[Federal Register Volume 65, Number 188 (Wednesday, September 27, 2000)]
[Notices]
[Pages 58136-58137]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-24735]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43308; File No. SR-Amex-00-12]


Self-Regulatory Organizations; Order Approving Proposed Rule 
Change by the American Stock Exchange LLC Relating to Procedures for 
the Review of Initial Listing Decisions

September 20, 2000.

I. Introduction

    On February 28, 2000, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``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 relating to procedures for the 
review of initial listing determinations. The proposed rule change was 
published for comment in the Federal Register on July 13, 2000.\3\ This 
order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 43013 (July 13, 2000), 
65 FR 43386.
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II. Description of the Proposal

    Amex original listing criteria, set forth in Part 1 of the Amex 
Company Guide, provide quantitative and qualitative criteria for the 
original listing of securities on the Exchange. Section 101 of the Amex 
Company Guide currently provides that the approval of a listing 
application is a matter solely within the discretion of the Exchange. 
Thus, the Exchange currently has the discretion to list the securities 
of an applicant that may not satisfy each of the listing guidelines and 
to deny the listing of an applicant's securities that do satisfy those 
guidelines.\4\
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    \4\ The Commission believes these provisions should be invoked 
by the Exchange only under circumstances that would be consistent 
with the public interest. Since investors rightfully presume that 
the companies listed on the Amex meet the quantitative and 
qualitative guidelines, these provisions should not be used by the 
Exchange as a way to permit issuers to bypass the numerical 
requirements for listing. The Commission would be concerned to find 
the Amex routinely approving listing for issuers that have not met 
the quantitative guidelines.
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    Proposed Part 12 codifies the procedures for the review of Amex 
Staff listing determinations by a subcommittee of the Committee on 
Securities (as defined in Section 1204) and also sets forth the 
procedures with respect to appeals from the subcommittee to the Amex 
Adjudicatory Council (as defined in Section 1205) or the Amex Board of 
Governors. Under

[[Page 58137]]

Section 1202, the Exchange will notify applicants of a decision to deny 
a application, citing the specific quantitative or qualitative 
standards in Part 1 of the Amex Company Guide that were not met. The 
Exchange will notify the applicant that, upon request, the applicant 
will be provided an opportunity for a hearing under these procedures. 
An applicant may request a written or oral hearing within 7 days of the 
date of the Staff's determination to deny the application.\5\ Section 
1203 specifies written materials that the applicant may submit in 
connection with a hearing.
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    \5\ The Amex will not charge a hearing fee to appeal the 
Exchange Staff's listing determination. Telephone conservation 
between Michael Cavalier, Associate General Counsel, Amex, and Susie 
Cho, Attorney, Division of Market Regulation (``Division''), 
Commission, April 19, 2000.
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    Section 1204 provides that all hearings will be conducted before a 
subcommittee of the Committee on Securities (``Subcommittee'') 
consisting of at least two persons. Following the hearing, the 
Subcommittee must issue a written decision (``Subcommittee Decision'') 
citing specific grounds for the Subcommittee's determination. The 
Subcommittee will promptly provide its decision to the applicant and 
will also provide notice that the applicant may request review by the 
Adjudicatory Council \6\ within 15 days of the date of the Subcommittee 
Decision.\7\ The applicant will also be notified that the Adjudicatory 
Council may call for review of the Subcommittee Decision within 45 
days, at the request of one or more of the Council's members, as 
provided in Section 1205.
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    \6\ The Amex Adjudicatory Council, is established by the Amex 
Board pursuant to Article II, Section 6 of the Amex Constitution. 
The Council consists of six individuals, all of whom are nominated 
by the Amex Nominating Committee and elected by the regular and 
options principal members voting together as a single class. Three 
of the Council's members are Floor Governors and three are Public 
Governors.
    \7\ The Amex will not charge a hearing fee to appeal the 
Subcommittee's determination. Telephone conservation between Michael 
Cavalier, Associate General Counsel, Amex, and Susie Cho, Attorney, 
Division, Commission, April 19, 2000.
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    The Adjudicatory Council will consider the written record and can 
hold additional hearings. It may also recommend that the Amex Board 
consider the matter. The Adjudicatory Council will set forth specific 
grounds for its decision and provide notice that the Amex Board may 
call the decision for review at any time before its next meeting which 
is at least 15 days after the decision. If the Amex Board conducts a 
discretionary review, the applicant will be provided with a written 
decision affirming, modifying, reversing, or remanding the Adjudicatory 
Council's decision.\8\ The Board's decision constitutes final action of 
the Exchange and will take immediate effect unless it specifies to the 
contrary.\9\
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    \8\ See Section 1206(c).
    \9\ The Commission notes that any applicant aggrieved by a final 
action of the Amex may apply for review to the Commission in 
accordance with Section 19 of the Act.
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    Section 1207 describes the documents included in the written 
record. Section 1208 provides for the maintenance of the written record 
of review, as well as any documents excluded from the written record.
    Section 1211 prohibits the Amex Staff or an applicant from making 
any communication relevant to the merits of a proceeding with anyone 
who is participating in or advising in the consideration of a matter 
unless the applicant and the appropriate Amex Staff have been provided 
notice and an opportunity to participate in the communication. The 
Exchange currently expects that Amex Staff generally will waive their 
rights under this provisions in the interest of providing a non-
adversarial business forum for listing decisions.\10\
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    \10\ Although members of the Amex Staff may waive their rights 
under Section 1211, the Commission expects that the record on review 
will include all of the information used as the basis for the Amex's 
decision.
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III. Discussion

    The Commission finds that the Exchange's proposal is consistent 
with the requirements of Section 6 of the Act,\11\ and furthers the 
objectives of Section 6(b)(5) \12\ in particular because it is designed 
to prevent fraudulent and manipulative acts and practices, to promote 
just and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in securities, and, in general, to protect investors and the public 
interest.
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    \11\ In approving this rule, the Commission has considered the 
proposed rule's impact on efficiency, competition, and capital 
formation. 15 U.S.C. 78c(f).
    \12\ 15 U.S.C. 78f(b)(5).
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    The Commission believes that the proposed rule change, by 
establishing procedures for the review of initial listing 
determinations, will provide clarity and transparency to issuers 
concerning the Amex's decisionmaking process. The new rules require the 
Exchange to notify applicants of a decision to deny listing and set 
forth the specific grounds for the determination at each level of 
review.
    The proposed rules also provide a fair and independent review for 
issuers, with provisions detailing the maintenance of the record on 
review and prohibiting communications outside of the official 
proceeding. The Commission further notes that the proposed rules are 
modeled on the Nasdaq listing process.\13\ Similar to the rules 
proposed herein, the rules of the National Association of Securities 
Dealers, Inc. codify the procedures for the review of initial listing 
determinations.\14\
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    \13\ See NASD 4800 Series Rules.
    \14\ Securities Exchange Act Release No. 41367 (May 13, 1999), 
64 FR 25942.
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IV. Conclusion

    For the reasons discussed above, the Commission finds that the 
proposal is consistent with the Act and the rules and regulations 
thereunder.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\15\ that the proposed rule change, SR-Amex-00-12, be and hereby is 
approved.
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    \15\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-24735 Filed 9-26-00; 8:45 am]
BILLING CODE 8010-10-M