20236 Federal Register / Vol. 63, No. 78 /Thursday, April 23, 1998 / Notices

27See, e.g., letters from Edwards, Barington,

Cullum, Duke I, Duke II, Duncan-Smith, GKN,

Hoak, Morgan Stanley, Baird, and Montgomery.

28 15 U.S.C. § 78o–3(b)(6).

29Amendment No. 2 also makes several technical

amendments which clarify the application of the

previously noticed changes to Rules 3010 and 9610.

30 15 U.S.C. § 78o–3.

31 15 U.S.C. § 78s(b)(2).

32 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

conforming change to the Rule 9600

Series.27

III. Discussion

For the reasons discussed below, the

Commission finds that the proposed

rule change is consistent with the

requirements of the Act and the rules

and the regulations thereunder

applicable to registered securities

associations, in particular the

requirements of Section 15A(b)(6) of the

Act.28 Among other things, Section

15A(b)(6) of the Act requires that the

rules of a national securities association

be designed to foster cooperation and

coordination with persons engaged in

regulating, clearing, settling, processing

information with respect to, and

facilitating transactions in securities, 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.

In particular, the Commission

believes that the proposed rule change

will discourage the revival of

disciplined firms that have been barred

by the industry or that have had their

registrations revoked by the

Commission. In essence, firms that

decide to hire significant numbers of

employees from disciplined firms will

be required to ensure a proper

supervisory environment that protects

investors and prevents fraudulent and

manipulative telemarketing acts and

practices. The monitoring of registered

persons’ telephone conversations will

help to provide additional supervision

of individuals who formerly worked at

a disciplined firm where they were

inadequately trained and supervised.

In the Notice, the Commission

requested comments on all aspects of

the proposal, as well as the need to

inform investors that their calls are

being taped. The Commission received

one comment letter concerning the

proposal. The SIA expressed general

concerns about tape recording

conversations as a method of

supervision. While the Commission

recognizes the limitations of this form of

supervision, the Commission believes

that if registered persons know their

phone calls are being taped then they

are more likely to avoid making false or

exaggerated representations. In addition,

compliance officals will have another

tool to monitor persons who worked

previously at firms with significant sales

practice problems. Moreover, the fact

that tapes of the telephone

conversations will be available to

persons who have disputes with brokerdealer firms will spur firms with a

substantial percentage of representatives

from an expelled firm to take extra

measures to supervise these persons.

No comments were received

concerning the issue of notice to

investors that their calls are being taped.

NASD Regulation has indicated its

belief that the issue of notification is

addressed by state privacy laws and that

firms will be required to independently

determine that state laws are satisfied.

The Commission believes that the best

practice would be for member firms to

notify their registered persons and

customers that their telephone calls are

being tape recorded.

The Commission expects the NASD to

monitor the Rule and assess its

effectiveness. For example, the NASD

should monitor the number of firms that

become subject to the Rule as well as

firms that hire representatives from

disciplined firms but do not trigger the

taping requirement to see if there is a

need to adjust the percentages. Also, the

NASD should monitor the number of

firms exempt from the Rule because

they have five or fewer employees to

determine if this is an effective

exclusion. Furthermore, the NASD

should make sure firms comply with

state laws on notification.

The Commission finds good cause for

approving Amendment No. 2 prior to

the thirtieth day after the date of

publication of notice thereof in the

Federal Register. Amendment No. 2

applies the proposal to member firms

with a work force comprised of a

specified number of registered persons

who were employed by a ‘‘disciplined

firm’’ within the last three years instead

of two years.29 In the Notice, the

Commission requested comment on

whether the original two-year time

frame was appropriate. Although no

comments were received on this issue,

NASD Regulation and the Commission

believe that a three-year time frame will

better capture registered persons who

worked at disciplined firms during a

period of inadequate training,

supervision, and sales practice abuses.

Therefore, the Commission believes that

granting accelerated approval to

Amendment No. 2 is appropriate and

consistent with Section 15A of the

Act.30

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views and

arguments concerning Amendment No.

2 to the proposed rule change, 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, N.W., Washington, D.C.

20549. Copies of the submission, all

subsequent amendments,′ all written

statements with respect to Amendment

No. 2 that are filed with the

Commission, and all written

communications relating to Amendment

No. 2 between the Commission and any

persons, 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 the filing

will also be available for inspection and

copying at the principal office of the

NASD. All submissions should refer to

File No. SR–NASD–97–69 and should

be submitted by May 15, 1998.

V. Conclusion

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,31 that the

proposed rule change (SR–NASD–97–

69), including Amendment No. 2

thereto, is approved on an accelerated

basis.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.32

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–10796 Filed 4–22–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39881; File No. SR–PCX–

98–16]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change and

Amendment No. 1 Thereto by the

Pacific Exchange, Inc., Relating to

Communication Devices on the

Trading Floor

April 16, 1998.

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 March 31,

1998, the Pacific Exchange, Inc. (‘‘PCX’’
Federal Register / Vol. 63, No. 78 /Thursday, April 23, 1998 / Notices 20237

3See letter from Michael D. Pierson, Senior

Attorney, PCX to David Sieradzki, Attorney,

Commission dated April 13, 1998 (Amendment No.

1). In Amendment No. 1, the Exchange clarified the

purpose section of the filing.

4 Italics indicates text to be added and brackets

indicates material to be deleted.

5The Commission notes that, as part of the

current filing, the Exchange proposes to delete

Options Floor Procedure Advice F–3.

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

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

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 self-regulatory

organization. On April 16, 1998, the

Exchange filed Amendment No. 1 to the

proposal with the Commission.3 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 Exchange is proposing to adopt

new Rule 4.22 relating to telephone and

electronic communications on the

trading floors of the Exchange.

Text of Proposed Rule Change.4

¶38 Communications to and on the

Floor

Rule 4.22 No Member of Member

Organization may establish or maintain

any telephonic or electronic

communication between the Floor and

any other location, or between locations

on the Floor, without the prior approval

of the Exchange

[OFPA F–3 ¶7803 Subject:

Communication Access To and From

the Options Trading Floor Pursuant to

Rule XVII, prior approval by the

Exchange will be required before the

installation of any form of direct private

communication devices, including

PT&T and Western Union voice lines

and teletype or similar hard copy wire

connections. Such approval will be

granted only if the connection from the

Options Trading Floor terminates in one

of the following manners: (1) At an

office of a PSE member organization. (2)

At a floor facility of a PSE member

organization on the Options Trading

Floor of another national securities

exchange, subject to the approval of that

exchange. (3) At either of the Equity

Trading Floor of PSE. Approval will not

be granted for connections terminating

at any facility of a person or

organization who or which is not a

member organization of PSE. Standard

(non-private, non-direct) telephones

may be installed on the Options Trading

Floor in member organizations assigned

floor booths as desired but all requests

for such installation must be directed to

the Options Floor Manager for purposes

of coordination. In making use of

communications access to and from the

Options Trading Floor members are

reminded of the provisions of Section

12(k) of Rule I.]

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

self-regulatory organization 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 self-regulatory organization 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 is making this

proposed rule change as a housekeeping

measure to assure that the Exchange’s

rules state expressly that Members and

Member Organizations must obtain

prior approval before establishing or

maintaining telephonic or electronic

communications between the Floor and

other locations, or between locations on

the Floor. The Exchange believes that

the provision will improve upon its

current rules, including Options Floor

Procedure Advice F–3,5 by providing its

Members and Member Organizations

with clear notice of the requirement for

Exchange approval.

The Exchange is proposing to adopt

new Rule 4.22, which provides that no

Member or Member Organization may

establish or maintain any telephonic or

electronic communication between the

Floor and any other location, or between

locations on the Floor, without the prior

approval of the Exchange.

The Exchange is also proposing to

eliminate Options Floor Procedure

Advice (‘‘OFPA’’) F–3 relating to

communication access to and from the

Options Trading Floor. The Exchange

believes that proposed Rule 4.22

adequately replaces OFPA F–3, which is

obsolete.

The Exchange notes that proposed

Rule 4.22 is substantially similar to Rule

220 of the American Stock Exchange

and Rule 6.23 of the Chicago Board

Options Exchange.

2. Statutory Basis

The proposal is consistent with

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

Section 6(b)(5) 7 of the Act, in particular,

in that it is designed to protect investors

and the public interest and to promote

just and equitable principles of trade.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange does not believe that

the proposed rule change will impose

any inappropriate burden on

competition.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

No written comments were either

solicited or received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 days of the 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 the 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. 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
20238 Federal Register / Vol. 63, No. 78 /Thursday, April 23, 1998 / Notices

8 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3Securities Exchange Act Release No. 39472

(March 11, 1998), 63 FR 13082 (March 17, 1998).

The notice of the rule change included the

publication of a technical amendment to the

proposal, which was filed with the Commission on

March 10, 1998.

4 15 U.S.C. 78f(b)(3).

5 15 U.S.C. 78f.

6 In approving the rule change, the Commission

has considered the proposed rule’s impact on

efficiency, competition and capital formation. 15

U.S.C. 78c(f).

7 15 U.S.C. 78s(b)(2). 8 17 CFR 200.30–3(a)(12).

the principal office of the Exchange. All

submissions should refer to File No.

SR–PCX–98–16 and should be

submitted by May 14, 1998.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.8

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–10750 Filed 4–22–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39882; File No. SR–Phlx–

97–62]

Self-Regulatory Organizations; Order

Granting Approval of Proposed Rule

Change by the Philadelphia Stock

Exchange, Inc., To Amend its By-Law

Article X, Sections 10–16, 10–17 and

10–19 To Require That Each of its

Trading Floor Committees Consult

With Its Corresponding Quality of

Markets Committee on All Matters of

Policy and All Matters That Are To Be

Presented to the Board

April 17, 1998.

I. Introduction

On December 29, 1997, the

Philadelphia Stock Exchange, Inc.

(‘‘Phlx’’ or ‘‘Exchange’’) filed with the

Securities and Exchange Commission

(‘‘SEC’’ or ‘‘Commission’’) a proposed

rule change pursuant to Section 19(b)(1)

of the Securities Exchange Act of 1934

(‘‘Act’’) 1 and Rule 19b–4 thereunder.2

In this filing, the Phlx proposed

amendments to By-Law Article X,

Sections 10–16, 10–17 and 10–19.

Notice of the proposed rule change was

published in the Federal Register on

March 17, 1998.3 The Commission

received no comments on the proposal.

II. Description of the Proposal

Phlx By-Law Article X, Sections 10–

16, 10–17 and 10–19 set forth the

charters of the Exchange’s various

trading floor standing committees. The

proposed amendments specify that each

of the trading floor standing committees

shall consult with its respective quality

of markets committee on all matters of

policy and all matters that are to be

presented to the Phlx Board of

Governors. The proposed amendments

are intended to foster the sharing of

views on policy and other matters

between the various trading floor

standing committees (Floor Procedure,

Foreign Currency Options and Options)

and corresponding quality of markets

committees. The intended sharing of

views on all policy matters is designed

to bring the perspectives of the nonindustry representatives of the various

quality of markets committees to matters

that may be referred to the Board of

Governors by the various trading floor

standing committees.

III. Discussion

The Commission believes the

proposal is consistent with the Act in

general, and in particular, with Section

6(b)(3) of the Act.4 Section 6(b)(3) of the

Act requires that the rules of an

exchange assure a fair representation of

its members in the selection of its

directors and administration of its

affairs and provide that one or more

directors shall be representative of

issuers and investors and not be

associated with a member of the

exchange, broker, or dealer.

Phlx By-Law Article X, Section 10–20

requires that the quality of markets

committees have broad representation

that shall be equally balanced between

industry and non-industry committee

members. Thus, by requiring that the

Phlx’s quality of markets committees

participate in the Phlx’s policy making

process, the proposal should help to

ensure that the Phlx’s rules fairly

represent the views of all of the Phlx’s

members and constituents, including

investors. The Commission believes that

by promoting the participation of nonindustry representatives in the decision

making process of the Phlx, the proposal

is consistent with Section 6(b)(3) of the

Act.

Accordingly, the Commission believes

the proposed rule change is consistent

with Section 6 of the Act 5 in general,

and in particular, with Section 6(b)(3) in

that it is designed to assure a fair

representation in the administration of

the Exchange’s affairs.6

IV. Conclusion

It is therefore ordered, pursuant to

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

proposed rule change SR–Phlx–97–62

be and hereby is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.8

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–10751 Filed 4–22–98; 8:45 am]

BILLING CODE 8010–01–M

SMALL BUSINESS ADMINISTRATION

[Declaration of Disaster #3076]

State of Alabama

As a result of the President’s major

disaster declaration on April 9, 1998, I

find that Jefferson, St. Clair, and

Tuscaloosa Counties in the State of

Alabama constitute a disaster area due

to damages caused by severe storms and

tornadoes beginning on April 8, 1998

and continuing. Applications for loans

for physical damages as a result of this

disaster may be filed until the close of

business on June 8, 1998, and for loans

for economic injury until the close of

business on January 11, 1999 at the

address listed below or other locally

announced locations:

U.S. Small Business Administration,

Disaster Area 2 Office, One Baltimore

Place, Suite 300, Atlanta, GA 30308

In addition, applications for economic

injury loans from small businesses

located in the following contiguous

counties in Alabama may be filed until

the specified date at the above location:

Bibb, Blount, Calhoun, Etowah, Fayette,

Greene, Hale, Pickens, Shelby,

Talladega, and Walker.

The interest rates are:

Percent

Physical Damage:

Homeowners with credit available elsewhere ...................... 7.000

Homeowners without credit

available elsewhere ............... 3.500

Businesses with credit available

elsewhere .............................. 8.000

Businesses and non-profit organizations without credit available elsewhere ...................... 4.000

Others (including non-profit organizations) with credit available elsewhere ...................... 7.125

For Economic Injury:

Businesses and small agricultural cooperatives without

credit available elsewhere ..... 4.000

The numbers assigned to this disaster

are 307612 for physical damage and

983300 for economic injury.

(Catalog of Federal Domestic Assistance

Program Nos. 59002 and 59008)