[Federal Register Volume 60, Number 34 (Tuesday, February 21, 1995)]
[Notices]
[Pages 9709-9710]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-4159]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35373; File No. SR-NYSE-94-42]


Self-Regulatory Organizations; New York Stock Exchange, Inc.; 
Order Granting Approval to Proposed Rule Change Relating to the Mailing 
of Interim Financial Statements to Shareholders

Februrary 14, 1995.
    On December 1, 1994, the New York Stock Exchange, Inc. (``NYSE'' or 
``Exchange'') submitted to 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 require corporations that 
distribute interim reports to shareholders to distribute such reports 
to both registered and beneficial shareholders.

    \1\15 U.S.C. 78s(b)(1) (1988).
    \2\CFR 240.19b-4 (1993).
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    The proposed rule change was published for comment in Securities 
Exchange Act Release No. 35092 (December 12, 1994), 59 FR 65554 
(December 20, 1994). No comments were received on the proposal.
    Currently, the NYSE requires listed companies to publish interim 
earnings statements as press reports, but does not require that such 
statements also be sent to shareholders. The rule change to paragraph 
203.02 of the NYSE's Listing Company Manual will continue to make the 
distribution of interim reports to shareholders voluntary, but will 
require that corporations choosing to distribute interim reports to 
shareholders must distribute the reports to both registered and 
beneficial shareholders.
    The NYSE proposal is the product of a review by various industry 
groups, including the American Society of Corporate Secretaries and the 
Securities Industry Association, of listed companies' dissemination of 
interim earnings reports to shareholders. The groups have been 
attempting to achieve some uniformity among listed companies in the 
handling of interim earnings reports. Presently, while some listed 
companies distribute interim reports to both record and beneficial 
shareholders, some listed companies only send interim reports to record 
shareholders, and some do not send interim reports to any shareholders. 
The cost of providing interim reports to beneficial shareholders has 
been identified as a factor that discourages listed companies from 
making a full distribution of interim listed companies from making a 
full distribution of interim reports. Because broker-dealers that hold 
investors' securities in the [[Page 9710]] broker-dealers' own name 
(``street-name'') charge issuers a fee for distributing interim reports 
to beneficial shareholders, many listed companies choose not to 
distribute them.
    The industry review considered the cost of requiring interim 
reports to be mailed to all shareholders, particularly where securities 
are held in ``street-name.'' In this regard, while the industry groups 
have not reached an agreement with respect to the fees charged issuers 
to distribute interim reports to shareholders, they have reached 
agreement on the need to submit reports to registered and beneficial 
shareholders. This agreement is reflected in the NYSE's rule change.
    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, and, in 
particular, with the requirements of Section 6(b).\3\ In particular, 
the Commission believes the proposal is consistent with the Section 
6(b)(5) requirements that the rules of an exchange be designed to 
promote just and equitable principles of trade, 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.

    \3\15 U.S.C. Sec. 78f(b) (1988).
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    Although the Commission does not require public companies to 
distribute interim reports to shareholders,\4\ it believes that it is 
appropriate for the NYSE to improve the distribution by its listed 
companies of interim reports to shareholders. The NYSE proposal will 
accomplish this by ensuring equal treatment of record and beneficial 
shareholders in the distribution of reports. In addition, the NYSE's 
rule change reflects the results of the compromise reached by the 
various industry groups with regard to distribution of interim reports. 
The Commission believes the NYSE's adoption of this industry policy 
should help to create uniformity in the practices of NYSE-listed 
companies with respect to their distribution of interim financial 
reports.

    \4\The interim reports that are the subject of the NYSE's rule 
change are not the quarterly financial reports required to be filed 
with the Commission on Form 10-Q pursuant to the Commission's 
authority under Sections 13(a) and 15(d) of the Securities Exchange 
Act of 1934. See 15 U.S.C. Secs. 78m(a) and 78o(d) (1988). The 
reports are voluntarily prepared and published by companies as part 
of their shareholder relations activities.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\5\ that the proposed rule change (SR-NYSE-94-42) is approved.

    \5\15 U.S.C. 78s(b)(2) (1988).

    For the Commission, by the Division of Market Regulation, 
pursuant to delayed authority.\6\

    \6\17 CFR 200.30-3(a)(12) (1993).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-4159 Filed 2-17-95; 8:45 am]
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