On December 1, 2009, the Securities and Exchange Commission approved the Financial Industry Regulatory Authority’s proposed rule change to adopt a new set of rules governing clearly erroneous transactions in the consolidated FINRA rulebook. The new FINRA Rule 11890 Series will replace National Association of Securities Dealers Rule 11890, Interpretive Material 11890-1 and Interpretive Material 11890-2. FINRA has amended these rules as part of a market-wide effort among multiple self-regulatory organizations to provide transparency and finality with respect to clearly erroneous executions. Among other things, the new rule series includes a new general rule defining “clearly erroneous” transactions, separate provisions for the determination of clearly erroneous transactions (depending upon whether the transaction involves an exchange-listed security or an over-the-counter equity security), procedures for appealing FINRA clearly erroneous determinations and minimum numerical criteria necessary for a transaction to qualify as clearly erroneous. The effective date of the new rule series is February 15.
Click here to read FINRA Regulatory Notice 10-04.