[Federal Register Volume 69, Number 47 (Wednesday, March 10, 2004)]
[Notices]
[Pages 11467-11469]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-5377]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49351; File No. SR-Amex-2003-110]


Self-Regulatory Organizations; Notice of Filing of a Proposed 
Rule Change and Amendment No. 1 Thereto by the American Stock Exchange 
LLC Relating to Procedures Applicable to Continued Listing Evaluation 
and Follow-Up

March 2, 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 December 12, 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 the 
Exchange. On February 19, 2004, the Exchange filed Amendment No. 1 to 
the proposed rule change.\3\ 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)(l).
    \2\ 17 CFR 240.19b-4.
    \3\ See Letter from Claudia Crowley, Vice President, Listing 
Qualifications, Amex, to Nancy Sanow, Assistant Director, Division 
of Market Regulation (``Division''), Commission, dated February 18, 
2004 (``Amendment No. 1''). In Amendment No. 1, the Amex replaced 
the text of the proposed rule change in its entirety.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Section 1009 of the Amex Company 
Guide (``Company Guide'') to clarify the authority of the Exchange 
staff to establish a time period of less than 18 months for a listed 
company that is below the continued listing standards to return to 
compliance thereof.
    The text of the proposed rule change is below. Proposed new 
language is italicized; proposed deletions are in brackets.
* * * * *

Sec. 1009. Continued Listing Evaluation And Follow-Up

    (a) The following procedures shall be applied by the Exchange staff 
to companies identified as being below the Exchange's continued listing 
policies and standards. Notwithstanding such procedures, when the 
Exchange staff deems it necessary for the protection of investors, 
trading in any security can be suspended immediately, and

[[Page 11468]]

application made to the SEC to delist the security and/or the Exchange 
staff may truncate the procedures specified in this Section.
    (b) Once the Exchange staff identifies, through internal reviews or 
notice (a press release, news story, company communication, etc.), a 
company as being below the continued listing criteria set forth in 
Sections 1001 through 1006 (and not able to otherwise qualify under an 
initial listing standard), the Exchange staff will notify the company 
by letter of its status within 10 business days. This letter will also 
provide the company with an opportunity to provide the Exchange staff 
with a plan (the ``Plan'') advising the Exchange staff of action the 
company has taken, or will take, that would bring it into compliance 
with the continued listing standards within 18 months of receipt of the 
letter. However, the Exchange staff may establish a time period of less 
than 18 months for a company to regain compliance with some or all of 
the continued listing standards if it determines that the nature and 
circumstances of the company's particular continued listing status 
warrant such shorter period of time (see Commentary .01). Within 10 
five business days after receipt of the letter, the company must 
contact the Exchange staff to confirm receipt of the notification, 
discuss any possible financial data of which the Exchange staff may be 
unaware, and indicate whether or not it plans to present a Plan; 
otherwise, delisting proceedings will commence.
    (c) The company has 30 days from the receipt of the letter to 
submit its Plan to the Exchange staff for review[;]. However, the 
Exchange staff may require submission of a company's Plan within less 
than 30 days (but in no event less than seven days) if the Exchange 
staff has established a time period of 90 days or less for the company 
to regain compliance with some or all of the continued listing 
standards pursuant to paragraph (b) of this Section. [i]If it does not 
submit a Plan within [this] the specified time period, delisting 
procedures will commence. The Plan must include specific milestones, 
quarterly financial projections, and details related to any strategic 
initiatives the company plans to complete. Exchange staff will evaluate 
the Plan, including any additional documentation that supports the 
Plan, and make a determination as to whether the company has made 
reasonable demonstration in the Plan of an ability to regain compliance 
with the continued listing standards within the [18 month] time period 
described in paragraph (b) of this Section. The Exchange staff will 
make such determination within 45 days of receipt of the proposed Plan 
(or such shorter period of time as is consistent with the time period 
established by the Exchange staff for the company to regain compliance 
pursuant to paragraph (b) of this Section), and will promptly notify 
the company of its determination in writing.
    (d) and (e)--No change.
    (f) If, prior to the end of the [18-month] extension period, the 
company is able to demonstrate compliance with the continued listing 
standards (or that it is able to qualify under an original listing 
standard) for a period of two consecutive quarters, the Exchange staff 
will deem the Plan period over. If the company does not meet continued 
listing standards at the end of the [18-month] extension period, the 
Exchange staff will promptly initiate delisting procedures.
    (g) through (i)--No change.
    Commentary . . .
    .01 In determining whether to establish a time period of less than 
whether to establish a time period of less than 18 months for a company 
to regain compliance with some or all of the continued listing 
standards, pursuant to paragraph (b), the Exchange staff will consider 
whether, in view of the nature and severity of the particular continued 
listing deficiency, including the investor protections concerns raised, 
18 months would be an inappropriately long period of time to regain 
compliance. While it is not possible to enumerate all possible 
circumstances, the following is a non-exclusive list of the types of 
continued listing deficiencies that, based on the a particular listed 
company's unique situation, may result in imposition of a shorter time 
period: delinquencies with respect to SEC filing obligations, severe 
short-term liquidity and/or financial impairment, present or potential 
public interest concerns;\4\ deficiencies with respect to the requisite 
distribution requirements that make the security unsuitable for auction 
market trading.
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    \4\ Public interest concerns could include, for example, 
situations where the company, a corporate officer or affiliate is 
the subject of a criminal or regulatory investigation or action; or 
the company's auditors have resigned and withdrawn their most recent 
audit opinion raising concerns regarding the internal controls and 
financial reporting process. However, other situations not 
specifically enumerated could also raise public interest concerns 
regarding the appropriateness of a particular company's continued 
listing.
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* * * * *

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
    Section 1009 of the Company Guide became effective in May 2002.\5\ 
It specifies the procedures applicable to listed companies identified 
as being below the continued listing standards, and provides such 
companies with the opportunity to submit a business plan to the staff 
of the Amex Listing Qualifications Department detailing the action it 
has taken or proposes to take to bring it into compliance with the 
continued listing standards within 18 months. Any business plan 
submitted pursuant to this provision is subject to approval and 
monitoring by the staff of the Listing Qualifications Department, as 
well as public disclosure by the listed company.
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    \5\ See Securities Exchange Act Release No. 45898 (May 8, 2002), 
67 FR 34502 (May 14, 2002) (order approving File No. SR-Amex-2001-
47).
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    The Exchange's experience with the procedures specified in section 
1009 of the Company Guide indicates that certain clarifying amendments 
are necessary. Specifically, paragraphs (b) and (c) specify that a 
listed company identified as below the continued listing standards must 
submit a business plan which makes a reasonable demonstration of an 
ability to regain compliance with 18 months. However, paragraph (a) 
provides that the Exchange staff may initiate immediate delisting 
proceedings at any time, notwithstanding the specified procedures, if 
deemed necessary for the protection of investors. In view of this broad 
authority, the staff of Listing Qualifications Department has 
occasionally required a particular listed company to submit a business 
plan demonstrating an ability to regain compliance within less than 18 
months. Such shortened time periods have been applied in circumstances 
in which the

[[Page 11469]]

staff believed that 18 months was an inappropriately long period of 
time to regain compliance in view of the nature and severity of the 
particular continued listing deficiency. For example, companies which 
are delinquent with respect to SEC filing obligations, facing severe 
short-term liquidity and financial impairment, or present potential 
public interest concerns,\6\ or deficiencies with respect to the 
requisite distribution requirements that make the security unsuitable 
for auction market trading, have typically been required to return to 
compliance with the impacted continued listing standards within 30 to 
90 days. In some cases, a particular company has been given staggered 
extension deadlines (i.e., the company must resolve its SEC filing 
deficiency and short-term financial impairment issues within 30 days, 
but is given 18 months to increase its shareholders equity to the 
required level).
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    \6\ Public interest concerns could include, for example, 
situations where the company, a corporate officer or affiliate is 
the subject of a criminal or regulatory investigation or action; or 
the company's auditors have resigned and withdrawn their most recent 
audit opinion raising concerns regarding the internal controls and 
financial reporting process. However, other situations not 
specifically enumerated could also raise public interest concerns 
regarding the appropriateness of a particular company's continued 
listing.
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    Although none of the listed companies that have been subject to the 
shortened extension periods have challenged the staff's authority to 
impose a shorter period, some have raised questions about it. 
Accordingly, the Exchange is proposing to revise section 1009 of the 
Company Guide to clarify that the staff may establish a time period of 
less than 18 months for a listed company to regain compliance with some 
or all of the continued listing standards, if the nature and 
circumstances of the company's particular continued listing status 
warrant such shorter time period. In addition, the Exchange proposes 
that corresponding revisions be made to the applicable submission and 
review deadlines.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act,\7\ in general, and furthers the 
objectives of section 6(b)(5) of the Act,\8\ 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, and, 
in general, to protect investors and the public interest.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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 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 proposal, as 
amended, 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-2003-110. The file number should be included on the 
subject line if e-mail is used. To help the Commission process and 
review your 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 be submitted by March 31, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-5377 Filed 3-9-04; 8:45 am]
BILLING CODE 8010-01-P