Document ID: SEC-2008-1718-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2008-12-29T05:00Z

[Federal Register: December 29, 2008 (Volume 73, Number 249)]
[Notices]               
[Page 79525-79527]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29de08-100]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59108; File No. SR-FINRA-2008-063]

 
Self-Regulatory Organizations: Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change Relating to Adoption of NASD Rules 12805 and 13805 
as FINRA Rules in the New Consolidated FINRA Rulebook

December 16, 2008.
    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 December 15, 2008, the 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 concerned solely with the 
administration of the self-regulatory organization under Section 
19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(3) 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).
    \4\ 17 CFR 240.19b-4(f)(3).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to adopt Rule 12805 of the NASD Code of 
Arbitration Procedure for Customer Disputes (``Customer Code'') and 
Rule 13805 of the NASD Code of Arbitration Procedure for Industry 
Disputes (``Industry Code'') (collectively, the ``NASD Codes'') as 
FINRA rules into a new consolidated rulebook. Below is the text of 
Rules 12805 and 13805. FINRA is not proposing any changes to the rule 
text.
* * * * *
Customer Code
12805. Expungement of Customer Dispute Information under Rule 2130
    In order to grant expungement of customer dispute information under 
Rule 2130, the panel must:

[[Page 79526]]

    (a) Hold a recorded hearing session (by telephone or in person) 
regarding the appropriateness of expungement. This paragraph will apply 
to cases administered under Rule 12800 even if a customer did not 
request a hearing on the merits.
    (b) In cases involving settlements, review settlement documents and 
consider the amount of payments made to any party and any other terms 
and conditions of a settlement.
    (c) Indicate in the arbitration award which of the Rule 2130 
grounds for expungement serve(s) as the basis for its expungement order 
and provide a brief written explanation of the reason(s) for its 
finding that one or more Rule 2130 grounds for expungement applies to 
the facts of the case.
    (d) Assess all forum fees for hearing sessions in which the sole 
topic is the determination of the appropriateness of expungement 
against the parties requesting expungement relief.
* * * * *
Industry Code
13805. Expungement of Customer Dispute Information under Rule 2130
    In order to grant expungement of customer dispute information under 
Rule 2130, the panel must:
    (a) Hold a recorded hearing session (by telephone or in person) 
regarding the appropriateness of expungement. This paragraph will apply 
to cases administered under Rule 13800 even if a claimant did not 
request a hearing on the merits.
    (b) In cases involving settlements, review settlement documents and 
consider the amount of payments made to any party and any other terms 
and conditions of a settlement.
    (c) Indicate in the arbitration award which of the Rule 2130 
grounds for expungement serve(s) as the basis for its expungement order 
and provide a brief written explanation of the reason(s) for its 
finding that one or more Rule 2130 grounds for expungement applies to 
the facts of the case.
    (d) Assess all forum fees for hearing sessions in which the sole 
topic is the determination of the appropriateness of expungement 
against the parties requesting expungement relief.
* * * * *

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
    FINRA is in the process of developing the new consolidated rulebook 
(``Consolidated FINRA Rulebook'').\5\ That process involves FINRA 
submitting to the Commission for approval a series of proposed rule 
changes over time to adopt rules in the Consolidated FINRA Rulebook. 
The phased adoption and implementation of those rules necessitates 
periodic amendments to update rule cross-references and other non-
substantive technical changes in the Consolidated FINRA Rulebook.
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    \5\ The current FINRA rulebook includes, in addition to FINRA 
Rules, (1) NASD Rules and (2) rules incorporated from NYSE 
(``Incorporated NYSE Rules'') (together, the NASD Rules and 
Incorporated NYSE Rules are referred to as the ``Transitional 
Rulebook''). While the NASD Rules generally apply to all FINRA 
members, the Incorporated NYSE Rules apply only to those members of 
FINRA that are also members of the NYSE (``Dual Members''). For more 
information about the rulebook consolidation process, see FINRA 
Information Notice, March 12, 2008 (Rulebook Consolidation Process).
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    On September 25, 2008, the Commission approved, among other 
matters, a proposed rule change to adopt the NASD Codes as FINRA rules 
into a new consolidated rulebook.\6\ Those rules will be implemented on 
December 15, 2008.\7\
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    \6\ See Securities Exchange Act Release No. 58643 (September 25, 
2008), 73 FR 57174 (October 1, 2008) (Order Approving File No. SR-
FINRA-2008-021).
    \7\ See FINRA Regulatory Notice 08-57 (October 2008) (FINRA 
Announces SEC Approval and Effective Date for New Consolidated FINRA 
Rules).
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    The Commission approved new Rules 12805 and 13805 of the NASD 
Codes, which FINRA has not yet made effective.\8\ In a Regulatory 
Notice to be issued on December 15, 2008, FINRA will announce the 
effective date for new Rules 12805 and 13805. The proposed rule change 
would permit FINRA to include new Rules 12805 and 13805 with the rules 
that will be implemented in the Consolidated FINRA Rulebook on December 
15, 2008.
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    \8\ See Securities Exchange Act Release No. 58886 (October 30, 
2008), 73 FR 66086 (November 6, 2008) (Order Approving File No. SR-
FINRA-2008-010).
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2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\9\ 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 the proposed rule change will provide 
greater clarity to members and the public regarding FINRA's rules.
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    \9\ 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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \10\ and paragraph (f)(3) of Rule 19b-4 
thereunder.\11\ 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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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(3).
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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-2008-063 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.

[[Page 79527]]

All submissions should refer to File Number SR-FINRA-2008-063. 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 inspection 
and copying in the Commission's Public Reference Room 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-2008-063 
and should be submitted on or before January 20, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence Harmon,
Acting Secretary.
 [FR Doc. E8-30785 Filed 12-24-08; 8:45 am]

BILLING CODE 8011-01-P