[Federal Register Volume 68, Number 96 (Monday, May 19, 2003)]
[Notices]
[Pages 27114-27115]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-12450]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47842; File No. SR-Amex-2003-35]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the American Stock Exchange 
LLC, Relating to Legal Fees Incurred by the Exchange

May 13, 2003.
    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 28, 2003, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by Amex. 
Amex filed the proposed rule change pursuant to section 19(b)(3)(A) of 
the Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ which renders the 
proposal effective upon filing with the Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Amex proposes to adopt Exchange Rule 61 to require members, 
member organizations, limited trading permit holders, approved persons 
or persons associated with any of the foregoing who bring legal 
proceedings against the Exchange to reimburse the Exchange for all 
costs associated with defending such proceedings only when such persons 
do not prevail and the Exchange's costs exceed fifty thousand dollars 
($50,000.00). Below is the text of the proposed rule change. New text 
is in italics.
* * * * *
Exchange's Costs of Defending Legal Proceedings
    Rule 61. Any member, member organization, limited trading permit 
holder, approved person, or person associated with any of the foregoing 
who fails to prevail in a lawsuit or other legal proceeding instituted 
by such person against the Exchange or any of its directors, officers, 
committee members, employees, or agents, and related to the business of 
the Exchange, shall pay to the Exchange all reasonable expenses, 
including attorneys' fees, incurred by the Exchange in the defense of 
such proceeding, but only in the event that such expenses exceed fifty 
thousand dollars ($50,000.00). This provision shall not apply to 
disciplinary actions by the Exchange, to administrative appeals of 
Exchange actions or in any specific instance where the Board has 
granted a waiver of this provision.
* * * * *

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

    In its filing with the Commission, 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 IV below. The Amex 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
    Legal proceedings can significantly divert staff resources away 
from the Exchange's regulatory and business purposes. In addition, 
these proceedings often require the Exchange to secure outside 
counsel--a costly undertaking. The Exchange believes that seeking to 
ensure that only merit-based legal proceedings are pursued against the 
Exchange by members, member organizations, limited trading permit 
holders, approved persons or persons associated with any of the 
foregoing will help protect against Exchange resources being 
unnecessarily diverted from the Exchange's regulatory and business 
objectives, thus strengthening the overall organization. To this end, 
the Exchange is proposing to adopt a rule similar to one already in 
effect at the Chicago Board Options Exchange

[[Page 27115]]

(``CBOE'') \5\ requiring specified persons who bring legal proceedings 
against the Exchange and/or persons acting on the Exchange's behalf but 
who do not prevail to reimburse the Exchange for all costs associated 
with defending such proceedings when these costs exceed fifty thousand 
dollars. The proposed rule would not apply to disciplinary actions by 
the Exchange, administrative appeals of Exchange actions or in any 
specific instance where the Board has granted a waiver of this 
provision.
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    \5\ See CBOE Rule 2.24.
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2. Statutory Basis
    The proposed rule change is consistent with section 6(b) \6\ of the 
Act, in general, and furthers the objectives of section 6(b)(5),\7\ 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, and to 
remove impediments to and perfect the mechanisms of a free and open 
market and a national market system.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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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 that is not necessary or appropriate 
in furtherance of the 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 in response to the 
proposed rule change.

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

    The Amex has stated that because the proposed rule change does not: 
(i) Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days (or such shorter time as the Commission 
may designate if consistent with the protection of investors and the 
public interest), it has become effective pursuant to section 
19(b)(3)(A) of the Act \8\ and Rule 19b-4(f)(6) thereunder.\9\ At any 
time within 60 days of the filing of the proposed rule change, the 
Commission may summarily abrogate the rule change if it appears to the 
Commission that the action is necessary or appropriate in the public 
interest, for the protection of investors, or would otherwise further 
the purposes of the Act.
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6).
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    Pursuant to Rule 19b-4(f)(6)(iii) under the Act,\10\ the proposal 
may not become operative for 30 days after the date of its filing, or 
such shorter time as the Commission may designate if consistent with 
the protection of investors and the public interest, and the self-
regulatory organization must file notice of its intent to file the 
proposed rule change at least five business days beforehand. Amex has 
requested that the Commission waive the five-day pre-filing requirement 
and the 30-day operative delay so that the proposed rule change will 
become immediately effective upon filing.
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    \10\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Commission believes that waiving the five-day pre-filing 
provision and the 30-day operative delay is consistent with the 
protection of investors and the public interest.\11\ The Commission 
believes that waiving the pre-filing requirement and accelerating the 
operative date will not affect investors because the proposed rule 
change only applies to Exchange members, member organizations, limited 
trading permit holders, approved persons or persons associated with any 
of the foregoing. Furthermore, as Amex has noted, the proposed new rule 
is similar to one already in effect at the CBOE.\12\ For these reasons, 
the Commission designates the proposed rule change as effective and 
operative immediately.
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    \11\ For purposes only of accelerating the operative date of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
    \12\ See n. 5, supra.
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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. Amex-2003-35 and should 
be submitted by June 9, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-12450 Filed 5-16-03; 8:45 am]
BILLING CODE 8010-01-P