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Federal Register / Vol. 86, No. 168 / Thursday, September 2, 2021 / Notices
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composing to match the language used in Rule 1017a3.28
Finally, FINRA is proposing to add within Form CMAs Standard 1 section new Questions 4.a., 4.b. and 4.c that would efficiently collect the information needed to monitor for compliance with Rule 1017a6. Proposed Questions 4.a.
and 4.b. would ask the applicant to indicate whether the CMA is required under Rule 1017a6A or Rule 1017a6B, respectively.29 If the applicant answers yes to either question, then proposed Question 4.c.
would prompt the applicant to list, for each covered pending arbitration claim, unpaid arbitration award, or unpaid settlement related to an arbitration, the subject party and that persons CRD
number in a chart. FINRA believes that adding these proposed questions and the accompanying chart to Form CMAs Standard 1 section would efficiently collect the information needed to monitor for compliance with Rule 1017a6.30 The proposed questions would also achieve parity with the manner FINRA is proposing to elicit information needed to monitor for compliance with Rule 1017a7.
Additionally, proposed Question 4
would allow FINRA to readily coordinate information entered on Form CMA with information that may have been entered on a Uniform Registration Form or provided in a materiality consultation.
FINRA has filed the proposed rule change for immediate effectiveness and has requested that the SEC waive the requirement that the proposed rule change not become operative for 30 days after the date of the filing, so FINRA can implement the proposed rule change on September 1, 2021, to coincide with the 28 See Rule 1017a3 requiring, in pertinent part, a member to file an application for approval of direct or indirect acquisitions or transfers of 25
percent or more in the aggregate of the members assets or any asset, business or line of operation that generates revenues composing 25 percent or more in the aggregate of the members earnings measured on a rolling 36-month basis Emphasis added.
29 See generally Exhibit 3 Form CMA, Standard 1, proposed Questions 4, 4.a., 4.b., 4.c. and accompanying chart, within the category titled Overview of the proposed change.
30 The requested information is similar to the information that member firms would provide in a materiality consultation pursuant to Rule 1017a6. See Rule 1017a6A and B
providing that the written request for a materiality consultation must address the issues that are central to the materiality consultation; see also Checklist for Mandatory Materiality Consultations Under Rule 1017a6, https www.finra.org/rulesguidance/guidance/materiality-consultationprocess/checklist-under-rule-1017a6 providing guidance to firms to provide, among other things, the name, title and CRD number of associated persons with a covered pending arbitration claim, unpaid arbitration award or unpaid settlement related to an arbitration.

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effective date of the amendments to the MAP rules as announced in Regulatory Notice 2109.31 The proposed changes to Form CMA conform to the recently amended MAP rules. To facilitate member firm compliance with the amended rules on the date they become effective, it is necessary for the amendments to Form CMA to become effective on the same date.
2. Statutory Basis FINRA believes that the proposed rule change is consistent with the provisions of Section 15Ab6 of the Act,32 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.
The proposed changes to Form CMA
will conform the form to the amendments to Rule 1017a7, as described in the SEC Order. The proposed changes to Form CMA will also help ensure that applicants for continuing membership provide the information and documentation to produce a complete application package for FINRAs review.
B. Self-Regulatory Organizations 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. FINRAs recent amendments to the MAP rules, which specify additional events that require a CMA for FINRAs approval, necessitate conforming changes to the sections of Form CMA pertaining to the type of CMA, Standard 1 and Standard 3. The proposed conforming changes i.e., listing in Form CMAs Type of Continuing Membership Application section all of the events under Rule 1017a that require a member to file Form CMA, and incorporating in Form CMAs Standard 1 and Standard 3
sections questions that would require the applicant to provide information about an individuals final criminal matters and specified risk events that is necessary to support compliance with Rule 1017a7are derived from, 31 FINRA notes that the proposed rule change would impact all members, including members that have elected to be treated as capital acquisition brokers CABs, given that CAB Rule 116
Application for Approval of Change in Ownership, Control, or Business Operations incorporates, by reference, Rule 1017, which requires that a members application for approval of changes to its ownership, control, or business operations include a Form CMA. See Rule 1017b2.
32 15 U.S.C. 78o3b6.

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and effectuate, recent amendments to the MAP rules concerning persons with a significant history of misconduct and the broker-dealers that employ them, as described in the SEC Order. In addition, the proposed changes to Form CMAs Standard 1 section pertaining to Rule 1017a6 would efficiently collect the information needed to monitor for compliance with that rule in the same manner that FINRA proposes to collect information needed to monitor for compliance with Rule 1017a7.
FINRA considered and discussed the potential economic impact of the recent amendments in File No. SRFINRA
2020011, including the burden imposed on some applicants to seek a materiality consultation with FINRA, and noted the potential requirement to file a Form CMA and certain associated costs.33 FINRA believes that the proposed conforming changes to Form CMA and the proposed technical changes described herein would not result in new material economic effects.
C. Self-Regulatory Organizations 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 19b3A of the Act 34 and Rule 19b 4f6 thereunder.35
A proposed rule change filed under Rule 19b4f6 normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b4f6iii,36 the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. FINRA has requested that the Commission waive the 30-day operative delay requirement so that the proposed rule change may become operative on September 1, 2021. The Commission hereby grants the request. The 33 See Securities Exchange Act Release No. 88600
April 8, 2020, 85 FR 20745, 2075562 April 14, 2020 Notice of Filing of File No. SRFINRA
2020011.
34 15 U.S.C. 78sb3A.
35 17 CFR 240.19b4f6.
36 17 CFR 240.19b4f6iii.

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