[Federal Register Volume 64, Number 87 (Thursday, May 6, 1999)]
[Notices]
[Page 24437]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-11362]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-41344; File No. SR-NYSE-99-04]


Self-Regulatory Organization; New York Stock Exchange, Inc.; 
Order Approving Proposed Rule Change Relating to Amending Rule 347 To 
Expressly Allow Employees To Bring Employment Related Claims Before the 
EEOC, NLRB, or State or Local Anti-Discrimination Agencies

April 28, 1999.

I. Introduction

    On February 5, 1999, the New York Stock Exchange, Inc. (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act''),\1\ and Rule 19B-4 thereunder,\2\ a 
proposed rule change amending Exchange Rule 347 to expressly allow 
employees to bring employment related claims before the Equal 
Employment Opportunity Commission (``EEOC''), National labor Relations 
Board (``NLRB''), or state or local anti-discrimination agencies.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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    The proposed rule change was published for comment in the Federal 
Register on March 18, 1999.\3\ No comments were received on the 
proposal. This order approves the proposal.
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    \3\ Securities Exchange Act Release No. 41151 (March 10, 1999) 
64 FR 13460.
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II. Description of the Proposal

    The proposed rule change codifies the Exchange's interpretation of 
Exchange Rule 347 regarding the arbitration of employment disputes. 
Generally, Exchange Rule 347 requires that any controversy between a 
registered representative and the member or member organization that 
employs him arising out of employment or the termination of employment 
be settled by arbitration. This requirement does not extend to 
statutory employment discrimination claims.\4\ The proposed amendment 
to Exchange Rule 347 would clarify that the Exchange's Rule should not 
be interpreted to preclude employees from brining employment-related 
claims against members and member organizations before the EEOC, NLRB, 
or state or local antidiscrimination agencies.\5\
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    \4\ See Exchange Rules 347 and 600. Under the Exchange's Rules, 
discrimination claims are eligible for Exchange arbitration only 
where the parties have agreed to arbitrate the claim after it has 
arisen.
    \5\ The Commission notes that the amendment should not affect 
the obligation, under NYSE rules, of Exchange members of their 
employees to arbitrate claims brought by customers against them.
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    The proposed amendment would address an issue recently raised by a 
Teamsters Union Local with the NLRB. The Teamsters Union Local alleged 
that the Exchange's prior arbitration policy interfered with rights 
guaranteed by the National Labor Relations Act by prohibiting employees 
from filing and pursing charges with the NLRB. While the Exchange has 
never interpreted its arbitration rules to preclude employees of 
members or member organizations from pursuing such charges, the 
Exchange determined it would resolve the issue by amending Exchange 
Rule 347 to codify the existing Exchange interpretation.

III. Discussion

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange,\6\ and in 
particular, with the requirements of Section 6(b)(5).\7\ Specifically, 
the Commission finds that clarifying the rights of employees to bring 
employment-related claims before the EEOC, NLRB, or any state or local 
anti-discrimination agencies serves to promote just and equitable 
principles of trade, and, in general, to protect the public interest. 
The proposed rule change ensures that employees, members and member 
organizations have a fair and impartial forum for the resolution of 
their disputes.
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    \6\ In approving this rule, the Commission has considered the 
proposed rule's impact on efficiency, competition, and capital 
formation. 15 U.S.C. 78c(f).
    \7\ 15 U.S.C. 78F(b)(5).
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    By changing its rule, the Exchange codifies its current 
interpretation of Exchange Rule 347 to provide that Exchange Rules are 
not intended to, and should not be construed to prohibit employees from 
bringing employment-related claims against members or member 
organizations before the EEOC, NLRB, or any state or local anti-
discrimination agencies. This interpretation is consistent with the 
Exchange's recent amendment to Rule 347, which excluded claims of 
employment discrimination from arbitration unless the parties have 
agreed to arbitrate the claim after it has arisen.\8\
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    \8\ See Securities Exchange Act Release No. 40858 (December 29, 
1998) 64 FR 1051 (January 7, 1999).
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    Under the Act, self-regulatory organizations (``SROs'') like the 
Exchange are assigned rulemaking and enforcement responsibilities to 
perform their role in regulating the securities industry for the 
protection of investors and other related purposes. Pursuant to Section 
19(b)(2) of the Act,\9\ the Commission is required to approve an SRO 
rule change like the Exchange's if it determines that the proposal is 
consistent with applicable statutory standards.\10\ These standards 
include Section 6(b)(5) of the Act,\11\ which provides that the 
Exchange's rules must be designed to, among other things, ``promote 
just and equitable principles of trade'' and ``protect investors and 
the public interest.''
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    \9\ 15 U.S.C. 78s(b)(2).
    \10\ The Commission oversees the arbitration programs of the 
SROs, including the Exchange's, through inspections of the SRO 
facilities and the review of SRO arbitration rules. Inspections are 
conducted to identify areas where procedures should be strengthened, 
and to encourage remedial steps either through changes in 
administration or through the development of rule changes.
    \11\ 15 U.S.C. 78f(b)(5).
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\12\ that the proposed rule change (SR-NYSE-99-04) is approved.

    \12\ 15 U.S.C. 78s(b)(2).
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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-11362 Filed 5-5-99; 8:45 am]
BILLING CODE 8010-01-M