[Federal Register Volume 70, Number 87 (Friday, May 6, 2005)]
[Notices]
[Pages 24146-24148]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-2203]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51622; File No. SR-NYSE-2005-29]


Self-Regulatory Organizations; New York Stock Exchange, Inc; 
Notice of Filing of a Proposed Rule Change To Remove Incorrect 
Reference in Its Rule Relating to Failure To Honor an Arbitration Award

April 27, 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 April 25, 2005, the New York Stock Exchange, Inc. (``NYSE'' or the 
``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 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 NYSE proposes to amend NYSE Rule 637 to delete NYSE Rule 637's 
reference to NYSE Rule 476A. The text of the proposed rule change is 
available on the NYSE's Web site (http://www.nyse.com), at the 
principal office of the NYSE, and at the Commission's Public Reference 
Room. The text of the proposed rule change also appears below. 
Deletions are bracketed.

Rule 637 Failure To Honor Award

    Any member, allied member, registered representative or member 
organization who fails to honor an award of arbitrators appointed in 
accordance with these rules or who fails

[[Page 24147]]

to honor an award of arbitrators rendered under the auspices of any 
other self-regulatory organization or pursuant to the rules applicable 
to securities disputes before the American Arbitration Association, 
shall be subject to disciplinary proceedings in accordance with Rule 
476 [, Rule 476A] or Article IX of the New York Stock Exchange 
Constitution and Rules.

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 Exchange 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
    Pursuant to current NYSE Rule 637, Exchange members, allied 
members, registered representatives, and member organizations that fail 
to honor arbitration awards of the NYSE, other self-regulatory 
organizations, or the American Arbitration Association are ``subject to 
disciplinary proceedings in accordance with NYSE Rule 476, NYSE Rule 
476A \3\ or Article IX'' of the NYSE Constitution and Rules.
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    \3\ Rule 476A provides that the Exchange may impose a fine, not 
to exceed $5000, on any member, member organization, allied member, 
approved person, or registered or non-registered employee of a 
member or member organization for a minor violation of certain 
specified Exchange rules. The NYSE represents that the purpose of 
the NYSE Rule 476A procedure is to provide a meaningful sanction for 
a rule violation when the initiation of a disciplinary proceeding 
under NYSE Rule 476 would be more costly and time consuming than 
would be warranted given the minor nature of the violation, or when 
the violation calls for a stronger regulatory response than an 
admonition letter would convey. The NYSE states that NYSE Rule 476A 
preserves due process rights, identifies those rule violations that 
may be the subject of summary fines, and includes a schedule of 
fines.NYSE
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    Although current NYSE Rule 637 specifies NYSE Rule 476A as a 
possible vehicle for disciplinary action to remedy violations of NYSE 
Rule 637, NYSE Rule 637 was never added to NYSE Rule 476A's ``List of 
Exchange Rule Violations and Fines Applicable Thereto Pursuant to NYSE 
Rule 476A.'' This discrepancy could be eliminated by adding NYSE Rule 
637 to the list of rules in NYSE Rule 476A. However, due to the serious 
nature of any failure to honor an arbitration award,\4\ the Exchange's 
management concluded that violations of NYSE Rule 637 are not properly 
remedied through disciplinary action pursuant to the minor fine 
provisions of NYSE Rule 476A. Therefore, the discrepancy would be more 
appropriately eliminated through an amendment deleting NYSE Rule 637's 
reference to NYSE Rule 476A, as proposed herein.
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    \4\ The NYSE Represents that NYSE arbitration awards rarely 
remain unsatisfied.
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2. Statutory Basis
    The proposed amendment to NYSE Rule 637 is consistent with Section 
6(b) of the Act \5\ in general and in particular furthers 
therequirements of Section 6(b)(6), \6\ which requires the rules of the 
Exchange to provide that its members and persons associated with its 
members be appropriately disciplined for violation of Exchange rules by 
fitting sanction, in that it corrects a discrepancy between NYSE Rules 
637 and 476A as to the appropriate sanction for violations of NYSE Rule 
637.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 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 would 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 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-NYSE-2005-29 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-NYSE-2005-29. This 
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, 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 Section. Copies of 
such filing also will be available for inspection and copying at the 
principal office of the Exchange. 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-NYSE-2005-29 and should be submitted on or before May 
27, 2005.


[[Page 24148]]


    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E5-2203 Filed 5-5-05; 8:45 am]
BILLING CODE 8010-01-P