61206 Federal Register / Vol. 65, No. 200 / Monday, October 16, 2000 / Notices

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

2 17 CFR 240.19b–4.

3The Amex filed its proposed rule change on

August 16, 2000. On September 29, 2000, the Amex

filed Amendment No. 1 that entirely replaced the

original rule filing. See Letter from Michael J. Ryan,

Senior Vice President, Chief of Staff and Senior

Legal Officer, Amex, to Katherine A. England,

Assistant Director, Division of Market Regulation,

Commission (September 29, 2000) (‘‘Amendment

No. 1’’). In Amendment No. 1, the Amex also

designated SR–Amex–00–46 as a proposed rule

change under Section 19(b)(2) of the Act. 15 U.S.C.

78s(b)(2).

4The National Association of Securities Dealers,

Inc., through its wholly owned subsidiary The

Nasdaq Stock Market Inc., has filed a similar

proposed rule change (SR–NASD–00–50). See

Securities Exchange Act Release No. 43420 (October

6, 2000).

5 It is the Exchange’s understanding that the

Commission believes that this activity is not

appropriate under Section 5 of the Securities Act

of 1933. See 15 U.S.C. 77e

6 15 U.S.C. 78f(b).

7 15 U.S.C. 78f(b)(5).

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43419; File No. SR–Amex–

00–46]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the American Stock Exchange LLC

Adopting Commentary to Section 713

That Defines ‘‘Public Offering’’ for

Purposes of Shareholder Approval

Rules

October 6, 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 (‘‘SEC’’ or ‘‘Commission’’)

the proposed rule change as described

in Items I, II, and III below, which Items

have been prepared by the Exchange.3

The Commission is publishing this

notice to solicit comments on the

proposed rule change, as amended, from

interested persons.4

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Amex proposes to adopt

Commentary .01 to Section 713, to

define the term ‘‘public offering’’ for

purposes of the Exchange’s shareholder

approval rules. Below is the text of the

proposed rule change, which is entirely

new.

* * * * *

Amex Rules, Sec. 713. Other Transactions,

Commentary .01

Section 713 provides that shareholder

approval is required for ‘‘a transaction

involving the sale or issuance by the

company of common stock (or securities

convertible into or exercisable for common

stock) equal to 20 percent or more of

presently outstanding stock for less than the

greater of book or market value of the stock.’’

Under this rule, shareholder approval is not

required for a ‘‘public offering.’’

Issuers are encouraged to consult with

Exchange staff in order to determine if a

particular offering is a ‘‘public offering’’ for

purposes of the shareholder approval rules.

Generally, a firm commitment underwritten

securities offering registered with the

Securities and Exchange Commission will be

considered a public offering for these

purposes. Likewise, any other securities

offering which is registered with the

Securities and Exchange Commission and

which is publicly disclosed and distributed

in the same general manner and extent as a

firm commitment underwritten securities

offering will be considered a public offering

for purposes of the shareholder approval

rules. However, Exchange staff will not treat

an offering as a ‘‘public offering’’ for

purposes of the shareholder approval rules

merely because they are registered with the

Commission prior to the closing of the

transaction.

When determining whether an offering is

a ‘‘public offering’’ for purposes of these

rules, Exchange staff will consider all

relevant factors, including but not limited to:

(i) The type of offering (including whether

the offering is conducted by an underwriter

on a firm commitment basis, or an

underwriter or placement agent on a bestefforts basis, or whether the offering is selfdirected by the issuer);

(ii) The manner in which the offering is

marketed (including the number of investors

offered securities, how those investors were

chosen, and the breadth of the marketing

effort);

(iii) The extent of the offering’s distribution

(including the number and identify of the

investors who participate in the offering and

whether any prior relationship existed

between the issuer and those investors);

(iv) The offering price (including the extent

of any discount to the market price of the

securities offered); and

(v) The extent to which the issuer controls

the offering and its distribution.

* * * * *

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

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

Section 713 of the Amex Company Guide

requires shareholder approval for stock

issuances of 20 percent or more of an issuer’s

total shares outstanding, offered at less than

the greater of book or market value. The

applicable rules further provide, however,

that shareholder approval is not required for

a ‘‘public offering,’’ although that term is not

defined in the rules. The Exchange proposes

to adopt Commentary .01 to Section 713, to

clarify the definition of ‘‘public offering’’ for

issuers and interested parties. According to

the Amex, a number of issuers have recently

inquired as to whether certain large, belowmarket offerings were ‘‘public offerings’’

because the transactions were registered with

the Commission prior to closing the

transactions.5 The Exchange notes that

historically, for purposes of assessing the

applicability of the shareholder approval

rules, it has interpreted ‘‘public offering’’ as

a broadly distributed, registered offering

based on a firm commitment underwriting.

Conversely, the Exchange does not consider

a transaction to be a ‘‘public offering’’ for

these purposes when the transaction is of

limited distribution and/or is not based on a

firm commitment underwriting, even if the

offering was registered. Because the offerings

described above had limited distributions

and, in some cases, offerees that were predetermined by the issuer, the Exchange

believes that these transactions were not

‘‘public offerings’’ for purposes of the

shareholder approval rules.

The Amex expects that proposed

Commentary .01 will ensure issuer

understanding of how Amex determines

whether a transaction is a ‘‘public offering’’

for purposes of the shareholder approval

rules. The proposed Commentary identifies a

number of factors that will be considered in

establishing the existence of a ‘‘public

offering.’’ Such factors include the type of

offering; the marketing of the offering; the

extent of the offering’s distribution; the

offering price; and the extent to which the

issuer controls the offering and its

distribution. Decisions as to whether a

transaction is a ‘‘public offering’’ for

purposes of these rules will be based on the

facts and circumstances surrounding each

particular transaction.

2. Statutory Basis

The Exchange believes that the proposed

Commentary to Section 713 is designed to

educate issuers and other interested parties

as to how the Exchange defines a ‘‘public

offering’’ and ensure that issuers recognize

which transactions require shareholder

approval under the Exchange’s rules. For this

reason, the Exchange represents that the

proposed rule change is consistent with

Section 6(b) of the Act 6 in general, and

furthers the objectives of Section 6(b)(5) 7 in

particular, in that it is 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.

B. Self-Regulatory Organization’s Statement

on Burden on Competition

The Amex does not believe that the

proposed rule change will impose any

burden on competition that is not necessary

Federal Register / Vol. 65, No. 200 / Monday, October 16, 2000 / Notices 61207

8 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3See August 4, 2000 letter from Jurij Trypupenko,

Esq. (‘‘Trypupenko’’), PHLX, to Alton S. Harvey

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

(‘‘Division’’), SEC, and attachment (‘‘Amendment

No. 1’’). Amendment No. 1 converts the original

filing to a non-controversial proposal pursuant to

Section 19(b)(3)(A) of the Act and Rule 19b–4(f)(6)

thereunder, which renders the proposal effective

upon filing with the Commission. The Commission

accepts the original proposal as notice of the

PHLX’s intention to file the proposed rule change

as a non-controversial proposal. See 15 U.S.C.

78s(b)(3)(A) and 17 CFR 240.19b–4(f)(6)(iii).

4See August 31, 2000 letter from Trypupenko,

PHLX, to Harvey, Division, SEC and attachment

(‘‘Amendment No. 2’’). In Amendment No. 2, the

PHLX deleted references to decimal ‘‘trading’’ and

added language to refer to ‘‘quoting’’ and ‘‘pricing’’

in decimals. Amendment No. 2 also included

proposed language to reflect an amendment to the

Intermarket Trading System Plan regarding decimal

pricing. See also September 7, 2000 letter from

Trypupenko, PHLX, to Harvey, Division, SEC

(‘‘Amendment No. 3’’). In Amendment No. 3, the

Exchange deleted section (c) of proposed Rule 1034.

See also October 6, 2000 letter from Trypupenko,

PHLX, to Harvey, Division, SEC (‘‘Amendment No.

4’’). In Amendment No. 4, the PHLX made minor,

technical corrections to certain proposed rule

language.

5 15 U.S.C. 78s(b)(3)(A).

6 17 CFR 240.19b–4(f)(6).

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

The Exchange has neither solicited nor

received comments on 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

finding or (ii) as to which the Exchange

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, as amended, is

consistent with the Act. Persons making

written submissions should file six copies

thereof with the Secretary, Securities and

Exchange Commission, 450 Fifth Street,

N.W., Washington, D.C. 20549–0609. 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 provisions of 5 U.S.C. 552, will be

available for inspection and copying at the

Commission’s Public Reference Room.

Copies of such filing will also be available for

inspection and copying at the principal office

of the Exchange. All submissions should

refer to the File No. SR–Amex–00–46 and

should be submitted by November 6, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.8

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–26465 Filed 10–13–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43421; File No. SR–PHLX–

00–05]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change and

Amendment Nos. 1–4 by the

Philadelphia Stock Exchange, Inc.

Relating to Decimal Pricing

October 6, 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 January

10, 2000, the Philadelphia Stock

Exchange, Inc. (‘‘PHLX’’ 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 PHLX. On

August 7, 2000, the Exchange filed an

amendment to the proposed rule

change, which amendment completely

replaced and superseded the original

filing.3 Subsequently, the PHLX filed

three additional amendments to the

proposed rule change.4 The PHLX filed

the proposal pursuant to Section

19(b)(3)(A) of the Act,5 and Rule 19b–

4(f)(6) thereunder,6 which renders the

proposal effective upon filing with the

Commission. The Commission is

publishing this notice to solicit

comments on the proposed rule change,

as amended, from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The PHLX proposes to amend its rules

to provide for the implementation of

decimal pricing, in accordance with the

joint submission to the Commission by

the PHLX and other interested parties

dated July 24, 2000, entitled ‘‘Decimals

Implementation Plan for the Equities

and Options Markets’’ (‘‘Decimal Plan’’).

Proposed new PHLX Rule 134

establishes that, during the

decimalization phase-in period

established by the Decimals Plan,

securities will be priced in fractions and

in decimals, and that the Exchange may

issue decimalization guidelines to its

members, member organizations,

participants, and participant

organizations regarding, among other

things, what equities and options on

equities will be quoted in decimals and

when, the timing of partial or full

conversion to decimal pricing, and open

order conversion and dividend

processing.

In addition, the PHLX proposes to

amend the following Options Advices:

A–9, All-or-None Option Orders; A–11,

Responsibility to Make Ten-Up Markets;

B–11, Crossing, Facilitation and

Solicited Orders; and F–6, Option Quote

Parameters. The Exchange believes that

the proposed amendments to these

provisions are non-controversial in

nature, and are necessary for the

Exchange to convert from fraction to

decimal pricing in accordance with the

Decimals Plan.

Finally, the PHLX proposes to amend

Rule 2001 to conform to the rule to

amendments made to the Intermarket

Trading System Plan.

The text of the proposed rule change,

as amended, is available at the PHLX

and at the Commission.

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

PHLX included statements concerning

the purpose of and basis for its proposal

and discussed any comments it received

regarding the proposal. The text of these

statements may be examined at the

places specified in Item IV below. The

PHLX has prepared summaries, set forth

in Sections A, B and C below, of the

most significant aspects of such

statements.