[Federal Register Volume 59, Number 197 (Thursday, October 13, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-25279]


[[Page Unknown]]

[Federal Register: October 13, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34792; File No. SR-CBOE-94-33]

 

Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Chicago Board Options Exchange, Inc. Relating to the 
Reporting by the Exchange to the Central Registration Depository 
(``CRD'') of Information Concerning Pending Formal Exchange 
Disciplinary Proceedings

October 5, 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 September 15, 1994, the Chicago Board Options Exchange (``CBOE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the CBOE. 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 (1991).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The CBOE proposes to add Rule 17.14 to the CBOE's rules to provide 
for the reporting by the CBOE to the Central Registration Depository 
(``CRD''), for disclosure to the public, of information concerning 
pending formal CBOE disciplinary proceedings. In addition, the CBOE 
proposes to renumber the provisions which are currently contained in 
CBOE Rule 17.12 without affecting the substance of these provisions. 
The text of the proposed rule change is available at the Office of the 
Secretary, CBOE, and at the Commission.

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 CBOE 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 purpose of the proposed rule change is to add Rule 17.14 to the 
exchange's rules to provide for the reporting by the Exchange to the 
CRD,\3\ for disclosure to the public, of information concerning pending 
formal Exchange disciplinary proceedings.\4\ Currently, the Exchange 
discloses to the CRD information with respect to formal Exchange 
disciplinary proceedings only upon the conclusion of such proceedings.
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    \3\The CRD is an automated industry database containing 
employment and disciplinary history of members and associated 
persons registered with self-regulatory organizations (``SROs'') and 
state securities agencies. The CRD is operated by the National 
Association of Securities Dealers, Inc. (``NASD'') with input on 
policy and other matters from federal and state agencies and other 
SROs including the Exchange.
    \4\The CBOE represents that information concerning final 
disciplinary actions taken by the Exchange, the NASD, and other 
SROs, as well as information concerning certain criminal convictions 
contained in the CRD, has been disclosed to the public pursuant to 
the NASD's 800 number service since October 1991. On July 1, 1993, 
the Commission approved an NASD rule change to make more information 
available to the public regarding pending disciplinary proceedings 
or actions taken by federal or state agencies and SROs that relate 
to securities and commodities transactions, and regarding criminal 
indictments and information. See Securities Exchange Act Release No. 
32568 (July 1, 1993), 58 FR 36723 (July 8, 1993). In addition, the 
Commission recently approved rule changes by both the New York Stock 
Exchange, Inc. and the Chicago Stock Exchange, Inc. to provide 
information to the CRD concerning their pending formal disciplinary 
proceedings. See Securities Exchange Act Release Nos. 33844 (March 
31, 1994), 59 FR 16669 (April 7, 1994), and 34516 (August 10, 1994), 
59 FR 42317 (August 7, 1994), and 34516 (August 10, 1994), 59 FR 
42317 (August 17, 1994).
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    Under the proposed rule change, the amount of information 
concerning formal Exchange disciplinary proceedings\5\ reported by the 
Exchange to the CRD would be expanded to include the issuance of a 
statement of charges in such proceedings and all significant changes in 
the status of such proceedings while such proceedings are pending. For 
the purposes of Rule 17.14, a formal Exchange disciplinary proceeding 
would be considered to be pending from the time that a statement of 
charges is issued in the proceeding\6\ until the outcome of the 
proceeding becomes final. In addition, under Rule 17.14, significant 
changes in the status of a formal Exchange disciplinary proceeding 
would be deemed to include, but not be limited to, the scheduling of a 
disciplinary hearing, the issuance of a decision by the BCC, the filing 
of an appeal to the Exchange's Board of Directors, and the issuance of 
a decision by the Exchange's Board of Directors.
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    \5\According to the Exchange, for the purposes of Rule 17.14, an 
Exchange disciplinary proceeding would be considered to be a formal 
disciplinary proceeding if it is initiated by the Exchange pursuant 
to Exchange Rule 17.2, et seq.
    \6\The Exchange states that CBOE Rule 17.4(b) provides, in part, 
that whenever it shall appear to the Exchange's Business Conduct 
Committee (``BCC'') from the report of the staff of the Exchange 
that there is probable cause for finding a violation within the 
disciplinary jurisdiction of the Exchange and that further 
proceedings are warranted, the BCC shall direct the staff of the 
Exchange to prepare a statement of charges against the person or 
organization alleged to have committed a violation (the 
``Respondent'') specifying the acts in which the Respondent is 
charged to have engaged and setting forth the specific provisions of 
the Act, as amended, the rules and regulations promulgated 
thereunder, and the constitutional provisions, by-laws, rules, 
interpretations, or resolutions of which such acts are in violation. 
In addition, Rule 17.4(b) further provides that a copy of the 
charges shall be served upon the Respondent.
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    According to the Exchange, information on pending formal Exchange 
disciplinary proceedings, among other events, is currently in the CRD, 
but only to the extent that reports are made by Exchange members, 
member organizations, and associated persons pursuant to their 
reporting obligations on the Uniform Application for Securities 
Industry Registration or Transfer (Form U-4) and Form BD, the uniform 
application form for broker-dealer registration. The proposed rule 
change would expand the information available to the public concerning 
pending formal Exchange disciplinary proceedings by requiring the 
Exchange to report information concerning such pending proceedings to 
the CRD.
    In addition to the foregoing, the proposed rule change would 
renumber the provisions which are currently contained in Rule 17.12 
(Miscellaneous Provisions) without affecting the substance of these 
provisions. Specifically, under the proposed rule change, the current 
provisions of Rule 17.12 would be separated into two rules, Rule 17.12 
and Rule 17.13.
    The Exchange believes that the proposed rule change is consistent 
with Section 6 of the Act, in general, and furthers the objectives of 
Section 6(b)(5) of the Act,\7\ in particular, in that it will protect 
investors and the public interest by enhancing the public's access to 
information regarding disciplinary proceedings involving Exchange 
members, member organizations, and associated persons.
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    \7\15 U.S.C. Sec. 78f(b)(5) (1988).
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any inappropriate burden on competition.

(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

    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 Exchange 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.

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 Section, 450 Fifth Street, NW., 
Washington, DC. Copies of such filing will also be available for 
inspection and copying at the principal office of the CBOE. All 
submissions should refer to File No. SR-CBOE. All submissions should 
refer to File No. SR-CBOE-94-33 and should be submitted by November 3, 
1994.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\17 CFR 200.30-3(a)(12 (1993)
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[FR Doc. 94-25279 Filed 10-12-94; 8:45 am]
BILLING CODE 8010-01-M