FINRA amended provisions of FINRA Rule 2251 ("Processing and Forwarding of Proxy and Other Issuer-Related Materials") regarding reimbursement rates for incurred expenses in processing and forwarding proxy and other issuer-related materials.
The rule requires firms "to transmit proxy materials and other communications to beneficial owners of securities and limits the circumstances in which FINRA member firms may vote proxies without instructions from those beneficial owners." It also sets the "rate reimbursement provisions pursuant to which firms are entitled to receive fees in connection with the rule's forwarding obligations."
The amendments, which are effective immediately, (i) apply the notice and access fees to investment company shareholder report distributions, and (ii) prohibit fees on accounts that only contain shares that the member transferred for free to the account holder.
This rule change conforms to two amendments the SEC approved on the NYSE's rate reimbursement provisions. The notice and access fees provision under FINRA Rule 2251.01(a)(6) is designed to correspond with NYSE Rule 451.90(5). The prohibition on processing fees provision under FINRA 2251.01(a)(7) is designed to correspond with NYSE Rule 451A.
Primary Sources
- Regulatory Notice 22-02: FINRA Amends Rule 2251 regarding Reimbursement Rates for Processing and Forwarding Proxy and Other Issuer-Related Materials
- NYSE Rule 451: Processing and Transmission of Proxy Material
- NYSE Rule 451A: Fee Exclusion for Shares Distributed by Member Organizations without Charge
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