
[Federal Register: June 4, 2009 (Volume 74, Number 106)]
[Notices]               
[Page 26902-26903]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04jn09-121]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59987; File No. SR-FINRA-2009-016]

 
Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Order Approving Proposed Rule Change as Amended, 
Relating to the Adoption of FINRA Rule 2080 (Obtaining an Order of 
Expungement of Customer Dispute Information From the Central 
Registration Depository (CRD System)), FINRA Rule 2310 (Direct 
Participation Programs), FINRA Rule 4551 (Requirements for Alternative 
Trading Systems to Record and Transmit Order and Execution Information 
for Security Futures) and FINRA Rule 2266 (SIPC Information) in the 
Consolidated FINRA Rulebook

May 27, 2009.

I. Introduction

    On March 25, 2009, 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 (1) adopt NASD Rules 2130 (Obtaining an Order 
of Expungement of Customer Dispute Information from the Central 
Registration Depository (CRD System)), 2810 (Direct Participation 
Programs) and 3115 (Requirements for Alternative Trading Systems to 
Record and Transmit Order and Execution Information for Security 
Futures) as FINRA rules in the consolidated FINRA rulebook without 
material change; and (2) adopt NASD Rule 2342 (SIPC Information) in the 
consolidated FINRA rulebook without material change and to delete NYSE 
Rule 409A (SIPC Disclosures). The proposed rule change would renumber 
NASD Rule 2130 as FINRA Rule 2080, NASD Rule 2810 as FINRA Rule 2310, 
NASD Rule 3115 as FINRA Rule 4551 and NASD Rule 2342 as FINRA Rule 2266 
in the consolidated FINRA rulebook. On April 14, 2009, FINRA filed 
Amendment No. 1 to the proposed Rule Change.\3\ The proposed rule 
change was published for comment in the Federal Register on April 15, 
2009.\4\ The Commission received no comment letters on the proposed 
rule change. This order approves the proposed rule change as amended.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 1 replaced and superseded the original filing.
    \4\ See Securities Exchange Act Release No. 59771 (April 15, 
2009), 74 FR 18411.
---------------------------------------------------------------------------

II. Description of the Proposed Rule Change

    FINRA is proposing to adopt NASD Rule 2130 without material change 
in the Consolidated FINRA Rulebook as FINRA Rule 2080. NASD Rule 2130 
addresses the expungement of customer dispute information from the 
Central Registration Depository system.
    FINRA is proposing to adopt NASD Rule 2810 without material change 
in the Consolidated FINRA Rulebook as FINRA Rule 2310. NASD Rule 2810 
addresses underwriting terms and arrangements in public offerings of 
direct participation programs and unlisted real estate investment 
trusts.
    FINRA is proposing to adopt NASD Rule 3115 without material change 
in the Consolidated FINRA Rulebook as FINRA Rule 4551. NASD Rule 3115 
(Requirements for Alternative Trading Systems to Record and Transmit 
Order and Execution Information for Security Futures) requires 
alternative trading

[[Page 26903]]

systems (``ATSs'') \5\ that accept orders for security futures \6\ to 
record and report to FINRA certain information regarding those orders, 
including the date and time the order was received, the security future 
product name and symbol, the details of the order, and the date and 
time that the order was executed. The rule provides FINRA with an audit 
trail of orders for security futures placed on an ATS.
---------------------------------------------------------------------------

    \5\ ATSs generally are registered broker-dealers that provide or 
maintain a marketplace for bringing together purchasers and sellers 
of securities or otherwise perform the functions commonly performed 
by a securities exchange but do not perform self-regulatory 
functions.
    \6\ A security future is a contract of sale for future delivery 
of a single security or of a narrow-based security index. Security 
futures are defined as ``securities'' under the Act; consequently, 
the federal securities laws are generally applicable to security 
futures. See 15 U.S.C. 78c(a)(10).
---------------------------------------------------------------------------

    FINRA is proposing to adopt NASD Rule 2342 without material change 
in the Consolidated FINRA Rulebook as FINRA Rule 2266 and to delete 
comparable Incorporated NYSE Rule 409A. NASD Rule 2342 and Incorporated 
NYSE Rule 409A were adopted in response to a May 2001 report issued by 
the Government Accountability Office (``GAO''), entitled ``Securities 
Investor Protection: Steps Needed to Better Disclose SIPC Policies to 
Investors.'' \7\
---------------------------------------------------------------------------

    \7\ See U.S. Government Accountability Office, ``Securities 
Investor Protection: Steps Needed to Better Disclose SIPC Policies 
to Investors,'' Publication GAO-01-653 (May 25, 2001).
---------------------------------------------------------------------------

III. Discussion and 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 the provisions of Section 15A(b)(6) of 
the Act,\9\ which requires, among other things, that FINRA rules 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.
---------------------------------------------------------------------------

    \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)(6).
---------------------------------------------------------------------------

    The Commission believes that that transferring NASD Rule 2130 into 
the Consolidated FINRA Rulebook will ensure that its standards and 
procedures regarding expungement of customer dispute information from 
the CRD continue to be reasonably designed to ensure that information 
submitted to and maintained in the CRD is accurate and complete. The 
Commission believes that transferring NASD Rule 2810 into the 
Consolidated FINRA Rulebook will ensure that policies and procedures 
regarding FINRA's members' participation in public offerings of 
Investment Programs continue to meet statutory mandates. The Commission 
believes that transferring NASD Rule 3115 into the Consolidated FINRA 
Rulebook will continue to allow ATSs to provide trading facilities for 
security futures while also ensuring that FINRA will receive sufficient 
information to maintain an audit trail regarding the trading of 
security futures on ATSs. Finally, the Commission believes that 
transferring NASD Rule 2342 into the Consolidated FINRA Rulebook will 
continue to ensure that SIPC information is provided to customers 
effectively. The proposed rule change makes non-material changes to 
rules that have proven effective in meeting the statutory mandates.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\10\ that the proposed rule change (SR-FINRA-2009-016), as amended, 
be, and hereby is, approved.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-12997 Filed 6-3-09; 8:45 am]

BILLING CODE 8010-01-P
