18504 Federal Register / Vol. 72, No. 70 / Thursday, April 12, 2007 / Notices 

18 15 U.S.C. 78s(b)(2). 

19 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 In Amendment No. 1, which supplemented the 

original filing, the Exchange amended the filing to 

note that the need to remove an arbitrator might 

arise from a failure to disclose information that 

should have been disclosed, or from a conflict that 

arises after the commencement of the hearing. The 

Exchange also amended the filing to eliminate the 

proposal to provide the Director of Arbitration with 

discretion to limit a party’s additional information 

requests of an arbitrator. 

4See Exchange Act Release No. 54233 (July 27, 

2006), 71 FR 44751 (Aug. 7, 2006) (the ‘‘Notice’’). 

5See letter from Seth E. Lipner (Aug. 28, 2006) 

(‘‘Lipner Letter’’). 

6 In Amendment No. 2, which supplemented the 

original filing, the Exchange modified the proposed 

rule to provide that the Director of Arbitration may 

remove an arbitrator from a panel based on 

information that was not known to the parties when 

the arbitrator was appointed. Amendment No. 2 

also limited the reasons for which the Director of 

Arbitration may remove an arbitrator to information 

not known to the parties when the arbitrator was 

appointed and information required to be disclosed 

pursuant to NYSE Rule 610 that was not previously 

disclosed. The rule, as amended by Amendment 

No. 1, had not required the parties to be unaware 

of the information serving as the basis for the 

Director of Arbitration’s decision, and had not 

limited the reasons for removal of the arbitrator. 

7 In Amendment No. 3, which supplemented the 

original filing, the Exchange corrected an ambiguity 

in Amendment No. 2. Amendment No. 3 clarified 

that the Director of Arbitration could remove an 

arbitrator for information that should have been 

disclosed pursuant to NYSE Rule 610, providing for 

disclosure of conflicts, and that either was not 

known to the parties prior to the commencement of 

the hearing, or that represented a new conflict, 

arising after the commencement of the hearing. The 

amendment also clarified that the Director of 

Arbitration could also remove an arbitrator where 

circumstances known to the parties before the 

commencement of the hearing developed into a 

conflict after the commencement of the hearing. 

The rule as amended by Amendment No. 2 did not 

clearly establish these requirements for removal. 

8See Notice, supra note 4. 

9See Lipner Letter, supra note 5. 

and redemption procedures, applicable 

Exchange rules, the various fees and 

expenses, and the prospectus delivery 

requirements applicable to the Shares. 

This Order is conditioned on NYSE’s 

adherence to the foregoing 

representations. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,18 that the 

proposed rule change (SR–NYSE–2006–

75), as modified by Amendment No. 1, 

be, and it hereby is, approved. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.19

Nancy M. Morris, 

Secretary. 

[FR Doc. E7–6897 Filed 4–11–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55593; File No. SR–NYSE–

2004–56] 

Self-Regulatory Organizations; New 

York Stock Exchange Inc. (n/k/a New 

York Stock Exchange LLC); Notice of 

Filing and Order Granting Accelerated 

Approval to Proposed Rule Change 

Relating to Amendments to Exchange 

Rule 611, ‘‘Disqualification or Other 

Disability of Arbitrators’’

April 6, 2007. 

I. Introduction 

On October 12, 2004, the New York 

Stock Exchange Inc. (n/k/a 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 611 

(‘‘Disqualification or other Disability of 

Arbitrators’’) to give the Director of 

Arbitration the authority to remove an 

arbitrator in the event a conflict comes 

to the attention of the parties or the 

Exchange that, for any reason, was not 

appropriately disclosed pursuant to 

NYSE rules. On May 26, 2006, the 

Exchange filed Amendment No. 1 to the 

proposed rule change (‘‘Amendment No. 

1’’).3 The proposed rule change, as 

amended by Amendment No. 1, was 

published for comment in the Federal 

Register on August 7, 2006.4 The 

Commission received one comment on 

the proposal, as amended.5 On January 

11, 2007, the NYSE filed Amendment 

No. 2 (‘‘Amendment No. 2’’),6 and on 

March 21, 2007, the Exchange filed 

Amendment No. 3 (‘‘Amendment No. 

3’’) 7 to the proposed rule change. This 

order approves the proposed rule 

change, as amended, on an accelerated 

basis, and solicits comment from 

interested persons on the proposed rule 

change as modified by Amendment Nos. 

2 and 3. 

II. Description of the Proposed Rule 

Change 

A. Description of the Proposal 

At present, once an arbitrator has 

taken the Oath of Arbitrators for a 

particular case, NYSE rules do not 

provide for the Director of Arbitration to 

remove an arbitrator from serving on 

that case. Rather, NYSE Rule 610 

permits the Director of Arbitration to 

remove an arbitrator prior to, but not 

after, the commencement of the hearing. 

The need to remove a sitting arbitrator 

could arise if, for example, an item that 

should have been disclosed by the 

arbitrator pursuant to Exchange rules 

had not been disclosed, or a conflict 

arises after commencement of the 

hearing. Historically, when this 

situation has arisen, the remedy has 

been for the arbitrator to recuse himself 

or herself. Nevertheless, the Exchange 

proposed to amend its rules, indicating 

that it would be prudent to give the 

Director of Arbitration the authority to 

remove an arbitrator in the event a 

conflict comes to the attention of the 

parties or the Exchange that for any 

reason was not appropriately disclosed 

pursuant to NYSE rules and was 

unknown to the parties, or if a conflict 

arises after the commencement of the 

hearing. 

B. Comment Summary and NYSE’s 

Response 

1. Comments Received 

The proposal was published for 

comment in the Federal Register on 

August 7, 2006,8 and the Commission 

received one comment.9 The commenter 

generally supported the proposed rule 

change, but expressed concern that it 

would not sufficiently protect against 

possible gamesmanship or delays in 

seeking to remove arbitrators. In the 

commenter’s view, a party who is aware 

of grounds for removal but does not act 

should be prevented from bringing a 

later challenge to remove the arbitrator. 

2. NYSE’s Response to Comments 

The NYSE responded to the 

commenter’s concerns by filing 

Amendment No. 2 to the proposed rule 

change, providing that the Director of 

Arbitration may remove an arbitrator 

from an arbitration panel solely for 

information not disclosed pursuant to 

NYSE Rule 610 or based on information 

not known to the parties when the 

arbitrator was appointed. Subsequently, 

the NYSE filed Amendment No. 3, 

correcting an ambiguity in the rule, and 

clearly setting forth that the grounds for 

removal from the panel would be either 

a new conflict, arising after the 

commencement of the hearing (whether 

arising from circumstances known to 

the parties prior to the commencement 

of the hearing but only developing into 

a conflict after the commencement of 

the hearing, or from circumstances 

arising after the hearing), or, 

alternatively, an undisclosed conflict of 

which the parties were previously 

unaware. 


rmajette on PROD1PC67 with NOTICES
Federal Register / Vol. 72, No. 70 / Thursday, April 12, 2007 / Notices 18505 

10 15 U.S.C. 78f(b). 

11 15 U.S.C. 78f(b)(5). 

12 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). 

13 15 U.S.C. 78s(b)(2). 

14 15 U.S.C. 78s(b)(2). 

15 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

III. Discussion and Commission 

Findings 

After careful review, the Commission 

finds that the proposed rule change is 

consistent with Section 6(b) of the Act 10

in general and Section 6(b)(5) of the 

Act 11 in particular, which require that 

the rules of the Exchange 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.12 The proposed rule 

change, as amended, enables the 

Director of Arbitration to remove an 

arbitrator when a conflict arises after the 

commencement of the hearing or when 

information required to be disclosed 

pursuant to Exchange Rule 610 and of 

which the parties were previously 

unaware, is not disclosed. Similarly, the 

proposed rule change also permits an 

arbitrator to be removed where 

circumstances known before the 

commencement of the hearing develop 

into a conflict after the commencement 

of the hearing. Enabling the Director of 

Arbitration to remove arbitrators with 

any of these conflicts if they fail to 

recuse themselves will address 

circumstances in which an arbitrator 

with a conflict could otherwise continue 

serving on a panel. We believe that 

allowing the Director of Arbitration to 

exercise this authority will facilitate the 

removal of arbitrators with either 

previously undisclosed and unknown 

conflicts or newly-arising conflicts 

(whether from known or unknown 

circumstances), and will therefore 

enhance the fairness and transparency 

of the arbitration process. Accelerated 

Approval of the Proposed Rule Change 

as Modified by Amendment Nos. 2 and 

3. The Commission finds good cause for 

approving the proposed rule change as 

modified by Amendment Nos. 2 and 3 

to the proposed rule change prior to the 

thirtieth day after the amendment is 

published for comment in the Federal 

Register pursuant to Section 19(b)(2) of 

the Act.13 Amendment No. 2 responded 

to a comment by providing that parties 

aware of conflicts prior to the time that 

the arbitrator was appointed could not 

delay action on that knowledge. 

Amendment No. 3, which clarified 

Amendment No. 2, set forth the two 

grounds for removal of an arbitrator 

after commencement of the hearing: 

first, a conflict arising after the 

commencement of the hearing; and 

second, a failure to disclose information 

pursuant to Rule 610 if the parties were 

previously unaware of the undisclosed 

information. The Commission finds 

that, given the concerns the commenter 

raised with respect to the possibility 

that the arbitration process might be 

manipulated by parties seeking to 

remove an arbitrator based on 

information known to a party at an 

earlier date but acted upon only after 

the party assessed the arbitrator, it is 

appropriate and responsive for the 

Exchange to amend the proposed rule 

change to provide that an arbitrator 

cannot be removed after taking the oath 

of arbitration for a particular case based 

on a conflict of which the parties were 

previously aware. In essence, the rule 

provides that parties who come into 

knowledge of a conflict may not delay 

before requesting removal of an 

arbitrator. Similarly, the Commission 

believes that it is appropriate to permit 

the Director of Arbitration to remove an 

arbitrator for whom a conflict arises 

after commencement of the hearing, as 

the NYSE rules do not presently provide 

for such removal. Accordingly, the 

Commission finds good cause to 

accelerate approval of the proposed rule 

change, as amended. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the proposed rule 

change as modified by Amendment Nos. 

2 and 3, including whether Amendment 

Nos. 2 and 3 are 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 e-mail to rulecomments@sec.gov. Please include File 

Number SR–NYSE–2004–56 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–NYSE–2004–56. 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 in 

the Commission’s Public Reference 

Room. Copies of such filing also will be 

available for inspection and copying at 

the principal office of the NYSE. 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 File 

Number SR–NYSE–2004–56 and should 

be submitted on or before May 3, 2007. 

V. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act 14 that the 

proposed rule change (SR–NYSE–2004–

56), as amended, be, and hereby is, 

approved on an accelerated basis. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.15

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–6935 Filed 4–11–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55591; File No. SR–Phlx–

2007–30] 

Self-Regulatory Organizations; 

Philadelphia Stock Exchange, Inc.; 

Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change Relating to Ratio Spreads 

April 6, 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 March 27, 

2007, the Philadelphia Stock Exchange, 

Inc. (‘‘Phlx’’ or ‘‘Exchange’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared substantially by the Phlx. 


rmajette on PROD1PC67 with NOTICES