July 10, 2013.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”) 
and Rule 19b-4 thereunder,
notice is hereby given that on June 26, 2013, New York Stock Exchange LLC (“NYSE” or the “Exchange”) filed with the Securities and Exchange Commission (the “Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been substantially prepared by the Exchange. The Commission is publishing this notice to solicit Start Printed Page 42574comments on the proposed rule change from interested persons.
I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The Exchange proposes to amend and adopt several NYSE rules 
to reflect changes to rules of the Financial Industry Regulatory Authority (“FINRA”). Specifically, the Exchange proposes to: (1) Amend Rule 8210 to conform to changes recently adopted by FINRA for FINRA Rule 8210, which concerns the provision of information and testimony and inspection and copying of books and records; (2) adopt certain FINRA guidance on the Rule 8000-9000 Series; and (3) amend Rule 8320 with respect to the non-payment of fines. The text of the proposed rule changes is available on the Exchange's Web site at www.nyse.com, at the principal office of the Exchange, 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, the Exchange included statements concerning the purpose of, and basis for, the proposed rule changes and discussed any comments it received on the proposed rule changes. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change
The Exchange proposes to: (1) Amend Rule 8210 to conform it to changes recently adopted by FINRA for FINRA Rule 8210, which concerns the provision of information and testimony and inspection and copying of books and records; (2) adopt certain FINRA guidance on the Rule 8000-9000 Series; and (3) amend Rule 8320 with respect to the non-payment of fines.
On July 30, 2007, the National Association of Securities Dealers, Inc. (“NASD”), NYSE, and NYSE Regulation, Inc. (“NYSER”) consolidated their member firm regulation operations into a combined organization, FINRA, and entered into a plan to allocate to FINRA regulatory responsibility for common rules and common members (“17d-2 Agreement”).
In 2007, the parties also entered into a Regulatory Services Agreement (“RSA”), whereby FINRA was retained to perform certain regulatory services on behalf of NYSER for non-common rules. On June 14, 2010, the Exchange, NYSER, and FINRA amended the RSA and retained FINRA to perform the market surveillance and enforcement functions that had previously been performed by NYSER up to that point.
Accordingly, since June 14, 2010, FINRA has been performing all NYSE enforcement-related regulatory services on behalf of NYSER, including disciplinary proceedings relating to NYSE-only rules and against dual members and non-FINRA members. To facilitate FINRA's performance of these enforcement functions under the RSA and to further harmonize the rules of NYSE with those of FINRA, NYSE recently adopted the text of the FINRA Rule 8000-9000 Series, which set forth rules for conducting investigations and enforcement actions, with certain modifications.
The new rules were implemented on July 1, 2013.
Proposed Rule Change
FINRA recently amended FINRA Rule 8210, effective February 25, 2013.
The Exchange proposes to amend the text of Rule 8210 to conform to FINRA Rule 8210. The Exchange's Rule 8210 became operative on July 1, 2013, which was the date that the Exchange had announced as the operative date of the Rule 8000-9000 Series.
The text of the rule is substantially the same as the text of FINRA's rule, except for technical and conforming amendments.
Rule 8210 confers on Exchange staff the authority to compel a member organization or covered person to produce documents, provide testimony, or supply written responses or electronic data in connection with an investigation, complaint, examination, or adjudicatory proceeding. The proposed rule change would clarify the scope of the Exchange's authority under the rule to inspect and copy the books, records, and accounts of such member organizations or covered persons, specify the method of service for certain unregistered persons under the rule, and authorize service on attorneys who are representing clients.
Rule 8210 applies to all member organizations and covered persons over whom the Exchange has jurisdiction, including former covered persons subject to the Exchange's jurisdiction as described in Rule 8130. Rule 8210(c) provides that a member organization's or covered person's failure to provide information or testimony or to permit an inspection and copying of books, records, or accounts is a violation of the rule.
Information in a Member Organization's or Covered Person's Possession, Custody or Control
Rule 8210(a)(2) currently provides that Exchange staff shall have the right to inspect and copy the books, records, and accounts of all member organizations and covered persons with respect to any matter involved in an investigation, complaint, examination, or proceeding. The proposed rule change would clarify that the information that Exchange staff shall have the right to inspect and copy must be in the member organization's or covered person's “possession, custody or control.” This language parallels the Federal Rules of Civil Procedure regarding document requests and subpoenas for documents.
Notice to Associated but Unregistered Persons
Rule 8210 addresses the legal concept of service of a written request by using the term “notice” of a request. Currently, Rule 8210(d) states that, with Start Printed Page 42575respect to member organizations and covered persons, notice shall be deemed received by the member organization or covered person when a copy of the notice is mailed or otherwise transmitted to the last known relevant address of the member organization or covered person as reflected in the Central Registration Depository (“CRD”). The CRD system contains information concerning registered member organizations and certain covered persons,
but in most instances it does not contain information concerning unregistered persons who are or were associated with a member organization.
Although not routine, some investigations require Exchange examiners or investigators to request information from persons currently or formerly associated with a member organization in an unregistered capacity.
The current rule is unclear as to what would constitute proper notice on such persons for whom information is not available in CRD. The proposed rule change would explicitly address the methods by which notice would be deemed received by persons currently or formerly associated with a member organization in an unregistered capacity.
With respect to unregistered persons currently associated with a member organization, the proposed rule change would provide that notice shall be deemed received by mailing or otherwise transmitting the notice to the last known business address of the member organization as reflected in CRD. In addition, the proposed rule change would retain the provision that if Exchange staff responsible for transmitting the notice has actual knowledge that the member organization's address provided through CRD is out of date or inaccurate, then a copy of the notice must be transmitted to both the address provided through CRD, as well as any more current address known to Exchange staff.
With respect to unregistered persons formerly associated with a member organization, the proposed rule change would provide that notice shall be deemed received upon personal service, which is described in Rule 9134(a)(1).
FINRA Rule 9134(a)(1) is based on traditional concepts for serving a summons under Rule 4 of the Federal Rules of Civil Procedure.
Notice to Member Organizations and Covered Persons Represented by Counsel
The proposed rule change would amend Rule 8210(d) to explicitly address issues of service on member organizations or covered persons that are known to be represented by counsel. Currently, the rule does not explicitly permit Exchange staff to serve notice on a member organization's or covered person's counsel in situations in which Exchange staff knows that the member organization or covered person is represented by counsel regarding the matter in question. The proposed rule change would allow Exchange staff to recognize that counsel can act as an authorized agent on behalf of a member organization or covered person. It would provide that, if Exchange staff knows that a member organization or covered person is represented by counsel regarding the matter in question, then notice shall be provided to counsel rather than to the member organization or covered person. The proposed rule change would harmonize the Exchange's rule in this regard with Codes of Professional Conduct in many states regarding service on counsel.
The proposed rule change would add supplementary material to Rule 8210. The supplementary material would state that Rule 8210 requires Exchange member organizations and covered persons to provide Exchange staff and adjudicators with requested books, records, and accounts. In specifying the books, records and accounts “of such member organization or covered person,” paragraph (a) of the rule refers to books, records, and accounts that the broker-dealer or its associated persons make or keep relating to its operation as a broker-dealer or relating to the person's association with the member. This includes but is not limited to records relating to an Exchange investigation of outside business activities, private securities transactions or possible violations of just and equitable principles of trade, as well as other Exchange rules and the federal securities laws. It does not ordinarily include books and records that are in the possession, custody or control of a member organization or covered person, but whose bona fide ownership is held by an independent third party and the records are unrelated to the business of the member organization. The rule requires, however, that an Exchange member organization or covered person make available its books, records, or accounts when the books, records, or accounts are in the possession of another person or entity, such as a professional service provider, but the Exchange member organization or covered person controls or has a right to demand them.
Adoption of FINRA Guidance
The Exchange has determined that all interpretive guidance issued by FINRA with respect to the Rule 8000-9000 Series for which the Exchange has adopted substantially the same rule text would be equally applicable in NYSE investigations and disciplinary proceedings as a stated policy and practice of the Exchange.
The Exchange notes that it has not adopted the text of certain FINRA rules, which Start Printed Page 42576are marked “Reserved” in the Exchange's rulebook. The text of Rule 9217 and the Rule 9300 Series are not substantially the same as FINRA's counterpart rules because the Exchange has retained its own list of minor rule violations and its own appellate process. As such, FINRA guidance concerning such rules and “Reserved” rules would not be applicable. The Exchange believes that this policy and practice would help ensure that there is consistency in the application of substantially similar rules.
Amendment to Rule 8320
To facilitate the transition from the Exchange's former disciplinary rules to the new FINRA-based disciplinary rules, the Exchange amended Rule 309 to provide that any member, member organization or principal executive who fails to pay a fee or any other sums due to the Exchange, within 45 days after the same is payable, shall be reported to the Chief Financial Officer of the Exchange or designee who, after notice has been given to such member, member organization or principal executive of such arrearages, may suspend access to some or all of the facilities of the Exchange until payment is made. The rule provides an exception for failing to pay a fine levied in connection with a disciplinary action, which would be governed by Rule 8320. Rule 8320 permits summary suspensions for the non-payment of fines, monetary sanctions, and costs.
Rule 8320 cross-references to sanctions imposed under Rule 8310, which in turn references sanctions imposed under the Rule 9000 Series. The Exchange notes that if a disciplinary action was ongoing at the time that the Rule 9000 Series became effective on July 1, 2013, it would be concluded under Rule 476. To prevent any potential gap in the rules and clarify the transitional rules, the Exchange proposes to amend Rule 8320 to add a new paragraph (d) that would provide that the Exchange may exercise the authority set forth in Rule 8320 with respect to non-payment of a fine, monetary sanction, or cost assessed in a disciplinary action initiated under Rule 476 for which a decision was issued on or after July 1, 2013.
2. Statutory Basis
The Exchange believes that the proposed rule changes are consistent with Section 6(b) of the Act,
in general, and furthers the objectives of Section 6(b)(5) of the Act,
in particular, in that the proposal is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, and to remove impediments to and perfect the mechanism of a free and open market and a national market system. In addition, the Exchange believes that the proposed rule changes further the objectives of Section 6(b)(7) of the Act,
in particular, in that it provides fair procedures for the disciplining of members 
and persons associated with members, the denial of membership to any person seeking membership therein, the barring of any person from becoming associated with a member thereof, and the prohibition or limitation by the Exchange of any person with respect to access to services offered by the Exchange or a member thereof.
The proposed change to Rule 8210 would provide greater harmonization between Exchange and FINRA rules of similar purpose, resulting in greater uniformity in investigative rules and less burdensome and more efficient regulatory compliance. As previously noted, the proposed rule text is substantially the same as FINRA's recently adopted rule text, which already has been approved by the Commission.
As such, the proposed rule change would foster cooperation and coordination with persons engaged in facilitating transactions in securities and would remove impediments to and perfect the mechanism of a free and open market and a national market system.
The proposed change to Rule 8320 would prevent any potential gap in the rules concerning non-payment of fines, monetary sanctions, and costs and clarify the transition from the old to the new disciplinary rules. The Exchange believes that the proposed rule change will provide respondents with better notice of potential sanctions, thereby improving the fairness of its disciplinary proceedings.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change would result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change is not designed to address any competitive issues but rather is designed to provide greater harmonization among Exchange and FINRA rules of similar purpose for investigations, resulting in less burdensome and more efficient regulatory compliance for common members and facilitating FINRA's performance of its regulatory functions under the RSA. The proposed rule changes are also intended to provide greater clarity and notice to respondents during the transition from the old disciplinary rules to the new disciplinary rules.
C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others
No written comments were solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action
The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act
and Rule 19b-4(f)(6) thereunder.
Because the proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative prior to 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-4(f)(6)(iii) thereunder.
A proposed rule change filed under Rule 19b-4(f)(6) 
normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b-4(f)(6)(iii),
the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Exchange stated its belief that this proposal is non-controversial Start Printed Page 42577and will not significantly affect the protection of investors because the Exchange is not proposing any substantive changes and is merely amending its rule text to mirror FINRA's rules. Further, the Commission has previously considered the amendments to FINRA Rule 8210, which this proposed rule change mirrors, as well as comments responding to the amendments to FINRA Rule 8210.
Based on the Exchange's statements and the Commission's previous experiences with FINRA Rule 8210 amendments, the Commission believes that waiving the operative delay is consistent with the protection of investors and the public interest. Accordingly, the Commission hereby grants the Exchange's request and waives the 30-day operative delay.
At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act.
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:
- 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 No. SR-NYSE-2013-49. 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 office 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 No. SR-NYSE-2013-49 and should be submitted on or before August 6, 2013.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Elizabeth M. Murphy,
[FR Doc. 2013-16936 Filed 7-15-13; 8:45 am]
BILLING CODE 8011-01-P