Federal Register / Vol. 73, No. 169 / Friday, August 29, 2008 / Notices 51033 

6See Securities Exchange Act Release No. 48701 

(October 24, 2003), 68 FR 62126 (October 31, 2003) 

(Order Approving File No. SR–NASD–99–60); see 

also NASD Notice to Members 03–79 (December 

2003) (SEC Approves New Rule 2790 (Restrictions 

on the Purchase and Sale of IPOs of Equity 

Securities); Replaces Free-Riding and Withholding 

Interpretation). 

7 Incorporated NYSE Rules only apply to FINRA 

members who are also members of the NYSE. All 

FINRA members are subject to existing NASD rules. 

See Note 5, supra. Thus, the movement of a rule 

that existed only the NASD rulebook but was not 

an Incorporated NYSE Rule into the Consolidated 

FINRA Rulebook does not create any new 

obligations for FINRA members. 

8See Note 4, supra. 

9 In approving this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

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

10 15 U.S.C. 78o–3(b)(6). 

11See Note 6, supra. 

12 15 U.S.C. 78s(b)(2). 

13 17 CFR 200.30–3(a)(12). 

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

217 CFR 240.19b–4. 

securities in a public offering for their 

own benefit or use such securities to 

reward persons who are in a position to 

direct future business to firms, and 

industry insiders, including FINRA 

member firms and their associated 

persons, do not take advantage of their 

insider position to purchase new issues 

for their own benefit at the expense of 

public customers. Because of these 

controls, FINRA believes that the Rule 

plays an important part in maintaining 

investor confidence in the capital 

raising and IPO process. 

The Rule was originally adopted in 

2003, replacing NASD IM–2110–1 (the 

Free-Riding and Withholding 

Interpretation) in its entirety.6 The Rule 

was subject to extensive input from the 

industry and other interested persons 

during a four-year rulemaking process, 

and FINRA believes that there is broad 

support for it. The Rule provides 

necessary predictability and certainty in 

support of capital formation. Based on 

FINRA’s experience, the Rule is 

achieving its purpose and is 

significantly easier than NASD IM–

2110–1 for FINRA member firms and 

the investing public to understand and 

follow. Among other things, FINRA has 

seen a significant reduction in the 

number of interpretive and exemptive 

issues that have arisen with respect to 

the IPO allocation process since the 

Rule became effective. There is no 

Incorporated NYSE Rule equivalent to 

the Rule.7

For the reasons discussed above, 

FINRA proposed to transfer NASD Rule 

2790 to the Consolidated FINRA 

Rulebook in substantially the same 

form. As part of this transfer, FINRA 

proposed minor changes to the Rule to 

reflect the registration of the NASDAQ 

Stock Market LLC (‘‘NASDAQ’’) as a 

national securities exchange. The Rule 

currently refers to the NASDAQ Global 

Market because at the time the Rule was 

adopted, references to the listing 

standards of a national securities 

exchange did not include NASDAQ’s 

Global Market. Since NASDAQ 

completed its registration as a national 

securities exchange, the references to 

the NASDAQ Global Market in the Rule 

are no longer necessary. In addition, 

FINRA proposed certain minor, 

technical changes to the Rule. 

FINRA represented that it would 

announce the effective date of the 

proposed rule change in a Regulatory 

Notice to be published no later than 60 

days following Commission approval of 

the proposed rule change. 

III. Summary of Comments 

The Commission received one 

comment letter on the proposal.8 The 

commenter urged that FINRA amend the 

proposal to except FINRA members that 

are not underwriters from the Rule. 

FINRA has considered the comment and 

determined that it is not germane to the 

proposal in that the comment relates to 

the substantive requirements of the Rule 

which FINRA did not propose to change 

other than in minor, technical ways. 

IV. Discussion and Findings 

After careful review, the Commission 

finds that the proposed rule change is 

consistent with the requirements of the 

Act, and the rules and regulations 

thereunder that are applicable to a 

national securities association.9 In 

particular, the Commission believes that 

the proposed rule change is consistent 

with the provisions of Section 15A(b)(6) 

of the Act,10 which requires, among 

other things, that FINRA rules be 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, and, in general, to protect 

investors and the public interest. The 

Commission notes that it has previously 

approved the Rule,11 and the proposal 

merely moves the Rule nearly verbatim 

from the NASD rulebook to the 

Consolidated FINRA Rulebook. The 

Commission believes that the move 

proposed in this filing is primarily 

ministerial and only aids FINRA 

members in complying with existing 

obligations. 

V. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,12 that the 

proposed rule change (File No. SR–

FINRA–2008–025) be, and hereby is, 

approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–20084 Filed 8–28–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58413; File No. SR–NYSE 

Arca–2008–84] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by NYSE 

Arca, Inc. To Discontinue Its Policy of 

Requiring Legal Opinions in 

Connection With Listings of Securities 

August 22, 2008. 

Pursuant to section 19(b)(1) of the 

Securities Exchange Act of 1934 (the 

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

notice is hereby given that, on August 

8, 2008, NYSE Arca, Inc. (‘‘NYSE Arca’’

or the ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(the ‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice 

and order to solicit comments on the 

proposal from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

NYSE Arca, through its wholly-owned 

subsidiary NYSE Arca Equities, Inc. 

(‘‘NYSE Arca Equities’’), proposes to 

discontinue its practice of requiring the 

delivery of an opinion of counsel in 

connection with any application to list 

securities on the Exchange. In lieu 

thereof, the Exchange will require 

companies to (i) furnish the Exchange 

with copies of opinions of counsel filed 

in connection with recent public 

offerings or private placements or (ii) if 

no opinions of counsel exist, provide to 

the Exchange a certificate of good 

standing from the company’s 

jurisdiction of incorporation. In 

addition, the Exchange is discontinuing 

its policy of requiring an opinion of 

counsel to the effect that the company 

is in compliance with all of the 

Exchange’s corporate governance 

requirements at the time of listing and, 

in lieu thereof, will require that 

companies provide a revised form of 

initial written affirmation evidencing 

mstockstill on PROD1PC66 with NOTICES

51034 Federal Register / Vol. 73, No. 169 / Friday, August 29, 2008 / Notices 

3See Exhibit 3 to this filing, which includes the 

revised initial and annual written affirmation (Rule 

5.3—Corporate Governance and Disclosure Policies) 

marked to show changes from the initial written 

affirmation previously used by the Exchange. The 

Commission notes that pursuant to the General 

Instructions for Form 19b–4, if any form, report, or 

questionnaire is referred to in a proposed rule 

change, then the form, report, or questionnaire must 

be attached and shall be considered as part of the 

proposed rule change. See Securities Exchange Act 

Release No. 50486 (October 4, 2004), 69 FR 60287 

(October 8, 2004). 

4The required opinion relates to: The legality and 

valid existence of the issuer; the issuer’s 

qualification to do business in jurisdictions other 

than its jurisdiction of incorporation; the validity of 

authorization and issuance of the securities; 

whether the securities are fully paid and nonassessable; the validity of the securities; any 

government orders or proceedings that are a 

prerequisite to the issuance of the securities; 

whether registration of the securities is required; 

whether such registration has occurred; and that the 

company is in compliance with the Exchange’s 

corporate governance listing requirements. 

5The Exchange will also put companies on notice 

of this requirement by including a reference to it 

in the list of required documentation in connection 

with listing applications presented on its Web site 

and the checklist of required documentation sent 

out to listing applicants. See the revised list of 

required documentation included in Exhibit 3 

hereto. The Exchange has significantly revised and 

shortened the section of its Web site dealing with 

the listing application process, primarily by 

deleting text that relates to procedures that are no 

longer in use and have not been for some time. In 

revising the Web site, the Exchange has not changed 

its listing policies or procedures in any way that is 

not disclosed elsewhere in this filing. 

6See Securities Exchange Act Release No. 42539 

(March 17, 2000), 65 FR 15672 (March 23, 2000) 

(SR–Amex–99–39). 7See note 3, supra. 8 15 U.S.C. 78f. 

9 15 U.S.C. 78f(b)(5). 

their compliance with the applicable 

corporate governance requirements.3

The text of the proposed rule change is 

available on the Exchange’s Web site 

(http://www.nyse.com), at the 

Exchange’s Office of the Secretary, and 

at the Commission’s Public Reference 

Room. 

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 III 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 Exchange proposes to 

discontinue its practice of requiring the 

delivery of an opinion of counsel in 

connection with any application to list 

securities on the Exchange. In lieu 

thereof, the Exchange will require 

companies to (i) furnish the Exchange 

with copies of opinions of counsel filed 

in connection with recent public 

offerings or private placements or (ii) if 

no opinions of counsel exist, provide to 

the Exchange a certificate of good 

standing from the company’s 

jurisdiction of incorporation. In 

addition, the Exchange is discontinuing 

its policy of requiring an opinion of 

counsel to the effect that the company 

is in compliance with all of the 

Exchange’s corporate governance 

requirements at the time of listing and, 

in lieu thereof, will require that 

companies provide a revised form of 

initial written affirmation evidencing 

their compliance with the applicable 

corporate governance requirements. 

The Exchange has had a longstanding 

policy of requiring the delivery of an 

opinion of counsel addressed to the 

Exchange in connection with each 

application to list securities, including 

applications to list additional shares of 

a previously listed class.4 The Exchange 

believes that its opinion requirement is 

duplicative of several safeguards that 

now exist to protect investors in listed 

securities. In particular, an issuer’s 

independent auditor reviews the 

issuance of securities as part of its 

annual audit. Additionally, the 

underwriters of securities sold in a 

public offering receive legal opinions as 

to the validity of the issuance of the 

securities they purchase, as well as 

performing their own due diligence on 

the company and the securities. 

Furthermore, a legal opinion as to the 

legality of the issuance of the securities 

being registered is delivered to the SEC 

in connection with the filing of any 

registration statement. Accordingly, the 

Exchange proposes to end its policy of 

requiring legal opinions in connection 

with listing applications, including 

applications to list additional shares of 

a previously listed class. Through its 

standard condition letter, the Exchange 

will require issuers to (i) furnish the 

Exchange with copies of opinions of 

counsel filed in connection with recent 

public offerings or private placements or 

(ii) if no opinions of counsel exist, 

provide to the Exchange a certificate of 

good standing from the company’s 

jurisdiction of incorporation.5

The Exchange notes that the 

Commission approved a rule filing by 

the American Stock Exchange (the 

‘‘Amex’’) in 2000 to eliminate opinion 

requirements from the Amex Company 

Guide under the same conditions NYSE 

Arca is proposing in this filing.6

Additionally, to the Exchange’s 

knowledge, Nasdaq does not require 

legal opinions in connection with new 

listings. As such, the Exchange believes 

that it is appropriate to conform its 

listing procedure in this regard to those 

of its direct competitors. In doing so, the 

Exchange will avoid the possibility of 

any competitive harm arising out of the 

imposition of this additional burden on 

issuers. 

No other major exchange requires as 

a condition to listing an opinion with 

respect to the issuer’s compliance with 

the exchange’s corporate governance 

requirements. The Exchange believes 

that it has two different sources of 

assurance that, at the time of initial 

listing, a company is in compliance 

with the Exchange’s corporate 

governance requirements. First, the 

company provides a listing application 

executed by an authorized officer of the 

company in which it affirms that, at the 

time of filing the application, it has 

‘‘read and understood the Exchange’s 

Listings Rule, and fully believes itself to 

be in compliance with, and, if approved 

for listing, intends to continue to be in 

compliance with, the Exchange’s listing 

and corporate governance rules and 

requirements, as amended.’’ Second, the 

Company provides a written affirmation 

at the time of listing that it is in 

compliance with the Exchange’s board 

and audit committee independence 

requirements. The Exchange intends to 

amend the written affirmation so that it 

includes affirmations of compliance 

with the Exchange’s nominating and 

compensation committee independence 

requirements and thereby 

comprehensively covers the Exchange’s 

corporate governance requirements. The 

revised affirmation is included in 

Exhibit 3 to the filing.7 The Exchange 

believes that the affirmation in the 

listing application and the written 

affirmation provide sufficient evidence 

of a company’s compliance with the 

corporate governance requirements at 

the time of listing and that requiring a 

corporate governance opinion is 

unnecessary. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the objectives of section 6 8 of the Act 

in general and furthers the objectives of 

section 6(b)(5),9 in particular, in that it 

is designed to promote just and 

mstockstill on PROD1PC66 with NOTICES

Federal Register / Vol. 73, No. 169 / Friday, August 29, 2008 / Notices 51035 

10 15 U.S.C. 78s(b)(3)(A). 

11 17 C.F.R. 240.19b–4(f)(6). 

12 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(1). 

4 17 CFR 240.19b–4. 

5The Exchange recently filed, and the 

Commission approved, a proposed rule change with 

the Commission to automate the process for 

handling and executing complex orders. See 

Securities Exchange Act Release No. 58361 (August 

14, 2008) (SR–Phlx–2008–50) (‘‘Approval Order’’). 

A Complex Order is composed of two or more 

option components and is priced as a single order 

(a ‘‘Complex Order Strategy’’) on a net debit or net 

credit basis. 

6See Securities Exchange Act Release No. 50100 

(July 27, 2004), 69 FR 46612 (August 3, 2004) (SR–

Phlx–2003–59). 

equitable principles of trade, to remove 

impediments, and to 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 proposed 

amendment specifically seeks to remove 

impediments to and perfect the 

mechanisms of a free and open market 

by conforming the Exchange’s listing 

procedures to those of Nasdaq and the 

Amex, thereby eliminating any 

competitive disadvantage the Exchange 

may suffer as a result of imposing a legal 

opinion requirement with respect to 

securities listings. In addition, the 

Exchange’s procedures will continue to 

protect the interests of investors by 

imposing requirements that will ensure 

that listed companies are duly and 

validly organized and in good standing 

in their jurisdiction of incorporation. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will 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 Received From 

Members, Participants or Others 

Written comments on the proposed 

rule change were neither solicited nor 

received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The proposed rule change has taken 

effect upon filing pursuant to section 

19(b)(3)(A) of the Act.10

The Exchange asserts that the 

proposed rule change (i) will not 

significantly affect the protection of 

investors or the public interest, (ii) will 

not impose any significant burden on 

competition, and (iii) will not become 

operative for 30 days after the date of 

this filing, or such shorter time as the 

Commission may designate if consistent 

with the protection of investors and the 

public interest. 

The Exchange provided the 

Commission with written notice of its 

intent to file the proposed rule change, 

along with a brief description and text 

of the proposed rule change, at least five 

business days prior to the date of the 

filing of the proposed rule change as 

required by Rule 19b–4(f)(6).11

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission may summarily abrogate 

such rule change if it appears to the 

Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or otherwise in furtherance of the 

purposes of the Act. 

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. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form http://www.sec.gov/

rules/sro.shtml); or 

• Send an e-mail to 

rule-comments@sec.gov. Please include 

File Number SR–NYSEArca–2008–84 on 

the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSEArca–2008–84. This 

file number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/

rules/sro.shtml). 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, 100 F Street, NE., Washington, 

DC 20549, on official business days 

between the hours of 10 a.m. and 3 p.m. 

Copies of the filing also will be available 

for inspection and copying at the 

principal office of the self-regulatory 

organization. All comments received 

will be posted without change; the 

Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–

NYSEArca–2008–84 and should be 

submitted on or before September 19, 

2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–20063 Filed 8–28–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58420; File No. SR–Phlx–

2008–62] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by the 

Philadelphia Stock Exchange, Inc. 

Relating to the Exchange’s Fee 

Schedule Concerning Complex Orders 

August 25, 2008. 

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 August 

22, 2008, the Philadelphia Stock 

Exchange, Inc. (‘‘Phlx’’ 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 Phlx. 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 Phlx, pursuant to section 19(b)(1) 

of the Act 3 and Rule 19b–4 thereunder,4

proposes to amend its option fee 

schedule by establishing that certain 

fees would not be assessed on contracts 

that are executed electronically as part 

of a Complex Order 5 on the Exchange’s 

electronic trading platform for options, 

Phlx XL,6 and that contract volume 

thresholds applicable to certain 

mstockstill on PROD1PC66 with NOTICES