Document ID: SEC-2006-0560-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2006-04-28T04:00Z

[Federal Register: April 28, 2006 (Volume 71, Number 82)]
[Notices]               
[Page 25254-25256]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28ap06-116]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53708; File No. SR-Amex-2005-116]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing of a Proposed Rule Change and Amendment No. 1 Thereto 
Relating to Written Compliance and Supervisory Controls

April 24, 2006.
    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 November 7, 2005, 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, II, 
and III below, which Items have been prepared by the Exchange. Amex 
filed Amendment No. 1 with the Commission on April 6, 2006.\3\ The 
Commission is publishing this notice to solicit comments on the 
proposed rule change, as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Amendment No. 1.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Amex Rule 320 to (1) require members 
and member organizations with employees to establish, maintain, enforce 
and keep current a system of compliance and supervisory controls 
reasonably designed to achieve compliance with applicable securities 
laws and regulations and Exchange rules, and (2) make certain other 
technical changes to the rule text.
    The text of the proposed rule change is available on the Amex's Web 
site at http://www.amex.com, at the Amex'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, Amex included statements 
concerning the purpose of and basis for the proposal and discussed any 
comments it received on the proposal. 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

[[Page 25255]]

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
    Amex Rule 320 currently requires each office, department or 
business activity of a member or member organization to be under the 
supervision and control of the member or member organization, and it 
also mandates that each member or member organization provide for 
appropriate supervisory and control procedures and designate 
appropriately qualified personnel to ensure that its business complies 
with securities laws and regulations. The purpose of this proposal is 
to amend Amex Rule 320 to require members and member organizations that 
have employees to adopt a system of compliance and supervisory 
controls, including written compliance and supervisory policies and 
procedures.
    Specifically, Amex proposes to add a new section (e) to Amex Rule 
320, and consequently re-designate existing section (e) as section (f), 
to require that members and member organizations with employees must 
establish, maintain, enforce and keep current compliance and 
supervisory control systems appropriate to their business size, 
structure, customer accounts, transactions and business activities. 
Proposed Amex Rule 320(e) would require that the written compliance and 
supervisory procedures be amended, as appropriate and within a 
reasonable time, to reflect changes in applicable securities laws and 
regulations, Exchange rules, and the member's or member organization's 
compliance and supervisory system. Additionally, under proposed Amex 
Rule 320(e), the individual designated pursuant to Amex Rule 320(c) to 
assume authority and responsibility for the member's or member 
organization's compliance with securities laws, regulations and 
Exchange rules would be required to provide reports, at least annually, 
to the member's or member organization's senior management summarizing: 
(1) The system of supervisory controls, (2) the system of follow-up and 
review to verify that any delegated authority and responsibility is 
being properly exercised, (3) any additional or amended compliance or 
supervisory programs that have been created and implemented during the 
course of the previous twelve months, and (4) any supervisory 
procedures created as a result of changes in the system of follow up 
and review that have been revised or added in the past twelve months.
    The Exchange also proposes to adopt new Commentary .08 to Amex Rule 
320 to provide that a member or member organization consisting of a 
single individual (for example, a sole proprietorship) must maintain a 
written compliance manual specifying (1) the obligations to which such 
member or member organization is subject under applicable securities 
laws and regulations and Exchange rules and (2) the processes and 
controls in place that are reasonably designed to achieve compliance 
with such obligations. Because these members and member organizations 
do not have employees to supervise, proposed Amex Rule 320(e) would not 
require that they establish or maintain either a system of supervisory 
controls or written supervisory policies and procedures, or that they 
implement annual reporting requirements to the member's or member 
organization's senior management concerning supervisory controls.
    The Exchange also proposes to amend sections (b) and (c) of Amex 
Rule 320 to include references to compliance with Exchange rules, in 
addition to the current references to compliance with securities laws 
and regulations, in order to explicitly reference a member's and member 
organization's obligation to comply with Exchange rules in addition to 
all applicable securities laws and regulations.
    Finally, the Exchange proposes technical conforming changes to: (1) 
Replace references to ``member firm'' with a reference to ``member 
organization,'' and (2) clarify references to ``member organization'' 
as applying to ``member or member organization,'' as appropriate, 
throughout Amex Rule 320.
2. Statutory Basis
    Amex believes that the proposed rule change is consistent with 
section 6(b) of the Act,\4\ in general, and furthers the objectives of 
section 6(b)(5) of the Act,\5\ in particular, in that it is 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.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that 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

    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 Exchange consents, the Commission will:
    (A) By order approve such proposed rule change, as amended, or
    (B) Institute proceedings to determine whether the proposed rule 
change, as amended, 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 an e-mail to rule-comments@sec.gov. Please include 

File Number SR-Amex-2005-116 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-2005-116. 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

[[Page 25256]]

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 Exchange. 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-2005-116 and should be submitted on or before May 19, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E6-6412 Filed 4-27-06; 8:45 am]

BILLING CODE 8010-01-P