[Federal Register Volume 68, Number 101 (Tuesday, May 27, 2003)]
[Notices]
[Pages 28866-28868]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-13134]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47881; File No. SR-NYSE-2003-12]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendment No. 1 Thereto and Order Granting Accelerated 
Approval of Amended Proposal by the New York Stock Exchange, Inc. To 
Conform the New York Stock Exchange Listed Company Manual to New York 
Stock Exchange Rules That 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 April 25, 2003, the New York Stock Exchange, Inc. (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in items I, II, 
III below, which items have been prepared by the Exchange. On May 7, 
2003, the NYSE submitted Amendment No. 1 to the proposal.\3\ The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons. The Commission has also 
decided to accelerate approval of the proposed rule change, as 
described in more detail below.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240-19b-4.
    \3\ See letter from Mary Yeager, Assistant Secretary, NYSE, to 
Nancy J. Sanow, Assistant Director, Division of Market Regulation 
(``Division''), Commission, dated May 6, 2003 (``Amendment No. 1''). 
Amendment No. 1 replaces the original filing in its entirety. 
Telephone conversation between AnnMarie Tierney, Senior Counsel, 
Office of the General Counsel, NYSE, and Jennifer Lewis, Attorney, 
Division, Commission, on May 13, 2003.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The NYSE proposes to amend sections 402.06 (``Exchange Proxy Rules 
for Member Organizations (General)'') and 402.10 (``Charges by Member 
Organizations for Distributing Material'') of its Listed Company Manual 
to conform such sections to NYSE rules that allow authorized state-
registered investment advisers to receive and vote proxy materials on 
behalf of beneficial owners. The text of the proposed amendment is 
below. Proposed new language is italicized; deleted language is in 
brackets.

[[Page 28867]]

Listed Company Manual
* * * * *
402.00 Proxies
* * * * *
402.06 Exchange Proxy Rules for Member Organizations (General)
* * * * *
    The term ``state'' as used in this section shall have the meaning 
given to such term in section 202(a)(19) of the Investment Advisers Act 
of 1940, and as such term may be amended from time to time therein.
(A) Rule 450--Restriction on Giving of Proxies
    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 
452 (Para. 2452), unless such member organization is the beneficial 
owner of such stock. Notwithstanding the foregoing,
    (1) Any member organization, designated by a named fiduciary as the 
investment manager of stock held as assets of an ERISA Plan that 
expressly grants discretion to the investment manager to manage, 
acquire, or dispose of any plan asset and which has not expressly 
reserved the proxy voting right for the named fiduciary, may vote the 
proxies in accordance with its ERISA Plan fiduciary responsibilities; 
and
    (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.
(A) Rule 451--Transmission of Proxy Material
    (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] the person 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
* * * * *
(D) Rule 452--Giving Proxies by Member Organization
    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 holding as executor, etc.

    A member organization may give or authorize the giving of a proxy 
to vote any stock registered in its name, or in the name of its 
nominee, if such member organization holds such stock as executor, 
administrator, guardian, trustee, or in a similar representative of 
fiduciary capacity with authority to vote.

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 451, 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.
* * * * *

402.10 Charges by Member Organizations for Distributing Material

    The Exchange is engaged in a pilot program covering proxy fees. 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 451 and in mailing interim reports 
or other material pursuant to rule 465. 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 the 
proxies); and (iii) any actual communication expenses (excluding 
overhead) incurred in receiving voting returns either telephonically or 
electronically. Rule 465 states: that, ``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 material 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.''
    The term ``state'' as used in this section shall have the meaning 
given to such term in section 202(a)(19) of the Investment Advisers Act 
of 1940, and as such term may be amended from time to time therein.
* * * * *

[[Page 28868]]

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 NYSE included statements 
concerning the purpose of, and basis for, the proposed rule change. The 
text of these statements may be examined at the places specified in 
item III below. The NYSE 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
    On October 16, 2002, the NYSE filed with the Commission amendments 
to NYSE rule 450 (``Restrictions on Giving of Proxies''), rule 451 
(``Transmission of Proxy Material''), rule 452 (``Giving Proxies by 
Member Organizations'') and rule 465 (``Transmission of Interim Reports 
and Other Material'') to allow authorized state-registered investment 
advisers to receive and vote proxy materials on behalf of beneficial 
owners.\4\ These amendments were approved by the Commission on March 6, 
2003.\5\ In light of the fact that Listed Company Manual sections 
402.06 and 402.10 restate portions of NYSE rules 450, 451, 452 and 465, 
the Exchange is proposing to amend the Listed Company Manual to conform 
to the NYSE rule amendments approved by the Commission. In addition, 
the NYSE has proposed minor amendments to conform the restatement of 
NYSE rule 452 in section 402.06 to the text of current NYSE rule 452.
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    \4\ See Securities Exchange Act Release No. 47215 (January 17, 
2003), 68 FR 4263 (January 28, 2003) (SR-NYSE 2002-50).
    \5\ See Securities Exchange Act Release No. 47458 (March 6, 
2003), 68 FR 12131 (March 13, 2003) (SR-NYSE-2002-50) (``Approval 
Order'').
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2. Statutory Basis
    The Exchange believes the basis under the Act for this proposed 
rule change is the requirement under section 6(b)(5) \6\ that an 
exchange have rules that are 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, in general, to protect 
investors and the public interest.
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    \6\ 15 U.S.C. 78(f)(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 Exchange Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments were neither solicited nor received.

III. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the amended 
proposal 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 
NYSE. All submissions should refer to File No. SR-NYSE-2003-12 and 
should be submitted by June 17, 2003.

IV. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change

    The Commission finds that the amended proposal is consistent with 
the requirements of the Act and the rules and regulations thereunder 
applicable to a national securities exchange, and in particular, the 
requirements of section 6(b)(5) of the Act.\7\ The Commission believes 
the NYSE Listed Company Manual should conform to the NYSE rules; 
differences between the two could lead to confusion and 
misunderstanding. The Commission also believes that the changes to the 
NYSE Listed Company Manual are consistent with the Act for the reasons 
discussed in the prior Approval Order.\8\ Therefore, the Commission 
finds that the amended proposal will promote just and equitable 
principles of trade, and, and in general, protect investors and the 
public interest consistent with section 6(b)(5) of the Act.\9\
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    \7\ 15 U.S.C. 78f(b)(5).
    \8\ See the Approval Order, supra note 5, discussing changes 
made to the NYSE rules. The Commission hereby incorporates by 
reference the discussion contained therein.
    \9\ 15 U.S.C. 78f(b)(5). In approving this proposed rule change, 
the Commission notes that it has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
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    The NYSE has requested that the amended proposal be given 
accelerated approval pursuant to section 19(b)(2) of the Act.\10\ The 
Commission finds that good cause exists to grant accelerated approval 
to the proposal. The Commission notes that the proposed rule change is 
identical to amendments to the NYSE rules that were previously approved 
by the Commission after publication of notice thereof in the Federal 
Register.\11\ Further, the Commission received one comment letter 
supporting the proposal in response to the publication.\12\ Based on 
this, and the fact that the contents of the current proposal were 
subject to full notice and comment in the prior publication, the 
Commission finds there is good cause to accelerate approval of the 
proposal. Accordingly, the Commission finds good cause, consistent with 
sections 6(b)(5) and 19(b)(2) of the Act,\13\ to approve the amended 
proposal prior to the 30th day after the date of publication of the 
notice of filing thereof in the Federal Register.
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    \10\ 15 U.S.C. 78s(b)(2).
    \11\ See supra notes 4 and 5.
    \12\ See letter from Christine A. Bruenn, NASSA President and 
Maine Securities Administrator, North American Securities 
Administrators Association, Inc., to Jonathan G. Katz, Secretary, 
Commission, dated February 18, 2003.
    \13\ 15 U.S.C. 78f(b)(5) and 15 U.S.C. 78s(b)(2).
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    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\14\ that the amended proposal (SR-NYSE-2003-12) is hereby approved 
on an accelerated basis.
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    \14\ Id.
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    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).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-13134 Filed 5-23-03; 8:45 am]
BILLING CODE 8010-01-P