69976 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Notices

10 15 U.S.C. 78f(b)(7).

11 15 U.S.C. 78f(b)(1).

12 15 U.S.C. 78f(b)(6).

13 15 U.S.C. 78f(b)(7).

14Currently, the AAC is only permitted to affirm

the determination and penalty imposed, modify or

reverse the determination, decrease or eliminate the

penalty imposed, impose any lesser penalty

permitted, or remand the matter to the Disciplinary

Panel for further consideration. See Exchange Rule

345.

15The Commission notes that both parties in a

civil proceeding have the right to appeal the

decision of the court.

16 In approving this rule change, the Commission

has considered the proposal’s impact on efficiency,

competition, and capital formation, consistent with

Section 3(f) of the Act. 15 U.S.C. 78c(f). 17 15 U.S.C. 78s(b)(2). 18 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3See letter from Michael J. Ryan, Senior Vice

President, Chief of Staff, and Senior Legal Officer,

Amex, to Alton Harvey, Office Chief, Division of

Market Regulation, Commission, dated September

20, 2000.

Governors). Therefore, the Exchange

explained, when the Board exercises its

discretionary right to review a decision

of the AAC, all of the members of the

AAC who participated in the initial

decision will also participate in the

Board’s consideration of the matter, thus

providing member representation.

Further, the Exchange pointed out that

one-third of the Board’s governors are

Exchange members. Therefore, the

Exchange believes that at both the AAC

level of review and at the Board level of

review, member participation is more

than adequate to satisfy any peer review

requirement that might be implicit in

Section 6(b)(7) of the Act.10

With regard to the commenters’

opinion that the proposed rule change

would expose members to double

jeopardy because a separate entity could

increase a penalty determined to be fair

by a peer group, the Exchange noted

that the proposed rule does not provide

that a member or member organization

may be charged twice for the same

conduct.

IV. Discussion

For the reasons discussed below, the

Commission finds that the proposed

changes to the Amex Constitution and

Rules governing the procedures for

review of disciplinary decisions are

consistent with the Act in that they will

enhance the ability of the Exchange to

enforce compliance by its members and

persons associated with its members

with the provisions of the Act, the rules

and regulations thereunder, and the

rules of the Exchange consistent with

the requirement of Section 6(b)(1) of the

Act; 11 they will help ensure that

members and persons associated with

members are appropriately disciplined

for violations of the Act, the rules and

regulations thereunder, and the rules of

the Exchange consistent with Section

6(b)(6) of the Act; 12 and they will

provide a fair procedure for the

disciplining of members and persons

associated with members consistent

with Section 6(b)(7) of the Act.13

The Commission finds that it is fair

and appropriate to grant the division or

department of the Exchange which

brought the charges (‘‘Enforcement

Department’’) the same right to appeal

decisions of the Disciplinary Panel to

the AAC as is granted to members. The

Commission believes that allowing the

Enforcement Department to appeal these

decisions will provide an additional

check on the disciplinary process to

ensure that all parties are treated fairly.

While the Commission recognizes the

importance of Exchange rules designed

to protect members accused of violating

Exchange rules from unfair treatment, it

is also important to have procedures in

place that allow the Enforcement

Department to seek review of decisions

that it believes are improper or unfair.

The Commission does not believe that

the rights and protections granted to

members under the Rules will be

impinged upon by virtue of the fact the

Enforcement Department also has the

right of appeal. All final disciplinary

actions of SROs can be appealed to the

Commission. In addition, the

Commission has the ability to review on

its own motion any final disciplinary

action of an SRO.

Further, the Commission believes that

it is appropriate to grant the AAC the

authority to increase penalties imposed

by the Disciplinary Panel upon

appeal.14 The Enforcement

Department’s right to appeal is limited

under the current rule because the AAC

may not impose a penalty harsher than

that originally imposed by the

Disciplinary Panel. The Commission

believes that as part of the Enforcement

Division’s right to appeal, it should be

permitted to request an increased

penalty if it believes that the penalty

imposed by the Disciplinary Panel is

inadequate.15

Finally, the Commission believes that

it is also appropriate to allow the Board

of Governors additional discretion to

review penalties imposed as proposed

by the Exchange. Currently, the Board

may only affirm, modify or reverse the

decision of the AAC, or remand the

matter for further consideration. The

Commission believes that by granting

the Board the authority to sustain,

increase or eliminate any penalty

imposed, or impose a lesser penalty, the

disciplinary process will be more

streamlined. This change will permit

the Board to review not only decisions

of the AAC regarding whether it is

appropriate to sanction a member, but

also whether the sanction ultimately

imposed is appropriate. For example, if

the Board fees AAC’s decision to impose

a penalty is correct, but disagrees with

the penalty imposed, instead of

remanding the matter to the AAC for

additional consideration with

instructions, the Board may impose a

penalty that it believes is just. The

Commission finds that it is appropriate

for the Board to have the authority to

make these decisions.

V. Conclusion

For all of the aforementioned reasons,

the Commission finds that the proposed

rule change is consistent with the

requirements of the Act and the rules

and regulations thereunder applicable to

a national securities exchange.16

It is Therefore Ordered, pursuant to

Section 19(b)(2) of the Act,17 that the

proposed rule change (SR–AMEX–00–

22) is approved.

For the Commission, by the Division

of Market Regulation, pursuant to

delegated authority.18

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–29709 Filed 11–20–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43559; File No. SR–Amex–

00–43]

Self-Regulatory Organizations; Order

Approving Proposed Rule Change by

the American Stock Exchange LLC

Amending Its Rules To Require

Companies To Publicly Disclose

Receipt of a Delisting Notice

November 14, 2000.

I. Introduction

On August 16, 2000, the American

Stock Exchange LLC (‘‘Amex’’ or

‘‘Exchange’’) filed with the Securities

and Exchange Commission

(‘‘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 to

amend its rules to require companies to

publicly disclose receipt of a written

delisting notice from the Exchange. On

September 26, 2000, the Amex

submitted Amendment No. 1 to the

proposal to make certain technical

modifications.3

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Notices 69977

4Securities Exchange Act Release No. 43371

(Sept. 27, 2000), 65 FR 59476.

5 In approving this rule change, the Commission

has considered its impact on efficiency,

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

6 15 U.S.C. 78f(b)(5).

7 15 U.S.C. 78s(b)(2).

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

2 17 CFR 240.19b–4.

The proposed rule change was

published for comment in the Federal

Register on October 5, 2000.4 No

comments were received. This order

approves the proposed rule change.

II. Description of the Proposal

The Exchange has had a policy of

requiring a company whose securities

are listed on the Exchange (or trade on

the Exchange pursuant to unlisted

trading privileges) to publicly disclose

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 a company

in receipt of such notice.

In order to provide investors with the

greatest protection possible, the

Exchange believes that a company’s

public announcement of its pending

delisting should disclose not only the

fact of the company’s having received a

written notice from the Exchange, but

also indicate on which of the Amex

continued listing guidelines 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 about whether to make or

maintain investments in the securities

of such company.

The Exchange has proposed that a

company make public its announcement

regarding its 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 should fail

to disclose the receipt of a written

delisting notice under the Exchange’s

proposal, trading of its securities would

be halted until the announcement has

been made, even if the company elects

to appeal the underlying delisting

determination as provided for under

Section 1010 of the Exchange’s Listing

Standards, Policies and Requirements.

The Exchange has also proposed that,

where a company has elected to appeal

the Exchange’s delisting determination

but fails 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 or

not to delist the company’s securities

may also be based on the company’s

failure to make the required public

announcement.

III. Discussion

After careful review, the Commission

finds that the proposed rule change is

consistent with the Act and the rules

and regulations thereunder governing

national securities exchanges.5 In

particular, the Commission finds that

the proposal is consistent with the

provisions of Section 6(b)(5) of the Act 6

which requires, among other things, that

an exchange have rules that are, in

general, designed to protect investors

and the public interest. The

Commission finds that it is appropriate

for the Amex to codify in its rules its

current policy requiring a listed

company (or a company whose

securities trade on the Exchange

pursuant to unlisted trading privileges)

to promptly disclose to the public that

it has received a written delisting notice

from the Exchange, and to set forth in

its public disclosure the continued

listing guidelines cited by the Exchange

in making its delisting determination.

The proposed rule change will better

enable the Exchange to ensure that

investors in the securities traded on the

Exchange have as much information as

possible about the issuers of such

securities.

It is Therefore Ordered, pursuant to

Section 19(b)(2) of the Act,7 that the

proposed rule change (SR–Amex–00–

43) is hereby approved.

For the Commission, by the Division

of Market Regulation, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–29710 Filed 11–20–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43537; File No. SR–CBOE–

00–43]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the Chicago Board Options Exchange,

Inc. Relating to Participation Rights in

Crossing Transactions

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 August

29, 2000, the Chicago Board Options

Exchange, Inc. (‘‘CBOE’’ or ‘‘Exchange’’)

filed with the Securities and Exchange

Commission (‘‘Commission’’) the

proposed rule change as 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.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The CBOE is proposing certain

changes to provisions of its rule that

governs the participation rights of firms

crossing orders. The text of the

proposed rule change is set forth below.

Additions are italicized and deletions

are bracketed.

* * * * *

Chicago Board Options Exchange, Inc.,

Rules, Chapter VII, Section D: Floor

Brokers, ‘‘Crossing’’ Orders, Rule 6.74

(a)–(c) No change.

(d) Notwithstanding the provisions of

paragraphs (a) and (b) of this Rule, when

a Floor Broker holds an equity option

order of the eligible order size or greater

(‘‘original order’’), the Floor Broker is

entitled to cross a certain percentage of

the order with other [customer] orders

[from the same firm from which the

original order originated (‘‘originating

firm] that he is holding or in the case

of a public customer order with a

facilitation order of the originating firm

(i.e., the firm from which the original

customer order originated). The

appropriate Floor Procedure Committee

may determine, on a class by class basis

the eligible size for an order that may be

transacted pursuant to this paragraph

(d), however, the eligible order size may

not be less than 50 contracts. In

accordance with his responsibilities for

due diligence, a Floor Broker