[Federal Register Volume 67, Number 123 (Wednesday, June 26, 2002)]
[Notices]
[Pages 43197-43198]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-16063]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46086; File No. SR-Amex-2002-39]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval to Proposed Rule Change by the American 
Stock Exchange LLC To Revise and Clarify the Income Based Original 
Listing Standard

June 18, 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 25, 2002, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons. For the reasons discussed 
below, the Commission is granting accelerated approval to the proposed 
rule change.
---------------------------------------------------------------------------

    \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 Amex proposes to amend Section 101 of the Amex Company Guide to 
revise and clarify its income-based original listing standard. The text 
of the proposed rule change appears below. New language is italicized.
* * * * *

CRITERIA FOR ORIGINAL LISTING

Section 101. GENERAL

    No Change.
(a) REGULAR LISTING CRITERIA
    1. Size--Stockholders' equity of at least $4,000,000.
    2. Income--Pre-tax income from continuing operations of at least 
$750,000 in its last fiscal year, or in two of its last three fiscal 
years.
    Additional criteria applicable to various classes of securities and 
issuers are set forth below. Applicants should also consider the 
policies regarding conflicts of interest, independent directors and 
voting rights described in Secs. 120-125.
* * * * *

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 Amex 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 III 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

I. Purpose
    Section 101 of the Amex Company Guide contains a number of 
quantitative guidelines under which listing applicants are evaluated. 
Pursuant to Section 101(a)(2) of the Amex Company Guide, a listing 
applicant is subject to a pre-tax income guideline of at least $750,000 
in its last fiscal year, or in two of its last three fiscal years.\3\ 
The Amex represents that this income guideline is intended to provide a 
measurement of an applicant's financial performance in evaluating its 
listing eligibility, but makes no provision for exclusion of 
discontinued operations, extraordinary items or the cumulative effect 
of changes in accounting principles. Because discontinued operations, 
extraordinary items, or the cumulative effect of changes in accounting 
principles are not incurred in the ordinary course of business, the 
Exchange does not believe such items are relevant to an evaluation of 
an issuer's true financial situation and performance. Accordingly, the 
Exchange proposes to amend Section 101(a)(2) of the Amex Company Guide 
to use the term ``pre-tax income from continuing operations'' instead 
of ``pre-tax income.'' The Exchange represents that compliance with 
this term would be determinable in accordance with Generally Accepted 
Accounting Principals and, therefore, would be a transparent standard.
---------------------------------------------------------------------------

    \3\ An applicant can also qualify for listing based on 
compliance with one of the other listing standards contained in 
Section 101.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \4\ in general and furthers the objectives 
of Section 6(b)(5) of the Act \5\ in particular in that it is designed 
to prevent fraudulent and manipulative acts and practices, to promote 
just and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in facilitating transactions in 
securities, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system, and, in general, to 
protect investors and the public interest, and is not designed to 
permit unfair discrimination between customers, issuers, brokers or 
dealers. The Exchange believes that the proposed change to the income-
based

[[Page 43198]]

listing standard would provide a better and transparent measure of an 
issuer's financial performance in evaluating its listing eligibility.
---------------------------------------------------------------------------

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

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes 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 has neither solicited nor received written comments on 
the proposed rule change.

III. 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 the filing will also be 
available for inspection and copying at the principal offices of the 
Exchange. All submissions should refer to File No. SR-Amex-2002-39 and 
should be submitted by July 17, 2002.

IV. Commission Findings and Order Granting Accelerated Approval to 
Proposed Rule Change

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange.\6\ In 
particular, the Commission believes the proposed rule change is 
consistent with the Section 6(b)(5) of the Act \7\ requirement that the 
rules of an exchange be designed to facilitate transactions in 
securities, promote just and equitable principles of trade, remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, and, in general, to protect investors and the 
public interest, and is not designed to permit unfair discrimination 
between customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \6\ In approving this proposal, 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(b)(5).
---------------------------------------------------------------------------

    The Commission believes that by addressing the effects of 
discontinued operations, extraordinary items, and the cumulative effect 
of changes in accounting principles not incurred in the ordinary course 
of business, the proposal should permit the Amex to better evaluate a 
listing applicant's financial situation and performance. The Commission 
notes that the scope of the proposed rule change is limited by the 
requirement that compliance with the proposed changes be determinable 
in a manner consistent with Generally Accepted Accounting Principles. 
Further, the Commission notes that another self-regulatory organization 
recently changed its rules to establish a substantially similar 
standard \8\ and no comments were received on that proposal. Therefore, 
the Commission believes that the proposed rule change raises no new 
significant regulatory issues for consideration.
---------------------------------------------------------------------------

    \8\ See Securities Exchange Act Release Nos. 45431 (February 11, 
2002), 67 FR 7436 (February 19, 2002) (SR-NASD-2002-16).
---------------------------------------------------------------------------

    The Amex has requested that the Commission expedite review of, and 
grant accelerated approval to, this proposal, pursuant to Section 
19(b)(2) of the Act.\9\ The Commission finds good cause, consistent 
with Section 19(b)(2) of the Act,\10\ to approve the proposed rule 
change prior to the thirtieth day after the date of publication of the 
notice of filing thereof in the Federal Register. As discussed above, 
the proposal is substantially similar to another self-regulatory 
organization's rule and, thus, raises no new significant regulatory 
issues. Further, accelerated approval of this proposal should permit 
the Amex to apply the revised listing standard to new issuers without 
delay. Accordingly, the Commission finds that there is good cause, 
consistent with Section 19(b)(2) of the Act,\11\ to approve the 
proposal on an accelerated basis.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(2).
    \10\ Id.
    \11\ Id.
---------------------------------------------------------------------------

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (SR-Amex-2002-39) be, and hereby is, 
approved on an accelerated basis.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

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

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-16063 Filed 6-25-02; 8:45 am]
BILLING CODE 8010-01-P