[Federal Register Volume 59, Number 9 (Thursday, January 13, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-823]


[[Page Unknown]]

[Federal Register: January 13, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-33441; File No. SR-PSE-93-23]

 

Self-Regulatory Organizations; Order Approving Proposed Rule 
Change by the Pacific Stock Exchange, Inc., Relating to Employee 
Gratuities

January 6, 1994.
    On September 28, 1993, the Pacific Stock Exchange, Inc. (``PSE'' or 
``Exchange'') submitted to the Securities and Exchange Commission 
(``SEC'' or ``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 amend the PSE's rules to 
increase from $25.00 to $50.00 the amount of gifts or gratuities which 
an Exchange employee or the employee of an Exchange member may receive 
from an Exchange member without the consent of his employer.
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    \1\15 U.S.C. 78s(b)(1) (1988).
    \2\17 CFR 240.19b-4 (1993).
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    The proposed rule change was published for comment in Securities 
Exchange Act Release No. 33091 (October 22, 1993), 58 FR 50210. No 
comments were received on the proposed rule change.
    Currently, Exchange Rule 1.17(g), ``Gratuities, Employees,'' 
prohibits members from giving any compensation or gratuity to any 
employee of any other Exchange member, or non-member brokers, dealers, 
banks, or institutions, without the prior consent of his employer. 
Exchange Rule 1.18(g) also prohibits members from giving any 
compensation or gratuity to any Exchange employee without the prior 
written consent of the Exchange. Under the rules, a gift of any 
character having a valuation of more than $25.00 is considered to be a 
gratuity. Exchange Rule 1.17 (f), ``Requests for Approval,'' provides 
that any request to the Exchange for consent to make a gift or gratuity 
to an Exchange employee must specify, among other things, the dollar 
amount of the value of such gift or gratuity when it is in excess of 
$25.00. The Exchange proposes to amend Exchange Rules 1.17 (f) and (g) 
to increase the dollar amount from $25.00 to $50.00 in order to make 
the PSE's rules consistent with the rules of the other self-regulatory 
organizations (``SROs'')\3\ and to allow for inflation.
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    \3\See, e.g., New York Stock Exchange Rule 350(a)(2); American 
Stock Exchange Rule 348, Commentary .01; Chicago Board Options 
Exchange Rule 4.4; and National Association of Securities Dealers 
Rules of Fair Practice, Article III, Sec. 10(a) (paragraph 2160).
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    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange, and, in 
particular the requirements of section 6(b)(5)\4\ in that it is 
designed to prevent fraudulent and manipulative acts and practices and 
to protect investors and the public interest. The Commission believes 
that Exchange Rules 1.17 and 1.18 are designed to prevent fraudulent 
acts and practices which might arise in connection with the giving of 
valuable gifts without the employer's knowledge. In particular, the 
rules require the principal employer (i.e., the relevant Exchange 
member and/or the Exchange) to review a gratuity or compensation 
arrangement to determine whether a conflict of interest exists. Under 
the proposed rule change, the employer will still be required to 
approve in writing any of the covered gratuity or compensation 
arrangements, and thus will have to review the proposed arrangements.
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    \4\15 U.S.C. 78f(b) (1982).
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    The proposal will change only the dollar limitations in the 
Exchange's rules, so that gifts over $50.00, rather than $25.00, will 
be considered gratuities. The Commission believes that the proposed 
increase from $25.00 to $50.00 will neither compromise the intent nor 
reduce the ability of the rules to prevent fraudulent acts and 
practices which might arise in connection with the giving of valuable 
gifts or payments to persons without their employer's knowledge. In 
addition, the Commission notes that the proposal is consistent with the 
rules of other SROs.\5\
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    \5\See note 3, supra.
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    It is therefore ordered, Pursuant to section 19(b)(2) of the 
Act,\6\ that the proposed rule change (SR-PSE-93-23) is approved.

    \6\15 U.S.C. 78s(b)(2) (1982).
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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\17 CFR 200.30-3(a)(12) (1993).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-823 Filed 1-12-94; 8:45 am]
BILLING CODE 8010-01-M