[Federal Register: September 2, 2003 (Volume 68, Number 169)]
[Notices]
[Page 52256-52257]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02se03-147]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-48411; File No. SR-GSCC-2002-04]
Self-Regulatory Organizations; Government Securities Clearing
Corporation; Notice of Filing of Proposed Rule Change To Institute
Informal Hearing Procedures for Fine Disputes
August 26, 2003.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on June 28, 2002, the
Government Securities Clearing Corporation (``GSCC'') filed with the
Securities and Exchange Commission (``Commission'') and on August 19,
2003, amended the proposed rule change described in Items I, II, and
III below, which items have been prepared primarily by GSCC. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested parties.
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\1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
GSCC's current rules provide procedures whereby a member can
dispute any fine through a formal hearing process. GSCC's rules also
permit GSCC to establish procedures for a hearing not otherwise
provided for in its rules. The proposed rule change would allow GSCC to
institute informal hearing procedures for disputed fines.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, GSCC 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. GSCC has prepared summaries, set forth in sections (A),
(B), and (C) below, of the most significant aspects of these
statements.\2\
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\2\ The Commission has modified the text of the summaries
prepared by OCC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
Since 1998, GSCC has had the authority to impose fines in order to
promote greater compliance with its funds settlement debit and clearing
fund deposit deficiency call deadlines.\3\ GSCC Rule 37 contains
procedures whereby a member can dispute any fine assessment through a
formal hearing process. Rule 37 also permits GSCC to establish
procedures for a hearing not otherwise provided for in the rules.\4\
With this proposed rule filing, GSCC seeks authority to specifically
incorporate into its rules informal hearing procedures with respect to
disputed fines.
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\3\ Securities Exchange Act Release No. 39746 (March 12, 1998),
63 FR 13439 (March 19, 1998) [File No. SR-GSCC-97-04].
\4\ Government Securities Clearing Corporation Rule 37, Section
7.
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Pursuant to GSCC's new procedures, when a formal hearing is
requested to dispute a fine, an informal hearing will automatically
take place prior to a formal hearing occurring. Thus, if a member
disputes a fine and asks for a formal hearing in the manner already
specified in the rules, GSCC's management will automatically conduct a
review of the disputed fine. Based on the documentation already
required in the rules and/or a meeting arranged with the member,
management may determine to waive the fine. If management determines to
waive the fine, it must inform the Membership and Risk Management
Committee of the waiver and management's reasons for granting the
waiver. The Committee has the ability to accept or reject management's
determination. If the Committee accepts management's determination, the
fine will be waived. However, if the Committee chooses not to accept
management's determination or if management initially determined not to
waive the fine after conducting its review, the member has the right to
the formal hearing already provided for in Rule 37.
GSCC also seeks to change its rules to reflect that if a fine is
assessed, the member must pay the fine within 30 calendar days after it
receives the fine
[[Page 52257]]
imposition letter unless the member has requested a hearing to dispute
the fine. Currently, GSCC's rules require that fines be paid within 90
days. If a hearing has been requested, the fine is waived until the
dispute is resolved.
GSCC believes that the proposed rule change is consistent with the
requirements of section 17A of the Act \5\ and the rules and
regulations thereunder applicable to GSCC because it will promote the
prompt and accurate clearance and settlement of securities transactions
by clearly setting forth in GSCC's rules its procedures for conducting
a review with respect to disputed fines, which procedures afford
members a fair and less burdensome method for resolving fine disputes
than is currently set forth in the rules.
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\5\ 15 U.S.C. 78q-1.
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(B) Self-Regulatory Organization's Statement on Burden on Competition
GSCC does not believe that the proposed rule change will have any
impact, or impose any burden, on competition.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants or Others
Written comments relating to the proposed rule change have not yet
been solicited or received. Members will be notified of the rule change
filing, and comments will be solicited by an Important Notice. GSCC
will notify the Commission of any written comments received by GSCC.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within thirty-five days of the date of publication of this notice
in the Federal Register or within such longer period (i) as the
Commission may designate up to ninety days of such date if it finds
such longer period to be appropriate and publishes its reasons for so
finding or (ii) as to which the self-regulatory organization consents,
the Commission will:
(A) by order approve such proposed rule change or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
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. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609.
Comments may also be submitted electronically at the following e-mail
address: rule-comments@sec.gov. All comment letters should refer to
File No. SR-GSCC-2002-04. This file number should be included on the
subject line if e-mail is used. To help us process and review comments
more efficiently, comments should be sent in hardcopy or by e-mail but
not by both methods. 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 Section, 450 Fifth Street, NW., Washington, DC 20549. Copies
of such filing also will be available for inspection and copying at the
principal office of GSCC.
All submissions should refer to File No. SR-GSCC-2002-04 and should
be submitted by September 23, 2003.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\6\
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\6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-22232 Filed 8-29-03; 8:45 am]
BILLING CODE 8010-01-P