[Federal Register Volume 69, Number 10 (Thursday, January 15, 2004)]
[Notices]
[Pages 2369-2372]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-879]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49041; File No. SR-Amex-2003-97]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the American Stock Exchange LLC Relating to Amendment of 
Exchange Rule 590

January 8, 2004.
    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 November 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 
Commission is publishing this notice to solicit comments on the 
proposed rule change, as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Amex proposes to add three existing reports to the list of 
reports submitted to the Financial Regulation Department (``FRD'') that 
may be subject to a fine under Amex's Minor Rule Violation Fine Plan 
(``Plan'').
    The text of the proposed rule change is below. Additions are 
italicized; deletions are in brackets.\3\
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    \3\ With the Exchange's consent, the Commission made a technical 
correction to the text of the proposed rule change. Telephone 
conversation between Bill Floyd-Jones, Associate General Counsel, 
Amex, and Ian K. Patel, Attorney, Division of Market Regulation, 
Commission, on January 7, 2004.
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* * * * *
Rule 590. Minor Rule Violation Fine System
Part 1 General Rule Violations No change
Part 2 Floor Decorum Violations No change
Part 3 Reporting Violations
    (a) Notwithstanding Article V, Section 1(b) of the Constitution, 
the Exchange may, subject to the requirements set forth herein, impose 
a fine of $50 a day on any member or member organization for the late 
filing of those reports listed in Paragraph (g) of Part 3 of this Rule 
required to be filed pursuant to Rule 30.
    (b) In any action taken by the Exchange pursuant to Part 3 of this 
Rule, any person against whom a fine is imposed shall be served with a 
written statement, signed by an authorized officer of the Exchange 
Department or Division responsible for receiving the delinquent report, 
setting forth (i) the name of the delinquent report (ii) the fine 
imposed for such violation, and (iii) the date by which such 
determination becomes final and such fine becomes due and payable to 
the Exchange, or such determination must be contested as provided 
below, such date to be not less than 20 days after the date of service 
of the written statement.
    (c) If the person against whom a fine is imposed pays the fine, 
such payment will be deemed to be a waiver of such person's right to a 
hearing before an Exchange Disciplinary Panel and to an appeal to the 
Amex Adjudicatory Council.
    (d) Any person against whom a fine is imposed pursuant to Part 3 of 
this Rule may contest the Exchange's determination by notifying the 
Secretary of the Exchange not later than the date by which such 
determination must be contested, at which point the matter shall become 
subject to the provisions of Article V, Section l(b) of the 
Constitution. In any such formal disciplinary proceeding, if the 
Disciplinary Panel determines that the person charged is guilty of the 
reporting violation, the Panel shall be free to impose any one or more 
of the disciplinary sanctions authorized by the Exchange's Constitution 
and rules.
    (e) The Exchange shall issue an information circular to the 
membership from time to time listing the reports (listed below in 
Paragraph (g)) as to which the Exchange may impose fines as provided in 
Part 3 of this Rule.
    (f) A request for an extension of time to file a report must be 
submitted to the Exchange prior to the filing deadline. Any report 
containing material inaccuracies shall be deemed not to have been filed 
until a corrected copy of the report has been resubmitted.
    (g) The following is a list of the reports required to be filed 
with the Exchange as to which the Exchange may impose fines for late 
filing pursuant to Part 3 of this Rule.

------------------------------------------------------------------------
                              Required to be filed
           Report                      by            Frequency/due date
------------------------------------------------------------------------
A. EXAMINATIONS
[bull] [Exam 12 (Report of    [(1)(6)]............  [Monthly--17th
 financial condition)].                              business day
                                                     following month-
                                                     end].
[bull] Equity Computation *.  [(3)(4)(6) and other  Monthly--17th
                               orgs. not subject     business day
                               to SEC Rule 15c3-1]   following month-
                               Sole members and      end.
                               member
                               organizations
                               designated to the
                               Amex NOT subject to
                               SEC Rule 15c3-1
                               that are engaged
                               solely in the
                               business of acting
                               as registered
                               traders.
[bull] Net Capital            [(1)(2)(3)(4) doing   Monthly--17th
 Computation [(Regulatory      no business with      business day
 financial report of           public but] Sole      following month-
 individual members not        members and member    end.
 associated with member        organizations
 orgs., and member orgs.       designated to the
 which do not transact         Amex subject to SEC
 business with the public)].   Rule 15c3-1.

[[Page 2370]]

 
[bull] X-17A-5 Part II **     [(3)(4)(5) carrying   Quarterly--17th
 (FOCUS Report).               customers (subject    business day
                               to 15c3-1)] Sole      following quarter-
                               members and member    end.
                               organizations
                               designated to the
                               Amex that self-
                               clear or carry
                               customer accounts
                               that are subject to
                               SEC Rule 15c3-1.
[bull] X-17A-5 Part I **      [(3)(4)(5) carrying   Monthly--(Interim to
 (FOCUS Report).               customers (subject    quarterly filings
                               to 15c3-1)] Sole      above) 17th
                               members and member    business day
                               organizations         following interim
                               designated to the     month-end.
                               Amex that self-
                               clear or carry
                               customer accounts
                               that are subject to
                               SEC Rule 15c3-1.
[bull] X-17A-5 Part IIA       [Non-clearing         Quarterly--17th
 (FOCUS Report).               (3)(4)(5) not         business day
                               carrying customers    following quarter-
                               (subject to 15c3-     end.
                               1)] Sole members
                               and member
                               organizations
                               designated to the
                               Amex that are
                               subject to SEC Rule
                               15c3-1 but do NOT
                               file FOCUS Parts I
                               or II.
[bull] X-17A-5 Part IIA       [(1)(2)(3)(4) not     [Annually--17th
 (Short Form) (FOCUS Report).  normally filing       business day
                               FOCUS reports] Sole   following calendar
                               members and member    year-end]
                               organizations that    Quarterly--17th
                               do not file one of    business day
                               the FOCUS reports     following quarter-
                               listed above.         end.
[bull] Form 171 (Self-        (6).................  Daily--Next business
 Clearing Specialist                                 day.
 financial form).
[bull] MO 14 and MO 15        (6).................  Quarterly.
 (Specialist financial
 reports).
[bull] Written Responses to   Members and Member    Two weeks from the
 Financial Regulation          Organizations.        date on the
 Examination Deficiency                              Deficiency Letter.
 Letters.
[bull] ITSFEA Forms I & II..  Sole members and      Annually--17th
                               member                business day
                               organizations         following calendar
                               designated to the     year end.
                               Amex.
[bull] Annual Audited         Sole members and      Annually--60
 Financial Statements.         member                calendar days
                               organizations         following the date
                               designated to the     of the financial
                               Amex.                 statement.
B. TRADING ANALYSIS
[bull] 191 Report             (6).................  Daily--Next business
 (Specialist principal                               day.
 trading).
[bull] Form 958-C (ROT and    (2)(6)(7)...........  Daily--Next business
 Specialist Report of orders                         day.
 entered in underlying
 securities related to Amex
 options).
[bull] 114A Report            (8).................  Daily--Next business
 (Registered Equity Market                           day.
 Maker trading.
[bull] 114B Report (Report    (Floor Official/      Daily--Next business
 of situations when            Floor Broker).        day.
 Registered Equity Market
 Maker was asked to bid and/
 or offer.
[bull] Equity Floor Broker    Designated Equity     Quarterly--By the
 Questionnaire.                Floor Brokers.        date specified by
                                                     the Exchange.
[bull] Option Floor Broker    Designated Options    Semi-Annual--By the
 Questionnaire.                Floor Brokers.        date specified by
                                                     the Exchange.
C. MARKET SURVEILLANCE
[bull] Form 50 (Short         (3)(5)..............  Monthly--Varies
 Position).                                          (usually around the
                                                     17th day of each
                                                     month).
[bull] 1-RA (Exchange         (1)(3)(5)...........  Weekly--Friday
 transactions initiated from                         following close of
 off-floor).                                         the week covered in
                                                     the Report.
[bull] 1-S (Round lot short   Clearing Firms......  Weekly--Thursday
 sales transactions).                                following close of
                                                     the week covered in
                                                     the report.
D. MEMBERSHIP SERVICES
[bull] Form U-5.............  Members and Member    10 days following
                               Organizations.        termination of a
                                                     clerk.
------------------------------------------------------------------------
* No prescribed form
** Also applies to self-clearing firms
(1) Regular Member
(2) Option Principal Member
(3) Regular Member Organization
(4) Option Principal Organization
(5) Assoc. Member Organization
(6) Specialist
(7) Registered Option Trader

    Commentary:
    .01 Nothing in this Rule shall require the Exchange to impose a 
fine pursuant to this Rule with respect to any violation covered by the 
Rule, and the Exchange shall be free to proceed under Article V, 
Section 1(b) of the Constitution or Rule 345 rather than under this 
Rule.
    .02 Fines imposed pursuant to this Rule will generally not be 
subject to Exchange publicity under Rule 12 of the Rules of Procedure 
Applicable to Exchange Disciplinary Proceedings. However, except for 
uncontested floor decorum violations, they will be reported to the SEC 
as required by SEC Rule 19d1.
    .03 Any person that contests a fine imposed under Rule 590 will be 
required to pay a $100 fee to contest such fine. This fine will be 
assessed at the conclusion of any Disciplinary hearing if the person is 
found guilty of the alleged rule violation. It will not be

[[Page 2371]]

assessed if the person is found not guilty of the charge.
* * * * *

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 Exchange 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
    The Exchange has had a Plan since 1976 that provides a simplified 
procedure for the resolution of minor rule violations. Codified in Amex 
Rule 590, the Plan has three distinct sections: Part 1 (General Rule 
Violations), which covers more substantive matters that, nonetheless, 
are deemed ``minor'' by the Commission and the Amex; Part 2 (Floor 
Decorum), which covers floor decorum and operational matters; and Part 
3 (Reporting Violations) which covers the late submission of routine 
reports.
    Part 3 of Amex Rule 590 allows the specified departments of the 
Exchange that routinely receive regulatory reports from members and 
member organizations to issue abbreviated ``written statements'' to 
persons who may have violated the specified reporting rules. These 
statements identify the rules violated, the act or omission 
constituting the violation, and the amount of the fine. The fines are 
$50 per day for each day the report is late. The issuance of a written 
statement does not constitute a finding of guilt. Persons receiving a 
written statement may plead ``no contest'' and return the statement to 
the Exchange with the specified fine. In the alternative, persons who 
are charged under the Plan may contest the fine and receive a hearing 
before an Exchange Disciplinary Panel.
    The Exchange is proposing to add three existing reports to the list 
of reports submitted to the FRD that may subject to a fine under Amex 
Rule 590. These are: (i) ITSFEA Forms 1 and 2; \4\ (ii) responses to 
FRD Deficiency Letters; and (iii) annual audited financial statements. 
The Exchange believes that adding these reports to the list of reports 
that are subject to a fine for late filing will help ensure the timely 
submission of these materials. The Exchange is also proposing to revise 
the text of the schedule to Part 3 of Amex Rule 590 to: (1) Eliminate 
an obsolete report (Form 12 has been replaced by the FOCUS Report), (2) 
clarify the obligations of sole members and member organizations 
designated to the Amex for financial responsibility oversight to file 
FOCUS and other reports, and (3) provide that sole members and member 
organizations designated to the Amex for financial responsibility 
oversight that are not subject to the Commission's Net Capital Rule 
must file the Short Form FOCUS Report with the Exchange quarterly 
rather than annually.
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    \4\ ITSFEA Form I is a certification that the member or member 
organization has implemented procedures to detect insider trading. 
ITSEFEA Form II is a list of securities accounts maintained by 
persons associated with the member or member organization.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act in general and furthers the objectives of 
section 6(b)(1),\5\ 6(b)(6),\6\ and 6(b)(7) \7\ of the Act in 
particular, in that it will enhance the ability of the Exchange to 
enforce compliance by its members and persons associated with its 
members with the provisions of the Act, the rules and regulations 
thereunder, and the rules of the Exchange. The Exchange also believes 
that it will help ensure that members and persons associated with 
members are appropriately disciplined for violations of the Act, the 
rules and regulations thereunder, and the rules of the Exchange; and 
will provide a fair procedure for the disciplining of members and 
persons associated with members.
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    \5\ 15 U.S.C. 78f(b)(1).
    \6\ 15 U.S.C. 78f(b)(6).
    \7\ 15 U.S.C. 78f(b)(7).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change will impose no burden on competition 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 with respect to the 
proposed rule change.

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission will:
    A. by order approve such proposed rule change, or
    B. institute proceedings to determine whether the proposed rule 
change should be disapproved.

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. 
Comments may also be submitted electronically at the following e-mail 
address: [email protected]. All comment letters should refer to 
File No. SR-Amex-2003-97. This file number should be included on the 
subject line if e-mail is used. To help the Commission process and 
review comments more efficiently, comments should be sent in hardcopy 
or by e-mail but not by both methods. 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 SR-Amex-2003-97 and should be submitted by 
February 5, 2004.


[[Page 2372]]


    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).

J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 04-879 Filed 1-14-04; 8:45 am]
BILLING CODE 8010-01-P