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Notice

Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Expiration Date of the Refund Program Under FINRA Rule 3110.15 (Temporary Program To Address Underreported Form U4 Information)

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Start Preamble March 16, 2015.

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) [1] and Rule 19b-4 thereunder,[2] notice is hereby given that on March 3, 2015, Financial Industry Regulatory Authority, Inc. (“FINRA”) filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by FINRA. FINRA has designated the proposed rule change as constituting a “non-controversial” rule change under paragraph (f)(6) of Rule 19b-4 under the Act,[3] which renders the proposal effective upon receipt of this filing by the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

FINRA is proposing to amend FINRA Rule 3110.15 (Temporary Program to Address Underreported Form U4 Information) to extend the expiration date of the refund program under that rule, which currently is July 31, 2015, until December 1, 2015.

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

On December 30, 2014, the SEC approved FINRA Rule 3110.15, which establishes a temporary refund program whereby FINRA will issue a refund to members of Late Disclosure Fees assessed for the late filing of responses to Question 14M (relating to unsatisfied judgments or liens) on the Form U4 (Uniform Application for Securities Industry Registration or Transfer), subject to specified conditions.[4] The refund program under FINRA Rule 3110.15 is intended to incentivize members to disclose underreported information and save FINRA the time and regulatory resources expended in contacting firms and requesting that such information be reported. The refund program has a retroactive effective date of April 24, 2014,[5] and it is currently scheduled to expire on July 31, 2015. FINRA understands that, following SEC approval of the rule, some firms have undertaken a wholesale review of their registrants to identify judgments and liens that may have been unreported, including those that meet the parameters of the refund program. Based on FINRA's experience to date, FINRA believes that a four-month extension of the program will more effectively achieve its intended purpose. Therefore, FINRA is proposing to amend FINRA Rule 3110.15 to extend the sunset date of the refund program until December 1, 2015, which will give firms adequate time to identify and report information to FINRA. FINRA is not proposing any changes to the other parameters of the refund program.

As proposed, FINRA Rule 3110.15 will provide that FINRA will issue a refund to firms of Late Disclosure Fees assessed for the late filing of responses to Form U4 Question 14M (unsatisfied judgments or liens) if the Form U4 amendment is filed between April 24, 2014, and December 1, 2015, and one of the following conditions is met:

(1) The judgment or lien has been satisfied, and at the time it was unsatisfied, it was under $5,000, and the date the judgment or lien was filed with a court (as reported on Form U4 Judgment/Lien DRP, Question 4A) was on or before August 13, 2012; [6] or

(2) the unsatisfied judgment or lien was satisfied within 30 days after the individual learned of the judgment or lien (as reported on Form U4 Judgment/Lien DRP, Question 4.B.).

The refund program will continue to have a retroactive effective date of April 24, 2014, but it will automatically sunset on December 1, 2015, as proposed. Thus, firms will not be able to obtain a refund pursuant to the parameters established under the program after December 1, 2015. While the program is in effect, FINRA will initially assess firms a Late Disclosure Fee and subsequently refund the fee in the firm's FINRA Flex-Funding Account if the firm can establish, or if FINRA otherwise determines, that the conditions of the program have been satisfied.

FINRA has filed the proposed rule change for immediate effectiveness. The implementation date of the proposed Start Printed Page 15042rule change will be July 31, 2015, which is the current expiration date of FINRA Rule 3110.15. The proposed rule change extends the expiration date of FINRA Rule 3110.15 until December 1, 2015. As proposed, FINRA Rule 3110.15 will have a retroactive effective date of April 24, 2014, and it will automatically expire on December 1, 2015.

2. Statutory Basis

FINRA believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,[7] which requires, among other things, that FINRA rules must 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. FINRA believes that the temporary refund program under FINRA Rule 3110.15 incentivizes members to disclose underreported information relating to judgments and liens and saves FINRA the time and regulatory resources expended in contacting firms and requesting that such information be reported and that extending the expiration date of the refund program will more effectively achieve that purpose.

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 temporary refund program under FINRA Rule 3110.15 encourages members to comply with their existing reporting obligations and allows them to receive a refund of Late Disclosure Fees if the conditions specified in FINRA Rule 3110.15 are satisfied. As such, FINRA does not believe that extending the expiration date of the temporary refund program will result in any burden on members.

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

Because the foregoing 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 for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act [8] and Rule 19b-4(f)(6) thereunder.[9]

At any time within 60 days of the filing of the 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. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or 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

Paper Comments

  • Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-FINRA-2015-005. 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 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of FINRA. 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-2015-005 and should be submitted on or before April 10, 2015.

Start Signature

For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.[10]

Brent J. Fields,

Secretary.

End Signature End Preamble

Footnotes

4.  See Securities Exchange Act Release No. 73966 (December 30, 2014), 80 FR 546 (January 6, 2015) (Order Approving File No. SR-FINRA-2014-038).

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5.  See FINRA Board Approves Amendment to Supervision Rule Requiring Firms to Conduct Background Checks on Registration Applicants, FINRA News Release, April 24, 2014, available at http://www.finra.org/​Newsroom/​NewsReleases/​2014/​P493588.

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6.  See Information Notice August 17, 2012 (Late Disclosure Fee Related to Reporting of Judgment/Lien Events), available at http://www.finra.org/​web/​groups/​industry/​@ip/​@reg/​@notice/​documents/​notices/​p152106.pdf.

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[FR Doc. 2015-06360 Filed 3-19-15; 8:45 am]

BILLING CODE 8011-01-P