Document ID: SEC-2007-1048-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: New York Stock Exchange LLC
Posted Date: 2007-08-02T04:00Z

[Federal Register: August 2, 2007 (Volume 72, Number 148)]
[Notices]               
[Page 42457-42459]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02au07-142]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56158; File No. SR-NYSE-2005-48]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; Order 
Approving Proposed Rule Change as Modified by Amendment Nos. 1, 2, 3, 
and 4 Thereto and Notice of Filing and Order Granting Accelerated 
Approval to Amendment No. 5 to Revise Rule 619 Pertaining to Subpoenas 
for the Production of Documents and Appearances of Witnesses

July 27, 2007.

I. Introduction

    On July 13, 2005, the New York Stock Exchange LLC (``NYSE'' 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 amending NYSE Rule 619, which pertains to 
subpoenas for the production of documents and the appearance of 
witnesses. On September 26, 2005, the Commission published for comment 
the proposed rule change in the Federal Register.\3\ The Commission 
received no comments on the proposal. On April 18, 2006, November 2, 
2006, December 22, 2006, and February 8, 2007, the NYSE submitted 
Amendment Nos. 1, 2, 3, and 4, respectively, to the proposed rule 
change.\4\ On April 13, 2007, the Commission published for comment the 
proposed rule change, as amended, in the Federal Register.\5\ The 
Commission received two comments on the proposal.\6\ On July 13, 2007, 
NYSE

[[Page 42458]]

submitted Amendment No. 5 to the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 52468 (Sept. 19, 
2005), 70 FR 56201 (Sept. 26, 2005).
    \4\ Amendment No. 1 clarified that only the arbitrator(s) may 
issue subpoenas and delineated the manner in which a party may 
request the issuance of a subpoena. Amendment No. 2 established a 
time frame for the parties to make and respond to objections to the 
requested subpoena and clarified that the arbitrator(s) may not rule 
on such a request until this time period has elapsed. Amendment No. 
3 made technical changes to the rule and clarified that the 
arbitrator(s) must receive copies of any objections to the issuance 
of a subpoena. Amendment No. 4 clarified that a party requesting a 
subpoena may not serve the request or the draft subpoena on a non-
party.
    \5\ See Securities Exchange Act Release No. 55594 (April 6, 
2007), 72 FR 18710 (April 13, 2007).
    \6\ See letters from Steven B. Caruso, President, Public 
Investors Arbitration Bar Association (``PIABA''), dated April 17, 
2007; and Martin L. Feinberg, dated May 4, 2007 (``Feinberg''). The 
NYSE responded to these comments in telephone conversations with 
Commission staff. Telephone conversations among Karen Kupersmith, 
Director of Arbitration, NYSE; Lourdes Gonzalez, Assistant Chief 
Counsel--Sales Practices, Commission; and Michael Hershaft, Special 
Counsel, Commission (July 11, 2007 and July 27, 2007) (``NYSE 
Response'').
---------------------------------------------------------------------------

    This notice and order solicits comment from interested persons on 
Amendment No. 5 and approves the proposal, as amended, on an 
accelerated basis. The text of the proposed rule change is available at 
http://www.nyse.com, the principal offices of the NYSE, and the 

Commission's Public Reference Room.

II. Description of the Proposed Rule Change

    In its amended filing, the NYSE proposed to revise Rule 619 to 
provide that only the arbitrator(s) may issue subpoenas for the 
production of documents and the appearance of witnesses. The rule also 
provides that the arbitrator(s), and not the courts, will rule on 
discovery disputes concerning the issuance of subpoenas. Under the 
rules, the party who requests a subpoena must make a written request 
asking the arbitrator(s) to issue the subpoena and send a copy of the 
request and the requested draft subpoena to the Director of 
Arbitration, each arbitrator, and all parties to the arbitration in a 
manner reasonably expected to result in delivery to everyone on the 
same day. The requesting party may not serve the request or the 
requested draft subpoena on any non-party.
    If a party has an objection to the propriety or scope of the 
subpoena, that party must file objections in writing with the Director 
of Arbitration and send copies to all other parties, including each 
arbitrator, within 10 days of service of the request and draft 
subpoena. The party requesting the subpoena could file a reply to the 
objection within five days of receipt of the objection. The 
arbitrator(s) then determine the propriety and scope of the requested 
subpoena after the time period for filing objections or replies had 
elapsed. If a subpoena is issued by the arbitrator(s), the party that 
requested the subpoena must serve the subpoena at the same time and in 
the same manner on all parties, and, if applicable, on any non-party 
receiving the subpoena.
    In addition, the proposed rule change provides that any party that 
receives documents in response to a subpoena served upon a non-party 
must provide notice to all other parties within five days of receipt of 
the documents. Thereafter, any party may request copies of those 
documents and, if such a request is made, the documents must be 
provided within 10 days following receipt of the request. The party 
requesting the documents is responsible for the reasonable costs 
associated with the production of the copies, unless the panel 
determines otherwise.
    Amendment No. 5 clarified that calendar days, and not business 
days, apply to (1) The 10-day period to object to the scope or 
propriety of subpoenas, (2) the five-day period to respond to an 
objection, (3) the five-day period to notify all other parties of 
receipt of documents from a third party, and (4) the 10-day period to 
request copies of these documents.

III. Summary of Comments Received and NYSE Response

    One commenter \7\ noted that the proposed rule does not expressly 
state whether calendar or business days apply to various filing 
deadlines, and urged the NYSE to clarify in the rule specify that 
calendar days govern the applicable time periods. In response to this 
comment, the NYSE filed Amendment No. 5, which clarified that calendar 
days apply to all deadlines under the proposed rule. Both commenters 
criticized the proposed rule's requirement that the party receiving 
documents in response to a subpoena will be responsible for the 
reasonable costs associated with the production, unless the panel 
determines otherwise. PIABA stated that this ``cost-shifting'' will 
increase arbitration expenses associated with the initiation and 
prosecution of every arbitration proceeding, while Feinberg maintained 
that the rule should not require payment for subpoenaed documents.
---------------------------------------------------------------------------

    \7\ PIABA.
---------------------------------------------------------------------------

    The NYSE responded that although the proposed rule is ambiguous, 
this provision only applies to the receipt of documents from a third-
party, and does not apply more broadly to all subpoenas, as the 
commenters suggest. The arbitration panel still may allocate fees among 
the parties pursuant to NYSE Rule 629(c)(2), which permits arbitrators 
to determine in the award the amount of costs incurred pursuant to Rule 
619 (among other rules) and, unless applicable law directs otherwise, 
other costs and expenses of the parties.\8\
---------------------------------------------------------------------------

    \8\ NYSE Response.
---------------------------------------------------------------------------

    One commenter \9\ contended that under the proposed rule, read in 
light of the subpoena service requirements of the Federal Arbitration 
Act, would require personal service of subpoenas and copies of 
subpoenas. In the commenter's view, this would be expensive, burdensome 
and unnecessary. The NYSE responded that neither the proposed rule nor 
its other rules require personal service.\10\ In particular, NYSE 
stated that Rule 612 provides that ``[s]ervice and filing are 
accomplished on the date of mailing either by first-class postage 
prepaid or by means of overnight mail service or, in the case of other 
means of service, on the date of delivery.'' \11\
---------------------------------------------------------------------------

    \9\ Feinberg.
    \10\ NYSE Response.
    \11\ Id.
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning Amendment No. 5, including whether Amendment No. 5 
is consistent with the Exchange 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-2005-48 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-NYSE-2005-48. 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 NYSE. All comments 
received will be posted

[[Page 42459]]

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-NYSE-2005-48 and should be submitted on or before August 
23, 2007.

V. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the Act and the rules and regulations 
thereunder applicable to the NYSE, and, in particular, with section 
6(b)(5) of the Act.\12\ Section 6(b)(5) requires, among other things, 
that the NYSE's rules be 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.\13\ The Commission believes that the proposed rule 
change is designed to accomplish these ends by permitting only 
arbitrators to issue subpoenas and by making the arbitration subpoena 
process more orderly and efficient.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b)(5).
    \13\ Id.
---------------------------------------------------------------------------

Accelerated Approval of Amendment No. 5

    The Commission finds good cause for approving Amendment No. 5 to 
the proposed rule change prior to the thirtieth day after the amendment 
is published for comment in the Federal Register pursuant to section 
19(b)(2) of the Act. Amendment No. 5 clarifies that calendar days, and 
not business days, apply to various filing deadlines under the proposed 
rule. The Commission anticipates that these changes will provide for 
greater clarity with respect to the subpoena process. Accordingly, the 
Commission finds that accelerated approval of Amendment No. 5 is 
appropriate.

VI. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the Act 
\14\ that the proposed rule change, as modified by Amendment Nos. 1, 2, 
3, 4, and 5, (SR-NYSE-2005-48), be, and hereby is, approved on an 
accelerated basis.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
---------------------------------------------------------------------------

    \15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Nancy M. Morris,
Secretary.
 [FR Doc. E7-14993 Filed 8-1-07; 8:45 am]

BILLING CODE 8010-01-P