596 Federal Register / Vol. 72, No. 3 / Friday, January 5, 2007 / Notices 

4 If SZD relies on rule 701(d)(2)(ii), it will not sell 

pursuant to rule 701, during any consecutive 12- 

month period, Interests in the Fund if the sales 

price of those Interests exceeds 15% of the total 

assets of the Fund. 

5 In order to comply with the requirements of rule 

701, at the beginning of each Investment Period the 

Fund will accept capital contributions or 

irrevocable commitments from Regulation D 

Investors for the relevant Series, and then prepare 

a balance sheet as required by rule 701. The Fund 

may then receive and accept subscription 

agreements, and thereafter accept capital 

contributions or commitments, from Rule 701 

Investors for that Series, which in the aggregate will 

not exceed 15% of the total amount of capital 

contributions and irrevocable commitments 

received from Regulation D Investors. 

participants, unless any such CoInvestor, prior to disposing of all or part 

of its investment, (a) gives the General 

Partner sufficient, but not less than one 

day’s, notice of its intent to dispose of 

its investment, and (b) refrains from 

disposing of its investment unless the 

participating Fund holding such 

investment has the opportunity to 

dispose of its investment prior to or 

concurrently with, on the same terms as, 

and on a pro rata basis with the CoInvestor. The term ‘‘Co-Investor’’ with 

respect to any Fund means any person 

who is (a) an ‘‘affiliated person’’ (as 

defined in section 2(a)(3) of the Act) of 

the Fund; (b) the SZD Group; (c) a 

Principal, lawyer, or employee of the 

SZD Group; (d) an investment vehicle 

offered, sponsored, or managed by SZD 

or an affiliated person of SZD; or (e) an 

entity in which an SZD entity acts as a 

general partner or has a similar capacity 

to control the sale or other disposition 

of the entity’s securities. 

The restrictions contained in this 

condition, however, shall not be 

deemed to limit or prevent the 

disposition of an investment by a CoInvestor: (a) To its direct or indirect 

wholly-owned subsidiary, to any 

company (a ‘‘parent’’) of which the CoInvestor is a direct or indirect whollyowned subsidiary, or to a direct or 

indirect wholly-owned subsidiary of its 

parent; (b) to Immediate Family 

Members of the Co-Investor or a trust 

established for any such Immediate 

Family Member; (c) when the 

investment is comprised of securities 

that are listed on a national securities 

exchange registered under section 6 of 

the Exchange Act; or (d) when the 

investment is comprised of securities 

that are national market system 

securities pursuant to section 11A(a)(2) 

of the Exchange Act and rule 11Aa2–1 

thereunder. 

5. The General Partner of each Fund 

will send to each person who was a 

Fund Investor in such Fund at any time 

during the fiscal year then ended 

audited financial statements with 

respect to those Series in which the 

Fund Investor held Interests. At the end 

of each fiscal year, the General Partner 

will make a valuation or have a 

valuation made of all of the assets of the 

Fund as of the fiscal year end in a 

manner consistent with customary 

practice with respect to the valuation of 

assets of the kind held by the Fund. In 

addition, as soon as practicable after the 

end of each fiscal year of each Fund, the 

General Partner of the Fund shall send 

a report to each person who was a Fund 

Investor at any time during the fiscal 

year then ended, setting forth such tax 

information as shall be necessary for the 

preparation by the Fund Investor of his 

or her federal and state income tax 

returns and a report of the investment 

activities of such Fund during such 

year. 

6. Each Fund and the General Partner 

will maintain and preserve, for the life 

of each Series of that Fund and at least 

five years thereafter, such accounts, 

books, and other documents as 

constitute the record forming the basis 

for the audited financial statements and 

annual reports of such Series to be 

provided to its Fund Investors, and 

agree that all such records will be 

subject to examination by the 

Commission and its staff. All such 

records will be maintained in an easily 

accessible place for at least the first two 

years. 

Compliance With Rule 701 

7. Prior to receiving a subscription 

agreement from any potential Fund 

Investor pursuant to an offering in 

reliance on rule 701, SZD will make 

available at no charge to potential Fund 

Investors the services of a Financial 

Consultant qualified to provide advice 

concerning the appropriateness of 

investing in a Fund. Specifically, the 

Financial Consultant will hold one or 

more group meetings with potential 

Fund Investors at which the Financial 

Consultant will discuss the risks and 

other considerations relevant to 

determining whether to invest in a 

Fund. The Financial Consultant also 

will be available to the group of 

potential Fund Investors to answer 

general questions regarding an 

investment in the Fund. In addition, 

potential Fund Investors will be given 

the opportunity to submit relevant 

questions and issues to the Financial 

Consultant in advance of the group 

meetings, so that the Financial 

Consultant can address those questions 

and issues at the meetings. SZD will not 

need to reveal the specific investments 

made by any Fund to the Financial 

Consultant, as long as the investment 

objectives, risk characteristics and other 

material information about the Fund of 

the type that would be disclosed in the 

offering documents for the Fund is 

made available to the Financial 

Consultant. 

8. SZD will at all times control each 

Fund, within the meaning of rule 405 

under the Securities Act. In this regard, 

SZD will, either directly or through a 

wholly-owned subsidiary, be the 

General Partner of the Fund, own at 

least 95% of the voting Interests of the 

Fund, and make all investment and 

other operational decisions for the 

Fund. 

9. SZD or a wholly-owned subsidiary 

will own not less than 5% of the 

economic Interests issued each year by 

the Fund, and (as discussed above) at 

least 95% of the voting Interests of the 

Fund. In addition, SZD and its 

Principals, directly or through Qualified 

Investment Vehicles, together will own 

at least 80% of the economic Interests 

of each Series. 

10. SZD prepares its financial 

statements on a modified cash basis, 

and does not consolidate the Fund’s 

financial statements with its own. If, 

however, SZD prepared its financial 

statements in accordance with GAAP, it 

would consolidate the Fund’s financial 

statements with its own. 

11. SZD, when offering Interests 

pursuant to rule 701 under the 

Securities Act, will issue Interests in 

each Series in compliance with rule 

701(d)(2),4 and will comply with all 

applicable requirements of rule 701(e).5

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. E6–22605 Filed 1–4–07; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[File No. 500–1] 

In the Matter of Cosmetic Center, Inc., 

Impax Laboratories, Inc., Phoenix 

Waste Services Company, Inc., and 

Telynx, Inc.; Order of Suspension of 

Trading 

December 29, 2006. 

It appears to the Securities and 

Exchange Commission that there is a 

lack of current and accurate information 

concerning the securities of Cosmetic 

Center, Inc., because it has not filed any 

periodic reports since the period ended 

September 26, 1998. 

It appears to the Securities and 

Exchange Commission that there is a 


sroberts on PROD1PC70 with NOTICES
Federal Register / Vol. 72, No. 3 / Friday, January 5, 2007 / Notices 597 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 54618 

(October 18, 2006), 71 FR 62492. 4See letter from Jonathan Q. Frey, Managing 

Partner, J. Streicher & Co. L.L.C., to Nancy M. 

Morris, Secretary, Commission, dated November 13, 

2006 (‘‘Streicher Letter I’’), and Web comment from 

William Silver, Managing Partner, Weiskopf, Silver 

Co, dated November 6, 2006 (‘‘Weiskopf Letter’’). 

5See letter from Neal L. Wolkoff, Chairman & 

Chief Executive Officer, Amex, to Nancy M. Morris, 

Secretary, Commission, dated November 28, 2006 

(‘‘Amex Response’’). 

6See letter from Jonathan Q. Frey, Managing 

Partner, J. Streicher & Co. L.L.C., to Nancy M. 

Morris, Secretary, Commission, dated December 5, 

2006 (‘‘Streicher Letter II’’). 

7See Streicher Letter I and Streicher Letter II. 

8See Weiskopf Letter. 

9 Id. 

10Streicher Letter I at 2–3. 

11Amex Response at 3–4. 

lack of current and accurate information 

concerning the securities of Impax 

Laboratories, Inc., because it has not 

filed any periodic reports since the 

period ended September 30, 2004. 

It appears to the Securities and 

Exchange Commission that there is a 

lack of current and accurate information 

concerning the securities of Phoenix 

Waste Services Company, Inc., because 

it has not filed any periodic reports 

since the period ended October 31, 

2002. 

It appears to the Securities and 

Exchange Commission that there is a 

lack of current and accurate information 

concerning the securities of Telynx, 

Inc., because it has not filed any 

periodic reports since the period ended 

October 31, 2004. 

The Commission is of the opinion that 

the public interest and the protection of 

investors require a suspension of trading 

in the securities of the above-listed 

companies. 

Therefore, it is ordered, pursuant to 

Section 12(k) of the Securities Exchange 

Act of 1934, that trading in securities of 

the above-listed companies is 

suspended for the period from 9:30 a.m. 

est on December 29, 2006, through 11:59 

p.m. est on January 16, 2007. 

By the Commission. 

Nancy M. Morris, 

Secretary. 

[FR Doc. 06–9986 Filed 12–29–06; 11:32 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55008; File No. SR–Amex–

2006–98] 

Self-Regulatory Organizations; 

American Stock Exchange LLC; Order 

Approving Proposed Rule Change 

Relating to the Codification of 

Exchange Policy Regarding Specialist 

Commissions 

December 22, 2006. 

I. Introduction 

On October 4, 2006, the American 

Stock Exchange LLC (‘‘Amex’’ 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 Amex Rule 154 to codify policies 

regarding specialist commissions. The 

proposed rule change was published for 

comment in the Federal Register on 

October 25, 2006.3 The Commission 

received two comment letters regarding 

the proposal.4 On November 28, 2006, 

the Exchange submitted a response to 

the comments.5 On December 5, 2006, 

one of the initial commenters submitted 

a response to the Amex Response.6 This 

order approves the proposed rule 

change. 

II. Description 

The Exchange proposes to codify in 

new subparagraph (b) to Amex Rule 154 

its policies regarding situations where 

specialists may charge a commission for 

trades that are executed in whole or in 

part. Specifically, proposed Amex Rule 

154(b) would prohibit a specialist from: 

(i) Charging a commission on an offfloor order in equities that is 

electronically delivered to the specialist 

unless the order requires special 

handling by the specialist or the 

specialist provides a service, and (ii) 

billing for electronically delivered 

orders in equities that are executed 

automatically by the Exchange’s order 

processing facilities upon receipt. In 

addition, proposed Amex Rule 154(b) 

would reference Amex Rule 152(c), 

which prohibits specialists from 

charging a commission where they act 

as principal in the execution of an order 

entrusted to them as agent. Lastly, 

proposed Amex Rule 154(b) sets forth 

the types of orders specialists would be 

allowed to bill a commission. In 

particular, these orders would include 

limit orders that remain on the book for 

more than two minutes, market on close 

or limit on close orders, tick sensitive 

orders, orders for non-regular way 

settlement, stop or stop limit orders, 

orders stopped at one price and 

executed at a better price, fill-or-kill, 

and immediate-or-cancel orders, and 

orders for the account of a competing 

market maker. 

III. Summary of Comments 

The Commission received three 

comment letters regarding the proposed 

rule change from two specialists. Two of 

these comment letters, submitted by 

Streicher, opposed the proposed rule 

change for the three reasons discussed 

below.7 The third comment letter, 

submitted by Weiskopf, supported the 

proposed rule change, because ‘‘the 

specialist’s commission charges, if not 

competitive, have the potential to drive 

business away from the exchange and 

eliminate an important competitor from 

the market place.’’ 8 Weiskopf also 

stated its view that the proposed rule 

change is ‘‘a very constructive step 

towards fostering greater competition in 

The National Market System.’’ 9

Streicher argued that the proposed 

rule change would ‘‘adversely impact 

investors by reducing the qualify [sic] of 

markets offered by the Amex.’’ In 

particular, Streicher argued that Amex’s 

proposed elimination of certain 

specialist commissions would harm 

investors by putting pressure on 

specialists to increase spreads to offset 

the lost commissions. Streicher stated 

that ‘‘[w]hile an increase in spreads may 

not be practical in highly competitive 

markets, many of the securities listed on 

the Amex are thinly traded with most of 

their trading volume taking place 

primarily on the Amex.’’ According to 

Streicher, ‘‘there is often little effective 

competition from other markets’’ for 

these securities, and, thus, the resulting 

increased spreads will ‘‘have an adverse 

impact investors * * *.’’ 10

In its response, the Exchange stated 

that the purpose of the proposed rule 

change ‘‘is to attract and maintain order 

flow to Amex specialists by providing 

transparency, clarity and consistency to 

the costs of doing business on the 

Exchange.’’ The Exchange argued that 

Streicher’s position that the elimination 

of certain specialist commissions would 

lead to specialists seeking higher 

spreads is flawed, because ‘‘it is against 

each specialist’s own economic interest 

to widen its spreads and thereby risk 

losing order flow.’’ Furthermore, the 

Exchange disagreed with Streicher’s 

assertion that ‘‘there is often little 

effective competition from other 

markets’’ and noted that ‘‘[a]ll Amex 

listed securities trade in at least one 

additional market center’’ and that 

‘‘[t]he large majority of Amex issues 

trade on multiple venues.’’ The 

Exchange concluded that ‘‘[w]idening of 

the spreads in these securities will 

likely result in further market share 

erosion as order flow providers mindful 

of their best execution responsibilities 

direct their orders elsewhere.’’ 11


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