Document ID: SEC-2008-1688-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2008-12-16T05:00Z

[Federal Register: December 16, 2008 (Volume 73, Number 242)]
[Notices]               
[Page 76431-76432]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16de08-99]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59076; File No. SR-FINRA-2008-053]

 
Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Order Approving a Proposed Rule Change To Amend 
Section 4(c) of Schedule A of the FINRA By-Laws To Increase Certain 
Qualification Examination Fees

December 10, 2008.

I. Introduction

    On October 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 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to amend Section 4(c) of Schedule A of the FINRA 
By-Laws (``Schedule A'') to increase certain qualification examination 
fees. The proposed rule change was published for comment in the Federal 
Register on October 29, 2008.\3\ The Commission received one comment 
letter on the proposed rule change.\4\ This order approves the proposed 
rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 58832 (October 22, 
2008); 73 FR 64374 (``Notice'').
    \4\ See Letter to Florence E. Harmon, Acting Secretary, 
Commission, from Dennis P. Beirne, Vice President and Chief 
Compliance Officer, People's Securities, Inc., dated November 12, 
2008 (``People's Securities Letter'').
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II. Description

    Any person associated with a member firm who is engaged in the 
securities business of the firm must register with FINRA. As part of 
the registration process, securities professionals must pass a 
qualification examination to demonstrate competence in each area in 
which they intend to work. These mandatory qualification examinations 
cover a broad range of subjects on the markets, products, a person's 
responsibilities in a given position, securities industry rules and the 
regulatory structure. The proposed rule change amends Schedule A to 
increase certain qualification examination fees.\5\
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    \5\ Schedule A sets forth examination fees for those 
examinations that are sponsored or co-sponsored by FINRA and/or that 
may be required by FINRA for its members.
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III. Comment Letter

    The Commission received one comment letter in response to the 
proposed rule change.\6\ People's Securities, Inc. (``People's 
Securities'') submitted a comment letter in opposition to the proposal, 
arguing that FINRA's decision to increase examination fees comes at a 
time when many firms are suffering from a reduction in business and 
have resorted to measures such as reducing the number of new hires and 
current staff in order to decrease expenditures. People's Securities 
states that an increase in examination fees would result in a 
``significant burden'' on firms, and for People's Securities in 
particular, as many of the proposed fee increases are for the 
examinations that People's Securities uses the most. People's 
Securities suggests that if FINRA increases these fees, these changes 
will result in fewer registered representatives which will 
detrimentally affect the ability of firms to service the needs of 
investors.
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    \6\ Supra note 4.
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    In its response to the People's Securities Letter,\7\ FINRA 
acknowledged People's Securities' economic arguments but explained that 
FINRA has experienced a rise in its own costs of developing, 
administering, and delivering the exams, and consequently had to raise 
examination fees. In support of its decision, FINRA stated that it had 
not raised any examination fees since 2006, and that it had conducted a 
test based on a sample of its regulated firms and concluded that its 
proposed fee changes would increase a firm's overall examination fees 
on average by less than 10% each year.
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    \7\ See Letter to Florence E. Harmon, Acting Secretary, 
Commission, from Erika L. Lazar, Senior Attorney, FINRA, dated 
November 26, 2008 (``FINRA Letter'').
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IV. Discussion and Commission's Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities 
association.\8\ In particular, the Commission finds that the proposed 
rule change is consistent with Section 15A(b)(5) of the Act,\9\ which 
requires, among other things, that FINRA rules provide for the 
equitable allocation of reasonable dues, fees and other charges among 
members and issuers and other persons using any facility or system that 
FINRA operates or controls. The filing increases certain qualification 
examination fees to reflect FINRA's increased costs in developing, 
administering and delivering qualification examinations. While the 
Commission recognizes the issues raised by People's Securities, FINRA 
has represented that an increase in fees is necessary to account for 
increases in its own costs to manage its qualification examinations, 
many of which are utilized throughout the securities industry and are 
used to ensure that registered persons new to the securities industry 
have the basic knowledge to enable them to do their jobs and comply 
with industry rules and regulations. The Commission notes FINRA's 
representation that it will continue to maintain an examination fee 
structure at a reasonable cost in light of the current economic 
culture.
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    \8\ In approving this proposal, the Commission has considered 
the proposed rule's impact on efficiency, competition, and capital 
formation. See 15 U.S.C. 78c(f).
    \9\ 15 U.S.C. 78o-3(b)(5).

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[[Page 76432]]

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\10\ that the proposed rule change (SR-FINRA-2008-053) be, and 
hereby is, approved.
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    \10\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-29702 Filed 12-15-08; 8:45 am]

BILLING CODE 8011-01-P