Document ID: SEC-2007-1512-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2007-11-05T05:00Z

[Federal Register: November 5, 2007 (Volume 72, Number 213)]
[Notices]               
[Page 62500-62502]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05no07-83]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56707; File No. SR-Amex-2007-111]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Enable Settlements of Disciplinary Matters To Be Considered for 
Approval or Rejection by Exchange Hearing Officers Without the Need To 
Convene a Formal Hearing

October 26, 2007.
    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 October 19, 2007, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been substantially prepared by Amex. The 
Exchange filed the proposal as a ``non-controversial'' rule change 
pursuant to section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6) thereunder,\4\ which renders the proposal effective upon 
receipt of this filing by 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)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).

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[[Page 62501]]

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to adopt changes to sections 1 and 2 of 
Article V of the Exchange's Constitution; Rule 345 of the Exchange's 
``Office Rules''; and Rules 2(a), 2(b) and 8 of the Exchange's ``Rules 
of Procedure in Disciplinary Matters'' in order to enable settlements 
of disciplinary matters to be considered for approval or rejection by 
Exchange hearing officers without the need to convene a formal hearing.
    The text of the proposed rule change is available on the Amex's Web 
site at http://www.amex.com, the Office of the Secretary, the Amex 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, Amex 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. Amex 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 is proposing amendments to sections 1 and 2 of Article 
V of the Exchange's Constitution; Rule 345 of the Exchange's Office 
Rules; and Rules 2(a), 2(b) and 8 of the Exchange's Rules of Procedure 
in Disciplinary Matters in order to streamline the handling of 
settlements of disciplinary matters by permitting such matters to be 
addressed by a single Exchange hearing officer, who shall either 
approve or reject the settlement, without being required to convene a 
formal hearing.
    Under current Amex rules, settlements of disciplinary proceedings 
are handled as follows: Should a member, member organization, approved 
person, or a registered or non-registered employee or prospective 
employee of a member or member organization (each a ``respondent''), on 
one side, and enforcement staff of the Exchange, on the other side, 
enter into a stipulation of facts and consent to a specified penalty (a 
``Stipulation''), a formal hearing before an Exchange Disciplinary 
Panel (``Panel''), which may act solely through its Chair, must be 
convened to consider the Stipulation. Prior to that hearing, the Chair 
is provided with an enforcement staff memorandum outlining the 
Stipulation and analyzing how the agreed upon sanctions in the 
Stipulation are consistent with the Exchange Sanctions Guidelines and 
relevant precedent.\5\ The subsequent hearings generally are conducted 
by telephone and consist of the respondent's counsel and enforcement 
staff affirming support for the Stipulation. After considering the 
presentation, the Chair issues a written decision either (i) approving 
the Stipulation, (ii) rejecting the Stipulation, if the Chair considers 
the penalty too lenient, or (iii) imposing a lesser penalty than that 
contained in the Stipulation, if the Chair considers the agreed upon 
penalty too severe.
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    \5\ The respondent's counsel (or the respondent, in the event he 
is not represented) is also concurrently provided with a copy of the 
memorandum.
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    The above process has proven more time consuming than the Exchange 
believes necessary. It typically takes several months to schedule the 
hearing as a result of various scheduling conflicts among the parties 
involved, yet the hearing itself only takes a few minutes and is more 
formal than substantive, given the negotiated settlement and submission 
of the detailed enforcement staff memorandum in advance of the hearing. 
Therefore, in order to streamline the process, the Exchange is 
proposing to modify its rules to allow a Stipulation to be accepted or 
rejected by a hearing officer without conducting a formal hearing. 
Further, the Exchange is also proposing that the Chair's power to 
impose a lesser penalty than that contained in a Stipulation be 
eliminated as unnecessary, in view of the fact that the Amex 
Adjudicatory Counsel, in any event, still retains the right to impose a 
lower sanction if it exercises its right to call the Chair's acceptance 
or rejection of the Stipulation for review.
    In summary, the new proposed Stipulation consideration procedure 
will differ from current practice in only two substantive respects: (i) 
No formal hearing will now take place before the Chair, as a single 
hearing officer can consider the Stipulation without a formal hearing; 
and (ii) if a hearing officer deems a penalty in a Stipulation to be 
too severe, he will now reject the Stipulation, rather than propose a 
lesser penalty. The Exchange anticipates that these changes will 
provide a more efficient and expedient process for resolution of 
Exchange disciplinary matters, without compromising the quality of the 
process.
    In addition, Amex proposes certain non-substantive ``housekeeping'' 
changes, including elimination of repetitive or unnecessary phrasing; 
creation of certain defined terms for ease of reference (i.e., 
``Stipulation''); and addition of rule cross-references.
2. Statutory Basis
    The proposed rule change is consistent with sections 6(b)(6), 
6(b)(7) and 6(d) of the Act \6\ in that it is designed to ensure that 
members and persons associated with members of the Exchange shall be 
appropriately disciplined for violation of the securities laws, the 
rules or regulations thereunder, or the rules of the Exchange; provide 
a fair procedure for imposition of such discipline; and ensure that a 
record is kept of such proceedings.
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    \6\ 15 U.S.C. 78f(b)(6), 78f(b)(7), and 78f(d).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change does not 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

    No written comments were solicited or received with respect to the 
proposed rule change.

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

    Because the foregoing proposed rule change does not: (A) 
Significantly affect the protection of investors or the public 
interest; (B) impose any significant burden on competition; and (C) by 
its terms, become operative for 30 days from the date on which it was 
filed, or such shorter time as the Commission may designate, if 
consistent with the protection of investors and the public interest, it 
has become effective pursuant to Section 19(b)(3)(A) of the Act \7\ and 
Rule 19b-4(f)(6) thereunder.\8\
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires that a self-regulatory organization submit to the 
Commission 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 filing of 
the proposed rule change, or such shorter time as designated by the 
Commission. The Commission notes that Amex has satisfied the five-
day pre-filing notice requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally may 
not become operative prior to 30 days after

[[Page 62502]]

the date of filing. However, Rule 19b-4(f)(6)(iii) permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has requested that the Commission waive the 30-day operative delay.
    The Commission believes that the proposed amendments should allow 
the Exchange to settle disciplinary matters more efficiently, without 
affecting the rights of respondents in any significant manner. In 
addition, the Exchange's non-substantive changes should help make Amex 
rules clearer and easier for readers to understand. The Commission 
believes that for these reasons, waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
Therefore, the Commission designates the proposed rule change to be 
operative upon filing with the Commission.\9\
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    \9\ For purposes only of waiving the 30-day operative delay, the 
Commission has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
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    At any time within 60 days of the filing of such 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-Amex-2007-111 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-Amex-2007-111. 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 such filing also will be available for 
inspection and copying at the principal office of Amex. 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-Amex-2007-111 and should be 
submitted on or before November 26, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-21632 Filed 11-2-07; 8:45 am]

BILLING CODE 8011-01-P