Federal Register / Vol. 65, No. 237 / Friday, December 8, 2000 / Notices 77055

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

2 17 CFR 240.19b–4.

3See Securities Exchange Act Release No. 43471

(October 20, 2000), 65 FR 64463 (October 27, 2000).

4For further discussion of the CSE’s Market Order

Display Rule, see CSE Regulatory Circular to

Exchange Members 97–07 (June 17, 1997).

chief financial officer and registered

financial and operations principal.

The law judge found that, on four

separate dates between December 1995

and March 1996, RSI violated the

Commission’s net capital rule, failed to

keep accurate books and records, and

failed to notify the Commission of its

net capital and books and records

deficiencies. The law judge also found

that Kent willfully aided and abetted,

and caused, RSI’s violations. The law

judge fined RSI $100,000; suspended

Kent for one year from association with

a broker-dealer or a member of a

national securities exchange or

registered securities association, and

fined Kent $25,000; and ordered RSI

and Kent to cease and desist from future

similar violations.

Among the issues likely to be argued

are the following:

(1) Whether the stock due to RSI

under its investment banking

agreements was ‘‘readily convertible

into cash,’’ and thus an allowable asset

under the net capital rule;

(2) Whether the net capital rule’s

provision for disallowing assets not

‘‘readily convertible into cash’’ violates

due process;

(3) Whether Kent’s conduct satisfied

the elements of aider and abettor

liability; and

(4) What sanctions; if any, are

appropriate.

For further information, contact Joan

Loizeaux at (202) 942–0950.

Commissioners, Counsel to the

Commissioners, the Secretary to the

Commission, and recording secretaries

will attend the closed meeting. Certain

staff members who have an interest in

the matters may also be present.

The General Counsel of the

Commission, or his designee, has

certified that, in his opinion, one or

more of the exemptions set forth in 5

U.S.C. 552b(c) (4), (8), (9)(A) and (10)

and 17 CFR 200.402(a)(4), (8), (9)(A) and

(10), permit consideration for the

scheduled matter at the closed meeting.

The subject matter of the closed

meeting scheduled for Wednesday,

December 13, 2000 will be:

• Post argument discussion.

The subject matter of the closed

meeting scheduled for Thursday,

December 14, 2000 will be:

• Institution and settlement of

injunctive actions; and

• Institution and settlement of

administrative proceedings of an

enforcement nature.

At times, changes in Commission

priorities require alterations in the

scheduling of meeting items. For further

information and to ascertain what, if

any, matters have been added, deleted

or postponed, please contact:

The Office of the Secretary at (202)

942–7070.

Dated: December 6, 2000.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–31485 Filed 12–6–00; 3:44 pm]

BILLING CODE 8010–01–M

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[File No. 500–1]

Net Tel International, Inc.; Order of

Suspension of Trading

December 5, 2000.

It appears to the Securities and

Exchange Commission that there is a

lack of current and accurate information

concerning the securities of Net Tel

International, Inc. (‘‘Net Tel’’) because

of questions regarding the accuracy of

publicly disseminated information

concerning, among other things, letters

of intent to acquire businesses entered

into by Net Tel.

The Commission is of the opinion that

the public interest and the protection of

investors require a suspension of trading

in the securities of the above listed

company.

Therefore, it is ordered, pursuant to

section 12(k) of the Securities Exchange

Act of 1934, that trading in the above

listed company is suspended for the

period from 1:30 p.m. EST, December 5,

2000, through 11:59 p.m. EST, on

December 18, 2000.

By the Commission.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–31408 Filed 12–6–00; 11:35 am]

BILLING CODE 8010–01–M

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[Release No. 34–43653; File No. SR–CSE–

00–08]

Self-Regulatory Organizations; The

Cincinnati Stock Exchange,

Incorporated; Order Granting Approval

to Proposed Rule Change To Include

CSE Rule 11.9(u) and Interpretation .01

Thereunder in the Minor Rule Violation

Program

December 1, 2000.

I. Introduction

On October 13, 2000, The Cincinnati

Stock Exchange, Incorporated (‘‘CSE’’ 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 to

amend CSE Rule 8.15, Imposition of

Fines for Minor Violation(s) of Rules, to

include CSE Rule 11.9(u) and

Interpretation .01 thereunder, requiring

CSE members to display certain market

orders (‘‘Market Order Display Rule’’).

The proposed rule change was

published for comment in the Federal

Register on October 27, 2000.3 No

comments were received on the

proposal. This order approves the

proposed rule change.

II. Description of the Proposal

The CSE proposes to amend CSE Rule

8.15, Imposition of Fines for Minor

Violation(s) of Rules, which provides for

an alternative disciplinary regimen

involving violations of Exchange rules

that the Exchange determines are minor

in nature. In lieu of commencing a

disciplinary proceeding pursuant to

Rules 8.1 through 8.14, the Minor Rule

Violation Program (‘‘Program’’) permits

the Exchange to impose a fine, not to

exceed $2,500, on any member, member

organization, or registered or nonregistered employee of a member or

member organization (‘‘Member’’) that

the Exchange determines has violated a

rule included in the Program. Adding a

particular rule violation to the Program

in no way circumscribes the Exchange’s

ability to address violations of those

rules through more formal disciplinary

rules. The Program simply provides the

Exchange with greater flexibility in

addressing rule violations that warrant a

stronger regulatory response after the

issuance of cautionary letters and yet,

given the nature of the violations, do not

rise to the level of requiring formal

disciplinary proceedings.

The Exchange proposes to add the

failure to properly expose on the

Exchange or immediately price improve

certain customer market orders, as

provided in Interpretation .01 to

Exchange Rule 11.9(u), to the list of

Exchange rule violations and fines

included in the Program.4 The Exchange

believes that Market Order Display Rule

violations often are inadvertent and, in

most cases, are best addressed in a

summary fashion. However, because

Interpretation .01 is predicated on the

Exchange’s commitment to promote

customer price improvement

77056 Federal Register / Vol. 65, No. 237 / Friday, December 8, 2000 / Notices

5While the Exchange will collect data on a daily

basis, the Exchange’s initial sampling will consist

of a review of data collected for two days per

week—the day with the most violations, and the

day with the fewest. Based on the Exchange’s

analysis of this information, the Exchange will

determine if the violations exceed 2% of all eligible

market orders for each calendar quarter. The

Exchange plans eventually to determine violations

based on information collected daily, rather than on

a partial sample, with March 2001 as the proposed

target date. See telephone conversation among

Jeffrey Brown, Vice President, Regulation and

General Counsel, CSE, James Flynn, Staff Attorney,

CSE and Katherine England, Assistant Director,

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

and Joseph Morra, Special Counsel, Division, SEC,

November 30, 2000.

6 In approving this rule, the Commission has

considered its impact on efficiency, competition,

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

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

8 15 U.S.C. 78f(b)(6).

9 15 U.S.C. 78f(b)(7).

10 15 U.S.C. 78f(d)(1).

11 15 U.S.C. 78s(b)(2).

12 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

opportunities, violations of this

Interpretation require sanctions more

rigorous than a series of cautionary

letters prior to formal proceedings.

Under the proposal, Exchange

regulatory staff will review a sampling

of Exchange members’ market orders,

based on appropriate market conditions,

to determine if a threshold of market

order exposure violations has been

exceeded. Violations that exceed 2% of

all eligible market orders of any Member

for any calendar quarter will result in a

$1,000 fine for that quarter. The second

quarterly violation within a rolling 12-

month period will result in a $2,500

fine. A third quarterly violation within

a rolling 12-month period will result in

a CSE Business Conduct Committee

hearing with a staff recommendation of

a $10,000 fine.5

The minor rule violation fine

schedule is merely a recommended

schedule; fines of more or less than the

recommended amount can be imposed

(up to a $2,500 maximum) in

appropriate situations. Also, the

Exchange reserves the right to proceed

with formal disciplinary action when, in

the Exchange’s opinion, circumstances

warrant a more severe level of sanction

or remedial action.

III. Discussion

The Commission has reviewed

carefully the CSE’s proposed rule

change and finds, for the reasons set

forth below, that the proposal is

consistent with the requirements of the

Act and the rules and regulations

thereunder applicable to a national

securities exchange.6 In particular, the

commission finds the proposal is

consistent with sections 6(b)(5),7

6(b)(6),8 6(b)(7),9 and 6(d)(1),10 of the

Act.

Section 6(b)(5) requires that the rules

of an exchange be designed to promote

just and equitable principles of trade

and to remove impediments to and

perfect the mechanism of a free and

open market and a national market

system, and, in general, to protect

investors and the public interest. The

Commission believes the proposal is

consistent with section 6(b)(5) because

it will augment the Exchange’s ability to

police its market, and will allow greater

flexibility in responding to violations of

the Market Order Display Rule.

Section 6(b)(6) requires that the rules

of an exchange provide that its members

and persons associated with its

members shall be appropriately

disciplined for violations of

Commission and Exchange rules.

Including violations of the Market Order

Display Rule in the Program should give

the Exchange the ability to treat

violations of the Rule in a summary

fashion, but retain the flexibility to

address more egregious violations of the

Rule with more severe sanctions where

appropriate.

In addition, the Commission believes

that the proposal provides a reasonable

procedure for the discipline of Members

consistent with sections 6(b)(7) and

6(d)(1) of the Act. Section 6(b)(7)

requires the rules of an eschange to be

in accordance with the provisions

Section 6(d), and, in general, to provide

a fair procedure for the disciplining of

members and persons associated with

members. Section 6(d)(1) requires that,

in any proceeding by an exchange to

determine whether a member should be

disciplined, the exchange must bring

specific charges, notify the member of

those charges, and give the member an

opportunity to defend against the

charges. Because CSE Rule 8.15

provides procedural safeguards to the

Member being fined, and allows the

Member who is disciplined to request

full hearing on the matter, the

Commission believes the proposal is

both reasonable and consistent with

sections 6(b)(7) and 6(d)(1).

The Commission notes that by

allowing the CSE to address violations

of the Market Order Display Rule under

the Program, the Commission in no way

minimizes the importance of

compliance with the Rule, and all other

Rules subject to the imposition of fines

under the Program. The Commission

believes that the violation of any

Exchange and/or Commission Rule is a

serious matter. However, in an effort to

provide the Exchange with greater

flexibility in addressing certain

violations, the Program provides a

reasonable means to address rule

violations that do not rise to the level of

requiring formal disciplinay

proceedings. The Commission expects

that the CSE will continue to conduct

surveillance with due diligence, and

make a determination based on its

findings whether fines of more or less

the recommended amount are

appropriate for violation of the Market

Order Display Rule on a case by case

basis, or if a violation requires formal

disciplinary action.

IV. Conclusion

It is therefore ordered, pursuant to

section 19(b)(2) of the Act, 11 that the

proposed rule change (SR–CSE–00–08)

is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority. 12

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–31297 Filed 12–7–00; 8:45 am]

BILLING CODE 8010–01–M

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[Release No. 34–43659; File No. SR–ISE–

00–14]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of a Proposed Rule Change by the

International Securities Exchange LLC,

Relating to Listing Procedures

December 4, 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 November

15, 2000, the International Securities

Exchange LLC (‘‘Exchange’’ or ‘‘ISE’’)

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 ISE. 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 ISE is proposing to amend the

procedures by which it lists options to

conform its procedures to those

currently in place at the other options

exchanges. The text of the proposed rule

change is available at the Commission

and the ISE.