Document ID: SEC-2009-1696-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify the Sample Broker Letters Set Forth In Rule 451
Posted Date: 2009-12-01T05:00Z

[Federal Register: December 1, 2009 (Volume 229, Number 74)]
[Notices]               
[Page 62849-62851]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01de09-141]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61046; File No. SR-NYSE-2009-114]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Modify the Sample Broker Letters Set Forth In Rule 451

November 20, 2009.
    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 16, 2009, New York Stock Exchange LLC (the ``Exchange'' or 
``NYSE'') 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 
Exchange has designated the proposed rule change as constituting a non-
controversial rule change under Rule 19b-4(f)(6) under the Act,\3\ 
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\ 17 CFR 240.19b-4(f)(6).
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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 Exchange Rule 451 and Sections 
905.01, 905.02 and 905.03 of the Exchange's Listed Company Manual (the 
``Manual'') to amend the forms of letters contained in those rules to 
reflect the recent amendments to the Exchange's broker voting rules.
    The text of the proposed rule change is available on the Exchange's 
Web site (http://www.nyse.com), at the Exchange'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, the self-regulatory organization 
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 NYSE 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 recently amended Exchange Rule 452 and Section 402.08 
of the Manual to provide that brokers which are record holders of 
shares held in client accounts will no longer be permitted to vote 
those shares in the election of directors without instructions from the 
beneficial holder of those shares.\4\ The amendments take effect for 
shareholder meetings held on or after January 1, 2010, except to the 
extent that a meeting was originally scheduled to be held prior to such 
effective date but was properly adjourned to a date on or after such 
effective date.\5\
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    \4\ See Securities Exchange Act Release No. 60215 (July 1, 2009) 
74 FR 33293 (July 10, 2009) (SR-NYSE-2006-92).
    \5\ The amendment does not affect brokers voting as record 
holders of shares of companies registered under the Investment 
Company Act of 1940.
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    Supplementary Material .20 to Exchange Rule 451 and Sections 
905.01, 905.02 and 905.03 contain specimens of letters containing the 
information and instructions required pursuant to the proxy rules to be 
given by NYSE member organizations to clients where the member 
organization is the record holder of shares beneficially owned by those 
clients in the circumstances where a broker (i) may vote on all 
proposals without voting instructions (Section 905.01), (ii) may not 
vote on any proposals without instructions (Section 905.02), and (ii) 
may vote on certain but not all proposals without instructions (Section 
905.03). These letters are shown as examples and not as prescribed 
forms. Member organizations are permitted to adapt the form of these 
letters for their own purposes provided all of the required information 
and instructions are clearly enumerated in letters to clients.
    The Exchange is concerned that many shareholders receiving proxy 
materials from their brokers for meetings scheduled after January 1, 
2010 will not be aware of the amendments to the NYSE's broker voting 
rules and may therefore assume that the broker as record holder will 
vote their shares on the election of directors if they do not return 
voting instructions to their broker. The NYSE believes it is important 
for as many shares as possible to be voted in the election of directors 
and, therefore, believes it is important to educate retail investors 
with respect to the implications of their failure to return voting 
instructions under the amended rules. Consequently, the Exchange 
proposes to amend the forms of letters provided for use in connection 
with meetings where the broker may vote on none of the proposals before 
the meeting and meetings where the broker may vote on some but not all 
of the proposals before the meeting. The proposed amendments will 
insert the following language in those forms for use in connection with 
meetings scheduled after January 1, 2010:

    Please note that, under a rule amendment adopted by the New York 
Stock Exchange for shareholder meetings held on or after January 1, 
2010, brokers are no longer allowed to vote shares held in their 
clients' accounts on uncontested elections of directors unless the 
client has provided voting instructions (it will continue to be the 
case that brokers cannot vote their clients' shares in contested 
director elections). Consequently, if you want us to vote your 
shares on your behalf on the election of directors, you must provide 
voting instructions to us. Voting on matters presented at 
shareholders meetings, particularly the election of directors, is 
the primary method for shareholders to influence the direction taken 
by a publicly-traded

[[Page 62850]]

company. We urge you to participate in the election by returning the 
enclosed voting instruction form to us with instructions as to how 
to vote your shares in this election.

    The Exchange also proposes to amend Supplementary Material .20 to 
Rule 451 and Sections 905.01, 905.02 and 905.03 of the Manual to 
correct references in the text which indicate that the broker is 
sending a ``proxy'' to its clients. In actuality, these letters are 
intended for use in circumstances where the broker as record holder is 
seeking voting instructions from its clients as beneficial holders. The 
broker then provides a voting proxy to the company, voting according to 
client instructions to the extent applicable. As such, the broker sends 
a voting instruction form to its clients, rather than a proxy, and the 
Exchange is amending the rule text to accurately reflect this fact.
    Currently, the letters for use when the broker may not vote on any 
proposals without instructions and may vote on certain but not all 
proposals without instructions state that if a client returns a signed 
voting instruction form without otherwise marking the form, the shares 
will be voted as recommended by the management on all matters to be 
considered at the meeting. Rule 14a-4(b)(1) under the Act provides that 
``a proxy may confer discretionary authority with respect to matters as 
to which a choice is not specified by the security holder provided that 
the form of proxy states in bold-face type how it is intended to vote 
the shares represented by the proxy in each such case.'' In light of 
this requirement that it be made very clear that the absence of 
instructions gives the broker discretion as to how the shares are 
voted, the Exchange proposes to amend the language of the applicable 
letters to emphasize this fact by clarifying that it is understood 
that, if the client signs without otherwise marking the form, this will 
be construed as instruction to vote the shares as recommended by the 
management on all matters to be considered at the meeting.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) \6\ of the Act, in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\7\ in particular in that it 
is designed to promote just and equitable principles of trade, to 
foster cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general, to protect investors and the public interest. 
The Exchange believes that the proposed amendments are consistent with 
the investor protection objectives of the Act in that their sole 
purpose is to explain to shareholders the implications of failing to 
provide voting instructions to their brokers, thereby enabling them to 
make a more informed decision with respect to the exercise of their 
voting rights.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 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

    Written comments were neither solicited nor received.

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

    Because the proposed rule change: (i) Does not significantly affect 
the protection of investors or the public interest; (ii) does not 
impose any significant burden on competition; and (iii) does not become 
operative for 30 days after the date of the filing, or such shorter 
time as the Commission may designate if consistent with the protection 
of investors and the public interest, provided that the self-regulatory 
organization has given the Commission written notice of its intent to 
file 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 proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \8\ and Rule 19b-
4(f)(6) thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6). The Commission notes that the 
Exchange has met this requirement.
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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-NYSE-2009-114 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSE-2009-114. 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 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 publicly available. All 
submissions should refer to File Number SR-NYSE-2009-114 and should be 
submitted on or before December 22, 2009.
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    \10\ 17 CFR 200.30-3(a)(12).

[[Page 62851]]

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    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
Elizabeth M. Murphy,
Secretary.
[FR Doc. E9-28614 Filed 11-30-09; 8:45 am]

BILLING CODE 8011-01-P