securities on a customer account statement 
and FINRA Rule 2310 (Direct Participation Programs) to modify the 
requirements applicable to members' participation in a public offering 
of DPP or REIT securities.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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    The proposed rule change was published for comment in the Federal 
Register on February 19, 2014.\3\ The Commission received eighteen (18) 
comment letters in response to the Notice of Filing.\4\ On March 14, 
2014, FINRA extended the time period in which the Commission must 
approve the proposed rule change, disapprove the proposed rule change, 
or institute proceedings to determine whether to approve or disapprove 
the proposed rule change to May 20, 2014. On May 20, 2014, the 
Commission issued an order instituting proceedings pursuant to Section 
19(b)(2)(B) of the Act \5\ to determine whether to approve or 
disapprove the proposed rule change. The order was published for 
comment in the Federal Register on May 27, 2014.\6\ The Commission 
received six (6) comment letters in response to the Proceedings 
Order.\7\
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    \3\ Exchange Act Release No. 71545 (Feb. 12, 2014), 79 FR 9535 
(Feb. 19, 2014) (Notice of Filing of Proposed Rule Change Relating 
to Per Share Estimated Valuations for Unlisted DPP and REIT 
Securities) (``Notice of Filing''). The comment period closed on 
March 12, 2014.
    \4\ Letters to Elizabeth Murphy, Secretary, SEC, from Mark 
Goldberg, Chairman, Investment Program Association, dated February 
5, 2014; David T. Bellaire, Esq., Executive Vice President and 
General Counsel, Financial Services Institute, dated February 5, 
2014; Mark Kosanke, President, Real Estate Investment Securities 
Association, dated February 11, 2014; Steven A. Wechsler, President 
and Chief Executive Officer, National Association of Real Estate 
Investment Trusts, dated February 14, 2014; Jeff Johnson, Chief 
Executive Officer, Dividend Capital Diversified Property Fund Inc., 
dated February 28, 2014; Michael Crimmins, Chief Executive Officer 
and Managing Director, KBS Capital Markets Group, dated February 28, 
2014; Scott Ilgerfritz, Immediate Past-President, Public Investors 
Arbitration Bar Association, dated March 11, 2014; Thomas Price, 
Managing Director, Securities Industry and Financial Markets 
Association, dated March 12, 2014; Steve Morrison, Senior Vice 
President and Associate Counsel, LPL Financial, dated March 12, 
2014; Jacob Frydman, Chairman and Chief Executive Officer, United 
Realty Trust Incorporated, dated March 12, 2014; Dechert LLP, dated 
March 12, 2014; David Hirschmann, President and Chief Executive 
Officer, Center for Capital Markets Competitiveness, U.S. Chamber of 
Commerce, dated March 12, 2014; Steven A. Wechsler, President and 
Chief Executive Officer, National Association of Real Estate 
Investment Trusts, dated March 12, 2014; Kirk Montgomery, Head of 
Regulatory Affairs, CNL Financial Group, LLC, dated March 12, 2014; 
Mark Goldberg, Chairman, Investment Program Association, dated March 
12, 2014; David T. Bellaire, Esq., Executive Vice President and 
General Counsel, Financial Services Institute, dated March 12, 2014; 
Martel Day, Principal, NLR Advisory Services, LLC, dated March 12, 
2014; and Mark Kosanke, President, Real Estate Investment Securities 
Association, dated March 12, 2014. Comment letters are available at 
www.sec.gov.
    The Commission discussed these comments in the Proceedings 
Order. See infra note 6.
    \5\ 15 U.S.C. 78s(b)(2)(B).
    \6\ Exchange Act Release No. 72193 (May 20, 2014), 79 FR 30217 
(May 27, 2014) (Order Instituting Proceedings to Determine Whether 
to Approve or Disapprove a Proposed Rule Change Relating to Per 
Share Estimated Valuations for Unlisted DPP and REIT Securities) 
(``Proceedings Order''). The comment period closed on June 26, 2014.
    \7\ Letters to Elizabeth Murphy, Secretary, SEC, from Kenneth 
Mills, dated June 24, 2014; Jason Doss, President, Public Investors 
Arbitration Bar Association, dated June 25, 2014; Mark Kosanke, 
President, Real Estate Investment Securities Association, dated June 
26, 2014; Thomas F. Price, Managing Director, Operations, Technology 
and BCP, Securities Industry and Financial Markets Association, 
dated June 26, 2014; David T. Bellaire, Executive Vice President and 
General Counsel, Financial Services Institute, dated June 26, 2014; 
and Peter Peters, dated July 15, 2014. Comment letters are available 
at www.sec.gov.
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    On July 11, 2014, FINRA filed a letter responding to comments and 
Amendment No. 1 to the proposed rule change.\8\ A notice of the 
amendment was published for comment in the Federal Register on July 22, 
2014.\9\ The Commission received six (6) comment letters in response to 
the Notice of Amendment.\10\ On September 16, 2014, FINRA filed a 
letter responding to these comments.\11\
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    \8\ Letter to Kevin O'Neill, Deputy Secretary, SEC, from Matthew 
E. Vitek, Associate General Counsel, FINRA, dated July 11, 2014 
(``FINRA's First Response Letter''). FINRA's First Response Letter 
is available at www.sec.gov.
    \9\ Exchange Act Release No. 72626 (July 16, 2014); 79 FR 42590 
(July 22, 2014) (Notice of Filing of Amendment No. 1 to Proposed 
Rule Change Relating to Per Share Estimated Valuations for Unlisted 
DPP and REIT Securities) (``Notice of Amendment''). The comment 
period closed on August 12, 2014.
    \10\ Letters to Elizabeth Murphy, Secretary, SEC, from Mark 
Goldberg, Chairman, Investment Program Association, dated July 28, 
2014 (``IPA Letter''); Steven A. Wechsler, President and Chief 
Executive Office, National Association of Real Estate Investment 
Trusts, dated August 12, 2014 (``NAREIT Letter''); Frederick P. 
Baerenz, President and Chief Executive Officer, AOG Wealth 
Management, dated August 12, 2014 (``AOG Letter''); Daniel R. 
Gilbert, Chief Investment and Operating Officer, NorthStar Asset 
Management Group, Inc., dated August 12, 2014 (``NorthStar 
Letter''); David T. Bellaire, Executive Vice President and General 
Counsel, Financial Services Institute, dated August 12, 2014 (``FSI 
Letter''); and Andrea Seidt, President, North American Securities 
Administrators Association, Inc., and Commissioner, Ohio Division of 
Securities, dated August 22, 2014 (``NASAA Letter''). Comment 
letters are available at www.sec.gov.
    \11\ Letter to Brent J. Fields, Secretary, SEC, from Matthew E. 
Vitek, Associate General Counsel, FINRA, dated September 16, 2014 
(``FINRA's Second Response Letter''). FINRA's Second Response Letter 
is available at www.sec.gov.
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    This order approves the proposed rule change, as modified by 
Amendment No. 1.

II. Description of the Proposal, as Modified by Amendment No. 1

A. Proposed Revisions to NASD Rule 2340 (Customer Account Statements)

    FINRA proposes to amend NASD Rule 2340 to require general 
securities members to include in customer account statements a per 
share estimated value for an unlisted DPP or REIT security, developed 
in a manner reasonably designed to ensure that the per share estimated 
value is reliable, as well as to make related disclosures.\12\ FINRA 
also proposes two methodologies for calculating the per share estimated 
value for a DPP or REIT security that would be deemed to have been 
developed in a manner reasonably designed to ensure that it is 
reliable: (1) The net investment methodology; and (2) the appraised 
value methodology.\13\ Each methodology is described in greater detail 
below, along with other proposed revisions.
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    \12\ See Proposed NASD Rule 2340(c).
    \13\ See Proposed NASD Rule 2340(c)(1).
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1. Net Investment Methodology
    Under the proposal, the net investment methodology would reflect 
the ``net investment'' disclosed in the issuer's most recent periodic 
or current

[[Page 62490]]

report. More specifically, the proposal would require ``net 
investment'' to be based on the ``amount available for investment'' 
percentage in the ``Estimated Use of Proceeds'' section of the offering 
prospectus; \14\ alternatively, where ``amount available for 
investment'' is not provided, the proposal would require ``net 
investment'' to be based on another equivalent disclosure that reflects 
the estimated percentage deduction from the aggregate dollar amount of 
securities registered for sale to the public of sales commissions, 
dealer manager fees, and estimated issuer offering and organization 
expenses.\15\
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    \14\ ``This disclosure is typically included in the prospectus 
for REIT offerings and is described in the SEC's Securities Act 
Industry Guide 5 (Preparation of registration statements relating to 
interests in real estate limited partnerships).'' Notice of Filing 
at note 12.
    \15\ See Proposed NASD Rule 2340(c)(1)(A).
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    The proposal would not require the calculation of ``net 
investment'' to involve the deduction from the per share estimated 
value of ``over-distributions.'' \16\ The proposal would, however, 
require members that use the net investment methodology to provide a 
per share estimated value for a DPP or REIT security to disclose in the 
customer account statement the following statement: ``IMPORTANT--Part 
of your distribution includes a return of capital. Any distribution 
that represents a return of capital reduces the estimated per share 
value shown on your account statement.'' \17\ The proposal would 
require the member to disclose this statement prominently and in 
proximity to the disclosure of distributions and the per share 
estimated value.\18\
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    \16\ See Notice of Filing at note 20 (generally describing 
``over-distributions'' as a return of investor capital as a 
distribution rather than the use of that capital to generate return 
on investment); see also Notice of Amendment (clarifying that 
``over-distributions'' should be excluded from the calculation of 
``net investment'').
    \17\ See Proposed NASD Rule 2340(c)(2)(A).
    \18\ Id.
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    In addition, the proposal would clarify that when an issuer 
provides a range of amounts available for investment, the proposal 
would allow a general securities member to use the maximum offering 
percentage unless the member has reason to believe that such percentage 
is unreliable. If the member has reason to believe that it is 
unreliable, the member must use the minimum offering percentage.\19\
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    \19\ See Proposed NASD Rule 2340(c)(1)(A).
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    Finally, the proposal would allow a member to use the net 
investment methodology at any time before 150 days following the second 
anniversary of the breaking of escrow.\20\
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    \20\ See Id. See also Notice of Filing at note 11 (stating that 
``[g]enerally, offering proceeds are placed in escrow until the 
minimum conditions of the offering are met, at which time the issuer 
is permitted to access the offering proceeds'').
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2. Appraised Value Methodology
    Under the proposal, the appraised value methodology would consist 
of the appraised valuation disclosed in the issuer's most recent 
periodic or current report. More specifically, the proposal would 
require: (1) That the valuation be based on valuations of the assets 
and liabilities of the DPP or REIT; and (2) that those valuations: (a) 
Be performed at least annually; (b) be conducted by, or with the 
material assistance or confirmation of, a third-party valuation expert 
or service; and (c) be derived from a methodology that conforms to 
standard industry practice. The proposal would allow a member to use 
the appraised value methodology at any time.\21\
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    \21\ See Proposed NASD Rule 2340(c)(1)(B).
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    The proposed rule change would, however, provide a different 
requirement for DPPs subject to the Investment Company Act of 1940 
(``1940 Act'') (e.g., business development companies). Specifically, 
FINRA acknowledged that business development companies that fall under 
the definitions of DPP are subject to the 1940 Act, which already 
requires the issuer to determine and publish its net asset value on a 
regular basis.\22\ Thus, for these DPPs, the proposed rule would 
require the appraised value methodology to be consistent with the 
valuation requirements of the 1940 Act and the rules thereunder.\23\
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    \22\ See Notice of Amendment.
    \23\ See Proposed NASD Rule 2340(c)(1)(B).
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3. General Disclosures
    The proposal would also require members to include specific 
disclosures on customer account statements that provide a per share 
estimated value for a DPP or REIT security (calculated using either the 
net investment methodology or the appraised value methodology). In 
particular, the proposal would require a member to include disclosures 
stating that the DPP or REIT security is not listed on a national 
securities exchange, is generally illiquid, and that, even if a 
customer is able to sell the security, the price received may be less 
than the per share estimated value provided in the statement.\24\
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    \24\ See Proposed NASD Rule 2340(c)(2)(B).
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B. Proposed Revisions to FINRA Rule 2310 (Direct Participation 
Programs)

    FINRA also proposes to amend FINRA Rule 2310(b)(5) to prohibit a 
member from participating in a public offering of the securities of a 
REIT or DPP unless the issuer of the DPP or REIT has agreed to 
disclose:
    (1) A per share estimated value of the DPP or REIT security that 
is: (a) Developed in a manner reasonably designed to ensure it is 
reliable, and (b) disclosed in the DPP's or REIT's periodic reports 
filed pursuant to Sections 13(a) or 15(d) of the Act; an explanation of 
the method by which the value was developed; and the date of the 
valuation; and
    (2) a per share estimated value of the DPP or REIT security that 
is: (a) Based on valuations of the assets and liabilities of the DPP or 
REIT performed at least annually by, or with the material assistance or 
confirmation of, a third-party valuation expert or service; (b) derived 
from a methodology that conforms to standard industry practice; and (c) 
disclosed in the DPP's or REIT's periodic reports filed pursuant to 
Sections 13(a) or 15(d) of the Act within 150 days following the second 
anniversary of breaking escrow (and in each annual report thereafter); 
and a concomitant written opinion or report by the issuer, delivered at 
least annually to the member that explains the scope of the review, the 
valuation methodology used, and the basis for the reported value.
    The proposed rule change would, however, except DPPs subject to the 
1940 Act from the requirements of proposed Rule 2310(b)(5). As stated 
above, FINRA acknowledged that such DPPs are subject to an existing 
regulatory framework (the 1940 Act) that already requires the issuer of 
their securities to determine and publish their net asset value on a 
regular basis.\25\
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    \25\ See Notice of Amendment.
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C. Technical Change

    FINRA also proposes making a change to its Rules Manual to conform 
to the other revisions discussed above by deleting FINRA Rule 
5110(f)(2)(L) (Corporate Financing Rule--Underwriting Terms and 
Arrangements). That paragraph currently provides that it is unfair and 
unreasonable for a member or person associated with a member to 
participate in a public offering of a REIT unless the trustee will 
disclose in each annual report distributed to investors a per share 
estimated value of the trust securities, the methodology by which it

[[Page 62491]]

was developed, and the date of the data used to develop the value.
    The text of the proposed rule change is available at the principal 
office of FINRA, on FINRA's Web site at http://www.finra.org, and at 
the Commission's Public Reference Room.

III. Description of Comments on the Proposal, as Amended, and FINRA's 
Response

A. Comments

    As stated above, the Commission received six (6) comment letters in 
response to the Proceedings Order.\26\ Those commenters generally 
reiterated concerns expressed in response to the Notice of Filing.
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    \26\ See supra note 7.
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    In addition, the Commission received six (6) comment letters in 
response to the Notice of Amendment.\27\ Four (4) of these commenters 
fully supported the proposal.\28\ Two (2) other commenters, however, 
raised concerns (discussed below).\29\
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    \27\ See supra note 10.
    \28\ FSI Letter, IPA Letter, NAREIT Letter, and NorthStar 
Letter.
    \29\ AOG Letter and NASAA Letter.
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    One of the concerned commenters supported aspects of the 
proposal.\30\ This commenter, however, encouraged rejecting the 
proposal's requirement for members to report initial share prices, 
stating that substituting ``a flawed share pricing system with a 
different flawed pricing system is apt to lead to confusion rather than 
clarity.'' \31\ This commenter also suggested that market forces are 
sufficiently driving improvements in the unlisted DPP and REIT 
industry, noting changes in fee structures.\32\
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    \30\ AOG Letter (stating that ``providing sponsor companies with 
a formula and timeline . . . for appraising and reporting the values 
[other than the initial value] of non-traded REITS is very 
valuable'' and ``[providing] broker-dealers assurance that they can 
rely on those values is also very helpful'').
    \31\ Id.
    \32\ Id.
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    The second concerned commenter also supported aspects of the 
proposal.\33\ This commenter, however, opposed the following other 
aspects of the proposal:
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    \33\ NASAA Letter (stating that ``[r]equiring securities to be 
valued on the customer account statement enhances transparency to 
the customer'').
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    (1) The commenter opposed excluding over-distribution from the 
valuation calculation under the net investment methodology, stating 
that excluding it would decrease the accuracy and transparency of the 
disclosed values of DPP and REIT securities.\34\
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    \34\ See supra note 16 and surrounding text.
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    (2) The commenter also expressed concern that members could use the 
net investment methodology's requirements concerning offering and 
organization expenses to manipulate valuation of DPP and REIT 
securities.\35\
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    \35\ See supra note 19 and surrounding text.
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    (3) In addition, the commenter recommended that FINRA require 
disclosure of the identity of the third-party valuation expert or 
service used to obtain a valuation under the appraised value 
methodology and clarify that such third-party must be independent.
    (4) Finally, the commenter opposed the extension of the effective 
date of the proposal, as amended, stating that ``industry should not 
need an additional year-and-a-half to make the necessary changes'' and 
``[investors] should not be forced to wait another year for more 
transparent price reporting.'' \36\
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    \36\ NASAA Letter.
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B. FINRA's Response

    In its response letter, FINRA stated that it has considered the 
concerns raised by the two concerned commenters.\37\ FINRA also stated, 
however, that it believes that the proposal, as amended, 
``significantly improves the transparency of the per share estimated 
value of DPP and REIT securities on customer account statements.'' \38\ 
Accordingly, FINRA declined making any additional changes in response 
to commenters' concerns but stated that it would ``continue to monitor 
practices in this area to determine whether additional changes are 
necessary.'' \39\
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    \37\ FINRA's Second Response Letter. See, e.g., FINRA's First 
Response Letter (summarizing and responding to commenters' concerns 
about calculating over-distributions); FINRA's First Response Letter 
(proposed NASD Rule 2340(c)(1)(A) (stating that if a member has 
reason to believe that the maximum offering percentage is 
unreliable, the member must use the minimum offering percentage); 
FINRA's First Response Letter (extending the effective date to 
provide industry participants sufficient time to make adjustments to 
product structures and any necessary operational changes, as well as 
to limit the impact of the amended proposal on current offerings); 
and proposed NASD Rule 2340(c)(1)(B) (stating that the valuation 
expert or service must be a third-party).
    \38\ FINRA's Second Response Letter.
    \39\ Id.
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IV. Discussion and Commission Findings

    The Commission has carefully considered the proposal, as amended; 
the comments received; and FINRA's responses to the comments. Based on 
its review of the record, the Commission finds that the proposal is 
consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities 
association.\40\ In particular, the Commission finds 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's rules be 
designed to prevent fraudulent and manipulative acts and practices; 
promote just and equitable principles of trade; and, in general, 
protect investors and the public interest.\41\
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    \40\ In approving the proposal, as amended, the Commission has 
considered the impact on efficiency, competition, and capital 
formation. See 15 U.S.C. 78c(f).
    See, e.g., Proceedings Order at 7 (noting commenters' concern 
about the potential economic impact of the proposal, as originally 
proposed; also FINRA's First Response Letter, which provided a 
detailed economic impact statement in response to those commenters). 
The Commission has received no additional public comment on the 
potential economic impact of the proposed rule change, as amended.
    \41\ 15 U.S.C. 78o-3(b)(6).
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    The proposal, as amended, is designed to address longstanding 
concerns with the current industry practice of displaying a DPP or REIT 
security's immutable offering price as its per share estimated value on 
customer account statements throughout the offering period (which can 
last several years),\42\ despite the fact that the value of the DPP or 
REIT security fluctuates. FINRA's proposed rule change would require 
members to include in customer account statements per share estimated 
values of unlisted DPP and REIT securities that are developed in a 
manner reasonably designed to ensure they are reliable. The Commission 
believes that the proposal would, therefore, greatly improve the 
accuracy and transparency of the value of DPP and REIT securities and, 
in turn, better protect the investing public.
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    \42\ See Notice of Filing at note 8 and surrounding text 
(stating that ``Rule 415(a)(5) under the Securities Act of 1933 
(`Securities Act') provides that certain types of securities 
offerings, including continuous offerings of DPPs and REITs, may 
continue for no more than three years from the initial effective 
date of the registration statement. Under Rule 415(a)(6), the SEC 
may declare another registration statement for a DPP or REIT 
effective such that an offering can continue for another three-year 
offering period'').
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    As discussed above, the Commission received eighteen (18) comment 
letters in response to the Notice of Filing, six (6) comment letters in 
response to the Proceedings Order, six (6) comment letters in response 
to the Notice of Amendment, and two (2) response letters from FINRA. 
The Commission appreciates the points raised by the commenters, and the 
Commission believes that FINRA responded appropriately to their 
concerns.\43\ The

[[Page 62492]]

Commission notes that, while one commenter on the amended proposal 
suggested market forces should be sufficient to drive improvements in 
the unlisted DPP and REIT industry,\44\ given current industry practice 
with respect to disclosure of DPP and REIT values, the Commission 
believes that FINRA's amended proposal is warranted.
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    \43\ FINRA did not directly respond to the commenter's 
recommendation to require disclosure of the name of the third-party 
expert or service for purposes of proposed NASD Rule 2340(c)(1)(B). 
The Commission notes, however, that this information may be 
available in an issuer's prospectus.
    \44\ AOG Letter.
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    Also, given commenters' concern regarding the complexity of 
calculating over-distributions, the Commission supports FINRA's amended 
approach of requiring enhanced disclosure surrounding them. More 
specifically, the Commission believes that, at this time, this approach 
would improve investor awareness and understanding in a practical 
manner.
    In addition, one commenter on the amended proposal expressed 
concern that members could use the net investment methodology's 
requirements concerning offering and organization expenses to 
manipulate DPP and REIT values.\45\ Under the amended proposal, 
however, if a member has reason to believe a calculation of the 
offering and organization expenses using the maximum offering 
percentage is unreliable, the member must use the minimum offering 
percentage.\46\
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    \45\ NASAA Letter.
    \46\ See FINRA's First Response Letter.
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    The same commenter further recommended that FINRA require 
disclosure of the identity of the service used to obtain a valuation 
under the appraised value methodology and clarify that such service 
must be independent.\47\ Regarding disclosure of the valuation 
service's identity, the Commission notes that this information may be 
available through an issuer's prospectus. Regarding the independence of 
the service, the amended proposal requires the use of a ``third-party 
valuation expert,'' which both the Commission and FINRA interpret as 
being an independent entity.\48\
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    \47\ Id.
    \48\ See, e.g., FINRA's First Response Letter (discussing the 
economic impact of requiring ``independent valuations'').
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    Finally, the commenter opposed the extension of the effective date 
under the amended proposal, stating that investors should not have to 
wait for more transparent price reporting.\49\ FINRA extended the 
effective date, however, to provide industry participants sufficient 
time to make adjustments to product structures and any necessary 
operational changes, as well as to limit the impact of the amended 
proposal on current offerings.\50\
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    \49\ NASAA Letter.
    \50\ FINRA's First Response Letter.
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    In sum, the Commission believes that the proposal, as amended, 
represents a significant improvement to current industry practice 
concerning the disclosure of the value of unlisted DPP and REIT 
securities. As amended, the proposal would help ensure that investors 
receive more accurate information regarding the nature and worth of 
their holdings of DPP and REIT securities. While the Commission 
believes that this outcome would improve accuracy and transparency and, 
consequently, investor protection, it will continue to monitor the 
activity in this market for potential abuses.
    For the reasons stated above, the Commission finds that the 
proposed rule change, as amended, is consistent with the Act and the 
rules and regulations thereunder.

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\51\ that the proposed rule change (SR-FINRA-2014-006), as modified 
by Amendment No. 1, be, and hereby is, approved.
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    \51\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\52\
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    \52\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-24681 Filed 10-16-14; 8:45 am]
BILLING CODE 8011-01-P