Document ID: SEC-2018-1248-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2018-08-10T04:00Z

[Federal Register Volume 83, Number 155 (Friday, August 10, 2018)]
[Notices]
[Pages 39802-39804]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-17123]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83781; File No. SR-FINRA-2018-027]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Amend FINRA Rule 9000 Series (Code of 
Procedure) To Reflect an Internal Reorganization of FINRA's Enforcement 
Operations

August 6, 2018.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

[[Page 39803]]

(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on August 3, 2018, 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. 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 make technical and other non-substantive 
changes to FINRA Rule 9000 Series (Code of Procedure) (``the Code'') to 
reflect an internal reorganization of FINRA's enforcement operations to 
create a single Department of Enforcement.
    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
    In March 2017, FINRA launched FINRA360, a comprehensive self-
evaluation and organizational improvement initiative to ensure that 
FINRA is operating as an optimally effective self-regulatory 
organization, working to protect investors and promote market integrity 
in a manner that supports strong and vibrant capital markets. In 
connection with this ongoing initiative, FINRA has sought feedback from 
its members, as well as investors, investor advocates, regulators, 
trade associations and FINRA employees. FINRA has analyzed the feedback 
received from these stakeholders and as a result has made significant 
changes across the organization.\3\
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    \3\ See FINRA, Progress Report on FINRA360 (April 2018), https://www.finra.org/sites/default/files/FINRA360ProgressReport_April2018.pdf.
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    Until last summer, FINRA had two distinct enforcement teams. One 
enforcement group that was historically part of the Department of 
Market Regulation handled disciplinary actions related to trading-based 
matters found through Market Regulation's surveillance and examination 
programs; and a separate enforcement group handled cases referred from 
other regulatory oversight divisions including Member Regulation, 
Corporate Financing, the Office of Fraud Detection and Market 
Intelligence, and Advertising Regulation. As part of FINRA360, 
stakeholders raised concerns that these dual programs sometimes 
resulted in duplication of effort and inconsistency of results. As a 
result, in July 2017, FINRA announced its plan to consolidate its 
existing enforcement functions into a unified Department of 
Enforcement. On July 26, 2018, FINRA announced that it had completed 
the final phase of this consolidation.\4\ The unified structure is 
intended to improve FINRA's ability to streamline investigations, share 
information, enhance consistency and maximize resources to protect 
investors and the markets.
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    \4\ See News Release, FINRA, FINRA Announces Enforcement 
Structure, Senior Leadership (July 26, 2018), http://www.finra.org/newsroom/2018/finra-announces-enforcement-structure-senior-leadership-team.
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    The proposed rule change would make technical and other non-
substantive changes to the Code to reflect the single Department of 
Enforcement. The proposed changes would therefore remove references to 
the Market Regulation department, its head and employees from the Code 
where those references reflect the previously separate Market 
Regulation enforcement function.
    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,\5\ 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 will 
provide clarity to members and the public by reflecting throughout the 
Code the now unified FINRA Department of Enforcement.
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    \5\ 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. The proposed rule change brings 
clarity and consistency to FINRA rules without adding any burden on 
firms.

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 \6\ and Rule 19b-
4(f)(6) thereunder.\7\
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires FINRA 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) \8\ normally 
does not become operative for 30 days after the date of its filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\9\ the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. FINRA has requested 
that the Commission waive the 30-day operative delay so that the 
internal reorganization of FINRA's enforcement operations can 
immediately be reflected in the Code. Because waiver of the operative 
delay would increase transparency and accuracy of the Code, the 
Commission

[[Page 39804]]

believes that waiver of the operative delay is consistent with the 
protection of investors and the public interest. Accordingly, the 
Commission hereby waives the operative delay and designates the 
proposal as operative upon filing.\10\
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    \8\ Id.
    \9\ 17 CFR 240.19b-4(f)(6)(iii).
    \10\ 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).
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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

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 [email protected]. Please include 
File Number SR-FINRA-2018-027 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-2018-027. 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, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 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. 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-2018-027 and should be submitted 
on or before August 31, 2018.
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    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-17123 Filed 8-9-18; 8:45 am]
 BILLING CODE 8011-01-P