[Federal Register: February 3, 2003 (Volume 68, Number 22)]
[Notices]
[Page 5322-5323]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03fe03-85]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-47253; File No. SR-NYSE-2001-27]
Self-Regulatory Organizations; Notice of Filing of a Proposed
Rule Change and Amendment No. 1 Thereto by the New York Stock Exchange,
Inc. Relating to Amendments to Section 804 of the Listed Company Manual
and Rule 499 of the Exchange
January 24, 2003.
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 August 17, 2001, the New York Stock Exchange, Inc. (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the NYSE. On January
22, 2003, the NYSE filed Amendment No. 1 to the proposed rule change
with the Commission.\3\ The Commission is publishing this notice to
solicit comments on the proposed rule change, as amended, from
interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See letter from Darla Stuckey, Corporate Secretary, NYSE, to
Nancy Sanow, Assistant Director, Division of Market Regulation,
Commission, dated January 17, 2003 (``Amendment No. 1''). In
Amendment No. 1, the Exchange replaced its original proposal in its
entirety. In part, the Exchange clarified its rotation system with
respect to the industry directors voting on a particular matter,
clarified the basis for a decision made by the Committee for Review,
specified the quorum requirements for the Committee for Review, and
made conforming changes to the Exchange's rule text.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The NYSE proposes to amend Section 804 of the Listed Company Manual
to specify that public directors will constitute a majority of the
directors of the Committee for Review voting on final delisting
determinations. The NYSE also proposes to codify this change in the
parallel Exchange Rule 499, as well as make other minor conforming
changes.
The text of the proposal is below. Proposed new language is in
italics; proposed deletions are in brackets.
* * * * *
804.0 Procedure for Delisting
[sbull] If the Exchange staff should determine that a security be
removed from the list, it will so notify the issuer in writing,
describing the basis for such decision and the specific policy or
criterion under which such action is to be taken. The Exchange will
simultaneously (1) issue a press release disclosing the company's
status and basis for the Exchange's determination and (2) begin daily
dissemination of ticker and information notices identifying the
security's status, and include similar information on the Exchange's
web site.
[sbull] The notice to the issuer shall also inform the issuer of
its right to a review of the determination by a Committee of the Board
of Directors of the Exchange ([comprised of] a majority of the members
of such Committee voting on each determination must be public
Directors), provided a written request for such a review is filed with
the Secretary of the Exchange within ten business days after receiving
the aforementioned notice.
* * * * *
If a review is requested, the review will be scheduled for the
first Review Day which is at least 25 business days from the date the
request for review is filed with the Secretary of the Exchange, unless
the next subsequent Review Day must be selected to accommodate the
Committee's schedule. The chairman of the Committee will disclose to
the company and the staff at the commencement of the review which of
the industry Directors present will be voting on the matter, although
all directors will be entitled to participate in the discussion. The
Committee's review and final decision shall be based on oral argument
(if any) and the written briefs and accompanying materials submitted by
the parties.
* * * * *
Delisting of Securities
Suspension from Dealings or Removal from List by Action of the Exchange
* * * * *
Rule 499. Securities admitted to the list may be suspended from
dealings or removed from the list at any time.
* * * Supplementary Material
* * * * *
.70 Procedure for Delisting
a. If the Exchange staff should determine that a security be
removed from the list, it will so notify the issuer in writing,
describing the basis for such decision and the specific policy or
criterion under which such action is to be taken. The Exchange will
simultaneously (1) issue a press release disclosing the company's
status and basis for the Exchange's determination and (2) begin
[appending a suffix to the security's ticker symbol identifying the
security's status] daily dissemination of ticker and information
notices identifying the security's status, and include similar
information on the Exchange's web site. The notice to the issuer shall
also inform the issuer of its right to a review of the determination by
a Committee of the Board of Directors of the Exchange ([comprised of] a
majority of the members of such Committee voting on each determination
must be public Directors), provided a written request for such a review
is filed with the Secretary of the Exchange within ten business days
after receiving the aforementioned notice.
* * * * *
c. If a review is requested, the review will be scheduled for the
first Review Day which is at least 25 business days from the date the
request for review is filed with the Secretary of the Exchange, unless
the next subsequent Review Day must be selected to accommodate the
Committee's schedule. The chairman of the Committee will disclose to
the company and the staff at the commencement of the review which of
the industry Directors present will be voting on the matter, although
all directors will be entitled to participate in the discussion. The
Committee's review and final decision shall be based on oral argument
(if any) and the written briefs and accompanying materials submitted by
the parties.
* * * * *
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the NYSE 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. The NYSE has prepared summaries, set forth in
[[Page 5323]]
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
Section 804 of the Listed Company Manual describes the procedures
to be followed when the Exchange determines that a security should be
removed from the list. It provides that the issuer has a right to
request a review of the Exchange's determination by a Committee of the
Board of Directors of the Exchange, and specifies that that committee
is to be ``comprised of a majority of public Directors.'' This
requirement was added as part of a larger revision of these procedures
that became effective in 2000. \4\ The Exchange represents that the
Committee for Review has long been the committee of the Board that has
reviewed both disciplinary and delisting matters, and it has often been
comprised of equal numbers of public and industry directors. \5\ The
Exchange represents that when the Exchange began to implement the new
delisting review procedures in 2000, it became necessary to reconcile
the Committee's traditional composition with the new requirement that
delisting matters be reviewed by a committee comprised of a majority of
public directors. The Exchange also wanted to ensure that non-voting
industry directors were not precluded from participating in discussions
regarding delisting determinations as a result of the new requirement.
Consequently, the Committee required that the quorum for delisting
matters be two public directors and one industry director, and
established a rotation system \6\ with respect to industry director
voting on delisting matters so that those voting are comprised of a
majority of public directors and at least one industry director.
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\4\ See Securities Exchange Act Release No. 42863 (May 30,
2000); 65 FR 36488 (June 8, 2000).
\5\ The Exchanges states that as is the composition of any other
Board Committee, the composition of the Committee for Review is
determined annually, based on availability and expertise of Board
members.
\6\ Pursuant to the rotation system, the Committee designates
prior to each delisting hearing which industry director(s) shall
vote. At all hearings, all public directors present shall vote. For
example, at a Committee meeting attended by three (3) public
directors and three (3) industry directors at which two delisting
appeals are considered, all public directors present and industry
directors 1 and 2 will vote on the first delisting matter and all
public directors present and industry directors 3 and 1 will vote on
the second delisting matter. If, on the Committee's next review
date, the meeting is attended by two (2) public directors and three
(3) industry directors and one delisting appeal is considered, all
public directors present and industry director 2 will vote on the
matter; industry directors 1 and 3 will not vote. If any of the
industry directors designated to vote next is not present at a
Committee meeting, the next succeeding industry director(s) will
vote. The rotation system is subject to the composition of the
Committee, which varies at each meeting as described above,
depending upon each director's availability. As is the case with
other procedures of the Committee, the rotation system may also be
changed from time to time.
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To insure that the Exchange's procedures are adequately described
in the Listed Company Manual, the NYSE proposes to amend Section 804 of
the Listed Company Manual to specify that public directors will
constitute a majority of the directors voting on the delisting matter.
The Exchange is also proposing to codify this change in the parallel
Exchange Rule 499. Proposed NYSE Rule 499 also reflects a previous
amendment to Section 804 of the Listed Company Manual that was
inadvertently not added to NYSE Rule 499.
In addition, pursuant to the proposed rule change, the Chairman of
the Committee would also be required to disclose to the issuer and the
staff at the commencement of each delisting hearing which of the
industry directors will be voting on the delisting matter. Furthermore,
the decision relating to the delisting appeal would be required to
identify by name which directors participated only and which directors
voted on the matter. The written decision issued by the Committee would
also be required to clearly state that, in reaching its decision, the
Committee considered only the oral arguments, written briefs and
accompanying materials presented by the parties at the time of the
hearing.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act, \7\ in general, and furthers the
objectives of Section 6(b)(5), \8\ in particular, because it is
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to remove impediments
to, and perfect the mechanism of a free and open market and, in
general, to protect investors and the public interest.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
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
The Exchange has neither solicited nor received written comments on
the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 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 90 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 NYSE consents, the Commission will:
(A) By order approve the 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, as amended, 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. 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. Copies of such
filing will also be available for inspection and copying at the
principal office of the NYSE. All submissions should refer to File No.
SR-NYSE-2001-27 and should be submitted by February 24, 2003.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority. \9\
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\9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-2404 Filed 1-31-03; 8:45 am]
BILLING CODE 8010-01-P