[Federal Register Volume 68, Number 7 (Friday, January 10, 2003)]
[Notices]
[Pages 1493-1494]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-458]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47123; File No. SR-Amex-00-48]


Self-Regulatory Organizations; Order Granting Approval of 
Proposed Rule Change and Amendment Nos. 1 and 2 by the American Stock 
Exchange LLC, and Notice of Filing and Order Granting Accelerated 
Approval to Amendment No. 3 To Amend Amex Rule 590, Minor Rule 
Violation Fine Systems

January 3, 2003.
    On August 17, 2000, the American Stock Exchange LLC (``Amex'' 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 the Amex's Minor Rule Violation Fine Plan 
(``Plan''). On December 7, 2000, the Amex amended the proposal.\3\ The 
Amex again amended the proposal on January 29, 2001.\4\ On March 19, 
2001, the proposed rule change, as modified by Amendment Nos. 1 and 2, 
was published for notice and comment in the Federal Register.\5\ The 
Commission received no comments on the proposed rule change. On 
December 23, 2002, the Amex amended the proposed rule change.\6\ This 
order approves the proposed rule change as modified by Amendment Nos. 1 
and 2. Simultaneously, the Commission provides notice of filing of 
Amendment No. 3 and grants accelerated approval of Amendment No 3.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See December 1, 2000 letter from William Floyd-Jones, Jr., 
Esq., Assistant General Counsel, Amex, to Katherine A. England, 
Assistant Director, Division of Market Regulation (``Division''), 
Commission, and attachments (``Amendment No. 1''). In Amendment No. 
1, the Amex made technical changes to the proposed rule language to 
clarify which language was added and which language was rearranged.
    \4\ See January 26, 2001 letter from William Floyd-Jones, Jr., 
Esq., to Nancy J. Sanow, Assistant Director, Division, Commission, 
and attachments (``Amendment No. 2''). While the cover letter 
indicates that Amendment No. 2 replaces and supersedes the original 
filing, Amendment No. 2 only replaces and supersedes the proposed 
rule language provided in the original proposal and Amendment No. 1. 
Telephone conversation March 12, 2001 between William Floyd-Jones, 
Jr., Esq., Assistant General Counsel, Amex, and Joseph P. Morra, 
Special Counsel, Division, Commission.
    \5\ See Securities Exchange Act Release No. 44066 (March 12, 
2001), 66 FR 15511.
    \6\ See December 20, 2002 letter from William Floyd-Jones, Jr., 
Esq., Assistant General Counsel, Amex, to Nancy J. Sanow, Assistant 
Director, Division, Commission, and attachments (``Amendment No. 
3''). In Amendment No. 3, the Amex removed the following rules from 
the list of rules that the Amex originally proposed to add to the 
Plan: (1) Violations of the Amex's short sale borrowing policies; 
(2) failure to liquidate positions as directed by the Amex that are 
over applicable position limits; and (3) failure to comply with the 
Amex's restrictions on transactions and exercises in specified 
options. As a result of Amendment No. 3, the only rules that the 
Amex proposes to administer pursuant to the Plan are violation of 
SEC Rule 11Ac1-4 (commonly referred to as the ``Limit Order Display 
Rule,'' and violation of the Amex's rules regarding the deactivation 
of Quote Assist (Amex Rule 170, Commentary .10).
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    The Commission has reviewed carefully the proposed rule change and 
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 \7\ and, in particular, the requirements 
of section 6 of the Act \8\ 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 \9\ in that it will provide 
a procedure whereby member organizations can be appropriately 
disciplined in those instances when a rule violation is minor in 
nature, but a sanction more serious than an admonition letter is 
appropriate. Additionally, the Commission finds the proposed rule 
change is consistent with the requirements of sections 6(b)(7) \10\ and 
6(d)(1) \11\ of the Act. Section 6(b)(7) requires the rules of an 
exchange to be in accordance with the provisions of section 6(d) of the 
Act, and, in general, to provide a fair procedure for the disciplining 
of members and persons associated with members. Section 6(d)(1) 
requires an exchange to bring specific charges, notify such member or 
person of, and give him an opportunity to defend against, such charges, 
and keep a record, in any proceeding to determine whether a member or 
person associated with a member should be disciplined. Finally, the 
Commission finds the proposal is consistent with

[[Page 1494]]

Rule 19d-1(c)(2) under the Act \12\ that governs minor rule violation 
plans.
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    \7\ 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).
    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(6).
    \10\ 15 U.S.C. 78f(b)(7).
    \11\ 15 U.S.C. 78f(d)(1).
    \12\ 17 CFR 240.19d-1(c)(2).
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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 organization's 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 Amex 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.
    The Commission finds good cause for approving proposed Amendment 
No. 3 before the 30th day after the date of publication of notice of 
filing thereof in the Federal Register. The Amex filed Amendment No. 3 
to remove certain rules from the proposal. Removal of these rules from 
the proposal presents no novel issues that would require further notice 
and comment before approving this modification. Therefore, the 
Commission finds good cause for accelerating approval of the proposed 
rule change, as amended.
    In approving this proposed rule change, the Commission recognizes 
that certain aspects of the proposal will require additional time for 
implementation, while other aspects of the proposed rule change can be 
implemented upon Commission approval. The Commission expects that the 
Amex will implement as much of the proposed rule change's terms and 
conditions as is possible upon approval, and will implement the 
remaining provisions of the proposed rule change as soon as practicable 
thereafter.\13\
    Interested persons are invited to submit written data, views and 
arguments concerning Amendment No. 3, including whether Amendment No. 3 
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 Amendment No. 3 that are filed with the Commission, and all 
written communications relating to Amendment No. 3 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 number SR-Amex-00-48 and should be 
submitted by January 31, 2003.
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    \13\ For example, the Amex will require additional time to 
implement the new Committee structure for the Minor Floor Violation 
Disciplinary Committee. The Amex anticipates it will be able to 
implement the new structure after the April 23, 2003 meeting of the 
Amex Board. See January 3, 2003 letter from William Floyd-Jones, 
Jr., Esq., Assistant General Counsel, Amex, to Joseph P. Morra, 
Special Counsel, Division, Commission (via e-mail).
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\14\ that the proposed rule change (SR-Amex-00-48), as amended by 
Amendment Nos. 1 and 2, be, and it hereby is, approved, and that 
Amendment No. 3 to the proposed rule change be, and hereby is, approved 
on an accelerated basis.

    \14\ 15 U.S.C. 78s(b)(2).

    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).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-458 Filed 1-9-03; 8:45 am]
BILLING CODE 8010-01-P