Central Registration Depository Reporting of ARS Settlements

SIFMA provides comments to the Financial Industry Regulatory Authority (FINRA) on central registration depository reporting of auction rate security (ARS) settlements, Regulatory Notice 09-12. SIFMA requests that the FINRA reconsider and withdraw the new reporting requirements set forth in the Notice. The Notice requires that global settlements entered into between regulatory agencies and member firms regarding auction rate securities must be reported as individual settlements on Forms U-4 and U-5 or pursuant to NYSE Rule 351 NASD Rule 3070 provided that the customer who participated in the global settlement had previously made a reportable complaint against a registered representative or a claim for damages against an individual or a member firm. RN 09-12 also requires that in connection with ARS “settlements,” regulatory filings must report the par amount paid for the ARS as the “settlement” amount, and may not reflect the value of the ARS, even though the firms received the ARS back as part of the transaction.