RegAlert2009-03-17
Added · Updated
SEC Division of Trading and Markets no-action letter: Financial Industry Regulatory Authority, Inc.
The SEC Staff provides interpretive guidance stating that a person is no longer subject to a statutory disqualification under Section 3(a)(39) of the Securities Exchange Act of 1934 when a time-limited bar or license revocation expires, provided the bar has no continuing effect and is not related to fraudulent, manipulative, or deceptive conduct. The Staff also clarifies that a state securities commission bar based solely on a prior self-regulatory organization disciplinary action does not constitute a statutory disqualification. Additionally, the Staff interprets Exchange Act Rule 19h-1(a) to exclude willful violations of Municipal Securities Rulemaking Board rules and aiding and abetting violations from notice filing requirements if the related sanctions are no longer in effect. The Staff will not recommend enforcement action against FINRA for failing to file notices for persons subject to specific statutory disqualifications, including those arising from Sarbanes-Oxley amendments or foreign regulatory findings, under the detailed conditions outlined in the letter.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
DIVISION OF
TRADING AND MARKETS
Patrice M. Gliniecki
Senior Vice President and Deputy General Counsel 1735 K Street, NW Washington DC 20006-1506 Dear Ms. Gliniecki:
In your letter dated March 16,2009, on behalf ofthe Financial Industry Regulatory Authority, Inc. ("FINRA") (formerly, the National Association of Securities Dealers, Inc. or "NASD"), you ask that the staff ofthe Division ofTrading and Markets ("Staff') ofthe Securities and Exchange Commission ("Commission" or "SEC") provide interpretive guidance with regard to the definition of statutory disqualification, as contained in Section 3(a)(39) ofthe Securities Exchange Act of 1934 ("Exchange Act") (which incorporates by reference Sections 15(b)(4)(D), (E) and (H), among others). In particular, you seek guidance on the effect of certain time-limited bars or license revocations, as well as the effect of bars by State securities commissions that are based solely upon a disciplinary action taken by a self-regulatory organization ("SRO"). You further seek interpretive guidance in connection with Exchange Act Rule 19h-l(a), with respect to the notice requirements for willful violations of the rules ofthe Municipal Securities Rulemaking Board ("MSRB") and aiding and abetting violations. In addition, in your letter, you request that the Staff provide assurances that it will not recommend enforcement action to the Commission under Exchange Act Section 15A(g)(2) or Rule 19h-l(a) ifFINRA does not file a notice with the Commission for any person subject to a statutory disqualification under Section 3(a)(39) ("subject person") that FINRA is proposing to admit to or continue in membership or association with a member, under the circumstances described more fully below. The Staffhas granted similar guidance and no-action reliefto NYSE Regulation, Inc. See NYSE Regulation, Inc., SEC No-Action Letter, 2006 SEC No-Act. LEXIS 577 (August 1,2006) ("NYSE No-Action Letter"). On July 30, 2007, NASD and NYSE Regulation, Inc. consolidated their member firm regulation operations into a combined organization, FINRA. As a result, FINRA evaluates applications for relief from a disqualification on behalf of its members, including members of both FINRA and NYSE, for purposes of determining eligibility for FINRA membership. Today, the Commission approved FINRA's proposed rule change to, establish the eligibility procedures for persons subject to the categories
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