[Federal Register Volume 78, Number 156 (Tuesday, August 13, 2013)]
[Notices]
[Pages 49313-49317]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-19509]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70131; File No. SR-FINRA-2013-033]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing of a Proposed Rule Change To Amend
FINRA Rule 9217 (Violations Appropriate for Disposition Under Plan
Pursuant to SEC Rule 19d-1(c)(2))
August 7, 2013.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on July 24, 2013, Financial Industry Regulatory Authority
(``FINRA'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II
and III 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 the
Substance of the Proposed Rule Change
FINRA is proposing to amend FINRA Rule 9217 (Violations Appropriate
for Disposition Under Plan Pursuant to SEA Rule 19d-1(c)(2)) to include
additional rule violations eligible for disposition under FINRA's Minor
Rule Violation Plan (``MRVP'').
The text of the proposed rule change is available on FINRA's Web
site 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
FINRA Rule 9216(b) provides procedures for disposition of certain
rule violations designated as minor rule violations pursuant to a plan
declared effective by the Commission in accordance with Section
19(d)(1) of the Act and Rule 19d-1(c)(2) thereunder. FINRA's MRVP
allows FINRA to impose a fine of up to $2,500 on any member or person
associated with a member for a minor violation of an eligible rule.
FINRA Rule 9217 sets forth the rules eligible for disposition pursuant
to FINRA's MRVP. FINRA is proposing to expand the universe of eligible
rules as part of an effort to concentrate regulatory resources on
higher risk matters: expanded use of the MRVP could free up resources
better allocated to high-risk matters because MRVP settlements
typically are handled more efficiently and expeditiously.
The purpose of the MRVP is to provide reasonable but meaningful
sanctions for minor or technical violations of rules when the conduct
at issue does not warrant stronger, reportable disciplinary sanctions.
The inclusion of a rule in FINRA's MRVP does not minimize the
importance of compliance with such rule, nor does it preclude FINRA
from choosing to pursue violations of eligible rules through an
Acceptance, Waiver and Consent (``AWC'') or Complaint if the nature of
the violations or prior disciplinary history warrants more significant
sanctions. Rather, the option to impose an MRVP sanction gives FINRA
additional flexibility to administer its enforcement program in the
most effective and efficient manner, while still fully meeting FINRA's
remedial objectives in addressing violative conduct. For example, MRVP
dispositions provide a useful tool for implementing the concept of
progressive discipline to remediate misconduct. FINRA will continue to
examine and surveil for compliance with eligible rules in a manner
consistent with its examination programs and will determine on a case-
by-case basis whether disposition pursuant to the MRVP is appropriate.
FINRA conducted a comprehensive review of its rules and examination
dispositions to determine the rules it proposes to add to the MRVP.
Among other things, FINRA considered (1) rules routinely cited in
formal disciplinary actions that are not currently part of the MRVP;
(2) rules cited frequently in informal actions; (3) rules comparable to
existing rules in the MRVP; and (4) rules included in other self-
regulatory organization MRVPs.
The rules proposed for inclusion in the MRVP broadly can be grouped
into several categories.
Filings and Notifications
In general, FINRA believes that isolated failures to comply with
rules that require periodic reporting, filings or notifications are
appropriate for inclusion in the MRVP. At the same time FINRA
recognizes that willful, widespread or repeated failures under such
eligible rules may be more appropriate for disposition through an AWC
or the filing of a Complaint. FINRA notes that the current MRVP
includes several such rules. Accordingly, the proposed rule change
would add the following rules to the MRVP for violations involving late
or incomplete notices or filings: FINRA Rule 2251(a) (Forwarding of
Proxy and other Issuer-Related Materials) (failure to timely forward
proxy and other issuer-related materials); FINRA Rule 4524
(Supplemental FOCUS Information) (failure to timely file or filing of
incomplete reports or information); FINRA Rule 5110(b) (Corporate
Financing Rule--
[[Page 49314]]
Underwriting Terms and Arrangements) (failure to timely file or filing
of incomplete documents or information); FINRA Rule 5121(b)(2) (Public
Offerings of Securities with Conflicts of Interest) (failure to give
timely notification of termination or settlement of public offering or
failure to file net capital computation); FINRA Rule 5122(b)(2)
(Private Placements of Securities Issued by Members) (failure to timely
file private placement documents); FINRA Rule 5190 (Notification
Requirements for Offering Participants) (failure to give timely
notification of participation in offerings); and FINRA Rule 6760
(Obligation to Provide Notice) (failure to give timely or complete
notification concerning offerings of TRACE-Eligible Securities). FINRA
believes inclusion of these rules is appropriate, as certain instances
of late filings or notifications may constitute minor, technical
violations of the applicable rules that can be remediated through the
MRVP.
Late Registrations
For many of the same reasons, the proposed rule change also would
include in the MRVP the following MSRB and FINRA rules for certain
isolated or technical failures to timely register: MSRB Rule G-2
(Standards of Professional Qualification) and MSRB Rule G-3(b)(ii)(D)
and (c)(ii)(D) (Classification of Principals and Representatives;
Numerical Requirements; Testing; Continuing Education Requirements)
(failure to pass qualification examination within 90 days of becoming a
principal) \3\ and NASD Rule 1021(d) (Registration Requirements)
(failure to pass qualification examination within 90 days of acting in
a principal capacity). These provisions permit a municipal securities
representative or registered representative, as applicable, to
temporarily function in a principal capacity, provided such person
registers as a principal and passes the appropriate qualification
examination within 90 days of acting in such capacity. Typically, these
circumstances occur when a registered principal leaves a firm or has an
extended absence. FINRA believes MRV disposition may be appropriate in
limited circumstances where a representative assumes principal duties
but takes more than 90 days to pass the corresponding qualification
examination.
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\3\ The proposed rule change includes both MSRB Rule G-2 and G-3
because the two are linked. Rule G-3 states that no broker, dealer
or municipal securities dealer ``shall be qualified for the purposes
of Rule G-2'' unless the requirements set forth in Rule G-3 are met.
FINRA typically charges a violation of both rules where there is a
failure to comply with the requirements of Rule G-3.
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Untimely Marking, Transaction Reporting and Other Market Rules
The proposed rule change similarly would add to the MRVP late
filing and notification requirements related to market regulation. The
current FINRA MRVP includes several such market rules, including, for
example, FINRA Rule 4560 (failure to timely file reports of short
positions); FINRA Rules 6380A, 6622, 6730 (transaction reporting);
FINRA Rule 7450 (OATS reporting); and MSRB Rule G-14 (failure to submit
reports). Thus, the proposed rule change would include: Rule 605(a)(1)
and (3) of SEC Regulation NMS (Disclosure of Order Execution
Information) (failure to timely report or provide complete order
execution information); Rule 606 of SEC Regulation NMS (Disclosure of
Order Routing Information) (failure to timely disclose or provide
complete order routing information); FINRA Rule 6181 (Timely
Transaction Reporting) (failure to timely report transactions in NMS
securities); and FINRA Rule 6623 (Timely Transaction Reporting)
(failure to timely report transactions in OTC and restricted equity
securities).
The proposed rule change further would make eligible for MRVP
disposition other marking and reporting requirements related to trade
and audit data: Rule 200(g) of SEC Regulation SHO (Definition of
``Short Sale'' and Marking Requirements) (failure to accurately mark
sell orders of equity securities); FINRA Rule 6182 (Trade Reporting of
Short Sales) (failure to accurately mark short sales in NMS stocks);
FINRA Rule 6250 (Quote and Order Access Requirements) (failure to
comply with quote and order access requirements for FINRA's Alternative
Display Facility); FINRA Rule 6624 (Trade Reporting of Short Sales)
(failure to accurately mark short sales in OTC Equity Securities);
FINRA Rule 7330 (Trade Report Input) (failure to timely and accurately
input trade reports into the OTC Reporting Facility); and FINRA Rule
7360 (Audit Trail Requirements) (ongoing obligation to input trade
reporting requirements in Rule 7330(d) accurately and completely). In
addition, the proposed rule change would add three rules governing the
FINRA/NYSE Trade Reporting Facility whose counterpart rules regarding
the FINRA/NASDAQ Trade Reporting Facility are already subject to MRV
treatment: FINRA Rule 6380B (Transaction Reporting); FINRA Rule 7230B
(Trade Report Input); and FINRA Rule 7260B (Audit Trail Requirements).
Rules To Achieve Consistency
In addition to the market rules referenced above, FINRA further
proposes to add certain rules to the MRVP to achieve consistency with
rules that already are part of the plan. Thus, the proposed rule change
would add FINRA Rule 1250(a), the Regulatory Element of FINRA's
continuing education requirements. The current MRVP includes FINRA Rule
1250(b), the Firm Element provision of the continuing education
requirements, and FINRA believes there is no compelling reason to
differentiate with respect to the MRVP minor violations of the
regulatory element. Similarly, the proposed rule change further would
bring consistency to the enforcement of the MSRB Rules by adding to the
MRVP MSRB Rule G-3(h) (Classification of Principals and
Representatives; Numerical Requirements; Testing; Continuing Education
Requirements) (failure to comply with the continuing education
requirements) to include in the MRVP both the Firm and Regulatory
Elements of the MSRB's equivalent continuing education requirements
rule. The proposed rule change also seeks consistency by adding MSRB
Rule G-21 (Advertising) to the MRVP, since the FINRA communications
with the public counterparts, FINRA Rules 2210, 2212, 2213, 2215, 2216
and NASD Interpretive Material 2210-2, already are subject to MRVP
disposition.
FINRA Rule 9217 currently states that ``[f]ailures to provide or
update contact information as required by FINRA or NASD rules'' may be
resolved pursuant to the MRVP. Accordingly, FINRA proposes to add NASD
Rule 1150 (Executive Representative) (failure to review and update
executive representative designation and contact information) and NASD
Rule 1160 (Contact Information Requirements) to the MRVP. For the same
reason, FINRA also proposes to add MSRB Rules G-40(a) and (c)
(Electronic Mail Contacts), which require each broker, dealer or
municipal securities dealer to designate and update electronic mail
contact information for communications with the MSRB, and FINRA Rule
4370(f) (Business Continuity and Emergency Contact Information), which
requires a member to report to FINRA emergency contact information and
to designate emergency contact persons. Rule 4370(f)(2) further
requires member to promptly update such information in the event of any
material change in accordance with NASD Rule 1160. FINRA also proposes
to include in the MRVP other provisions of Rule 4370, which are
discussed below.
[[Page 49315]]
Recordkeeping
The current MRVP includes violations of FINRA Rule 4510 Series
(Books and Records Requirements) for failure to keep and preserve
books, accounts, records, memoranda, and correspondence in conformance
with all applicable laws, rules and regulations and statements of
policy promulgated thereunder, and with FINRA rules. Rule 4511 requires
firms to preserve for at least six years those FINRA books and records
for which there is no specified period under FINRA rules or applicable
Exchange Act rules. Otherwise, the rule mandates compliance with the
books and record requirements under FINRA rules, the Exchange Act and
the applicable Exchange Act rules. The proposed rule change would add
to the MRVP specific SEC and MSRB rules that require records to be made
and preserved: Exchange Act Rule 17a-3(a) (Records to Be Made By
Certain Exchange Members, Brokers and Dealers); Exchange Act Rule 17a-4
(Records to Be Preserved By Certain Exchange Members, Brokers and
Dealers); MSRB Rule G-8 (Books and Records to Be Made By Brokers,
Dealers and Municipal Securities Dealers); and MSRB Rule G-9
(Preservation of Records). FINRA typically charges recordkeeping
violations under both FINRA Rule 4511 or MSRB Rule G-9 and the
applicable Exchange Act rules. FINRA includes the Exchange Act rules
because those rules have greater specificity than the self-regulatory
organization rules. In addition, the violation often involves a record
specified in the Exchange Act rules, such as an order ticket. Under
such circumstances, FINRA believes it appropriate to charge a violation
of the specific Exchange Act provision, as well as the more general
FINRA rule that requires compliance with the Exchange Act books and
records rules.
Supervisory Procedures Regarding MRVP Rules
The current MRVP includes NASD Rule 3010(b) (Supervision; Written
Procedures), but only with respect to failures to timely file reports
required of a firm subject to the ``Taping Rule''--a requirement to,
among other things, tape record conversations of its registered persons
and file with FINRA periodic reports on supervision of telemarketing
activities of its registered persons. The proposed rule change would
expand the MRVP to include any violation of NASD Rule 3010(b)
(Supervision; Written Procedures) for failure to maintain adequate
written supervisory procedures with respect to the provision of a rule
that is eligible for MRV disposition. Thus, for example, FINRA Rules
7440 and 7450 currently are included in FINRA's MRVP and require
recording and transmission of Order Audit Trail System (``OATS'') data.
NASD Rule 3010(b) requires members with such data to have written
supervisory procedures reasonably designed to achieve compliance with
the OATS rules. The proposed rule change would allow FINRA to resolve
as an MRV a failure to maintain adequate written supervisory procedures
with respect to compliance with OATS rules, whether or not there is a
violation of the OATS rules themselves. The proposed rule change would
also include the parallel MSRB Rule G-27 (Supervision) to the same
extent. FINRA believes inclusion of these provisions is logically
consistent with the purposes of the MRVP: If the potential underlying
violation is eligible for MRV disposition, the procedures to require
compliance with that rule also should be eligible for such disposition.
Options
FINRA Rule 2360(b)(5) (Reporting of Options Positions) requires,
among other things, members to report each account in which a member
has an interest that has established an aggregate position of 200 or
more option contracts. The proposed rule change makes this rule
eligible for disposition under the MRVP for, among other things,
technical or manual inputting problems that in the judgment of FINRA do
not materially affect the market. FINRA notes that other provisions of
FINRA's options reporting rules are eligible for MRVP disposition \4\
and that options reporting requirements are part of the MRVP for almost
all of the options exchanges,\5\ thus including them in FINRA's plan
would promote greater consistency across the markets. The need for such
consistency is heightened because FINRA is party to an agreement
allocating regulatory responsibility for options reporting rules.\6\
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\4\ The MRVP currently covers violations of FINRA Rule
2360(b)(3) regarding position limits, (b)(4) regarding exercise
limits and (b)(23) regarding tendering procedures for exercise of
options.
\5\ See NYSE MKT Rule 590(g) (referencing violations of
reporting rules including Rule 906 (Reporting of Options
Positions)); NYSE Arca Options Rule 10.12(h)(23); BATS Rule 25.3(b);
Nasdaq Options Rule Chapter X, Section 7(d); BX Options Rule Chapter
X, Section 7(d); CBOE Rule 17.50(g)(15); C2 Rule Chapter 17 (which
incorporates the rules contained in CBOE Chapter XVII); ISE Rule
1614(d)(10).
\6\ See Securities Exchange Act Release No. 68362 (December 5,
2012) 77 FR 73719 (December 11, 2012) (Notice of Filing and Order
Approving and Declaring Effective an Amendment to the Plan for the
Allocation of Regulatory Responsibilities Among the NYSE MKT LLC,
BATS Exchange, Inc., BOX Options Exchange LLC, C2 Options Exchange,
Incorporated, the Chicago Board Options Exchange, Incorporated, the
International Securities Exchange LLC, Financial Industry Regulatory
Authority, Inc., the NYSE Arca, Inc., The NASDAQ Stock Market LLC,
NASDAQ OMX BX, Inc., NASDAQ OMX PHLX, Inc., and Miami International
Securities Exchange, LLC concerning options-related market
surveillance).
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Other Rules
Finally, the proposed rule change would make violations of several
other rules eligible for disposition under the MRVP. With respect to
each rule, FINRA believes that a minor violation, depending on the
circumstances, could appropriately be remediated under the terms of the
MRVP without compromising investor protection.
Exchange Act Rule 10b-10 (Confirmation of Transactions) requires
broker-dealers to disclose specified information in writing to
customers at or before completion of a transaction, including but not
limited to information concerning the date and time of the transaction,
the number of shares bought or sold, the price or average price of the
transaction, the capacity in which the member is acting in connection
with the transaction, and the nature of the remuneration received or to
be received by the member. FINRA has observed circumstances where
members have committed minor violations of the rule by failing to fully
or accurately disclose such information. For example, FINRA has seen
circumstances where a broker-dealer mistakenly reported the ``average
price'' of a transaction as the ``price'' or mismarked a principal
transaction as an agency transaction. Depending upon the specific facts
and circumstances of the transaction, including the sophistication of
the customer and the nature of the information that was not disclosed
or improperly disclosed, FINRA believes an MRV could be an appropriate
disposition.
FINRA Rule 4360(b) (Fidelity Bonds) requires a member to maintain
minimum fidelity bond coverage commensurate with its net capital
requirements. MSRB Rule G-6 (Fidelity Bonding Requirements) requires a
broker, dealer or municipal securities dealer to maintain the minimum
fidelity bond coverage that is required by the national securities
association with which it is registered. FINRA has observed instances
where a member had fidelity bond coverage but less than the required
coverage. FINRA believes MRV disposition may be appropriate in such
circumstances, depending on the reason for the shortfall and the
magnitude and
[[Page 49316]]
duration of the failure. For example, a modest shortfall in coverage
based on a miscalculation of net capital that was quickly discovered
and remedied might be appropriate for an MRV disposition.
MSRB Rule G-10 (Delivery of Investor Brochure) requires a broker,
dealer or municipal securities dealer to deliver a copy of an investor
brochure to a customer promptly after receiving a complaint from the
customer. As with other provisions referenced above and those already
part of FINRA's MRVP involving a late filing or delivery, FINRA
believes that a failure to timely deliver such brochure may be
appropriate for MRV disposition under certain factual circumstances;
e.g., where a violation is not widespread or willful.
FINRA By-Laws Schedule A, Sec. 1(b) (Member Regulatory Fees)
assesses on members a Trading Activity Fee for the sale of covered
securities. The provision defines covered securities, exempts certain
transactions, sets forth fee rates and provides that members shall
report the volume of applicable sales in a manner prescribed by FINRA.
FINRA has observed that firms sometimes fail to make accurate payment
of the Trading Activity Fee based on an inadvertent miscalculation of
the fee or failure to apply the fee to the proper universe of trades.
FINRA has also observed instances where a firm has inadvertently failed
to accurately report the volume of sales of covered securities, thus
impacting the proper calculation of the fee. FINRA believes such
circumstances may be appropriate for MRVP disposition and therefore has
included the By-Law provision in the proposed rule change.
FINRA Rule 2266 (SIPC Information) requires members to provide
customers with written notification of the availability of SIPC
information at account opening and annually thereafter. FINRA may
consider isolated failures to satisfy this requirement without customer
harm to be minor in nature and therefore appropriate for an MRV.
FINRA Rules 3160(a)(1), (3), (4) and (5) (Networking Arrangements
Between Members and Financial Institutions) set forth standards of
conduct for conducting broker-dealer services on or off the premises of
a financial institution pursuant to a networking arrangement. These
provisions specify: the setting in which a member may conduct broker-
dealer services on the premises of a financial institution; the
disclosure required to inform the customer that the broker-dealer
products sold are not guaranteed or federally insured; the content
requirements of communications with the public; and the requirement to
promptly notify the financial institution if any associated person of a
member employed by the institution has been terminated for cause. FINRA
believes there are several potential factual scenarios where a minor
violation could occur under these provisions. For example, Rule
3160(a)(3)(B) requires a member to disclose orally, in addition to
written disclosure, that the securities products purchased are not
guaranteed or federally insured. FINRA could foresee a circumstance
where either written or oral disclosure is provided rather than both
and believes an MRV may be appropriate under such facts. FINRA notes
that the proposed rule change excludes Rule 3160(a)(2), which sets
forth the requirement that a written agreement govern any networking
arrangement and include key broker-dealer obligations pursuant to Rule
701 of SEC Regulation R and ensure access to the financial
institution's premises by broker-dealer supervisory personnel and
regulators from FINRA and the SEC.
FINRA Rules 4370(a), (b), (c) and (e) (Business Continuity Plans
and Emergency Contact Information) require a member to create, maintain
and update a written business continuity plan and to disclose the
elements of the plan to customers at account opening, on its Web site
and upon customer request. The provisions allow for flexibility in the
design of the plan but also include a number of minimum elements. While
FINRA recognizes the importance of an effective business continuity
plan, we also have seen minor violations of the provisions that may not
implicate the overall effectiveness of a plan. For example, FINRA has
observed instances where members have failed for a short duration to
timely update their plans in violation of Rule 4370(b) or failed to
address one of the ten elements set forth in Rule 4370(c). FINRA could
also envision circumstances where a member failed to address an
existing relationship with another broker dealer in violation of Rule
4370(a) or failed in an isolated circumstance to timely provide
disclosure about its business continuity plan after receiving a request
from a customer under Rule 4370(e). FINRA believes these examples may
be appropriate for MRV disposition. However, FINRA does not believe MRV
disposition would be appropriate where a member has no business
continuity plan or procedures as required by Rule 4370(a).
FINRA has not proposed to include Rule 4370(d) for MRVP
eligibility. That provision requires a member to designate a member of
senior management to approve the plan and be responsible for an annual
review of it, and FINRA does not foresee any circumstances where a
violation of those requirements would be appropriate for MRVP
disposition.
FINRA Rule 5121(a) (Public Offerings of Securities with Conflicts
of Interest) sets forth requirements for participation in public
offerings of a member's securities where a conflict of interest is
present. The rule requires prominent disclosure in the prospectus,
offering circular or similar document of the nature of the conflict of
interest, the name of a qualified independent underwriter that has
participated in the preparation of the offering documents and the role
and responsibilities of that independent underwriter. FINRA believes
that under certain facts, a failure to prominently disclose these
items--e.g., disclosing them in smaller font--may constitute a minor
violation appropriate for MRVP disposition.
FINRA Rule 7430 (Synchronization of Member Business Clocks)
requires members to synchronize their business clocks for the purposes
of recording the date and time of events that must be reported pursuant
to FINRA By-Laws and rules. FINRA believes that isolated violations
where certain business clocks fall out of synch due to software
glitches or other technical reasons may be appropriate to resolve as an
MRV, and therefore FINRA has proposed to include the rule in the MRVP.
FINRA reiterates that inclusion of a rule in the MRVP does not mean
that all violations of that rule must be treated pursuant to the MRVP.
FINRA staff maintains the discretion to handle any violation of such
rules through AWCs or Complaints with the full range of applicable
sanctions.\7\ Similarly, members and associated persons maintain the
right to a hearing, with all the same procedural rights accorded all
formal disciplinary proceedings, instead of accepting a Minor Rule
Violation.
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\7\ FINRA does not intend to develop a formula as to when a
matter must be handled pursuant to the MRVP, as opposed to informal
action, or when an otherwise eligible MRVP matter would be handled
through an AWC or the filing of a complaint. The disposition of any
matter will depend on the particular facts and circumstances.
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The implementation date will be the date of Commission approval.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\8\ which requires, among
other things, that FINRA rules must be designed to
[[Page 49317]]
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 further believes that the proposed rule
change is consistent with Sections 15A(b)(2) and (b)(7) of the Act,\9\
which require that FINRA enforce and provide appropriate discipline for
violation of FINRA rules and applicable federal securities laws, rules
and regulations. FINRA believes that adopting the proposed rule change
will strengthen FINRA's ability to carry out its oversight and
enforcement responsibilities in cases where full disciplinary
proceedings are unwarranted in view of the minor nature of the
particular violation.
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\8\ 15 U.S.C. 78o-3(b)(6).
\9\ 15 U.S.C. 78o-3(b)(2) and 78o-3(b)(7).
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In addition, FINRA's MRVP, as amended by this proposal, provides a
fair procedure for disciplining members and persons associated with
members, consistent with Sections 15A(b)(8) and 15A(h)(1) of the
Act.\10\ The MRVP does not preclude a member or associated person from
contesting an alleged violation and receiving a hearing on the matter
with the same procedural rights through a litigated disciplinary
proceeding.
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\10\ 15 U.S.C. 78o-3(b)(8) and 78o-3(h)(1).
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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 will
allow for a quicker, more efficient means to resolve minor violations
of the eligible rules, potentially lessening the burden on firms in
those circumstances where, absent the rule's inclusion in the MRVP, a
more resource-intense formal proceeding might ensue.
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
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) by order approve or disapprove such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
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-2013-033 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-2013-033. 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 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
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available
for inspection and copying at the principal offices of the Exchange.
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-2013-
033, and should be submitted on or before September 3, 2013.
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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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-19509 Filed 8-12-13; 8:45 am]
BILLING CODE 8011-01-P