As with so many items on the  Securities and Exchange Commission's ("SEC's") table, this one looks fairly innocuous:

Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Rename the OTC Bulletin Board in the FINRA Rulebook [Release No. 34-64397; File No. SR-FINRA-2011-019] 

Under the "Purpose" section of the proposal at pages 2-4, we find the following commentary:

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

1. Purpose

As initially announced by FINRA in September 2009, FINRA currently is seeking to divest itself of the OTCBB trademark, related domain name, and all informational content from the website that is not otherwise required to be retained by FINRA for regulatory purposes ("OTCBB assets"). FINRA reached agreement with an entity for the sale of the OTCBB assets in the third quarter of 2010. 4 In connection with this effort, and to remove certain current impediments to the completion of such a transaction, FINRA is filing the proposed rule change to rename the OTC Bulletin Board ("OTCBB") as the Non-NMS Quotation Service ("NNQS").

4 See Rodman & Renshaw Capital Group, Inc., Press Release September 14, 2010 ("Rodman and FINRA Reach Preliminary Agreement on Terms for Rodman Acquisition of OTCBB Assets").

OTCBB assets do not include the technology comprising the interdealer quotation system operated by FINRA, which is currently known as "OTCBB." Thus, the renaming of OTCBB as NNQS, as proposed here, enables FINRA to proceed with the sale of the OTCBB assets by removing references to OTCBB from the current FINRA Rulebook, while continuing to permit FINRA to operate its interdealer quotation system under the new name without change or interruption to the availability of this service by FINRA. The FINRA Rule 6500 Series will govern the operation of the NNQS as it currently does for OTCBB, and the functionality of the NNQS will be identical to that of the current OTCBB.

While FINRA has filed the proposed rule change for immediate effectiveness, the renaming, transitioning of the related domain name, and consummation of the sale transaction will be implemented at a later date to be announced by FINRA (the "implementation date"). . .

Not So Fast!

Okay, fair enough. FINRA wants to sell this OTCBB asset to Rodman & Renshaw. The self-regulatory organization ("SRO") is also in a bit of a rush and wants the SEC to expedite the transaction. At first blush, that seems non-controversial.  However, there are a number of folks who find the proposal to be highly controversial.  In commenting on FINRA's request, Byron Roth, CEO, Roth Capital Partners, LLC (May 31, 2011) writes, in part:

Although changing the name of the OTCBB to the NNQS may appear to be non‐controversial on its face, the underlying purpose of the name change impacts competition and affects investor protection. FINRA's stated purpose for changing the name of the OTCBB is to enable FINRA to sell the OTCBB brand name and the website to Rodman & Renshaw Capital Group, Inc., the owner of Rodman & Renshaw LLC, a broker‐dealer registered with the SEC and a member of FINRA (collectively, "Rodman"). Rodman also has recently merged with Hudson Holding Corporation, the owner of Hudson Securities, LLC, a very substantial OTC market maker in OTC securities.

The OTCBB brand name is closely associated with FINRA and is recognized as a highly regulated marketplace for the securities of small companies. Roth believes that permitting Rodman, a member of FINRA, to acquire and use the highly‐regarded and well known OTCBB brand name and the website will bestow a significant competitive advantage upon Rodman to the detriment of Rodman's competitors, including Roth and other investment banking firms and market makers. . .

[I]t is not hard to imagine that the very reason Rodman wants to buy the OTCBB brand name is because the name has a substantial amount of good will due to its longstanding association with FINRA. If Rodman were permitted to use the OTCBB brand name and website, it is a virtual certainty that some investors will not understand that the securities offered by Rodman have not been approved by FINRA nor are they subject to any more regulation than the securities offered by any other broker‐dealer. . .

A similar refrain is heard from Michael Trocchio, Bingham McCutchen, on behalf of OTC Markets Group Inc. (May 31, 2011), who writes at page 4 of his letter:

If Rodman ever uses the OTCBB Assets, many people would naturally associate the services to be offered by Rodman with FINRA and its strict regulatory standards. For example, this could lead visitors to the website to believe that companies mentioned there, with which Rodman works in its investment banking and market making capacities, are affiliated with or approved by a regulator. This would increase confusion and could potentially, unwittingly, aid fraudulent or other undesirable market practices. If the Proposal is adopted and the OTCBB Assets are sold to Rodman, a private entity would suddenly be offering services, possibly including a quotation system and/or other securities services, using the OTCBB Assets, which would surely cause confusion among the many investors who would continue to mistakenly believe that the services performed and/or information offered are being offered by FINRA.

A Parting Shot

One last point - a parting shot if you will - y'all remember FINRA's advertising campaign in which it claimed that it was a "not for profit resource with nothing for sale?"  Umm, am I missing something here?  Didn't I raise this issue in 2008? If FINRA, a self-regulatory organization, has nothing for sale, then what is Rodman & Renshaw buying?