[Federal Register: March 13, 2003 (Volume 68, Number 49)]
[Notices]
[Page 12131]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13mr03-138]
[[Page 12131]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-47458; File No. SR-NYSE-2002-50]
Self-Regulatory Organizations; Order Approving Proposed Rule
Change, as Amended by Amendment No. 1 Thereto, by the New York Stock
Exchange, Inc. To Adopt Amendments to Exchange Rules 450
(``Restrictions on Giving of Proxies''), 451 (``Transmission of Proxy
Material''), 452 (``Giving Proxies by Member Organizations''), and 465
(``Transmission of Interim Reports and Other Material'')
March 6, 2003.
On October 16, 2002, the New York Stock Exchange, Inc. (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to amend NYSE Rule 450 (``Restriction on Giving of
Proxies''), NYSE Rule 451 (``Transmission of Proxy Material''), NYSE
Rule 452 (``Giving Proxies by Member Organizations''), and NYSE Rule
465 (``Transmission of Interim Reports and Other Material'') to allow
authorized state-registered investment advisers to receive and vote
proxy materials on behalf of beneficial owners. On December 19, 2002,
the NYSE amended the proposal to define the term ``state'' in proposed
NYSE Rule 451 by reference to the Investment Advisers Act of 1940
(``Advisers Act''),\3\ instead of the Act.\4\
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 80b.
\4\ See letter from Darla Stuckey, Corporate Secretary, NYSE, to
Nancy Sanow, Assistant Director, Division of Market Regulation,
Commission, dated December 19, 2002 (``Amendment No. 1'').
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The Commission published the proposed rule change, as amended, for
comment in the Federal Register on January 28, 2003.\5\ The Commission
received one comment letter relating to the proposal. \6\ This order
approves the amended proposal.
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\5\ See Securities Exchange Act Release No. 47215 (January 17,
2003), 68 FR 4263.
\6\ See letter from Christine A. Bruenn, NASSA President and
Maine Securities Administrator, North American Securities
Administrators Association, Inc. (``NASAA''), to Jonathan G. Katz,
Secretary, Commission, dated February 18, 2003 (``NASAA Comment
Letter''). In its comment letter, the NASAA expressed support for
the proposal. See also infra note 11.
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Currently, NYSE Rules 450, 451, 452, and 465 provide beneficial
owners the ability to authorize investment advisors to receive proxy
material, other related issuer material and to vote proxies on their
behalf, if such investment advisers are registered under the Advisers
Act, exercise investment discretion pursuant to an advisory contract,
and have been designated to the member organization in writing by the
beneficial owner.
Title III of the National Securities Markets Improvement Act of
1996 (the ``Coordination Act'') reallocated regulatory responsibilities
for investment advisers between the Commission and the states.\7\
Generally, the Coordination Act provides for Commission regulation of
advisers with $25 million or more of assets under management, and state
regulation of advisers with less than $25 million of assets under
management. As a result, the Exchange believes that the number of
advisers eligible to be registered with the Commission has been reduced
by approximately two-thirds. Consequently, because NYSE's current rules
require the authorized investment adviser to be registered under the
Advisers Act, beneficial owners cannot designate a large number of
investment advisers (those with less than $25 million under management)
to exercise investment discretion pursuant to an advisory contract, or
to receive and vote proxy materials on their behalf. The proposed
amendments would allow such authorization to be extended to advisers
registered under state law.
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\7\ 62 FR 28112 (May 22, 1997); Release No. IA-1633, File No.
S7-31-96.
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The Commission finds that the proposed rule change, as amended, is
consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities exchange \8\
and, in particular, the requirements of section 6 of the Act.\9\ The
Commission finds that the proposed rule change, as amended, is
consistent with section 6(b)(5) of the Act,\10\ which requires, among
other things, that the rules of an exchange be designed to promote just
and equitable principles of trade and, in general, to protect investors
and the public interest. The Commission believes that amending NYSE
Rules 450, 451, 452, and 465 to allow authorized state-registered
advisers to receive and vote proxy materials on behalf of the
beneficial owner, would allow for the reasonable expectation that all
registered advisers, state and federal, subject to due authorization
and regulation, be permitted to receive and vote proxy materials on
their behalf. The Commission also believes that this change recognizes,
and is consistent with, the regulatory scheme set up for the
registration of investment advisors under state and federal law
pursuant to the Coordination Act.\11\
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\8\ In approving this proposed rule change, the Commission notes
that it has considered the proposed rule's impact on efficiency,
competition, and capital formation. 15 U.S.C. 78c(f).
\9\ 15 U.S.C. 78f.
\10\ 15 U.S.C. 78f(b)(5).
\11\ See NASAA Comment Letter, supra note 6. In its comment
letter, the NASAA stated that while federal and state-registered
advisers are distinguished based on their levels of assets under
management, both federal and state-registered advisers generally
perform similar functions. According to the NASAA, while not all
clients may want their adviser to vote on their behalf, NASAA
believes this option should be available to all investors.
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NYSE's rules will continue to require that such investment advisers
are exercising investment discretion on behalf of the beneficial owner
pursuant to an advisory contract, and have been designated to the
member organization in writing by the beneficial owner. These
requirements should help to ensure that any state registered adviser is
acting on behalf of the beneficial owner.
It is therefore Ordered, pursuant to section 19(b)(2) of the
Act,\12\ that the proposed rule change (SR-NYSE-2002-50), as amended,
is approved.
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\12\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30'3(a)(12).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-6075 Filed 3-12-03; 8:45 am]
BILLING CODE 8010-01-P