29582 Federal Register / Vol. 61, No. 113 / Tuesday, June 11, 1996 / Notices

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

2 17 CFR 240.19b–4.

3See Securities Exchange Act Release No. 19406

(Feb. 17, 1983), 48 FR 8385 (Feb. 28, 1983) (order

approving File No. SR–PSE–82–16).

4See PSE Const., Art. III, Sec. 2(c).

a negative balance in any Joint Account

for any reason, although each

Participant will be permitted to draw

down its entire balance at any time.

Each Participant’s decision to invest in

a Joint Account would be solely at its

option, and no Participant would be

obligated to invest in the Joint Account

or to maintain any minimum balance in

the Joint Account. In addition, each

Participant would retain the sole rights

of ownership to any of its assets

invested in the Joint Account, including

interest payable on such assets invested

in the Joint Account.

6. Norwest would administer the

investment of cash balances in and

operation of the Joint Accounts as part

of its general duties under its advisory

agreements with Participants and would

not collect any additional or separate

fees for advising any Joint Account.

7. The administration of the Joint

Account would be within the fidelity

bond coverage required by section 17(g)

of the Act and rule 17g–1 thereunder.

8. The Board of Trustees of each Trust

(each a ‘‘Board’’) would adopt

procedures pursuant to which the Joint

Accounts would operate, which will be

reasonably designed to provide that the

requirements of this application will be

met. Each Board will make and approve

such changes as they deem necessary to

ensure that such procedures are

followed. In addition, the Board of each

Fund would determine, no less

frequently than annually, that the Joint

Accounts have been operated in

accordance with the proposed

procedures and would permit a Fund to

continue to participate therein only if it

determines that there is a reasonable

likelihood that the Fund and its

shareholders would benefit from the

Fund’s participation.

9. Any Short-Term Investments made

through the Joint Accounts would

satisfy the investment criteria of all

Participants in that investment.

10. Each Participant and the

Custodian would maintain records (in

conformity with Section 31 of the Act

and the rules thereunder) documenting

for any given day, the Participant’s

aggregate investment in a Joint Account

and the Participant’s pro rata share of

each Short-Term Investment made

through such Joint Account. Each

Participant that is not a registered

investment company or registered

investment adviser would make

available to the Commission, upon

request, such books and records with

respect to its participation in a Joint

Account.

11. Short-Term Investments held in a

Joint Account generally would not be

sold prior to maturity except if: (a)

Norwest believes the investment no

longer presents minimal credit risks; (b)

the investment no longer satisfies the

investment criteria of all Participants in

the investment because of a

downgrading or otherwise; or (c) in the

case of a repurchase agreement, the

counterparty defaults. Norwest may,

however, sell any Short-Term

Investment (or any fractional portion

thereof) on behalf of some or all

Participants prior to the maturity of the

investment if the cost of such

transactions will be borne solely by the

selling Participants and the transaction

would not adversely affect other

Participants. In no case would a sale

prior to maturity of a Short-Term

Investment on behalf of less than all

Participants be permitted if it would

reduce the principal amount or yield to

be received by other Participants in the

Short-Term Investment or otherwise

adversely affect the other Participants.

Each Participant of a Joint Account will

be deemed to have consented to such

sale and partition of the investments in

the Joint Account.

12. Short-Term Investments held

through a Joint Account with a

remaining maturity of more than seven

days, as calculated pursuant to rule 2a–

7 under the Act, will be considered

illiquid and, for any Participant that is

an open-end investment company

registered under the Act, will be subject

to the restriction that the Fund may not

invest more than 10%, in the case of a

money market fund, and 15%, in the

case of a non-money market fund, (or

such other percentage as set forth by the

SEC from time to time) of its net assets

in illiquid securities, if Norwest cannot

sell the instrument, or the Fund’s

fractional interest in such instrument,

pursuant to the preceding condition.

For the SEC, by the Division of Investment

Management, under delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–14712 Filed 6–10–96; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–37274; File No. SR–PSE–

96–08]

Self-Regulatory Organizations; the

Pacific Stock Exchange, Inc.; Order

Granting Approval to Proposed Rule

Change Relating to Amendments to

Exchange Constitution Article III,

Section 2(c)

June 4, 1996.

I. Introduction

On March 28, 1996, the Pacific Stock

Exchange, Inc. (‘‘PSE’’ 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

amend Exchange Constitution Article II,

Section 2(c).

The proposed rule change was

published for comment in Securities

Exchange Act Release No. 37083 (April

8, 1996), 61 FR 16515 (April 15, 1996).

No comments were received on the

proposal.

II. Background

Prior to 1973, the Exchange had no

rule in place regarding conflicts of

interest on the Board of Governors. In

1973, a simplified version of the current

rule was added to the PSE Constitution,

which read as follows:

No two or more Governors for a common

or overlapping term may be associated either

as partners, stockholders or otherwise in the

same member firm or in a partnership or

corporation which is affiliated with the same

member firm.

In 1983, the rule expanded the

definition of associates to include

officers and directors,3 and attempted to

define more clearly an ‘‘indirect

association’’ between Governors, by

using two specific tests that are set forth

in the current rule.4 The experience of

PSE management and the PSE Board of

Governors, however, in interpreting and

applying the current rule has been that

the language is too cumbersome and

specific to achieve the intended purpose

of eliminating conflicts. The existing

rule limits the Exchange’s authority to

force a governor off the Board only in

limited circumstances.

A task force was created to review the

current rule and to examine alternatives

that might work better to avoid conflicts

on both the Board of Governors and the

Exchange committees. The task force

consisted of nine members as follows:

four Governors (including a public

governor, a specialist, an options floor

broker and an allied member), two

options clearing firm officials, the

chairman of the Options Floor Trading

Committee, the chairman of the Equity

Floor Trading Committee, and the

chairman of the Ethics and Business

Conduct Committee. The task force

concluded that the current language was

unnecessarily specific, and therefore

was too restrictive on the Board’s power
Federal Register / Vol. 61, No. 113 / Tuesday, June 11, 1996 / Notices 29583

5See Amex Const. Art. 3, Para. 9022; CBOE

Const. Art. 4, para. 1033.

6 15 U.S.C. 78f(b). 7 15 U.S.C. 78s(b)(2). 8 17 CFR 200.30–3(a)(12).

to determine whether a conflict existed.

After review, the task force noted that

most of the other exchanges used broad

and general language,5 or no language at

all, with the understanding that the

boards of each exchange follow the

spirit of a general policy of avoiding

conflicts of interest. The task force

approved the proposed rule, which is

intended to provide the PSE Board with

more flexibility in determining when a

conflict exists and with the authority to

take appropriate action when such

conflicts arise.

III. Description of Proposal

The PSE, accordingly, proposes to

amend its rules to authorize the

Exchange to remove a governor from the

Board, if no resignation is received, in

cases where the Board determines that

an affiliation or association between

Governors of the Board creates a conflict

of interest. Moreover, the proposed rule

provides that care shall be taken to have

the various interests of the membership

represented on the Board of Governors.

The PSE states that the proposal is

designed to provide the Exchange with

the added flexibility and authority

necessary to assure that the Board of

Governors is comprised of members

representative of the public interests

while ensuring that an affiliation or

association between two or more

governors does not create a conflict of

interest.

IV. Discussion

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).6 In

particular, the Commission believes the

proposal is consistent with the Section

6(b)(1) requirement that the exchange be

organized so as to be able to carry out

the purposes of the Act. The proposal

also is consistent with the Section

6(b)(3) requirement that the rules of the

exchange assure a fair representation of

its members in the selection of its

directors and administration of its

affairs and provides that one or more

directors must be representative of

issuers and investors and not be

associated with a member of the

exchange, broker, or dealer. Lastly, the

proposal is consistent with the Section

6(b)(5) requirement that the rules of an

exchange be designed to promote just

and equitable principles of trade, to

prevent fraudulent and manipulative

acts, and, in general, to protect investors

and the public interest.

The Commission believes that the

PSE’s proposal to authorize the

Exchange to remove a Governor from

the Board, if no resignation is received,

when, in the opinion of the Board, an

affiliation or association between

Governors creates a conflict of interest

while ensuring that various interests of

the membership are represented on the

Board is appropriate and will make the

PSE’s rules consistent with those that

are applicable on other exchanges.

The Commission believes that the

current rule prevents the Board from

resolving conflicts of interest arising

among Governors in certain situations

in that it limits the Exchange’s authority

to force a governor off the Board only in

limited circumstances. As a result, the

Exchange is precluded from addressing

various conflicts of interest that arise

from an affiliation or association

between Governors of the Board that can

result in a lack of independence among

the Board of Governors. This situation

may affect the Board’s ability to

effectuate proper oversight of the

Exchange’s business. In this regard, the

Commission supports the PSE’s

proposal which gives the Exchange the

authority to remove a governor from the

Board when any conflicts of interest

arise due to an affiliation or association

between Governors of the Board. The

Commission notes that the proposal

appropriately gives the Exchange the

requisite authority to promote and

ensure the independence of the Board of

Governors, which should result in a

more impartial decision making process.

The Commission also believes that a

diversified Board, which no single

membership group could dominate,

would better represent the interests of

all of the PSE’s constituencies. Towards

this end, the PSE proposal appropriately

promotes and ensures the diversity of

Board representation among the

different categories of member firms and

the public in that it requires the

Exchange to exhibit care to have various

interests of the membership represented

on the Board of Governors.

Finally, the Commission believes that

the PSE proposal promotes a Board of

Governors representative of various

independent interests that would be

more likely to enforce the rules of the

Act and of the Exchange.

V. Conclusion

It is therefore ordered, pursuant to

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

proposed rule change (SR–PSE–96–08)

is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.8

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–14711 Filed 6–10–96; 8:45 am]

BILLING CODE 8010–01–M

STATE JUSTICE INSTITUTE

Sunshine Act Meeting

TIME AND DATE:

Friday, June 14, 1996, 9 a.m.–5 p.m.

Saturday, June 15, 1996, 9 a.m.–1 p.m.

PLACE: State Justice Institute, 1650 King

Street, Suite 600, Alexandria, VA 22314.

MATTERS TO BE CONSIDERED: FY 1996

grant requests and internal Institute

business.

PORTIONS OPEN TO THE PUBLIC: All

matters other than those noted as closed

below.

PORTIONS CLOSED TO THE PUBLIC: Internal

personnel matters; Board committee

meetings.

CONTACT PERSON FOR MORE INFORMATION:

David I. Tevelin, Executive Director,

State Justice Institute, 1650 King Street,

Suite 600, Alexandria, VA 22314, (703)

684–6100.

[FR Doc. 96–14890 Filed 6–7–96; 12:48 pm]

BILLING CODE 6820–SC–M

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

Aviation Rulemaking Advisory

Committee Meeting on Airport

Certification Issues

AGENCY: Federal Aviation

Administration (FAA), DOT.

ACTION: Notice of meeting.

SUMMARY: The FAA is issuing this notice

to advise the public of a meeting of the

Federal Aviation Administration

Aviation Rulemaking Advisory

Committee to discuss airport

certification issues.

DATES: The meeting will be held on June

27, 1996, at 10:00 a.m. Arrange for oral

presentations by June 17, 1996.

ADDRESSES: The meeting will be held at

the Airports Council International—

North American Region, Suite 500, 1775

K Street NW., Washington, DC 20006–

1502.

FOR FURTHER INFORMATION CONTACT:

Ms. Marisa Mullen, Federal Aviation

Administration, Office of Rulemaking