[Federal Register Volume 67, Number 29 (Tuesday, February 12, 2002)]
[Notices]
[Pages 6569-6570]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-3305]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45396; File No. SR-PCX-2002-05]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Pacific Exchange, Inc. Relating to Hearing Fees for 
Issuer Requests for Review of Delisting Decisions

February 5, 2002.
    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 January 18, 2002, the Pacific Exchange, Inc. (``PCX'' or 
``Exchange''), through its wholly owned subsidiary PCX Equities, Inc. 
(``PCXE'' or ``Corporation'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by the PCXE. 
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, through its wholly owned subsidiary PCXE, proposes to 
amend PCXE Rule 5.5(m) to require issuers to pay an appeal hearing fee 
of $2,500 in connection with their appeal of the Corporation's decision 
to delist a security. The text of the proposed rule change is available 
at the Office of the Secretary, the PCX, 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
    PCXE Rule 5.5(m) provides the procedures with which the Corporation 
complies in determining to delist a security for other than routine 
reasons (such as redemptions, maturities, etc.). In order to determine 
whether the security meets the maintenance criteria, the Corporation 
relies upon the objective data furnished by the issuer.\3\ If it 
appears that the security no longer meets the maintenance requirements, 
the Corporation notifies the issuer in writing describing the basis on 
which the Corporation is considering delisting the security and 
proposes to meet with the issuer to hear reasons why the issuer 
believes the security should not be delisted.\4\ If the issuer does not 
provide a sufficient basis demonstrating that it meets the current 
listing criteria, the Corporation will notify the issuer that it 
proposes to delist the security and that the issuer has the right to 
appeal the decision.\5\ An issuer who wishes to appeal may, within five 
days of

[[Page 6570]]

receiving written notice, petition the Secretary of the Corporation for 
an appeal hearing. The Secretary, in turn, processes the petition and 
forwards the request, along with the documentary evidence, to the 
Corporation's Board Appeals Committee, which conducts a special hearing 
in order to make a final determination on the merits of the issuer's 
petition.
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    \3\ See PCXE 5.5(a), Maintenance Requirements and Delisting 
Procedures.
    \4\ See PCXE 5.5(m)(1), Delisting Procedures.
    \5\ See PCXE 5.5(m)(2).
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    The Corporation does not currently impose a fee in connection with 
the appeal of delisting decisions, and consequently, there is no 
disincentive for frivolous appeals of the Corporation's delisting 
decisions. This, coupled with the fact that the Corporation expends 
significant resources in accommodating appeals, has caused the 
Corporation to incur expenses that it is not capable of recovering. 
Given the increasing costs associated with an appeal hearing, i.e., the 
allocation of time incurred by the Corporation's Listing Qualifications 
Department, the Secretary of the Corporation, Corporation counsel and 
the Board Appeals Committee, the Exchange proposes to impose hearing 
fees in order to recoup some of its costs. Accordingly, the Corporation 
proposes to amend PCXE Rule 5.5(m) to require issuers to submit a fee 
of $2,500 in order to cover a portion of the cost of an appeal hearing. 
The proposed rule requires that the issuer submit the fee within five 
days of receiving written notice of the Corporation's decision to 
delist a security. During this time frame, the issuer will also be 
required to submit a written request for a hearing. If the issuer does 
not submit a hearing fee or a written statement by the time prescribed 
by the Corporation, the issuer will be deemed to have waived its right 
to appeal the delisting decision.
    The Exchange believes that the proposed fee is fair and reasonable 
as it is intended to cover only a portion of the Corporation's expenses 
associated with the processing and hearing of delisting appeals.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with section 
6(b) \6\ of the Act, in general, and section 6(b)(4) of the Act,\7\ in 
particular, because it provides for the equitable allocation of 
reasonable dues, fees and other charges among its members and issuers 
and other persons using its facilities.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange represents that the proposed rule change will impose 
no burden on competition.

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

    The Exchange neither solicited nor received written comments with 
respect to 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 self-regulatory organization 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 filing will also be 
available for inspection and copying at the principal office of the 
Exchange. All submissions should refer to File No. SR-PCX-2002-05 and 
should be submitted by March 5, 2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-3305 Filed 2-11-02; 8:45 am]
BILLING CODE 8010-01-P