(a) Registration procedures; notice of filing; other regulatory agencies.
(1) The Commission shall,
upon the filing of an application for registration as a national securities
exchange, registered securities association, or registered clearing
agency, pursuant to section 6, 15A, or 17A of this title, respectively,
publish notice of such filing and afford interested persons an opportunity
to submit written data, views, and arguments concerning such application.
Within ninety days of the date of publication of such notice (or within
such longer period as to which the applicant consents), the Commission
shall—
(A) by order grant such registration,
or
(B) institute
proceedings to determine whether registration should be denied. Such
proceedings shall include notice of the grounds for denial under consideration
and opportunity for hearing and shall be concluded within one hundred
eighty days of the date of a publication of notice of the filing of
the application for registration. At the conclusion of such proceedings
the Commission, by order, shall grant or deny such registration. The
Commission may extend the time for conclusion of such proceedings
for up to ninety days if it finds good cause for such extension and
publishes its reasons for so finding or for such longer period as
to which the applicant consents.
The Commission shall grant such registration if it finds
that the requirements of this title and the rules and regulations
thereunder with respect to the applicant are satisfied. The Commission
shall deny such registration if it does not make such finding.
5-196
(2) With respect to an application
for registration filed by a clearing agency for which the Commission
is not the appropriate regulatory agency—
(A) The Commission shall
not grant registration prior to the sixtieth day after the date of
publication of notice of the filing of such application unless the
appropriate regulatory agency for such clearing agency has notified
the Commission of such appropriate regulatory agency’s determination
that such clearing agency is so organized and has the capacity to
be able to safeguard securities and funds in its custody or control
or for which it is responsible and that the rules of such clearing
agency are designed to assure the safeguarding of such securities
and funds.
(B) The
Commission shall institute proceedings in accordance with paragraph (1)(B)
of this subsection to determine whether registration should be denied
if the appropriate regulatory agency for such clearing agency notifies
the Commission within sixty days of the date of publication of notice
of the filing of such application of such appropriate regulatory agency’s
(i) determination that such clearing agency may not be so organized
or have the capacity to be able to safeguard securities or funds in
its custody or control for which it is responsible to assure the rules
of such clearing agency may not be designed to assure the safeguarding
of such securities and funds and (ii) reasons for such determination.
(C) The Commission
shall deny registration if the appropriate regulatory agency for such
clearing agency notifies the Commission prior to the conclusion of
proceedings instituted in accordance with paragraph (1)(B) of this
subsection of such appropriate regulatory agency’s (i) determination
that such clearing agency is not so organized or does not have the
capacity to be able to safeguard securities or funds in its custody
or control or for which it is responsible or that the rules of such
clearing agency are not designed to assure the safeguarding of such
securities or funds and (ii) reasons for such determination.
5-197
(3) A self-regulatory organization
may, upon such terms and conditions as the Commission, by rule, deems
necessary or appropriate in the public interest or for the protection
of investors, withdraw from registration by filing a written notice
of withdrawal with the Commission. If the Commission finds that any
self-regulatory organization is no longer in existence or has ceased
to do business in the capacity specified in its application for registration,
the Commission, by order, shall cancel its registration. Upon the
withdrawal of a national securities association from registration
or the cancellation, suspension, or revocation of the registration
of a national securities association, the registration of any association
affiliated therewith shall automatically terminate.
5-198
(b) Proposed rule changes;
notice; proceedings.
(1) Each self-regulatory organization shall
file with the Commission, in accordance with such rules as the Commission
may prescribe, copies of any proposed rule or any proposed change
in, addition to, or deletion from the rules of such self-regulatory
organization (hereinafter in this subsection collectively referred
to as a “proposed rule change”) accompanied by a concise general statement
of the basis and purpose of such proposed rule change. The Commission
shall, as soon as practicable after the date of the filing of any
proposed rule change, publish notice thereof together with the terms
of substance of the proposed rule change or a description of the subjects
and issues involved. The Commission shall give interested persons
an opportunity to submit written data, views, and arguments concerning
such proposed rule change. No proposed rule change shall take effect
unless approved by the Commission or otherwise permitted in accordance
with the provisions of this subsection.
5-199
(2) (A)
(i) Except as
provided in clause (ii), not later than 45 days after the date of
publication of a proposed rule change under paragraph (1), the Commission
shall—
(I) by order, approve or
disapprove the proposed rule change; or
(II) institute proceedings under subparagraph
(B) to determine whether the proposed rule change should be disapproved.
(ii) The Commission
may extend the period established under clause (i) by not more than
an additional 45 days, if—
(I) the Commission determines that a longer period is appropriate
and publishes the reasons for such determination; or
(II) the self-regulatory
organization that filed the proposed rule change consents to the longer
period.
(B) (i) If the Commission
does not approve or disapprove a proposed rule change under subparagraph
(A), the Commission shall provide to the self-regulatory organization
that filed the proposed rule change—
(I) notice of the grounds for disapproval under consideration; and
(II) opportunity for hearing,
to be concluded not later than 180 days after the date of publication
of notice of the filing of the proposed rule change.
(ii) Order of approval or
disapproval.
(I) Except as provided in
subclause (II), not later than 180 days after the date of publication
under paragraph (1), the Commission shall issue an order approving
or disapproving the proposed rule change.
(II) The Commission may extend the period
for issuance under clause (I) by not more than 60 days, if—
(aa) the Commission determines that a longer
period is appropriate and publishes the reasons for such determination;
or
(bb) the self-regulatory
organization that filed the proposed rule change consents to the longer
period.
(C) (i) The
Commission shall approve a proposed rule change of a self-regulatory
organization if it finds that such proposed rule change is consistent
with the requirements of this title and the rules and regulations
issued under this title that are applicable to such organization.
(ii) The Commission shall
disapprove a proposed rule change of a self-regulatory organization
if it does not make a finding described in clause (i).
(iii) The Commission may not approve
a proposed rule change earlier than 30 days after the date of publication
under paragraph (1), unless the Commission finds good cause for so
doing and publishes the reason for the finding.
(D) A proposed rule
change shall be deemed to have been approved by the Commission, if—
(i) the Commission does not approve or disapprove the proposed rule
change or begin proceedings under subparagraph (B) within the period
described in subparagraph (A); or
(ii) the Commission does not issue an order
approving or disapproving the proposed rule change under subparagraph
(B) within the period described in subparagraph (B)(ii).
(E) Publication date
based on Federal Register publishing. For purposes of this
paragraph, if, after filing a proposed rule change with the Commission
pursuant to paragraph (1), a self-regulatory organization publishes
a notice of the filing of such proposed rule change, together with
the substantive terms of such proposed rule change, on a publicly
accessible website, the Commission shall thereafter send the notice
to the Federal Register for publication thereof under paragraph
(1) within 15 days of the date on which such website publication is
made. If the Commission fails to send the notice for publication thereof
within such 15 day period, then the date of publication shall be deemed
to be the date on which such website publication was made.
(F) (i) Not
later than 180 days after the date of enactment of the Investor Protection
and Securities Reform Act of 2010, after consultation with other regulatory
agencies, the Commission shall promulgate rules setting forth the
procedural requirements of the proceedings required under this paragraph.
(ii) The rules promulgated
by the Commission under clause (i) are not required to include republication
of proposed rule changes or solicitation of public comment.
5-200
(3) (A) Notwithstanding the provisions
of paragraph (2) of this subsection, a proposed rule change shall take
effect upon filing with the Commission if designated by the self-regulatory
organization as (i) constituting a stated policy, practice, or interpretation
with respect to the meaning, administration, or enforcement of an
existing rule of the self-regulatory organization, (ii) establishing
or changing a due, fee, or other charge imposed by the self-regulatory
organization on any person, whether or not the person is a member
of the self-regulatory organization, or (iii) concerned solely with
the administration of the self-regulatory organization or other matters
which the Commission, by rule, consistent with the public interest
and the purposes of this subsection, may specify as without the provisions
of such paragraph (2).
(B) Notwithstanding any other provision of this subsection, a proposed
rule change may be put into effect summarily if it appears to the
Commission that such action is necessary for the protection of investors,
the maintenance of fair and orderly markets, or the safeguarding of
securities or funds. Any proposed rule change so put into effect shall
be filed promptly thereafter in accordance with the provisions of
paragraph (1) of this subsection.
5-201
(C) Any proposed rule change of a self-regulatory
organization which has taken effect pursuant to subparagraph (A) or
(B) of this paragraph may be enforced by such organization to the
extent it is not inconsistent with the provisions of this title, the
rules and regulations thereunder, and applicable Federal and State
law. At any time within the 60-day period beginning on the date of
filing of such a proposed rule change in accordance with the provisions
of paragraph (1), the Commission summarily may temporarily suspend
the change in the rules of the self-regulatory organization made thereby,
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 this title. If the Commission takes
such action, the Commission shall institute proceedings under paragraph
(2)(B) to determine whether the proposed rule should be approved or
disapproved. Commission action pursuant to this subparagraph shall
not affect the validity or force of the rule change during the period
it was in effect and shall not be reviewable under section 25 of this
title nor deemed to be “final agency action” for purposes of section
704 of title 5, United States Code.
5-202
(4) With respect to a proposed rule change
filed by a registered clearing agency for which the Commission is
not the appropriate regulatory agency—
(A) The Commission shall
not approve any such proposed rule change prior to the thirtieth day
after the date of publication of notice of the filing thereof unless
the appropriate regulatory agency for such clearing agency has notified
the Commission of such appropriate regulatory agency’s determination
that the proposed rule change is consistent with the safeguarding
of securities and funds in the custody or control of such clearing
(B) The Commission
shall institute proceedings in accordance with paragraph (2)(B) of
this subsection to determine whether any such proposed rule change
should be disapproved, if the appropriate regulatory agency for such
clearing agency notifies the Commission within thirty days of the
date of publication of notice of the filing of the proposed rule change
of such appropriate regulatory agency’s (i) determination that the
proposed rule change may be inconsistent with the safeguarding of
securities or funds in the custody or control of such clearing agency
or for which it is responsible and (ii) reasons for such determination.
(C) The Commission
shall disapprove any such proposed rule change if the appropriate
regulatory agency for such clearing agency notifies the Commission
prior to the conclusion of proceedings instituted in accordance with
paragraph (2)(B) of this subsection of such appropriate regulatory
agency’s (i) determination that the proposed rule change is inconsistent
with the safeguarding of securities or funds in the custody or control
of such clearing agency or for which it is responsible and (ii) reasons
for such determination.
(D) (i) The Commission shall order the
temporary suspension of any change in the rules of a clearing agency
made by a proposed rule change that has taken effect under paragraph
(3), if the appropriate regulatory agency for the clearing agency
notifies the Commission not later than 30 days after the date on which
the proposed rule change was filed of—
(I) the determination by the appropriate regulatory agency that the
rules of such clearing agency, as so changed, may be inconsistent
with the safeguarding of securities or funds in the custody or control
of such clearing agency or for which it is responsible; and
(II) the reasons for the determination
described in subclause (I).
(ii) If the Commission takes action under
clause (i), the Commission shall institute proceedings under paragraph
(2)(B) to determine if the proposed rule change should be approved
or disapproved.
5-202.1
(5) The Commission shall consult with and
consider the views of the Secretary of the Treasury prior to approving
a proposed rule filed by a registered securities association that
primarily concerns conduct related to transactions in government securities,
except where the Commission determines that an emergency exists requiring
expeditious or summary action and publishes its reasons therefor.
If the Secretary of the Treasury comments in writing to the Commission
on a proposed rule that has been published for comment, the Commission
shall respond in writing to such written comment before approving
the proposed rule. If the Secretary of the Treasury determines, and
notifies the Commission, that such rule, if implemented, would, or
as applied does (i) adversely affect the liquidity or efficiency of
the market for government securities; or (ii) impose any burden on
competition not necessary or appropriate in furtherance of the purposes
of this section, the Commission shall, prior to adopting the proposed
rule, find that such rule is necessary and appropriate in furtherance
of the purposes of this section notwithstanding the Secretary’s determination.
(6) In approving rules
described in paragraph (5), the Commission shall consider the sufficiency
and appropriateness of then existing laws and rules applicable to
government securities brokers, government securities dealers, and
persons associated with government securities brokers and government
securities dealers.
5-202.2
(7) (A) A self-regulatory
organization that is an exchange registered with the Commission pursuant
to section 6(g) of this title or that is a national securities association
registered pursuant to section 15A(k) of this title shall file with
the Commission, in accordance with such rules as the Commission may
prescribe, copies of any proposed rule change or any proposed change
in, addition to, or deletion from the rules of such self-regulatory
organization (hereinafter in this paragraph collectively referred
to as a “proposed rule change”) that relates to higher margin levels,
fraud or manipulation, recordkeeping, reporting, listing standards,
or decimal pricing for security futures products, sales practices
for security futures products for persons who effect transactions
in security futures products, or rules effectuating such self-regulatory
organization’s obligation to enforce the securities laws. Such proposed
rule change shall be accompanied by a concise general statement of
the basis and purpose of such proposed rule change. The
Commission shall, upon the filing of any proposed rule change, promptly
publish notice thereof together with the terms of substance of the
proposed rule change or a description of the subjects and issues involved.
The Commission shall give interested persons an opportunity to submit
data, views, and arguments concerning such proposed rule change.
(B) A proposed rule
change filed with the Commission pursuant to subparagraph (A) shall
be filed concurrently with the Commodity Futures Trading Commission.
Such proposed rule change may take effect upon filing of a written
certification with the Commodity Futures Trading Commission under
section 5c(c) of the Commodity Exchange Act, upon a determination
by the Commodity Futures Trading Commission that review of the proposed
rule change is not necessary, or upon approval of the proposed rule
change by the Commodity Futures Trading Commission.
(C) Any proposed rule change of a self-regulatory
organization that has taken effect pursuant to subparagraph (B) may
be enforced by such self-regulatory organization to the extent such
rule is not inconsistent with the provisions of this title, the rules
and regulations thereunder, and applicable Federal law. At any time
within 60 days of the date of the filing of a written certification
with the Commodity Futures Trading Commission under section 5c(c)
of the Commodity Exchange Act, the date the Commodity Futures Trading
Commission determines that review of such proposed rule change is
not necessary, or the date the Commodity Futures Trading Commission
approves such proposed rule change, the Commission, after consultation
with the Commodity Futures Trading Commission, may summarily abrogate
the proposed rule change and require that the proposed rule change
be refiled in accordance with the provisions of paragraph (1), if
it appears to the Commission that such proposed rule change unduly
burdens competition or efficiency, conflicts with the securities laws,
or is inconsistent with the public interest and the protection of
investors. Commission action pursuant to the preceding sentence shall
not affect the validity or force of the rule change during the period
it was in effect and shall not be reviewable under section 25 of this
title nor deemed to be a final agency action for purposes of section
704 of title 5, United States Code.
(D) (i) Within 35 days
of the date of publication of notice of the filing of a proposed rule
change that is abrogated in accordance with subparagraph (C) and refiled
in accordance with paragraph (1), or within such longer period as
the Commission may designate up to 90 days after such date if the
Commission finds such longer period to be appropriate and publishes
its reasons for so finding or as to which the self-regulatory organization
consents, the Commission shall—
(I) by order approve such proposed rule change; or
(II) after consultation with the Commodity
Futures Trading Commission, institute proceedings to determine whether
the proposed rule change should be disapproved. Proceedings under
subclause (II) shall include notice of the grounds for disapproval
under consideration and opportunity for hearing and be concluded within
180 days after the date of publication of notice of the filing of
the proposed rule change. At the conclusion of such proceedings, the
Commission, by order, shall approve or disapprove such proposed rule
change. The Commission may extend the time for conclusion of such
proceedings for up to 60 days if the Commission finds good cause for
such extension and publishes its reasons for so finding or for such
longer period as to which the self-regulatory organization consents.
(ii) The Commission
shall approve a proposed rule change of a self-regulatory
organization under this subparagraph if the Commission finds that
such proposed rule change does not unduly burden competition or efficiency,
does not conflict with the securities laws, and is not inconsistent
with the public interest or the protection of investors. The Commission
shall disapprove such a proposed rule change of a self-regulatory
organization if it does not make such finding. The Commission shall
not approve any proposed rule change prior to the 30th day after the
date of publication of notice of the filing thereof, unless the Commission
finds good cause for so doing and publishes its reasons for so finding.
(8) Not later than 9 months after the date on which trading in any
security futures product commences under this title, all self-regulatory
organizations listing or trading security futures products shall file
proposed rule changes necessary to implement decimal pricing of security
futures products. The Commission may not require such rules to contain
equal minimum increments in such decimal pricing.
5-202.3
(9) (A) The Commission
shall consult with and consider the views of the Commodity Futures
Trading Commission prior to approving or disapproving a proposed rule
change filed by a national securities association registered pursuant
to section 15A(a) or a national securities exchange subject to the
provisions of subsection (a) that primarily concerns conduct related
to transactions in security futures products, except where the Commission
determines that an emergency exists requiring expeditious or summary
action and publishes its reasons therefor.
(B) If the Commodity Futures Trading
Commission comments in writing to the Commission on a proposed rule
that has been published for comment, the Commission shall respond
in writing to such written comment before approving or disapproving
the proposed rule. If the Commodity Futures Trading Commission determines,
and notifies the Commission, that such rule, if implemented or as
applied, would—
(i) adversely affect the liquidity or efficiency
of the market for security futures products; or
(ii) impose any burden on competition not
necessary or appropriate in furtherance of the purposes of this section,
the Commission shall, prior to approving or disapproving the proposed
rule, find that such rule is necessary and appropriate in furtherance
of the purposes of this section notwithstanding the Commodity Futures
Trading Commission’s determination.
(10)
** Notwithstanding paragraph (2), the time period
within which the Commission is required by order to approve a proposed
rule change or institute proceedings to determine whether the proposed
rule change should be disapproved is stayed pending a determination
by the Commission upon the request of the Commodity Futures Trading
Commission or its Chairman that the Commission issue a determination
as to whether a product that is the subject of such proposed rule
change is a security pursuant to section 718 of the Wall Street Transparency
and Accountability Act of 2010.
(10) Rule of construction relating to filing
date of proposed rule changes.
(A) For purposes of this subsection,
the date of filing of a proposed rule change shall be deemed to be
the date on which the Commission receives the proposed rule change.
(B) A proposed rule
change has not been received by the Commission for purposes of subparagraph
(A) if, not later than 7 business days after the date of receipt by
the Commission, the Commission notifies the self-regulatory organization
that such proposed rule change does not comply with the rules of the
Commission relating to the required form of a proposed rule change,
except that if the Commission determines that the proposed rule change
is unusually lengthy and is complex or raises novel regulatory issues,
the Commission shall inform the self-regulatory organization of such
determination not later than 7 business days after the date of receipt
by the Commission and, for the purposes of subparagraph (A), a proposed
rule change has not been received by the Commission, if, not later
than 21 days after the date of receipt by the Commission, the Commission
notifies the self-regulatory organization that such proposed rule
change does not comply with the rules of the Commission relating to
the required form of a proposed rule change.
5-203
(c) Amendment by Commission
of rules of self-regulatory organizations. The Commission, by
rule, may abrogate, add to, and delete from (hereinafter in this subsection
collectively referred to as “amend”) the rules of a self-regulatory
organization (other than a registered clearing agency) as the Commission
deems necessary or appropriate to insure the fair administration of
the self-regulatory organization, to conform its rules to requirements
of this title and the rules and regulations thereunder applicable
to such organization, or otherwise in furtherance of the purposes
of this title, in the following manner:
(1) The Commission shall notify the self-regulatory
organization and publish notice of the proposed rulemaking in the
Federal Register. The notice shall include the text of the proposed
amendment to the rules of the self-regulatory organization and a statement
of the Commission’s reasons, including any pertinent facts, for commencing
such proposed rulemaking.
(2) The Commission shall give interested persons an opportunity for
the oral presentation of data, views, and arguments, in addition to
an opportunity to make written submissions. A transcript shall be
kept of any oral presentation.
(3) A rule adopted pursuant to this subsection
shall incorporate the text of the amendment to the rules of the self-regulatory
organization and a statement of the Commission’s basis for and purpose
in so amending such rules. This statement shall include an identification
of any facts on which the Commission considers its determination so
to amend the rules of the self-regulatory agency to be based, including
the reasons for the Commission’s conclusions as to any of such facts
which were disputed in the rulemaking.
5-204
(4) (A) Except as provided
in paragraphs (1) through (3) of this subsection, rulemaking under
this subsection shall be in accordance with the procedures specified
in section 553 of title 5, United States Code, for rulemaking not
on the record.
(B)
Nothing in this subsection shall be construed to impair or limit the
Commission’s power to make, or to modify or alter the procedures the
Commission may follow in making, rules and regulations pursuant to
any other authority under this title.
(C) Any amendment to the rules of a
self-regulatory organization made by the Commission pursuant to this
subsection shall be considered for all purposes of this title to be
part of the rules of such self-regulatory organization and shall not
be considered to be a rule of the Commission.
(5) With respect to rules described
in subsection (b)(5), the Commission shall consult with and consider
the views of the Secretary of the Treasury before abrogating, adding
to, and deleting from such rules, except where the Commission determines
that an emergency exists requiring expeditious or summary action and
publishes its reasons therefor.
5-205
(d) Notice of disciplinary action taken by self-regulatory
organization against a member or participant; review of action by
appropriate regulatory agency; procedure.
(1) If any self-regulatory organization
imposes any final disciplinary sanction on any member
thereof or participant therein, denies membership or participation
to any applicant, or prohibits or limits any person in respect to
access to services offered by such organization or member thereof
or if any self-regulatory organization (other than a registered clearing
agency) imposes any final disciplinary sanction on any person associated
with a member or bars any person from becoming associated with a member,
the self-regulatory organization shall promptly file notice thereof
with the appropriate regulatory agency for the self-regulatory organization
and (if other than the appropriate regulatory agency for the self-regulatory
organization) the appropriate regulatory agency for such member, participant,
applicant, or other person. The notice shall be in such form and contain
such information as the appropriate regulatory agency for the self-regulatory
organization, by rule, may prescribe as necessary or appropriate in
furtherance of the purposes of this title.
5-206
(2) Any action with respect to which a
self-regulatory organization is required by paragraph (1) of this
subsection to file notice shall be subject to review by the appropriate
regulatory agency for such member, participant, applicant, or other
person, on its own motion, or upon application by any person aggrieved
thereby filed within thirty days after the date such notice was filed
with such appropriate regulatory agency and received by such aggrieved
person, or within such longer period as such appropriate regulatory
agency may determine. Application to such appropriate regulatory agency
for review, or the institution of review by such appropriate regulatory
agency on its own motion, shall not operate as a stay of such action
unless such appropriate regulatory agency otherwise orders, summarily
or after notice and opportunity for hearing on the question of a stay
(which hearing may consist solely of the submission of affidavits
or presentation of oral arguments). Each appropriate regulatory agency
shall establish for appropriate cases an expedited procedure for consideration
and determination of the question of a stay.
(3) The provisions of this subsection shall
apply to an exchange registered pursuant to section 6(g) of this title
or a national securities association registered pursuant to section
15A(k) of this title only to the extent that such exchange or association
imposes any final disciplinary sanction for—
(A) a violation
of the Federal securities laws or the rules and regulations thereunder;
or
(B) a violation
of a rule of such exchange or association, as to which a proposed
change would be required to be filed under section 19 of this title,
except that, to the extent that the exchange or association rule violation
relates to any account, agreement, contract, or transaction, this
subsection shall apply only to the extent such violation involves
a security futures product.
5-207
(e) Disposition of review; cancellation,
reduction, or remission of sanction.
(1) In any proceeding to review a final
disciplinary sanction imposed by a self-regulatory organization on
a member thereof or participant therein or a person associated with
such a member, after notice and opportunity for hearing (which hearing
may consist solely of consideration of the record before the self-regulatory
organization and opportunity for the presentation of supporting reasons
to affirm, modify, or set aside the sanction)—
(A) if the
appropriate regulatory agency for such member, participant, or person
associated with a member finds that such member, participant, or person
associated with a member has engaged in such acts or practices, or
has omitted such acts, as the self-regulatory organization has found
him to have engaged in or omitted, that such acts or practices, or
omissions to act, are in violation of such provisions of this chapter,
the rules or regulations thereunder, the rules of the self-regulatory
organization, or, in the case of a registered securities association,
the rules of the Municipal Securities Rulemaking Board as have been
specified in the determination of the self-regulatory organization,
and that such provisions are, and were applied in a manner, consistent
with the purposes of this chapter, such appropriate regulatory agency,
by order, shall so declare and, as appropriate, affirm the sanction
imposed by the self-regulatory organization, modify the sanction in
accordance with paragraph (2) of this subsection, or remand to the
self-regulatory organization for further proceedings; or
(B) if such appropriate
regulatory agency does not make any such finding it shall, by order,
set aside the sanction imposed by the self-regulatory organization
and, if appropriate, remand to the self-regulatory organization for
further proceedings.
5-208
(2) If the appropriate regulatory agency
for a member, participant, or person associated with a member, having
due regard for the public interest and the protection of investors,
finds after a proceeding in accordance with paragraph (1) of this
subsection that a sanction imposed by a self-regulatory organization
upon such member, participant, or person associated with a member
imposes any burden on competition not necessary or appropriate in
furtherance of the purposes of this chapter or is excessive or oppressive,
the appropriate regulatory agency may cancel, reduce, or require the
remission of such sanction.
5-209
(f) Dismissal of review proceeding. In any
proceeding to review the denial of membership or participation in
a self-regulatory organization to any applicant, the barring of any
person from becoming associated with a member of a self-regulatory
organization, or the prohibition or limitation by a self-regulatory
organization of any person with respect to access to services offered
by the self-regulatory organization or any member thereof, if the
appropriate regulatory agency for such applicant or person, after
notice and opportunity for hearing (which hearing may consist solely
of consideration of the record before the self-regulatory organization
and opportunity for the presentation of supporting reasons to dismiss
the proceeding or set aside the action of the self-regulatory organization)
finds that the specific grounds on which such denial, bar, or prohibition
or limitation is based exist in fact, that such denial, bar, or prohibition
or limitation is in accordance with the rules of the self-regulatory
organization, and that such rules are, and were applied in a manner,
consistent with the purposes of this chapter, such appropriate regulatory
agency, by order, shall dismiss the proceeding. If such appropriate
regulatory agency does not make any such finding or if it finds that
such denial, bar, or prohibition or limitation imposes any burden
on competition not necessary or appropriate in furtherance of the
purposes of this chapter, such appropriate regulatory agency, by order,
shall set aside the action of the self-regulatory organization and
require it to admit such applicant to membership or participation,
permit such person to become associated with a member, or grant such
person access to services offered by the self-regulatory organization
or member thereof.
5-210
(g) Compliance
with rules and regulations.
(1) Every self-regulatory organization
shall comply with the provisions of this title, the rules and regulations
thereunder, and its own rules, and (subject to the provisions of section
17(d) of this title, paragraph (2) of this subsection, and the rules
thereunder) absent reasonable justification or excuse enforce compliance—
(A) in the case of a national securities exchange, with such provisions
by its members and persons associated with its members;
(B) in the case of a registered
securities association, with such provisions and the provisions of
the rules of the Municipal Securities Rulemaking Board by its members
and persons associated with its members; and
(C) in the case of
a registered clearing agency, with its own rules by its participants.
(2) The
Commission, by rule, consistent with the public interest, the protection
of investors, and the other purposes of this title, may relieve any
self-regulatory organization of any responsibility under this title
to enforce compliance with any specified provision of this title or
the rules or regulations thereunder by any member of such organization
or person associated with such a member, or any class of such members
or persons associated with a member.
5-211
(h) Suspension or revocation of self-regulatory
organization’s registration; censure; other sanctions.
(1) The appropriate regulatory agency for
a self-regulatory organization is authorized, by order, if in its
opinion such action is necessary or appropriate in the public interest,
for the protection of investors, or otherwise in furtherance of the
purposes of this title, to suspend for a period not exceeding twelve
months or revoke the registration of such self-regulatory organization,
or to censure or impose limitations upon the activities, functions,
and operations of such self-regulatory organization, if such appropriate
regulatory agency finds, on the record after notice and opportunity
for hearing, that such self-regulatory organization has violated or
is unable to comply with any provision of this title, the rules or
regulations thereunder, or its own rules or without reasonable justification
or excuse has failed to enforce compliance—
(A) in the case of
a national securities exchange, with any such provision by a member
thereof or a person associated with a member thereof;
(B) in the case of a registered securities
association, with any such provision or any provision of the rules
of the Municipal Securities Rulemaking Board by a member thereof or
a person associated with a member thereof; or
(C) in the case of a registered clearing
agency, with any provision of its own rules by a participant therein.
5-212
(2) The appropriate regulatory
agency for a self-regulatory organization is authorized, by order,
if in its opinion such action is necessary or appropriate in the public
interest, for the protection of investors, or otherwise in furtherance
of the purposes of this title, to suspend for a period not exceeding
twelve months or expel from such self-regulatory organization any
member thereof or participant therein, if such member or participant
is subject to an order of the Commission pursuant to section 15(b)(4)
of this title or if such appropriate regulatory agency finds, on the
record after notice and opportunity for hearing, that such member
or participant has willfully violated or has effected any transaction
for any other person who, such member or participant had reason to
believe, was violating with respect to such transaction—
(A) in the
case of a national securities exchange, any provision of the Securities
Act of 1933, the Investment Advisers Act of 1940, the Investment Company
Act of 1940, this title, or the rules or regulations under any of
such statutes;
(B)
in the case of a registered securities association, any provision
of the Securities Act of 1933, the Investment Advisers Act of 1940,
the Investment Company Act of 1940, this title, the rules or regulations
under any of such statutes, or the rules of the Municipal Securities
Rulemaking Board; or
(C) in the case of a registered clearing agency, any provision of
the rules of the clearing agency.
5-213
(3) The appropriate regulatory agency for
a national securities exchange or registered securities association
is authorized, by order, if in its opinion such action is necessary
or appropriate in the public interest, for the protection of investors,
or otherwise in furtherance of the purposes of this title, to suspend
for a period not exceeding twelve months or to bar any person from being
associated with a member of such national securities exchange or registered
securities association, if such person is subject to an order of the
Commission pursuant to section 15(b)(6) or if such appropriate regulatory
agency finds, on the record after notice and opportunity for hearing,
that such person has willfully violated or has effected any transaction
for any other person who, such person associated with a member had
reason to believe, was violating with respect to such transaction—
(A) in the case of a national securities exchange, any provision
of the Securities Act of 1933, the Investment Advisers Act of 1940,
the Investment Company Act of 1940, this title, or the rules or regulations
under any of such statutes; or
(B) in the case of a registered securities
association, any provision of the Securities Act of 1933, the Investment
Advisers Act of 1940, the Investment Company Act of 1940, this title,
the rules or regulations under any of the statutes, or the rules of
the Municipal Securities Rulemaking Board.
5-214
(4) The appropriate regulatory agency for
a self-regulatory organization is authorized, by order, if in its
opinion such action is necessary or appropriate in the public interest,
for the protection of investors, or otherwise in furtherance of the
purposes of this title, to remove from office or censure any person
who is, or at the time of the alleged misconduct was, an officer or
director of such self-regulatory organization, if such appropriate
regulatory agency finds, on the record after notice and opportunity
for hearing, that such person has willfully violated any provision
of this title, the rules or regulations thereunder, or the rules of
such self-regulatory organization, willfully abused his authority,
or without reasonable justification or excuse has failed to enforce
compliance—
(A) in the case of a national securities
exchange with any such provision by any member or person associated
with a member;
(B)
in the case of a registered securities association, with any such
provision or any provision of the rules of the Municipal Securities
Rulemaking Board by any member or person associated with a member;
or
(C) in the case
of a registered clearing agency, with any provision of the rules of
the clearing agency by any participant.
5-215
(i) Appointment of trustee. If a proceeding under subsection (h)(1) of this section results
in the suspension or revocation of the registration of a clearing
agency, the appropriate regulatory agency for such clearing agency
may, upon notice to such clearing agency, apply to any court of competent
jurisdiction specified in section 21(d) or 27 of this title for the
appointment of a trustee. In the event of such an application, the
court may, to the extent it deems necessary or appropriate, take exclusive
jurisdiction of such clearing agency and the records and assets thereof,
wherever located; and the court shall appoint the appropriate regulatory
agency for such clearing agency or a person designated by such appropriate
regulatory agency as trustee with power to take possession and continue
to operate or terminate the operations of such clearing agency in
an orderly manner for the protection of participants and investors,
subject to such terms and conditions as the court may prescribe.
[15 USC 78s.
As amended by acts of Sept. 5, 1961 (75 Stat. 465); July 27, 1962
(76 Stat. 247); June 4, 1975 (89 Stat. 146); Dec. 17, 1993 (107 Stat.
2350, 2351); Dec. 21, 2000 (114 Stat. 2763A-418, 420, 421); July 30,
2002 (116 Stat. 768); and July 21, 2010 (124 Stat. 1652, 1834, 1835,
1836).]
