[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