[Federal Register Volume 60, Number 151 (Monday, August 7, 1995)]
[Notices]
[Pages 40215-40217]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-19385]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36040; File No. SR-NYSE-95-15]
Self-Regulatory Organizations; Notice of Filing and Order
Granting Accelerated Approval of Proposed Rule Change and Amendment No.
1, Amendment No. 2, and Amendment No. 3 to the Proposed Rule Change by
the New York Stock Exchange, Inc., Relating to the Use of an Automated
Telephone Voting System by Member Organizations or Their Agents
July 31, 1995.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
[[Page 40216]]
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on April 6, 1995, the New York Stock Exchange, Inc. (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'' or ``SEC'') the proposed rule change as described in
Items I and II below, which Items have been prepared by the self-
regulatory organization. On May 10, 1995, the NYSE submitted to the
Commission Amendment No. 1 \3\ and on June 2, 1995, the NYSE submitted
Amendment No. 2 \4\ to the proposed rule change. The NYSE submitted
Amendment No. 3 to the Commission on July 21, 1995.\5\ The NYSE has
requested accelerated approval of the proposal. The Commission is
approving the proposal and soliciting comments.
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 C.F.R. 240.19b-4.
\3\ See letter from James E. Buck, Senior Vice President and
Secretary, NYSE to Greg Corso, Office of Tender Offers, SEC, dated
May 10, 1995. Amendment No. 1 made non-substantive, clarifying
changes to the proposal. Amendment No. 1 is further described at
note 6, infra.
\4\ See letter from James E. Buck, Senior Vice President and
Secretary, NYSE, to Sharon Lawson, Assistant Director, SEC, dated
May 25, 1995. Amendment No. 2 is further described at note 7, infra.
\5\ See letter from James E. Buck, Senior Vice President and
Secretary, NYSE to Sharon Lawson, Assistant Director, SEC, dated
July 21, 1995. Amendment No. 3 is further described at note 8,
infra.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its rules to permit the use of
automated telephone voting systems by member organizations or their
proxy agents. The proposed rule would amend NYSE Rule 452.16 and the
Listed Company Manual Section 402.08(G) by adding the following test:
Instructions from beneficial owners may also be accepted by
member organizations or their agents through the use of an automated
telephone voting system, which has been approved by the Exchange.
Such a system shall utilize an identification code for beneficial
owners and provide an opportunity for beneficial owners to validate
votes to ensure that they were received correctly. Records of voting
including the date of receipt of instructions and the name of the
recipient must be retained by the member organization of their
agent.
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 self-regulatory organization
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 III below. The self-regulatory
organization 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
1. Purpose
The Exchange proposes to amend its rules in order to permit member
organizations or their proxy agents to accept the use of automated
telephone voting systems to receive voting instructions from beneficial
owners. The voting process that is presently used by member
organizations or their agents provides for the transmission of a proxy
statement and a voting authorization form to beneficial owners. The
appropriate voting selections are indicated on the form by the
beneficial owner and it is mailed back to the member organization or
its agent.
The automated telephone voting system permits the beneficial owner
to give voting instructions on appropriate corporate proposals through
a touch tone telephone.\6\ The system utilizes identification codes and
provides a validation opportunity in order for the beneficial owner to
confirm that voting instructions were received correctly.\7\ Beneficial
holders will be informed of this new option by specific language at the
top of the voting form.\8\
\6\ Amendment No. 1 clarified that beneficial owners still have
the option to vote in writing using the voting authorization form.
The use of the automated telephone voting system is an alternative
to the current system.
\7\ Under the NYSE rule, only those automated telephone systems
which have been approved by the Exchange may be accepted by member
organizations. Amendment No. 2 clarifies that the Exchange will
consult with the Commission staff to determine whether the proposed
system operates in a manner consistent with Section 14(a) of the Act
and the rules and regulations thereunder, prior to the Exchange
approving any automated system. Currently, Automatic Data Processing
Brokerage Information Services Group provides the only approved
system.
\8\ Amendment No. 3 provides the specific language that will be
added to the voting form for the purpose of informing beneficial
owners of their option to vote through an automated telephone voting
system. If this language is changed in any manner, the Exchange will
contact the Commission and receive approval before using the new
language.
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The system is deemed to be less prone to tabulation error than the
current system, in addition to being more efficient and cost effective.
2. Statutory Basis
The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) that an exchange have rules that are
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest.
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 of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
The Exchange has neither solicited nor received written comments on
the proposed rule change.
III. 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 at the
Commission's Public Reference Section, 450 Fifth Street, NW.,
Washington, DC 20549. Copies of such filing will also be available for
inspection and copying at the principal office of the NYSE. All
submissions should refer to File No. SR-NYSE-95-15 and should be
submitted by August 28, 1995.
[[Page 40217]]
IV. Commission's Findings and Order Granting Accelerated Approval of
Proposed Rule Change
The Commission finds that the NYSE's proposal to permit the use of
automated telephone voting systems by member organizations or their
proxy agents is consistent with the requirements of the Act and the
rules and regulations thereunder applicable to a national securities
exchange. The Commission believes that the use of automated telephone
voting systems by member organizations or their proxy agents is
consistent with Sections 6 \9\ and 14 \10\ of the Act. In particular,
the proposal is consistent with the Section 6(b)(5) \11\ requirements
that the rules of an exchange be designed to foster cooperation and
coordination with persons engaged in regulating, clearing, settling,
processing information with respect to, and facilitating transactions
in securities, to remove impediments to and perfect the mechanism of a
free and open market, and, in general, to protect investors and the
public interest and Section 14 of the Act which sets forth the
requirements for the solicitation of proxies.
\9\ 15 U.S.C. 78f.
\10\ 15 U.S.C. 78n.
\11\ 15 U.S.C. 78f(b)(5).
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The NYSE, consistent with Section 14 of the Act, has rules
governing the forwarding of proxy materials to beneficial holders.
Pursuant to these rules, member firms are required to forward to
beneficial holders a proxy statement and a voting authorization form on
which the holder would indicate his voting selections and mail the form
back to the member firm. The NYSE is now proposing to adopt rules that
would permit member firms or their proxy agents to use an Exchange
approved automated telephone voting system that operates in a manner
consistent with Section 14(a) of the Act as an alternative to written
voting instructions.\12\ Under the proposed rules, the automated system
must at a minimum provide an identification code for beneficial owners
and provide an opportunity for beneficial owners to validate
instructions to ensure that they were received correctly. In addition,
the automated system must provide beneficial owners with the same power
and authority to issue, revoke, or otherwise change voting instructions
as currently exists for instructions communicated in written form.
Further, member organizations or their agents utilizing this method
must maintain records of voting which include information sufficient to
evidence validity of voting instructions, including the name of the
beneficial owner, the date of receipt of the instructions, and the
voting instructions as transmitted.
\12\ See letter from James E. Buck, Senior Vice President and
Secretary, NYSE, to Sharon Lawson, Assistant Director, SEC, dated
May 25, 1995. As described above, Amendment No. 2 clarifies that the
Exchange will consult with the Commission staff to determine whether
the proposed system operates in a manner consistent with Section
14(a) of the Act and the rules and regulations thereunder, prior to
the Exchange approving any automated system.
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The Commission believes that the proposal will be beneficial to
both shareholders and member organizations in fulfilling the proxy
requirements under the Act and NYSE rules for several reasons.
First, the use of an automated telephone voting system is a simpler
and more efficient means of communicating voting instructions than the
current method, which requires a beneficial owner to mail a voting
authorization form to the member organization, who would vote the
proxy. In this regard, the Commission notes that the proposed rule
change will permit beneficial owners to make more timely decisions on
corporate matters. For these reasons, the Commission believes that the
proposed rule change appropriately gives beneficial owners the ability
to use a more convenient and efficient means of providing voting
instructions. Second, the use of an automated telephone voting system
should prove to be more efficient and accurate than the current system
in communicating voting instructions. As the NYSE has indicated, the
automated telephone voting system is deemed less prone to tabulation
errors than the scanners that are currently used to calculate the votes
from the written voting authorization forms.\13\ In addition, the
automated telephone voting system utilizes identification codes and
provides a validation opportunity for the beneficial owner to confirm
that voting instructions were received correctly. Finally, the
automated telephone voting system is generally viewed as more cost
efficient for member organizations because this system can handle a
higher volume of voting instructions than the scanners that are
currently used to calculate voting instructions from the voting
authorization forms.\14\
\13\ Telephone conversation between Gary Tuttle, Director of
Securities Operation Department, NYSE, and Elisa Metzger, Senior
Counsel, SEC, on June 16, 1995.
\14\ Id.
In summary, the Commission believes that the use of identification
codes, the opportunity to confirm that voting instructions were
received correctly, and the purported improved accuracy in the new
system will be beneficial to shareholders and member organizations and
is consistent with the public interest and the protection of investors.
Despite these benefits, the Commission notes that the automated voting
system is an alternative to the current method of communicating voting
instructions by mail. Shareholders will still have the option to choose
their preferred method of communicating their voting instructions. In
addition, the NYSE rules will continue to ensure that an adequate
record is kept of all voting, including voting done through the
automated telephone voting system.
The Commission finds good cause for approving the proposed rule
change, including Amendments No. 1, 2, and 3, prior to the thirtieth
day after the date of publication of notice of filing thereof in the
Federal Register. The Commission believes that accelerated approval of
the use of automated telephone voting systems by member organizations
or their proxy agent should provide an immediate benefit to investors
by affording them a more convenient means of communicating their voting
instructions, as well as a more efficient method of transmitting voting
instructions. In addition, the Commission notes that the rule change
continues to permit investors who wish to communicate their voting
instructions by mailing the voting authorization form to the member
organization to do so. The use of the automated telephone voting system
is merely an alternative to the current system. For these reasons, the
Commission finds good cause for accelerating approval of the proposed
rule changes as amended.
It is therefore ordered, pursuant to Section 19(b)(2)\15\ that the
proposed rule change, including Amendments No. 1, 2, and 3, is hereby
approved.
\15\ 15 U.S.C. 78s(b)(2).
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For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\16\
\16\ 17 C.F.R. 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-19385 Filed 8-4-95; 8:45 am]
BILLING CODE 8010-01-M