41986 Federal Register / Vol. 62, No. 149 / Monday, August 4, 1997 / Notices

15 15 U.S.C. § 78f.

16 15 U.S.C. § 78s(b)(2).

17 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3See Letter from Edith Hallahan, Director and

Special Counsel, Regulatory Services, Phlx, to

Michael Walinskas, Senior Special Counsel,

Division of Market Regulation (‘‘Division’’), SEC,

dated June 25, 1997 (‘‘Amendment No. 1’’). In

Amendment No. 1, the Phlx amended the proposal

by: (1) Requiring the approval of the Options

Committee, rather than two Floor Officials, to

extend the Wheel assignment area beyond two

contiguous quarter turrets; (2) deleting the

requirement that a trade occur while a trader was

away from the Wheel for more than a brief interval

before the trader would be subject to removal and

fines; and (3) clarifying several aspects of the

proposal.

4See Letter from Philip H. Becker, Senior Vice

President and Chief Regulatory Officer, Phlx, to

Michael Walinskas, Senior Special Counsel,

Division, SEC, dated July 22, 1997 (‘‘Amendment

No. 2’’). In Amendment No. 2, the Phlx replaced the

word ‘‘crowd’’ with the phrase ‘‘Wheel assignment

area’’ in the text of the rule to clarify that the

proposal requires the trader to be present in the

Wheel assignment area, but not necessarily the

trading crowd.

5AUTOM is an electronic order routing and

delivery system for options orders.

6 In Amendment No. 1, the Phlx clarified that a

brief interval may exceed 5 minutes where an ROT

payment a check, draft, or other form of

negotiable paper drawn on a customer’s

checking, savings, share or similar

account, is appropriate. The

Commission notes that requiring a

member, foreign currency option

participant or person associated with a

member or foreign currency option

participant organization to obtain

express written authorization from a

customer in the above-mentioned

circumstances assists in the prevention

of fraudulent and manipulative acts in

that it reduces the opportunity for a

member, foreign currency option

participant or person associated with a

member or foreign currency option

participant organization to

misappropriate customers’ funds. In

addition, the Commission believes that

by requiring a member, foreign currency

option participant or person associated

with a member or foreign currency

option participant organization to retain

the authorization for three years, Rule

762 protects investors and the public

interest in that it provides interested

parties with the ability to acquire

information necessary to ensure that

valid authorization was obtained for the

transfer of a customer’s funds for the

purchase of a security.

The Commission believes that the

amendment to Rule 605, requiring the

retention of telemarketing scripts for a

period of three years is appropriate. By

requiring the retention of telemarketing

scripts for three years, Rule 605 assists

in the prevention of fraudulent and

manipulative acts and practices and

provides for the protection of the public

in that interested parties will have the

ability to acquire copies of the scripts

used to solicit the purchase of securities

to ensure that members, foreign

currency option participant

organizations and associated persons are

not engaged in unacceptable

telemarketing practices. Finally, the

Commission believes that the proposed

rule achieves a reasonable balance

between the Commission’s interest in

preventing members from engaging in

deceptive and abusive telemarketing

acts and the members’ and foreign

currency option participant

organizations’ interests in conducting

legitimate telemarketing practices.

The Commission notes that the

Exchange proposes to amend parts .02,

.08 and .10 to its Supplementary

Information Regarding Rule 605,

relating to Disclosure, Claims for

Research and Identification of Sources,

to clarify the applicability of these

guidelines to foreign currency option

participants and foreign currency option

participant organizations. The

Commission believes that the

Exchange’s proposal to clarify that its

guidelines apply to foreign currency

option participants and foreign currency

option participant organizations is

reasonable.

The Commission finds good cause for

approving the proposed rule change,

including Amendment No. 1, prior to

the thirtieth day after the date of

publication of notice thereof in the

Federal Register. The proposal is

identical to the NASD and MSRB rules,

which were published for comment and,

subsequently, approved by the

Commission. The approval of the Phlx’s

rules provides a consistent standard

across the industry. In that regard, the

Commission believes that granting

accelerated approval to the proposed

rule change is appropriate and

consistent with Section 6 of the Act.15

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,16 that the

proposed rule change (SR–Phlx–97–18),

including Amendment No. 1, is

approved on an accelerated basis.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.17

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–20411 Filed 8–1–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–38881; File No. SR–Phlx–

97–21]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of Proposed

Rule Change and Amendment Nos. 1

and 2 Thereto by the Philadelphia

Stock Exchange, Inc., Relating to

Wheel Removal and Assignment Areas

July 28, 1997.

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 25,

1997, the Philadelphia Stock Exchange,

Inc. (‘‘Phlx’’ or ‘‘Exchange’’) 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 the selfregulatory organizations. On July 1,

1997, the Phlx submitted Amendment

No. 1 to the proposed rule change.3 On

July 24, 1997, the Phlx submitted

Amendment No. 2 to the proposal.4 The

Commission is publishing this notice to

solicit comments on the proposed rule

change from interested persons and to

grant accelerated approval to the

proposed rule change, as amended.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Phlx proposes to amend Floor

Procedure Advice (‘‘Advice’’) F–24,

AUTO–X Contra-Party Participation (the

‘‘Wheel’’), to: (1) Establish a procedure

for the removal of Registered Options

Traders (‘‘ROTs’’) from the Wheel; and

(2) extend the Wheel assignment area in

certain circumstances. The Wheel is an

automated mechanism for assigning

floor traders (i.e. specialists and ROTs),

on a rotating basis, as contra-side

participants to AUTO–X orders. AUTO–

X is the automatic execution feature of

the Exchange’s Automated Options

Market (‘‘AUTOM’’) system,5 which

provides customers with automatic

executions of eligible equity option and

index option orders at displayed

markets.

Currently, an ROT must be actively

making markets to be on the Wheel, and

an ROT must be present in his Wheel

assignment area to participate in Wheel

executions. The Exchange proposes to

amend Advice F–24 to state that ROTs

must sign-off the Wheel when leaving

the Wheel assignment area for more

than a brief interval, which means 5

minutes or less, or in matters of a

dispute, the amount of time it takes to

call in a Floor Official and inform him/

her of the issue at hand.6 If an ROT does
Federal Register / Vol. 62, No. 149 / Monday, August 4, 1997 / Notices 41987

has left the Wheel assignment area to summon a

Floor Official. See Amendment No. 1, supra note

3.

7The proposal, as originally filed, subjected the

ROT to removal and a fine only if the ROT left the

Wheel assignment area for more than a brief

interval and the ROT was assigned a trade while

away from the Wheel. Pursuant to Amendment No.

1, the ROT is subject to both removal and a fine if

the ROT leaves the Wheel assignment area for more

than a brief interval without signing off the Wheel,

regardless of whether a trade occurs during the

trader’s absence. Amendment No. 1 also clarified

that once a Floor Official has determined that a

violation has occurred, the Floor Official is required

to subject the ROT to removal and a fine. See

Amendment No. 1, supra note 3.

8The Phlx’s minor rule plan, codified in Phlx

Rule 970, contains floor procedure advices, such as

Advice F–24, with accompanying fine schedules.

Rule 19d–1(c)(2) authorizes national securities

exchanges to adopt minor rule violation plans for

summary discipline and abbreviated reporting; Rule

19d–1(c)(1) requires prompt filing with the

Commission of any final disciplinary actions.

However, minor rule violations not exceeding

$2,500 are deemed not final, thereby permitting

periodic, as opposed to immediate, reporting.

9As originally filed, the proposal established that

the Wheel assignment area could be extended with

the approval of two Floor Officials, both specialists

and all Wheel participants on both Wheels. The

proposal was amended to require the approval of

the Phlx’s Options Committee, rather than two

Floor Officials, and to clarify that the proposed rule

does not limit the extension of the assignment area

to two Wheels. See Amendment No. 1, supra note

3.

10See Securities Exchange Act Release No. 35033

(November 30, 1994), 59 FR 63152 (December 7,

1994) (SR–Phlx–94–32).

11See supra note 7.

12See supra note 9.

13 15 U.S.C. 78f.

14 15 U.S.C. 78f(b)(5).

leave the Wheel assignment area for

more than a brief interval, the ROT is

subject to both removal from all Wheel

participation for the remainder of the

trading day and a fine in accordance

with the established fine schedule.7 The

establishment of the fine schedule for

violations of Advice F–24 requires the

Exchange to enact a corresponding

amendment to the Exchange’s minor

rule violation enforcement and

reporting plan (‘‘minor rule plan’’), as

proposed herein.8 Specifically,

violations will be subject to the

following fine schedule, which will be

implemented on a one year running

calendar basis: 1st Occurence—

Warning; 2nd Occurrence—$100.00; 3rd

Occurrence—$250.00; 4th and

Thereafter—Sanction is discretionary

with Business Conduct Committee.

In addition to a fine, the ROT being

removed from the Wheel would be

responsible for any trades assigned to

his/her account until the sign-off has

been processed through the system.

When removed from the Wheel in this

manner, the ROT will be prohibited

from signing back on to any Wheel for

the remainder of the trading day.

The Exchange also proposes to extend

the Wheel assignment area in certain

circumstances. Currently, ROTs may

elect to participate on the Wheel for any

or all issues in which they maintain an

ROT assignment, as long as those listed

options are located within two

contiguous quarter turrets of each other

and the ROT is actively making markets

in the specific issues. The Exchange

proposes to permit an ROT to

participate on Wheels that are not

within two contiguous quarter turrets,

if: the Options Committee approves it,

the specialists and all Wheel

participants on those Wheels agree, and

the particular circumstances warrant

extending the Wheel assignment area.9

The text of the proposed rule change

is available at the Office of the

Secretary, Phlx, and at the Commission.

II. Self-Regulatory Organization’s

Statements Regarding the Purpose of,

and Statutory Basis for, the Proposed

Rule Change

In its filing with the Commission, the

Phlx 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 III below. The Phlx 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

The Exchange’s Wheel provisions

were approved by the Commission in

1994 as Advice F–24.10 The purpose of

the Wheel is to increase the efficiency

and liquidity of order execution through

AUTO-X by including all floor traders

in the automated assignment of contraparties to incoming AUTO-X orders.

Thus, the Wheel is intended to make

AUTO-X more efficient, as contra-side

participation will be assigned

automatically, and no longer entered

manually. The Wheel also is intended to

promote liquidity by including ROTS,

as opposed to solely Specialists, as a

contra-side to AUTO-X orders.

The floor-wide roll-out of the Wheel

was completed the week of April 21,

1997. As a result of the experience

garnered from Wheel implementation

thus far, the Exchange proposes two

changes to address specific issues that

have arisen on the trading floor. First,

the Exchange proposes to require ROTs

to sign-off the Wheel after leaving the

Wheel assignment area for more than a

brief interval. The Exchange’s Options

Committee has determined that

performing stock execution or hedging

functions near the crowd does not

constitute leaving the crowd. Further,

the ROT is required to be present in the

Wheel assignment area, but not

necessarily the trading crowd. If an ROT

does leave the Wheel assignment area

for more than a brief interval, under the

proposal, the ROT would be: fined,

removed from all Wheel participation

for the remainder of the day and held

responsible for Wheel trades assigned

until the sign-off is processed.11 The

purpose of this provision is to

encourage presence in the Wheel

assignment area, to minimize

marketplace disruptions by not

reallocating Wheel trades from absent

ROTs, and to deter violations by

imposing a fine schedule for minor

violations.

The second aspect of this proposal

concerns the definition of the Wheel

assignment area. During the roll-out, the

Exchange learned that it is possible to

be ‘‘actively making markets in the

specific issues’’ and be considered

‘‘present’’ in a Wheel assignment area

that is larger than two contiguous

quarter turrets. Specifically, in certain

areas of the trading floor, depending on

the physical layout of the trading posts,

and where there is little trading activity,

visibility and access across turrets is

greater than initially determined when

Wheel procedures were drafted in 1994.

Thus, the Exchange believes that this

proposal, which takes into account

trading activity and crowd size as well

as the intervening trading posts, fairly

extends the Wheel assignment area

where warranted, which should

promote liquidity and ROT Wheel

participation in less active issues. Thus,

the proposal is limited to extending the

Wheel assignment area where, with the

approval of the Options Committee, the

specialists and all Wheel participants on

those Wheels agree that an ROT can be

actively making markets in that

particular situation and can, thus, be

considered present in such Wheel

issues, until the specialists or any other

Wheel participants in the affected

Wheel assignment area no longer agree

that the circumstances warrant an

extension.12

For these reasons, the Exchange

believes that the proposed rule change

is consistent with Section 6 of the Act 13

in general, and in particular, with

Section 6(b)(5),14 in that the

amendments are designed to promote

just and equitable principles of trade,

prevent fraudulent and manipulative

acts and practices, to foster cooperation
41988 Federal Register / Vol. 62, No. 149 / Monday, August 4, 1997 / Notices

15 15 U.S.C. 78f.

16 In approving this rule, the Commission notes

that it has considered the proposed rule’s impact on

efficiency, competition, and capital formation. 15

U.S.C. 78c(f).

17 15 U.S.C. 78f(b)(5).

18See supra note 8.

19The Commission notes that the Phlx has the

discretion to take any violations, including those

under the minor rule plan, to full disciplinary

proceedings and would expect the Phlx to do so

where appropriate, for example, in cases of

egregious and repeated violations of Advice F–24. 20 15 U.S.C. 78f.

and coordination with persons engaged

in regulating, clearing, settling,

processing information with respect to,

and facilitating transactions in

securities, as well as to protect investors

and the public interest, by encouraging

ROT presence in the Wheel assignment

area by establishing punitive measures

for failure to do so and flexibly

extending the Wheel assignment area

where warranted to encourage

additional ROT participation. This, in

turn, should further the intent of the

Wheel to promote ROT participation as

contra-parties to AUTO–X trades and to

reduce opportunities for keypunching

errors through increased automation.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Phlx does not believe that the

proposed rule change will impose any

inappropriate burden on competition.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

No written comments were either

solicited or received.

III. 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. 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

Section, 450 Fifth Street, NW,

Washington, DC 20549. Copies of such

filing will also be available for

inspection and copying at the principal

office of the Phlx. All submissions

should refer to File No. SR–Phlx–97–21

and should be submitted by August 25,

1997.

IV. Commission’s Findings and Order

Granting Accelerated Approval of

Proposed Rule Change

The Commission has reviewed

carefully the Phlx’s proposed rule

change and believes, for the reasons set

forth below, the proposal, as amended,

is consistent with the requirements of

Section 6 of the Act,15 and the rules and

regulations thereunder applicable to a

national securities exchange.16

Specifically, the Commission believes

the proposal is consistent with Section

6(b)(5) of the Act 17 because it will

facilitate the operation of the Wheel,

which will promote just and equitable

principles of trade, foster cooperation

and coordination with persons engaged

in regulating, clearing, settling,

processing information with respect to,

and facilitating transactions in

securities.

The Commission believes that the

proposed provision relating to removal

of ROTs from the Wheel under

specifically-defined circumstances

should clarify the responsibilities and

duties undertaken by Wheel

participants, thereby resulting in less

conflict and disruption relating to the

operation of the Wheel. The

Commission also believes that including

violations of Advice F–24 in the

Exchange’s minor rule plan 18 is

consistent with the Act. The

Commission believes that the

Exchange’s proposed changes to its

minor rule plan are reasonable and

provide fair procedures for

appropriately discipling members and

member organizations for minor rule

violations that warrant a sanction more

severe than a warning or cautionary

letter, but for which a full disciplinary

proceeding would be costly and timeconsuming in light of the minor nature

of the violation. The Commission notes

that violations of Advice F–24 are

objective and easily verifiable, and thus,

lend themselves to the use of expedited

proceedings. Specifically, the issue of

whether an ROT has left the Wheel

assignment area for more than a brief

interval may be determined objectively

and adjudicated quickly without

complicated factual and interpretive

inquiries.19 The Commission believes

that the proposed fine schedule,

coupled with the proposed provisions

requiring the ROT to be removed from

the Wheel for the rest of the day and to

be responsible for all assigned trades,

should serve to encourage consistent

Wheel participation and to deter

repeated violations of the Exchange’s

rules.

In addition, the Commission believes

that the proposed provision relating to

Wheel assignment areas provides

participants some flexibility in Wheel

selection by extending an ROT’s Wheel

assignment area beyond two contiguous

quarter turrets if circumstances warrant.

The Commission notes that in

evaluating a request for an extension of

the Wheel assignment area, the Options

Committee must, on a case-by-case

basis, consider the trading activity and

crowd size in the particular options, as

well as the intervening posts. The

Commission further notes that all

affected specialists and ROTs must

agree with the determination of the

Options Committee to expand the

Wheel assignment area. The

Commission believes that expansion of

the Wheel assignment area should

promote liquidity and ROT Wheel

participation in less active issues.

Accordingly, the Commission believes

that the proposed changes will facilitate

the operation of the Wheel and,

therefore, the proposed rule change is

appropriate and consistent with Section

6 of the Act.20

The Commission finds good cause for

approving the proposed rule change,

including Amendment Nos. 1 and 2,

prior to the thirtieth day after the date

of publication of notice thereof in the

Federal Register. The Commission notes

that the proposed changes reflect input

received from several Exchange

committees and floor members based on

their experiences with the Wheel to

date. Moreover, the Commission notes

that the proposed changes concerning

removal of floor traders and the

extension of Wheel assignment areas

relate specifically to Phlx member

participation on the Wheel. The

proposal does not affect public

customers using AUTO-X, which will

continue to execute public customer

orders automatically. Further, the

Commission notes that those directly

affected by the proposed changes, Phlx

member Wheel participants, will have

an opportunity to express their views

with respect to any request for the

extension of Wheel assignment areas.

With regard to the implementation of

Wheel sign-off procedures and the

institution of a fine mechanism for

violations of such procedures, the

Commission believes that expedited

approval of the proposal is appropriate

in order to ensure optimal performance

of the Wheel and to prevent market

disruptions that can occur if Wheelassignment trades must be re-allocated
Federal Register / Vol. 62, No. 149 / Monday, August 4, 1997 / Notices 41989

21 15 U.S.C. 78f and 78s(b)(2).

22 15 U.S.C. 78s(b)(2).

23 17 CFR 200.30–3(a)(12).

1 Under the Social Security Independence and

Program Improvements Act of 1994, Pub. L. No.

103-296, effective March 31, 1995, SSA became an

independent agency in the Executive Branch of the

United States Government and was provided

ultimate responsibility for administering the Social

Security programs under title II of the Act. Prior to

March 31, 1995, the Secretary of Health and Human

Services had such responsibility.

2 At the pertinent time, Georgia law provided that

a child born out of wedlock may inherit from or

through his father or any paternal kin only if the

criteria specified in the statute are satisfied ‘‘during

the lifetime of the father and after conception of the

child.’’ A 1991 amendment, not applicable in this

case, expanded the time frame for establishing

paternity to include the period when proceedings

on the father’s estate are pending.

from absent Wheel participants.

Therefore, the Commission believes that

granting accelerated approval of the

proposed rule change, as amended, is

consistent with Sections 6 and 19(b)(2)

of the Act.21

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,22 that the

proposed rule change (SR-Phlx-97-21),

including Amendment Nos. 1 and 2, is

hereby approved on an accelerated

basis.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.23

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–20412 Filed 8–1–97; 8:45 am]

BILLING CODE 8010–01–M

SOCIAL SECURITY ADMINISTRATION

[Social Security Acquiescence Ruling 97-

3(11)]

Daniels on Behalf of Daniels v.

Sullivan; Application of a State’s

Intestacy Law Requirement That

Paternity be Established During the

Lifetime of the Father

AGENCY: Social Security Administration.

ACTION: Notice of Social Security

Acquiescence Ruling.

SUMMARY: In accordance with 20 CFR

422.406(b)(2), the Commissioner of

Social Security gives notice of Social

Security Acquiescence Ruling 97-3(11).

EFFECTIVE DATE: August 4, 1997.

FOR FURTHER INFORMATION CONTACT:

Gary Sargent, Litigation Staff, Social

Security Administration, 6401 Security

Boulevard, Baltimore, MD 21235, (410)

965-1695.

SUPPLEMENTARY INFORMATION: Although

not required to do so pursuant to 5

U.S.C. 552(a)(1) and (a)(2), we are

publishing this Social Security

Acquiescence Ruling in accordance

with 20 CFR 422.406(b)(2).

A Social Security Acquiescence

Ruling explains how we will apply a

holding in a decision of a United States

Court of Appeals that we determine

conflicts with our interpretation of a

provision of the Social Security Act (the

Act) or regulations when the

Government has decided not to seek

further review of that decision or is

unsuccessful on further review.

We will apply the holding of the

Court of Appeals decision as explained

in this Social Security Acquiescence

Ruling to claims at all levels of

administrative adjudication within the

Eleventh Circuit. This Social Security

Acquiescence Ruling will apply to all

determinations and decisions made on

or after August 4, 1997. If we made a

determination or decision on your

application for benefits between

December 30, 1992, the date of the Court

of Appeals decision, and August 4,

1997, the effective date of this Social

Security Acquiescence Ruling, you may

request application of the Ruling to your

claim if you first demonstrate, pursuant

to 20 CFR 404.985(b), that application of

the Ruling could change our prior

determination or decision.

If this Social Security Acquiescence

Ruling is later rescinded as obsolete, we

will publish a notice in the Federal

Register to that effect as provided for in

20 CFR 404.985(e). If we decide to

relitigate the issue covered by this

Social Security Acquiescence Ruling as

provided for by 20 CFR 404.985(c), we

will publish a notice in the Federal

Register stating that we will apply our

interpretation of the Act or regulations

involved and explaining why we have

decided to relitigate the issue.

(Catalog of Federal Domestic Assistance

Program Nos. 96.001 Social Security -

Disability Insurance; 96.002 Social Security -

Retirement Insurance; 96.004 Social Security

- Survivors Insurance; 96.005 Special

Benefits for Disabled Coal Miners.)

Dated: December 20, 1995.

Shirley S. Chater,

Commissioner of Social Security.

Editorial note: This document was

received at the Office of the Federal Register

July 28, 1997.

Acquiescence Ruling 97-3(11)

Daniels on Behalf of Daniels v.

Sullivan, 979 F.2d 1516 (11th Cir.

1992)—Application of a State’s Intestacy

Law Requirement that Paternity be

Established During the Lifetime of the

Father—Title II of the Social Security

Act.

Issue: Whether, in determining a

child’s status under section 216(h)(2)(A)

of the Social Security Act (the Act), the

Social Security Administration (SSA),1

in applying the requirement imposed by

a State’s law of intestate succession that

an illegitimate child establish paternity

during the lifetime of the father, created

an insurmountable barrier that violated

the constitutional right to equal

protection of the law.

Statute/Regulation/Ruling Citation:

Sections 202(d) and 216(h)(2)(A) of the

Social Security Act (42 U.S.C. 402(d)

and 416(h)(2)(A)); 20 CFR 404.354(b).

Circuit: Eleventh (Alabama, Florida,

Georgia)

Daniels on Behalf of Daniels v.

Sullivan, 979 F.2d 1516 (11th Cir. 1992).

Applicability of Ruling: This Ruling

applies to determinations or decisions at

all administrative levels (i.e., initial,

reconsideration, Administrative Law

Judge (ALJ) hearing and Appeals

Council).

Description of Case: On April 11,

1985, Cassandra Daniels, who was 14

years old, gave birth to a son, Adonis

Daniels. Daniels claimed that Kirby

Marshall was Adonis’ father even

though Daniels and Marshall never

married or lived together, and a father’s

name was not listed on the child’s birth

certificate. Although Marshall did not

provide support for Adonis, both

Daniels’ mother and Marshall’s mother

stated that he was the father. Marshall

died in an automobile accident on

September 12, 1987.

In November 1987 Daniels filed an

application, on behalf of Adonis, for

child’s benefits on Marshall’s earnings

record but the claim was denied, both

initially and upon reconsideration,

because the child did not satisfy any of

the statutory entitlement requirements.

After a hearing, an ALJ found that

Adonis was not Marshall’s ‘‘child’’

under section 216(h)(3) of the Act

because the deceased wage earner was

not living with or contributing to the

support of Adonis at the time of his

death. The ALJ also found that Adonis

was not entitled under the other

definitions of child in section 216(h),

including the definition incorporated by

reference from the Georgia law of

intestate succession.2 However, the ALJ

stated that Adonis appeared to be the

child of the worker. The Appeals

Council denied Daniels’ request for

review of the ALJ’s decision.

The plaintiff sought judicial review

alleging that SSA’s application of the

Georgia statutory scheme for intestate

succession was unconstitutional

because it denied her child equal

protection of law. The district court

affirmed SSA’s findings and rejected the