[Federal Register Volume 59, Number 127 (Tuesday, July 5, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-16187]


[[Page Unknown]]

[Federal Register: July 5, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34271; File No. SR-PSE-94-14]

 

Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by Pacific Stock Exchange, Inc., 
Relating to Assessments and Fees on Members

June 28, 1994.
    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 June 24, 1994, the Pacific Stock Exchange Incorporated (``PSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC'') the proposed rule change as described in 
Items I, II and III below, which Items have been prepared by the PSE. 
The PSE has designated this proposal as one establishing or changing a 
fee under Section 19(b)(3)(A)(ii) of the Act, which renders the rule 
effective upon the Commission's receipt of this filing. 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) (1988).
    \2\17 CFR 240.19b-4 (1994).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The PSE is proposing to add new Rule 12.32 to the Rules of the 
Board of Governors of the PSE to require that any member named as a 
party to an arbitration proceeding shall be assessed a $200 non-
refundable surcharge when the Arbitration Department perfects service 
of the claim naming the member on any party to the proceeding. Below is 
the text of the proposed rule change. Proposed new language is 
italicized.
* * * * *

Member Surcharge

Rule 12.32
    (a) Each member, member organization, or associated person who is 
named as a party to an arbitration proceeding, whether in a Claim, 
Counterclaim, Third-Party Claim, or Crossclaim, shall be assessed a 
$200 non-refundable surcharge when the Arbitration Department perfects 
service of the claim naming the member, member organization or 
associated person on any party to the proceeding. For each associated 
person who is named, the surcharge shall be assessed against the 
member(s) or member organization(s) which employed the associated 
person at the time of the events which gave rise to the dispute, claim 
or controversy. No member or member organization shall be assessed more 
than a single surcharge in any arbitration proceeding. The surcharge 
shall not be subject to reimbursement under Rule 12.31.
    (b) For the purposes of this Rule, service is perfected when the 
Arbitration Department properly serves the Respondent(s) to the 
arbitration proceeding under Rule 12.13(c).
* * * * *

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 PSE 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 PSE 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

    The PSE is proposing to add new Rule 12.32 to provide that any 
member, member organization or associated person named as a party to an 
arbitration proceeding shall be assessed a $200 non-refundable 
surcharge when the Arbitration Department perfects service of the claim 
naming the member, member organization or associated person on any 
party to the proceeding. In addition, the firm whose associated persons 
are named in an arbitration proceeding will be assessed the surcharge.
    Historically, the revenue-to-expense ratio of the PSE's arbitration 
service has resulted in a deficit, which has been subsidized by other 
revenues of the PSE. Although the deficit has declined in recent years, 
the Arbitration Department has determined in a recent review of the 
arbitration process that the deficit will begin to rise in the 
immediate future as a result of significantly increased resourcing 
needs. The PSE anticipates such needs to be ongoing. The increased 
resourcing needs result from a number of factors, including case 
growth, more complex cases being filed, more selective arbitrator 
recruitment, increased arbitrator training, and increased arbitrator 
compensation. Cost recovery for increased resourcing needs should be 
directed at those member firms using the PSE's arbitration service.
    Proposed new Rule 12.32(a) would require each member, member 
organization or associated person who is named as a party to an 
arbitration proceeding, as a Claimant or a Respondent, in a Claim, 
Counterclaim, Third-Party Claim, or Crossclaim, to be assessed a $200 
non-refundable surcharge when the Arbitration Department perfects 
service of the Claim naming the member, member organization or 
associated person on any party to the proceeding. This fee would be in 
addition to fees assessed pursuant to Rule 12.31. The fee applies both 
to members, member organizations and associated persons who file as 
Claimants and to members, member organizations and associated persons 
who are served by the Arbitration Department as Respondents. In a claim 
brought by a member, member organization or associated person against a 
customer, the $200 fee would be assessed in addition to the $500 claim 
filing fee described in the current fee schedule in Rule 12.31. For an 
associated person who is named as a party to an arbitration proceeding, 
the fee would be assessed against the member or member organization 
which employed the associated person at the time of the events which 
gave rise to the claim. However, no member or member organization will 
be assessed more than a single charge in any arbitration proceeding. 
Finally, Rule 12.32(a) clarifies that the surcharge is not subject to 
reimbursement under Rule 12.31.
    Proposed new Rule 12.32(b) clarifies that service is considered to 
have been perfected when the Arbitration Department serves the Claim 
under Rule 12.13.
    The PSE believes that the proposed rule change is consistent with 
the provisions of Section 6(b)(5) of the Act, which require that the 
rules of the Exchange provide for the equitable allocation of 
reasonable dues, fees and other charges among members, member 
organizations and associated persons in that the proposed rule 
equitably assesses a surcharge on each member, member organization and 
associated person who is named and for whom service is perfected in an 
arbitration proceeding and applies such revenue to additional costs 
resulting from increased arbitration resourcing needs.

(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 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 on the proposed rule change were neither solicited 
nor received.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act and subparagraph (e) of Rule 19b-4 
thereunder in that it constitutes a due, fee or other charge. 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. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549. 
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. Copies of such filing will also be 
available for inspection and copying at the principal office of the 
PSE. All submissions should refer to File No. SR-PSE-94-14 and should 
be submitted by July 26, 1994.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority, 17 CFR 200.30-3(a)(12).
Jonathan G. Katz,
Secretary.
[FR Doc. 94-16187 Filed 7-1-94; 8:45 am]
BILLING CODE 8010-01-M