[Federal Register Volume 65, Number 194 (Thursday, October 5, 2000)]
[Notices]
[Pages 59476-59478]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-25594]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43371; File No. SR-Amex-00-43]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the American Stock Exchange LLC Amending Its Rules To Require 
Companies to Publicly Disclose Receipt of a Delisting Notice

September 27, 2000.
    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 August 16, 2000, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change to amend its rules to require 
companies to publicly disclose receipt of a written delisting notice 
frame the Exchange. On September 26, 2000, the Amex submitted Amendment 
No. 1 to the proposal to make certain technical modifications.\3\ The 
proposal, as amended, is described in Items I, II, and III below, which 
Items have been prepared by the Exchange. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See letter from Michael J. Ryan, Senior Vice President, 
Chief of Staff, and Senior Legal Office, Amex, to Alton Harvey, 
Office Chief, Division of Market Regulation, Commission, dated 
September 20, 2000.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    It is currently the policy of the Exchange whenever delivering a 
delisting notice to a company whose securities trade on the Exchange to 
require the company to disclose the receipt of such delisting notice in 
a public announcement. The Exchange proposes to codify the requirements 
of this policy in its rules. Below is the text of the proposed rule 
change. Proposed new language appears in italics; proposed deletions 
appear in brackets.
* * * * *
Sec. 401. OUTLINE OF EXCHANGE DISCLOSURE POLICIES
    The Exchange considers that the conduct of a fair and orderly 
market requires every listed company to make available to the public 
information necessary for informed investing and to take reasonable 
steps to ensure that all who invest in its securities enjoy equal 
access to such information. In applying this fundamental principle, the 
Exchange has adopted the following [six]seven specific policies 
concerning disclosure, each of which is more fully discussed (in a 
Question and Answer format) in Sec. 402:
    (a)-(f) No change.
    (g) Receipt of Written Delisting Notice--A company is required to 
publicly disclose that it has received a written notice indicating that 
the Exchange has determined to remove a company's securities from 
listing (or unlisted trading) as a result of non-compliance with the 
continued listing requirements. (See Sec. 1010).
Sec. 402. EXPLANATION OF EXCHANGE DISCLOSURE POLICIES
    (a)-(f) No change.
    (g) Receipt of Written Delisting Notice.
    Q. What kinds of information should be included in the public 
announcement?
    A. The public announcement must indicate that the Exchange has 
determined to remove the company's securities from listing (or unlisted 
trading) and the reason(s) for the determination. In order to assist 
the company in the preparation of the public announcement, Exchange 
staff will provide the company with the Section(s) upon which its 
determination was based and a template for disclosure.
    Q. When must the public announcement be made?
    A. The public announcement must be made as promptly as possible, 
but no more than seven calendar days following the company's receipt of 
the written notice from the Exchange. The Exchange notes that companies 
should not construe the seven calendar day time frame as a safe harbor 
for disclosure.
    Q. What steps must be taken before the public announcement is made?
    A. The public announcement must be provided to Amex's StockWatch 
Department at (212) 306-8383 (phone), (212) 306-1488 (facsimile) and 
Listing Qualifications Department at (212) 858-5267 (phone), (212) 858-
4780 (facsimile) prior to public dissemination.
    Q. What action may the Exchange take if a company fails to make a 
public announcement indicating that the Exchange has determined to 
remove the company's securities from listing (or unlisted trading)?
    A. Failure by a company to make the required public announcement 
will result in the institution of a trading halt in the company's 
securities until the announcement is made, even if the company appeals 
the determination as provided for under Section 1010. If the company 
fails to make the announcement by the time that the Adjudicatory 
Council issues its decision, that decision will also determine whether 
to delist the company's securities for failure to make the public 
announcement.
    Q. Does Section 1010(b) relieve the company of its disclosure 
obligations under the federal securities laws?
    A. No. Section 1010(b) does not relieve the company of its 
obligation to make a materiality assessment of the pending delisting 
action as it may relate to the disclosure requirements of the federal 
securities laws, nor should it be construed as providing a safe harbor 
under the federal securities laws. The Exchange suggests that the 
company consult with corporate/securities counsel in assessing its 
disclosure

[[Page 59477]]

obligations under the federal securities laws.
* * * * *
Sec. 1010. DELISTING PROCEDURES
    Whenever the Exchange determines that it is appropriate to consider 
removing a security from listing (or from unlisted trading) for other 
than routine reasons (such as redemptions, maturities, etc.), it will 
follow, insofar as practicable, the following procedures:
    (a) No change.
    (b) If, after such conference, the Exchange determines that the 
security should be removed, it will notify the company in writing, 
indicating the basis for such decision and the specific delisting 
policies and guidelines under which action will be taken. Such notice 
will also inform the company that it may appeal to the Board of 
Governors of the Exchange, or such committee or committees as the Board 
may authorize, and request a hearing. A company shall make a public 
announcement through the news media that it has received such notice, 
including the specific policies and guidelines upon which the 
determination was based. Prior to the release of the public 
announcement, the company shall provide such disclosure to Amex's 
StockWatch and Listing Qualifications Departments.* The public 
announcement shall be made as promptly as possible, but not more than 
seven calendar days following receipt of the written notice from the 
Exchange.
---------------------------------------------------------------------------

    *Notification may be provided to Amex's StockWatch Department at 
(212) 306-8383 (telephone), (212) 306-1488 (facsimile), and Listing 
Qualifications Department at (212) 858-5267 (telephone), (212) 858-
4780 (facsimile).
---------------------------------------------------------------------------

    (c)-(h) 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 regarding the proposed rule change. 
The text of these statements may be examined at the places specified in 
Item IV below. The Exchange 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
    The Exchange presently has a policy of requiring any company whose 
securities are listed on the Exchange (or trade on the Exchange 
pursuant to unlisted trading privileges) to publicly disclose its 
receipt from the Exchange of a written delisting notice for failure to 
comply with the Exchange's continued listing guidelines. The purpose of 
the proposed rule change is to codify this policy in order to protect 
present and potential investors in the securities of such a company.
    In order to provide investors with the greatest protection 
possible, the Exchange believes that a company's public announcement of 
pending delisting should not only disclose the receipt of a written 
notice from the Exchange, but also indicate upon which section(s) of 
the Amex Company Guide the determination to delist has been based. The 
Exchange believes that requiring companies to disclose to investors 
which specific listing guideline(s) a company has failed to meet will 
better enable investors to make informed decisions regarding the 
advisability of making or maintaining investments in the securities of 
such company. The Exchange additionally proposes that a company be 
required to make public its announcement regarding the pending 
delisting as promptly as possible, but not more than seven calendar 
days following its receipt of the written delisting notice from the 
Exchange. The Amex believes that the proposed seven-day time frame is 
consistent with its current policy and that such time frame would 
provide the subject company with sufficient opportunity to prepare its 
public announcement and also ensure that investors receive the 
information in a timely manner. If a company fails to disclose the 
receipt of a written delisting notice under the proposed requirement, 
trading of its securities shall be halted until the announcement has 
been made, even if the company appeals the underlying delisting 
determination as provided for under Section 1010. In this regard, the 
Exchange proposes that, if the company has failed to make the required 
announcement before the Adjudicatory Council issues its decision with 
regard to the company's appeal, such decision by the Adjudicatory 
Council whether to delist the company's securities may also be based on 
the company's failure to make the public announcement.
2. Statutory Basis
    The Exchange believes that the proposed rule change, whose purpose 
is to ensure that investors be notified when the Exchange has 
determined to delist a company's securities for non-compliance with the 
continued listing guidelines, is consistent with the provisions of 
Section 6(b)(5) of the Act \4\ which requires that an exchange have 
rules that are, in general, designed to protect investors and the 
public interest.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Amex believes that the proposed rule change will not impose any 
burden on competition.

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 with respect 
to the proposed rule change.

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so findingse 450 or (ii) 
as to which the self-regulatory organization consents, the Commission 
will:
    A. By order approve such proposed rule change, or
    B. Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. 
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

[[Page 59478]]

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 will also be available for inspection and copying at the 
principal office of the Amex. All submissions should refer to file 
number SR-Amex-00-43 and should be submitted by October 26, 2000.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\5\
---------------------------------------------------------------------------

    \5\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-25594 Filed 10-04-00; 8:45 am]
BILLING CODE 8010-01-M