Document ID: SEC-2008-1355-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Approval Order: American Stock Exchange LLC
Posted Date: 2008-10-03T04:00Z

[Federal Register: October 3, 2008 (Volume 73, Number 193)]
[Notices]               
[Page 57705-57707]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03oc08-116]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58678; File No. SR-Amex-2008-64]

 
Self-Regulatory Organizations; American Stock Exchange LLC; Order 
Approving the Adoption of New Rule 478T To Set Forth the Temporary 
Procedures That Will Apply To Disciplinary Proceedings Pending as of 
the Closing Date of the Acquisition of Amex by NYSE Euronext

September 29, 2008.
    On July 28, 2008, American Stock Exchange LLC, a Delaware limited

[[Page 57706]]

liability company (``Amex'' or ``Exchange''), filed with the Securities 
and Exchange Commission (``Commission''), pursuant to Section 19(b)(1) 
of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to adopt a new rule to set forth 
the temporary procedures that would apply to the disciplinary 
proceedings pending with the Exchange as of the closing date of the 
acquisition of Amex by NYSE Euronext (``Transaction Date''). On August 
7, 2008, the proposed rule change was published for comment in the 
Federal Register.\3\ The Commission received no comments on the 
proposed rule change. This order grants approval to the proposed rule 
change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 58286 (August 1, 
2008), 73 FR 46097 (``Amex Notice'').
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    Pursuant to an agreement dated January 17, 2008, NYSE Euronext, the 
ultimate parent company of NYSE, Inc. (``NYSE'') and NYSE Arca, Inc. 
(``NYSE Arca''), is acquiring Amex, through a series of mergers 
(``Mergers'').\4\ Upon completion of the Mergers and Related 
Transactions, Amex will continue to operate as a national securities 
exchange under Section 6 of the Act and will be renamed NYSE Alternext 
US LLC (``NYSE Alternext US'').
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    \4\ Immediately following the Mergers, NYSE Euronext plans to 
effectuate certain related transactions, as a result of which NYSE 
Alternext US will become a direct wholly-owned subsidiary of NYSE 
Group, Inc. (``NYSE Group''), the wholly-owned subsidiary of NYSE 
Euronext (``Related Transactions''). For a detailed description of 
the Mergers and Related Transactions, see Securities Exchange Act 
Release No. 58284 (August 1, 2008), 73 FR 46086 (SR-Amex-2008-62) 
(``Amex Merger Notice'').
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    In a separate proposed rule change adopting various rules in 
connection with the Mergers and Related Transactions, Amex proposes to 
adopt new NYSE Alternext US Rules 475, 476 and 477 as its disciplinary 
rules, which are substantially similar to the existing NYSE 
disciplinary rules.\5\ To avoid any potential confusion to respondents 
in disciplinary matters that had been commenced by Amex and still 
pending as of the Transaction Date (each, a ``Legacy Disciplinary 
Proceeding''),\6\ Amex proposes applying rules that are substantially 
similar to the current procedures governing Amex disciplinary 
proceedings to such Legacy Disciplinary Proceedings. Accordingly, Amex 
proposes to adopt new Rule 478T to set forth the temporary procedures 
that will apply to such Legacy Disciplinary Proceedings. This rule will 
become operative as of the closing of the Mergers and Related 
Transactions.
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    \5\ See Amex Merger Notice, supra note 4 and Securities Exchange 
Act Release No. 58673 (September 29, 2009) (order approving SR-Amex-
2008-62).
    \6\ Paragraph (a) of proposed NYSE Alternext US Rule 478T(c) 
defines ``Legacy Disciplinary Proceedings'' to include disciplinary 
charges, executed (but not yet approved) stipulations and consents, 
suspensions, summary proceedings, and summary fine notices for minor 
rule violations.
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    Currently, the procedural rules governing Amex disciplinary 
proceedings are set forth in portions of the Amex Constitution, Amex 
Rule 345, and the Rules of Procedure in Disciplinary Matters 
(collectively, the ``Legacy Disciplinary Procedural Rules''). Proposed 
NYSE Alternext US Rule 478T will effectively ``grandfather'' the 
substance of these Legacy Disciplinary Procedural Rules with respect to 
resolution of disciplinary matters by means of a settlement (i.e., 
stipulation and consent) or hearing at NYSE Alternext US. The Legacy 
Disciplinary Procedural Rules, as incorporated in proposed Rule 
478T(c), have been modified in certain respects from their current 
form, to account for certain changes in the disciplinary structures and 
processes at NYSE Alternext US that are expected as a consequence of 
the Mergers and Related Transactions.\7\
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    \7\ See paragraph (c) of proposed NYSE Alternext US Rule 
478T(c).
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    Amex proposes to replace the Amex roster of appointed hearing 
officers and hearing board members from which the chairman and members 
of individually-constituted disciplinary hearing panels are selected, 
with a new roster appointed by the Chairman of the NYSE Alternext US 
Board of Directors (``NYSE Alternext US Board'') pursuant to proposed 
NYSE Alternext US Rule 476(b). Notwithstanding the change in the manner 
in which the roster of hearing officers and hearing board members is 
assembled, the process of selection of hearing officers and hearing 
board members from that roster to serve on an individual hearing panel 
will not change.\8\
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    \8\ Amex notes that the proposed NYSE Alternext US roster of 
appointed hearing officers and hearing board members would be 
substantially similar to that of the NYSE.
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    In addition, appeals from disciplinary determinations will be 
governed solely by the proposed NYSE Alternext US rules pertaining to 
appeals.\9\ Specifically, Amex proposes to eliminate the Amex 
Adjudicatory Council (``AAC''), a body which currently hears appeals 
from determinations of Amex disciplinary panels, and whose decisions, 
in turn, can be further appealed to Amex's Board of Governors. Instead, 
these functions of the AAC will be performed by the NYSE Alternext US 
Board or by an official standing committee of NYSE Regulation (the 
``NYSE Regulation Committee''), in the sole discretion of the NYSE 
Alternext US Board.\10\ The NYSE Regulation Committee will be charged 
with the responsibility to review determinations in Legacy Disciplinary 
Proceedings \11\ and render advisory opinions to the NYSE Alternext US 
Board, which will have the ultimate responsibility to rule on such 
appeals.\12\ The NYSE Regulation Committee will be expanded to include 
at least four individuals who are associated with member organizations 
of NYSE Alternext US.\13\
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    \9\ See proposed NYSE Alternext US Rules 475(c) and (j) and 
476(e)-(g), and Amex Merger Notice, supra note 4.
    \10\ See paragraph (b) of proposed NYSE Alternext US Rule 
478T(c).
    \11\ Section 3(f) of Legacy Article V of the Amex Constitution 
and Section 5(a) of Legacy Article IV of the Amex Constitution hold 
open the possibility that the NYSE Regulation Committee may also be 
charged with the responsibility to hear: (i) Appeals from 
suspensions of members and member organizations in view of their 
financial and/or operating condition and (ii) applications for 
reinstatement following such suspensions.
    \12\ Specifically, any review of a disciplinary decision shall 
be conducted by the NYSE Alternext US Board or the NYSE Regulation 
Committee, in the sole discretion of the NYSE Alternext US Board. 
Upon review, and with the advice of the NYSE Regulation Committee, 
the NYSE Alternext US Board, by the affirmative vote of a majority 
of the NYSE Alternext US Board then in office, may sustain any 
determination or penalty imposed, or both, may modify or reverse any 
such determination, and may increase, decrease or eliminate any such 
penalty, or impose any penalty permitted under the provisions of 
Rule 476. Unless the NYSE Alternext US Board otherwise specifically 
directs, the determination and penalty, if any, of the NYSE 
Alternext US Board after review shall be final and conclusive 
subject to the provisions for review of the Act.
    \13\ These new members of the NYSE Regulation Committee must 
include at least one of each of the following: (1) An individual 
associated with a member organization of NYSE Alternext US that 
engages in a business involving substantial direct contact with 
securities customers; (2) An individual associated with an member 
organization of NYSE Alternext US that is registered as a specialist 
and spends a substantial part of his or her time on the trading 
floor of NYSE Alternext US; (3) an individual associated with a 
member organization of NYSE Alternext US not registered as a 
specialist that spends a majority of his or her time on the trading 
floor of NYSE Alternext US and has as a substantial part of his 
business the execution of transactions on the trading floor of NYSE 
Alternext US for other than his or her own account or the account of 
his NYSE Alternext US member organization; and (4) an individual 
associated with a NYSE Alternext US Member Organization not 
registered as a specialist that spends a majority of his or her time 
on the trading floor of NYSE Alternext US and has as a substantial 
part of his or her business the execution of transactions on the 
trading floor of NYSE Alternext US for his own account or the 
account of his or her NYSE Alternext US Member Organization. See 
Securities Exchange Act Release No. 58285 (August 1, 2008), 73 FR 
46117 (SR-NYSE-2008-60).

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[[Page 57707]]

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulation thereunder applicable to a national securities exchange.\14\ 
In particular, the Commission finds that the proposed rule change is 
consistent with Sections 6(b)(6) and 6(b)(7) of the Act \15\ in that it 
provides a fair procedure for the discipline of members and persons 
associated with members. The Commission further finds that the proposed 
rule change provides NYSE Alternext US with the ability to comply, and 
with the authority to enforce compliance by its members and persons 
associated with its members, with the provisions of the Act, the rules 
or regulations thereunder, or the rules of NYSE Alternext US.
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    \14\ In approving the proposal, the Commission has considered 
the proposed rules' impact on efficiency, competition, and capital 
formation. See 15 U.S.C. 78c(f).
    \15\ 15 U.S.C. 78f(b)(6) and 15 U.S.C. 78f(b)(7).
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Conclusion

    For the foregoing reasons, the Commission finds that the proposed 
rule change is consistent with the Act and the rules and regulations 
thereunder applicable to a national securities exchange.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (SR-Amex-2008-64), be and hereby is 
approved.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-23314 Filed 10-2-08; 8:45 am]

BILLING CODE 8011-01-P