[Federal Register Volume 65, Number 135 (Thursday, July 13, 2000)]
[Notices]
[Pages 43386-43388]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-17724]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43013; File No. SR-Amex-00-12]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the American Stock Exchange LLC Relating to Procedures for 
the Review of Initial Listing Decisions

July 6, 2000.
    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 February 28, 2000, the American Stock Exchange LLC (the 
``Amex'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``SEC'' or ``Commission'') the proposed rule change as 
described in Items I, II, and III below, which Items have been prepared 
by the Exchange. 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).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Amex proposes to adopt new Part 12 of the Amex Company Guide to 
establish procedures for the review of initial listing determinations. 
The text of the proposed rule change is available at the Amex and 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 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 Amex proposes to establish new procedures for the review of 
initial listing determinations. Amex original listing criteria, set 
forth in Part 1 of the Amex Company Guide, provide quantitative and 
qualitative criteria for the original listing of securities on the 
Exchange. Section 101 of the Amex Company Guide currently provides that 
the approval of a listing application is a matter solely within the 
discretion of the Exchange. Thus, the Exchange currently has the 
discretion to list the securities of an applicant that may not satisfy 
each of the listing guidelines and to deny the listing of an 
applicant's securities that do satisfy those guidelines. Furthermore, 
under the Exchange's existing procedures, original listing 
determinations are made by different entities. The ultimate discretion 
to list applicants that do not satisfy each of the guidelines is vested

[[Page 43387]]

with the Exchange's Committee on Securities; \3\ however, the Amex 
Staff generally determines whether to deny a listing or whether an 
applicant should be considered by the Committee on Securities at 
all.\4\
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    \3\ The Committee on Securities is appointed by the Amex Board 
and consists of six non-floor, financial professionals and six Floor 
members. Of the six non-floor financial professionals, not less than 
three must be affiliated with a member organization.
    \4\ The Committee on Securities also has the discretion to deny 
listing to an applicant which is recommended by the Staff
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    The Exchange believes that the existing process is not sufficiently 
transparent to applicants and also operates to create inefficiencies in 
the listing process. To address these concerns, the Exchange proposes 
to implement specific procedures governing the review of initial 
listing determinations. The proposed rules are modeled on the Nasdaq 
listing process.;\5\
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    \5\ See NASD 4800 Series Rules.
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    Proposed Part 12 codifies the procedures for the review of Amex 
Staff listing determinations by a subcommittee of the Committee on 
Securities (as defined in proposed Section 1204) and also sets forth 
the procedures with respect to appeals from the subcommittee to the 
Amex Adjudicatory Council (as defined in Section 1205) or the Amex 
Board of Governors. Under the proposed rules, Exchange determinations 
to limit or prohibit the initial listing of an applicant's securities 
will continue to be made by the Listing Qualifications Department or 
the Listing Investigations Department.
    The Exchange will notify applicants of a decision to deny an 
application, citing the specific quantitative or qualitative standards 
in Part 1 of the Amex Company Guide that were not met. The Exchange 
will notify the applicant that, upon request, the applicant will be 
provided an opportunity for a hearing under these procedures. The 
applicant will be solely responsible for presenting the arguments in 
favor of listing to the subcommittee. Presently, such burden rests with 
the Exchange Staff.
    An applicant may request a written or oral hearing within 7 days of 
the date of the Staff's determination to deny the application.\6\ Such 
hearings will be scheduled, to the extent practicable, within 45 days 
of the date the request is filed. The applicant will be provided at 
least 10 days notice of the hearing unless the applicant waives such 
notice. Proposed Section 1203 specifies written materials that the 
applicant may submit in connection with a hearing.
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    \6\ The Amex will not charge a hearing fee to appeal the 
Exchange Staff's listing determination. Telephone conversation 
between Michael Cavalier, Associate General Counsel, Amex, and Susie 
Cho, Attorney, Division of Market Regulation (``Division''), 
Commission, April 19, 2000.
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    Proposed Section 1204 provides that all hearings will be conducted 
before a subcommittee of the Committee on Securities (``Subcommittee'') 
consisting of at least two persons. Following the hearing, the 
Subcommittee must issue a written decision (``Subcommittee Decision'') 
citing specific grounds for the Subcommittee's determination. The 
Subcommittee will promptly provide its decision to the applicant and 
will also provide notice that the applicant may request review by the 
Adjudicatory Council \7\ within 15 days of the date of the Subcommittee 
Decision.\8\ The applicant will also be notified that the Adjudicatory 
Council may call for review of the Subcommittee Decision within 45 
days, at the request of one or more of the Council's members, as 
provided in proposed Section 1205. The applicant will be promptly 
informed of the reasons for the review. Any such review does not 
operate as a stay of the Subcommittee Decision, unless the Adjudicatory 
Council's call for review specifies to the contrary.
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    \7\ The Amex Adjudicatory Council, is established by the Amex 
Board pursuant to Article II, Section 6 of the Amex Constitution. 
The Council consists of six individuals, all of whom are nominated 
by the Amex Nominating Committee and elected by the regular and 
options principal members voting together as a single class. Three 
of the Council's members are Floor Governors and three are Public 
Governors.
    \8\ The Amex will not charge a hearing fee to appeal the 
Subcommittee's determination. Telephone conversation between Michael 
Cavalier, Associate General Counsel, Amex, and Susie Cho, Attorney, 
Division of Market Regulation (``Division''), Commission, April 19, 
2000.
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    The Adjudicatory Council will consider the written record and can 
hold additional hearings. It may also recommend that the Amex Board 
consider the matter. The Adjudicatory Council will issue a written 
decision that affirms, modifies or reverses the Subcommittee Decision. 
The Adjudicatory Council will set forth specific grounds for the 
decision and provide notice that the Amex Board may call the decision 
for review at any time before its next meeting which is at least 15 
days after the decision.
    Such review by the Amex Board will be solely at the Board's 
discretion. Governors that serve on the Adjudicatory Council will not 
participate in the Board review.\9\ If the Board conducts a 
discretionary review, the applicant will be provided with a written 
decision affirming, modifying or reversing the Adjudicatory Council's 
decision. The Board may also remand the matter to the Adjudicatory 
Council, the Committee on Securities, or the Amex Staff, with 
appropriate instructions. The Board's decision constitutes final action 
of the Exchange and will take immediate effect unless it specifies to 
the contrary.\10\
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    \9\ See Proposed Section 1206(a).
    \10\ The Commission notes that any applicant aggrieved by a 
final action of the Amex may apply for review to the Commission in 
accordance with Section 19 of the Act.
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    Proposed Section 1207 describes the documents included in the 
written record. The Exchange will provide the applicant with a list of 
the documents in the written record and a copy of any documents in the 
record that are not in applicant's possession or control, at least 3 
days in advance of the deadline for the applicant's submissions. 
Proposed Section 1208 states that the written record for the review, as 
well as any documents excluded from the written record, will be 
maintained until the date upon which the decision becomes final, 
including, if applicable, upon conclusion of any Commission or federal 
court review.
    Time is computed within proposed Part 12 procedures based on 
calendar days. In computing any period of time, the day of the act 
event or default from which the period of time begins is not included. 
The last day of the period is included, unless it is a Saturday, 
Sunday, federal holiday or Amex holiday.\11\
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    \11\ See Proposed Section 1210.
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    Finally, proposed Section 1211 prohibits the Amex Staff or an 
applicant from making any communication relevant to the merits of a 
proceeding with anyone who is participating in or advising in the 
consideration of a matter (members of the Committee on Securities, the 
Adjudicatory Council, the Amex Board, and Amex Staff), unless the 
applicant and the appropriate Amex Staff have been provided notice and 
an opportunity to participate in the communication. The Amex represents 
that the purpose of this limitation is to prevent non-record 
information from being considered in rendering a decision. The Exchange 
currently expects that Amex Staff generally will waive their rights 
under this provision in the interest of providing a non-adversarial 
business forum for listing decisions.
2. Statutory Basis
    The Amex believes that the proposed rule change is consistent with 
Section 6(b) of the Act \12\ in general and furthers

[[Page 43388]]

the objectives of Section 6(b)(5) \13\ in particular in that it is 
designed to prevent fraudulent and manipulative acts and practic4es, 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, and, in general, to protect investors and 
the public interest.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
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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 
result in 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 comments on the 
proposed rule change.

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 Amex consents, the Commission will:
    A. by order approve the 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, including whether the proposed rule 
change is consistent with the Act. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW., Washington, DC 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 at the 
Commission's Public Reference Room. Copies of such filings will also be 
available for inspection and copying at the principal office of the 
Amex. All submissions should refer to File No. SR-Amex-00-12 and should 
be submitted by August 3, 2000.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-17724 Filed 7-12-00; 8:45 am]
BILLING CODE 8010-01-M