[Federal Register Volume 66, Number 117 (Monday, June 18, 2001)]
[Notices]
[Pages 32856-32857]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-15219]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44402; File No. SR-PCX-2001-19]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Pacific Exchange, Inc. Relating to Exchange Rules Under 
the Minor Rule Plan

June 8, 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 April 4, 2001, the Pacific Exchange, Inc. (``PCX''or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'' or 
``SEC'') 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1)
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange proposes to increase the fines imposed on ETP Holders, 
ETP Firms or associated persons of an ETP Firm of its wholly-owned 
subsidiary, PCX Equities, Inc. (``PCXE'' or ``Cooperation'') for 
violating the Exchange rules under the Minor Rule Plan.

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 PCXE's rules governing Minor Rule 
Plan violations to increase most fines because the Exchange believes 
that: (1) the current fines are too low to deter violations of PCXE 
rules; and (2) an increase in the current fines will more adequately 
sanction violations of the PCXE's order-handling and investigating 
rules. Many of these violations are processed under the Minor Rule 
Plan.\3\
---------------------------------------------------------------------------

    \3\ The Exchange notes that when it imposes a sanction in excess 
of $2,500, it must comply with Rule 19d-1 under the Act. 17 CFR 
240.19d-1. Telephone conversation between Cindy Sink, Senior 
Attorney, Regulatory Policy, PCX, and Jennifer Colihan, Special 
Counsel, Division of Market Regulation, Commission, on June 8, 2001.
---------------------------------------------------------------------------

    Disruptive conduct on the quality floor is currently not fined for 
a first violation, fined $250 for a second violation and $500 for a 
third. Multiple violations are calculated on a running two-year basis. 
Under the proposed increases, these fines will be $500 for a first 
violation, $2,000 for a second and $3,500 for a third calculated on the 
same two-year basis.
    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 violation, and $5,000 for a third violation. 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 or improper dress under 
the PCXE dress code remains the same at $100 for the first violation, 
$250 for the second and $500 for the third. Under the proposed rule, 
the Enforcement Department would continue to exercise its discretion 
under PCXE Rule 10.12(j) and takes cases out of the Minor Rule Plan to 
pursue them as formal disciplinary matters if the facts or 
circumstances warrant such action. The Exchange's proposal also 
includes amendments to PCXE's Equity Floor Procedure Advices

[[Page 32857]]

(``EFPA'') that correspond to the increased Minor Rule Plan fines.
    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 rule also should aid the Exchange in carrying out its 
compliance and surveillance functions.
2. Basis
    The Exchange believes that this proposal is consistent with section 
6(b) \4\ of the Act, in general, and furthers the objectives of section 
6(b)(5) \5\ and 6(b)(6),\6\ 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 and provides that Exchange members shall be 
appropriately disciplined for violations of the rules of the Exchange.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
    \6\ 15 U.S.C. 78f(b)(6).
---------------------------------------------------------------------------

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 self-regulatory organization consents, the Commission will:
    (A) By order approve such 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 it 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 in the Commission's Public 
Reference Room, 450 Fifth Street, NW., Washington, DC 20549. Copies of 
such filing will also be available for inspection and copying at the 
principal office of the PCX. All submissions should refer to File No. 
SR-PCX-2001-19 and should be submitted by July 9, 2001.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
---------------------------------------------------------------------------

    \7\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-15219 Filed 6-15-01; 8:45 am]
BILLING CODE 8010-01-M