Document ID: SEC-2012-1639-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2012-10-09T04:00Z

[Federal Register Volume 77, Number 195 (Tuesday, October 9, 2012)]
[Notices]
[Pages 61460-61461]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-24741]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67966; File No. SR-Phlx-2012-117]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Offer 
Members and Member Organizations the Ability To Pay a Regulatory Fine 
Pursuant to an Installment Plan

October 2, 2012.
    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 September 26, 2012, NASDAQ OMX PHLX LLC (``Phlx'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I and II, 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 the 
Substance of the Proposed Rule Change

    The Exchange proposes a rule change to offer members and member 
organizations the ability to pay a regulatory fine pursuant to an 
installment plan, under certain conditions. The text of the proposed 
rule change is available at http://nasdaqomxphlx.cchwallstreet.com/nasdaqomxphlx/phlx, [sic] at the Exchange's principal office, 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 Exchange 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 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
    Phlx is proposing to amend Rule 52 governing ``Fees, Dues and Other 
Charges'' to offer members and member organizations the ability to pay 
a regulatory fine pursuant to an installment plan, under certain 
conditions. In order for a member or member organization to be eligible 
to pay a regulatory fine via an installment plan, the fine under the 
applicable offer of settlement\3\ must be $50,000 or more. A fine of 
less than $50,000 is not eligible for the installment plan. When 
submitting its offer of settlement, the member or member organization 
must check the installment plan option on the election of payment form 
included with the offer of settlement. A sample election of payment 
form and offer of settlement are included in Exhibit 3 \4\ to this 
proposed rule change. A down payment of twenty-five percent (25%) or 
more of the total fine must be submitted with the signed offer of 
settlement.
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    \3\ See Phlx Rule 960.7.
    \4\ The Commission notes that Exhibit 3 is an exhibit to the 
proposed rule change, not to this Notice.
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    After receipt of the offer of settlement and down payment, an 
installment package, including a promissory note and payment schedule, 
will be mailed to the member or member organization. A sample 
promissory note and payment schedule are included in Exhibit 3 to this 
proposed rule change. The member or member organization must then 
submit an executed (signed and notarized) promissory note for the 
unpaid balance of the fine, along with its first installment payment. 
The term of the installment plan may not exceed four years after the 
execution of the offer of settlement. The member or member organization 
may elect monthly or quarterly payments.
2. Statutory Basis
    Phlx believes that the proposed rule change is consistent with the 
provisions of Section 6 of the Act,\5\ in general, and with Section 
6(b)(5) of the Act,\6\ in particular, in that the proposal is designed 
to prevent fraudulent and manipulative acts and practices, 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. In addition, Phlx believes 
that the proposed rule change is consistent with the provisions of 
Section 6(b)(6) and 6(b)(7) of the Act,\7\\\ which require an exchange 
to provide fair procedures for the disciplining of members and persons 
associated with members. Specifically, Phlx believes that the proposal 
will promote the settlement of disciplinary cases by allowing members 
and member organizations to make installment payments. Phlx believes 
that settlement is a beneficial method of disciplining members and 
member organizations because it imposes meaningful sanctions on the 
member while avoiding the cost and uncertainty of a protracted 
disciplinary proceeding. Phlx further believes that affording members 
and member organizations with the opportunity to pay a regulatory fine 
over a period of time may allow Phlx to impose higher fines in 
appropriate circumstances and diminish the risk that sanctioned members 
or member organizations will fail to pay.
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    \5\ 15 U.S.C. 78f.
    \6\ 15 U.S.C. 78f(b)(5).
    \7\ 15 U.S.C. 78f(b)(6) and (b)(7).
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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 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended.

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 foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on

[[Page 61461]]

which it was filed, or such shorter time as the Commission may 
designate, it has become effective pursuant to Section 19(b)(3)(A) of 
the Act\8\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of the filing of the 
proposed rule change, or such shorter time as designated by the 
Commission. The Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6)\10\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\11\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that Phlx may 
offer members that are contemplating the execution of an offer of 
settlement the option of entering into an installment arrangement as 
soon as possible. The Commission believes that waiving the 30-day 
operative delay is consistent with the protection of investors and the 
public interest as it will provide members the option of paying large 
fines in installments. Therefore, the Commission hereby waives the 30-
day operative delay and designates the proposed rule change to be 
operative upon filing with the Commission.\12\
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    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 17 CFR 240.19b-4(f)(6)(iii).
    \12\ For the purposes of waiving the operative delay for this 
proposal, 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 the proposed rule 
change, the Commission summarily may temporarily suspend 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 email to rule-comments@sec.gov. Please include 
File Number SR-Phlx-2012-117 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.
All submissions should refer to File Number SR-Phlx-2012-117. This file 
number should be included on the subject line if email 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 Web site viewing and 
printing in the Commission's Public Reference Room on official business 
days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such 
filing also will be available for inspection and copying at the 
principal offices 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-Phlx-2012-117, and should be submitted on or before 
October 30, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
Kevin M. O'Neill,
Deputy Secretary.
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    \13\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2012-24741 Filed 10-5-12; 8:45 am]
BILLING CODE 8011-01-P