[Federal Register Volume 67, Number 85 (Thursday, May 2, 2002)]
[Notices]
[Pages 22142-22143]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-10870]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45837; File No. SR-CBOE-2002-20]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Board Options 
Exchange, Inc. Relating to Legal Proceedings Against the Exchange

April 26, 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 April 23, 2002, the Chicago Board Options Exchange, Inc. (``CBOE or 
Exchange'') 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 CBOE. 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 proposes to amend CBOE Rule 6.7A to prohibit members 
from initiating certain types of legal proceedings against the Exchange 
or its contractors. The text of the proposed rule change is provided 
below. Text that has been added to the current Exchange rule is in 
italics.

Rule 6.7A Legal Proceedings Against the Exchange and its Directors, 
Officers, Employees, Contractors or Agents
    No member or person associated with a member shall institute a 
lawsuit or other legal proceeding against the Exchange or any director, 
officer, employee, contractor, agent or other official of the Exchange 
or any subsidiary of the Exchange, for actions taken or 2 omitted to be 
taken in connection with the official business of the Exchange or any 
subsidiary, except to the extent such actions or omissions constitute 
violations of the federal securities laws for which a private right of 
action exists. This provision shall not apply to appeals of 
disciplinary actions or other actions by the Exchange as provided for 
in the Rules.

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 CBOE 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 CBOE has prepared summaries, set forth in Sections 
A, B, and C below, of the most significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Currently, CBOE Rule 6.7A prohibits a member or associated person 
from instituting a lawsuit or any other type of legal proceeding 
against any officer, director, employee, agent or other official of the 
Exchange or any of its subsidiaries based on action taken or omitted to 
be taken while such person is acting on Exchange business or the 
business of any of its subsidiaries. CBOE Rule 6.7A does not prevent a 
legal proceeding based on violation of the federal securities laws 
where a private right of action for such violation otherwise exists, 
nor does it prevent appeals of Exchange actions as provided for in the 
Rules of the Exchange.\3\
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    \3\ The Commission approved CBOE Rule 6.7A on July 11, 1996. See 
Securities Exchange Act Release No. 37421, 61 FR 37513 (July 18, 
1996).
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    The purpose of the proposed rule change is to amend CBOE Rule 6.7A 
to also prohibit a member or associated person from instituting a 
lawsuit or any other type of legal proceeding against the Exchange or 
its contractors. According to the CBOE, the proposed change to CBOE 
Rule 6.7A would not impair a member's ability to initiate legal action 
against the Exchange or its contractors based upon violations of the 
federal securities laws for which a private right of action exists, 
appeals of disciplinary actions, or other actions by the CBOE as 
provided for in the Exchange's rules. The Exchange believes that the 
proposed rule change would make CBOE Rule 6.7A consistent with the 
International Securities Exchange's Rule 705(c).
2. Statutory Basis
    The CBOE believes that the proposed rule change is consistent with 
the provisions of Section 6(b) of the Act,\4\ in general, and furthers 
the objectives of Section 6(b)(5) of the Act,\5\ in particular, because 
by precluding certain types of legal actions by members against the 
Exchange and its contractors, it will further reduce the costs of the 
Exchange in responding to claims and lawsuits, thereby permitting the 
resources of the Exchange to be better utilized for promoting just and 
equitable principles of trade and protecting investors and the public 
interest.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The CBOE does not believe that the proposed rule change will impose 
a burden on competition that is not necessary or appropriate in 
furtherance of purposes of the Act.

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

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

    The proposed rule change has become effective pursuant to Section 
19(b)(3)(A)(iii) of the Act \6\ and Rule 19b-4(f)(6) thereunder,\7\ 
because the proposed rule change (1) does not significantly affect the 
protection of investors or the public interest; (2) does not impose any 
significant burden on competition; and (3) does not become operative 
for 30 days from the date of filing, or such shorter time that the 
Commission may designate if consistent with the protection of investors 
and the public interest, and the Exchange provided the Commission with 
written notice of its intent to file the proposed rule change at least 
five business days prior to the filing date.
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    \6\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \7\ 17 CFR 240.19b-4(f)(6).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in the furtherance of the purposes of the Act.\8\
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    \8\ 15 U.S.C. 78s(b)(3)(C).

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[[Page 22143]]

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 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 
CBOE. All submissions should refer to File No. SR-CBOE-2002-20 and 
should be submitted by May 23, 2002.
    For the Commission, by the Division of Market Regulation, pursuant 
to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-10870 Filed 5-1-02; 8:45 am]
BILLING CODE 8010-01-P