[Federal Register Volume 83, Number 198 (Friday, October 12, 2018)]
[Notices]
[Pages 51720-51722]
[FR Doc No: 2018-22205]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84376; File No. SR-FINRA-2018-036]

Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Change Relating to Provision of Test Result Information to
Candidates Who Pass a FINRA Qualification Examination

October 5, 2018.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on September 27, 2018, Financial Industry Regulatory Authority, Inc.
(``FINRA'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission'') the proposed rule change as described in Items I,
II, and III below, which Items have been prepared by FINRA. FINRA has
designated the proposed rule change as ``constituting a stated policy,
practice, or interpretation with respect to the meaning,
administration, or enforcement of an existing rule'' under Section
19(b)(3)(A)(i) of the Act \3\ and Rule 19b-4(f)(1) thereunder,\4\ which
renders the proposal effective upon receipt of this filing by the
Commission. 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\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(i).
    \4\ 17 CFR 240.19b-4(f)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    FINRA is proposing revisions relating to test results information
on the content outlines of certain FINRA representative- and principal-
level qualification examinations. FINRA is not proposing any textual
changes to the By-Laws, Schedules to the By-Laws or Rules of FINRA.
    The text of the proposed rule change [sic] is available on FINRA's
website at http://www.finra.org, at the principal office of FINRA 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, FINRA 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 these statements may be examined at the places specified in
Item IV below. FINRA has prepared summaries, set forth in sections A,
B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Each FINRA representative- and principal-level qualification
examination has a minimum score threshold that is necessary for passing
the examination (also referred to as a ``passing score''). For
instance, the passing score for the current General Securities
Representative (Series 7) examination is 72. FINRA determines the
passing score for each examination based on a process known as standard
setting, which assesses a number of factors, including industry trends,
historical examination performance and evaluations of content
difficulty by a committee of industry professionals who have passed the
related examination. The passing score for an examination reflects the
minimum level of knowledge necessary to perform the functions for which
a candidate is registering.
    A candidate's numerical score on an examination is necessary to
determine whether the candidate has satisfied the minimum score
threshold for passing the examination. In addition, if a candidate
fails to meet the minimum score threshold for passing an examination,
the candidate's numerical score is relevant in evaluating the extent to
which the candidate needs additional study time and training and
whether the candidate should retake the examination.\5\
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    \5\ A candidate who fails an examination is eligible to retake
that examination after 30 calendar days. However, if a candidate
fails an examination three or more times in succession within a two-
year period, the candidate is prohibited from retaking that
examination until 180 calendar days from the date of the candidate's
last attempt to pass it.
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    Currently, candidates who take a FINRA qualification examination
receive a test results report of their

performance at the end of their test session. The test results report
will indicate a pass or fail status. Further, the report will indicate
a total score and a score profile for each major section of the content
outline. Several FINRA representative- and principal-level examination
content outlines currently include information relating to the test
results.\6\ This information appears in different places in the content
outlines. For instance, in the Series 99 examination outline, the
information appears under the ``Candidates' Test Results'' heading;
whereas, in the Series 22 examination outline, the information is under
the ``Introduction'' heading.
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    \6\ These representative-level examinations are the current
Investment Company and Variable Contracts Products Representative
(Series 6), General Securities Representative (Series 7), Order
Processing Assistant Representative (Series 11), United Kingdom
Securities Representative (Series 17), Direct Participation Programs
Representative (Series 22), Canadian Securities Representative
(Series 37 and Series 38), Options Representative (Series 42),
Securities Trader (Series 57), Corporate Securities Representative
(Series 62), Government Securities Representative (Series 72),
Investment Banking Representative (Series 79), Private Securities
Offerings Representative (Series 82) and Operations Professional
(Series 99) examinations. These examinations are available to
candidates who open an examination window in the Central
Registration Depository (``CRD[supreg]'') system prior to October 1,
2018. The revised Series 6, 7, 22, 57, 79, 82 and 99 examinations,
which will be available to candidates who open an examination window
on or after October 1, 2018, do not include information relating to
examination results. In addition, the current Series 11, 17, 37, 38,
42, 62 and 72 will not be available to candidates who open an
examination window on or after October 1, 2018.
    The principal-level examinations are the Registered Options
Principal (Series 4), General Securities Sales Supervisor (Series 9
and Series 10), Supervisory Analyst (Series 16), General Securities
Principal Sales Supervisor Module (Series 23), General Securities
Principal (Series 24), Investment Company and Variable Contracts
Products Principal (Series 26), Financial and Operations Principal
(Series 27), Introducing Broker-Dealer Financial and Operations
Principal (Series 28) and Direct Participation Programs Principal
(Series 39) examinations.
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    Effective October 1, 2018, FINRA is restructuring its
representative-level qualification examination program.\7\ In
conjunction with the restructuring, starting on October 1, 2018, FINRA
will no longer provide a total score and a score profile for each major
section of the content outline to candidates who pass a qualification
examination. FINRA believes that providing such information is
unnecessary once a candidate has met the minimum score threshold for
passing an examination.\8\ However, FINRA will continue to provide a
total score and a score profile for each major section of the content
outline to a candidate who fails an examination. As noted above, such
information is relevant in evaluating whether the candidate needs
additional study time and training and whether the candidate should
retake the examination.
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    \7\ See Regulatory Notice 17-30 (October 2017).
    \8\ Unlike FINRA qualification examinations, some examinations,
such as the SAT, do not have a minimum score threshold for passing
the examination (i.e., they do not have a passing score). For such
an examination, an individual's total score and breakdown of the
score is necessary in evaluating the individual's performance
compared to other individuals who took the examination.
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    Consistent with this administrative change, FINRA is reformatting
the content outlines for the current Series 6, 7, 11, 17, 22, 37, 38,
42, 57, 62, 72, 79, 82 and 99 examinations as well as for the Series 4,
9, 10, 16, 23, 24, 26, 27, 28 and 39 examinations to remove references
to information relating to test results. Instead, such information will
be available on a dedicated location on FINRA's website.
Availability of Content Outlines
    The revised content outlines will be available on FINRA's website
on the date of this filing.
    FINRA is filing the proposed rule change for immediate
effectiveness. The implementation date will be October 1, 2018, to
coincide with the implementation of the restructured representative-
level examination program.
2. Statutory Basis
    FINRA believes that the proposed changes to the examination content
outlines are consistent with the provisions of Section 15A(b)(6) of the
Act,\9\ 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, and Section 15A(g)(3) of the
Act,\10\ which authorizes FINRA to prescribe standards of training,
experience, and competence for persons associated with FINRA members.
FINRA is proposing an administrative change relating to test results
information on the content outlines, without compromising the
qualification standards. In addition, the proposed rule change
streamlines the content outlines by moving test results information,
which currently appears in different places on the outlines, to a
dedicated location on the FINRA website.
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    \9\ 15 U.S.C. 78o-3(b)(6).
    \10\ 15 U.S.C. 78o-3(g)(3).
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B. Self-Regulatory Organization's 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.
Economic Impact Assessment
Economic Baseline
    Currently, candidates who take a FINRA qualification examination
receive a total score and score break down regardless of whether they
pass or fail their examination. These examinations are designed to
demonstrate basic proficiency around a subject matter.
    Anecdotally, FINRA is aware that candidates approach the test with
different objectives; specifically, some candidates seek to achieve the
highest possible score while others seek only to ensure that they
achieve a score sufficient to pass the examination.
Economic Impact
    Beginning on October 1, 2018, FINRA will no longer provide score
information to candidates who pass a qualification examination. A
candidate will receive score information only if the candidate did not
pass the examination. In conjunction with this change, the proposed
rule change revises the impacted content outlines to remove references
to information relating to score information.
Impact on Individuals
    The absence of score information for candidates who pass a
qualification examination neither imposes additional costs on, nor
provides additional benefits to, non-passing candidates. The continued
availability of the failing scores and score profiles will continue to
benefit candidates who want to use this information to decide whether
to retake the examination and if so, what areas they should focus on
when studying for future examinations.
    For passing candidates, the lack of score information affects the
information set available to them, and thus may impact them in
different ways. For example, candidates may use the information
provided today in a variety of contexts related to their employment,
including negotiating compensation, seeking future employment or
demonstrating areas of particular strength. However, FINRA knows of no
established evidence that these scores reliably predict future outcomes
related to employment success.\11\ Further,

FINRA qualification examinations are not designed to provide
information beyond demonstration of basic proficiency. For these
reasons, comparisons of test scores across candidates may not be
appropriate.\12\
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    \11\ In Do Investors Have Valuable Information About Brokers?,
Qureshi and Sokobin demonstrate that examination scores are not
informative for predicting future customer harm when used in
conjunction with other relevant public data (available at: http://www.finra.org/industry/chief-economist).
    \12\ The Standard for Educational and Psychological Testing
published by the American Education Research Association, American
Psychological Association, and National Council on Measurement in
Education have established that ``[i]f validity for some common or
likely interpretation for a given use has not been evaluated, or if
such an interpretation is inconsistent with available evidence, that
fact should be made clear and potential users should be strongly
cautioned about making unsupported interpretations.''
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    Nevertheless, to the extent that test scores are used by
individuals and others today, restricting the information may impose
certain costs. For individuals, these costs can vary from time and
effort to differentiate themselves, to direct monetary costs if a test
score would have improved their compensation or position. Regardless of
its predictive ability, where parties today rely on the details of
passing scores to make decisions and would make a different judgment in
the absence of such information, the change may result in an economic
transfer away from high-scoring individuals towards others.
Impact on Other Users of the Information
    The economic impact to others is fundamentally related to the
extent to which candidates share passing score information with current
or prospective employers and the reliability of such scores as a signal
in the contexts for which they are being used.
    In situations where passing scores are misleading and cause users
to make inefficient or ineffective decisions, the elimination of this
information may lead to benefits through better decision making. In
situations where passing scores are not misleading but are
uninformative, they add noise to the decision-making process. However,
noisy information should not cause consistent bias in the aggregate.
Finally, in situations where passing scores are viewed as providing
valuable information in decision making, the elimination of this
information may result in the need for an alternative process and, in
turn, result in additional costs.

C. Self-Regulatory Organization's 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

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \13\ and paragraph (f)(1) of Rule 19b-4
thereunder.\14\ At any time within 60 days of the filing of the
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 to determine whether the proposed rule should be approved
or disapproved.
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(1).
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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

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include
File Number SR-FINRA-2018-036 on the subject line.

Paper Comments

     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-FINRA-2018-036. 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 (http://www.sec.gov/rules/sro.shtml).
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 a.m. and 3
p.m. Copies of such filing also will be available for inspection and
copying at the principal office of FINRA. All comments received will be
posted without change. Persons submitting comments are cautioned that
we do not redact or edit personal identifying information from comment
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File Number SR-
FINRA-2018-036 and should be submitted on or before November 2, 2018.
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    \15\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-22205 Filed 10-11-18; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 77, Number 122 (Monday, June 25, 2012)]
[Notices]
[Pages 37956-37957]
[FR Doc No: 2012-15395]

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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

[Docket No. NHTSA-2012-0075; Notice 1]

BMW of North America, LLC, a Subsidiary of BMW AG; Receipt of
Petition for Decision of Inconsequential Noncompliance

AGENCY: National Highway Traffic Safety Administration, DOT.

ACTION: Receipt of Petition.

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SUMMARY: BMW of North America, LLC,\1\ a subsidiary of BMW AG,\2\ has
determined that certain model year 2012 BMW X6M SAV multipurpose
passenger vehicles (MPV) manufactured between April 1, 2011 and March
23, 2012, do not fully comply with paragraph S4.3(b) of Federal Motor
Vehicle Safety Standard (FMVSS) No. 110, Tire selection and rims and
motor home/recreation vehicle trailer load carrying capacity
information for motor vehicles with a GVWR of 4,536 kilograms (10,000
pounds) or less. BMW has filed an appropriate report dated April 4,
2012, pursuant to 49 CFR part 573, Defect and Noncompliance
Responsibility and Reports.
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    \1\ BMW of North America, LLC, is a U.S. company that
manufacturers and imports motor vehicles.
    \2\ BMW AG, is a German company that manufactures motor
vehicles.
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    Pursuant to 49 U.S.C. 30118(d) and 30120(h) (see implementing rule
at 49 CFR part 556), BMW submitted a petition for an exemption from the
notification and remedy requirements of 49 U.S.C. Chapter 301 on the
basis that this noncompliance is inconsequential to motor vehicle
safety.
    This notice of receipt of BMW's petition is published under 49
U.S.C. 30118 and 30120 and does not represent any agency decision or
other exercise of judgment concerning the merits of the petition.
    Vehicles involved: Affected are approximately 364 model year 2012
BMW X6M SAV MPVs manufactured between April 1, 2011 and March 23, 2012.
    NHTSA notes that the statutory provisions (49 U.S.C. 30118(d) and
30120(h)) that permit manufacturers to file petitions for a
determination of inconsequentiality allow NHTSA to exempt manufacturers
only from the duties found in sections 30118 and 30120, respectively,
to notify owners, purchasers, and dealers of a defect or noncompliance
and to remedy the defect or noncompliance. Therefore, these provisions
only apply to the subject 364 \3\ vehicles that BMW no longer
controlled at the time it determined that the noncompliance existed.
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    \3\ BMW's petition, which was filed under 49 CFR part 556,
requests an agency decision to exempt BMW as a vehicle manufacturer
from the notification and recall responsibilities of 49 CFR part 573
for the 364 affected vehicles. However, a decision on this petition
will not relieve vehicle distributors and dealers of the
prohibitions on the sale, offer for sale, introduction or delivery
for introduction into interstate commerce of the noncompliant
vehicles under their control after BMW notified them that the
subject noncompliance existed.
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    Noncompliance: BMW explains that the noncompliance is that the tire

placard on the affected vehicles incorrectly identifies the rear
designated seating capacity as ``2'' when in fact it should be ``3,''
and the total designated seating capacity as ``4'' when in fact it
should be ``5.''
    Rule text: Paragraph S4.3(b) of FMVSS No. 110 requires in pertinent
part:

    S4.3(b) Placard. Each vehicle, except for a trailer or
incomplete vehicle, shall show the information specified in S4.3(a)
through (g), and may show, at the manufacturer's option, the
information specified in S4.3(h) and (i), on a placard permanently
affixed to the driver's side B-pillar. * * *
    (b) Designated seated capacity (expressed in terms of total
number of occupants and number of occupants for each front and rear
seat location); * * *

Summary of BMW's Analysis and Arguments

    BMW states that while the tire placard incorrectly identifies the
vehicle seating capacity, this noncompliance is inconsequential to
motor vehicle safety for the following reasons:
    1. It would become clear to a vehicle owner that the rear seat of
the affected vehicles contains three sets of seat belts, and provides
adequate space for three people to occupy the rear seat and that the
vehicle in fact does accommodate five passengers not four as labeled.
    2. The tire pressure value on the tire placard is correct. In fact,
the recommended tire inflation pressure for both the five passenger and
the four passenger vehicles is the same. Therefore, there is no risk of
under-inflation.
    3. The vehicle capacity weight listed on the tire placard is
correct, and is the same for X6M model vehicles built for four or five
occupants. Therefore, there is no risk of overloading.
    4. The vehicle's Monroney label contains a listing of all options
that have been equipped on the affected vehicles. The option regarding
the rear seat for three occupants is noted on the Monroney label;
therefore, an owner would have been notified at time of purchase of the
vehicle that the rear seat is equipped to accommodate three occupants.
    5. The vehicle Owner's Manual contains information pertaining to
the vehicle's tires, tire pressure, and the vehicle capacity weight.
Therefore, if owners check the Owner's Manual, correct information is
available for their use.
    6. BMW also offers Roadside Assistance\TM\ and BMW Assist\TM\ which
are available 24 hours/day with representatives that are available to
provide drivers with all of the available tires sizes and
specifications for the affected vehicles.
    7. BMW has received no customer complaints and are unaware of any
accidents or injuries regarding this noncompliance of the affected
vehicles.
    BMW has additionally informed NHTSA that it has corrected future
production and that all other required markings are present and
correct.
    BMW also expressed its belief that NHTSA has previously granted
similar petitions.
    In summation, BMW believes that the described noncompliance of its
tire placards regarding seating capacity is inconsequential to motor
vehicle safety, and that its petition, to exempt from providing recall
notification of noncompliance as required by 49 U.S.C. 30118 and
remedying the recall noncompliance as required by 49 U.S.C. 30120
should be granted.
    Comments: Interested persons are invited to submit written data,
views, and arguments on this petition. Comments must refer to the
docket and notice number cited at the beginning of this notice and be
submitted by any of the following methods:
    a. By mail addressed to: U.S. Department of Transportation, Docket
Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue SE., Washington, DC 20590.
    b. By hand delivery to: U.S. Department of Transportation, Docket
Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue SE., Washington, DC 20590. The Docket Section is open on
weekdays from 10 a.m. to 5 p.m. except Federal Holidays.
    c. Electronically: By logging onto the Federal Docket Management
System (FDMS) Web site at http://www.regulations.gov/. Follow the
online instructions for submitting comments. Comments may also be faxed
to 1-202-493-2251.
    Comments must be written in the English language, and be no greater
than 15 pages in length, although there is no limit to the length of
necessary attachments to the comments. If comments are submitted in
hard copy form, please ensure that two copies are provided. If you wish
to receive confirmation that your comments were received, please
enclose a stamped, self-addressed postcard with the comments. Note that
all comments received will be posted without change to http://www.regulations.gov, including any personal information provided.
    Documents submitted to a docket may be viewed by anyone at the
address and times given above. The documents may also be viewed on the
Internet at http://www.regulations.gov by following the online
instructions for accessing the dockets. DOT's complete Privacy Act
Statement is available for review in the Federal Register published on
April 11, 2000, (65 FR 19477-78).
    The petition, supporting materials, and all comments received
before the close of business on the closing date indicated below will
be filed and will be considered. All comments and supporting materials
received after the closing date will also be filed and will be
considered to the extent possible. When the petition is granted or
denied, notice of the decision will be published in the Federal
Register pursuant to the authority indicated below.

DATES: Comment Closing Date: July 25, 2012.

    Authority:  (49 U.S.C. 30118, 30120: Delegations of authority at
CFR 1.50 and 501.8)

    Issued on: June 18, 2012.
Claude H. Harris,
Director, Office of Vehicle Safety Compliance.
[FR Doc. 2012-15395 Filed 6-22-12; 8:45 am]
BILLING CODE 4910-59-P