80_FR_70234 80 FR 70016 - Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Approving a Proposed Rule Change To Amend FINRA Rule 8312 (FINRA BrokerCheck Disclosure) To Reduce the Waiting Period for the Release of Information Reported on Form U5

80 FR 70016 - Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Approving a Proposed Rule Change To Amend FINRA Rule 8312 (FINRA BrokerCheck Disclosure) To Reduce the Waiting Period for the Release of Information Reported on Form U5

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 218 (November 12, 2015)

Page Range70016-70017
FR Document2015-28680

Federal Register, Volume 80 Issue 218 (Thursday, November 12, 2015) 
[Federal Register Volume 80, Number 218 (Thursday, November 12, 2015)]
[Notices]
[Pages 70016-70017]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-28680]



[[Page 70016]]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76359; File No. SR-FINRA-2015-032]


Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Order Approving a Proposed Rule Change To Amend FINRA 
Rule 8312 (FINRA BrokerCheck Disclosure) To Reduce the Waiting Period 
for the Release of Information Reported on Form U5

November 5, 2015.

I. Introduction

    On September 14, 2015, the Financial Industry Regulatory Authority, 
Inc. (``FINRA'') filed with the Securities and Exchange Commission 
(``SEC'' or ``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 FINRA Rule 8312 (FINRA 
BrokerCheck Disclosure) to reduce the 15-day waiting period for the 
release of information reported on Form U5 (Uniform Termination Notice 
for Securities Industry Registration) through BrokerCheck. The proposed 
rule change was published for comment in the Federal Register on 
October 1, 2015.\3\ The Commission received two comment letters on the 
proposed rule change.\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. 75988 (September 25, 
2015), 80 FR 59215 (``Notice'').
    \4\ See Letter from Joseph C. Peiffer, President, Public 
Investors Arbitration Bar Association, dated October 19, 2015 
(``PIABA Letter'') and Letter from Denise M. Hammond, Law Student, 
Barry University, dated October 22, 2014 (``Hammond Letter'').
---------------------------------------------------------------------------

II. Description of the Proposed Rule Change

    BrokerCheck provides the public with information on the 
professional background, business practices, and conduct of FINRA 
members and their associated persons. The information that FINRA 
releases through BrokerCheck is derived from the Central Registration 
Depository (``CRD''), the securities industry online registration and 
licensing database. FINRA member firms, their associated persons and 
regulators report information to the CRD system via the uniform 
registration forms.\5\
---------------------------------------------------------------------------

    \5\ FINRA discloses through BrokerCheck information that is 
reported on the following uniform registration forms: Form U4 
(Uniform Application for Securities Industry Registration or 
Transfer); Form U5 (Uniform Termination Notice for Securities 
Industry Registration); Form U6 (Uniform Disciplinary Action 
Reporting Form); Form BD (Uniform Application for Broker-Dealer 
Registration); and Form BDW (Uniform Request for Broker-Dealer 
Withdrawal).
---------------------------------------------------------------------------

    Rule 8312 governs the information that FINRA releases to the public 
through BrokerCheck. Pursuant to this rule, most of the information 
that FINRA releases through BrokerCheck is made available the day after 
it is filed with the CRD system.\6\ Rule 8312(d)(5), however, prohibits 
FINRA from releasing Form U5 information for 15 days following the 
filing of such information. According to FINRA, this 15-day waiting 
period was established to give brokers on whose behalf the Form U5 was 
submitted an opportunity to comment on the disclosure event either 
through a Form U4, or by submitting a comment directly to FINRA to be 
included on BrokerCheck.\7\
---------------------------------------------------------------------------

    \6\ See Notice, supra note 3, at 59216.
    \7\ See Securities Exchange Act Release No. 55127 (January 18, 
2007), 72 FR 3455 (January 25, 2007) (Order Approving File No. SR-
NASD-2003-168).
---------------------------------------------------------------------------

    FINRA has proposed to shorten this 15-day waiting period for the 
release of Form U5 disclosure information. Specifically, the proposed 
rule change will amend Rule 8312(d)(5) to provide that FINRA shall not 
release events reported on Section 7 of Form U5 (other than ``Internal 
Review Disclosure'' events) for three business days after FINRA's 
processing \8\ of the filing.\9\ However, if an event is reported on 
Form U5 and the same event is thereafter reported on Form U4 before the 
three-business-day period expires, FINRA will release the Forms U4 and 
U5 information simultaneously upon processing; this three-business-day 
period may be shortened.\10\
---------------------------------------------------------------------------

    \8\ FINRA states that, for purposes of the proposed rule change, 
a Form U5 will be considered processed once the Disclosure Reporting 
Page, which contains the details about a disclosure event, has been 
reviewed by FINRA staff. FINRA states that most Forms U5 that 
contain disclosure information are processed within two days of 
being filed with the CRD system. See Notice, supra note 3, at 59216, 
n.7.
    \9\ For example, if disclosure information on Form U5 is 
processed on Monday, FINRA would release that information via 
BrokerCheck on Thursday.
    \10\ For example, if FINRA processes a disclosure event reported 
on Form U5 on Monday, and on Tuesday processes a Form U4 filed by a 
broker reporting that event, the Form U5 information would be made 
publicly available in BrokerCheck on Wednesday, which is the same 
day that the Form U4 information would be released.
---------------------------------------------------------------------------

III. Comment Letters

    Commenters support the proposal.\11\ One commenter, while 
supporting the proposed rule change, believes that FINRA needs to go 
further to ``address and correct the present system that allows for the 
routine expungement of customer claims'' from BrokerCheck and to expand 
the information available to the public through BrokerCheck to include 
more comprehensive CRD disclosure information that is currently 
available through some state legacy CRD systems.\12\ Another commenter 
noted that releasing information sooner protects the public and reduces 
the chance that an investor might deal with a broker who has been 
terminated. \13\
---------------------------------------------------------------------------

    \11\ See PIABA Letter at 1 and Hammond Letter.
    \12\ See PIABA Letter at 2.
    \13\ See Hammond Letter.
---------------------------------------------------------------------------

IV. Discussion and Commission Findings

    After careful review of the proposed rule change and the comment 
letters, the Commission finds that the proposed rule change is 
consistent with the requirements of the Act and the rules and 
regulations thereunder that are applicable to a national securities 
association.\14\ Specifically, the Commission finds that the proposed 
rule change is consistent with Section 15A(b)(6) of the Act,\15\ which 
requires, among other things, that FINRA's 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.
---------------------------------------------------------------------------

    \14\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \15\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

    The proposed rule change, by reducing the waiting period for the 
release of Form U5 information through BrokerCheck, is designed to 
enhance investor protection by allowing investors to more quickly 
access disclosure information reported on Form U5 through BrokerCheck 
and limiting the time period during which an incomplete picture of a 
broker's disclosure history may be displayed in BrokerCheck. In 
addition, by providing for the simultaneous release of Forms U4 and U5 
information on BrokerCheck before the three-business day waiting period 
in the case where the same disclosure event is reported on both forms, 
the proposed rule should help to reduce investor uncertainty and 
confusion regarding the same disclosure event; namely, a broker's 
termination from his prior firm.
    The Commission believes that BrokerCheck is an important tool for 
investors to use to help them make informed choices about the 
individuals and firms with which they conduct business.\16\ The 
Commission believes

[[Page 70017]]

that reducing the waiting period for the release of Form U5 disclosure 
information through BrokerCheck, and releasing Form U4 and Form U5 
information regarding the same disclosure event simultaneously on 
BrokerCheck before the end of the waiting period, will limit the time 
period during which an incomplete picture of a broker's disclosure 
history may be displayed in BrokerCheck and should help to reduce 
investor confusion regarding the reason for a broker's termination. The 
Commission notes that brokers on whose behalf a Form U5 is submitted 
will continue to have an opportunity to comment on the reported 
disclosure event either through a Form U4 or by submitting a broker 
comment directly to FINRA for inclusion in BrokerCheck.
---------------------------------------------------------------------------

    \16\ The Commission encourages investors to utilize all sources 
of information, including the databases of state regulators, as well 
as legal search engines and records searches to conduct a thorough 
search of any associated person or firm with which they are 
considering doing business. See also Securities Exchange Act Release 
No. 62476 (July 8, 2010), 75 FR 41254 (July 15, 2010) (SR-FINRA-
2010-012).
---------------------------------------------------------------------------

    The Commission appreciates FINRA's efforts to enhance BrokerCheck 
and encourages FINRA to continue improving it and to consider the 
suggestions made regarding the expungement of customer claims from 
BrokerCheck and expanding the information made available to the public 
through BrokerCheck.\17\
---------------------------------------------------------------------------

    \17\ See supra note 12 and accompanying text.
---------------------------------------------------------------------------

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\18\ that the proposed rule change (SR-FINRA-2015-032), be, and 
hereby is, approved.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
---------------------------------------------------------------------------

    \19\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-28680 Filed 11-10-15; 8:45 am]
BILLING CODE 8011-01-P

70016 Federal Register / Vol. 80, No. 218 / Thursday, November 12, 2015 / Notices SECURITIES AND EXCHANGE Rule 8312 governs the information customer claims’’ from BrokerCheck and COMMISSION that FINRA releases to the public to expand the information available to through BrokerCheck. Pursuant to this the public through BrokerCheck to [Release No. 34–76359; File No. SR–FINRA– rule, most of the information that include more comprehensive CRD 2015–032] FINRA releases through BrokerCheck is disclosure information that is currently Self-Regulatory Organizations; made available the day after it is filed available through some state legacy CRD Financial Industry Regulatory with the CRD system.6 Rule 8312(d)(5), systems.12 Another commenter noted Authority, Inc.; Order Approving a however, prohibits FINRA from that releasing information sooner Proposed Rule Change To Amend releasing Form U5 information for 15 protects the public and reduces the FINRA Rule 8312 (FINRA BrokerCheck days following the filing of such chance that an investor might deal with Disclosure) To Reduce the Waiting information. According to FINRA, this a broker who has been terminated. 13 Period for the Release of Information 15-day waiting period was established to give brokers on whose behalf the IV. Discussion and Commission Reported on Form U5 Findings Form U5 was submitted an opportunity November 5, 2015. to comment on the disclosure event After careful review of the proposed either through a Form U4, or by rule change and the comment letters, I. Introduction submitting a comment directly to the Commission finds that the proposed On September 14, 2015, the Financial FINRA to be included on BrokerCheck.7 rule change is consistent with the Industry Regulatory Authority, Inc. FINRA has proposed to shorten this requirements of the Act and the rules (‘‘FINRA’’) filed with the Securities and 15-day waiting period for the release of and regulations thereunder that are Exchange Commission (‘‘SEC’’ or Form U5 disclosure information. applicable to a national securities ‘‘Commission’’), pursuant to Section Specifically, the proposed rule change association.14 Specifically, the 19(b)(1) of the Securities Exchange Act will amend Rule 8312(d)(5) to provide Commission finds that the proposed of 1934 (‘‘Act’’) 1 and Rule 19b–4 that FINRA shall not release events rule change is consistent with Section thereunder,2 a proposed rule change to reported on Section 7 of Form U5 (other 15A(b)(6) of the Act,15 which requires, amend FINRA Rule 8312 (FINRA than ‘‘Internal Review Disclosure’’ among other things, that FINRA’s rules BrokerCheck Disclosure) to reduce the events) for three business days after be designed to prevent fraudulent and 15-day waiting period for the release of FINRA’s processing 8 of the filing.9 manipulative acts and practices, to information reported on Form U5 However, if an event is reported on promote just and equitable principles of (Uniform Termination Notice for Form U5 and the same event is trade, and, in general, to protect Securities Industry Registration) thereafter reported on Form U4 before investors and the public interest. through BrokerCheck. The proposed the three-business-day period expires, The proposed rule change, by rule change was published for comment FINRA will release the Forms U4 and reducing the waiting period for the in the Federal Register on October 1, U5 information simultaneously upon release of Form U5 information through 2015.3 The Commission received two processing; this three-business-day BrokerCheck, is designed to enhance comment letters on the proposed rule period may be shortened.10 investor protection by allowing change.4 This order approves the III. Comment Letters investors to more quickly access proposed rule change. disclosure information reported on Commenters support the proposal.11 Form U5 through BrokerCheck and II. Description of the Proposed Rule One commenter, while supporting the limiting the time period during which Change proposed rule change, believes that an incomplete picture of a broker’s BrokerCheck provides the public with FINRA needs to go further to ‘‘address disclosure history may be displayed in information on the professional and correct the present system that BrokerCheck. In addition, by providing background, business practices, and allows for the routine expungement of for the simultaneous release of Forms conduct of FINRA members and their U4 and U5 information on BrokerCheck for Securities Industry Registration); Form U6 associated persons. The information that (Uniform Disciplinary Action Reporting Form); before the three-business day waiting FINRA releases through BrokerCheck is Form BD (Uniform Application for Broker-Dealer period in the case where the same derived from the Central Registration Registration); and Form BDW (Uniform Request for disclosure event is reported on both Depository (‘‘CRD’’), the securities Broker-Dealer Withdrawal). forms, the proposed rule should help to 6 See Notice, supra note 3, at 59216. industry online registration and 7 See Securities Exchange Act Release No. 55127 reduce investor uncertainty and licensing database. FINRA member (January 18, 2007), 72 FR 3455 (January 25, 2007) confusion regarding the same disclosure firms, their associated persons and (Order Approving File No. SR–NASD–2003–168). event; namely, a broker’s termination regulators report information to the CRD 8 FINRA states that, for purposes of the proposed from his prior firm. system via the uniform registration rule change, a Form U5 will be considered The Commission believes that processed once the Disclosure Reporting Page, forms.5 which contains the details about a disclosure event, BrokerCheck is an important tool for has been reviewed by FINRA staff. FINRA states investors to use to help them make 1 15 U.S.C. 78s(b)(1). that most Forms U5 that contain disclosure informed choices about the individuals 2 17 CFR 240.19b–4. information are processed within two days of being and firms with which they conduct 3 See Securities Exchange Act Release No. 75988 filed with the CRD system. See Notice, supra note 3, at 59216, n.7. business.16 The Commission believes (September 25, 2015), 80 FR 59215 (‘‘Notice’’). 4 See Letter from Joseph C. Peiffer, President, 9 For example, if disclosure information on Form 12 See PIABA Letter at 2. Public Investors Arbitration Bar Association, dated U5 is processed on Monday, FINRA would release mstockstill on DSK4VPTVN1PROD with NOTICES 13 See Hammond Letter. October 19, 2015 (‘‘PIABA Letter’’) and Letter from that information via BrokerCheck on Thursday. 14 In approving this proposed rule change, the Denise M. Hammond, Law Student, Barry 10 For example, if FINRA processes a disclosure University, dated October 22, 2014 (‘‘Hammond event reported on Form U5 on Monday, and on Commission has considered the proposed rule’s Letter’’). Tuesday processes a Form U4 filed by a broker impact on efficiency, competition, and capital 5 FINRA discloses through BrokerCheck reporting that event, the Form U5 information formation. See 15 U.S.C. 78c(f). information that is reported on the following would be made publicly available in BrokerCheck 15 15 U.S.C. 78o–3(b)(6). uniform registration forms: Form U4 (Uniform on Wednesday, which is the same day that the 16 The Commission encourages investors to Application for Securities Industry Registration or Form U4 information would be released. utilize all sources of information, including the Transfer); Form U5 (Uniform Termination Notice 11 See PIABA Letter at 1 and Hammond Letter. databases of state regulators, as well as legal search VerDate Sep<11>2014 18:15 Nov 10, 2015 Jkt 238001 PO 00000 Frm 00082 Fmt 4703 Sfmt 4703 E:\FR\FM\12NON1.SGM 12NON1

Federal Register / Vol. 80, No. 218 / Thursday, November 12, 2015 / Notices 70017 that reducing the waiting period for the exemption from sections 18(c) and 18(i) Applicants’ Representations release of Form U5 disclosure of the Act, under sections 6(c) and 1. The Fund is a Delaware statutory information through BrokerCheck, and 23(c)(3) of the Act for an exemption trust that is registered under the Act as releasing Form U4 and Form U5 from rule 23c–3 under the Act, and for a non-diversified, closed-end information regarding the same an order pursuant to section 17(d) of the management investment company. The disclosure event simultaneously on Act and rule 17d–1 under the Act. Fund’s investment objective is to seek BrokerCheck before the end of the total return through a combination of waiting period, will limit the time SUMMARY OF APPLICATION: Applicants long-term capital appreciation and period during which an incomplete request an order to permit certain income generation. picture of a broker’s disclosure history registered closed-end management 2. The Adviser is a Delaware limited may be displayed in BrokerCheck and investment companies to issue multiple liability company and is registered as an should help to reduce investor classes of shares and to impose asset- investment adviser under the confusion regarding the reason for a based distribution fees and early Investment Advisers Act of 1940. The broker’s termination. The Commission withdrawal charges (‘‘EWCs’’). Adviser serves as investment adviser to notes that brokers on whose behalf a the Fund. Form U5 is submitted will continue to APPLICANTS: Wildermuth Endowment 3. The applicants seek an order to have an opportunity to comment on the Strategy Fund (the ‘‘Fund’’) and permit the Fund to issue multiple reported disclosure event either through Wildermuth Advisory, LLC (the classes of shares, each having its own a Form U4 or by submitting a broker ‘‘Adviser’’). fee and expense structure, and to comment directly to FINRA for The application was filed FILING DATES: impose asset-based distribution fees and inclusion in BrokerCheck. on August 13, 2015. EWCs. The Commission appreciates FINRA’s 4. Applicants request that the order efforts to enhance BrokerCheck and HEARING OR NOTIFICATION OF HEARING: also apply to any continuously-offered encourages FINRA to continue An order granting the requested relief registered closed-end management improving it and to consider the will be issued unless the Commission investment company that has been suggestions made regarding the orders a hearing. Interested persons may previously organized or that may be expungement of customer claims from request a hearing by writing to the organized in the future for which the BrokerCheck and expanding the Commission’s Secretary and serving Adviser or any entity controlling, information made available to the applicants with a copy of the request, controlled by, or under common control public through BrokerCheck.17 personally or by mail. Hearing requests with the Adviser, or any successor in should be received by the Commission interest to any such entity,1 acts as V. Conclusion by 5:30 p.m. on November 30, 2015, and investment adviser and which operates It is therefore ordered, pursuant to should be accompanied by proof of as an interval fund pursuant to rule Section 19(b)(2) of the Act,18 that the service on the applicants, in the form of 23c–3 under the Act or provides proposed rule change (SR–FINRA– an affidavit, or, for lawyers, a certificate periodic liquidity with respect to its 2015–032), be, and hereby is, approved. of service. Pursuant to rule 0–5 under shares pursuant to rule 13e–4 under the For the Commission, by the Division of the Act, hearing requests should state Securities Exchange Act of 1934 Trading and Markets, pursuant to delegated the nature of the writer’s interest, any (‘‘Exchange Act’’) (each, a ‘‘Future authority.19 facts bearing upon the desirability of a Fund’’ and together with the Fund, the Robert W. Errett, hearing on the matter, the reason for the ‘‘Funds’’).2 Deputy Secretary. request, and the issues contested. 5. The Fund is currently making a [FR Doc. 2015–28680 Filed 11–10–15; 8:45 am] Persons who wish to be notified of a continuous public offering of its BILLING CODE 8011–01–P hearing may request notification by common shares. Applicants state that writing to the Commission’s Secretary. additional offerings by any Fund relying ADDRESSES: Secretary, U.S. Securities on the order may be on a private SECURITIES AND EXCHANGE placement or public offering basis. and Exchange Commission, 100 F Street COMMISSION Shares of the Funds will not be listed on NE., Washington, DC 20549–1090; [Investment Company Act Release No. Applicants: Wildermuth Endowment any securities exchange, nor quoted on 31896; File No. 812–14534] Strategy Fund and Wildermuth any quotation medium. The Funds do Advisory, LLC, c/o David J. Baum, Esq. not expect there to be a secondary Wildermuth Endowment Strategy Fund Alston & Bird, LLC, 950 F Street NW., trading market for their shares. and Wildermuth Advisory, LLC; Notice 6. If the requested relief is granted, the Washington, DC 20004. of Application Fund intends to redesignate its common FOR FURTHER INFORMATION CONTACT: shares as ‘‘Class A Shares’’ and to November 5, 2015. Kaitlin C. Bottock, Senior Counsel, at continuously offer ‘‘Class C Shares’’, AGENCY: Securities and Exchange (202) 551–8658, or Daniele Marchesani, and may also offer additional classes of Commission (‘‘Commission’’). Branch Chief, at (202) 551–6821 shares in the future. Because of the ACTION: Notice of an application under (Division of Investment Management, different distribution fees, services and section 6(c) of the Investment Company Chief Counsel’s Office). any other class expenses that may be Act of 1940 (the ‘‘Act’’) for an attributable to the Class A Shares and SUPPLEMENTARY INFORMATION: The mstockstill on DSK4VPTVN1PROD with NOTICES engines and records searches to conduct a thorough following is a summary of the 1 A successor in interest is limited to an entity search of any associated person or firm with which application. The complete application that results from a reorganization into another they are considering doing business. See also may be obtained via the Commission’s jurisdiction or a change in the type of business Securities Exchange Act Release No. 62476 (July 8, Web site by searching for the file organization. 2010), 75 FR 41254 (July 15, 2010) (SR–FINRA– 2 Any Fund relying on this relief in the future will 2010–012). number, or for an applicant using the do so in a manner consistent with the terms and 17 See supra note 12 and accompanying text. Company name box, at http:// conditions of the application. Applicants represent 18 15 U.S.C. 78s(b)(2). www.sec.gov/search/search.htm or by that each entity presently intending to rely on the 19 17 CFR 200.30–3(a)(12). calling (202) 551–8090. requested relief is listed as an applicant. VerDate Sep<11>2014 18:15 Nov 10, 2015 Jkt 238001 PO 00000 Frm 00083 Fmt 4703 Sfmt 4703 E:\FR\FM\12NON1.SGM 12NON1


Document Created: 2015-12-14 14:53:36
Document Modified: 2015-12-14 14:53:36
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation80 FR 70016 
2025 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR