Self-Regulatory Organizations; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change and Amendment No. 1 Thereto of the New York Stock Exchange, Inc. Relating to Arbitration, 15137-15139 [E5-1293]
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Federal Register / Vol. 70, No. 56 / Thursday, March 24, 2005 / Notices
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–BSE–2004–58 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–BSE–2004–58. 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 (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change, as amended, that are filed with
the Commission, and all written
communications relating to the
proposed rule change, as amended,
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 BSE. 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–BSE–2004–58 and should
be submitted on or before April 14,
2005.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.13
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5–1291 Filed 3–23–05; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
six-month period ending March 31,
2005.3
Exchange Rule 600(g) states:
[Release No. 34–51395; File No. SR–NYSE–
2005–14]
This paragraph applies to the Ethics
Standards for Neutral Arbitrators in
Contractual Arbitrations promulgated by the
Judicial Council of California (the ‘‘California
Standards’’), which, were they to have effect
in connection with arbitrations conducted
pursuant to this Code, would conflict with
this Code. In light of this conflict, the
affected customer(s) or an associated person
of a member or member organization who
asserts a claim against the member or
member organization with which she or he
is associated may:
• Request the Director to appoint
arbitrators and schedule a hearing outside
California, or
• Waive the California Standards and
request the Director to appoint arbitrators
and schedule a hearing in California. A
written waiver by a customer or associated
person who asserts a claim against the
member or member organization with which
he or she is associated on a form provided
by the Director of Arbitration under this Code
shall also constitute and operate as a waiver
for all other parties to the arbitration who are
members, allied members, member
organizations, and/or associated persons of a
member or member organization.
Self-Regulatory Organizations; Notice
of Filing and Order Granting
Accelerated Approval of Proposed
Rule Change and Amendment No. 1
Thereto of the New York Stock
Exchange, Inc. Relating to Arbitration
March 18, 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
7, 2005, the New York Stock Exchange,
Inc. (‘‘NYSE’’ or ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’)
the proposed amendment to its
arbitration rules as described in Items I
and II below, which Items have been
prepared by the Exchange. On March
10, 2005, the Exchange filed
Amendment No. 1 to the proposed rule
change. The Commission is publishing
this notice to solicit comments on the
proposed rule change from interested
persons and is approving the proposal
on an accelerated basis.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The proposed rule change consists of
an extension, until September 30, 2005,
of Exchange Rule 600(g), relating to
arbitration.
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 III below and is
set forth in Sections A, B and C below.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The proposed rule change is intended
to extend until September 30, 2005,
Exchange Rule 600(g), a pilot program
that was most recently extended for a
BILLING CODE 8010–01–P
1 15
13 17
CFR 200.30–3(a)(12).
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15:04 Mar 23, 2005
2 17
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15137
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00073
Fmt 4703
According to the NYSE, Exchange
Rule 600(g) was adopted by the
Exchange in response to the purported
imposition of California state law on
arbitrations conducted under the
auspices of the Exchange and pursuant
to a set of nationally-applied rules
approved by the Commission.4 The
Exchange states that on July 1, 2002, as
a result of the purported application of
the Ethics Standards for Neutral
Arbitrators in Contractual Arbitrations
(the ‘‘California Standards’’) to
Exchange arbitrations and arbitrators,
the Exchange suspended the
appointment of arbitrators for cases
pending in California. The Exchange
and NASD Dispute Resolution, Inc.
sought a declaratory judgment that the
California Standards are preempted by
federal law. On November 12, 2002,
Judge Samuel Conti dismissed the
action on Eleventh Amendment
grounds.5 A Notice of Appeal from
Judge Conti’s decision has been filed
with the United States Court of Appeals
for the Ninth Circuit.6 The Exchange has
3 See Securities Exchange Act Release No. 50449
(September 24, 2004), 69 FR 58985 (October 1,
2004) (SR–NYSE–2004–50).
4 See Securities Exchange Act Release No. 46816
(November 12, 2002), 67 FR 69793 (November 19,
2002) (SR–NYSE–2002–56).
5 NASD Dispute Resolution, Inc. and New York
Stock Exchange, Inc. v. Judicial Council of
California, No. C 02 3485 (N.D. Cal.).
6 The appeal from Judge Conti’s decision in NASD
Dispute Resolution, Inc. and New York Stock
Exchange, Inc. v. Judicial Council of California is
Continued
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Federal Register / Vol. 70, No. 56 / Thursday, March 24, 2005 / Notices
determined that, in the absence of a
final judicial determination or
legislative resolution of the preemption
issue, there is a continuing need for the
waiver option provided by Exchange
Rule 600(g).
2. Statutory Basis
The Exchange states that the proposed
change is consistent with Section 6(b)(5)
of the Act 7 in that it promotes just and
equitable principles of trade by ensuring
that members and member organizations
and the public have a fair and impartial
forum for the resolution of their
disputes.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will 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 on the
proposed rule change.
currently stayed. In another district court decision,
Mayo v. Dean Witter Reynolds, Inc., Morgan Stanley
Dean Witter & Co. dba Morgan Stanley Dean Witter,
and Does 1–50, No. C–01–20336 JF, 2003 WL
1922963 (N.D. Cal. Apr. 22, 2003), Judge Jeremy
Fogel held that application of the California
Standards to the Exchange and other self-regulatory
organizations (‘‘SROs’’) is preempted by the Act, the
comprehensive system of federal regulation of the
securities industry established pursuant to the Act,
and the Federal Arbitration Act (‘‘FAA’’). The Mayo
decision was not appealed. Since the decision in
Mayo, the question of the applicability of the
California Standards to SROs has been presented in
another case in federal court in California, Credit
Suisse First Boston Corp. v. Grunwald, No. C 02–
2051 SBA (N.D. Cal. Mar. 31, 2003). The District
Court in Grunwald concluded that the California
Standards cannot apply to SRO-appointed
arbitrators because such arbitrators do not fall
within the statutory definition of ‘‘neutral
arbitrators.’’ On appeal, the Ninth Circuit disagreed
that SRO-appointed arbitrators did not fall within
the statutory definition of ‘‘neutral arbitrators’’ but
held that the California Standards are preempted by
the Act. See Credit Suisse First Boston Corp. v.
Grunwald, No. 03–15695 (9th Cir. Mar. 1, 2005).
NASD Dispute Resolution and the Exchange also
submitted an amicus brief in Jevne v. Superior
Court, 6 Cal. Rptr. 3d 542, 113 Cal. App. 4th 486
(2d Dist. 2003), in which the California Court of
Appeal, Second District held that the Judicial
Council acted within its authority in drafting the
California Standards, that the California Standards
are not preempted by the FAA, but that they are
preempted by the Act. On March 17, 2004, the
California Supreme Court granted review in Jevne.
NASD Dispute Resolution and the Exchange were
allowed to intervene on appeal before the California
Supreme Court. The Jevne appeal has been fully
briefed and was argued before the California
Supreme Court on March 8, 2005.
7 15 U.S.C. 78f(b)(5).
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thereunder, applicable to a national
securities exchange.8 In particular, the
Commission finds that the proposed
rule change is consistent with Section
6(b)(5) of the Act 9 in that it promotes
just and equitable principles of trade by
ensuring that members and member
organizations and the public have a fair
and impartial forum for the resolution of
Electronic Comments
their disputes.
• Use the Commission’s Internet
The Commission also believes that the
comment form (https://www.sec.gov/
proposed rule change raises no issues
rules/sro.shtml); or
that have not been previously
• Send an e-mail to ruleconsidered by the Commission.
comments@sec.gov. Please include File
Granting accelerated approval here will
Number SR–NYSE–2005–14 on the
merely extend a pilot program that is
subject line.
designed to inform aggrieved parties
Paper Comments
about their options regarding
• Send paper comments in triplicate
mechanisms that are available for
to Jonathan G. Katz, Secretary,
resolving disputes with broker-dealers.
Securities and Exchange Commission,
The NYSE adopted the pilot program
450 Fifth Street, NW., Washington, DC
under Rule 600(g) in response to the
20549–0609.
purported imposition of the California
All submissions should refer to File
Standards on Exchange arbitrations and
Number SR–NYSE–2005–14. This file
arbitrators. The pilot rule is currently
number should be included on the
subject line if e-mail is used. To help the extended until March 31, 2005, and
must be extended in order to continue
Commission process and review your
to provide the waiver option until a
comments more efficiently, please use
only one method. The Commission will final judicial determination is reached.
post all comments on the Commission’s During the period of this extension, the
Commission and NYSE will continue to
Internet Web site (https://www.sec.gov/
rules/sro/shtml). Copies of the
monitor the status of the previously
submission, all subsequent
discussed litigation.
amendments, all written statements
After careful consideration, the
with respect to the proposed rule
Commission finds good cause, pursuant
change that are filed with the
to Section 19(b)(2) of the Act,10 for
Commission, and all written
approving the proposed rule change
communications relating to the
prior to the thirtieth day after the date
proposed rule change between the
Commission and any person, other than of publication of notice in the Federal
Register. The Commission notes that the
those that may be withheld from the
current extension of the pilot program
public in accordance with the
under Exchange Rule 600(g) expires on
provisions of 5 U.S.C. 552, will be
March 31, 2005. Accordingly, the
available for inspection and copying in
Commission believes that there is good
the Commission’s Public Reference
cause, consistent with Section 6(b)(5) of
Room, 450 Fifth Street, NW.,
the Act,11 to approve the proposal on an
Washington, DC 20549–0609. Copies of
such filing also will be available for
accelerated basis.
inspection and copying at the principal
V. Conclusion
office of the NYSE. All comments
received will be posted without change;
It is therefore ordered, pursuant to
the Commission does not edit personal
Section 19(b)(2) of the Act,12 that the
identifying information from
proposed rule change (SR–NYSE–2005–
submissions. You should submit only
14), as amended, is hereby approved on
information that you wish to make
an accelerated basis, and Exchange Rule
available publicly. All submissions
600(g) is extended until September 30,
should refer to File Number SR–NYSE–
2005.
2005–14 and should be submitted on or
before April 14, 2005.
III. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change, as amended, is consistent with
the Act. Comments may be submitted by
any of the following methods:
IV. Commission’s Findings and Order
Granting Accelerated Approval of
Proposed Rule Change
The Commission finds that the
proposed rule change, as amended, is
consistent with the requirements of the
Act and the rules and regulations
PO 00000
Frm 00074
Fmt 4703
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8 In approving this proposal, the Commission has
considered its impact on efficiency, competition,
and capital formation. 15 U.S.C. 78c(f).
9 15 U.S.C. 78f(b)(5).
10 15 U.S.C. 78s(b)(2).
11 15 U.S.C. 78f(b)(5).
12 15 U.S.C. 78s(b)(2).
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15139
Federal Register / Vol. 70, No. 56 / Thursday, March 24, 2005 / Notices
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.13
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5–1293 Filed 3–23–05; 8:45 am]
which have been determined by the
Exchange to be obsolete or unnecessary.
The text of the proposed rule change, as
amended, is set forth below.
Proposed deletions are in brackets.
*
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BILLING CODE 8010–01–P
Rule 4
*
SECURITIES AND EXCHANGE
COMMISSION
Self-Regulatory Organizations; Notice
of Filing and Proposed Rule Change
and Amendment Nos. 1 and 2 Thereto
by the Pacific Exchange, Inc. Relating
to the Deletion of Obsolete or
Unnecessary Rules
March 17, 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 July 9,
2004, the Pacific Exchange, Inc. (‘‘PCX’’
or ‘‘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. On February
9, 2005, the Exchange filed Amendment
No. 1 to the proposed rule change.3 On
March 10, 2005, the Exchange filed
Amendment No. 2 to the proposed rule
change.4 The Commission is publishing
this notice to solicit comments on the
proposed rule change, as amended, from
interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to delete
certain of its rules, or portions thereof,
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 Amendment No. 1 replaced and superseded the
original proposal.
4 In Amendment No. 2, PCX deleted the proposed
changes to PCX Rule 6.68(a), which would have
required an OTP Holder or OTP Firm to write its
name or badge number on the trade ticket, since the
necessary changes were made to PCX Rule 6.68(a)
on January 7, 2005. See Securities Exchange Act
Release No. 50998 (January 7, 2005), 70 FR 2443
(January 13, 2005)(approving File No. SR–PCX–
2004–122). In SR–PCX–2004–122, PCX amended its
rules relating to the systematization of orders in
connection with the requirement to design and
implement a consolidated options audit trail
system, which included PCX Rule 6.68(a). PCX
represents that the information in PCX Rule 6.68(a)
is the same information required in PCX Options
Floor Procedure Advice D–10. Amendment No. 2
also deleted language in the filing related to PCX
Rule 6.68(a). In addition, Amendment No. 2
corrected a typographical error in the proposed rule
text.
1 15
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*
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*
Exemptions
[Release No. 34–51392; File No. SR–PCX–
2004–65]
13 17
*
Rule 4.7 An OTP Holder or OTP Firm
shall be exempt from the filing
requirements prescribed by Rules 4.5
and 4.6 under the following conditions:
(a) Any Floor Broker, Market Maker in
listed options, or Lead Market Maker in
listed options, registered with the
Exchange in any such capacity, who is
exempt from the minimum net capital
requirements prescribed by Rule 4.1.
[An OTP Holder or OTP Firm
qualifying for an exemption from the
regular filing requirements pursuant to
this Paragraph shall file with the
Exchange for each calendar quarter a
balance sheet and income statement in
such form as prescribed by the
Exchange. Such balance sheet and
income statement shall be due by the
fifteenth calendar day following the end
of each calendar quarter in which the
exemption provided in this Paragraph is
applicable.]
(b) Any OTP Holder or OTP Firm that
is a member of another self-regulatory
organization, which has been designated
the examining authority for such OTP
Holder or OTP Firm by the Securities
and Exchange Commission.
[An OTP Holder or OTP Firm
qualifying for an exemption pursuant to
this Paragraph shall file with the
Exchange a copy of Notice and Part II
of SEC Form X–17A–5, including such
supplementary schedules as may be
required, pursuant to the provisions of
Rule 17a-11 under the Securities
Exchange Act of 1934, as amended, at
such time and at such frequency as
prescribed by such other Designated
Examining Authority or by any
applicable rule.]
*
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Rule 11
Business Conduct
*
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*
*
Joint Accounts
Rule 11.12(a)—No change.
[(b) Reporting. No OTP Holder or OTP
Firm, nor any participant therein shall
directly or indirectly hold any interest
or participation in any substantial joint
account for buying or selling any
security through the facilities of the
Exchange, unless such joint account is
PO 00000
Frm 00075
Fmt 4703
Sfmt 4703
reported to and not disapproved by the
Exchange. Such reports, in form
prescribed by the Exchange, shall be
filed with the Exchange before any
transaction is completed through the
facilities of the Exchange for such joint
account.
The Exchange shall require weekly
reports, in form prescribed by the
Exchange, to be filed with it with
respect to every substantial joint
account for buying or selling any
specific security on the Exchange and
with respect to every joint account
which actively trades in any security on
the Exchange in which any OTP Holder,
OTP Firm or participant therein holds
any interest or participation or of which
such OTP Holder, OTP Firm or
participant therein has knowledge by
reason of transactions executed by or
through such OTP Holder, OTP Firm or
participant therein; provided, however,
that this paragraph shall not apply to
joint accounts specifically permitted by
this Rule.
In the event the requirements hereof
should be applicable to a security also
dealt in on another national securities
exchange having requirements
substantially equivalent hereto and an
OTP Holder or OTP Firm is a member
or member firm of such other exchange
and complies with such requirements of
such other exchange, then such OTP
Holder or OTP Firm need not comply
with the reporting provisions hereof.]
*
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*
Options Floor Procedure Advices
*
*
*
*
*
*
*
*
Orders
*
*
[D–10
Subject: Imprinting the Name of OTP
Holder or OTP Firm on Trade Tickets
Rule 6.66 requires an OTP Holder or
OTP Firm to immediately give up the
name of the clearing member through
whom the transaction will be cleared
and Rule 6.67 requires that orders be in
a written form approved by the
Exchange.
In order to reduce confusion and
potential errors, the Exchange has ruled
that OTP Holders or OTP Firms ordering
trade tickets, other than Market Maker
trade tickets, either from the Exchange
or from other approved sources, shall
cause to be imprinted or written thereon
the name of the OTP Holder or OTP
Firm that will be given up in
transactions effected by the use of that
ticket.]
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]]>Agencies
[Federal Register Volume 70, Number 56 (Thursday, March 24, 2005)]
[Notices]
[Pages 15137-15139]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-1293]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-51395; File No. SR-NYSE-2005-14]
Self-Regulatory Organizations; Notice of Filing and Order
Granting Accelerated Approval of Proposed Rule Change and Amendment No.
1 Thereto of the New York Stock Exchange, Inc. Relating to Arbitration
March 18, 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 7, 2005, the New York Stock Exchange, Inc. (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed amendment to its arbitration
rules as described in Items I and II below, which Items have been
prepared by the Exchange. On March 10, 2005, the Exchange filed
Amendment No. 1 to the proposed rule change. The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons and is approving the proposal on an accelerated
basis.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The proposed rule change consists of an extension, until September
30, 2005, of Exchange Rule 600(g), relating to arbitration.
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 III below and is set forth in Sections A, B and C below.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The proposed rule change is intended to extend until September 30,
2005, Exchange Rule 600(g), a pilot program that was most recently
extended for a six-month period ending March 31, 2005.\3\
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 50449 (September 24,
2004), 69 FR 58985 (October 1, 2004) (SR-NYSE-2004-50).
---------------------------------------------------------------------------
Exchange Rule 600(g) states:
This paragraph applies to the Ethics Standards for Neutral
Arbitrators in Contractual Arbitrations promulgated by the Judicial
Council of California (the ``California Standards''), which, were
they to have effect in connection with arbitrations conducted
pursuant to this Code, would conflict with this Code. In light of
this conflict, the affected customer(s) or an associated person of a
member or member organization who asserts a claim against the member
or member organization with which she or he is associated may:
Request the Director to appoint arbitrators and
schedule a hearing outside California, or
Waive the California Standards and request the Director
to appoint arbitrators and schedule a hearing in California. A
written waiver by a customer or associated person who asserts a
claim against the member or member organization with which he or she
is associated on a form provided by the Director of Arbitration
under this Code shall also constitute and operate as a waiver for
all other parties to the arbitration who are members, allied
members, member organizations, and/or associated persons of a member
or member organization.
According to the NYSE, Exchange Rule 600(g) was adopted by the
Exchange in response to the purported imposition of California state
law on arbitrations conducted under the auspices of the Exchange and
pursuant to a set of nationally-applied rules approved by the
Commission.\4\ The Exchange states that on July 1, 2002, as a result of
the purported application of the Ethics Standards for Neutral
Arbitrators in Contractual Arbitrations (the ``California Standards'')
to Exchange arbitrations and arbitrators, the Exchange suspended the
appointment of arbitrators for cases pending in California. The
Exchange and NASD Dispute Resolution, Inc. sought a declaratory
judgment that the California Standards are preempted by federal law. On
November 12, 2002, Judge Samuel Conti dismissed the action on Eleventh
Amendment grounds.\5\ A Notice of Appeal from Judge Conti's decision
has been filed with the United States Court of Appeals for the Ninth
Circuit.\6\ The Exchange has
[[Page 15138]]
determined that, in the absence of a final judicial determination or
legislative resolution of the preemption issue, there is a continuing
need for the waiver option provided by Exchange Rule 600(g).
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 46816 (November 12,
2002), 67 FR 69793 (November 19, 2002) (SR-NYSE-2002-56).
\5\ NASD Dispute Resolution, Inc. and New York Stock Exchange,
Inc. v. Judicial Council of California, No. C 02 3485 (N.D. Cal.).
\6\ The appeal from Judge Conti's decision in NASD Dispute
Resolution, Inc. and New York Stock Exchange, Inc. v. Judicial
Council of California is currently stayed. In another district court
decision, Mayo v. Dean Witter Reynolds, Inc., Morgan Stanley Dean
Witter & Co. dba Morgan Stanley Dean Witter, and Does 1-50, No. C-
01-20336 JF, 2003 WL 1922963 (N.D. Cal. Apr. 22, 2003), Judge Jeremy
Fogel held that application of the California Standards to the
Exchange and other self-regulatory organizations (``SROs'') is
preempted by the Act, the comprehensive system of federal regulation
of the securities industry established pursuant to the Act, and the
Federal Arbitration Act (``FAA''). The Mayo decision was not
appealed. Since the decision in Mayo, the question of the
applicability of the California Standards to SROs has been presented
in another case in federal court in California, Credit Suisse First
Boston Corp. v. Grunwald, No. C 02-2051 SBA (N.D. Cal. Mar. 31,
2003). The District Court in Grunwald concluded that the California
Standards cannot apply to SRO-appointed arbitrators because such
arbitrators do not fall within the statutory definition of ``neutral
arbitrators.'' On appeal, the Ninth Circuit disagreed that SRO-
appointed arbitrators did not fall within the statutory definition
of ``neutral arbitrators'' but held that the California Standards
are preempted by the Act. See Credit Suisse First Boston Corp. v.
Grunwald, No. 03-15695 (9th Cir. Mar. 1, 2005). NASD Dispute
Resolution and the Exchange also submitted an amicus brief in Jevne
v. Superior Court, 6 Cal. Rptr. 3d 542, 113 Cal. App. 4th 486 (2d
Dist. 2003), in which the California Court of Appeal, Second
District held that the Judicial Council acted within its authority
in drafting the California Standards, that the California Standards
are not preempted by the FAA, but that they are preempted by the
Act. On March 17, 2004, the California Supreme Court granted review
in Jevne. NASD Dispute Resolution and the Exchange were allowed to
intervene on appeal before the California Supreme Court. The Jevne
appeal has been fully briefed and was argued before the California
Supreme Court on March 8, 2005.
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2. Statutory Basis
The Exchange states that the proposed change is consistent with
Section 6(b)(5) of the Act \7\ in that it promotes just and equitable
principles of trade by ensuring that members and member organizations
and the public have a fair and impartial forum for the resolution of
their disputes.
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\7\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
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 on
the proposed rule change.
III. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change, as amended, is consistent with the Act. Comments may be
submitted by any of the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NYSE-2005-14 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-2005-14. 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 (https://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, 450 Fifth
Street, NW., Washington, DC 20549-0609. 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 submissions should refer to File Number SR-
NYSE-2005-14 and should be submitted on or before April 14, 2005.
IV. Commission's Findings and Order Granting Accelerated Approval of
Proposed Rule Change
The Commission finds that the proposed rule change, as amended, is
consistent with the requirements of the Act and the rules and
regulations thereunder, applicable to a national securities
exchange.\8\ In particular, the Commission finds that the proposed rule
change is consistent with Section 6(b)(5) of the Act \9\ in that it
promotes just and equitable principles of trade by ensuring that
members and member organizations and the public have a fair and
impartial forum for the resolution of their disputes.
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\8\ In approving this proposal, the Commission has considered
its impact on efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
\9\ 15 U.S.C. 78f(b)(5).
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The Commission also believes that the proposed rule change raises
no issues that have not been previously considered by the Commission.
Granting accelerated approval here will merely extend a pilot program
that is designed to inform aggrieved parties about their options
regarding mechanisms that are available for resolving disputes with
broker-dealers. The NYSE adopted the pilot program under Rule 600(g) in
response to the purported imposition of the California Standards on
Exchange arbitrations and arbitrators. The pilot rule is currently
extended until March 31, 2005, and must be extended in order to
continue to provide the waiver option until a final judicial
determination is reached. During the period of this extension, the
Commission and NYSE will continue to monitor the status of the
previously discussed litigation.
After careful consideration, the Commission finds good cause,
pursuant to Section 19(b)(2) of the Act,\10\ for approving the proposed
rule change prior to the thirtieth day after the date of publication of
notice in the Federal Register. The Commission notes that the current
extension of the pilot program under Exchange Rule 600(g) expires on
March 31, 2005. Accordingly, the Commission believes that there is good
cause, consistent with Section 6(b)(5) of the Act,\11\ to approve the
proposal on an accelerated basis.
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\10\ 15 U.S.C. 78s(b)(2).
\11\ 15 U.S.C. 78f(b)(5).
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V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\12\ that the proposed rule change (SR-NYSE-2005-14), as amended,
is hereby approved on an accelerated basis, and Exchange Rule 600(g) is
extended until September 30, 2005.
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\12\ 15 U.S.C. 78s(b)(2).
[[Page 15139]]
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For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-1293 Filed 3-23-05; 8:45 am]
BILLING CODE 8010-01-P
