[Federal Register Volume 65, Number 77 (Thursday, April 20, 2000)]
[Notices]
[Pages 21230-21233]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-9918]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42689; File No. SR-NYSE-99-30]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendment Nos. 1, 2, and 3 Thereto by the New York Stock 
Exchange, Inc. Relating to NYSE's Procedures for Delisting a Security 
and Related Issuer Appeals

April 13, 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 June 23, 1999, the New York Stock Exchange, Inc. (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change. The Exchange submitted 
Amendment No. 1 to its proposal on December 27, 1999,\3\ Amendment No. 
2 on March 9, 2000,\4\ and Amendment No. 3 on March 26, 2000.\5\ The 
proposed rule change is 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, the Exchange withdrew its request for 
implementation of a pilot program on an accelerated basis, provided 
an opportunity for an issuer to request a hearing (which a committee 
could grant or deny), and added a specific day each month on which 
committee members would be available to conduct reviews. See letter 
from James E. Buck, Senior Vice President and Secretary, NYSE, to 
Richard Strasser, Assistant Director, Division of Market Regulation 
(``Division''), Commission, dated December 21, 1999 (``Amendment No. 
1'').
    \4\ In Amendment No. 2, the Exchange proposed the following 
additional changes to: (1) give issuers ten business days in which 
to notify the Exchange of an intent to appeal: (2) run the notice 
and document submission time period consecutively; (3) expand the 
hearing cycle period from twenty business days to twenty-five 
business days; and (4) clarify in its rule language that the 
Committee would be comprised of a majority of public directors for 
purposes of delisting appeals. See letter from James E. Buck, Senior 
Vice President and Secretary, NYSE, to Richard Strasser, Assistant 
Director, Division, Commission, dated March 7, 2000 (``Amendment No. 
2'').
    \5\ In Amendment No. 3, the Exchange made technical changes to 
its proposed rule language. See letter from James E. Buck, Senior 
Vice President and Secretary, NYSE to Belinda Blaine, Associate 
Director, Division, Commission, dated March 23, 2000 
(``Amendment'').
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The proposed rule change consists of amendments to the Exchange's 
Listed Company Manual (``Manual'') and NYSE Rule 499 regarding the 
Exchange's procedures for delisting a security and the accompanying 
appeals process available to the issuer. The text of the proposed rule 
change follows. New text is italicized and deleted text is bracketed.

804.00  Procedure for Delisting

    <bullet> If the Exchange staff should determine that a security be 
removed from the list, it will so notify the issuer in writing, 
describing the basis for such decision and the specific policy or 
criterion under which such action is to be taken. The Exchange will 
simultaneously (1) issue a press release disclosing the company's 
status and basis for the Exchange's determination and (2) begin 
appending a suffix to the security's ticker symbol identifying the 
security's status.
    <bullet> The [Such] notice to the issuer shall also inform the 
issuer of its right to a review of the determination by [hearing 
before] a Committee of the Board of Directors of the Exchange 
(comprised of a majority of public Directors), provided a written 
request for such a review [hearing] is filed with the Secretary of the 
Exchange within ten business [twenty] days after receiving the 
aforementioned notice. Such review will be conducted on the next 
monthly Review Day which is at least 25 business days from the date the 
request for review is filed with the Secretary of the Exchange. If the 
next Review Day is in less than 25 business days, the review will be 
scheduled for the following Review Day.

[[Page 21231]]

    <bullet> If the issuer does not request a review [hearing] within 
the specified period, the Exchange shall suspend trading in the 
security and an application shall be submitted by the Exchange [S]staff 
to the Securities and Exchange Commission to strike the security from 
listing and a copy of such application shall be furnished to the issuer 
in accordance with Section 12 of the Securities Exchange Act of 1934 
and the rules promulgated thereunder.
    <bullet> If a review [hearing] is requested, the review will be 
conducted by [hearing will be held before] a Committee of the Board of 
Directors [, consisting of at least three public Directors and three 
industry Directors]. A request for review will ordinarily stay the 
suspension of the subject security pending the review, but the Exchange 
staff may immediately suspend from trading any security pending review 
should it determine that such immediate suspension is necessary or 
appropriate in the public interest, for the protection of investors, or 
to promote just and equitable principles of trade. [The issuer and the 
Exchange staff will be given at least 15 days written advance notice of 
the time and date of this hearing.]
    <bullet> Any brief or memorandum dealing with the issuer's or the 
Exchange [S] staff's position as well as any other written material 
which the aforementioned parties want the Committee to consider must be 
received by [should be submitted to] the Office of the General Counsel 
of the Exchange within 17 business days from the date the issuer 
receives the notice of its right to a review [at least ten days prior 
to the date of the hearing] so that such material can be furnished [for 
review] to the members of the Committee[, the issuer, and the Exchange 
Staff]. Each party must also serve such materials on its counterparty 
simultaneously with the submission to the Office of the General Counsel 
of the Exchange. The counterparty service must be made in the same 
manner as such material is filed with the Office of the General Counsel 
of the Exchange.
    <bullet> The Committee, in its sole discretion upon written motion 
or either party or upon its own motion, may extend any of the time 
periods specified above and may permit the parties to make oral 
presentations on their Review Day in accordance with such procedures as 
the Committee may specify at the time. If the Committee denies a 
request by either party to make an oral presentation, its reason for 
doing so must be included in its written decision on the review, which 
decision is provided to all parties. [At the hearing,the issuer and the 
Exchange [S] staff must prove their respective cases by presenting 
testimony, evidence, and argument to the Committee. Both parties may 
present any witnesses they wish and all those witnesses and parties who 
testify are subject to cross examination by the opposing side and 
questioning from the members of the Committee. The form and manner in 
which the actual hearing will be conducted will be established by the 
Committee so as to assure the orderly conduct of the proceeding. At the 
hearing, the Committee may require the parties to furnish additional 
written information which has come to its attention.]
    <bullet> If [After the conclusion of the proceeding,] the Committee 
decides [shall make its decision. If said decision is] that the 
security of the issuer should be removed from listing, the Exchange 
shall suspend trading in the security as soon as practicable and an 
application shall be submitted by the Exchange to the Securities and 
Exchange Commission to strike the security from listing and 
registration and a copy of such application shall be furnished to the 
issuer in accordance with Section 12 of the Securities Exchange Act of 
1934 and the rules promulgated thereunder. If the Committee decides 
[decision is] that the security should not be removed from listing, the 
issuer will receive from the Exchange a notice to that effect.
* * * * *

807.00  Voluntary Transfer to Another Exchange by a Company that 
Falls Below Criteria for Continued Listing

    Where a company falls below the criteria for continued listing, the 
Exchange will permit the company, by action of its Board of Directors, 
to voluntarily transfer its listing, and/or its principal market to 
another national securities exchange and cooperate with the company and 
the other exchange in order to avoid any interruption in trading. 
During this transition, the Exchange will append an identifier suffix 
to the ticker symbols of the securities of the issuer identifying the 
securities/status.
* * * * *
NYSE Constitution and Rules
* * * * *
Delisting of Securities, Suspension From Dealings or Removal From List 
by Action of the Exchange
* * * * *
    Rule 499  Securities admitted to the list may be suspended from 
dealings or removed from the list at any time.

* * * Supplementary Material:
* * * * *

.70  Procedure for Delisting.--

    a. If [New Listings and Corporation Liaison] the Exchange staff 
should determine that a security be delisted, it will so notify the 
issuer in writing, describing the basis for such decision and the 
specific delisting policy or criteria under which such action is to be 
taken. The Exchange will simultaneously (1) issue a press release 
disclosing the company's status and basis for the Exchange's 
determination and (2) begin appending a suffix to the security's ticker 
symbol identifying the security's status. [Such] The notice to the 
issuer shall also inform the issuer of its right of a review of the 
determination by [hearing before] a Committee of the Board of Directors 
of the Exchange (comprised of a majority of public Directors), provided 
a written request for such a review [hearing] is filed with the 
Secretary of the Exchange within ten business [twenty] days after 
receiving the aforementioned notice. Such a request will ordinarily 
stay the suspension of the subject security pending the review, but the 
Exchange may immediately suspend from trading any security pending 
review should it determine that suspension is necessary or appropriate 
in the public interest, for the protection of investors, or to promote 
just and equitable principles of trade.
    b. If the issuer does not request a review [hearing] within the 
specified period, the Exchange shall suspend trading in the security 
and an application shall be submitted by the Exchange to the Securities 
and Exchange Commission to strike the security from listing and a copy 
of such application shall be furnished to the issuer in accordance with 
Section 12 of the Securities Exchange Act of 1934 and the rules 
promulgated thereunder.
    c. If a review [hearing] is requested, the [hearing will be held 
before] review will be conducted by a Committee of the Board of 
Directors[, consisting of at least three public Directors and three 
industry Directors. The issuer and New Listings and Corporate Liaison 
will be given at least fifteen days' written advance notice of the time 
and date of the aforesaid hearing]. Such review will be conducted on 
the next monthly Review Day which is at least 25 business days from the 
date the request for review is filed with the Secretary of the 
Exchange. If the next Review Day is in less than 25 business days, the 
review will be scheduled for the following Review Day.
    d. Any brief or memorandum dealing with the issuer's or [New 
Listings and Corporate Liaison] the Exchange staff

[[Page 21232]]

position as well as any other written material which the aforementioned 
parties want the Committee to consider must be received by [should be 
submitted to] the Office of the General Counsel of the Exchange within 
seventeen business days from the date the issuer receives the notice of 
its right to a review [at least ten days prior to the date of the 
hearing] so that such material can be furnished [for review] to the 
members of the Committee[, the issuer, and New Listings and Corporate 
Liaison]. Each party must also serve such materials on its counterparty 
simultaneously with the submission to the Office of the General Counsel 
of the Exchange. The counterparty service must be made in the same 
manner as such material is filed with the Office of the General Counsel 
of the Exchange.
    e. The Committee, in its sole discretion upon written motion of 
either party or upon its own motion, may extend any of the time periods 
specified above and may permit the parties to make oral presentations 
on their Review Day in accordance with such procedures as the Committee 
may specify at the time. If the Committee denies a request by either 
party to make an oral presentation, its reason for doing so must be 
included in its written decision on the review, which decision is 
provided to all parties.
    [e. At the hearing, the issuer and New Listings and Corporate 
Liaison must prove their respective cases by presenting testimony, 
evidence, and argument to the Committee. Both parties may present any 
witnesses they wish and all those witnesses and parties who testify are 
subject to cross examination by the opposing side and questioning from 
the members of the Committee. The form and manner in which the actual 
hearing will be conducted will be established by the Committee so as to 
assure the orderly conduct of the proceeding. At the hearing, the 
Committee may require the parties to furnish additional written 
information which has come to its attention.]
    f. If [After the conclusion of the proceeding,] the Committee 
decides [shall make its decision. If said decision is] that the 
security of the issuer be removed from listing, the Exchange shall 
suspend trading in the security as soon as practicable and and 
application shall be submitted by the Exchange to the Securities and 
Exchange Commission to strike the security from listing and a copy of 
such application shall be furnished to the issuer in accordance with 
Section 12 of the Securities Exchange Act of 1934 and the rules 
promulgated thereunder. If the Committee decides [decision is] that the 
security should not be removed from listing, the issuer will receive 
from the Exchange a notice to that effect.

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
    The purpose of the proposed rule change is to modify the Exchange's 
procedures with regard to (1) delisting a security and (2) the issuer's 
appeal. This proposed rule change both streamlines the appeal process 
and ensures notification to the public when the Exchange staff 
determines a security warrants the implementation of suspension and 
delisting procedures.
    The Exchange has found that too much time sometimes elapses between 
identification of a company as not meeting the continued listing 
requirements and the suspension of its securities from trading, as well 
as between the suspension from trading of a security and the Exchange's 
subsequent application to the Commission to delist the security. In 
addition, the Board Committee that hears appeals of companies which 
have been suspended, has expressed concern that the delisting decision 
has often already been made and their oversight is more a review of 
staff decisions as opposed to consideration of an appeal by the 
company. The Exchange believes that it has already tightened its 
procedures regarding monitoring and delisting of companies falling 
below the Exchange's continued listing criteria in a filing that was 
approved by the Commission on June 9, 1999.\6\ In addition, to expedite 
the Exchange's internal review process, the Committee for Review of the 
Exchange's Board of Directors, which hears delisting appeals by 
issuers, would be streamlined to consist of its Public Directors and 
one of its Industry Directors and would be permitted to meet by 
telephone without seeking the permission of the Chairman of the Board.
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    \6\ See Securities Exchange Act Release No. 41502, 64 FR 32588 
(June 17, 1999).
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    The Exchange also has determined that investors should be promptly 
informed if a company is identified as one that warrants commencement 
of suspension and delisting procedures. Thus, simultaneously with 
providing the company with notice and an opportunity to appeal, the 
Exchange proposes to issue a press release disclosing the status of the 
company and the rationale for the determination. The Exchange also 
proposes to append an identifier suffix to ticker symbols of securities 
that have been determined by Exchange staff as warranting suspension 
and delisting. Finally, in a change that both addresses the timing 
issue and responds to the anomaly of hearing an issuer's listing appeal 
after the suspension in trading, the appeal would also generally stay 
the suspension of trading. Reviews would be conducted on the next 
monthly review day, which is at least 25 business days from the date 
the issuer's request for review is filed with the Exchange.\7\
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    \7\ See Amendment No. 2, supra note 4.
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    Specifically, with regard to the changes to the appeal process and 
the implementation of a press release requirement, the Exchange 
proposes to amend the Manual and NYSE Rule 499 as follows:
    1. Implement a press release process triggered by a staff decision 
to suspend and delist security;
    2. Clarify that a request for appeal would stay the suspension 
unless the staff determines that a stay is contrary to the interest of 
the public and investors;
    3. Specify that issuers can request before the Committee for Review 
and that the Committee may grant or deny such request, provided that an 
explicit rationale for a denial is provided. \8\
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    \8\ See Amendment No. 1, supra note 3. The Committee's denial 
could ultimately be grounds for an appeal to the Commission. Id.
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    4. Shorten the time periods relating to the appeal process such 
that (a) the issuer must notify the Exchange of its intent to appeal 
within ten business days of receiving notice that the Exchange staff 
has determined that its security should be delisted and (b) written 
submissions must be served within seventeen business days from the date 
the issuer received notice of its right to review, \9\ and
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    \9\ See Amendment No. 2, supra note 4.
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    5. Clarify that counterparty service is the responsibility of each 
party (not the Office of the General Counsel) and that

[[Page 21233]]

such service must be made in the same manner as service on the Office 
of the General Counsel.
    With regard to the identifier suffix, the Exchange proposes to 
amend the Manual in two sections. First, Para. 804 would be amended to 
specify that once Exchange staff determines that a security should be 
removed from the list, the Exchange would not only issue the current 
requisite press release, but also would begin appending the identifier 
suffix to the security's ticker symbol to indicate that is has 
commenced proceedings to suspend and delist the security. Second, Para. 
807 would be amended to specify that during a transition to another 
market, the identifier suffix would be appended.
2. Statutory Basis
    The Exchange believes that the basis under the Act for the proposed 
rule change is the requirement under section 6(b)(5) \10\ that an 
Exchange have rules that are designed to promote just and equitable 
principles of trade, to remove impediments to, and perfect the 
mechanism of a free and open market and, in general, to protect 
investors and the public interest.
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    \10\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change would 
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 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 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, 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 in the Commission's Public Reference Room in Washington, 
D.C. Copies of such filing will also be available for inspection and 
copying at the principal office of the Exchange. All submissions should 
refer to SR-NYSE-99-30 and should be submitted by May 11, 2000.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority. \11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 00-9918 Filed 4-19-00; 8:45 am]
BILLING CODE 8010-01-M