[Federal Register Volume 70, Number 43 (Monday, March 7, 2005)]
[Notices]
[Pages 11040-11042]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-915]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51276; File No. SR-NYSE-2004-59]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the New York Stock Exchange, Inc., To Adopt New Rule 401A 
(``Customer Complaints''), and an Amendment to Rule 476A (``Imposition 
of Fines for Minor Violations of Rules''), Adding Rule 401A to the List 
of Exchange Rule Violations and Fines Applicable Thereto Pursuant to 
Rule 476A

February 28, 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 October 21, 2004, the New York Stock Exchange, Inc. (``NYSE'' or 
``Exchange''), filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC'') the proposed rule change as described in 
Items I, II and III below, which Items have been prepared by NYSE. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Proposed new Exchange Rule 401A (``Customer Complaints'') would 
require members and member organizations (the ``Membership'' or 
``Member Firms'') to send acknowledgement of any customer complaint 
subject to the reporting requirements of Rule 351(d) within 15 business 
days of receiving such complaint, and to respond to the issues raised 
in such complaint within a reasonable period of time. The proposed 
corresponding amendment to Rule 476A (``Imposition of Fines for Minor 
Violations of Rules'') would allow the Exchange to sanction the 
Membership's less serious violations of the acknowledgement provisions 
of proposed new Rule 401A pursuant to the minor fine provisions of Rule 
476A. Below is the text of the proposed rule change. Proposed new 
language is italicized.
* * * * *

Rule 401A

Customer Complaints

    (a) For every customer complaint they receive that is subject to 
the reporting requirements of Rule 351(d), members and member 
organizations must:

[[Page 11041]]

    (1) Acknowledge receipt of the complaint within 15 business days of 
receiving it, and
    (2) Respond to the issues raised in the complaint within a 
reasonable period of time.
    (b) Each acknowledgement and response required by this rule must be 
conveyed to the complaining customer by appropriate method:
    (1) Acknowledgements and responses to written complaints must be 
either:
    (i) In writing, mailed to the complaining customer's last known 
address, or
    (ii) Electronically transmitted to the e-mail address from which 
the complaint was sent (method only permissible for electronically 
transmitted complaints).
    (2) Acknowledgements and responses to verbal complaints must be 
either:
    (i) In writing, mailed to the complaining customer's last known 
address, or
    (ii) Made verbally to the complaining customer, and recorded in a 
log of verbal acknowledgements and responses to customer complaints.
    (c) Written records of the acknowledgements, responses, and logs 
required by this rule must be retained in accordance with Rule 440 
(``Books and Records'').
* * * * *

Rule 476A

Imposition of Fines for Minor Violation of Rules
    (Rule 476A (a) through (e) unchanged)
Supplementary Material: List of Exchange Rule Violations and Fines 
Applicable Thereto Pursuant to Rule 476A
* * * * *
    Rule 387 requirements for customer COD/POD transactions
    Rule 392 notification requirements
    Failure to acknowledge customer complaint within 15 business days, 
as required by Rule 401A
    Rule 407 requirements for transactions of employees of the 
Exchange, members or member organizations
    Rule 407A reporting and notification requirements for members
* * * * *

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, NYSE 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. 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
    Background. NYSE Rule 351 (``Reporting Requirements'') specifies 
several occurrences, incidents, and periodic information that the 
Membership must report to the Exchange. NYSE Rule 351(d) requires the 
Membership to report to the Exchange statistical information regarding 
specified verbal and written customer complaints.\3\ Each complaint is 
classified by product and category, and attributed to a registered 
representative and branch office. The Exchange collects, aggregates, 
and analyzes these statistics to identify and monitor regulatory 
problems, focus its field examinations of Member Firms, identify 
content for its qualification examinations, and modify its continuing 
education programs. However, there is currently no NYSE rule requiring 
the Membership to respond to, or even acknowledge, such complaints. 
Recent Exchange examinations revealed several instances in which Member 
Firms did not, in fact, respond to or acknowledge customer complaints.
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    \3\ NYSE Information Memo No. 03-38, dated September 19, 2003, 
specifies that ``[a]ll complaints, regardless of how delivered 
(oral, written, e-mail or fax), are required to be reported to the 
Exchange.''
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2. Statutory Basis
    Proposed new Rule 401A and the corresponding amendment to NYSE Rule 
476A are consistent with the requirements of Section 6(b)(5) \4\ of the 
Exchange Act, which requires that the rules of the Exchange be designed 
to prevent fraudulent and manipulative acts and practices, to promote 
just and equitable principles of trade and, in general, to protect 
investors and the public interest in that it improves customer 
relations, supervision of registered representatives, early detection 
of potential regulatory problems, prevention of future securities 
violations, identification of issues requiring more thorough coverage 
in continuing education programs, and oversight of the Membership. The 
proposed rule change is also consistent with Section 6(b)(6) \5\ of the 
Exchange Act, which requires the rules of the Exchange to provide for 
its members and persons associated with its members to be appropriately 
disciplined for violations of those rules through fitting sanctions, 
including the imposition of fines.
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    \4\ 15 U.S.C. 78f(b)(5).
    \5\ 15 U.S.C. 78f(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that the proposal does not impose any burden 
on competition 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. 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 self-regulatory organization 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 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 e-mail to [email protected]. Please include File 
Number SR-NYSE-2004-59 in 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-NYSE-2004-59. This 
file number should be included on the

[[Page 11042]]

subject line of 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 Internet 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 Room. Copies of such filing also will be available for 
inspection and copying at the principal office of the NYSE.
    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 submission should refer to File Number SR-NYSE-2004-59 
and should be submitted on or before March 28, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-915 Filed 3-4-05; 8:45 am]
BILLING CODE 8010-01-P