[Federal Register Volume 68, Number 100 (Friday, May 23, 2003)]
[Notices]
[Pages 28302-28305]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-12940]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47882; File No. SR-Amex-2003-43]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by American Stock Exchange LLC 
Relating to Amendments to Rules 575, 576, 577, and 585 and Sections 
721, 722, 723, and 725 of the American Stock Exchange Company Guide To 
Allow Authorized State-Registered Investment Advisers To Receive and 
Vote Proxy Materials on Behalf of Beneficial Owners

May 16, 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 May 13, 2003, 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 
Exchange 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 amend Amex Rules 575, 576, 577, and 585 and 
Sections 721, 722, 723, and 725 of the Amex Company Guide to specify 
that a designated investment adviser may be registered under either the 
Investment Advisers Act of 1940 or under the laws of a state. The text 
of the proposed change is below; new language is italicized.
* * * * *

Giving of Proxies Restricted

    Rule 575. No member organization shall give or authorize the giving 
of a proxy to vote stock registered in its name, or in the name of its 
nominee, except as required or permitted under the provisions of Rule 
577, unless such member organization is the beneficial owner of such 
stock. Notwithstanding the foregoing:

[[Page 28303]]

    (1) No change.
    (2) Any person registered as an investment adviser either under the 
Investment Advisers Act of 1940 or under the laws of a state, who 
exercises investment discretion pursuant to an advisory contract for 
the beneficial owner and has been designated in writing by the 
beneficial owner to vote the proxies for stock which is in the 
possession or control of the member organization, may vote such 
proxies.
Commentary
    .01 The term ``state'' as used in Rules 575, 576(a), 577 and 585, 
and Sections 721, 722, 723 and 725 of the Exchange Company Guide shall 
have the meaning given to such term in section 202(a)(19) of the 
Investment Advisers Act of 1940, as such term may be amended from time 
to time therein.

Transmission of Proxy Material to Customers

    Rule 576. (a) Whenever a person soliciting proxies shall furnish a 
member organization:
    (1) Copies of all soliciting material which such person is sending 
to registered holders, and
    (2) Satisfactory assurance that he will reimburse such member 
organization for all out-of-pocket expenses, including reasonable 
clerical expenses, incurred by such member organization in connection 
with such solicitation, such member organization shall transmit to each 
beneficial owner of stock which is in its possession or control or to 
an investment adviser registered either under the Investment Advisers 
Act of 1940 or under the laws of a state, who exercises investment 
discretion pursuant to an advisory contract for the beneficial owner 
and has been designated in writing by the beneficial owner of such 
stock (hereinafter ``designated investment adviser'') to receive 
soliciting material in lieu of the beneficial owner, the material 
furnished; and
    (b) No further change.

Giving Proxies by Member Organization

    Rule 577. A member organization shall give or authorize the giving 
of a proxy for stock registered in its name, or in the name of its 
nominee, at the direction of the beneficial owner. If the stock is not 
in the control or possession of the member organization, satisfactory 
proof of the beneficial ownership as of the record date may be 
required.
    Voting Member Organization Holdings as Executor, etc.
    No change.

Voting Procedure Without Instructions

    A member organization which has transmitted proxy soliciting 
material to the beneficial owner of stock or to an investment adviser 
registered either under the Investment Advisers Act of 1940 or under 
the laws of a state who exercises investment discretion pursuant to an 
advisory contract for the beneficial owner and has been designated in 
writing by the beneficial owner of such stock (hereinafter ``designated 
investment adviser'') to receive soliciting material in lieu of the 
beneficial owner and solicited voting instructions in accordance with 
the provisions of Rule 576, and which has not received instructions 
from the beneficial owner or from the beneficial owner's designated 
investment adviser by the date specified in the statement accompanying 
such material, may give or authorize the giving of a proxy to vote such 
stock, provided the person in the member organization giving or 
authorizing the giving of the proxy has no knowledge of any contest as 
to the action to be taken at the meeting and provided such action is 
adequately disclosed to stockholders and does not include authorization 
for a merger, consolidation or any other matter which may affect 
substantially the rights or privileges of such stock.
    No further change.

Transmission of Interim Reports and Other Material

    Rule 585. A member organization, when so requested by a company, 
and upon being furnished with:
    (1) Copies of interim reports of earnings or other material being 
sent to stockholders, and
    (2) Satisfactory assurance that it will be reimbursed by such 
company for all out-of-pocket expenses, including reasonable clerical 
expenses, shall transmit such reports or materials to each beneficial 
owner of stock of such company held by such member organization and 
registered in a name other than the name of the beneficial owner unless 
the beneficial owner has instructed the member organization in writing 
to transmit such reports or material to a designated investment adviser 
registered either under the Investment Advisers Act of 1940 or under 
the laws of a state, who exercises investment discretion pursuant to an 
advisory contract for such beneficial owner.

Giving of Proxies--Restriction on Member Organizations (Exchange Rule 
575)

Sec. 721.

    No member organization shall give or authorize the giving of a 
proxy to vote stock registered in its name, or in the name of its 
nominee, except as required or permitted under the provisions of Rule 
577, unless such member organization is the beneficial owner of such 
stock. Notwithstanding the foregoing.
    (1) No change.
    (2) any person registered as an investment adviser either under the 
Investment Advisers Act of 1940 or under the laws of a state, who 
exercises investment discretion pursuant to an advisory contract for 
the beneficial owner and has been designated in writing by the 
beneficial owner to vote the proxies for stock which is in the 
possession or control of the member organization, may vote such 
proxies.

Commentary

    .01 The term ``state'' as used in Rules 575, 576(a), 577 and 585, 
and Sections 721, 722, 723 and 725 of the Exchange Company Guide shall 
have the meaning given to such term in section 202(a)(19) of the 
Investment Advisers Act of 1940, as such term may be amended from time 
to time therein.

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

Sec. 722

    (a) Whenever a person soliciting proxies shall furnish a member 
organization:
    (1) Copies of all soliciting material which such person is sending 
to registered holders, and
    (2) Satisfactory assurance that he will reimburse such member 
organization for all out-of-pocket expenses, including reasonable 
clerical expenses, incurred by such member organization in connection 
with such solicitation, such member organization shall transmit to each 
beneficial owner of stock which is in its possession or control or to 
an investment adviser registered either under the Investment Advisers 
Act of 1940 or under the laws of a state, who exercises investment 
discretion pursuant to an advisory contract for the beneficial owner 
and has been designated in writing by the beneficial owner of such 
stock (hereinafter ``designated adviser'') to receive soliciting 
material in lieu of the beneficial owner, the material furnished; and
    (a) No further change.

[[Page 28304]]

Giving Proxies by Member Organization (See Exchange Rule 577)

    Rule 723. A member organization shall give or authorize the giving 
of a proxy for stock registered in its name, or in the name of its 
nominee, at the direction of the beneficial owner. If the stock is not 
in the control or possession of the member organization, satisfactory 
proof of the beneficial ownership as of the record date may be 
required.
    Voting Member Organization Holdings as Executor, etc.
    No change.

Voting Procedure Without Instructions

    A member organization which has transmitted proxy soliciting 
material to the beneficial owner of stock or to an investment adviser 
registered either under the Investment Advisers Act of 1940 or under 
the laws of a state who exercises investment discretion pursuant to an 
advisory contract for the beneficial owner and has been designated in 
writing by the beneficial owner of such stock (hereinafter ``designated 
investment adviser'') to receive soliciting material in lieu of the 
beneficial owner and solicited voting instructions in accordance with 
the provisions of Rule 576, and which has not received instructions 
from the beneficial owner or from the beneficial owner's designated 
investment adviser by the date specified in the statement accompanying 
such material, may give or authorize the giving of a proxy to vote such 
stock, provided the person in the member organization giving or 
authorizing the giving of the proxy has no knowledge of any contest as 
to the action to be taken at the meeting and provided such action is 
adequately disclosed to stockholders and does not include authorization 
for a merger, consolidation or any other matter which may affect 
substantially the rights or privileges of such stock.
    No further change.

Transmission of Interim Reports and Other Material (See Exchange Rule 
585)

Sec. 725

    A member organization, when so requested by a company, and upon 
being furnished with:
    (1) Copies of interim reports of earnings or other material being 
sent to stockholders, and
    (2) Satisfactory assurance that it will be reimbursed by such 
company for all out-of-pocket expenses, including reasonable clerical 
expenses, shall transmit such reports or materials to each beneficial 
owner of stock of such company held by such member organization and 
registered in a name other than the name of the beneficial owner unless 
the beneficial owner has instructed the member organization in writing 
to transmit such reports or material to a designated investment adviser 
registered either under the Investment Advisers Act of 1940 or under 
the laws of a state, who exercises investment discretion pursuant to an 
advisory contract for such beneficial owner.
* * * * *

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 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Amex Rules 575 (Giving of Proxies Restricted), 576 (Transmission of 
Proxy Material to Customers), 577 (Giving Proxies by Member 
Organization), and 585 (Transmission of Interim Reports and Other 
Material) relate to voting of proxies and transmission of proxy and 
related issuer material. These rules are also incorporated into 
Sections 721, 722, 723, and 725, respectively, of the Amex Company 
Guide. These rules permit beneficial owners of stock to authorize 
investment advisers registered under the Investment Advisers Act of 
1940 (``Advisers Act'')\5\ to receive proxy soliciting materials, 
annual reports and other related issuer material and to vote proxies 
for beneficial owners. Investment advisers can do so if they exercise 
investment discretion pursuant to an advisory contract and have been 
designated in writing by the beneficial owner to perform these 
activities.
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    \5\ 15 U.S.C. 80b.
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    The Exchange proposes to amend the above-noted Amex rules and 
Company Guide provisions to provide that a designated investment 
adviser must be registered either under the Advisers Act or under the 
laws of a state. These amendments are similar to changes made to 
comparable New York Stock Exchange (``NYSE'') and National Association 
of Securities Dealers (``NASD'') rules approved recently by the 
Commission.\6\ These rule changes take into account rules and rule 
amendments adopted effective July 1997 by the Commission under the 
Advisers Act, which implement provisions of Title III of the National 
Securities Markets Improvement Act of 1996, reallocating regulatory 
responsibilities for investment advisers between the Commission and the 
states.\7\ The Commission now only regulates advisers with $25 million 
or more of assets under management and the states regulate advisers 
with less than $25 million of assets. Because the majority of 
investment advisers manage assets of less than $25 million and, 
therefore, are not registered under the Advisers Act, the amendments 
are needed to apply Exchange proxy transmission and voting rules to the 
many investment advisers registered under state law that exercise 
investment discretion pursuant to an advisory contract and have been 
designated by the beneficial owner to vote and receive proxy materials 
on their behalf.
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    \6\ See Securities Exchange Act Release Nos. 47458 (March 6, 
2003), 68 FR 12131 (March 13, 2003) (SR-NYSE-2002-50); and 47459 
(March 6, 2003), 68 FR 12120 (March 13, 2003) (SR-NASD-2002-124).
    \7\ 62 FR 28112 (May 22, 1997); Release No. IA-1633, File No. 
S7-31-96
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act,\8\ in general, and furthers the 
objectives of section 6(b)(5),\9\ 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, to protect investors 
and the public interest and is not designed to permit unfair 
discrimination between customers, issuers, brokers, or dealers.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 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.

[[Page 28305]]

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

    Because the foregoing proposed rule change: (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, and the Exchange 
has 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,\10\ the proposed rule change has become effective pursuant 
to section 19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(6) 
thereunder.\12\
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    \10\ See letter from Michael Cavalier, Associate General 
Counsel, Amex, to Nancy Sanow, Division of Market Regulation, 
Commission, dated April 29, 2003.
    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \13\ does not 
become operative prior to 30 days after the date of filing or such 
shorter time as the Commission may designate if such action is 
consistent with the protection of investors and the public interest. 
The Amex has requested, in order to permit Amex rules to immediately 
take into account rules adopted by the Commission to implement 
provisions of the National Securities Market Improvement Act of 1996, 
that the Commission waive the 30-day operative date.\14\ The Commission 
believes waiving the 30-day operative date is consistent with the 
protection of investors and the public interest. For this reason, the 
Commission has determined to make the proposed rule change operative as 
of the date of this notice.\15\
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    \13\ Id.
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
    \15\ 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).
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    At any time within 60 days of filing of such proposed rule change, 
the Commission may summarily abrogate such rule change if its appears 
to the Commission that such action is necessary of appropriate in the 
public interest, for the protection of investors, or otherwise in the 
furtherance of the purposes of the Act.

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-2003-43 and 
should be submitted by June 13, 2003.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 03-12940 Filed 5-22-03; 8:45 am]
BILLING CODE 8010-01-P