Notice2024-27745
Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of Proposed Change To Harmonize NYSE American Rule 4530
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Published
November 27, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 229 (Wednesday, November 27, 2024)</title>
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[Federal Register Volume 89, Number 229 (Wednesday, November 27, 2024)]
[Notices]
[Pages 93703-93706]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-27745]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-101676; File No. SR-NYSEAMER-2024-72]
Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing and Immediate Effectiveness of Proposed Change To Harmonize NYSE
American Rule 4530
November 21, 2024.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on November 12, 2024, NYSE American LLC (``NYSE American'' 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 prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to harmonize NYSE American Rule 4530
(Reporting Requirements) with certain changes by the Financial Industry
Regulatory Authority, Inc. (``FINRA'') to FINRA Rule 4530. The proposed
rule change is available on the Exchange's website at <a href="http://www.nyse.com">www.nyse.com</a>, 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 self-regulatory organization
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 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
1. Purpose
The Exchange proposes to harmonize NYSE American Rule 4530
(Reporting Requirements) with certain changes by FINRA to FINRA Rule
4530.\4\
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\4\ This proposed change aligns with NYSE Rule 4530, which was
recently updated to conform with FINRA 4530 regarding Reporting
Requirements. See Securities Exchange Act Release No. 100168 (May
17, 2024), 89 FR 45712 (May 23, 2024) (SR-NYSE-2024-28). See also
NYSE Rule 4530.
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Background and Proposed Rule Change
NYSE American Rule 4530 requires member organizations to promptly
report to the Exchange specified events, such as statutory
disqualifications and quarterly statistical and summary information
regarding written customer complaints. The Exchange adopted the text of
FINRA Rule 4530 in 2011 to replace comparable provisions in its legacy
reporting Rule 351.\5\
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\5\ See Securities Exchange Act Release No. 64784 (June 30,
2011), 76 FR 39947 (July 7, 2011) (SR-NYSEAMEX-2011-42). FINRA Rule
4530, adopted in 2010, was modeled after NYSE American Rule 351(a)-
(d) and NASD Rule 3070. See Securities Exchange Act Release No.
63260 (November 5, 2010), 75 FR 69508 (November 12, 2010) (SR-FINRA-
2010-034). See also Securities Exchange Act Release No. 64560 (May
27, 2011), 76 FR 32246 (June 3, 2011) (SR-FINRA-2011-024).
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In 2013, FINRA amended Rule 4530(e) to provide an exception from
the reporting requirement for information disclosed on the Form U4
(Uniform Application for Securities Industry Registration or Transfer)
in order to avoid duplicative reporting.\6\ In addition, in 2013, FINRA
added Supplementary Material .10 to FINRA Rule 4530 to provide that,
for purposes of FINRA Rules 4530(a)(1)(A), (C) and (D) only, members
are not required to report findings and actions by FINRA.\7\
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\6\ See Securities Exchange Act Release No. 68701 (January 18,
2013), 78 FR 5532 (January 25, 2013) (SR-FINRA-2013-006) (Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change
Relating to FINRA Rule 4530 (Reporting Requirements)).
\7\ See id. FINRA Rule 4530(a)(1)(A) requires a member to report
external findings regarding the member or an associated person.
FINRA Rules 4530(a)(1)(C) and (D) require a member to report
regulatory actions against the member or an associated person. FINRA
Rules 4530(a)(1)(A), (C) and (D) do not expressly exclude findings
and actions by FINRA. See generally id. NYSE American Rules
4530(a)(1)(A), (C) and (D) are virtually identical to the FINRA
rules.
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[[Page 93704]]
In 2015, FINRA again amended FINRA Rule 4530 to provide an
exception from the reporting requirements of paragraph (a)(1)(H) of the
rule for dealings with a member or associated person subject to
statutory disqualification, if that member or associated person has
been approved (or is otherwise permitted pursuant to FINRA rules and
the federal securities laws) to be a member or to be associated with a
member.\8\
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\8\ See Securities Exchange Act Release No. 74953 (May 13,
2015), 80 FR 28740 (May 19, 2015) (SR-FINRA-2015-011) (Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change
Relating to the Reporting Requirements of FINRA Rule 4530(a)(1)(H)).
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The Exchange proposes to incorporate each of these amendments into
NYSE American Rule 4530, as follows.
NYSE American Rule 4530(a)(1)(H)
NYSE American Rule 4530(a)(1)(H) requires member organizations to
promptly report whenever the member organization or an associated
person of the member organization is subject to a ``statutory
disqualification'' as defined in the Act.\9\ The rule also requires a
member organization to report whenever the member organization or an
associated person thereof is involved in the sale of any financial
instrument, the provision of any investment advice or the financing of
any such activities with any person that is subject to a ``statutory
disqualification'' as defined in the Act. The report must include the
name of the person subject to the statutory disqualification and
details concerning the disqualification.
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\9\ See 15 U.S.C. 78c(a)(39).
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The Exchange proposes, consistent with current FINRA Rule
4530(a)(1)(H), to exclude activities with a disqualified member or
associated person that has been approved (or is otherwise permitted
pursuant to FINRA rules and the federal securities laws) to be a member
organization or associated with a member organization. To effectuate
this change, the Exchange proposes to add the following deletions
(bracketed) and additions (italicized) to NYSE American Rule
4530(a)(1)(H):
(H) is (i) subject to a ``statutory disqualification'' as that
term is defined in the Exchange Act[,] or [is](ii) involved in the
sale of any financial instrument, the provision of any investment
advice or the financing of any such activities with any person
[who]that is[,] subject to a ``statutory disqualification'' as that
term is defined in the Exchange Act, provided, however, that this
requirement shall not apply to activities with a member organization
or an associated person that has been approved (or is otherwise
permitted pursuant to Exchange rules and the federal securities
laws) to be a member organization or to be associated with a member
organization. The report shall include the name of the person
subject to the statutory disqualification and details concerning the
disqualification; or
With the exception of conforming changes reflecting the Exchange's
membership. the proposed text is identical to FINRA's counterpart rule.
NYSE American Rule 4530(e)
NYSE American Rule 4530(e) currently provides that a member
organization is not required to report a specified event under the rule
if it reports that event on the Form U5 (Uniform Termination Notice for
Securities Industry Registration), consistent with the requirements of
that form. The exception does not extend to the reporting of quarterly
statistical and summary customer complaint information under the rule.
In order to eliminate duplicative reporting of information disclosed on
a Form U4, and consistent with FINRA's current rule, the Exchange
proposes to provide a similar exception for certain specified events
reported on the Form U4. To effectuate this change, the Exchange
proposes to add the following deletions (bracketed) and additions
(italicized) to NYSE American Rule 4530(e):
(e) Nothing contained in this Rule shall eliminate, reduce or
otherwise abrogate the responsibilities of a member organization or
person associated with a member organization to promptly disclose
required information on the Forms BD, U4 or U5, as applicable, to
make any other required filings or to respond to the Exchange with
respect to any customer complaint, examination or inquiry. In
addition, member organizations are required to comply with the
reporting obligations under paragraphs (a), (b) and (d) of this
Rule, regardless of whether the information is reported or disclosed
pursuant to any other rule or requirement, including the
requirements of the Form[s] BD [or U4]. However, a member
organization need not report an event otherwise required to be
reported under (1) paragraph (a)(1) of this Rule if the member
organization discloses the event on the Form U4, consistent with the
requirements of that form, and indicates, in such manner and format
that the Exchange may require, that such disclosure satisfies the
requirements of paragraph (a)(1) of this Rule, as applicable; or (2)
paragraphs (a) or (b) of this Rule if the member organization
discloses the event on the Form U5, consistent with the requirements
of that form.
With the exception of conforming changes reflecting the Exchange's
membership, the proposed text is identical to FINRA's counterpart rule.
NYSE American Rule 4530, Supplementary Material .11
Finally, the Exchange proposes to adopt the text of FINRA Rule
4530, Supplementary Material .10, as new NYSE American Rule 4530,
Supplementary Material .11.
NYSE American Rule 4530(a)(1)(A) requires a member organization to
report that the member organization or an associated person has been
found to have violated any securities-, insurance-, commodities-,
financial- or investment-related laws, rules, regulations or standards
of conduct of any domestic or foreign regulatory body, self-regulatory
organization or business or professional organization.
NYSE American Rule 4530(a)(1)(C) requires a member organization to
report that the member organization or an associated person thereof has
been named as a defendant or respondent in any proceeding brought by a
domestic or foreign regulatory body or self-regulatory organization
alleging the violation of any provision of the Act, or of any other
federal, state or foreign securities, insurance or commodities statute,
or of any rule or regulation thereunder, or of any provision of the by-
laws, rules or similar governing instruments of any securities,
insurance or commodities domestic or foreign regulatory body or self-
regulatory organization.
Finally, NYSE American Rule 4530(a)(1)(D) requires a member
organization to report that the member organization or associated
person thereof has been denied registration or is expelled, enjoined,
directed to cease and desist, suspended or otherwise disciplined by any
securities, insurance or commodities industry domestic or foreign
regulatory body or self-regulatory organization or is denied membership
or continued membership in any such self-regulatory organization; or is
barred from becoming associated with any member organization of any
such self-regulatory organization.
Since NYSE American Rules 4530(a)(1)(A), (C) and (D) do not
expressly exclude findings and actions by the Exchange or FINRA, the
Exchange proposes to add the following new Supplementary Material .11
to NYSE American Rule 4530 (additions italicized):
.11 For purposes of paragraphs (a)(1)(A), (C) and (D) of this
Rule only, member organizations are not required to report findings
and actions by the Exchange or by FINRA.
With the exception of adding findings and actions by the Exchange,
the proposed Supplementary Material .11 to NYSE American Rule 4530 is
identical to FINRA Rule 4530.10.
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Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Act,\10\ in general, and furthers the objectives of Section
6(b)(5),\11\ in particular, because it 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, to
remove impediments to, and perfect the mechanism of, a free and open
market and a national market system and, in general, to protect
investors and the public interest.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed rule changes support the
objectives of the Act by eliminating unnecessary reporting of
information to the Exchange and allowing the Exchange to use its
resources more efficiently. The Exchange believes that harmonizing
Exchange rules modeled on FINRA's rules would result in less burdensome
and more efficient regulatory compliance without compromising the
regulatory information available to the Exchange. As previously noted,
except for changes reflecting the Exchange's membership, the proposed
additional text for NYSE American Rule 4530 is identical to the text in
FINRA Rule 4530. As such, the proposed rule change would facilitate
rule harmonization among self-regulatory organizations with respect to
the reporting requirements, thereby fostering cooperation and
coordination with persons engaged in facilitating transactions in
securities and will remove impediments to and perfect the mechanism of
a free and open market and a national market system.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The proposed rule change is
not intended to address competitive issues but rather would reduce
potential compliance burdens on member organizations by eliminating
potentially duplicative information under NYSE American Rule 4530.
Specifically, the proposed rule change would reduce potential
compliance burdens on firms by eliminating the requirements under NYSE
American Rule 4530(a)(1)(H) to report to the Exchange each instance
where a member organization or an associated person is involved in a
financial activity with a disqualified member organization or
associated person that has been approved or is otherwise permitted to
be a member organization or associated with a member organization.
Similarly, the proposed amendment to NYSE American Rule 4530(e) to
provide an exception for information disclosed on the Form U4 will
eliminate the burden on member organizations of having to report the
same event twice. Finally, the addition of Supplementary Material .11
to NYSE American Rule 4530 eliminates the burden on member
organizations of having to report findings and actions by the Exchange
or by FINRA for purposes of NYSE American Rules 4530(a)(1)(A), (C) and
(D).
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 with respect to the
proposed rule change.
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 \12\ and Rule 19b-4(f)(6) thereunder.\13\
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.\14\
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\12\ 15 U.S.C. 78s(b)(3)(A)(iii).
\13\ 17 CFR 240.19b-4(f)(6).
\14\ Rule 19b-4(f)(6)(iii) requires a self-regulatory
organization to give the Commission written notice of its intent to
file the proposed rule change, along with a brief description and
text of the proposed rule change, at least five business days prior
to the date of filing of the proposed rule change, or such shorter
time as designated by the Commission. The Exchange has satisfied
this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \15\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\16\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest.
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\15\ 17 CFR 240.19b-4(f)(6).
\16\ 17 CFR 240.19b-4(f)(6)(iii).
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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. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \17\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\17\ 15 U.S.C. 78s(b)(2)(B).
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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
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#4f3d3a232a622c2022222a213b3c0f3c2a2c61282039"><span class="__cf_email__" data-cfemail="ed9f988188c08e8280808883999ead9e888ec38a829b">[email protected]</span></a>. Please include
file number SR-NYSEAMER-2024-72 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-NYSEAMER-2024-72. 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 website (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>). 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 website 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
[[Page 93706]]
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-NYSEAMER-2024-72 and should
be submitted on or before December 18, 2024.
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\18\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-27745 Filed 11-26-24; 8:45 am]
BILLING CODE 8011-01-P
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