[Federal Register Volume 68, Number 12 (Friday, January 17, 2003)]
[Notices]
[Pages 2593-2594]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-1052]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47164; File No. SR-BSE-2002-04]


Self-Regulatory Organizations; the Boston Stock Exchange, 
Incorporated; Order Granting Approval to Proposed Rule Change To Amend 
the Exchange's Minor Rule Violation Plan

January 10, 2003.
    On May 17, 2002, the Boston Stock Exchange, Inc. (``BSE'' 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\ a proposed rule change to amend its 
Minor Rule Violation Plan (``Plan''). The BSE amended the proposed rule 
change

[[Page 2594]]

on August 23, 2002.\2\ The BSE again amended the proposal on October 9, 
2002.\3\ The proposed rule change, as amended, was published for notice 
and comment in the Federal Register on October 29, 2002.\4\ The 
Commission received no comments on the proposal.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ See August 21, 2002 letter from John A. Boese, Assistant 
Vice President, Legal and Regulatory, BSE, to Nancy Sanow, Assistant 
Director, Division of Market Regulation (``Division''), Commission, 
and attachments (``Amendment No. 1''). Amendment No. 1 completely 
replaced and superseded the original proposed rule change.
    \3\ See October 8, 2002 letter from John A. Boese, Assistant 
Vice President, Legal and Regulatory, BSE, to Nancy Sanow, Assistant 
Director, Division, Commission (``Amendment No. 2''). In Amendment 
No. 2, the BSE added language to set a standard by which violations 
of certain provisions of the Plan will be determined.
    \4\ See Securities Exchange Act Release No. 46705 (October 22, 
2002), 67 FR 66029. The notice contained the text of the proposed 
rule change, as well as an explanation of the purpose for the 
proposed rule change.
---------------------------------------------------------------------------

    The Commission has reviewed carefully the proposed rule change and 
finds it is consistent with the requirements of the Act and the rules 
and regulations thereunder applicable to a national securities exchange 
\5\ and, in particular, the requirements of section 6 of the Act \6\ 
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 \7\ in that it will provide a procedure whereby 
member organizations can be disciplined appropriately 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)\8\ and 6(d)(1)\9\ 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 Rule 19d-1(c)(2) under the Act,\10\ which governs minor 
rule violation plans.
---------------------------------------------------------------------------

    \5\ 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).
    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b)(6).
    \8\ 15 U.S.C. 78f(b)(7).
    \9\ 15 U.S.C. 78f(d)(1).
    \10\ 17 CFR 240.19d-1(c)(2).
---------------------------------------------------------------------------

    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 BSE 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.
    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\11\ that the proposed rule change (SR-BSE-2002-04), as amended, 
be, and it hereby is, approved.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(2).

    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. 03-1052 Filed 1-16-03; 8:45 am]
BILLING CODE 8010-01-P