[Federal Register Volume 67, Number 129 (Friday, July 5, 2002)]
[Notices]
[Pages 44902-44905]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-16848]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46146; File No. SR-Amex-2002-51]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the American Stock Exchange 
LLC Amending Exchange Rules 576 and 585, and Sections 722 and 725 of 
the Amex Company Guide

June 28, 2002.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''), \1\ and Rule 19b-4\2\ thereunder, notice is hereby given 
that on June 3, 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, II, 
and III 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.
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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 Exchange Rules 576 and 585, and 
Sections 722 and 725 of the Amex Company Guide. The proposed changes 
would implement the same fee structure governing the reimbursement of 
member organizations for costs incurred in the transmission of proxy 
and other shareholder communications that was recently adopted by the 
New York Stock Exchange, Inc. (``NYSE'').
    Below is the text of the proposed rule change. Proposed new 
language is italicized; proposed deleted language is [bracketed].
* * * * *

Transmission of Proxy Material to Customers

    Rule 576. (a). No change.
    (b) Such member organization shall transmit with such material 
either:
    (1) A request for voting instructions and, as to matters which may 
be voted without instructions under Rule 577, a statement to the effect 
that, if such instructions are not received by the tenth day before the 
meeting, the proxy may be given at discretion by the owner of record of 
the stock; provided, however, that such statement may be made only when 
the proxy soliciting material is transmitted to the beneficial owner of 
the stock or to the beneficial owner's designated investment adviser, 
at least fifteen days before the meeting. When the proxy soliciting 
material is transmitted to the beneficial owner of the stock or to the 
beneficial owner's designated investment adviser twenty-five days or 
more before the meeting, the statement accompanying such material shall 
be to the effect that the proxy may be given fifteen days before the 
meeting at the discretion of the owner of record of the stock; or
    (2) A signed proxy indicating the number of shares held for such 
beneficial owner and bearing a symbol identifying the proxy with proxy 
records of such member organization, and also a letter informing the 
beneficial owner or the beneficial owner's designated investment 
adviser, of the necessity for completing the proxy form and forwarding 
it to the person soliciting proxies in order that the shares may be 
represented at the meeting.
    This rule shall not apply to beneficial owners outside the United 
States.

* * * Commentary

    .10 through .70 No change.
    .80 Schedule of approved charges by member organization in 
connection with proxy solicitations.--The Exchange has approved the 
following as fair and reasonable rates of reimbursement of member 
organizations for all out-of-pocket expenses, including reasonable 
clerical expenses, incurred in connection with proxy solicitations 
pursuant to Rule 576 and in mailing interim reports or other material 
pursuant to Rule 585. In addition to the charges specified in this 
schedule, member organizations also are entitled to receive 
reimbursement for: (i) actual postage costs (including return postage 
at the lowest available rate); (ii) the actual cost of envelopes 
(provided they are not furnished by the person soliciting proxies); and 
(iii) any actual communication expenses (excluding overhead) incurred 
in receiving voting returns either telephonically or electronically.[:]

Charges for Initial Proxy and/or Annual Report Mailings

    [60[cent]] 40[cent] for each set of proxy material, i.e. proxy 
statement, form of proxy and annual report when mailed as a unit, 
unless an opposition proxy statement has been furnished to security 
holders [for those meetings that do not include a proposal which 
requires beneficial owner instructions, plus postage], with a minimum 
of $5.00 for all sets mailed;
    [70[cent]] $1.00 for each set of proxy material, i.e., proxy 
statement, form of proxy and annual report when mailed as a unit, for a 
meeting for which an opposition proxy statement has been furnished to 
security holders [for those meetings which include a proposal requiring 
beneficial owner instructions, plus postage], with a minimum of $5.00 
for all sets mailed;
    [20[cent]] 15[cent] for each copy, plus postage, for annual 
reports, which are mailed separately from the proxy material pursuant 
to the instruction of the person soliciting proxies, with a minimum 
charge of $3.00 for all sets mailed.
    The Exchange has approved, as fair and reasonable, the following 
supplemental proxy fees for intermediaries that coordinate multiple 
nominees: $20.00 per nominee plus (i) 10[cent] for each set of proxy 
material, with respect to issuers whose shares are held in fewer than 
200,000 nominee accounts, or (ii) 5[cent] for each set of proxy 
material, with respect to issuers whose shares are held in at least 
200,000 nominee accounts.

Charges for Proxy Follow-up Mailings

    40[cent] for each set of follow-up materials, plus postage. [, when 
the follow-up material is mailed to all beneficial owners;]
    [60[cent] for each set of follow-up materials, plus postage, when 
the follow-up material is mailed only to beneficial owners who have not 
responded to the initial mailing;]

[[Page 44903]]

Charges for Interim Report Mailings

    [20[cent]] 15[cent] for each copy, plus postage, for interim 
reports, annual reports if mailed separately, post meeting reports or 
other material, with a minimum of $2.00 for all sets mailed[;]. Member 
organizations may charge for envelopes, provided they are not furnished 
by the person soliciting proxies.

Incentive Fees

    An ``Incentive Fee'' (as defined below) for proxy material 
mailings, including the annual report, and 10[cent] for interim report 
mailings, with respect to each account where the member organization 
has eliminated the need to send materials in paper format through the 
mails (such as by including multiple proxy ballots or forms in one 
envelope with one set of material mailed to the same household, by 
distributing multiple proxy ballots or forms electronically thereby 
reducing the sets of material mailed, or by distributing some or all 
material electronically.)
    With respect to issuers whose shares are held in at least 200,000 
nominee accounts, the Incentive Fee shall be 25[cent].
    With respect to issuers whose shares are held in fewer than 200,000 
nominee accounts, the Incentive Fee shall be 50[cent].
    [Member organizations are required to mail out such material as 
provided by Rules 576 and 585 when satisfactory assurance is received 
of reimbursement of expenses at such rates; provided that a member 
organization may request reimbursement of expenses at less than the 
approved rates; however, no member organization may seek reimbursement 
at rates higher than the approved rates or for items or services not 
specifically listed above without the prior notification to and consent 
of the person soliciting proxies or the company.]
    .90 No change
    .91 No change
    .92 No change
    .93 Member organizations are required to mail out such material as 
provided by Rules 576 and 585 when satisfactory assurance is received 
of reimbursement of expenses at such rates: provided that a member 
organization may request reimbursement of expenses at less than the 
approved rates; however, no member organization may seek reimbursement 
at rates higher than the approved rates or for items or services not 
specifically listed above without the prior notification to and consent 
of the person soliciting proxies or the company.
    .94 ``Householding'' of Reports. Rules 576 and 585 require member 
organizations to transmit issuer-supplied annual reports, interim 
reports, proxy statements and other material to beneficial owners. 
Member organizations are not required to transmit more than one annual 
report, interim report, proxy statement or other material to beneficial 
owners with more than one account (including trust accounts). In 
addition, member organizations may eliminate multiple transmissions of 
reports, statements or other materials to beneficial owners having the 
same address, provided they comply with applicable SEC rules with 
respect thereto (see SEC Rule 14b-1 under the Securities Exchange Act 
of 1934).
* * * * *

Transmission of Interim Reports and Other Material

    Rule 585. No change.

* * * Commentary

    .10 No change.
    .20 Mailing charges by member organizations.--These charges are set 
forth at [Commentary] Commentaries .80, .90, .91, .93 and .94 to Rule 
576.
* * * * *

Amex Company Guide

Sec. 722. Transmission of Proxy Material to Customers (See Exchange 
Rule 576)

    (a) and (b) No change.

* * * Commentary

    .10 through .70 No change.
    .80 Schedule of approved charges by member organization in 
connection with proxy solicitations.--The Exchange has approved the 
following as fair and reasonable rates of reimbursement of member 
organizations for all out-of-pocket expenses, including reasonable 
clerical expenses, incurred in connection with proxy solicitations 
pursuant to Rule 576 and in mailing interim reports or other material 
pursuant to Rule 585. In addition to the charges specified in this 
schedule, member organizations also are entitled to receive 
reimbursement for: (i) actual postage costs (including return postage 
at the lowest available rate); (ii) the actual cost of envelopes 
(provided they are not furnished by the person soliciting proxies); and 
(iii) any actual communication expenses (excluding overhead) incurred 
in receiving voting returns either telephonically or electronically.[:]

Charges for Initial Proxy and/or Annual Report Mailings

    [60[cent]] 40[cent] for each set of proxy material, i.e. proxy 
statement, form of proxy and annual report when mailed as a unit, 
unless an opposition proxy statement has been furnished to security 
holders [for those meetings that do not include a proposal which 
requires beneficial owner instructions, plus postage], with a minimum 
of $5.00 for all sets mailed;
    [70[cent]] $1.00 for each set of proxy material, i.e., proxy 
statement, form of proxy and annual report when mailed as a unit, for a 
meeting for which an opposition proxy statement has been furnished to 
security holders [for those meetings which include a proposal requiring 
beneficial owner instructions, plus postage], with a minimum of $5.00 
for all sets mailed;
    [20[cent]] 15[cent] for each copy, plus postage, for annual 
reports, which are mailed separately from the proxy material pursuant 
to the instruction of the person soliciting proxies, with a minimum 
charge of $3.00 for all sets mailed.
    The Exchange has approved, as fair and reasonable, the following 
supplemental proxy fees for intermediaries that coordinate multiple 
nominees:
    $20.00 per nominee plus (i) 10[cent] for each set of proxy 
material, with respect to issuers whose shares are held in fewer than 
200,000 nominee accounts, or (ii) 5[cent] for each set of proxy 
material, with respect to issuers whose shares are held in at least 
200,000 nominee accounts.

Charges for Proxy Follow-up Mailings

    40[cent] for each set of follow-up materials, plus postage. [, when 
the follow-up material is mailed to all beneficial owners;]
    [60[cent] for each set of follow-up materials, plus postage, when 
the follow-up material is mailed only to beneficial owners who have not 
responded to the initial mailing;]

Charges for Interim Report Mailings

    [20[cent]] 15[cent] for each copy, plus postage, for interim 
reports, annual reports if mailed separately, post meeting reports or 
other material, with a minimum of $2.00 for all sets mailed[;]. Member 
organizations may charge for envelopes, provided they are not furnished 
by the person soliciting proxies.

Incentive Fees

    An ``Incentive Fee'' (as defined below) for proxy material 
mailings, including the annual report, and 10[cent] for interim report 
mailings, with respect to each account where the member organization 
has eliminated the need to send materials in paper format through the 
mails (such as by including multiple proxy ballots or forms in one 
envelope with one set of material mailed to the

[[Page 44904]]

same household, by distributing multiple proxy ballots or forms 
electronically thereby reducing the sets of material mailed, or by 
distributing some or all material electronically.)
    With respect to issuers whose shares are held in at least 200,000 
nominee accounts, the Incentive Fee shall be 25[cent].
    With respect to issuers whose shares are held in fewer than 200,000 
nominee accounts, the Incentive Fee shall be 50[cent].
    [Member organizations are required to mail out such material as 
provided by Rules 576 and 585 when satisfactory assurance is received 
of reimbursement of expenses at such rates; provided that a member 
organization may request reimbursement of expenses at less than the 
approved rates; however, no member organization may seek reimbursement 
at rates higher than the approved rates or for items or services not 
specifically listed above without the prior notification to and consent 
of the person soliciting proxies or the company.]
    .90 No change
    .91 No change
    .92 Rescinded [Form of bill to be used by member organizations-The 
form of bill to be used by member organizations is set forth at 
Commentary .30 to Rule 585.]
    .93 Member organizations are required to mail out such material as 
provided by Rules 576 and 585 when satisfactory assurance is received 
of reimbursement of expenses at such rates: provided that a member 
organization may request reimbursement of expenses at less than the 
approved rates; however, no member organization may seek reimbursement 
at rates higher than the approved rates or for items or services not 
specifically listed above without the prior notification to and consent 
of the person soliciting proxies or the company.
    .94 ``Householding'' of Reports. Rules 576 and 585 require member 
organizations to transmit issuer-supplied annual reports, interim 
reports, proxy statements and other material to beneficial owners. 
Member organizations are not required to transmit more than one annual 
report, interim report, proxy statement or other material to beneficial 
owners with more than one account (including trust accounts). In 
addition, member organizations may eliminate multiple transmissions of 
reports, statements or other materials to beneficial owners having the 
same address, provided they comply with applicable SEC rules with 
respect thereto (see SEC Rule 14b-1 under the Securities Exchange Act 
of 1934).
* * * * *

Transmission of Interim Reports and Other Material

(See Exchange Rule 585)

    Section 725. No change.

Commentary

    * * *
    .10 No change.
    .20 Mailing charges by member organizations. `` These charges are 
set forth at [Commentary] Commentaries .80, .90, .91, .93 and .94 to 
Rule 576.
* * * * *

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 Commission recently approved changes to the NYSE's rules 
regarding the reimbursement of member organizations for costs incurred 
in the transmission of proxy and other shareholder communications.\3\ 
In light of these changes, the Amex is proposing to amend its rules 
regarding the reimbursement of these costs to conform them to those of 
the NYSE. The Amex also is amending its rules to permit the 
``householding'' of reports and annual mailings if done in compliance 
with Rule 14b-1 under the Act.\4\ The Amex believes that these changes 
will facilitate compliance by members with applicable self-regulatory 
organization rules by establishing consistent fees and rules for 
shareholder communications between the Amex and NYSE.
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    \3\ See Securities Exchange Act Release No. 45644 (March 25, 
2002), 67 FR 15440 (April 1, 2002) (order approving File No. SR-
NYSE-2001-53).
    \4\ See Securities Exchange Act Release No. 7912 (October 27, 
2000), 65 FR 65736 (November 2, 2000) (amending proxy rules under 
Act relating to householding of materials); and 43993 (February 22, 
2001), 66 FR 13364 (March 5, 2001) (File No. SR-NYSE-01-03) 
(amending NYSE rules to conform to the Commission's rules on 
householding of materials).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act \5\ in general and furthers the objectives 
of section 6(b)(5) of the Act \6\ in particular in that it is designed 
to prevent fraudulent and manipulative acts and practices, to promote 
just and equitable principles of trade, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general, to protect investor and the public interest; 
and are not designed to permit unfair discrimination between customers, 
issuers, brokers and dealers. The proposed rule change also furthers 
the objectives of section 6(b)(4) of the Act \7\ in particular in that 
it is designed to provide for the equitable allocation of reasonable 
dues, fees, and other charges among its member, issuers and other 
persons using its facilities.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
    \7\ 15 U.S.C. 78f(b)(4).
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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.

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 foregoing proposed rule change has become effective pursuant to 
section 19(b)(3)(A) \8\ of the Act and Rule 19b-4(f)(6) \9\ thereunder 
because the proposal: (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 as the 
Commission may designate if consistent with the protection of investors 
and the public interest; provided that the Exchange has given the 
Commission written notice of its intent to file the proposed rule 
change at least five business days prior

[[Page 44905]]

to the filing date of the proposed rule change.\10\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ As required under Rule 19b-4(f)(6)(iii), 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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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative prior to 30 days after the date of filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\11\ the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and public interest. The Amex has requested 
that the Commission waive the 30-day pre-operative waiting period. The 
Amex believes that acceleration of the operative date will permit the 
immediate harmonization of exchange fee schedules for the transmission 
of shareholder communications and, thus, will ease member firm 
compliance burdens. In addition, the Amex believes that the Commission 
has recently considered all issues raised by the Amex's filing in 
connection with its approval of the NYSE's proposal.
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    \11\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Commission, consistent with the protection of investors and the 
public interest, has waived the thirty-day operative date requirement 
for this proposed rule change, and has determined to designate the 
proposed rule change as operative as of the date of filing to allow the 
Amex to implement its revised proxy fee schedule immediately.\12\ The 
Commission notes that it has already considered and addressed issues 
that may be raised by this proposal when it approved similar proposals 
by the NYSE.\13\ The Commission further notes that this proposal will 
allow for consistency in proxy fees between the Amex and the NYSE. 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 furtherance 
of the purposes of the Act.
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    \12\ For the purposes only of accelerating the operative date of 
this proposal, the Commission has considered the proposed rules 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f)
    \13\ See Securities Exchange Act Release Nos. 45644 (March 25, 
2002), 67 FR 15440 (April 1, 2002) (order approving File No. SR-
NYSE-2001-53); and 43993 (February 22, 2001), 66 FR 13364 (March 5, 
2001) (order approving File No. SR-NYSE-01-03).
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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 
Amex. All submissions should refer to File No. SR-Amex-2002-51 and 
should be submitted by July 26, 2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
Jill M. Peterson,
Assistant Secretary.
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    \14\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 02-16848 Filed 7-3-02; 8:45 am]
BILLING CODE 8010-01-P