[Federal Register Volume 66, Number 15 (Tuesday, January 23, 2001)]
[Notices]
[Pages 7526-7527]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-1971]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43846; File No. SR-PCX-00-37]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendment No. 1 by the Pacific Exchange, Inc., To Increase 
Fines for Members, Floor Brokers and Market Makers for Violating 
Exchange Rules Under the Minor Rule Plan

January 16, 2001.
    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 December 11, 2000, the Pacific Exchange, Inc. (``PCX'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC'') the proposed rule change is described in 
Items, I, II, and III below, which Items have been prepared by the 
Exchange. The Exchange amended the proposal on January 8, 2001.\3\ The 
Commission is publishing this notice to solicit comments on the 
proposed rule change, as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See January 5, 2001 letter from Cindy L. Sink, Senior 
Attorney, Regulatory Policy, PCX to Nancy Sanow, Assistant Director, 
Division of Market Regulation (``Division''), SEC and attachments 
(``Amendment No. 1''). In response to a request from the Division, 
the PCX converted the proposal from effective upon filing pursuant 
to Section 19(b)(3)(A) of the Act, to being considered pursuant to 
Section 19(b)(2) in Amendment No. 1. 15 U.S.C. 78s(b)(3)(A). 15 
U.S.C. 78s(b)(2). The PCX requested accelerated approval of the 
proposed rule change.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The PCX proposes to adopt an increase in the fines to be imposed on 
members, floor brokers and market makers (including Lead Market Makers) 
for violating Exchange Rules under the Minor Rule Plan. The text of the 
proposed rule change is available at the PCX and at 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 Exchange proposes to amend PCX Rule 10.13(k) governing Minor 
Rule Plan violations to increase most of the fines. The PCX believes 
the current average Minor Rule Plan fine of $250 is too low to deter 
violations of PCX rules. The Exchange believes that an increase in the 
current fines will more adequately sanction violations of the PCX's 
order-handling and investigating rules, many of which are processed 
under the Minor Rule Plan.
    Most Minor Rule Plan violations currently specify a fine of $250 
for a first violation, $500 for a second, and $750 for a third. 
Multiple violations are calculated on a two-year basis. Under the 
proposed increases, most fines will be $1,000 for a first violation, 
$2,500 for a second and $3,500 for a third, calculated on the same two-
year basis. Less serious violations such as disruptive conduct or 
abusive language on the options floor will be $500 for a first 
violation, $2,000 for a second, and $3,500 for a third.
    More serious violations, such as a member's failure to cooperate 
with a PCX examination of its financial responsibility or operational 
condition will be fined $2,000 for a first violation, $4,000 for a 
second and $5,000 for a third. A member that impedes or fails to 
cooperate in an Exchange investigation will be fined $3,500 for a first 
violation, $4,000 for a second and $5,000 for a third. Less serious 
violations, such as fines for improper dress under the PCX dress code, 
remain unchanged at $100 for the first violation, $200 for the second, 
and $500 for the third.
    Under the proposal, the Enforcement Department would continue to 
exercise its discretion under PCX Rule 10.13(f) and take cases out of 
the Minor Rule Plan to pursue them as formal disciplinary matters if 
the facts or circumstances warrant such action.
    The Exchange believes that adoption of the proposed rule change 
will serve to significantly strengthen the ability of the Exchange to 
carry out its oversight responsibilities as a self-regulatory 
organization. The PCX also believes the proposal should aid the 
Exchange in carrying out its compliance and surveillance functions.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b) \4\ of the Act, in general, and furthers the objectives of 
Section 6(b)(5),\5\ in particular, in that it is designed to facilitate 
transactions in securities, to prevent fraudulent and manipulative acts 
and practices, and to promote just and equitable principles of trade.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(4).
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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 
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

    Written comments on the proposed rule change were neither solicited 
nor received.

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 PCX consents, the Commission will:
    A. By order approve such proposed rule change, or

[[Page 7527]]

    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 proposal 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 
Exchange. All submissions should refer to file number SR-PCX-00-37, and 
should be submitted by [insert date 21 days from the date of 
publication].

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-1971 Filed 1-22-01; 8:45 am]
BILLING CODE 8010-01-M