[Federal Register Volume 70, Number 42 (Friday, March 4, 2005)]
[Notices]
[Pages 10707-10709]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-879]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51250; File No. SR-Amex-2005-021]


Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
Relating to Amending Section 507 of the Amex Company Guide To Conform 
the Definition of a ``Large'' Dividend to the Threshold Specified in 
Section 521 of the Company Guide

February 24, 2005.
    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 February 11, 2005, the American Stock Exchange LLC (``Exchange'' or 
``Amex'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II, which Items have been prepared by the Exchange. The Exchange filed 
the proposal as a ``non-controversial'' 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 seeks to revise Section 507 of the Company Guide to 
conform the definition of a ``large'' dividend to the threshold 
specified in Section 521 of the Company Guide.
    The text of the proposed rule change is available on the Amex's Web 
site http://www.amex.com, at the Amex's Office of the Secretary, and at 
the Commission's Public Reference Room.

[[Page 10708]]

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 521 of the Company Guide specifies the procedures 
applicable to special ex-dividend rulings by the Exchange, and 
subsection (b) specifically relates to large or valuable dividends, 
dividends ``not in kind'' (e.g., paid in the stock of another issuer) 
and split-ups effected as stock distributions. Under any of these 
circumstances Section 521 provides that the ``ex-dividend'' or ``ex-
distribution'' date will be postponed until the dividend has been paid. 
Ordinarily, when an issuer declares a dividend, the Exchange quotes the 
stock ``ex-dividend'' beginning on the second business day preceding 
the record date for payment of the dividend, which has the effect that 
the buyer of the security is not entitled to the dividend. This is 
because the transaction will clear after the record date for payment 
and the buyer will thus not be the holder of record on the record date. 
Once a security is quoted ``ex-dividend,'' certain open orders, and the 
resulting market and collateral value of the security, are reduced in 
accordance with Amex Rule 132.\5\
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    \5\ Telephone conversation between Laura Clare, Assistant 
General Counsel, the Amex, and Natasha Cowen, Attorney, Division of 
Market Regulation, Commission, on February 18, 2005.
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    However, in the case of large or valuable dividends, as well as 
dividends ``not in kind'' and split-ups effected as stock 
distributions, Section 521 of the Company Guide provides for special 
procedures such that the ``ex'' date will be postponed until the 
dividend or distribution has been made, and neither open orders, nor 
the market and collateral value of the security, are reduced. Instead, 
the security in question trades with a ``due bill'' attached meaning 
that the seller is obligated to pay the dividend or distribution to the 
purchaser. The reason for this difference is that otherwise the price 
of orders for the security, and its collateral value, would be 
significantly reduced by the value of the dividend or distribution, 
which could require shareholders to provide additional collateral. 
Section 521 specifies that usually a dividend of 20% or more is 
considered a ``large'' dividend for purposes of these special 
procedures.
    Section 507 of the Company Guide specifies that if a company 
chooses to compute the cash payment on the dividend declaration date or 
if the ``ex'' date is postponed pursuant to Section 521 for a large 
dividend, then the applicable last sale price must be adjusted for the 
value of the dividend. However, Section 507 is inconsistent with 
Section 521 and incorrectly specifies a 25% dividend as constituting a 
``large'' dividend.
    Accordingly, the Amex is proposing to amend Section 507 of the Amex 
Company Guide to conform to Section 521 of the Company Guide.\6\
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    \6\ Specifically, the proposed rule change would amend the text 
of Section 507 by replacing the phrase ``large stock dividends of 
25% or more'' with the phrase ``large stock dividends of usually 20% 
or more'' and similarly replacing the phrase ``large stock dividends 
(25% or more)'' with the phrase ``large stock dividends (usually 20% 
or more)''. See Exhibit 5 of the proposed rule change.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6 of the Act \7\ in general and furthers the objectives of 
Section 6(b)(1) \8\ in particular, in that it is designed to enforce 
compliance by Exchange members and persons associated with its members 
with the rules of the Exchange.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(1).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change will impose no 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 by the Exchange on 
this proposal.

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

    Because the foregoing rule change does not:
    (i) Significantly affect the protection of investors or the public 
interest;
    (ii) Impose any significant burden on competition; and
    (iii) Become operative for 30 days from the date on which it was 
filed, or such shorter time as the Commission may designate, it has 
become effective \9\ pursuant to Section 19(b)(3)(A) of the Act \10\ 
and Rule 19b-4(f)(6) thereunder.\11\
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    \9\ The Exchange provided the Commission with notice of its 
intent to file the proposed rule change at least five days prior to 
the filing date.
    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act.
    The Amex has asked that the Commission waive the 30-day operative 
delay specified in 19b-4(f)(6)(iii) under the Act.\12\ The Commission 
believes such waiver is consistent with the protection of investors and 
the public interest, in that it will allow for the expeditious and 
accurate publication of the Exchange's rules. The Commission has 
therefore determined to waive the 30-day delay, rendering the proposal 
operative immediately.\13\
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    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ For purposes only of waiving the operative date of this 
proposal, 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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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. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File Number SR-Amex-2005-021 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609.
    All submissions should refer to File Number SR-Amex-2005-021. This 
file

[[Page 10709]]

number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Web site (http://www.sec.gov/rules/sro.shtml). 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 Section. Copies of such filing also will 
be available for inspection and copying at the principal offices of 
Amex. All comments received will be posted without change; the 
Commission does not edit personal identifying information from 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
Amex-2005-021 and should be submitted on or before March 25, 2005.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-879 Filed 3-3-05; 8:45 am]
BILLING CODE 8010-01-P