Document ID: SEC-2005-0021-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: New York Stock Exchange, Inc.
Posted Date: 2005-09-26T04:00Z

[Federal Register: September 26, 2005 (Volume 70, Number 185)]
[Notices]               
[Page 56201-56203]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26se05-76]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52468; File No. SR-NYSE-2005-48]

 
Self-Regulatory Organizations; New York Stock Exchange, Inc.; 
Notice of Filing of Proposed Rule Change to Provide for a 10-Day Notice 
Requirement Before a Party Issues a Subpoena to a Non-Party for Pre-
Hearing Discovery

September 19, 2005.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 \2\ thereunder, notice is hereby given 
that on July 13, 2005, the New York Stock Exchange, Inc. (``NYSE'' or 
the ``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 Exchange. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The NYSE is proposing to amend Rule 619 (``General Provision 
Governing Subpoenas, Production of Documents, etc.'') primarily to 
provide for a 10-day notice period requirement before a party issues a 
subpoena to a non-party for pre-hearing discovery. Below is the text of 
the proposed rule change. Proposed new language is in italics; proposed 
deletions are in brackets.
* * * * *

Rule 619: General Provision Governing Subpoenas, Production of 
Documents, etc.

    (a) to (e) no change.
    (f) Subpoenas.
    (1) The arbitrator(s) and any counsel of record to the proceedings 
[shall have the power of the subpoena process] may issue subpoenas as 
provided by law. [All parties shall be given a copy of the subpoena 
upon its issuance.] The party who requests or issues a subpoena must 
send a copy of the request or subpoena to all parties and the entity 
receiving the subpoena in a manner that is reasonably expected to cause 
the request or subpoena to be delivered to all parties and the entity 
receiving the subpoena on the same day. The parties shall produce 
witnesses and present [proofs to the fullest extent possible without 
resort to the subpoena process] proof at the hearing whenever possible 
without using subpoenas.
    (2) No subpoenas seeking discovery shall be issued to or served 
upon non-parties to an arbitration unless, at least 10 days prior to 
the issuance or service of the subpoena, the party seeking to issue or 
serve the subpoena sends notice of intention to serve the subpoena, 
together with a copy of the subpoena, to all parties to the 
arbitration.
    (3) In the event a party receiving such a notice objects to the 
scope or propriety of the subpoena, that party shall, within the 10 
days prior to the issuance or service of the subpoena, file with the 
Director of Arbitration, with copies to all other parties, written 
objections. The party seeking to issue or serve the

[[Page 56202]]

subpoena may respond thereto. The arbitrator(s) appointed shall rule 
promptly on the issuance and scope of the subpoena.
    (4) In the event an objection to a subpoena is filed under 
paragraph (f)(3), the subpoena may only be issued or served prior to 
the arbitrator's(s') ruling if the party seeking to issue or serve the 
subpoena advises the subpoenaed party of the existence of the objection 
at the time the subpoena is served, and instructs the subpoenaed party 
that it should preserve the subpoenaed documents, but not deliver them 
until a ruling is made by the arbitrator(s).
    (5) Rule 619(f)(2) and (3) do not apply to subpoenas addressed to 
parties or non-parties to appear at a hearing before the arbitrator(s).
    (6) The arbitrator(s) shall have the power to quash or limit the 
scope of any subpoena.
    (g) No change.
* * * * *

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 changes. 
The text of these statements may be examined at the places specified in 
Item IV 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
    Parties in arbitration often seek the production of documents from 
third parties as part of pre-hearing discovery. Exchange Rule 619 sets 
forth procedures for the issuance of subpoenas and for the production 
of documents. The rule provides that arbitrators and attorneys for the 
parties have subpoena powers as provided by law, and that all parties 
are to be given copies of subpoenas when issued.
    Under the current procedures, the opposing attorney may not receive 
notice of the subpoena until after it has been served on a non-party. 
In such situations, non-parties may produce documents that are the 
subject of dispute as to whether they should be produced at all. This 
has led to court action to have subpoenas quashed, which adds expense 
and delay to the arbitration process. Under the proposed amendments, 
the arbitrators, rather the courts, would rule on these discovery 
disputes.
    Under the proposed rule, the party who requests or issues a 
subpoena must send a copy of the request or subpoena to all parties to 
the arbitration, and to non-parties, if applicable, in a manner 
reasonably expected to result in delivery to everyone on the same day.
    As amended, the rule provides that subpoenas can be issued to non-
parties only after all parties have ten days advance notice and the 
opportunity to file objections. If a party has an objection to the 
propriety or scope of the subpoena, that party may file objections in 
writing with the Director of Arbitration and send copies to all other 
parties within the ten-day period prior to the issuance or service of 
the subpoena. The party requesting the subpoena may file a reply to 
objections. The arbitrator(s) shall determine the propriety and scope 
of the requested subpoena(s).
    Additionally, as amended, the rule provides that non-parties must 
be advised that documents subpoenaed are to be preserved but not 
delivered pending any determination that may be required by the 
arbitrator(s). Furthermore, the proposed rule does not apply to 
subpoenas addressed to parties or non-parties to appear at a hearing 
before the arbitrator(s).\3\ The proposed rule also provides that the 
arbitrator(s) may quash or limit the scope of subpoena(s).
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    \3\ Telephone conversation between Karen Kupersmith, Director of 
Arbitration, NYSE, and Michael Hershaft, Attorney Adviser, Division 
of Market Regulation, Commission (Sept. 15, 2005).
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    The proposed amendments are based on the Securities Industry 
Conference on Arbitration's Uniform Code of Arbitration.
2. Statutory Basis
    The proposed changes are consistent with Section 6(b)(5) \4\ of the 
Act in that they promote just and equitable principles of trade by 
ensuring that members and member organizations and the public have a 
fair and impartial forum for the resolution of their disputes.
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    \4\ 15 U.S.C. 78f(b)(5).
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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 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

    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 the 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, as amended, 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 e-mail to rule-comments@sec.gov. Please include File 

Number SR-NYSE-2005-48 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303.
    All submissions should refer to File Number SR-NYSE-2005-48. 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

[[Page 56203]]

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 such filing will also be available for 
inspection and copying at the principal office of the NYSE. 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-NYSE-2005-48 and should be 
submitted on or before October 17, 2005.
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    \5\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\5\
Jonathan G. Katz,
Secretary.
 [FR Doc. E5-5173 Filed 9-23-05; 8:45 am]

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