[Federal Register Volume 70, Number 25 (Tuesday, February 8, 2005)]
[Notices]
[Pages 6741-6742]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-495]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51119; File No. SR-Amex-2004-72]


Self-Regulatory Organizations; Order Approving Proposed Rule 
Change and Amendment No. 1 Thereto by the American Stock Exchange LLC 
to Amend Its Minor Rule Violation Plan

February 1, 2005.
    On August 23, 2004, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to amend Exchange Rule 590, its Minor Rule 
Violation Fine Plan (``Plan''). On November 23, 2004, Amex filed 
Amendment No. 1 to the proposed rule change. The proposed rule change, 
as amended, was published for comment in the Federal Register on 
December 22, 2004.\3\ The Commission received no comments regarding the 
proposal.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 50871 (December 16, 
2004), 69 FR 76801.
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    The Exchange proposed to make the following actions subject to its 
Plan:
     Failure to comply with trade reporting requirements for 
options (Amex Rule 992);
     Violation of Exchange rules regarding the deactivation of 
quote assist as it pertains to options (Amex Rules 950(g), Commentary 
.01 and 950-ANTE(g), Commentary .01);
     Violation of Exchange rules regarding the Options Linkage 
Program relating to the responding to, and receiving of, Linkage Orders 
(Amex Rule 941(d) and (e)), Avoidance and Satisfaction of Trade-
Throughs (Amex Rule 942(a)), and Locked Markets (Amex Rule 943);
     Violation of Exchange policy regarding affirmative 
determination of the availability for borrowing of shares of Amex-
listed issues prior to effecting short sale transactions (Circular 90-
25); and
     Effecting or causing to be effected a transaction outside 
of business hours through the Intermarket Trading System (Amex Rules 1, 
100, and 233).
    The Exchange also proposed to amend the Plan as follows:
     Expand the requirement of reporting trade comparison data 
(Part 2(d)(3) of Amex Rule 590) to include all transactions effected on 
the Exchange and to relocate such rule to Part 1(g) of Amex Rule 590 so 
as to subject it to Amex Enforcement Department action rather than Amex 
Floor Official action; and
     Revise Part 3 of Amex Rule 590 to reflect the current 
filing schedule for the Form 50 (Short Position), which is now also 
required to be filed at or about the end of the month for selected 
derivative products.
    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange.\4\ In 
particular, the Commission believes that the proposal is consistent 
with Section 6(b)(5) of the Act \5\ which requires that the rules of an 
exchange be designed to promote just and equitable principles of trade, 
to remove impediments and to perfect the mechanism of a free and open 
market and a national market system, and, in general, to protect 
investors and the public interest. The Commission also believes that 
the proposal is consistent with Sections 6(b)(1) \6\ and 6(b)(6) \7\ of 
the Act which require that the rules of an exchange enforce compliance 
and provide appropriate discipline for violations of Commission and 
Exchange rules. In addition, because Amex Rule 590 provides procedural 
rights to a person fined under the Plan to contest the fine and permit 
a hearing on the matter, the Exchange believes the proposal provides a 
fair procedure for the disciplining of members and persons associated 
with members, consistent with Sections 6(b)(7) \8\ and 6(d)(1) \9\ of 
the Act.
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    \4\ In approving this proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \5\ 15 U.S.C. 78f(b)(5).
    \6\ 15 U.S.C. 78f(b)(1).
    \7\ 15 U.S.C. 78f(b)(6).
    \8\ 15 U.S.C. 78f(b)(7).
    \9\ 15 U.S.C. 78f(d)(1).
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    Finally, the Commission finds that the proposal is consistent with 
the public interest, the protection of investors, or otherwise in 
furtherance of the purposes of the Act, as required by Rule 19d-1(c)(2) 
under the Act \10\ which governs minor rule violation plans. The 
Commission believes that these changes to Amex's Plan will strengthen 
its ability to carry out its oversight and enforcement responsibilities 
as a self-regulatory organization in cases where full disciplinary 
proceedings are unsuitable in view of the minor nature of the 
particular violation.
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    \10\ 17 CFR 240.19d-1(c)(2).
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    In approving this proposed rule change, the Commission in no way

[[Page 6742]]

minimizes the importance of compliance with Amex rules and all other 
rules subject to the imposition of fines under the Exchange's Plan. The 
Commission believes that the violation of any self-regulatory 
organization's rules, as well as Commission rules, is a serious matter. 
However, the Exchange's Plan provides a reasonable means of addressing 
rule violations that do not rise to the level of requiring formal 
disciplinary proceedings, while providing greater flexibility in 
handling certain violations. The Commission expects that Amex will 
continue to conduct surveillance with due diligence and make a 
determination based on its findings, whether fines of more or less than 
the recommended amount are appropriate for violations under the Plan, 
on case-by-case basis, or a violation requires formal disciplinary 
action.
    It is therefore ordered, pursuant to section 19(b)(2) of the Act 
\11\ and Rule 19d-1(c)(2) under the Act,\12\ that the proposed rule 
change (SR-Amex-2004-72), as amended, be, and hereby is, approved and 
declared effective.
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    \11\ 15 U.S.C. 78s(b)(2).
    \12\ 17 CFR 240.19d-1(c)(2).
    \13\ 17 CFR 200.30-3(a)(12); 17 CFR 200.30-3(a)(44).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
Jill M. Peterson,
Assistant Secretary.
 [FR Doc. E5-495 Filed 2-7-05; 8:45 am]
BILLING CODE 8010-01-P