[Federal Register Volume 62, Number 218 (Wednesday, November 12, 1997)]
[Notices]
[Pages 60739-60740]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-29747]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-39295; File No. SR-PCX-97-38]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Pacific Exchange, Inc. 
Relating to Charges and Recommended Fines for Late SIPC Reports

November 4, 1997.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\, notice is hereby given that on October 14, 1997, the 
Pacific Exchange, Inc. (``PCX'' or ``Exchange'') filed with the 
Securities and Exchange Commission (``Commission'' or ``SEC'') the 
proposed rule change as described in Items, I II and III below, which 
Items have been prepared by the PCX. The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1)(1994).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to modify the late charges and 
recommended fines applicable to members' late filing of forms and 
assessments with the Exchange pursuant to the Securities Investor 
Protection Act of 1970 (``SIPA'').\2\ The text of the proposed rule 
change is below. Additions are italicized; deletions are bracketed.
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    \2\ 15 U.S.C. 78aaa-78111(1994).
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Text of the Proposed Rule Change

Financial Reports

para.3405
    Rule 2.12(a)--(b)(1)--No change.
    Rule 2.12(b)(2). Each member organization for which the Exchange is 
the designated collection agent must [shall] file with the Exchange 
such forms and assessments as are required pursuant to the Securities 
Investor Protection Act of 1970. Any member organization that fails to 
file such form or assessment in a timely manner will [shall] be subject 
to a late filing charge as follows:

------------------------------------------------------------------------
                 Number of days late                    Amount of charge
------------------------------------------------------------------------
1-30.................................................       [$200]  $100
31-60................................................         [400]  200
61-90................................................         [800]  300
------------------------------------------------------------------------

Provided however: (A) If a member organization files its SIPC form and 
assessment after its receipt of SIPC's final late notice, but files 
within five business days after its receipt of SIPC's final late 
notice, such member organization will [shall] be subject to a fine 
pursuant to Rule 10.13; and (B) if a member organization fails to file 
its SIPC form and assessment within five business days after its 
receipt of SIPC's final late notice, such member organization will 
[shall] be subject to formal disciplinary action pursuant to Rule 10.3.

Commentary:

    .01-.02--No change.
* * * * *

[[Page 60740]]

Minor Rule Plan

para.6133
    Rule 10.13(a)--(j)--No change.
    (k) Minor Rule Plan: Recommended Fine Schedule
    (i)-(ii)--No change.
    (iii) Record Keeping and Other Minor Rule Violations
    1. No change.
    2. Failure to file a Securities Investors Protection Corporation 
form and assessment in a timely manner. (Rule 2.12(b))


[$1,200.00]                                  [$1,800.00]     [$2,400.00]
$500                                              $1,000          $1,500
                                                                        

    3.-6. 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, the Exchange 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 PCX 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

(a) Purpose
    PCX Rule 2.12(b)(2) provides that each member organization is 
required to file with the Exchange such forms and assessments as are 
required pursuant to SIPA. Rule 2.12(b)(2) further provides that any 
member organization that fails to file such form or assessment will be 
subject to a late charge of $200 if 1-30 days late; $400 if 31-60 days 
late; and $800 if 61-90 days late. The Exchange is proposing to reduce 
these charges to $100, $200 and $300, respectively.
    PCX Rule 2.12(b)(2) further provides that, if a member organization 
files its form and assessment after its receipt of the final late 
notice from the Securities Investor Protection Corporation (``SIPC''), 
but files within five business days after its receipt of SIPC's final 
late notice, such member organization will be subject to a fine 
pursuant to the Exchange's Minor Rule Plan.\3\ The current recommended 
fines for such violations are $1,200 for a first violation, $1,800 for 
a second violation and $2,400 for a third violation.\4\ The Exchange is 
proposing to reduce these recommended fines to $500, $1,000 and $1,500 
for first, second and third violations, respectively.
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    \3\ PCX rule 10.13(j)(2).
    \4\ PCX Rule 10.13(k)(iii)(2).
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(b) Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) of the Act, in general, and Section 6(b)(5) of the Act, in 
particular, in that it is designed to promote just and equitable 
principles of trade and to protect investors and the public interest. 
The Exchange notes that the amounts of the charges and fines were 
originally based upon proposed fines and charges for late FOCUS 
Reports.\5\ However, after reconsidering the levels of these fines, the 
Exchange believes that the filing of late FOCUS reports raises more 
serious investor protection concerns and warrants a higher fine than 
the filing of late SIPC reports.
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    \5\ Securities Exchange Act Release No. 32510 (June 24, 1993) 58 
FR 35491 (July 1, 1993) (order approving File No. SR-PSE-92-15).
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    The Exchange also believes that the proposal is consistent with 
Section 6(b)(4) in that it provides for the equitable allocation of 
reasonable charges among its members and it is consistent with Section 
6(b)(7) in that it provides a fair procedure for the disciplining of 
members. The late charges and fines applicable to late SIPC reports 
were adopted originally in 1992 and 1993, respectively.\6\ Since that 
time, the Exchange has reconsidered the levels of these recommended 
fines and has determined that the penalties are too severe for the 
violations at issue. The Exchange notes that SIPC has determined, for 
the years 1996 and 1997, to assess all of its members a flat minimum 
assessment of $150 (rather than a percentage of net revenues). In that 
regard, the Exchange believes that a reduction in charges and 
recommended fines for lateness is warranted.
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    \6\ Securities Exchange Act Release Nos. 33347 (December 15, 
1993) 58 FR 67888 (December 22, 1993) (order approving File No. SR-
PSE-93-21)(adopting late charges); and 32510 (June 24, 1993) 58 FR 
35491 (July 1, 1993) (order approving File No. SR-PSE-92-
15)(amending the Exchange's Minor Rule Plan and adopting recommended 
fines).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose 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 on the proposed rule change were neither solicited 
nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The proposed rule change establishes or changes a due, fee, or 
other charge imposed by the Exchange and therefore, has become 
effective on October 14, 1997, pursuant to Section 19(b)(3)(A)(ii) \7\ 
of the Act and Rule 19b-4(e)(2) \8\ thereunder. 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.
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    \7\ 15 U.S.C. 78s(b)(3)(A)(ii) (1994).
    \8\ 17 CFR 240.19b-4(e)(2) (1997).
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IV. 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, N.W., Washington, D.C. 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 Room, 450 Fifth Street, N.W., Washington, 
D.C. 20549. Copies of such filing will also be available for copying at 
the principal office of the PCX. All submissions should refer to File 
No. SR-PCX-97-38 and should be submitted by December 3, 1997.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12) (1997).
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Margaret H.McFarland,
Deputy Secretary.
[FR Doc. 97-29747 Filed 11-10-97; 8:45 am]
BILLING CODE 8010-01-M