708 Federal Register / Vol. 69, No. 3 / Tuesday, January 6, 2004 / Notices 

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

3 In addition to the prohibitions of Article V, 

Section 4 of the Amex Constitution, Rule 4 of the 

Amex’s General and Floor Rules prohibits 

transactions executed ‘‘for the purpose of creating 

or inducing a false, misleading or artificial 

appearance of activity in [a] security or for the 

purpose of unduly and improperly influencing the 

market price of [a] security or for the purpose of 

making a price which does not reflect the true state 

of the market in [a] security.’’

4 15 U.S.C. 78f(b).

5 15 U.S.C. 78f(b)(5).

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–48998; File No. SR–Amex–

2003–101] 

Self-Regulatory Organizations; Notice 

of Filing of Proposed Rule Change by 

the American Stock Exchange LLC 

Relating to Amex Membership’s Duty 

to Report Fraudulent or Manipulative 

Conduct 

December 29, 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 November 

21, 2003, 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, II, and III below, which Items 

have been prepared by the Amex. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons.

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Amex proposes to amend Rule 3 

of the Amex’s General and Floor Rules

to require Amex members or member 

organizations to report to the Exchange 

fraudulent or manipulative conduct in 

connection with the trading of securities 

on the Floor. 

The text of the proposed rule change 

appears below. Proposed new language 

is italicized; proposed deletions are 

[bracketed].

* * * * *

[Excessive Dealing] General 

Prohibitions and Duty to Report 

Rule 3. (a)–(g) no change 

(h) It shall be deemed an act 

detrimental to the interest or welfare of 

the Exchange for any member, member 

organization or employee thereof to fail 

to report immediately to the Exchange 

any fraudulent or manipulative conduct 

in connection with the trading of 

securities on the Floor (i) of which the 

member, member organization or 

employee thereof has knowledge, or (ii) 

that the member, member organization 

or employee thereof has been asked to 

perform. Reports to the Exchange of 

fraudulent or manipulative conduct 

shall be made in such form and to such 

person(s) as the Exchange shall 

prescribe from time to time in a notice 

to the membership.

* * * * *

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 

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. The 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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Paragraphs (b) and (c) of Article V, 

Section 4 of the Amex Constitution 

grant the Exchange the authority to 

discipline any member or member 

organization that engages in fraud and 

fictitious transactions.3 Furthermore, 

Paragraph (j) of Article V, Section 4 of 

the Amex Constitution grants the 

Exchange broad authority to discipline 

members and member organizations for 

conduct that is detrimental to the 

interest or welfare of the Exchange. The 

Exchange deems any fraudulent or 

manipulative conduct in connection 

with the trading of securities on the 

Exchange’s Floor to be a violation of the 

Amex Constitution and detrimental to 

the interest and welfare of investors and 

the Exchange.

The Exchange states that, at present, 

no Amex rule exists requiring members 

or member organizations to report to the 

Exchange fraudulent or manipulative 

acts that occur in connection with 

transactions on the Floor. Accordingly, 

the Exchange believes that there is an 

opportunity to enhance its ability to 

police such behavior. The Exchange 

therefore proposes to add paragraph (h) 

to Amex Rule 3 to require any member 

and member organization to report 

immediately to the Exchange fraudulent 

or manipulative conduct in connection 

with the trading of securities on the 

Floor of which the member or member 

organization has knowledge or has been 

asked to perform. 

In addition to adding paragraph (h), 

the Exchange proposes to use this 

opportunity to amend the title of Amex 

Rule 3. By way of background, Amex 

Rule 3 (‘‘Excessive Dealings’’) contains 

various prohibitions impacting members 

and member organizations. For 

example, among other prohibitions, 

Amex Rule 3 forbids a member or 

member organization from: (i) Effecting 

trades for an account in which the 

member or member organization has a 

direct or indirect interest where such 

trades are excessive in view of that 

member or member organization’s 

financial resources or in view of the 

market for the security; (ii) circulating 

rumors of a sensational character that 

might affect market conditions; (iii) 

improperly using or disclosing 

confidential information entrusted to 

the member or member organization by 

customers; and (iv) in the case of a 

regular or options principal member, 

effecting a transaction with an associate 

member or non-member on the Floor of 

the Exchange unless permitted by rule. 

In light of the unrelated prohibitions of 

the rule and the proposed addition of 

paragraph (h), the Exchange proposes to 

change the title of Amex Rule 3 from 

‘‘Excessive Dealings’’ to ‘‘General 

Prohibitions and Duty to Report.’’

2. Statutory Basis 

The Amex believes that the proposed 

rule change is consistent with section 

6(b) of the Act 4 in general and furthers 

the objectives of section 6(b)(5) of the 

Act 5 in particular in that it is designed 

to prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, to foster 

cooperation and coordination with 

persons engaged in facilitating 

transactions in securities, to remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and to 

protect investors and the public interest, 

and is not designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers.

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The proposed rule change will impose 

no burden on competition. 

Federal Register / Vol. 69, No. 3 / Tuesday, January 6, 2004 / Notices 709

6 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

3Securities Exchange Act Release No. 48797 

(November 17, 2003), 68 FR 65975.

4 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).

5 15 U.S.C. 78f(b)(5).

6 15 U.S.C. 78s(b)(2).

7 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

3See December 17, 2003 letter from Ellen J. 

Neely, Senior Vice President (‘‘SVP’’) and General 

Counsel (‘‘GC’’), CHX, to Joseph P. Morra, Special 

Counsel, Division of Market Regulation 

(‘‘Division’’), Commission, and attachments 

(‘‘Amendment No. 1’’). Amendment No. 1 

completely replaced and superseded the original 

filing.

4See December 22, 2003 letter from Ellen J. 

Neely, SVP and GC, CHX, to Joseph P. Morra, 

Special Counsel, Division, Commission, and 

attachments (‘‘Amendment No. 2’’). Amendment 

No. 2 completely replaced and superseded 

Amendment No. 1.

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 

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 Exchange 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. 

Persons making written submissions 

should file six copies thereof with the 

Secretary, Securities and Exchange 

Commission, 450 Fifth Street, NW., 

Washington, DC 20549. Comments may 

also be submitted electronically at the 

following e-mail address: rulecomments@sec.gov. All comment letters 

should refer to File No. SR–Amex–

2003–101. 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, 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 

Room. Copies of such filing will also be 

available for inspection and copying at 

the principal office of the Amex. All 

submissions should refer to File No. 

Amex–2003–101 and should be 

submitted by January 27, 2004.

For the Commission by the Division of 

Market Regulation, pursuant to delegated 

authority.6

Jill M. Peterson, 

Assistant Secretary.

[FR Doc. 04–222 Filed 1–5–04; 8:45 am] 

BILLING CODE 8010–01–P

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–48996; File No. SR–CBOE–

2003–49] 

Self-Regulatory Organizations; Order 

Approving Proposed Rule Change by 

the Chicago Board Options Exchange, 

Incorporated Relating to Time Periods 

Within the Membership Process 

December 29, 2003. 

On October 21, 2003, the Chicago 

Board Options Exchange, Inc. (‘‘CBOE’’

or ‘‘Exchange’’) submitted to 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 

that would extend the time periods (i) 

after which an individual’s inactive 

nominee status will be terminated and 

(ii) during which a former individual 

member may reapply for membership 

through the renewal/change of status 

application process. The Federal 

Register published the proposed rule 

change for comment on November 24, 

2003.3 The Commission received no 

comments on the proposal.

The Commission finds that the 

proposed rule change is consistent with 

the requirements of the Act and the 

rules and regulations thereunder 

applicable to a national securities 

exchange.4 In particular, the 

Commission believes that the proposed 

rule change is consistent with section 

6(b)(5) of the Act,5 which requires, 

among other things, that CBOE’s rules 

be designed to promote just and 

equitable principles of trade and, in 

general, to protect investors and the 

public interest. The proposed rule 

change should increase the flexibility of 

the Exchange’s membership process 

without compromising its standards. In 

addition, the Commission believes that 

the proposed rule change should 

prevent former members from trying to 

obtain the lower renewal applicant fee 

without following through on their 

applications or membership approvals 

on a timely basis.

It is therefore ordered, pursuant to 

section 19(b)(2) of the Act,6 that the 

proposed rule change (SR–CBOE–2003–

49) be, and it hereby is, approved.

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.7

Jill M. Peterson, 

Assistant Secretary.

[FR Doc. 04–223 Filed 1–5–04; 8:45 am] 

BILLING CODE 8010–01–P

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–49004; File No. SR–CHX–

2002–09] 

Self-Regulatory Organizations; Notice 

of Filing of Proposed Rule Change and 

Amendment Nos. 1 and 2 by the 

Chicago Stock Exchange, Incorporated 

To Amend Its Minor Rule Violation Plan 

December 29, 2003. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on April 11, 

2002, the Chicago Stock Exchange, 

Incorporated (‘‘CHX’’ 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 Exchange. 

The CHX amended the proposed rule 

change on December 22, 2003,3 and 

again on December 23, 2003.4 The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change, as amended, from interested 

persons.