[Federal Register Volume 66, Number 53 (Monday, March 19, 2001)]
[Notices]
[Pages 15516-15517]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-6667]


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 SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44061; File No. SR-Phlx-01-16]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Philadelphia Stock Exchange, Inc. Relating to Providing 
Compensation to Hearing Panelist

March 9, 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 February 6, 2001, the Philadelphia Stock Exchange, Inc. (``Phlx'' 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 
self-regulatory organization. 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 Exchange is proposing to amend its Disciplinary Rules, 
specifically Rule 960.5, to include a provision that allows hearing 
panelists to be compensated in connection with certain extraordinary 
matters. The text of proposed rule change is available at the Exchange 
and at the Commission.

II. Self-Regulatory Organization's Statement Regarding the Purpose 
of, and the 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 purpose of the proposed rule change is to amend the Exchange's 
current Disciplinary Rules to include a provision that would allow 
hearing panelists to be compensated in certain instances. Pursuant to 
Exchange rules, a hearing on a Statement of Charges is held before a 
Hearing Panel composed of three persons that are appointed by the 
Chairman of the Business Conduct Committee (``BCC'').\3\ At times, 
hearings and related proceedings \4\ are lengthy and complex, and 
thereby require a protracted time commitment on behalf of the hearing 
panelists. The Exchange believes that in those extraordinary cases, 
hearing panelists should be compensated for their time devoted to 
hearing-related matters. By providing compensation pursuant to specific 
guidelines, the Exchange should continue to attract qualified and 
experienced hearing panelists.
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    \3\ See Exchange Rule 960.5(a)(1).
    \4\ Related proceedings may include pre-hearing conferences, 
motions requesting the production of documentary evidence and 
witnesses, and conferences relating to the proceedings.
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    The proposed amendment specifically provides that hearing panelists 
appointed by the Chairman of the Exchange's BCC may be compensated in 
extraordinary cases, as determined by the Chairman of the BCC, in 
consultation with the Chairman of the Board of Governors (``Board''). 
Factors to be considered when determining whether a case is 
extraordinary include, but are not limited to, the anticipated length 
of time of the hearing; the complexity and serious nature of the 
matter; and magnitude of the potential penalty.
    In general, compensation will be paid only for attending (in person 
or by telephone) formal hearings, formal pre-hearing conferences or 
hearing panel deliberations, and not for conversations with staff, or 
telephone calls for the purpose of scheduling or other administrative 
matters. No compensation will be paid unless the Chairman of the BBC 
makes an affirmative determination that certain tasks warrant 
compensation. The Chairman of the BCC may also establish any caps or 
limits on compensation to hearing panelists for a given matter.\5\ 
Compensation for attending a formal hearing or other meeting, or 
participating in a telephone conference regarding the same, will be 
paid at the same rate and on the same terms as Board members' 
compensation for service on a Standing Committee with the understanding 
that any multiple meetings and/or hearings on the same day would be 
considered a single meeting for the purposes of compensation.\6\
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    \5\ The Chairman of the BBC must notify the Chairman of the 
Finance Committee of a determination to pay compensation and an 
estimate therefore. The Chairman of the Finance Committee shall 
report to the Finance Committee (without identifying the matter in 
question) and ensure that a provision is made for such compensation 
in the Exchange's budget, unless the expenditure is already provided 
for in existing budget categories in the relevant annual budget.
    \6\ For example, if a Board member, who is also a hearing 
panelist, attends a Board meeting and a pre-hearing conference on 
the same day, that member would be compensated at the rate that is 
equivalent to attending one meeting.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with

[[Page 15517]]

Section 6 of the Act,\7\ in general, and with Sections 6(b)(5),\8\ 
6(b)(6) \9\ and 6(b)(7) \10\ in particular, in that: (1) It promotes 
just and equitable principles of trade and protects investors and the 
public interest; (2) it is designed to ensure that Exchange members and 
persons associated with members are appropriately disciplined for 
violations of the provisions of the Act, the rules and regulations 
thereunder, or the rules of the Exchange; and (3) it provides a fair 
procedure for the disciplining of Exchange members and persons 
associated with members by helping to ensure that the Exchange 
continues to attract experienced panelists for all hearings, including 
complex and protracted matters.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
    \9\ 15 U.S.C. 78f(b)(6).
    \10\ 15 U.S.C. 78f(b)(7).
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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 inappropriate or unnecessary burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments were neither solicited nor received.

III. 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 submission 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 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 Exchange. All 
submissions should refer to File No. SR-Phlx-01-16 and should be 
submitted by April 9, 2001.

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

    The Exchange requests accelerated approval pursuant to Rule 
19(b)(2)(B) \11\ in order to expedite the adoption of amended Phlx Rule 
960.5(a)(4). After careful review, the Commission finds that the 
proposed rule change is consistent with the Act and the rules and 
regulations under the Act applicable to a national securities 
exchange,\12\ and that accelerated approval is appropriate.
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    \11\ 15 U.S.C. 19s(b)(2)(B).
    \12\ In approving this proposed rule change, the Commission 
notes that it has considered the proposed rule's impact on 
efficiency, competition, and capital formation.
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    Specifically, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(7) of the Act.\13\ This Section requires, 
among other things, that the rules of an exchange provide a fair 
procedure for disciplining members and persons associated with members. 
The Commission believes that if hearing panelists are compensated for 
the time they devote to hearing-related matters that are extraordinary, 
as proposed by the Exchange, experienced panelists may be more incline 
to preside over hearings that involve complex and protracted matters, 
thus helping to ensure that members receive hearings before panelists 
qualified to hear them.
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    \13\ 15 U.S.C. 78f(b)(7).
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    The Commission finds good cause for approving the proposed rule 
change prior to the thirtieth day after the date of publication of 
notice thereof in the Federal Register in order allow the Exchange to 
more quickly implement its policy to compensate hearing panelists when 
extraordinary circumstances warrant payment.
    It Is Therefore Ordered, pursuant to Section 19(b)(2) \14\ of the 
Act that the proposed rule change (SR-Phlx-01-16) be, and hereby is, 
approved.
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    \14\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-6667 Filed 3-16-01; 8:45 am]
BILLING CODE 8010-01-M