Federal Register / Vol. 73, No. 168 / Thursday, August 28, 2008 / Notices 50845 

13See SEC Release No. 34–58121 (Jul. 9, 2008); 

73 FR 40418 (Jul. 14, 2008). 

14Ernst & Young LLP and Deloitte & Touche LLP. 

15Ernst & Young LLP and Deloitte & Touche LLP. 

16Matthew L. Garzia, Student, Business 

Management, Tappan, New York. 

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

2 17 CFR 240.19b–4. 

before the professional engagement 

period begins. 

On April 22, 2008, the Board adopted 

the amendment to PCAOB Rule 3523 to 

exclude the portion of the audit period 

that precedes the beginning of the 

professional engagement period and a 

rule amendment to further delay the 

implementation date for that portion of 

Rule 3523 until December 31, 2008. 

The proposed amendment to PCAOB 

Rule 3523 provides that the Board will 

not apply Rule 3523 to tax services 

when those services are provided during 

the audit period and are completed 

before the professional engagement 

period begins. Rule 3523 continues to 

apply to tax services provided during 

the professional engagement period. 

Pursuant to the requirements of 

Section 107(b) of the Act and Section 

19(b) of the Securities Exchange Act of 

1934 (the ‘‘Exchange Act’’), the 

Commission published the PCAOB’s 

proposed Ethics and Independence Rule 

3526, Communication with Audit 

Committees Concerning Independence, 

conforming amendments to its interim 

standard ISB No. 1 and two related 

interpretations, and amendment to Rule 

3523, Tax Services for Persons in 

Financial Reporting Oversight Roles for 

public comment in the Federal Register 

on July 14, 2008.13

III. Discussion 

The Commission received two 

comment letters relating to proposed 

Rule 3526, both of which were generally 

supportive of the proposed rule.14 One 

of the firms, however, expressed 

concerns relating to the timing of the 

required communication of Rule 3526 

and its effect on an auditor’s 

participation in the activities associated 

with an initial public offering. The firm 

also expressed concerns about the 

difference between the ‘‘audit and 

professional engagement period’’

referenced in the SEC’s independence 

rules and Rule 3526’s requirement to 

communicate matters that may have 

existed outside of this time period. The 

firm requested that the Commission 

include clarifying commentary in its 

approval order regarding these matters 

and urged the PCAOB to issue 

additional interpretive guidance to aid 

in the consistent application of the 

rules. 

The PCAOB carefully considered the 

commenter’s concerns before it adopted 

Rule 3526 and addressed those concerns 

in its adopting release. We do not 

believe that any clarifying commentary 

is necessary at this time. We encourage 

the PCAOB to carefully monitor the 

implementation of Rule 3526 and to 

provide appropriate guidance if it is 

needed in the future. 

The Commission received three 

comment letters relating to the proposed 

amendment to Rule 3523. Two of the 

commenters were supportive of the 

amendment to Rule 3523.15 The other 

commenter 16 expressed concern that 

Rule 3523 ‘‘put[s] a huge burden on 

smaller companies and larger tax firms’’

because some companies could have 

large numbers of employees and 

chances are that some of those 

employees could be receiving tax 

services from potential external 

auditors. While purportedly outside the 

scope of the proposed amendment, 

which in fact limits the scope of the rule 

to a narrower period of just the 

professional engagement period, it 

should also be noted that Rule 3523 

applies only to persons in a financial 

reporting oversight role (FROR). This 

term is defined in PCAOB Rule 3501 as: 

[A] role in which a person is in a position 

to or does exercise influence over the 

contents of the financial statements or 

anyone who prepares them, such as when the 

person is a member of the board of directors 

or similar management or governing body, 

chief executive officer, president, chief 

financial officer, chief operating officer, 

general counsel, chief accounting officer, 

controller, director of internal audit, director 

of financial reporting, treasurer, or any 

equivalent position. 

Rule 3523 is further limited to exclude 

persons (i) who are in a FROR only 

because he or she serves as a member of 

the board of directors or similar 

management or governing body of the 

audit client, (ii) who are in FROR at 

affiliates if the affiliate’s financial 

statements are immaterial or audited by 

a different auditor and (iii) who 

received tax services before being hired 

or promoted into a FROR if the services 

are completed on or before 180 days 

after the hiring or promotion event. 

The PCAOB is not proposing to 

change the persons subject to Rule 3523 

in its proposing amendment. The 

PCAOB gave careful consideration to 

the issues raised by the commenter prior 

to Rule 3523’s adoption by the Board. 

PCAOB Rules 3526 and 3523, 

including the proposed amendment to 

Rule 3523 and the conforming 

amendments to the interim standards, 

are a reasonable exercise of the Board’s 

rule-making authority under the Act. 

IV. Conclusion 

On the basis of the foregoing, the 

Commission finds that the PCAOB’s 

proposed Ethics and Independence Rule 

3526, Communication with Audit 

Committees Concerning Independence, 

conforming amendments to its interim 

standard ISB No. 1 and two related 

interpretations, and amendment to Rule 

3523, Tax Services for Persons in 

Financial Reporting Oversight Roles, are 

consistent with the requirements of the 

Act and the securities laws and are 

necessary and appropriate in the public 

interest and for the protection of 

investors. 

It is therefore ordered, pursuant to 

Section 107 of the Act and Section 

19(b)(2) of the Exchange Act, that the 

proposed rule changes (File No. 

PCAOB–2008–03) be, and hereby are, 

approved. 

By the Commission. 

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–19989 Filed 8–27–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58408; File No. SR–BSE–

2008–42] 

Self-Regulatory Organizations; Notice 

of Filing of Proposed Rule Change by 

the Boston Stock Exchange, Inc. 

Relating to the Appointment of Market 

Makers on the Boston Options 

Exchange Facility 

August 22, 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 

19, 2008, the Boston Stock Exchange, 

Inc. (‘‘BSE’’ or ‘‘Exchange’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the selfregulatory organization. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

section 5 (Obligations of Market Makers) 

of Chapter VI of the Rules of the Boston 

Options Exchange Group, LLC (‘‘BOX’’). 


jlentini on PROD1PC65 with NOTICES
50846 Federal Register / Vol. 73, No. 168 / Thursday, August 28, 2008 / Notices 

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

4 15 U.S.C. 78f(b)(5). 5 17 CFR 200.30–3(a)(12). 

The text of the proposed rule change is 

available on the Exchange’s Internet 

Web site at http:// 

www.bostonstock.com, from the 

principal office of the Exchange and 

from the Commission. 

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 purpose of the proposed rule 

change is to remove certain language 

from section 5(a)(viii) of Chapter VI of 

the BOX Rules to eliminate any 

potential for confusion between this and 

section 4(f) of Chapter VI of the BOX 

Rules. 

Currently, section 4(f) of Chapter VI 

states that ‘‘Market Makers may 

withdraw from trading an options class 

that is within their appointment by 

providing the BOX with three business 

days’ written notice of such 

withdrawal.’’ However, Section 

5(a)(viii) states that ‘‘[o]rdinarily, 

Market Makers are expected to * * * 

[m]aintain active markets in all classes 

in which the Market Maker is appointed 

for a period of at least six months.’’ To 

address this potential ambiguity, the 

Exchange seeks to remove the language 

‘‘for a period of at least six months’’

from section 5(a)(viii). As a result, a 

Market Maker seeking to withdraw from 

a particular appointment will be 

required to provide BOX with at least 

three business days written notice of 

such withdrawal, as stated in section 

4(f), regardless of how long the Market 

Maker has held such appointment. 

In addition, the proposed rule change 

will result in certain changes to the 

formatting and text of Supplementary 

Material to Chapter VI, Section 5(c)(ii) 

of the BOX Rules. The rule change is 

non-substantive, and it will result in a 

closer universal format throughout the 

BOX Rules. 

2. Basis 

The Exchange believes that the 

proposal is consistent with the 

requirements of section 6(b) of the Act,3

in general, and section 6(b)(5) of the 

Act,4 in particular, in that it is designed 

to prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, to foster 

cooperation and coordination with 

persons engaged in 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. The proposed rule 

change will create greater clarity within 

the BOX Rules concerning Market 

Maker appointments in specific options 

classes and requests to withdraw from 

such appointments. 

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 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 

The Exchange has neither solicited 

nor received 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 such 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. 

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–BSE–2008–42 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–BSE–2008–42. 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–BSE–

2008–42 and should be submitted on or 

before September 18, 2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.5

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–19945 Filed 8–27–08; 8:45 am] 

BILLING CODE 8010–01–P 


jlentini on PROD1PC65 with NOTICES