Document ID: SEC-2010-1828-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority,Inc.
Posted Date: 2010-12-03T05:00Z

[Federal Register Volume 75, Number 232 (Friday, December 3, 2010)]
[Notices]
[Pages 75529-75530]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-30319]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63383; File No. SR-FINRA-2010-062]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change To Extend the Proposed Implementation Period for 
the Rule Changes Approved in SR-FINRA-2010-042 (Verification of Assets)

November 29, 2010.
    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 November 18, 2010, 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 adopting a proposed rule change to extend by 30 days the 
proposed implementation period for the rule changes approved in SR-
FINRA-2010-042.\4\ The proposed rule change would not make any new 
changes to the text of FINRA rules.
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    \4\ See Securities Exchange Act Release No. 63044 (October 5, 
2010), 75 FR 62911 (October 13, 2010) (Order Approving File No. SR-
FINRA-2010-042).
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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 August 4, 2010, FINRA filed SR-FINRA-2010-042, a proposed rule 
change to adopt FINRA Rule 4160 (Verification of Assets). The proposed 
rule provided that a member, when notified by FINRA, may not continue 
to custody or retain record ownership of assets, whether such assets 
are proprietary or customer assets, at a non-member financial 
institution, which, upon FINRA staff's request, fails promptly to 
provide FINRA with written verification of assets maintained by the 
member at such financial institution. In SR-FINRA-2010-042, FINRA 
stated that it would announce the effective date of the proposed rule 
change in a Regulatory Notice to be published ``no later than 60 days 
following Commission approval'' and to establish the effective date 
``no later than 30 days following publication'' of the Regulatory 
Notice announcing Commission approval.
    The proposed rule change was published for notice and comment.\5\ 
On October 1, 2010, FINRA filed Amendment No. 1 to SR-FINRA-2010-042 to 
respond to comments and to propose amendments in response to such 
comments (hereinafter, SR-FINRA-2010-042 and Amendment No. 1 thereto 
are, together, the ``Verification of Assets filing'').\6\ The 
Commission approved the Verification of Assets filing on October 5, 
2010.\7\
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    \5\ See Securities Exchange Act Release No. 62655 (August 5, 
2010), 75 FR 48731 (August 11, 2010) (Notice of Filing of File No. 
SR-FINRA-2010-042).
    \6\ See supra note 4.
    \7\ See supra note 4.
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    As stated in the Verification of Assets filing, FINRA will publish 
a Regulatory Notice no later than 60 days following Commission approval 
of the Verification of Assets filing. However, in this proposed rule 
change, FINRA proposes to make the effective date 60 days, rather than 
``no later than 30 days'', following the publication of the Regulatory 
Notice announcing Commission approval of the filing.
    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, such 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)(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 a 30-day extension of the 
effective date of SR-FINRA-2010-042 is appropriate to provide firms 
sufficient advance notice of the new Verification of Assets rule.
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    \8\ 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 \9\ and Rule 19b-
4(f)(6) thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) normally may 
not become operative prior to 30 days after the date of filing.\11\ 
However, Rule 19b-4(f)(6)(iii) \12\ permits the Commission to

[[Page 75530]]

designate a shorter time if such action is consistent with the 
protection of investors and the public interest. Because FINRA is 
delaying the implementation of the rule only, FINRA has requested that 
the Commission waive the 30-day operative delay so that the proposal 
may become operative upon filing. For these reasons, the Commission 
believes it is consistent with the protection of investors and the 
public interest to waive the 30-day operative delay, and hereby grants 
such waiver.\13\
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    \11\ 17 CFR 240.19b-4(f)(6)(iii).
    \12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires that a self-regulatory organization 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. The Commission notes that FINRA has satisfied the five-
day pre-filing notice requirement.
    \13\ For the purposes only of waiving the operative date of this 
proposal, 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 such 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, as amended, 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-2010-062 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-2010-062. 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 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-2010-062 
and should be submitted on or before December 27, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-30319 Filed 12-2-10; 8:45 am]
BILLING CODE 8011-01-P