[Federal Register Volume 65, Number 123 (Monday, June 26, 2000)]
[Notices]
[Pages 39459-39461]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-16026]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42954; File No. SR-NYSE-100-8]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of Proposed rule Change and Amendment No. 
1 Thereto by the New York Stock Exchange, Inc. Relating to the 
Exchange's Pride-Based Continued Listing Standards

June 19, 2000.
    Pursuant to Section 19(b)(12) of the Securities Exchange Act \1\ of 
1934 (``Act''), and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on February 22, 2000, the New York Stock Exchange, Inc. (``NYSE'' 
or ``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed; rule change as described in 
Items I, and II below, which Items have been prepared by the Exchange. 
On May 3, 2000, the Exchange submitted Amendment No. 1 to the proposed 
rule change.\3\ The Commission is publishing this notice to solicit 
comments on the proposed rule change, as amended, from interested 
persons and to grant accelerated approval to the proposed rule change 
and Amendment No. 1.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17i CFR 240.19b-4.
    \3\ In Amendment No. 1, the NYSE made technical changes to the 
proposed rule text. See letter from Daniel P. Odell, Assistant 
Secretary, NYSE, to Nancy dSanow, Senior Special Counsel, Division 
of Market Regulation, SEC, dated May 1, 2000 (``Amendment No. 1'').
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1. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The proposed rule change consists of an amendment to Section 
802.01C of the Listed Company Manual (``Manual'') of the Exchange and 
corresponding changes to NYSE Rule 499. The text of the proposed rule 
change, as amended, is as follows. New text is italicized.

NYSE Listed Company Manual

Section 8

Suspension and Delisting

801.00  Policy
* * * * *
802.00  Continued Listing
802.01  Continued Listing Criteria
* * * * *
802.01C. Price Criteria
    Average closing price of a security is less than $1.00 over a 
consecutive 30-trading-day period (D).
    (D) Once notified, the company must bring its average share price 
back above $1.00 by the later of its subsequent annual meeting date or 
six months following receipt of the notification. If this is the only 
criteria that makes the company below the Exchange's continued listing 
standards, the procedures outlined in Paras. 802.20 and 802.03 do not 
apply. The company must, however, notify the Exchange, within 10 
business days of receipt of the notification, of its intent to cure 
this deficiency or be subject to suspension and delisting procedures. 
In the event that at the expiration of the cure period, a $1.00 average 
share price over the preceding 30 trading days is not attained, the 
Exchange will commence suspension and delisting procedures. 
Notwithstanding the foregoing, if the subject security is not the 
primary trading common stock of the company (e.g., a tracking stock or 
a preferred class) or is a stock listed under the Affiliated Company 
standard where the parent remains in ``control'' as that term is used 
in that standard, the Exchange may determine whether to apply the Price 
Criteria to such security after evaluating the financial status of the 
company and/or the parent/affiliated company, as the case may be.
* * * * *

NYSE Rules

Delisting of Securities

Suspension From Dealings or Removal From List by Action of the 
Exchange

    The aim of the New York Stock Exchange is to provide the foremost 
auction market for securities of well-established companies in which 
there is a broad public interest and ownership.

Rule 499.
* * * * *
    .20 NUMERICAL AND OTHER CRITERIA--WHEN A COMPANY FALLS BELOW ANY OF 
THESE CRITERIA, THE EXCHANGE MAY GIVE CONSIDERATION TO ANY DEFINITIVE 
ACTION THAT A COMPANY WOULD PROPOSE TO TAKE THAT WOULD BRING IT ABOVE 
CONTINUED LISTING STANDARDS.
* * * * *
    9. Average closing price of a security is less than $1.00 over a 
consecutive 30 trading-day period. Once notified, the company must 
bring its average share price back above $1.00 by the later of its 
subsequent annual meeting date or six months following receipt of the 
notification. If this is the only criteria that makes the company below 
the Exchange's continued listing standards, the procedures outlined in 
Paras. .50 and .60 of this Rule 499 do not apply. The company must, 
however notify the Exchange, within 10 business days of receipt of the 
notification, of its intent to cure this deficiency. In the event that 
at the expiration of the cure period, a $1.00 average share price over 
the preceding 30 trading days is not attained, the Exchange will 
commence suspension and delisting procedures. Notwithstanding the 
foregoing, if the subject security is not the primary trading common 
stock of the company (e.g., a tracking stock or a preferred class) or 
is a stock listed under the Affiliated Company standard where the 
parent remains in ``control'' as that term is used in that standard, 
the Exchange may determine whether to apply the Price Criteria to such 
security after evaluating the financial status of the company and/or 
the parent/affiliated company, as the case may be.\1\
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    \4\ When the Exchange amended Section 802.01C of the Manual in 
SR-NYSE-00-12, the Exchange did not amend NYSE Rule 499 to reflect 
the corresponding changes. Accordingly, the Exchange proposes to do 
so now. See Securities Exchange Act Release No. 42671 (April 12, 
2000), 65 FR 21227 (April 20, 2000).

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[[Page 39460]]

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 III below. The Exchange 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 recently adopted and revised a series of standards and 
procedures regarding the continued listing of securities for both 
domestic and non-U.S. issuers.\5\ One of the new standards is a price-
based criterion of $1 over the span of 30 consecutive days. Once a 
company triggers this standard, it must re-establish its trading price 
above $1 within the later of its next annual meeting date or six months 
of notification. The Exchange represents that since the implementation 
of this new standard, several issuers (both listed and prospective) 
have questioned whether the standard is applicable to classes of 
securities other than the company's primary trading vehicle.\6\
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    \5\ See Securities Exchange Act Release No. 42194 (December 1, 
1999), 64 FR 69311 (December 10, 1999).
    \6\ For example, a company with a Class A common stock trading 
at $30 and several tracking stocks, one of which is below $1, would 
take the position that it is inappropriate to apply the price-based 
standard to this tracking stock because the low price of that stock 
is not indicative of the overall financial health and valuation of 
the company. In addition, the Exchange believes that delisting only 
the one low-priced security would result in the company's equity 
securities being traded in multiple markets, a situation undesirable 
to most issuers.
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    Therefore, the Exchange proposes to modify the price-based criteria 
so that the Exchange will have the discretion to determine whether the 
$1 standard is applicable to all of an issuer's listed classes of 
securities. In making such a determination, the Exchange would evaluate 
the overall financial status of a company, including the price of the 
primary trading common stock and its other listed securities.
2. Statutory Basis
    The Exchange represents that the proposed rule change is consistent 
with the requirement under Section 6(b)(5)\7\ of the Act that an 
Exchange have rules that are designed to promote just and equitable 
principles of trade, to remove impediments to, and perfect the 
mechanism of a free and open market and, in general, to protect 
investors and the public interest.
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    \7\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchanges 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, including whether the proposed rule 
change, as amended, is consistent with the Act. Persons making written 
submissions should file six copies thereof with the Secretary, 
Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, 
D.C. 20549-0609. 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 NYSE. All submissions should refer to File No. 
SR-NYSE-00-08 and should be submitted by July 17, 2000.

IV. Commission's Findings and Order Granting Approval of Proposed 
Rule Change

    The Commission finds that the proposed rule change, as amended, is 
consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange, 
and in particular, with the requirements of Section 6(b)(5),\8\ because 
the proposed rule is designed to promote just and equitable principles 
of trade, to remove impediments to, and perfect the mechanism of a free 
and open market and, in general, to protect investors and the public 
interest.\9\
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    \8\ 15 U.S.C. 78f(b)(5).
    \9\ In approving this rule, the Commission has considered its 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
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    Specifically, the Commission believes that the proposed rule change 
to the Exchange's price-based standard will allow for a more 
appropriate application of the criteria to classes of stock other than 
a company's primary trading stock by allowing the Exchange to evaluate 
the overall financial status of a company before determining whether 
the $1 standard should apply. The Commission further believes that the 
proposed rule change, as amended, is consistent with the Exchange's 
obligation to remove impediments to and perfect the mechanism of a free 
and open market. The Commission believes that the proposed rule will 
increase the Exchange's ability to retain listings that would otherwise 
not qualify under its current price-based criteria.
    The NYSE has requested that the Commission find good cause for 
approving the proposed rule change, as amended, prior to the thirtieth 
day after the date of publication of notice in the Federal Register. 
The NYSE contends that accelerated approval would enable the Exchange 
to uniformly implement the amendments to all affected listed companies 
and not disadvantage those possibly subject to the rule during the full 
commentary period. The Commission believes that it is reasonable to 
grant accelerated approval to allow the Exchange to uniformly implement 
the amendments to all affected listed companies at the same time, 
thereby eliminating any confusion or the possibility of inconsistent 
application of the new rule. Accordingly, the Commission finds good 
cause, consistent with Sections 6(b)(5) and 19(b)(2) of the Act,\10\ to 
approve the proposed rule change, as amended, on an accelerated basis.
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    \10\ 15 U.S.C. 78f(b)(5) and 78s(b)(2).
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    It Is Therefore Ordered, pursuant to Section 19(b)(2) of the 
Act,\11\ that the proposed rule change (SR-NYSE-00-08), as amended, is 
hereby approved on an accelerated basis.
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    \11\ 15 U.S.C. 78s(b)(2).


[[Page 39461]]


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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-16026 Filed 6-23-00; 8:45 am]
BILLING CODE 8010-01-M