Amendments to NASD IM-2210-4: Web Site References to FINRA Membership and Limitations on the Use of FINRA's Name and Other Corporate Names Owned by FINRA
FINRA Web Site References
| Regulatory Notice | |
Notice Type Rule Amendment |
Referenced Rules & Notices NTM 07-02 NASD IM-2210-4 NASD Rule 2210 |
| Suggested Routing Advertising Compliance Legal Operations SeniorManagement |
Key Topics Hyperlink Requirement Use of FINRA name and FINRA-owned corporate names Web site reference to FINRA membership |
Executive Summary
Effective November 17, 2007, member firms and persons associated with a member firm that refer to their FINRA membership on a Web site are required to provide a hyperlink to www.finra.org. Certain limits to the use of FINRA's name and any other corporate name owned by FINRA (including NASD) also become effective on this date.
IM-2210-4, as amended, is set forth in Attachment A. The amendments become effective on November 17, 2007.
Questions concerning this Notice should be directed to Gary L. Goldsholle, Vice President and Associate General Counsel, Office of General Counsel, at (202) 728-8104; or Rachael Grad, Counsel, Office of General Counsel, at (202) 728-8290.
Background & Discussion
"Hyperlink Requirement"
Previously, FINRA amended IM-2210-4 to establish a requirement for member firms and persons associated with a member that refer to their membership in NASD on a Web site to hyperlink to NASD's home page, www.nasd.com ("the hyperlink requirement").1 The rule change was scheduled to take effect on July 7, 2007.2 In view of the fact that NASD was changing its corporate name, NASD delayed the implementation of the hyperlink requirement until its new corporate name and Internet domain could be established.3
On July 30, 2007, NASD changed its name to FINRA and changed its Internet domain from www.nasd.com to www.finra.org. On September 17, 2007, FINRA submitted proposed rule change SR-FINRA-2007-14 to amend IM-2210-4 to reflect the new corporate identity.
The amendments to IM-2210-4 replace references to NASD with FINRA. Thus, member firms, or persons associated with a member firm, that refer to their FINRA membership on a Web site must provide a hyperlink to www.finra.org, instead of www.nasd.com.4 As discussed in NASD Notice to Members 07-02, firms are not required to refer to their FINRA membership on their Web sites. The hyperlink requirement applies only to the extent that a member firm or a person associated with a member firm chooses to represent on a Web site that the firm is a member of FINRA.
A hyperlink to www.finra.org must be located in close proximity to any reference reasonably designed to draw the public's attention to FINRA membership. Since only one hyperlink to www.finra.org is required, member firms have the flexibility to place the hyperlink in close proximity to any FINRA reference, as long as it is reasonably designed to draw the public's attention to FINRA membership. Firms should note that IM-2210-4 also applies to a Web site relating to a firm's investment banking or securities business that is maintained by or on behalf of any person associated with the firm.5
Use of FINRA-Owned Corporate Names
The amendments to IM-2210-4 also limit the use of any other corporate name owned by FINRA, including NASD, the Trade Reporting and Compliance Engine (TRACE) and the Alternative Display Facility (ADF). Members can neither state nor imply in any communications with the public that FINRA (or any other corporate name or facility owned by FINRA) endorses, indemnifies or guarantees the member's business practices, selling methods, the class or type of securities offered, or any specific security.
Finally, firms should note that the reference to the NASD By-Laws in IM-2210-4 has been updated to refer to the FINRA By-Laws, which were adopted on July 30, 2007.6
1See Securities Exchange Act Release No. 54740 (November 9, 2006); 71 FR 67184 (November 20, 2006); File No. SR-NASD-2006-073.
2See NASD Notice to Members 07-02 (January 2007).
3 FINRA previously announced that it would file a separate rule change to amend IM-2210-4 to reflect its new corporate name. See Securities Exchange Act Release No. 56124 (July 24, 2007); 72 FR 42165 (August 1, 2007); File No. SR-NASD-2007-042 (Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Delay the Implementation of NASD Interpretative Material 2210-4, which Requires Certain Member Firms to Provide a Hyperlink to http://www.nasd.com) (File No. SR-NASD-042).
4See File No. SR-NASD-2007-042.
5See NASD Notice to Members 07-02 (January 2007).
6 Specifically, Article XV, Section 2 of the FINRA By-Laws now states: "No member shall use the name of the Corporation except to the extent that may be permitted by the Rules of the Corporation." The name of the Corporation is Financial Industry Regulatory Authority, Inc. See Securities Exchange Act Release No. 56146 (July 26, 2007); 72 FR 42190 (August 1, 2007); File No. SR-NASD-2007-053 (Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change Relating to the Restated Certificate of Incorporation of National Association of Securities Dealers, Inc.).
ATTACHMENT A
Below is the text of the rule change. New language is underlined; deletions are in brackets.
* * * * *
2210. COMMUNICATIONS WITH THE PUBLIC
* * * * *
IM-2210-4. Limitations on Use of FINRA's [NASD's] Name and Any Other Corporate Name Owned by FINRA
Members may indicate [NASD] FINRA membership in conformity with Article XV, Section 2 of the [NASD] FINRA By-Laws in one or more of the following ways:
* * * * *