[Federal Register Volume 66, Number 205 (Tuesday, October 23, 2001)]
[Notices]
[Pages 53649-53650]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-26591]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44941; File No. SR-NYSE-99-38]


Self-Regulatory Organizations; Order Granting Approval of 
Proposed Rule Change and Amendment No. 1, and Notice of Filing and 
Order Granting Accelerated Approval of Amendment No. 2, by the New York 
Stock Exchange, Inc. to Amend the NYSE's Minor Rule Violation Plan

October 16, 2001.

I. Introduction

    On September 2, 1999, the New York Stock Exchange, Inc. (``NYSE'' 
or ``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to amend its Minor Rule Violation Plan (``Plan''). 
On November 12, 1999, the Exchange amended the proposal.\3\ Notice of 
the proposed rule change, as modified by Amendment No. 1, appeared in 
the Federal Register on December 20, 1999.\4\ The Commission received 
no comments on the proposal. On October 9, 2001, the NYSE again amended 
the proposal.\5\ This order approves the proposed rule change, as 
modified by Amendment Nos. 1 and 2.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See November 10, 1999 letter from James E. Buck, Senior Vice 
President and Secretary, NYSE, to Richard C. Strasser, Assistant 
Director, Division of Market Regulation (``Division''), Commission 
(``Amendment No. 1''). In Amendment No. 1, the NYSE made technical 
changes to the proposal.
    \4\ See Securities Exchange Act Release No. 42225 (December 13, 
1999), 64 FR 71162.
    \5\ See October 5, 2001 letter from James E. Buck, Senior Vice 
President and Secretary, NYSE, to Nancy Sanow, Assistant Director, 
Division, Commission (``Amendment No. 2''). In Amendment No. 2, at 
the request of Division staff, the NYSE removed NYSE Rule 345A(a) 
(Regulatory Element Continuing Education Requirements) from the 
proposed additions to the List of Exchange Rules Subject to Rule 
476A Procedures.
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II. Description of the Proposal

    The proposed rule change would revise the ``List of Exchange Rule 
Violations and Fines Applicable Thereto Pursuant to NYSE Rule 476A'' 
for imposition of fines for minor violations of rules by adding to the 
list failure to comply with the provisions of NYSE Rules 35, 345A(b), 
and 440A. In addition, the proposal clarifies that paragraph (c) of 
currently listed NYSE Rule 472 encompasses telemarketing scripts.

III. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the proposed Amendment No. 2, including whether 
the proposed rule change, as modified by Amendment No. 2, 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. 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 number

[[Page 53650]]

SR-NYSE-99-38 and should be submitted by November 13, 2001.

IV. Discussion and Commission Findings

    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 \6\ 
and, in particular, the requirements of section 6 of the Act \7\ and 
the rules and regulations thereunder. The Commission finds specifically 
that the proposed rule change is consistent with section 6(b)(6) of the 
Act \8\ because it provides an additional option for the appropriate 
discipline of the NYSE's members and persons associated with its 
members for certain rule violations. Finally, the Commission finds the 
proposal is consistent with Securities Exchange Act Rule 19d-1(c)(2) 
\9\ that governs minor rule violation plans.
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    \6\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. 15 U.S.C. 78c(f).
    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(6).
    \9\ 17 CFR 240.19d-1(c)(2).
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    The Commission finds good cause for accelerating approval of 
Amendment No. 2 to the proposed rule change prior to the 30th day after 
publication in the Federal Register. Amendment No. 2 removes the 
Regulatory Element of the Continuing Education requirements from the 
list of rules the NYSE administers pursuant to the Plan. The Commission 
notes that the National Association of Securities Dealers, (``NASD''), 
at the Commission's request, removed the Continuing Education 
Regulatory Element requirement from its proposal regarding 
administration of rules pursuant to its minor rule violation plan.\10\ 
Amendment No. 2 ensures that the NYSE and the NASD have the same 
disciplinary options for their members and associated persons with 
regard to violations of Continuing Education requirements. Accordingly, 
the Commission finds that good cause exists, consistent with section 
6(b)(6) of the Act,\11\ and section 19(b) of the Act \12\ to accelerate 
approval of Amendment No. 2 to the proposed rule change.
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    \10\ See Securities Exchange Act Release No. 44512 (July 3, 
2001), 66 FR 36812 (July 13, 2001) (SR-NASD-00-39).
    \11\ 15 U.S.C. 78f(b)(6).
    \12\ 15 U.S.C. 78s(b).
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    In approving this proposal, the Commission in no way minimizes the 
importance of compliance with these rules, and all other rules subject 
to the imposition of fines under the Plan. The Commission believes that 
the violation of any self-regulatory organizations' rules, as well as 
Commission rules, is a serious matter. However, in an effort to provide 
the Exchange with greater flexibility in addressing certain violations, 
the Plan provides a reasonable means to address rule violations that do 
not rise to the level of requiring formal disciplinary proceedings. The 
Commission expects that the NYSE will continue to conduct surveillance 
with due diligence, and make a determination based on its findings 
whether fines of more or less than the recommended amount are 
appropriate for violations of rules under the Plan, on a case by case 
basis, or if a violation requires formal disciplinary action.
    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\13\ and Rule 19d-1(c)(2) \14\ thereunder, that the proposed rule 
change (SR-NYSE-99-38), as amended, be, and it hereby is, approved.
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    \13\ 15 U.S.C. 78s(b)(2).
    \14\ 17 CFR 204.19d-1(c)(2).
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    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. 01-26591 Filed 10-22-01; 8:45 am]
BILLING CODE 8010-01-M