[Federal Register Volume 70, Number 222 (Friday, November 18, 2005)]
[Notices]
[Pages 69999-70001]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-6379]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52765; File No. SR-Amex-2005-102]


Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to an Interpretation of Exchange Rule 577 and Section 723 of 
the Amex Company Guide

November 10, 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 12, 2005, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the

[[Page 70000]]

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 Exchange proposes to amend an Exchange interpretation of 
Exchange Rule 577 (Giving Proxies by Member Organization) and Section 
723 (Giving Proxies by Member Organization) of the Amex Company 
Guide.\3\
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    \3\ The Commission notes that the proposed rule change does not 
amend the text of Exchange Rule 577 and its Commentary or Section 
723 of the Amex Company Guide and its Commentary.
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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 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Amex Rule 577 provides that a member organization may give a proxy 
to vote shares registered in its name, notwithstanding the failure of 
the beneficial owner to instruct the firm how to vote, provided, among 
other things, that the proposal being voted on does not involve a 
matter which ``may affect substantially the rights or privileges of 
such stock.'' \4\ Commentary .11 to Amex Rule 577 lists, by way of 
example, 18 ``non-routine'' actions in respect of which member 
organizations may not vote uninstructed shares. In addition to those 18 
specific actions, the Amex has interpreted Rule 577 to preclude member 
organizations from voting without instructions in certain other 
situations, including those involving any material amendment to an 
investment advisory contract with an investment company. The New York 
Stock Exchange (``NYSE'') Rule 452 is virtually identical to Amex Rule 
577 and has been similarly interpreted.
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    \4\ Section 723 of the Amex Company Guide is the same as Amex 
Rule 577 and this proposed rule interpretation will apply to both 
Section 723 of the Amex Company Guide and Amex Rule 577.
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    In the past, where the only change being made to the substantive 
terms of the investment advisory contract was a change in the identity 
of the investment adviser, both the Amex and the NYSE interpreted their 
respective proxy voting provisions to permit member organizations to 
vote uninstructed shares on the authorization of the new investment 
company investment advisory contract.\5\ A proposed rule change filed 
by the NYSE of its interpretation of its rule governing proxies by 
member organizations on votes relating to changes to investment 
advisory contracts recently became effective.\6\ Under the new 
interpretation, any proposal to obtain shareholder approval of an 
investment company's investment advisory contract with a new investment 
adviser,\7\ which approval is required by the Investment Company Act of 
1940, as amended (``1940 Act''),\8\ and the rules thereunder, will be 
deemed by NYSE to be a ``matter which may affect substantially the 
rights or privileges of such stock'' on which a member organization may 
not give a proxy to vote shares registered in its name absent 
instruction from the beneficial holder of the shares. This policy means 
that where the 1940 Act requires shareholder approval of an investment 
advisory contract due to an assignment of an investment company's 
investment advisory contract (including an assignment caused by a 
change in control of the investment adviser that is a party to the 
assigned contract), a member organization may not give a proxy to vote 
shares registered in its name absent instruction from the beneficial 
holder of the shares.
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    \5\ In 1992, the NYSE issued a formal interpretation of Rule 452 
to, among other things, allow member organizations to give a proxy 
on the initial approval of an investment advisory contract if the 
beneficial holder does not exercise his right to vote; however, 
member organizations are precluded from voting without instructions 
if there is a material amendment to the investment advisory 
contract. See Securities Exchange Act Release No. 30697 (May 13, 
1992), 57 FR 21434 (May 20, 1992) (SR-NYSE-92-05). Telephone 
conversation between Steve L. Kuan, Special Counsel, Division of 
Market Regulation (``Division''), Commission, and Marija Willen, 
Associate General Counsel, Amex, on October 27, 2005.
    \6\ See Securities Exchange Act Release No. 52569 (October 6, 
2005), 70 FR 60118 (October 14, 2005) (SR-NYSE-2005-61).
    \7\ Telephone conversation between Steve L. Kuan, Special 
Counsel, Division, Commission, and Marija Willen, Associate General 
Counsel, Amex, on October 27, 2005.
    \8\ 15 U.S.C. 80a-1 et seq.
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    Following discussions with the staff of the Commission's Division 
of Investment Management, the Amex has determined to adopt a comparable 
interpretation of Rule 577 to conform to the NYSE interpretation. Under 
the proposed interpretation of Amex Rule 577, any proposal to obtain 
shareholder approval of an investment company's investment advisory 
contract with a new investment adviser,\9\ which approval is required 
by the 1940 Act, and the rules thereunder, will be deemed to be a 
``matter which may affect substantially the rights or privileges of 
such stock'' (that is, a ``non-routine'' matter) on which a member 
organization may not give a proxy to vote shares registered in its name 
absent instruction from the beneficial holder of the shares.
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    \9\ See note 7 supra.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\10\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\11\ in particular, in that it 
is designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to remove 
impediments to and perfect the mechanisms 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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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that the proposed rule change does not 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

    The Exchange has neither solicited nor received written comments 
with respect to the proposed rule change.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \12\ and paragraph (f)(1) of Rule 19b-4 
thereunder \13\ as constituting a stated policy, practice, or 
interpretation with respect to the meaning, administration, or 
enforcement of an existing Exchange rule. At any time within 60 days of 
the filing of the proposed rule change, the Commission

[[Page 70001]]

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.
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(1).
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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-2005-102 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303.

All submissions should refer to File Number SR-Amex-2005-102. 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 Room. 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-Amex-2005-102 and should be submitted on or before 
December 9, 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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Jonathan G. Katz,
Secretary.
 [FR Doc. E5-6379 Filed 11-17-05; 8:45 am]
BILLING CODE 8010-01-P