Document ID: SEC-2020-0953-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2020-06-18T04:00Z

[Federal Register Volume 85, Number 118 (Thursday, June 18, 2020)]
[Notices]
[Pages 36928-36930]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-13113]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-89055; File No. SR-FINRA-2020-017]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Extend the Effective Date of the Temporary 
Amendments Set Forth in SR-FINRA-2020-015

June 12, 2020.
    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 10, 2020, Financial Industry Regulatory Authority, Inc. 
(``FINRA'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the self-regulatory 
organization. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to extend the effective date of the temporary 
amendments set forth in SR-FINRA-2020-015 \3\ from June 15, 2020 to 
July 31, 2020. In response to the impacts on FINRA's operations caused 
by the outbreak of the coronavirus disease (COVID-19), FINRA's May 8 
Filing temporarily modified some timing, method of service and other 
procedural requirements in FINRA rules through June 15, 2020.\4\
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    \3\ See Securities Exchange Act Release No. 88917 (May 20, 
2020), 85 FR 31832 (Notice of Filing and Immediate Effectiveness) 
(SR-FINRA-2020-015) (filed with the Commission on May 8, 2020 for 
immediate effectiveness) (the ``May 8 Filing'').
    \4\ See id.
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    The text of the proposed rule change is available on FINRA's 
website 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 May 8, 2020, FINRA filed with the Commission a proposed rule 
change for immediate effectiveness to temporarily amend some timing, 
method of service and other procedural requirements in FINRA rules 
during the period in which FINRA's operations are impacted by the 
outbreak of COVID-19. Those temporary amendments set forth in FINRA's 
May 8 Filing are in effect through June 15, 2020.\5\ The Commission 
published its notice of filing and immediate effectiveness for the May 
8 Filing on May 20, 2020.\6\
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    \5\ As noted in FINRA's May 8 Filing, the temporarily amended 
FINRA rules will revert back to their original state at the 
conclusion of the temporary relief period, now July 31, 2020, and 
any extension thereof.
    \6\ See supra note 3.
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    FINRA proposed the temporary amendments set forth in its May 8 
Filing to address the substantial impacts of the COVID-19 outbreak on 
FINRA's operations. Among other things, the need for FINRA staff, with 
limited exceptions, to work remotely and restrict in-person 
activities--consistent with the recommendations of public health 
officials--makes it challenging to meet certain procedural requirements 
and perform certain functions required under FINRA rules. The proposed 
rule change addressed these concerns by easing logistical and other 
issues and providing FINRA with needed flexibility for its operations 
during the COVID-19 outbreak.
    The COVID-19 conditions necessitating the temporary amendments in 
FINRA's May 8 Filing

[[Page 36929]]

persist and FINRA continues to face the same logistical and other 
challenges. For this reason and the reasons stated in the May 8 Filing, 
FINRA now proposes to extend the effective date of the temporary rule 
amendments in its May 8 Filing through July 31, 2020.\7\ The extension 
of these temporary amendments will continue to help minimize the impact 
of the COVID-19 outbreak on FINRA's operations, allowing FINRA to 
continue critical adjudicatory and review processes in a reasonable and 
fair manner and meet its critical investor protection goals, while also 
following best practices with respect to the health and safety of its 
staff.
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    \7\ FINRA is monitoring the impact of COVID-19 on its 
operations. If the temporary relief from the rule requirements 
identified in FINRA's May 8 Filing is necessary beyond July 31, 
2020, FINRA will submit a separate rule filing to extend the 
effectiveness of the temporary relief under those rules.
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    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 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)(6) of the Act,\8\ 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. FINRA believes that the proposed rule change is also 
consistent with Section 15A(b)(8) of the Act,\9\ which requires, among 
other things, that FINRA rules provide a fair procedure for the 
disciplining of members and persons associated with members.
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    \8\ 15 U.S.C. 78o-3(b)(6).
    \9\ 15 U.S.C. 78o-3(b)(8).
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    The proposed rule change to extend the effective date of the 
temporary amendments to FINRA rules set forth in the May 8 Filing to 
July 31, 2020, will continue to provide FINRA, and in some cases 
another party to a proceeding, temporary modifications to its 
procedural requirements in order to allow FINRA to maintain fair 
processes and protect investors while operating in a remote work 
environment and with corresponding restrictions on its activities. It 
is in the public interest, and consistent with the Act's purpose, for 
FINRA to operate pursuant to this temporary relief. The temporary 
amendments allow FINRA to specify filing and service methods, extend 
certain time periods, and modify the format of oral argument for FINRA 
disciplinary and eligibility proceedings and other review processes in 
order to cope with the current pandemic conditions. In addition, as set 
forth in the May 8 Filing, extending this temporary relief will further 
support FINRA's disciplinary and eligibility proceedings and other 
review processes that serve a critical role in providing investor 
protection and maintaining fair and orderly markets.

B. Self-Regulatory Organization's Statement on Burden on Competition

    FINRA does not believe that the temporary proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. FINRA believes 
that the proposed rule change, which extends the effectiveness of the 
temporary rule amendments in its May 8 Filing to July 31, 2020, would 
prevent unnecessary impediments to FINRA's operations and FINRA's 
investor protection goals that would otherwise result if the amendments 
in its May 8 Filing expire on June 15, 2020. FINRA does not believe 
that the proposed rule change will have any material negative effect on 
members and will not impose any new costs.

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 \10\ and Rule 19b-
4(f)(6) \11\ thereunder.
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give 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.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative for 30 days after the date of filing. However, 
pursuant to Rule 19b-4(f)(6)(iii), the Commission may designate a 
shorter time if such action is consistent with the protection of 
investors and the public interest. As FINRA requested in connection 
with its May 8 Filing, FINRA has also asked the Commission to waive the 
30-day operative delay so that this proposed rule change may become 
operative immediately upon filing. As in its May 8 Filing, FINRA has 
reiterated that the requested relief in this proposed rule change will 
help minimize the impact of the COVID-19 outbreak on FINRA's 
operations, allowing FINRA to continue critical adjudicatory and review 
processes in a reasonable and fair manner and meet its critical 
investor protection goals, while also following best practices with 
respect to the health and safety of its employees.\12\ We also note 
that this proposal, like FINRA's May 8 Filing, provides only temporary 
relief from, as FINRA states, the timing, method of service and other 
procedural requirements, described more fully in FINRA's May 8 Filing, 
during the period in which FINRA's operations are impacted by COVID-19. 
As proposed, these changes would be in place through July 31, 2020.\13\ 
FINRA also noted in both proposed rule change filings that the amended 
rules will revert back to their original, pre-May 8 Filing state at the 
conclusion of the temporary relief period and, if applicable, any 
extension thereof.\14\ For these reasons, the Commission believes that 
waiver of the 30-day operative delay is consistent with the protection 
of investors and the public interest. Accordingly, the Commission 
hereby waives the 30-day operative delay and designates the proposal 
operative upon filing.\15\
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    \12\ See May 8 Filing, 85 FR at 31833.
    \13\ As noted above, see supra note 5, FINRA states that if it 
requires temporary relief from the rule requirements identified in 
this proposal beyond July 31, 2020, it may submit a separate rule 
filing to extend the effectiveness of the temporary relief under 
these rules.
    \14\ See May 8 Filing, 85 FR at 31833.
    \15\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule change'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

[[Page 36930]]

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-2020-017 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-FINRA-2020-017. 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 website (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 website viewing and printing in 
the Commission's Public Reference Room, on business days between the 
hours of 10:00 a.m. and 3:00 p.m., located at 100 F Street NE, 
Washington, DC 20549. 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. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-FINRA-2020-017 and should be submitted 
on or before July 9, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-13113 Filed 6-17-20; 8:45 am]
BILLING CODE 8011-01-P