69596 Federal Register / Vol. 65, No. 223 / Friday, November 17, 2000 / Notices

6The Commission believes that this activity is not

appropriate under Section 5 of the Securities Act

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

7 15 U.S.C. 78o–3(b)(6).

8 In approving the proposal, the Commission has

considered the rule’s impact on efficiency,

competition, and capital formation. 15 U.S.C. 78c(f).

9 15 U.S.C. 78s(b)(2).

10 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

‘‘public offerings’’ because the

transactions, which were initiated

pursuant to exceptions to the

registration requirements, were

registered with the Commission prior to

closing the transactions.6 Historically,

for purposes of assessing the

applicability of the shareholder

approval rules, Nasdaq staff has

interpreted ‘‘public offering’’ as a

broadly distributed, registered offering

based on a firm commitment

underwriting. Conversely, Nasdaq staff

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 had limited

distributions and, in some cases, the

offerees were pre-determined by the

issuer, Nasdaq believed that these

transactions were not ‘‘public offerings’’

for purposes of the shareholder approval

rules.

To help to ensure that all issuers

understand how Nasdaq will determine

whether a transaction is a ‘‘public

offering’’ for purposes of the

shareholder approval rules, Nasdaq has

prepared the proposed Interpretative

Material. Determinations as to whether

a transaction is a ‘‘public offering’’ for

purposes of these rules will be made

based on the facts and circumstances

surrounding each particular transaction.

The proposed Interpretative Material

identifies a number of factors that will

be considered when determining

whether an offering is a ‘‘public

offering,’’ including 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.

II. Discussion

The Commission finds that the

proposed rule change is consistent with

the provisions of Section 15A(b)(6) 7 of

the Act, which requires, among other

things, that the Association’s rules be

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.8 The

Commission believes the Interpretative

Material is designed to educate issuers

and other interested parties as to how

Nasdaq defines a ‘‘public offering’’ in

order to ensure that issuers are aware as

to which transactions require

shareholder approval under the NASD’s

rules, thus promoting just and equitable

principles of trade and protecting

investors and the public interest.

It Is Therefore ordered, pursuant to

Section 19(b)(2) of the Act,9 that the

proposal, SR–NASD–00–50, as

amended, be and hereby is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.10

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–29466 Filed 11–16–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43538; File No. SR–NYSE–

00–39]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the New York Stock Exchange, Inc. To

Amend Arbitration Rules Regarding

Pilot Program for Mediation and

Administration Conferences

November 9, 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

September 29, 2000, the New York

Stock Exchange, Inc. (‘‘NYSE’’ 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 NYSE. The commission

is publishing this notice to solicit

comments on the proposed rule change

from interested persons.

I. Self-Regulatory Organizations’s

Statement of the Terms and Substance

of the Proposed Rule Change

The purpose of extending and

amending the pilot program for

mediation is to continue to offer

mediation as a way for parties to settle

cases earlier with fewer costs. The

administrative conference pilot, as

extended and amended, will allow the

arbitrators(s) to intervene early in the

case to set deadlines and resolve

preliminary issues. Below is the text of

the proposed rule change. Additions are

italicized; deletions are in brackets.

* * * * *

Rule 638 Mediation

(a) Mediation Pending Arbitration

(1) [(a)] A single mediation session of

up to four hours will be conducted in

all cases [not involving public

customers] submitted for arbitration

where the amount of the claim is

[$500,000] $250,000 or more.

(2) [(b)] The New York Stock

Exchange will provide the parties with

a mediator. The mediator’s fee for the

single mediation session shall be $500

and shall be paid by the New York

Stock Exchange. If the parties select a

mediator of their own choosing, from

outside the list of proposed mediators,

they shall be responsible for any

difference in the mediator’s fee. If the

parties desire they can extend the

mediation beyond the first session at

their own expense.

(3) [(c)] Unless the parties agree on a

mediator, the Director of Arbitration

will send the parties a list of five

proposed mediators together with the

mediators’s biographical information

described in Rule 608. The parties shall

have ten days to agree on a mediator

from the list or chose their own

mediator. If no agreement is reached,

the Director of Arbitration will select a

mediator from the list unless all the

names on the list are objected to by the

parties. In that instance, the Director of

Arbitration will appoint a mediator from

outside the list.

(4) [(d)] Unless otherwise agreed to by

the parties, mediation shall not delay

the arbitration.

(5) [(e)] The mediation shall be

confidential and no record kept of the

proceeding. The mediator will not be

permitted to act as an arbitrator in the

same case and the mediator shall not be

called to testify in any proceeding

regarding the mediation.

[(f) Mediation under this rule shall be

available in all matters submitted to

arbitration involving public customers

where the amount of the claim is

$500,000 or more, upon the consent of

the parties. The mediator will be

compensated under paragraph (b) of this

rule.]

(6) [g] In all other matters submitted

to arbitration, mediation shall be

available upon the consent of the

parties, at their own expense.

(b) Mediation Prior to Arbitration

(1) If the parties agree, any matter

eligible for arbitration under the

Constitution and Rules of the New York

Stock Exchange may be mediated at the

Exchange. To begin mediation under

Federal Register / Vol. 65, No. 223 / Friday, November 17, 2000 / Notices 69597

3The Commission approved the Exchange’s

mediation program and administrative conference

rule on a two-year pilot basis through November 20,

2000. See Securities Exchange Act Release No.

40695 (November 19, 1998), 63 FR 65834

(November 30, 1998). On October 31, 2000, the

Exchange’s current pilot programs for mediation

and administrative conferences were extended for

six months. See Securities Exchange Act Release

No. 43496, (October 31, 2000).

this paragraph, the parties must file

with the Exchange an agreement to

mediate.

(2) At the time of filing an agreement

to mediate, a party shall pay a nonrefundable filing fee to the Exchange as

required for the filing of an arbitration

for the same amount in dispute under

Rule 629 (Schedule of Fees) unless the

fee is waived by the Director of

Arbitration. The parties are directly

responsible for the payment of the

mediator’s fee.

(3) If the case does not settle after

mediation, the non-refundable filing fee

will be applied to the non-refundable

filing fee if a party elects a commence

arbitration.

Rule 639 Administrative Conferences

In all cases where the amount of the

claim is [$500,000] $250,000 or more,

the parties shall attend an

administrative conference with the

arbitrators. [The arbitrators will decide

whether the conference is conducted by

telephone or in person.] The Director of

Arbitration will schedule the conference

within [30] 90 days after the [answer is

filed] Director serves the Statement of

Claim, unless all parties request that it

be scheduled later. The administrative

conference will be conducted by

telephone with the chairperson

presiding. In any claim involving a

public customer, a public arbitrator will

conduct the administrative conference,

unless the public customer demands, in

writing, a securities arbitrator. The

chairperson shall have discretion to

conduct the conference in-person and

may request that all of the arbitrators

attend the conference.

At the conference, the Arbitrator(s)

may establish a schedule for discovery

and the hearing, issue subpoenas and

direct the appearance of witnesses, and

resolve or narrow any other issue which

may expedite the arbitration.

* * * * *

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

NYSE 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 NYSE 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 purpose of amending the

extending the pilot programs (Rules 638

and 639) is to continue to offer

mediation as a way of parties to settle

cases earlier with lower costs.3 The

administrative conference allows the

arbitrators to intervene early in the case

to set deadlines and resolve preliminary

procedural issues. The Exchange is also

proposing to amend both pilot programs

to include a greater number of cases by

lowering the threshold amount to

$250,000 from $500,000.

Mediation

Since November of 1998, the

Exchange has sponsored a pilot

mediation program. Under the pilot

(Rules 638), a single mediation session

of up to four hours is conducted in all

cases not involving public customers

submitted for arbitration where the

amount of the claim is $500,000 or

more. The Exchange pays the mediator

up to $500.00 for this single mediation

session. There are no costs assessed to

the parties unless they select a mediator

whose rate is higher or if the parties

agree to go beyond the single session. Of

the cases mediated under this provision

of the pilot, approximately 31 percent

(15 of 48) have settled before arbitration.

Early settlements reduce costs and

provide a greater measure of party

satisfaction.

Under the pilot, mediation is also

available in cases involving public

customers where the claim is $500,000

or more upon agreement of the parties.

These cases also qualify for the

Exchange’s $500 incentive payment to

the mediator. In all other cases,

mediation is available at the parties’

own expense. The Exchange, however,

will provide the parties with a list of

mediators, will assist in facilitating the

parties’ agreement to mediate and will

make its conference room facilities

available for the mediation.

To evaluate the pilot, the staff of the

Exchange met with mediators and

lawyers who participated in mediation

under the pilot. Based on the evaluators’

comments and the settlement rate, the

Exchange is proposing to extend the

pilot for two years, as amended.

To encourage greater use of

mediation, the Exchange proposes to

amend the mediation pilot program to

include all cases within a lowered

threshold of claims of $250,000 or more.

Most commentators supported the

pilot’s provision that a single mediation

session of up to four hours be conducted

in all cases with claims of $250,000 or

more. This process relieves the parties

from having to suggest mediation

because the Exchange rule provides for

it. Many parties believe that the other

side will view their suggestion to

mediate as a sign of weakness. it also

assists counsel in getting their clients to

consider mediation by making it part of

the arbitration process—with little or no

cost to them.

As amended, all cases with claims of

$250,000 or more will be included in

the pilot. This includes cases involving

public customers. The pilot’s inclusion

of customer cases may lead to more and

earlier settlements. Under the present

pilot, where the parties have elected to

mediate, 78.9 percent (15 of 19) of the

customer cases with claims over

$500,000 have settled before arbitration.

Under the present pilot, a single

mediation session of up to four hours is

conducted. Mediation is a voluntary

process and neither the Exchange nor

the mediator can require a party to

mediate. The mediation may last less

than four hours or the parties may

refuse to participate at all. The pilot’s

only requirement is that the Director of

Arbitration arrange for the mediation.

The Director will delegate to the

Exchange’s staff the tasks of sending the

parties a list of mediators and selecting

a mediator from the list if the parties do

not agree to a mediator. If the parties

object to all the names on the list, the

Director will appoint a mediator from

outside the list. Once the parties or the

Director selects a mediator, the Director

will schedule the mediation and advise

the parties. The mediator may contact

the parties to preliminarily discuss the

case. The pilot does not require the

parties to do anything they do not wish

to, including exchange information or

documents; and there is no required

pre-mediation exchange of exhibits. The

goal of scheduling mediation is to

encourage the parties to try to resolve

the dispute as quickly and efficiently as

possible. Unless the parties otherwise

agree, mediation will not delay the

arbitration.

The Exchange will continue to pay

the mediator’s fee for one session, up to

$500, in cases where the rule provides

that a single mediation session is to be

conducted. Many commentators noted

69598 Federal Register / Vol. 65, No. 223 / Friday, November 17, 2000 / Notices

4 15 U.S.C. 78f(b)(6). 5 17 CFR 200.30–3(a)(12).

that the Exchange’s provision for a

single mediation session and incentive

payment of the mediator’s fee, up to

$500, is helpful in encouraging their

clients to agree to try mediation. The

average mediation settles or reaches an

impasse after approximately two

sessions.

The Exchange is also proposing to

allow parties to mediate without first

filing for arbitration. The current pilot

only applies to cases already filed with

the NYSE for arbitration. Allowing the

parties to mediate prior to filing an

arbitration may save the parties some

costs of arbitration. The party requesting

mediation will be required to pay a nonrefundable filing fee. This fee will be

based upon the filing fee required for

arbitration under Rule 629 for claims of

the same amount. If the case does not

settle after mediation,the Exchange will

apply the fee to the non-refundable

filing fee for arbitration. The parties are

also required to pay the mediator’s fee

and agree on how the fee will be shared.

The parties’ agreement to mediate will

not toll the time limitation for

submission of a claim to arbitration.

As under the original pilot, cases with

claims for less than $250,000 may also

be mediated when the parties agree.

However, in these cases the parties are

responsible for payment of the entire

mediator’s fee. During the pilot

program, where the parties have agreed

to mediate claims below $500,000, 76

percent (16 of 21) have settled.

Administrative Conferences

Since November of 1998, the pilot

program has provided for an

administrative conference with the

parties and arbitrators in cases over

$500,000. The conference allows the

arbitrators to set deadlines early in the

case and resolve preliminary issues with

the aim of expediting the arbitration. To

date, 124 administrative conferences

have been conducted. Most

commentators supported the

administrative conference with certain

changes. The Exchange is proposing to

amend and extend the pilot for two

years.

In order to expedite a greater number

of claims, the Exchange is proposing to

lower the threshold for administrative

conferences from $500,000 to $250,000.

the Exchange is also proposing that, by

default, the chairperson of the panel

conduct the conference by telephone.

This will allow the staff to schedule the

conference earlier because it will

involve coordinating the schedules of

fewer persons. In cases involving public

customers, a public arbitrator will

conduct the administrative conference

unless the public customer requests, in

writing, a securities arbitrator. The

Chairperson shall have discretion to

conduct the conference in-person and

may request that all of the arbitrators

attend the conference. Under the

amended pilot, the Director of

Arbitration will schedule the conference

90 days after service of the Statement of

Claim, rather than 30 days after the

answer is filed. The additional period of

time is intended to permit the parties to

frame the issues for the administrative

conference. The administrative

conference pilot does not affect the

parties’ right to request a pre-hearing

conference to resolve discovery disputes

and other preliminary matters under

Rule 619.

2. Statutory Basis

The Exchange believes that the

proposed rule change is consistent with

Section 6(b)(5) of the Act 4 in that it

promotes just and equitable principles

of trade by ensuring that members and

member organizations and the public

have a fair and impartial forum for the

resolution of their disputes.

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

The Exchange has neither solicited

nor received written 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 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

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 NYSE. All

submissions should refer to File No.

SR–NYSE–00–39 and should be

submitted by December 8, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.5

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–29467 Filed 11–16–00; 8:45 am]

BILLING CODE 8010–01–M

DEPARTMENT OF STATE

[Public Notice 3476]

Determination; Assistance to the

National Democratic Alliance (NDA)

Pursuant to section 451 of the Foreign

Assistance Act of 1961, as amended (22

U.S.C. sec. 2261) (the ‘‘Act’’), and

section 1–201 of Executive Order 12163,

as amended, I hereby authorize,

notwithstanding any other provision of

law, the use of up to $3.0 million in FY

2000 funds made available under

Chapter IV of Part II of the Act for

assistance to the civilian wing of the

Sudanese National Democratic Alliance.

This authorization shall be reported to

Congress immediately and published in

the Federal Register.

Dated: October 31, 2000.

Madeline Albright,

Secretary of State.

[FR Doc. 00–29520 Filed 11–16–00; 8:45 am]

BILLING CODE 4710–26–P