Document ID: SEC-2008-1100-0001
Agency: sec
Document Type: Notice
Title: After all Legacy Disciplinary Proceedings have been concluded, Rule 478T will cease to have any applicability, as all disciplinary proceedings commenced on or after the date of closing of the Transaction will be governed by the new NYSE Alternext U.S. disciplinary procedural rules. The scope and applicability of proposed Rule 478T is as follows:   Paragraph (a) limits the application of the rule t
Posted Date: 2008-08-07T04:00Z

[Federal Register: August 7, 2008 (Volume 73, Number 153)]
[Notices]               
[Page 46097-46099]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07au08-109]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58286; File No. SR-Amex-2008-64]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change To Adopt 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 the 
Exchange by NYSE Euronext

August 1, 2008.
    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 July 28, 2008, American Stock Exchange LLC, a Delaware limited 
liability company (``Amex'' or ``Exchange''), filed with the Securities 
and Exchange Commission (the ``Commission'') the proposed rule change 
as described in Items I, II, and III below, which Items have been 
substantially 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

    In connection with its pending acquisition by NYSE Euronext, the 
parent company of the New York Stock Exchange LLC (``NYSE'') and NYSE 
Arca, Inc. (``NYSE Arca''), Amex is seeking to revise its procedural 
rules governing disciplinary proceedings to more closely align such 
rules with the NYSE's disciplinary procedural rules. The rule changes 
that would implement this change are proposed in SR-Amex-2008-62. 
However, in order to avoid any potential confusion to respondents in 
pending disciplinary matters that have been commenced prior to the date 
of closing of the transaction, the Exchange believes it is advisable to 
apply its current procedural rules governing disciplinary proceedings 
to such matters. Accordingly, the Exchange proposes to adopt new Rule 
478T to set forth the temporary procedures that will apply to those 
pending disciplinary proceedings, and which rule will only become 
operative as of the closing of the acquisition.
    The text of the proposed rule change is available on the Amex's Web 
site at http://www.amex.com, the Office of the Secretary, the Amex and 
at the Commission's Public Reference Room. The text of Exhibit 5 is 
available on the Commission's Web site (http://www.sec.gov/rules/
sro.shtml).

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
    Pursuant to an agreement dated January 17, 2008, the Amex is being 
acquired by NYSE Euronext--the parent company of the NYSE and NYSE 
Arca--through a series of mergers as described in SR-Amex-2008-62 (the 
``Transaction''). Following completion of the Transaction, Amex will be

[[Page 46098]]

renamed NYSE Alternext U.S. LLC (``NYSE Alternext U.S.'') and will 
contract with NYSE Regulation, Inc. (``NYSE Regulation'') for the 
performance of the Exchange's regulatory functions.\3\ In order to 
enable a consistent approach to disciplinary matters, the Exchange has 
determined to revise the Exchange procedural rules governing 
disciplinary matters to align such rules with those of the NYSE. To 
this end, in SR-Amex-2008-62, the Exchange is proposing to adopt new 
Rules 475, 476 and 477, which are substantially similar to NYSE Rules 
475, 476 and 477. However, in order to avoid any potential confusion to 
respondents in disciplinary matters that have been commenced and are 
still pending as of the date of closing of the Transaction (each a 
``Legacy Disciplinary Proceeding''), the Exchange believes it is 
advisable to continue to apply to such Legacy Disciplinary Proceedings 
the current procedural rules governing Exchange disciplinary 
proceedings (with some modifications discussed below). Accordingly, the 
Exchange proposes to adopt new Rule 478T to set forth the temporary 
procedures that will apply to such Legacy Disciplinary Proceedings at 
NYSE Alternext U.S. with such rule to become operative only as of the 
closing of the Transaction.\4\
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    \3\ NYSE Regulation is an indirect wholly-owned subsidiary of 
NYSE Euronext, which performs the regulatory functions of the NYSE 
and NYSE Arca. NYSE Regulation will fulfill the same functions for 
the Exchange pursuant to a regulatory services agreement. The 
Exchange will retain ultimate legal responsibility for, and control 
of, its self-regulatory responsibilities.
    \4\ It is further intended that this rule change proposal take 
effect at the same time as SR-Amex-2008-62.
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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 
Rule 478T would effectively ``grandfather'' the substance of these 
Legacy Disciplinary Procedural Rules for any Legacy Disciplinary 
Proceedings at NYSE Alternext U.S. insofar as the provisions thereof 
apply to resolution of disciplinary matters by means of a settlement 
(i.e., stipulation and consent) or hearing. The Legacy Disciplinary 
Procedural Rules, as incorporated in proposed Rule 478T(c), however, 
have been modified in certain respects from their current form to 
account for certain changes in the disciplinary structures and 
processes at NYSE Alternext U.S. expected as a consequence of the 
Transaction. The two most substantial of these changes are as follows: 
\5\
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    \5\ Additionally, various sections of the Legacy Disciplinary 
Procedural Rules have been modified from the original to convert 
references from ``Disciplinary Hearing Panel'' to ``Hearing Panel''; 
``Board of Governors'' to ``Board of Directors''; and miscellaneous 
corrections to internal cross-references in the rules have been made 
to the extent necessary.
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    First, the Amex roster of appointed hearing officers and hearing 
board members (from which the chairmen and members of individually 
constituted disciplinary hearing panels are currently selected) will 
cease to exist. Instead, individual hearing panels will be selected 
from a new roster of hearing officers and hearing board members to be 
appointed by the Chairman of the NYSE Alternext U.S. Board of Directors 
pursuant to proposed NYSE Alternext U.S. Rule 476(b). Therefore, all 
references to legacy Amex rules or procedures dealing with the 
appointment of the roster of hearing officers and the hearing board in 
the Legacy Disciplinary Procedural Rules have been eliminated and/or 
replaced, as necessary, with references to proposed NYSE Alternext U.S. 
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.\6\
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    \6\ Additionally, a reference in Rule 2(a) of the Legacy Rules 
of Disciplinary Procedure to the chairmen of individual hearing 
panels being selected by the Chief Executive Officer of the Exchange 
on a rotating basis from a roster of ``Exchange Officials'' eligible 
to serve on hearing panels has been corrected to refer to ``hearing 
officers'' instead. This more properly reflects the current 
appointment practice at the Exchange where hearing panel chairman 
appointments are made on a rotating basis among personnel supplied 
to the Exchange pursuant to a Regulatory Services Agreement and 
designated as Exchange ``hearing officers.''
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    Second, appeals from disciplinary determinations will be governed 
solely by the new NYSE Alternext U.S. Rules pertaining to appeals. 
Specifically, the Amex Adjudicatory Council (a body which heard appeals 
from determinations of Amex disciplinary panels, and whose decisions, 
in turn, could be further appealed to the Exchange Board of Governors) 
will cease to exist. Its functions will be performed by an official 
standing committee of NYSE Regulation (the ``NYSE Regulation 
Committee'') charged with the responsibility to review determinations 
in Legacy Disciplinary Proceedings and render advisory opinions on same 
to the Exchange Board of Directors, which will have the ultimate 
responsibility to rule on such appeals. Accordingly, all references to 
the Amex Adjudicatory Council and the appeals process in the Legacy 
Disciplinary Procedural Rules have been eliminated and/or replaced, as 
necessary, with references to the NYSE Regulation Committee and the new 
NYSE Alternext U.S. rules pertaining to appeals from disciplinary 
determinations.\7\
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    \7\ See proposed NYSE Alternext Rules 475(c) and (j) and 476(e)-
(g). Further, 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.
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    After all Legacy Disciplinary Proceedings have been concluded, Rule 
478T will cease to have any applicability, as all disciplinary 
proceedings commenced on or after the date of closing of the 
Transaction will be governed by the new NYSE Alternext U.S. 
disciplinary procedural rules. The scope and applicability of proposed 
Rule 478T is as follows:
    Paragraph (a) limits the application of the rule to ``Legacy 
Disciplinary Proceedings'' which are defined to include the following 
types of matters, if commenced by the Exchange and still pending as of 
the closing date of the Transaction: Disciplinary charges; executed 
(but not yet approved) stipulations and consents; suspensions; summary 
proceedings; and summary fine notices for minor rule violations.
    Paragraph (b) provides that Legacy Disciplinary Proceedings will be 
governed by the Legacy Disciplinary Procedural Rules set forth in 
paragraph (c), except that review of Exchange disciplinary 
determinations, sanctions guidelines, and procedures for the Exchange's 
retention of jurisdiction over former members, member organizations and 
employees thereof will be governed by the new NYSE Alternext U.S. 
disciplinary procedural rules.
    Subsection (c) is where the Legacy Disciplinary Procedural Rules 
are incorporated, with necessary modifications to the original text of 
the legacy Amex Constitution, Rule 345, and Rules of Procedure in 
Disciplinary Matters as described above.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Sections 6(b)(6), 6(b)(7) and 6(d) \8\ of the Act in that it is 
designed to ensure that

[[Page 46099]]

members and persons associated with its members of the Exchange shall 
be appropriately disciplined for violation of the securities laws, the 
rules or regulations thereunder, or the rules of the Exchange; provide 
a fair procedure for imposition of such discipline; and ensure that a 
record is kept of such proceedings.
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    \8\ 15 U.S.C. 78f(b)(6), 15 U.S.C. 78f(b)(7), 15 U.S.C. 78f(d).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    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 self-regulatory organization consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.
    The Exchange is targeting August 29, 2008 for the closing date of 
the Transaction, and has requested that the Commission accelerate 
effectiveness of SR-Amex-2008-62 pursuant to Section 19(b)(2) to a date 
no later than August 29, 2008, if necessary in order to facilitate that 
timetable. To the extent the Commission determines to grant such 
request, the Exchange further requests that the instant filing be given 
similar accelerated treatment, to insure that proposed Rule 478T 
becomes operative and effective simultaneously with the other new 
disciplinary rules for the Exchange proposed in SR-Amex-2008-62.

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-Amex-2008-64 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street, NE., Washington, DC 20549.

All submissions should refer to File Number SR-Amex-2008-64. 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 available publicly. All 
submissions should refer to File Number SR-Amex-2008-64 and should be 
submitted on or before August 28, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-18147 Filed 8-6-08; 8:45 am]

BILLING CODE 8010-01-P