[Federal Register Volume 61, Number 45 (Wednesday, March 6, 1996)]
[Notices]
[Pages 8989-8991]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5154]



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SECURITIES AND EXCHANGE COMMISSION
[Release NO. 34-36905; File No. SR-CSE-96-02]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by The Cincinnati Stock Exchange 
Relating To Including Within the Exchange's Minor Rule Plan Rule 4.1 
Which Deals With the Maintenance of Records

February 28, 1996.
    Pursuant to Section 19(b)(1) of the Secretary Exchange Act of 1934 

[[Page 8990]]
    (``Act''),\1\ notice is hereby given that on February 8, 1996 The 
Cincinnati Stock Exchange (``CSE'' 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 self-regulatory organization. On February 27, 
1996, the Exchange submitted Amendment No. 1 to the proposed rule 
change to the Commission.\2\ The Commission is publishing this notice 
to solicit comments on the proposed rule change from interested 
persons.

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Amendment No. 1 corrected the CSE's filing to reference 
Section 6(b)(6) of the Act rather than Section 6(b)(5) thereof as 
the statutory basis for the proposal. Amendment No. 1 also 
redesignated the proposed rule change as a ``noncontroversial'' 
filing under Section 19(b)(3)(A) and Rule 19b-4(e)(6) thereunder. 
See Letter dated February 27, 1996, from Robert Ackermann, Vice 
President Regulatory Service, CSE, to Glen Barrentine, Senior 
Counsel/Team Leader, SEC.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange hereby corrects and amends Rule 8.14 regarding the 
imposition of fines for minor violations.

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 IV 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
    Rule 8.14 \3\ authorizes the Exchange, in lieu of commencing a 
disciplinary proceeding before a hearing panel, to impose a fine not to 
exceed $2,500, on any member, member organization, or registered or 
non-registered employee of a member organization for a minor violation 
of certain specified Exchange Rules.\4\

    \3\ Rule 8.14 was approved by the Commission on September 1, 
1988. See Securities Exchange Act Release No. 26053 (September 1, 
1988), 53 FR 34851 (September 8, 1988) (order approving File No. SR-
CSE-88-1). A subsequent addition of a rule to the Rule 8.14 
Violations List was made in Securities Exchange Act Release No. 
27609 (January 11, 1990), 55 FR 1758 (January 18, 1990) (ordering 
approving File No. SR-CSE-89-60.
    \4\ CSE Rule 8.14, entitled Imposition of Fines for Minor 
Violation(s) of Rules, contains a list of minor rule violations as 
to which the Exchange may impose such fines. Although the CSE's 
Board of Trustees makes the initial determination of whether a CSE 
rule violation is ``minor'' for purposes of CSE Rule 8.14, this 
determination is subject to Commission approval pursuant to Section 
19(d)(1) of the Act and paragraph (c)(2) of Rule 19d-1 under the 
Act. See Release No. 26053 n.5, supra note 2.
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    The purpose of the Rule 8.14 procedure is to improve the Exchange's 
ability to efficiently meet its statutory enforcement responsibilities 
by establishing a program for the imposition of fines for minor 
violations of Exchange Rules and by designating certain specified Rule 
violations as minor Rule violations.\5\ In File No. SR-CSE-88-1 \6\, 
which initially set forth the provisions and procedures of Rule 8.14, 
the Exchange indicated that it would periodically prepare and announce 
to its members and member organizations a revised list of Exchange 
Rules for violation of which the Exchange may impose fines pursuant to 
Rule 8.14, as well as the fines that may be imposed for such violation.

    \5\ Id.
    \6\ Id.
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    The purpose of the proposed Rule change is to add Exchange Rule 4.1 
\7\ to, and correct, Exchange Rule 8.14. Due to a typographical error, 
Exchange Rule 8.14, which includes a list of Rules to which the minor 
rule plan applies, referenced Rule 4.1 instead of Rule 4.2, which was 
added to the Exchange's minor rule plan in 1990.\8\ At this time, the 
Exchange is correcting this reference and adding Rule 4.1, which 
relates to the maintenance of books and records, to such list. As a 
result, the list of Rules to which the minor rule plan applies will now 
reference both Rules 4.1 and 4.2

    \7\ CSE Rule 4.1 provides that ``each member shall make and keep 
books, accounts, records, memoranda and correspondence in conformity 
with Section 17 of the Act and the rules thereunder, with all other 
applicable laws and the rules, regulations and statements of policy 
promulgated thereunder, and with Exchange Rules.''
    \8\ CSE Rule 4.2 provides that ``every member shall furnish to 
the Exchange, upon request and in a time and manner required by the 
Exchange, current copies of any financial information filed with the 
Commission, as well as any records, files or financial information 
pertaining to transactions executed on or through the Exchange. 
Further, the Exchange shall be allowed access, at any time, to the 
books and records of the member in order to obtain or verify 
information related to transactions executed on or through the 
Exchange or activities relating to the Exchange.'' See Release No. 
34-27609, supra note 3.
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2. Statutory Basis
    The Proposed rule change is consistent with Section 6(b)(6) of the 
Act \9\ in that it will provide a procedure whereby member 
organizations can be ``appropriately disciplined'' in those instances 
when a rule violation is minor in nature, but a sanction more serious 
than a warning or cautionary letter is appropriate. The rule change 
provides a fair procedure for imposing such sanctions, in accordance 
with the requirements of Sections 6(b)(7) and 6(d)(1) of the Act.\10\

    \9\ 15 U.S.C. 78(b)(6).
    \10\ 15 U.S.C. 78f(b)(7) and 78f(d)(1).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change does not 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. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change: (1) does not 
significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
and (3) does not become operative for 30 days from February 8, 1996, 
the date on which it was filed, and the Exchange provided the 
Commission with written notice of its intent to file the rule change at 
least five business days prior to the filing date, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act\11\ and 
subparagraph (e)(6) of Rule 19b-4 thereunder.\12\

    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4.
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    At any time within 60 days of the filing of such 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, N.W., Washington, D.C. 20549. 
Copies of the 

[[Page 8991]]
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, N.W., Washington, D.C. 
20549. Copies of such filing also will be available for inspection and 
copying at the principal office of The Cincinnati Stock Exchange. All 
submissions should refer to File No. SR-CSE-96-02 and should be 
submitted by March 27, 1996.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\

    \13\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-5154 Filed 3-5-96; 8:45 am]
BILLING CODE 8010-01-M