[Federal Register: November 5, 2007 (Volume 72, Number 213)]
[Notices]
[Page 62500-62502]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05no07-83]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-56707; File No. SR-Amex-2007-111]
Self-Regulatory Organizations; American Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Enable Settlements of Disciplinary Matters To Be Considered for
Approval or Rejection by Exchange Hearing Officers Without the Need To
Convene a Formal Hearing
October 26, 2007.
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 October 19, 2007, the American Stock Exchange LLC (``Amex'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been substantially prepared by Amex. The
Exchange filed the proposal as a ``non-controversial'' rule change
pursuant to section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6) 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)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
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[[Page 62501]]
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to adopt changes to sections 1 and 2 of
Article V of the Exchange's Constitution; Rule 345 of the Exchange's
``Office Rules''; and Rules 2(a), 2(b) and 8 of the Exchange's ``Rules
of Procedure in Disciplinary Matters'' in order to enable settlements
of disciplinary matters to be considered for approval or rejection by
Exchange hearing officers without the need to convene a formal hearing.
The text of the proposed rule change is available on the Amex's Web
site at http://www.amex.com, the Office of the Secretary, the Amex 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, Amex 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. Amex 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
The Exchange is proposing amendments to sections 1 and 2 of Article
V of the Exchange's Constitution; Rule 345 of the Exchange's Office
Rules; and Rules 2(a), 2(b) and 8 of the Exchange's Rules of Procedure
in Disciplinary Matters in order to streamline the handling of
settlements of disciplinary matters by permitting such matters to be
addressed by a single Exchange hearing officer, who shall either
approve or reject the settlement, without being required to convene a
formal hearing.
Under current Amex rules, settlements of disciplinary proceedings
are handled as follows: Should a member, member organization, approved
person, or a registered or non-registered employee or prospective
employee of a member or member organization (each a ``respondent''), on
one side, and enforcement staff of the Exchange, on the other side,
enter into a stipulation of facts and consent to a specified penalty (a
``Stipulation''), a formal hearing before an Exchange Disciplinary
Panel (``Panel''), which may act solely through its Chair, must be
convened to consider the Stipulation. Prior to that hearing, the Chair
is provided with an enforcement staff memorandum outlining the
Stipulation and analyzing how the agreed upon sanctions in the
Stipulation are consistent with the Exchange Sanctions Guidelines and
relevant precedent.\5\ The subsequent hearings generally are conducted
by telephone and consist of the respondent's counsel and enforcement
staff affirming support for the Stipulation. After considering the
presentation, the Chair issues a written decision either (i) approving
the Stipulation, (ii) rejecting the Stipulation, if the Chair considers
the penalty too lenient, or (iii) imposing a lesser penalty than that
contained in the Stipulation, if the Chair considers the agreed upon
penalty too severe.
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\5\ The respondent's counsel (or the respondent, in the event he
is not represented) is also concurrently provided with a copy of the
memorandum.
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The above process has proven more time consuming than the Exchange
believes necessary. It typically takes several months to schedule the
hearing as a result of various scheduling conflicts among the parties
involved, yet the hearing itself only takes a few minutes and is more
formal than substantive, given the negotiated settlement and submission
of the detailed enforcement staff memorandum in advance of the hearing.
Therefore, in order to streamline the process, the Exchange is
proposing to modify its rules to allow a Stipulation to be accepted or
rejected by a hearing officer without conducting a formal hearing.
Further, the Exchange is also proposing that the Chair's power to
impose a lesser penalty than that contained in a Stipulation be
eliminated as unnecessary, in view of the fact that the Amex
Adjudicatory Counsel, in any event, still retains the right to impose a
lower sanction if it exercises its right to call the Chair's acceptance
or rejection of the Stipulation for review.
In summary, the new proposed Stipulation consideration procedure
will differ from current practice in only two substantive respects: (i)
No formal hearing will now take place before the Chair, as a single
hearing officer can consider the Stipulation without a formal hearing;
and (ii) if a hearing officer deems a penalty in a Stipulation to be
too severe, he will now reject the Stipulation, rather than propose a
lesser penalty. The Exchange anticipates that these changes will
provide a more efficient and expedient process for resolution of
Exchange disciplinary matters, without compromising the quality of the
process.
In addition, Amex proposes certain non-substantive ``housekeeping''
changes, including elimination of repetitive or unnecessary phrasing;
creation of certain defined terms for ease of reference (i.e.,
``Stipulation''); and addition of rule cross-references.
2. Statutory Basis
The proposed rule change is consistent with sections 6(b)(6),
6(b)(7) and 6(d) of the Act \6\ in that it is designed to ensure that
members and persons associated with members of the Exchange shall be
appropriately disciplined for violation of the securities laws, the
rules or regulations thereunder, or the rules of the Exchange; provide
a fair procedure for imposition of such discipline; and ensure that a
record is kept of such proceedings.
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\6\ 15 U.S.C. 78f(b)(6), 78f(b)(7), and 78f(d).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The proposed rule change does not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (A)
Significantly affect the protection of investors or the public
interest; (B) impose any significant burden on competition; and (C) by
its terms, become operative for 30 days from the date on which it was
filed, or such shorter time as the Commission may designate, if
consistent with the protection of investors and the public interest, it
has become effective pursuant to Section 19(b)(3)(A) of the Act \7\ and
Rule 19b-4(f)(6) thereunder.\8\
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\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires that a self-regulatory organization submit to the
Commission written notice of its intent to file the proposed rule
change, along with a brief description and text of the proposed rule
change, at least five business days prior to the date of filing of
the proposed rule change, or such shorter time as designated by the
Commission. The Commission notes that Amex has satisfied the five-
day pre-filing notice requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) normally may
not become operative prior to 30 days after
[[Page 62502]]
the date of filing. However, Rule 19b-4(f)(6)(iii) permits the
Commission to designate a shorter time if such action is consistent
with the protection of investors and the public interest. The Exchange
has requested that the Commission waive the 30-day operative delay.
The Commission believes that the proposed amendments should allow
the Exchange to settle disciplinary matters more efficiently, without
affecting the rights of respondents in any significant manner. In
addition, the Exchange's non-substantive changes should help make Amex
rules clearer and easier for readers to understand. The Commission
believes that for these reasons, waiving the 30-day operative delay is
consistent with the protection of investors and the public interest.
Therefore, the Commission designates the proposed rule change to be
operative upon filing with the Commission.\9\
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\9\ For purposes only of waiving the 30-day operative delay, the
Commission has considered the proposed rule's impact on efficiency,
competition, and capital formation. See 15 U.S.C. 78c(f).
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At any time within 60 days of the filing of such proposed rule
change, the Commission may summarily abrogate 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.
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 e-mail to rule-comments@sec.gov. Please include
File Number SR-Amex-2007-111 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-Amex-2007-111. This file
number should be included on the subject line if e-mail 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 Web site (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 inspection and
copying 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 Amex. All comments
received will be posted without change; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-Amex-2007-111 and should be
submitted on or before November 26, 2007.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-21632 Filed 11-2-07; 8:45 am]
BILLING CODE 8011-01-P