Federal Register / Vol. 72, No. 10 / Wednesday, January 17, 2007 / Notices 2055 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(6). 

5NASD informed the Commission staff that a 

clerical error was made in its filing and the word 

‘‘individual’s’’ in paragraph (a)(5)(B)(iii) of Rule 

10308 should be lowercase. Telephone conversation 

between Jean Feeney, Vice President, NASD; and 

Michael Hershaft, Special Counsel, Commission 

(Jan. 9, 2006). Because this is a non-substantive 

change, this amendment to the proposed rule 

change will not toll the 60-day abrogation period. 

6The Commission recently approved 

amendments to Rule 10308, effective Jan. 15, 2007. 

Securities Exchange Act Release No. 54607 (Oct. 16, 

2006), 71 FR 62026 (Oct. 20, 2006) (file No. SR–

NASD–2005–094). 7 Id. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.11

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–543 Filed 1–16–07; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55078; File No. SR–NASD–

2006–136] 

Self-Regulatory Organizations; 

National Association of Securities 

Dealers, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Make Technical and 

Grammatical Corrections to Rule 10308 

January 10, 2007. 

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 December 

28, 2006, the National Association of 

Securities Dealers, Inc. (‘‘NASD’’) filed 

with the Securities and Exchange 

Commission (‘‘SEC’’ or ‘‘Commission’’) 

the proposed rule change as described 

in Items I and II below, which Items 

have been prepared by NASD. NASD 

has filed this proposal pursuant to 

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

19b–4(f)(6) thereunder 4 which renders 

the proposal effective upon filing with 

the Commission.5 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 

NASD is proposing to amend 

paragraph (a)(5)(B) of Rule 10308 of the 

NASD Code of Arbitration Procedure to 

delete unnecessary cross references in 

the definition of ‘‘immediate family 

member,’’ and to correct a grammatical 

error.6 The text of the proposed rule 

change is below. Proposed new 

language is in italics; proposed 

deletions are in brackets. 

10308. Selection of Arbitrators 

(a) Definitions 

(1) through (4) No change. 

(5) ‘‘public arbitrator’’

(A) No change. 

(B) For [the] purposes of this Rule, the 

term ‘‘immediate family member’’

means: 

(i) [The] a person’s parent, stepparent, 

child, or stepchild[, of a person engaged 

in the conduct or activities described in 

paragraphs (a)(4)(A) through (D)]; 

(ii) A member of [the] a person’s 

household [of a person engaged in the 

conduct or activities described in 

paragraphs (a)(4)(A) through (D)]; 

(iii) An individual to whom a person 

[who receives] provides financial 

support of more than 50 percent of the 

individual’s annual income [from a 

person engaged in the conduct or 

activities described in paragraphs 

(a)(4)(A) through (D)]; or 

(iv) A person who is claimed as a 

dependent for federal income tax 

purposes [by a person engaged in the 

conduct or activities described in 

paragraphs (a)(4)(A) through (D)]. 

(6) through (7) No change. 

(b) through (f) No change. 

* * * * * 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

NASD 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. NASD 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 

NASD believes that the crossreferences to ‘‘a person engaged in the 

conduct or activities described in 

paragraph (a)(4)(A) through (D)’’ in the 

definition of immediate family member 

in paragraphs (a)(5)(B)(i)–(iv) of Rule 

10308 are redundant when read in 

conjunction with other provisions of the 

rule. For example, Rule 

10308(a)(5)(A)(vii) provides that a 

person may be a public arbitrator if he 

or she ‘‘is not the spouse or immediate 

family member of a person who is 

engaged in the conduct or activities 

described in paragraphs (a)(4)(A) 

through (D).’’ The definition of 

‘‘immediate family member’’ in Rule 

10308(a)(5)(B) states, in part, ‘‘For the 

purpose of this Rule, the term 

‘‘immediate family member’’ means 

* * * (i) the parent, stepparent, child, 

or stepchild, of a person engaged in the 

conduct or activities described in 

paragraphs (a)(4)(A) through (D).’’ Thus, 

both the rule and the definition refer 

redundantly to ‘‘a person [who is] 

engaged in the conduct or activities 

described in paragraphs (a)(4)(A) 

through (D).’’

Moreover, new paragraphs (a)(5)(A)(v) 

and (vi) of Rule 10308 were recently 

added to provide that persons who are 

otherwise qualified may not serve as 

public arbitrators if they have certain 

family members who are employed by, 

or serve as officers or directors of, 

entities in a control relationship with a 

broker-dealer.7 In these instances, there 

is no need to refer to paragraphs 

(a)(4)(A) through (D) as those paragraphs 

are not at issue. Rather, what is 

important is the family relationship 

itself. 

For these reasons, NASD proposes to 

amend the examples of family 

relationships in the definition of 

‘‘immediate family member’’ in 

paragraphs (a)(5)(B)(i)–(iv) of Rule 

10308 in a non-substantive way to retain 

the relationships themselves but omit 

the references to paragraphs (a)(4)(A) 

through (D) of the rule. As noted above, 

because this reference is in Rule 

10308(a)(5)(A)(vii), arbitrators who have 

an immediate family member engaged 

in the conduct or activities described in 

paragraphs (a)(4)(A) through (D) of the 

rule will continue to be ineligible to 

serve as public arbitrators. Arbitrators, 

who do not have immediate family 

members engaged in the conduct or 

activities described in paragraphs 

(a)(4)(A) through (D) of the rule, still 

may be subject to new paragraphs 

(a)(5)(A)(v) and (vi) of Rule 10308, 

which governs public arbitrators. 

In deleting the references to 

paragraphs (a)(4)(A) through (D), 

discussed above, NASD has rearranged 

phrases to provide additional clarity. In 

so doing, NASD does not intend to make 

any change in the substance of the 

definitions or in how they are 

construed. 

Finally, NASD proposes to correct a 

grammatical error in Rule 10308(a)(5)(B) 

by replacing the term ‘‘for the purpose 

of’’ with the more common phrase ‘‘for 

mstockstill on PROD1PC61 with NOTICES

2056 Federal Register / Vol. 72, No. 10 / Wednesday, January 17, 2007 / Notices 

8See, e.g., Rule 10308(a)(1), (2), (6), and (7). 

9See infra note 7. 

10 15 U.S.C. 78o–3(b)(6). 

11 15 U.S.C. 78s(b)(3)(A). 

12 17 CFR 240.19b–4(f)(6). 

13 17 CFR 240.19b–4(f)(6)(iii). 

14For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. 15 U.S.C. 78c(f). 

15 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

purposes of,’’ which is used in the 

remainder of the rule.8

NASD has filed this proposed rule 

change for immediate effectiveness so 

that these proposed non-substantive 

changes to the definition of ‘‘immediate 

family member’’ can become operational 

on January 15, 2007, the same time as 

the most recent changes to the 

definition of public arbitrator.9 NASD 

believes this proposal will help clarify 

Rule 10308, and make it easier to 

determine the proper classification of an 

arbitrator. 

2. Statutory Basis 

NASD believes that the proposed rule 

change is consistent with the provisions 

of Section 15A(b)(6) of the Act,10 which 

requires, among other things, that 

NASD’s rules 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. 

NASD believes that the proposed rule 

change is consistent with the provision 

of the Act noted above because it will 

assist in the administration of 

arbitrations by making Rule 10308 

easier to understand and apply. 

(B) Self-Regulatory Organization’s 

Statement on Burden on Competition 

NASD does not believe that the 

proposed rule change will result in 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 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing proposed rule change 

has become effective upon filing 

pursuant to Section 19(b)(3)(A) of the 

Act11 and Rule 19b–4(f)(6) thereunder12

because the proposed rule change does 

not: (i) Significantly affect the 

protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate if 

consistent with the protection of 

investors and the public interest. As 

required under Rule 19b–4(f)(6)(iii),13

NASD provided the Commission with 

written notice of NASD’s intent to file 

the proposed rule change along with a 

brief description and text of the 

proposed rule change, at least five 

business days prior to the filing date of 

the proposed rule change. 

NASD has requested that the 

Commission waive the 30-day operative 

delay so that the proposed rule change 

will become immediately effective upon 

filing. The Commission believes that 

waiving the 30-day operative delay is 

consistent with the protection of 

investors and the public interest,14 as 

such waiver is necessary so that the 

proposed rule changes will become 

effective with other amendments to Rule 

10308 on January 15, 2007. For these 

reasons, the Commission designates that 

the proposed rule change has become 

effective and operative immediately. 

At any time within 60 days of the 

filing of such proposed rule change, the 

Commission may summarily abrogate 

such 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 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–NASD–2006–136 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Nancy M. Morris, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–NASD–2006–136. 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, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). 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 at 

the principal office of NASD. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to the File 

Number SR–NASD–2006–136 and 

should be submitted on or before 

February 7, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.15

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–525 Filed 1–16–07; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55079; File No. SR–NYSE–

2006–97] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Order 

Approving Proposed Rule Change 

Relating to Exchange Rule 342 

(‘‘Offices—Approval, Supervision and 

Control’’) 

January 10, 2007. 

I. Introduction 

On October 26, 2006, the New York 

Stock Exchange LLC (‘‘NYSE’’ 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 

amending NYSE Rule 342.30 (‘‘Annual 

Reports’’) to require submission of the 

process report prepared in connection 

with the Chief Executive Officer 

(‘‘CEO’’) certification, as required under 

Rule 342.30(e)(iii), to the Board of 

Directors and Audit Committee (if such 

committee exists) of the member 

organization on or before April 1st of 

mstockstill on PROD1PC61 with NOTICES