Document ID: SEC-2010-1038-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2010-07-09T04:00Z

[Federal Register: July 9, 2010 (Volume 75, Number 131)]
[Notices]               
[Page 39610-39611]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09jy10-111]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62429; File No. SR-FINRA-2010-031]

 
Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change Amending Financial Industry Regulatory Authority, 
Inc. Online Form NMA

July 1, 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 June 24, 2010, 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'') the proposed rule change as described in Items I, II 
and III below, which Items have been prepared by FINRA. FINRA has 
designated the proposed rule change as ``constituting a stated policy, 
practice, or interpretation with respect to the meaning, 
administration, or enforcement of an existing rule'' under Section 
19(b)(3)(A)(i) of the Act \3\ and Rule 19b-4(f)(1) thereunder,\4\ 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\ 15 U.S.C. 78s(b)(3)(A)(i).
    \4\ 17 CFR 240.19b-4(f)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to amend online Form NMA, the standardized 
membership application form applicants must file pursuant to NASD Rule 
1013 (New Member Application and Interview) as part of their new 
membership application. The proposed change would amend Form NMA's 
hyperlink reference to SEC Form D (Notice of Exempt Offering of 
Securities) from ``high net worth,'' to ``accredited investor,'' the 
term used in SEC Form D.
    The proposed rule change does not propose amendments to existing 
rule text.

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
    Form NMA is the standardized online membership application form 
applicants must file pursuant to NASD Rule 1013 (New Member Application 
and Interview) as part of their new membership application. Form NMA 
assists applicants by identifying the information and supporting 
documentation required by Rule 1013. To that end, Form NMA Section I, 
Question 8a requires an applicant to identify (by indicating all that 
apply) the following types of customers the applicant will service: (1) 
Retail excluding high net worth; (2) high net worth; (3) institutional 
excluding high net worth; or (4) other (as described by the applicant). 
Form NMA does not provide a definition of a ``high net worth'' retail 
or institutional customer; rather, the form provides guidance to 
applicants responding to the question by providing a hyperlink for the 
term ``high net worth'' to SEC Form D (Notice of Exempt Offering of 
Securities), which references the term ``accredited investor'' as 
defined in Rule 501(a) of the Securities Act of 1933 (``Securities 
Act'').\5\
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    \5\ 17 CFR 230.501(a). Securities Act Rule 501(a) defines the 
term ``accredited investor'' to mean any person who comes within 
certain categories, as specified in the definition, at the time of 
the sale of the securities to that person. Those categories include, 
among others, institutions, such as banks, insurance companies, and 
employee benefit plans; trusts with total assets in excess of 
$5,000,000; and any natural persons with either an individual income 
for the past two years over $200,000 (or joint income over $300,000 
if married) or an individual net worth (or joint net worth if 
married) exceeding $1,000,000.
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    The proposed rule change will replace the hyperlink reference 
``high net worth'' with ``accredited investor,'' thereby conforming the 
terminology used in Question I, Section 8a to SEC Form D.\6\
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    \6\ The proposed rule change also will update the nonworking 
hyperlink address to SEC Form D with the current hyperlink address, 
http://www.sec.gov/about/forms/formd.pdf.
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    The effective date will be the date of filing; FINRA anticipates 
implementing the proposed rule change as part of a software release 
scheduled for July 31, 2010.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\7\ 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. The proposed rule change is consistent with the 
provisions stated above, as it updates a hyperlink reference in online 
Form NMA, providing greater clarity to applicants for FINRA membership.
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    \7\ 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.

[[Page 39611]]

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \8\ and paragraph (f)(1) of Rule 19b-4 
thereunder.\9\ At any time within 60 days of the filing of the proposed 
rule change, the Commission may summarily abrogate 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.
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(1).
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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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-FINRA-2010-031 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-2010-031. 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 the 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-2010-031 
and should be submitted on or before July 30, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
Elizabeth M. Murphy,
Secretary.
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    \10\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2010-16685 Filed 7-8-10; 8:45 am]
BILLING CODE 8010-01-P