32138 Federal Register / Vol. 65, No. 99 / Monday, May 22, 2000 / Notices

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

2 17 CFR 240.19b–4.

3 17 CFR 240.15c3–1. Certain options market

makers are not subject to the net capital rule, see

17 CFR 240.15c3–1(b)(1)(i), and therefore are not

subject to proposed CBOE Rule 3.6A.

pursuant to the order of a court of

competent jurisdiction.

* * * * *

Stanley F. Mires,

Chief Counsel, Legislative.

[FR Doc. 00–12780 Filed 5–19–00; 8:45 am]

BILLING CODE 7710–12–P

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42780; File No. SR–CBOE–

00–17].

Self-Regulatory Organizations;

Proposed Rule Change by Chicago

Board Options Exchange, Incorporated

Relating to Designation of Financial/

Operations Principals

May 12, 2000.

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 April 11,

2000, the Chicago Board Options

Exchange, Incorporated (‘‘CBOE’’ 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 CBOE. The Commission

is publishing this notice to solicit

comments on the proposed rule from

interested persons.

I. Self Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule

The CBOE proposes to require each

CBOE member subject to Commission

Rule 15c3–1 (the ‘‘net capital rule’’) to

designate a Financial/Operations

Principal (‘‘FINOP’’) and to register the

FINOP with the Exchange. Below is the

text of the proposed rule change.

Proposed new language is in italics;

proposed deletions are in brackets.

* * * * *

RULE 2.22—Other Fees or Charges

(a) No change.

(b) Registration Fees. Member

organizations (and individual members,

if applicable,) shall pay application,

maintenance and transfer registration

fees for their Series 7 qualified

Registered Representatives (‘‘RR’’) as

described in Rule 9.3, [and] their

Registered Options Principals (‘‘ROP’’)

as described in Rule 9.2 and their

Financial/Operations Principals

(‘‘FINOP’’) as described in rule 3.6A.

The fees are listed below:

(i) For each new RR, [or] ROP or

FINOP applicant—$35.00

(ii) For the maintenance of each RR,

[or] ROP or FINOP Registration–$30.00/

year[.]

(iii) For an RR or ROP who transfers

from another organization, or a FINOP

who transfers from another organization

and does not maintain any other FINOP

registrations—$30.00

* * * * *

Qualification and Registration of

Certain Associated Persons

RULE 3.6A. (a) Financial/Operations

Principal. Each individual member or

member organization subject to

Exchange Act Rule 15c3–1 shall

designate a Financial/Operations

Principal. The duties of a Financial/

Operations Principal shall include

taking appropriate actions to assure that

the member complies with applicable

financial and operational requirements

under the Rules and the Exchange Act,

including but not limited to those

requirements relating to the submission

of financial reports and the

maintenance of books and records. Each

Financial/Operations Principal is

required to have successfully completed

the Financial and Operations Principal

Examination (Series 27 Exam). Each

Financial/Operations Principal

designated by a member shall be

registered in that capacity with the

Exchange in a form and manner

prescribed by the Exchange. A

Financial/Operations Principal of a

member may be a full-time employee of

the member, or with the prior written

approval of the Exchange, may be a

part-time employee or independent

contractor of the member.

(b) Associated Person Statuses Under

Chapter IX. Associated person statuses

under Chapter IX (along with the

primary Exchange Rule concerning the

status) include: (i) Registered Options

Principal (Rule 9.2); (ii) Registered

Representative (Rule 9.3); (iii) Senior

Registered Options Principal (Rule 9.8);

and (iv) Compliance Registered Options

Principal (Rule 9.8).

. . . Interpretations and Policies:

.01 Each person in an associated

person status enumerated in paragraph

(a) or (b) of this Rule shall, in a form

and manner prescribed by the Exchange

(i) submit to the Exchange a Uniform

Application for Securities industry

Registration or Transfer (Form U–4) and

(ii) promptly submit to the Exchange

any required amendments to Form U–4.

.02 Any member that discharges or

terminates the employment or retention

of an associated person enumerated in

paragraph (a) or (b) of this Rule shall

comply with the termination filing

requirements set forth in Rule 9.3(b) and

Rule (9.3(c).

.03 Each person in an associated

person status enumerated in paragraph

(a) or (b) of this Rule is required to

satisfy the continuing educations

requirements set forth in Rule 9.3A.

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

CBOE 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 CBOE 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 purpose of the proposed rule

change is to require each individual

member or member organization subject

to Exchange Act Rule 15c3–1, the net

capital rule,3 to designate a FINOP and

to register the FINOP with the

Exchange. The Exchange proposes to

include this requirement in proposed

new CBOE Rule 3.6A,‘‘Qualification and

Registration of Certain Associated

Persons.’’

Proposed Rule 3.6A provides that the

duties of a FINOP include taking

appropriate actions to ensure that the

member complies with applicable

financial and operational requirements

under the CBOE’s Rules and the Act,

including but not limited to

requirements relating to the submission

of financial reports and the maintenance

of books and records. Additionally, each

FINOP would be required to complete

successfully the Financial and

Operations Principal Examination

(Series 27 Exam). Each FINOP

designated by a member would also be

required to be registered in that capacity

with the Exchange in a form and

manner prescribed by the Exchange.

Proposed Rule 3.6A also provides that

a FINOP of a member could be a fulltime employee of the member or, with

the prior written approval of the

Federal Register / Vol. 65, No. 99 / Monday, May 22, 2000 / Notices 32139

4The Commission interprets the term ‘‘associated

person’’ to include any independent contractor,

consultant, franchisee, or other person providing

services to a broker-dealer equivalent to those

service provided by persons specifically referenced

in the Act. Accordingly, a FINOP is an associated

person of a firm, making the FINOP and the firm

subject to all requirements that accompany

associated person status, regardless of the nature of

the employment relationship or contractual

relationship between the FINOP and the firm.

5The requirements set forth in CBOE Rules 9.3(b)

and 9.3(c) relate to the filing of a Uniform

Termination Notice for Securities Industry

Registration (Form U–5) and the filing of required

amendments to Form U–5.

6The fees applicable to Registered

Representatives and Registered Options Principals

were last raised in 1999. See Exchange Act Release

No. 41,748 (Aug. 16, 1999); 64 FR 46,218 (Aug. 24,

1999).

7 17 U.S.C. 78f(b).

8 17 U.S.C. 78f(b)(5).

9 17 U.S.C. 78f(b)(4).

10 15 U.S.C. 78s(b)(3)(A).

11 17 CFR 240.19b–4(f)(6).

Exchange, a part-time employee or

independent contractor of the member.4

The Exchange states that its proposal

to require designation of a FINOP is

comparable to requirements of other

securities self-regulatory organizations,

such as the New York Stock Exchange,

Inc. and the National Association of

Securities Dealers, Inc.

The Exchange also states that it

intends to monitor firms for compliance

with the requirements relating to

FINOPs during the course of the

Exchange’s financial examination

program for CBOE member

organizations for which CBOE is the

designated examining authority.

To promote ease of reference by CBOE

members, the Exchange also proposes to

set forth in Rule 3.6A and its

Interpretations certain existing

requirements with respect to associated

persons required to be registered with

the Exchange under Chapter IX of

CBOE’s Rules. Accordingly, Rule

3.6A(b) lists the persons that have

associated person status under Chapter

IX, and cross-references the primary

CBOE Rule concerning each of those

persons. These persons include

Registered Options Principals with Rule

9.2 as the primary CBOE rule,

Registered Representatives (Rule 9.3),

Senior Registered Options Principals

(Rule 9.8), and Compliance Registered

Options Principals (Rule 9.8).

The Interpretations to Rule 3.6A

reference certain existing requirements

applicable to individuals having

associated person status under Chapter

IX and provide that these requirements

shall be applicable to each FINOP.

Thus, Interpretation .01 provides that

each person having associated person

status as described in Rule 3.6A

(including a FINOP) shall, in a form and

manner prescribed by the Exchange,

submit to the Exchange a Uniform

Application for Securities Industry

Registration or Transfer (Form U–4) and

promptly submit to the Exchange any

required amendments to Form U–4.

Interpretation .02 provides that any

member that discharges or terminates

the employment or retention of an

associated person enumerated in Rule

3.6A shall comply with the termination

filing requirements set forth in CBOE

Rules 9.3(b) and 9.3(c).5 Interpretation

.03 provides that each associated person

enumerated in Rule 3.6A is required to

satisfy the continuing education

requirements set forth in CBOE Rule

9.3A.

The Exchange will allow members

subject to Rule 15c3–1 under the Act six

months from the date of approval of this

rule filing by the Commission in which

to designate a FINOP in accordance

with Rule 3.6A. The purpose of that

time period is to provide the Exchange

with an opportunity to notify the

Exchange’s membership of the new

requirement and to provide members

that do not currently employ or retain

an individual who functions as a FINOP

a reasonable period of time in which to

employ or retain such an individual.

The Exchange also proposes to amend

existing CBOE Rule 2.22(b) to assess

application, maintenance, and transfer

registration fees with respect to the

designation of FINOPs. These fees

would be the same as those that the

Exchange assesses on Registered

Representatives and Registered Options

Principals under Rule 2.22(b).6 Thus,

the fee for each new FINOP designated

by a member is proposed to be $35.00,

the annual maintenance fee for each

FINOP registration is proposed to be

$30.00 per year, and the transfer fee for

a FINOP who transfers from another

organization and does not maintain any

other FINOP registration is proposed to

be $30.00. Each member organization

(or individual member, if applicable)

would have to pay a registration fee for

a FINOP, regardless of whether the

FINOP also acts in that capacity for

another firm.

2. Statutory Basis

The Exchange states that the proposed

rule change would enhance compliance

with financial and operational

requirements under CBOE’s Rules and

the Act and make it easier for the

Exchange’s membership to reference

registration requirements under CBOE’s

Rules. Accordingly, the proposed rule is

consistent with Section 6(b) of the Act,7

in general, and furthers the objectives of

Section 6(b)(5),8 in particular, in that it

is designed to promote just and

equitable principles of trade, to prevent

fraudulent and manipulative acts and

practices, and to protect investors and

the public interest. The proposed rule

change also would further the objectives

of Section 6(b)(4) of the Act 9 in that it

is designed to provide for the equitable

allocation of reasonable dues, fees, and

other charges among CBOE members.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The CBOE does not believe that the

proposed rule change would impose any

burden on competition 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

The CBOE represents that the

proposed rule change (i) would not

significantly affect the protection of

investors or the public interest, (ii)

would not impose any significant

burden on competition, and (iii) would

not become operative for 30 days from

the date it was filed. In addition, the

Exchange provided the Commission

with written notice of its intent to file

the proposed rule change, along with a

description and text of the proposed

rule change, at least five business days

prior to the date of filing of the

proposed rule change. For the foregoing

reasons, this rule filing qualifies for

expedited approval as a ‘‘noncontroversial’’ rule change under

Section 19(b)(3)(A) of the Act 10 and

Rule 19b–4(f)(6) 11 thereunder and will

become operative 30 days from April 11,

2000, the date on which it was filed.

At any time within 60 days of the

filing of the proposed rule change, the

Commission may summarily abrogate

the 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

32140 Federal Register / Vol. 65, No. 99 / Monday, May 22, 2000 / Notices

12 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3The OHO issues decisions rendered by Hearing

Officers (default decisions) and Hearing Panels.

4Securities Exchange Act Release No. 42607

(April 3, 2000), 65 FR 19421.

5See Special NASD Notice to Member 97–55

(August 1997).

6 15 U.S.C. 78–o 3(b)(6).

7 15 U.S.C. 78–o 3(b)(7).

8 15 U.S.C. 78s(b)(2).

9 17 CFR 200.30–3(a)(12).

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. 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 CBOE. All

submissions should refer to File No.

SR–CBOE–00–17 and should be

submitted by June 6, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.12

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–12759 Filed 5–19–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42783: File No. SR–NASD–

00–05]

Self-Regulatory Organizations; Order

Granting Approval to Proposed Rule

Change by the National Association of

Securities Dealers, Inc. Relating to the

Release of Disciplinary Information

May 15, 2000.

I. Introduction

On February 16, 2000, the National

Association of Securities Dealers, Inc.

(‘‘NASD’’ or ‘‘Association’’), through its

wholly owned subsidiary NASD

Regulation, Inc. (‘‘NASD Regulation’’),

filed with the Securities and Exchange

Commission (‘‘SEC’’ or ‘‘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 IM–

8310–2 of the Association, to provide

for the publication of all final, litigated

decisions issued by the Office of

Hearing Officers (‘‘OHO’’),3 the National

Ad judicatory Council (‘‘NAC’’), and the

NASD Board, regardless of sanctions

imposed.

The proposed rule change was

published for comment in the Federal

Register on April 11, 2000.4 No

comments were received on the

proposal. This order approves the

proposal.

II. Description of the Proposal

Some NASD disciplinary decisions

are currently available in electronic

legal research databases, such as

Westlaw, Lexis-Nexis, and Books on

Screen. Interpretative Material 8310–2

(the ‘‘Interpretation’’) permits the NASD

to release any disciplinary decision: (1)

Imposing a suspension, cancellation or

expulsion of a member; (2) imposing a

suspension or revocation of the

registration of any associated person; (3)

imposing a suspension or barring a

member or associated person from

association with all members; (4)

imposing monetary sanctions of $10,000

or more on a member or associated

person; (5) containing on alleged

violation of a Designated Rule; or (6)

deemed by the President of NASD

Regulation to involve a significant

policy or enforcement determination

where the release of information would

be in the public interest.

The Association is proposing to

amend the Interpretation to provide for

the publication of all final, litigated

decisions issued by the OHO, the NAC,

and the NASD Board, regardless of

sanctions imposed. However, the names

of the parties and other identifying

information mentioned in the decisions

that do not meet the current enumerated

publication criteria, as outlined in the

Interpretation (listed above), will be

redacted from these decisions.

Settlements, Letters of Acceptance,

Waivers and Consents (‘‘AWCs’’), and

Minor Rule Violation Plan letters are

excluded from this proposal. The

proposed rule change will not have any

impact on the information contained in

or disclosed by the Central Registration

Depository system. The NASD will

make available all decisions covered

under this proposal that were issued

after August 7, 1997, the effective date

of the most recent significant changes to

the NASD Code of Procedure.5

III. Discussion

The Commission finds that the

proposal is consistent with Section

15A(b)(6) of the Act,6 which requires,

among other things, that the rules of an

association be designed to prevent

fraudulent and manipulative acts and

practices, to promote just and equitable

principles of trade, and, in general, to

protect investors and the public interest.

In particular, the Commission finds that

the proposal is consistent with Section

15A(b)(7) of the Act 7 in that it works to

adequately safeguard the interest of

investors while establishing fair rules

for its members and persons associated

with its members.

The Commission believes that

providing the public with this expanded

information on disciplinary decisions

will provide a clearer picture of the

Association’s current application and

interpretation of its substantive and

procedural rules. The NASD will make

the information available to vendors of

legal research databases. Members will

have additional insight into how NASD

rules are enforced, making it easier for

them to comply with the rules.

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act, 8 that the

proposed rule change (SR–NASD–00–

05) is approved. The NASD will

announce the effective date of this rule

in a Notice to Members to be published

within 60 days of the date on this order.

The effective date will be 30 days

following publication of the Notice to

Members announcing Commission

approval.

For the Commission, by the Division

of Market Regulation, pursuant to

delegated authority.9

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–12758 Filed 5–19–00; 8:45 am]

BILLING CODE 8010–01–M

SMALL BUSINESS ADMINISTRATION

[Declaration of Disaster #3253]

State of California

Los Angeles County and the

contiguous counties of Kern, Orange,

San Bernardino, and Ventura in the

State of California constitute a disaster

area as a result of severe storms that

occurred on April 18, 2000.

Applications for loans for physical

damage as a result of this disaster may

be filed until the close of business on

July 10, 2000 and for economic injury

until the close of business on February

9, 2001 at the address listed below or

other locally announced locations: U.S.

Small Business Administration, Disaster