80 FR 48379 - Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Approving a Proposed Rule Change To Amend FINRA Rules Regarding Temporary and Permanent Cease and Desist Orders
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 155 (August 12, 2015)
Federal Register Volume 80, Issue 155 (August 12, 2015)
| Page Range | 48379-48382 | |
| FR Document | 2015-19759 |
[Federal Register Volume 80, Number 155 (Wednesday, August 12, 2015)] [Notices] [Pages 48379-48382] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-19759] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-75629; File No. SR-FINRA-2015-019] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Approving a Proposed Rule Change To Amend FINRA Rules Regarding Temporary and Permanent Cease and Desist Orders August 6, 2015. I. Introduction On June 16, 2015, the Financial Industry Regulatory Authority, Inc. (``FINRA''), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') a proposal to amend FINRA Rule Series 9100, 9200, 9300, 9550, and 9800 regarding temporary cease and desist orders (TCDO) and permanent cease and desist orders (PCDO). The proposed rule change was published for comment in the Federal Register on July 7, 2015.\3\ The Commission received one comment on the proposal, which supported the proposal.\4\ This order approves the proposed rule change. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ See Securities Exchange Act Release No. 75333 (June 30, 2015), 80 FR 38783 (July 7, 2015) (``Notice''). \4\ See Letter from Joseph C. Peiffer, President, Public Investors Arbitration Bar Association, to Brent J. Fields, Secretary, Commission dated July 28, 2015 (``PIABA Letter''). --------------------------------------------------------------------------- II. Description of the Proposed Rule Change \5\ --------------------------------------------------------------------------- \5\ The Notice contains a more detailed description of the proposal. See Notice, supra note 3. --------------------------------------------------------------------------- The Code of Procedure (Rule Series 9000) governs FINRA's disciplinary process, and includes: Rule 9120, Definitions, Rule Series 9200, Disciplinary Proceedings, Rule Series 9300, Review of Disciplinary Proceeding by National Adjudicatory Council and FINRA Board; Application for SEC Review, Rule Series 9500, Other Proceedings, and Rule Series 9800, Temporary Cease and Desist Orders. FINRA's temporary cease and desist authority, introduced on a pilot basis in 2003 \6\ and approved permanently in 2009,\7\ can be used only in connection with the violation of specified rules,\8\ and requires that a Hearing Panel find by a preponderance of the evidence that the alleged violation has occurred in order to impose a TCDO.\9\ FINRA proposed to amend Rule Series 9800 to, among other things, lower the evidentiary standard for finding a violation to ``a showing of likelihood of success on the merits.'' FINRA also proposed to amend Rule Series 9100, 9200, 9300, and 9550 to adopt a new expedited proceeding for failure to comply with a TCDO or PCDO, to harmonize the provisions governing how documents are served in temporary cease and desist proceedings and related expedited proceedings, to clarify the process for issuing PCDOs, to ease FINRA's administrative burden in temporary cease and desist proceedings, particularly with respect to appointment of a Hearing Officer and Hearing Panel, and to make conforming changes throughout the Code of Procedure. --------------------------------------------------------------------------- \6\ See Securities Exchange Act Release No. 47925 (May 23, 2003), 68 FR 33548 (June 4, 2003) (Order Approving File No. SR-NASD- 98-80). \7\ See Securities Exchange Act Release No. 60306 (July 14, 2009), 74 FR 36292 (July 22, 2009) (Order Approving File No. SR- FINRA-2009-035). \8\ Rule 9810(a) provides that a temporary cease and desist proceeding may be initiated with respect to alleged violations of Section 10(b) of the Act (15 U.S.C. 78j(b)) and Rule 10b-5 under the Act (17 CFR 240.10b-5); Rules 15g-1 through 15g-9 under the Act (17 CFR 240.15g-1 et seq.); FINRA Rule 2010 (if the alleged violation is unauthorized trading, or misuse or conversion of customer assets, or based on violations of Section 17(a) of the Securities Act of 1933 (15 U.S.C. 77q(a))); FINRA Rule 2020; or Rule 4330 (if the alleged violation is misuse or conversion of customer assets). \9\ Rule 9840(a)(1). --------------------------------------------------------------------------- A. TCDO Evidentiary Standard Rule 9840(a)(1) provides that a TCDO shall be imposed if the Hearing Panel finds ``by a preponderance of the evidence that the alleged violation specified in the notice has occurred.'' FINRA believes this is too high an evidentiary threshold to obtain a TCDO, which FINRA considers a critical investor protection tool. FINRA notes that the evidentiary standard to get a TCDO is the same one needed to find a violation in the concurrent underlying disciplinary proceeding. FINRA states that it creates an administrative challenge to have to make the same evidentiary presentation in the temporary cease and desist proceeding as in the subsequent underlying disciplinary proceeding, but on an expedited basis. Therefore, FINRA has proposed to lower the evidentiary [[Page 48380]] standard in temporary cease and desist proceedings. B. Expedited Proceeding for Failure To Comply With TCDOs and Permanent Cease and Desist Orders FINRA proposed to amend Rule 9556, which sets forth expedited procedures for enforcing violations of TCDOs and PCDOs. Under current Rule 9556, if a member or person fails to comply with a TCDO or PCDO, FINRA may issue a notice stating that the failure to comply within seven days of the notice will result in a suspension or cancellation of membership or a suspension or bar from associating with any member and also stating what the respondent must do to avoid such action. FINRA is concerned that a respondent could abuse the current expedited procedure by a repeated pattern of ``violate and cure,'' where a respondent could violate a cease and desist order and then cure that violation before the effective date of the notice. Proposed Rule 9556(h) describes a new expedited proceeding for the respondent of a TCDO or PCDO that fails to comply with that order and has previously been served with a notice under Rule 9556(a) for a failure to comply with any provision of the TCDO or PCDO. In contrast with other expedited proceedings described by Rule 9556, proposed Rule 9556(h)(3) provides that a respondent's compliance with the TCDO or PCDO is not grounds for dismissing the Rule 9556(h) proceeding. C. Service Provisions in Temporary Cease and Desist Proceedings and Expedited Proceedings FINRA proposed to amend the rules that govern service of documents in temporary cease and desist proceedings and other related expedited proceedings to make the rules consistent. Currently, some rules explicitly address service by facsimile and on counsel, while others do not. FINRA proposed to explicitly allow service by facsimile and on counsel, as well as by email, across all temporary cease and desist and expedited proceedings. FINRA states that email service is particularly important in expedited proceedings and will allow parties to receive information quickly and will remove unnecessary burdens and inefficiencies. FINRA notes that where the proposed revisions permit email service, they also require duplicate service through other means such as overnight courier or personal delivery. D. PCDO Authority FINRA also proposed to clarify the process for imposing PCDOs in disciplinary proceedings. FINRA states that these changes are procedural in nature and do not reflect any change to FINRA's prior representations concerning the context in which it will seek PCDOs.\10\ --------------------------------------------------------------------------- \10\ See Order Approving File No. SR-NASD-98-80, at 33550 n.18, supra note 6. --------------------------------------------------------------------------- E. Administrative and Clarifying Changes to Temporary Cease and Desist Proceedings 1. Eligibility To Serve on a Hearing Panel for Temporary Cease and Desist Proceedings FINRA seeks to expand the pool of persons eligible to serve on a Hearing Panel. Currently, Rule 9820(a) requires that the three-person Hearing Panel appointed to preside over a temporary cease and desist proceeding include two panelists who are current or former Governors, Directors, or National Adjudicatory Council members, and at least one Panelist who is an associated person. FINRA states that the current rules limit the pool of potential panelists for temporary cease and desist proceedings and that other adjudicatory proceedings, including the disciplinary proceeding that underlies the temporary cease and desist proceeding and the various Rule 9556 expedited proceedings to enforce a cease and desist order, are not limited in this manner.\11\ FINRA believes that this limited pool, coupled with the short time in which a temporary cease and desist proceeding must be processed, creates administrative burdens for the Office of Hearing Officers. --------------------------------------------------------------------------- \11\ See Securities Exchange Act Release No. 73230 (September 26, 2014); 79 FR 59534 (October 2, 2014) approving SR-FINRA-2014-036 which amended Rules 9231 and 9232 regarding eligibility to serve on Hearing Panels and Extended Hearing Panels and Securities Exchange Act Release No. 72543 (July 3, 2014); 79 FR 39440 (July 10, 2014) providing notice of SR-FINRA-2014-031 which amended the definition of Hearing Officer in Rule 9120. --------------------------------------------------------------------------- FINRA proposed to amend Rule 9820 to permit the following persons to sit on Hearing Panels that preside over temporary cease and desist proceedings: Persons who currently serve or previously served on a District Committee; previously served on the National Adjudicatory Council; previously served on a disciplinary subcommittee of the National Adjudicatory Council or the National Business Conduct Committee; previously served as a member of the Board of Directors of FINRA Regulation or of the Board of Governors of FINRA; or currently serve or previously served on a committee appointed or approved by the Board of Governors of FINRA, but do not serve currently on the National Adjudicatory Council or as a member of the Board of Directors of FINRA Regulation or of the Board of Governors of FINRA. Each panelist must be associated with a member of FINRA or retired therefrom.\12\ --------------------------------------------------------------------------- \12\ The proposed pool of persons that would be eligible to serve on a Hearing Panel for TCDO proceedings is the same as that for disciplinary proceedings. See FINRA Rule 9231(b) (providing that each panelist shall be associated with a member of FINRA or retired therefrom and that the pool of panelists for disciplinary proceedings includes current or previous members of District Committees, former members of the National Adjudicatory Council, past members of disciplinary subcommittees of the National Adjudicatory Council or the National Business Conduct Committee, past members of the Board of Directors of FINRA Regulation or past members of the Board of Governors of FINRA, and current or previous members of committees appointed or approved by the Board of Governors of FINRA); FINRA Rule 9559(d)(2) (providing for the same pool for FINRA Rule 9556 expedited proceedings). --------------------------------------------------------------------------- 2. Procedure for Obtaining Extensions FINRA also proposed to amend the process to obtain an extension of deadlines for issuing decisions in temporary cease and desist proceedings and responding to requests to modify, set aside, limit or suspend a TCDO. Under current Rule 9840(a), the Hearing Panel's deadline for issuing its written decision can be extended by the Hearing Officer with the consent of the parties ``for good cause shown.'' FINRA believes that the Hearing Panel should have flexibility where it can make a good cause showing of why it needs additional time to prepare its decision or respond to a Rule 9850 request. The proposed changes to Rules 9840(a) and 9850 would permit the Chief Hearing Officer or Deputy Chief Hearing Officer to extend the deadlines for issuing decisions and responding to Rule 9850 applications where good cause is shown and eliminate the requirement for consent of the parties. 3. Additional Administrative Proposals FINRA also proposed to: (i) Require FINRA's prosecuting department to file a memorandum of points and authorities with the notice initiating a temporary cease and desist proceeding; and (ii) permit the Hearing Officer to order a party to furnish to all other parties and the Hearing Panel such information as deemed appropriate, including any or all of the pre-hearing submissions described in Rule 9242(a). FINRA states that the requirement to file a memorandum of points and authorities at the initiation of the proceeding will provide more context to [[Page 48381]] the allegations, which will make the process more efficient, improve the quality of the hearing, and increase the fairness of the proceeding. FINRA believes its proposal to authorize the Hearing Officer to order a party to furnish other pre-hearing submissions also serves these objectives. 4. Delivery Requirement FINRA further proposed to require a member firm that is the subject of a TCDO to provide a copy of the order to its associated persons, within one business day of receiving it. FINRA states that because of the significant nature of the harm that a TCDO is aimed at stopping, there is a heightened need to ensure that the persons who may act on behalf of the member firm are made aware of the contents of a TCDO imposed against the member firm.\13\ --------------------------------------------------------------------------- \13\ FINRA also proposed clarifying changes. See Notice, supra note 3, at 38787. --------------------------------------------------------------------------- III. Discussion and Commission Findings After careful review, the Commission finds that FINRA's proposal is consistent with the requirements of Section 15A of the Act \14\ and the rules and regulations thereunder applicable to a national securities association.\15\ In particular, the Commission finds that the proposed rule change is consistent with the requirements of Section 15A(b)(2) of the Act,\16\ which requires, among other things, that a national securities association have the capacity to be able to carry out the purposes of the Act and to comply, and to enforce compliance by its members and persons associated with its members, with the provisions of the Act, the rules and regulations thereunder, the rules of the Municipal Securities Rulemaking Board, and the rules of the association; Section 15A(b)(6) of the Act,\17\ which requires, among other things, that the rules of a national securities association 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; Section 15A(b)(7) of the Act,\18\ which requires, among other things, that the rules of a national securities association provide that its members and persons associated with its members shall be appropriately disciplined for violation of any provision of the Act, the rules of regulations thereunder, the rules of the Municipal Securities Rulemaking Board, or the rules of the association by expulsion, suspension, limitation of activities, functions, and operations, fine, censure, being suspended or barred from being associated with a member, or any other fitting sanction; and Section 15A(b)(8) of the Act,\19\ which requires that the rules of a national securities association provide a fair procedure for, among other things, the disciplining of members and persons associated with members. --------------------------------------------------------------------------- \14\ 15 U.S.C. 78(f). \15\ In approving this proposed rule change, the Commission notes that it has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). \16\ 15 U.S.C. 78o-3(b)(2). \17\ 15 U.S.C. 78o-3(b)(6). \18\ 15 U.S.C. 78o-3(b)(7). \19\ 15 U.S.C. 78o-3(b)(8). --------------------------------------------------------------------------- FINRA proposed to amend the evidentiary standard that must be met before imposing a TCDO from a preponderance of the evidence to a likelihood of success on the merits. The commenter expressed support for this amendment, noting that because a lesser showing is required at the TCDO stage, more time and effort could be devoted to meeting the ``preponderance of the evidence'' standard at the disciplinary stage.\20\ The commenter also stated that the change in evidentiary standard would harmonize FINRA's standard with that used in other jurisdictions.\21\ Finally, the commenter noted FINRA's commitment to use its TCDO authority judiciously, but argued that the benefits of the new evidentiary standard could not be realized if the proceedings are used judiciously.\22\ --------------------------------------------------------------------------- \20\ See PIABA Letter, supra note 4, at 2. \21\ Id. at 2-3. \22\ Id. at 3. --------------------------------------------------------------------------- The Commission believes that FINRA's proposed change to the evidentiary standard should improve FINRA's ability to initiate and resolve cases involving conversion of assets more quickly than under the current standard, which requires the same evidentiary showing that is required in the concurrent underlying disciplinary proceeding. The Commission agrees with FINRA's statement that the proposed rule change ``maintains all of the meaningful existing restraints'' on its TCDO authority.\23\ The Commission expects that FINRA will continue to use its authority in a judicious manner under the new evidentiary standard, consistent with its representation in the notice seeking permanent approval for the use of TCDOs.\24\ --------------------------------------------------------------------------- \23\ See Notice, supra note 3, at 38785. \24\ In the Commission's 2009 order approving FINRA's temporary cease and desist authority on a permanent basis, the Commission noted approvingly FINRA's statement that it would use the authority ``judiciously.'' See Order Approving SR-FINRA-2009-035, supra note 7. In the Notice, FINRA represented that its use of the authority to date has been judicious in that FINRA has sought and obtained TCDOs on only seven occasions since 2003. FINRA intends to continue using its temporary cease and desist authority in a judicious manner. See Notice, supra note 3, at 38784-5. See also Securities Exchange Act Release No. 60028 (June 2, 2009), 74 FR 27364 (June 9, 2009) (Notice of Filing of SR-FINRA-2009-035). --------------------------------------------------------------------------- The Commission also believes that the adoption of an expedited proceeding for failure to comply with a TCDO or PCDO will aid in the protection of investors and thus further the public interest and is designed to prevent fraudulent and manipulative acts and practices by removing the opportunity for a respondent to repeatedly violate a cease and desist order and then cure that violation before the effective date of the notice of failure to comply without any consequence to the respondent. The Commission also believes that the proposed expedited proceeding provides a fair procedure for the disciplining of members and persons associated with members because the proceeding can only occur after the respondent has been served with notice of failure to comply with the TCDO or PCDO, and the procedure of the expedited proceeding is governed by existing Rule 9559. Expanding the pool of persons eligible to serve on Hearing Panels should ensure that there is an adequate pool of persons available to serve on both the temporary cease and desist proceeding and the concurrent underlying disciplinary proceeding. Further, permitting the Chief Hearing Officer or Deputy Chief Hearing Officer to extend the deadlines for Hearing Panels to hold hearings, issue decisions, and respond to Rule 9850 applications where good cause is shown retains the requirement of the current rule that there must be a showing of good cause to obtain an extension, but requires that this showing be made to the Chief Hearing Officer or Deputy Chief Hearing Officer, rather than the Hearing Officer presiding over the proceeding, as the current rule requires. Thus, the requirement for the parties to consent to an extension of time is no longer necessary, as the person who is making the decision is not involved in the proceeding. FINRA's administrative proposals to (i) require FINRA's prosecuting department to file a memorandum of points and authorities with the notice initiating a temporary cease and desist proceeding; and (ii) permit the Hearing Officer to order a party to furnish to all other parties and the Hearing Panel such information as deemed appropriate, including any or all of the pre-hearing submissions described in Rule 9242(a) should enable FINRA to provide a fair procedure for the disciplining of [[Page 48382]] members and persons associated with members by providing the parties more information about the allegations at the outset of the proceeding. Requiring a member firm that is the subject of a TCDO to provide a copy of the order to its associated persons should help prevent fraudulent and manipulative acts and practices by ensuring that the persons who may act on behalf of the member firm are made aware of the contents of a TCDO imposed against the member firm. For the reasons discussed above, the Commission finds that the proposed rule change is consistent with the Section 15A of the Act and the rules and regulations thereunder. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,\25\ that the proposed rule change (SR-FINRA-2015-019) be, and it hereby is, approved. --------------------------------------------------------------------------- \25\ 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\26\ --------------------------------------------------------------------------- \26\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2015-19759 Filed 8-11-15; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 80, No. 155 / Wednesday, August 12, 2015 / Notices 48379
influence upon service members.55 For the Commission, by the Division of authority, introduced on a pilot basis in
FINRA, however, notes that requiring a Trading and Markets, pursuant to delegated 2003 6 and approved permanently in
registered representative to disclose his authority.62 2009,7 can be used only in connection
or her service history and discharge Robert W. Errett, with the violation of specified rules,8
status could unduly influence or Deputy Secretary. and requires that a Hearing Panel find
pressure current service members’ [FR Doc. 2015–19763 Filed 8–11–15; 8:45 am] by a preponderance of the evidence that
investment decisions.56 The BILLING CODE 8011–01–P the alleged violation has occurred in
Commission agrees that requiring order to impose a TCDO.9 FINRA
disclosure of a FINRA member’s proposed to amend Rule Series 9800 to,
military service could have the counter- SECURITIES AND EXCHANGE among other things, lower the
productive effect of causing that COMMISSION evidentiary standard for finding a
member to gain the sort of influence [Release No. 34–75629; File No. SR–FINRA– violation to ‘‘a showing of likelihood of
which such a requirement would seek to 2015–019] success on the merits.’’ FINRA also
avoid. proposed to amend Rule Series 9100,
Self-Regulatory Organizations; 9200, 9300, and 9550 to adopt a new
Finally, while the Commission Financial Industry Regulatory
appreciates the concerns raised by one expedited proceeding for failure to
Authority, Inc.; Order Approving a comply with a TCDO or PCDO, to
commenter suggesting that additional Proposed Rule Change To Amend
suitability criteria be considered, harmonize the provisions governing
FINRA Rules Regarding Temporary how documents are served in temporary
including those related to the and Permanent Cease and Desist
government’s Thrift Savings Plan,57 the cease and desist proceedings and related
Orders expedited proceedings, to clarify the
Commission agrees with FINRA that the
suitability obligations imposed by Rule August 6, 2015. process for issuing PCDOs, to ease
2111 satisfy the commenters’ FINRA’s administrative burden in
I. Introduction temporary cease and desist proceedings,
concerns.58 Thus, the Commission
On June 16, 2015, the Financial particularly with respect to appointment
believes that such concerns are already
Industry Regulatory Authority, Inc. of a Hearing Officer and Hearing Panel,
addressed by the rule as proposed.
(‘‘FINRA’’), pursuant to Section 19(b)(1) and to make conforming changes
In light of the statutory requirements of the Securities Exchange Act of 1934 throughout the Code of Procedure.
under Section 15A(b)(14) of the (‘‘Act’’) 1 and Rule 19b–4 thereunder,2
Exchange Act,59 and the need to protect A. TCDO Evidentiary Standard
filed with the Securities and Exchange
members of the U.S. Armed Forces from Commission (‘‘SEC’’ or ‘‘Commission’’) Rule 9840(a)(1) provides that a TCDO
unscrupulous practices regarding the a proposal to amend FINRA Rule Series shall be imposed if the Hearing Panel
sales of investment products, the 9100, 9200, 9300, 9550, and 9800 finds ‘‘by a preponderance of the
Commission believes that the proposed regarding temporary cease and desist evidence that the alleged violation
rule is consistent with the Act in that it orders (TCDO) and permanent cease and specified in the notice has occurred.’’
is designed to prevent fraudulent and desist orders (PCDO). The proposed rule FINRA believes this is too high an
manipulative acts and practices, to change was published for comment in evidentiary threshold to obtain a TCDO,
promote just and equitable principles of the Federal Register on July 7, 2015.3 which FINRA considers a critical
trade, and, in general, to protect The Commission received one comment investor protection tool. FINRA notes
investors and the public interest.60 on the proposal, which supported the that the evidentiary standard to get a
V. Conclusion proposal.4 This order approves the TCDO is the same one needed to find a
proposed rule change. violation in the concurrent underlying
It is therefore ordered, pursuant to II. Description of the Proposed Rule disciplinary proceeding. FINRA states
Section 19(b)(2) of the Act,61 that the Change 5 that it creates an administrative
proposed rule change (SR–FINRA– challenge to have to make the same
2015–009), be, and hereby is, approved. The Code of Procedure (Rule Series evidentiary presentation in the
9000) governs FINRA’s disciplinary temporary cease and desist proceeding
55 See MSU Letter.
process, and includes: Rule 9120, as in the subsequent underlying
56 See FINRA Response Letter at 4. Definitions, Rule Series 9200, disciplinary proceeding, but on an
57 See PIABA Letter. Both FINRA and the Disciplinary Proceedings, Rule Series expedited basis. Therefore, FINRA has
Commission’s Office of Compliance Inspections and 9300, Review of Disciplinary Proceeding proposed to lower the evidentiary
Examinations (‘‘OCIE’’) have recently identified by National Adjudicatory Council and
sales practices relating to retirement accounts and
rollovers as examination priorities. See FINRA 2015
FINRA Board; Application for SEC 6 See Securities Exchange Act Release No. 47925
Regulatory and Examination Priorities Letter, Review, Rule Series 9500, Other (May 23, 2003), 68 FR 33548 (June 4, 2003) (Order
January 6, 2015, available at http://www.finra.org/ Proceedings, and Rule Series 9800, Approving File No. SR–NASD–98–80).
sites/default/files/p602239.pdf (discussing Temporary Cease and Desist Orders. 7 See Securities Exchange Act Release No. 60306
Individual Retirement Account (IRA) Rollovers (and (July 14, 2009), 74 FR 36292 (July 22, 2009) (Order
Other ‘‘Wealth Events’’)). See also National Exam
FINRA’s temporary cease and desist
Approving File No. SR–FINRA–2009–035).
Program Examination Priorities for 2015, available 8 Rule 9810(a) provides that a temporary cease
62 17 CFR 200.30–3(a)(12).
at http://www.sec.gov/about/offices/ocie/national- and desist proceeding may be initiated with respect
examination-program-priorities-2015.pdf (‘‘[OCIE] 1 15 U.S.C. 78s(b)(1). to alleged violations of Section 10(b) of the Act (15
will assess whether registrants are using improper 2 17 CFR 240.19b–4.
U.S.C. 78j(b)) and Rule 10b–5 under the Act (17
mstockstill on DSK4VPTVN1PROD with NOTICES
or misleading practices when recommending the 3 See Securities Exchange Act Release No. 75333
CFR 240.10b–5); Rules 15g–1 through 15g–9 under
movement of retirement assets from employer- (June 30, 2015), 80 FR 38783 (July 7, 2015) the Act (17 CFR 240.15g–1 et seq.); FINRA Rule
sponsored defined contribution plans into other (‘‘Notice’’). 2010 (if the alleged violation is unauthorized
investments and accounts, especially when they 4 See Letter from Joseph C. Peiffer, President, trading, or misuse or conversion of customer assets,
pose greater risks and/or charge higher fees’’). Public Investors Arbitration Bar Association, to or based on violations of Section 17(a) of the
58 See FINRA Response Letter at 4.
Brent J. Fields, Secretary, Commission dated July Securities Act of 1933 (15 U.S.C. 77q(a))); FINRA
59 15 U.S.C. 78o–3(b)(14).
28, 2015 (‘‘PIABA Letter’’). Rule 2020; or Rule 4330 (if the alleged violation is
60 See 15 U.S.C. 78o–3(b)(6). 5 The Notice contains a more detailed description misuse or conversion of customer assets).
61 15 U.S.C. 78s(b)(2). of the proposal. See Notice, supra note 3. 9 Rule 9840(a)(1).
VerDate Sep<11>2014 18:16 Aug 11, 2015 Jkt 235001 PO 00000 Frm 00093 Fmt 4703 Sfmt 4703 E:\FR\FM\12AUN1.SGM 12AUN1](https://thefederalregister.org/doc/80_FR_48534/page/1.svg)
![48382 Federal Register / Vol. 80, No. 155 / Wednesday, August 12, 2015 / Notices
members and persons associated with I. Self-Regulatory Organization’s executed electronically on the Exchange
members by providing the parties more Statement of the Terms of Substance of in all multiply-listed option classes
information about the allegations at the the Proposed Rule Change (excluding Qualified Contingent Cross
outset of the proceeding. The Exchange is filing a proposal to Orders,5 mini-options,6 Priority
Requiring a member firm that is the amend the MIAX Options Fee Schedule Customer-to-Priority Customer Orders,
subject of a TCDO to provide a copy of (the ‘‘Fee Schedule’’). PRIME Auction Or Cancel Responses,
the order to its associated persons The text of the proposed rule change PRIME Contra-side Orders, PRIME
should help prevent fraudulent and is available on the Exchange’s Web site Orders for which both the Agency and
manipulative acts and practices by at http://www.miaxoptions.com/filter/ Contra-side Order are Priority
ensuring that the persons who may act wotitle/rule_filing, at MIAX’s principal Customers,7 and executions related to
on behalf of the member firm are made office, and at the Commission’s Public contracts that are routed to one or more
aware of the contents of a TCDO Reference Room. exchanges in connection with the
imposed against the member firm. Options Order Protection and Locked/
II. Self-Regulatory Organization’s
For the reasons discussed above, the Statement of the Purpose of, and Crossed Market Plan referenced in
Commission finds that the proposed Statutory Basis for, the Proposed Rule MIAX Rule 1400)), provided the
rule change is consistent with the Change Member meets certain tiered percentage
Section 15A of the Act and the rules and thresholds in a month as described in
regulations thereunder. In its filing with the Commission, the the Priority Customer Rebate Program
Exchange included statements table.8 For each Priority Customer order
IV. Conclusion concerning the purpose of and basis for
transmitted by that Member which is
the proposed rule change and discussed
It is therefore ordered, pursuant to executed electronically on the Exchange
any comments it received on the
Section 19(b)(2) of the Act,25 that the in MIAX Select Symbols, MIAX will
proposed rule change. The text of these
proposed rule change (SR–FINRA– statements may be examined at the continue to credit each member at the
2015–019) be, and it hereby is, places specified in Item IV below. The separate per contract rate for MIAX
approved. Exchange has prepared summaries, set Select Symbols.9 For each Priority
For the Commission, by the Division of forth in sections A, B, and C below, of Customer order submitted into the
Trading and Markets, pursuant to delegated the most significant aspects of such PRIME Auction as a PRIME Agency
authority.26 statements. Order, MIAX will continue to credit
Robert W. Errett, each member at the separate per
A. Self-Regulatory Organization’s contract rate for PRIME Agency
Deputy Secretary.
Statement of the Purpose of, and Orders.10 The volume thresholds are
[FR Doc. 2015–19759 Filed 8–11–15; 8:45 am]
Statutory Basis for, the Proposed Rule calculated based on the customer
BILLING CODE 8011–01–P Change volume over the course of the month.
1. Purpose Volume will be recorded for and credits
SECURITIES AND EXCHANGE The Exchange proposes to amend its
COMMISSION Fee Schedule to (i) establish an
5 A Qualified Contingent Cross Order is
comprised of an originating order to buy or sell at
additional transaction fee rebate for least 1,000 contracts, or 10,000 mini-option
[Release No. 34–75631; File No. SR–MIAX– Priority Customer 3 orders submitted by contracts, that is identified as being part of a
2015–51] Members that meet certain percentage qualified contingent trade, as that term is defined
in Interpretations and Policies .01 below, coupled
thresholds of national customer volume with a contra-side order or orders totaling an equal
Self-Regulatory Organizations; Miami in multiply-listed options classes listed number of contracts. A Qualified Contingent Cross
International Securities Exchange, on MIAX; and (ii) establish new Order is not valid during the opening rotation
LLC; Notice of Filing and Immediate monthly volume thresholds in such process described in Rule 503. See Exchange Rule
Effectiveness of Proposed Rule option classes in the Priority Customer 516(j).
6 A mini-option is a series of option contracts
Change to Amend Fee Schedule Rebate Program (the ‘‘Program’’).4 with a 10 share deliverable on a stock, Exchange
August 6, 2015. Traded Fund share, Trust Issued Receipt, or other
Priority Customer Rebate Program Equity Index-Linked Security. See Exchange Rule
Pursuant to Section 19(b)(1) of the Currently, the Exchange credits each 404, Interpretations and Policies .08.
Securities Exchange Act of 1934 Member the per contract amount
7 The MIAX Price Improvement Mechanism
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 (‘‘PRIME’’) is a process by which a Member may
resulting from each Priority Customer electronically submit for execution (‘‘Auction’’) an
notice is hereby given that on August 5, order transmitted by that Member that is order it represents as agent (‘‘Agency Order’’)
2015, Miami International Securities against principal interest, and/or an Agency Order
Exchange LLC (‘‘MIAX’’ or ‘‘Exchange’’) 3 The term ‘‘Priority Customer’’ means a person against solicited interest. For a complete
filed with the Securities and Exchange or entity that (i) is not a broker or dealer in description of PRIME and of PRIME order types and
securities, and (ii) does not place more than 390 responses, see Exchange Rule 515A.
Commission (‘‘Commission’’) the 8 See MIAX Fee Schedule Section (1)(a)(iii).
orders in listed options per day on average during
proposed rule change as described in a calendar month for its own beneficial accounts(s). 9 See Securities Exchange [sic] Release Nos.
Items I, II, and III below, which Items See Exchange Rule 100. 74291 (February 18, 2015), 80 FR 9841 (February
have been prepared by the Exchange. 4 See Securities Exchange Act Release Nos. 74758 24, 2015) (SR–MIAX–2015–09); 74288 (February 18,
The Commission is publishing this (April 17, 2015), 80 FR 22756 (April 23, 2015) (SR– 2015), 80 FR 9837 (February 24, 2015) (SR–MIAX–
MIAX–2015–27); 74007 (January 9 [sic], 2015), 80 2015–08); 71700 (March 12, 2014), 79 FR 15188
mstockstill on DSK4VPTVN1PROD with NOTICES
notice to solicit comments on the FR 1537 (January 12, 2015) (SR–MIAX–2014–69); (March 18, 2014) (SR–MIAX–2014–13); 72356 (June
proposed rule change from interested 72799 (August 8, 2014), 79 FR 47698 (August 14, 10, 2014), 79 FR 34384 (June 16, 2014) (SR–MIAX–
persons. 2014) (SR–MIAX–2014–40); 72355 (June 10, 2014), 2014–26); 72567 (July 8, 2014), 79 FR 40818 (July
79 FR 34368 (June 16, 2014) (SR–MIAX–2014–25); 14, 2014) (SR–MIAX–2014–34); 73328 (October 9,
71698 (March 12, 2014), 79 FR 15185 (March 18, 2014), 79 FR 62230 (October 16, 2014) (SR–MIAX–
25 15 U.S.C. 78s(b)(2). 2014) (SR–MIAX–2014–12); 71283 (January 10, 2014–50).
26 17 CFR 200.30–3(a)(12). 2014), 79 FR 2914 (January 16, 2014) (SR–MIAX– 10 See Securities Exchange [sic] Release No.
1 15 U.S.C. 78s(b)(1).
2013–63); 71009 (December 6, 2013), 78 FR 75629 72943 (August 28, 2014), 79 FR 52785 (September
2 17 CFR 240.19b–4. (December 12, 2013) (SR–MIAX–2013–56). 4, 2014) (SR–MIAX–2014–45).
VerDate Sep<11>2014 18:16 Aug 11, 2015 Jkt 235001 PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 E:\FR\FM\12AUN1.SGM 12AUN1](https://thefederalregister.org/doc/80_FR_48534/page/4.svg)
Document Created: 2016-09-27 22:27:12
Document Modified: 2016-09-27 22:27:12
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 80 FR 48379 |
2024 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR