Document ID: SEC-2007-0226-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Philadelphia Stock Exchange, Inc.
Posted Date: 2007-02-14T05:00Z

[Federal Register: February 14, 2007 (Volume 72, Number 30)]
[Notices]               
[Page 7104-7106]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14fe07-141]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55254; File No. SR-Phlx-2006-88]

 
 Self-Regulatory Organizations; Philadelphia Stock Exchange, 
Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change Relating to Rule 712, Independent Audit

February 8, 2007.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

[[Page 7105]]

(``Act'') \1\, and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on December 21, 2006, 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 Exchange has designated this proposal as one 
establishing or changing a due, fee, or other charge imposed by Phlx 
under Section 19(b)(3)(A)(ii) \3\ of the Act and Rule 19b-4(f)(2) \4\ 
thereunder, which renders the proposal effective upon filing with the 
Commission. 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\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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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 \5\ and Rule 19b-
4 thereunder,\6\ proposes to amend Phlx Rule 712, Independent Audit, to 
clarify that in certain circumstances a member organization may request 
an extension of time to file its annual audit from the Exchange in 
writing prior to the due date of the annual audit, and to provide for 
the imposition of a fee to be assessed for the late filing of an annual 
audited financial statement (``annual audit'').
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    \5\ 15 U.S.C. 78s(b)(1).
    \6\ 17 CFR 240.19b-4.
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    The proposed new language is set forth below, with new text 
italicized:
Rules of the Board of Governors
* * * * *
Independent Audit
    Rule 712. Each member organization doing any business with the 
public shall at least once each calendar year cause to be made an audit 
of its affairs, conducted in accordance with applicable audit 
requirements of the Securities and Exchange Commission and such other 
requirements as deemed appropriate by the Exchange, by independent 
public accountants and shall have such accountants prepare an answer to 
the financial questionnaire of the Exchange based upon such audit.
    Pursuant to Rule 17a-5(d), promulgated under the Exchange Act, all 
broker-dealers are required to file annually audited financial 
statements (``Annual Audits'') with their Designated Examining 
Authority and the SEC, no more than 60 days after the date of the year 
end financial statements. A member organization unable to meet the 
filing deadline for its Annual Audit as a result of exceptional 
circumstances may request an extension of time, in writing, prior to 
the filing due date. Annual Audits not received by the Exchange by the 
due date, or revised due date if an extension has been granted, will be 
subject to a late fee as set forth below for each week or any part 
thereof that the Annual Audit has not been filed, as calculated based 
on the due date or revised due date for filing the Annual Audit. 
(Implemented on a running three-year basis.)
    (i) $100 per week for the first late filing in a three-year period.
    (ii) $300 per week for the second late filing in a three-year 
period.
    (iii) $1,000 per week for the third late filing in a three-year 
period.
* * * * *

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 Phlx 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 Phlx has substantially 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
    Currently, Rule 712 sets forth the provisions governing the 
requirements for an annual audit to be conducted in accordance with 
audit requirements as set forth by the Securities and Exchange 
Commission and other requirements as deemed appropriate by the 
Exchange. The proposed amendment is designed to clarify that, if a 
member organization is unable to meet the filing deadline for its 
annual audit as a result of exceptional circumstances, the member 
organization may request an extension of time to file its annual audit 
in writing prior to the due date of the annual audit.\7\ In addition, 
the proposed amendment is intended to encourage the prompt filing of 
annual audits by those member organizations designated to the Exchange 
for examining purposes through the assessment of a late filing fee. 
Pursuant to the amended Rule, the Exchange may issue progressively 
higher fees for all subsequent violations within the running three-year 
time period.\8\
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    \7\ Requests for extensions of time to file an annual audit 
should be submitted to the Exchange.
    \8\ The Exchange may present repeated or aggravated failures to 
file such annual audits on a timely basis to the Exchange's Business 
Conduct Committee for disciplinary action under Exchange Rules.
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2. Statutory Basis
    The Exchange believes that its proposal to amend its schedule of 
fees is consistent with Section 6(b) of the Act \9\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \10\ in 
particular, in that it is an equitable allocation of reasonable fees 
and other charges among Exchange members.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4).
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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

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to section 
19(b)(3)(A)(ii) of the Act \11\ and paragraph (f)(2) of Rule 19b-4 \12\ 
thereunder. 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.
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    \11\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \12\ 17 CFR 240.19b-4(f)(2).
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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:

[[Page 7106]]

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-Phlx-2006-88 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-Phlx-2006-88. 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. Copies of the filing 
also will be available for inspection and copying at the principal 
office of the Phlx. 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-Phlx-2006-88 and should be submitted on or before March 7, 2007.
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    \13\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-2549 Filed 2-13-07; 8:45 am]

BILLING CODE 8010-01-P