Self-Regulatory Organizations; Order Approving Proposed Rule Change by the New York Stock Exchange, Inc. To Adopt a New Rule (NYSE Rule 401A) Requiring Members and Member Organizations To Respond to Customer Complaints, and Adding Failure To Acknowledge Customer Complaints to the Minor Fine Provisions of NYSE Rule 476A, 20410-20411 [E5-1817]
Download as PDF
<![CDATA[
20410
Federal Register / Vol. 70, No. 74 / Tuesday, April 19, 2005 / Notices
publication of notice of filing thereof in
that accelerated approval will benefit
NASD members and the investing
public.
V. Conclusion
It is therefore ordered, pursuant to
section 19(b)(2) of the Act, that the
proposed rule change (SR–NASD–2005–
045) be, and hereby is, approved on an
accelerated basis.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.11
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5–1818 Filed 4–18–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–51539; File No. SR–NYSE–
2004–59]
Self-Regulatory Organizations; Order
Approving Proposed Rule Change by
the New York Stock Exchange, Inc. To
Adopt a New Rule (NYSE Rule 401A)
Requiring Members and Member
Organizations To Respond to
Customer Complaints, and Adding
Failure To Acknowledge Customer
Complaints to the Minor Fine
Provisions of NYSE Rule 476A
April 13, 2005.
I. Introduction
On October 21, 2004, the New York
Stock Exchange, Inc. (‘‘NYSE’’ or ‘‘the
Exchange’’) filed with the Securities and
Exchange Commission (‘‘Commission’’),
pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a
proposed rule change to adopt a new
rule, denoted NYSE Rule 401A, to
require its members and member
organizations (‘‘members’’) to respond
to customer complaints, and to add
failure to acknowledge customer
complaints to the minor fine provisions
of NYSE Rule 476A. The proposed rule
change was published for comment in
the Federal Register on March 7, 2005.3
The Commission received no comments
in response to the proposed rule change.
For the reasons discussed below, the
Commission is approving the proposed
rule change.
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 Securities Exchange Act Release No. 51276 (Feb.
28, 2005), 70 FR 11040 (Mar. 7, 2005) (‘‘Notice’’).
II. Description of the Proposed Rule
Change
NYSE Rule 351(d) requires NYSE
members to ‘‘report to the Exchange
statistical information regarding
customer complaints relating to such
matters as may be specified by the
Exchange.’’ Pursuant to this Rule, the
NYSE currently requires reporting of
statistical information relating to
complaints by customers involving,
inter alia, sales practices, unauthorized
trading and misappropriation of funds.4
The reporting obligation applies to ‘‘[a]ll
complaints, regardless of how delivered
(oral, written, e-mail or fax) * * *.’’ 5
The NYSE now proposes to adopt a
new Rule, designated 401A, to require
its members to acknowledge and
respond to customer complaints.
Specifically, Rule 401A(a) would
require NYSE members to acknowledge
receipt of every customer complaint that
is subject to the reporting requirements
of Rule 351(d) within 15 business days
of receipt, and to respond to the issues
raised in such complaint within a
reasonable period of time. Rule 401A(b)
would mandate specific methods of
delivery for acknowledgements and
responses. Written acknowledgements
and responses mailed to the
complaining customer’s last known
address would suffice in all cases.
However, where a complaint was
electronically transmitted, members
would be permitted to acknowledge and
respond to it by electronic transmission
to the e-mail address from which the
complaint was sent. The Exchange
would also permit verbal
acknowledgements and responses to
verbal complaints, provided that they
are recorded in a log of such actions.
Paragraph (c) of the proposed rule
would require members to keep written
records of all such acknowledgements,
responses, and logs in accordance with
NYSE Rule 440 (‘‘Books and Records’’).
Finally, the Exchange proposes to add
failures to acknowledge customer
complaints within 15 days of receipt to
the list of violations in NYSE Rule 476A
(‘‘Imposition of Fines for Minor
Violations of Rules’’). Rule 476A
provides that the Exchange may impose
fines, not to exceed $5,000, on any
member for a minor violation of the
Exchange rules specified therein.
III. Discussion and Findings
The Commission finds the proposed
rule change is consistent with the Act,
and in particular with section 6(b)(5) of
the Act, which requires, among other
things, that the rules of a national
securities 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.6 The Commission
further finds that the proposal is
consistent with section 6(b)(6) of the
Act,7 which requires that members be
appropriately disciplined for violations
of Exchange rules. Finally, the
Commission finds the proposal is
consistent with Rule 19d–1(c)(2) under
the Act,8 which governs minor rule
violation plans.
As the Exchange stated in its
proposal, no current NYSE rule requires
members to acknowledge or respond to
complaints from customers.9 The
proposal will require NYSE members to
acknowledge and respond to any and all
customer complaints that must be
reported to the Exchange under NYSE
Rule 351(d). Indeed, under proposed
Rule 401A, ignoring or neglecting a
customer complaint would constitute a
violation of NYSE rules. The
Commission believes that the new Rule
is consistent with the protection of
investors and the public interest
because, by requiring members to
review and respond to customer
complaints, and by requiring records to
be kept with respect to such actions, the
Rule should encourage NYSE members
to attend to complaints that may alert
them to potential abuses and to take
corrective action, where appropriate.
The Commission also believes that the
new required procedures should foster
an awareness within NYSE member
firms of the volume and specific types
of complaints they receive, thereby
promoting appropriate preventive or
supervisory action by the member’s
compliance personnel. Specifically,
requiring firms to review and respond to
customer complaints should enhance a
member’s ability to supervise its
personnel by drawing attention to any
that may require additional training or
monitoring. Exposure to an aggregation
of complaints should also alert NYSE
members to systemic problems with
registered representatives, products, and
services and should allow the member
to identify areas where it, or its
personnel, could improve compliance.
Further, the Commission believes that
the proposed new Rule should serve to
protect investors because it will require
NYSE members to notify them when
11 17
1 15
VerDate jul<14>2003
18:06 Apr 18, 2005
Jkt 205001
4 NYSE Information Memo Number 03–39 (Sep.
19, 2003).
5 NYSE Information Memo Number 03–38 (Sep.
19, 2003).
PO 00000
Frm 00066
Fmt 4703
Sfmt 4703
6 15
U.S.C. 78f(b)(5).
U.S.C. 78f(b)(6).
8 17 CFR 240.19d–1(c)(2).
9 Notice at 11041.
7 15
E:\FR\FM\19APN1.SGM
19APN1
Federal Register / Vol. 70, No. 74 / Tuesday, April 19, 2005 / Notices
their complaints are received, and to
notify them of any action (or refusal to
act) with respect to their complaints. In
cases where an investor and member are
unable to resolve a dispute, records of
complaints and responses will
document the sequence of
correspondence and/or actions for use
in any potential formal resolution
proceedings.
The Commission believes that the
Exchange’s proposed requirements
relating to the timing and method of
delivery of acknowledgements and
responses are also reasonably 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, consistent with section
6(b)(5) of the Act.10 The Commission
notes that written, mailed
acknowledgements and responses will
always be sufficient, but that e-mail or
verbal correspondence will be permitted
where the complaint is transmitted by
such means. These requirements should
minimize any confusion regarding how
a complaint is to be processed, and limit
administrative burdens on NYSE
members. Likewise, the Commission
believes that requiring
acknowledgements to be delivered
within 15 business days of receipt of a
complaint, and responses to be
delivered ‘‘within a reasonable period of
time’’ should promote prompt and
effective resolution of customer
complaints, while allowing NYSE
members the flexibility to tailor specific
responses.
Proposed Rule 401A(c) would require
retention of records of
acknowledgements and responses in
accordance with NYSE Rule 440. The
Commission believes that this recordkeeping requirement should assist the
Exchange in monitoring and enforcing
compliance with proposed Rule 401A,
as well as Rule 351(d), by allowing it to
compare the number of a member’s
reported complaints to the number of
acknowledgements and responses.
Finally, the acknowledgements,
responses, and logs required by new
Rule 401A(c) may contain useful
information for the member’s
compliance personnel insofar as it may
relate to other obligations of the
member, such as the preparation of its
annual report on supervision and
compliance efforts during the preceding
year. See e.g., NYSE Rule 342
(‘‘Offices—Approval, Supervision and
Control’’).
10 15
U.S.C. 78f(b)(5).
VerDate jul<14>2003
15:12 Apr 18, 2005
Jkt 205001
The proposed rule change is also
consistent with section 6(b)(6) 11 of the
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, and with Rule 19d–
1(c)(2) under the Act 12 which governs
minor rule violation plans. Rule 476A
allows the NYSE to impose sanctions for
rule violations that do not rise to the
level of requiring formal disciplinary
proceedings. Because of the possible
range of severity of a member’s failure
to satisfy the acknowledgement
provisions of the proposed new rule,
Rule 476A would be amended in order
to allow the NYSE to sanction less
serious failures with minor fines. The
Commission notes that this proposal
will render violations of the
acknowledgement provisions of new
Rule 401A eligible for treatment as
minor violations, but will not require it
in all cases. Thus, the Exchange will
remain able to determine, on a case-bycase basis, whether a particular
violation requires formal disciplinary
action. Therefore, the Commission
believes that this change will not
compromise the Exchange’s ability to
bring formal disciplinary actions for
more serious violations of Rule 401A,
but will augment its ability to enforce its
rules in cases where full disciplinary
proceedings are not warranted.
IV. Conclusion
It is therefore ordered, pursuant to
section 19(b)(2) of the Act,13 and Rule
19d–1(c)(2) under the Act,14 that the
proposed rule change (SR–NYSE–2004–
59) be, and hereby is, approved.15
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.16
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5–1817 Filed 4–18–05; 8:45 am]
BILLING CODE 8010–01–P
U.S.C. 78f(b)(6).
CFR 240.19d–1(c)(2).
13 15 U.S.C. 78s(b)(2).
14 17 CFR 240.19d–1(c)(2).
15 In approving this proposed rule change, the
Commission notes that it has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. 15 U.S.C. 78c(f).
16 17 CFR 200.30–3(a)(12).
PO 00000
11 15
12 17
Frm 00067
Fmt 4703
Sfmt 4703
20411
DEPARTMENT OF STATE
[Public Notice 5053]
Bureau of Diplomatic Security, Office
of Foreign Missions, Diplomatic Motor
Vehicles; 30-Day Notice of Proposed
Information Collection: Form DS–1972,
U.S. Department of State Driver
License and Tax Exemption Card
Application, OMB Collection Number
1405–0105
Notice of request for public
comment and submission to OMB of
proposed collection of information.
ACTION:
SUMMARY: The Department of State has
submitted the following information
collection request to the Office of
Management and Budget (OMB) for
approval in accordance with the
Paperwork Reduction Act of 1995.
• Title of Information Collection: U.S.
Department of State Driver License and
Tax Exemption Card Application.
• OMB Control Number: 1405–0105.
• Type of Request: Extension of a
Currently Approved Collection.
• Originating Office: Bureau of
Diplomatic Security, Office of Foreign
Missions (DS/OFM).
• Form Number: DS–1972.
• Respondents: Foreign missions that
have personnel assigned to the United
Sates: diplomatic, consular,
administrative and technical, specified
official representatives of foreign
governments to international
organizations, and their dependents.
• Estimated Number of Respondents:
350 foreign missions.
• Estimated Number of Responses:
14,000.
• Average Hours Per Response: 0.5
hours (30 minutes).
• Total Estimated Burden: 7,000
hours.
• Frequency: On occasion. (As often
as is necessary for foreign missions to
obtain/renew driver licenses and/or tax
exemption cards for foreign mission
personnel.)
• Obligation to Respond: Required to
obtain or retain a benefit.
DATES: Submit comments to the Office
of Management and Budget (OMB) for
up to 30 days from April 19, 2005.
ADDRESSES: Direct comments and
questions to Katherine Astrich, the
Department of State Desk Officer in the
Office of Information and Regulatory
Affairs at the Office of Management and
Budget (OMB), who may be reached at
202–395–4718. You may submit
comments by any of the following
methods:
• E-mail: Katherine_T._ Astrich
@omb.eop.gov. You must include the DS
E:\FR\FM\19APN1.SGM
19APN1
]]>Agencies
[Federal Register Volume 70, Number 74 (Tuesday, April 19, 2005)]
[Notices]
[Pages 20410-20411]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-1817]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-51539; File No. SR-NYSE-2004-59]
Self-Regulatory Organizations; Order Approving Proposed Rule
Change by the New York Stock Exchange, Inc. To Adopt a New Rule (NYSE
Rule 401A) Requiring Members and Member Organizations To Respond to
Customer Complaints, and Adding Failure To Acknowledge Customer
Complaints to the Minor Fine Provisions of NYSE Rule 476A
April 13, 2005.
I. Introduction
On October 21, 2004, the New York Stock Exchange, Inc. (``NYSE'' or
``the Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to adopt a new rule, denoted NYSE Rule 401A, to
require its members and member organizations (``members'') to respond
to customer complaints, and to add failure to acknowledge customer
complaints to the minor fine provisions of NYSE Rule 476A. The proposed
rule change was published for comment in the Federal Register on March
7, 2005.\3\ The Commission received no comments in response to the
proposed rule change. For the reasons discussed below, the Commission
is approving the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Securities Exchange Act Release No. 51276 (Feb. 28, 2005),
70 FR 11040 (Mar. 7, 2005) (``Notice'').
---------------------------------------------------------------------------
II. Description of the Proposed Rule Change
NYSE Rule 351(d) requires NYSE members to ``report to the Exchange
statistical information regarding customer complaints relating to such
matters as may be specified by the Exchange.'' Pursuant to this Rule,
the NYSE currently requires reporting of statistical information
relating to complaints by customers involving, inter alia, sales
practices, unauthorized trading and misappropriation of funds.\4\ The
reporting obligation applies to ``[a]ll complaints, regardless of how
delivered (oral, written, e-mail or fax) * * *.'' \5\
---------------------------------------------------------------------------
\4\ NYSE Information Memo Number 03-39 (Sep. 19, 2003).
\5\ NYSE Information Memo Number 03-38 (Sep. 19, 2003).
---------------------------------------------------------------------------
The NYSE now proposes to adopt a new Rule, designated 401A, to
require its members to acknowledge and respond to customer complaints.
Specifically, Rule 401A(a) would require NYSE members to acknowledge
receipt of every customer complaint that is subject to the reporting
requirements of Rule 351(d) within 15 business days of receipt, and to
respond to the issues raised in such complaint within a reasonable
period of time. Rule 401A(b) would mandate specific methods of delivery
for acknowledgements and responses. Written acknowledgements and
responses mailed to the complaining customer's last known address would
suffice in all cases. However, where a complaint was electronically
transmitted, members would be permitted to acknowledge and respond to
it by electronic transmission to the e-mail address from which the
complaint was sent. The Exchange would also permit verbal
acknowledgements and responses to verbal complaints, provided that they
are recorded in a log of such actions. Paragraph (c) of the proposed
rule would require members to keep written records of all such
acknowledgements, responses, and logs in accordance with NYSE Rule 440
(``Books and Records'').
Finally, the Exchange proposes to add failures to acknowledge
customer complaints within 15 days of receipt to the list of violations
in NYSE Rule 476A (``Imposition of Fines for Minor Violations of
Rules''). Rule 476A provides that the Exchange may impose fines, not to
exceed $5,000, on any member for a minor violation of the Exchange
rules specified therein.
III. Discussion and Findings
The Commission finds the proposed rule change is consistent with
the Act, and in particular with section 6(b)(5) of the Act, which
requires, among other things, that the rules of a national securities
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.\6\ The
Commission further finds that the proposal is consistent with section
6(b)(6) of the Act,\7\ which requires that members be appropriately
disciplined for violations of Exchange rules. Finally, the Commission
finds the proposal is consistent with Rule 19d-1(c)(2) under the
Act,\8\ which governs minor rule violation plans.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78f(b)(5).
\7\ 15 U.S.C. 78f(b)(6).
\8\ 17 CFR 240.19d-1(c)(2).
---------------------------------------------------------------------------
As the Exchange stated in its proposal, no current NYSE rule
requires members to acknowledge or respond to complaints from
customers.\9\ The proposal will require NYSE members to acknowledge and
respond to any and all customer complaints that must be reported to the
Exchange under NYSE Rule 351(d). Indeed, under proposed Rule 401A,
ignoring or neglecting a customer complaint would constitute a
violation of NYSE rules. The Commission believes that the new Rule is
consistent with the protection of investors and the public interest
because, by requiring members to review and respond to customer
complaints, and by requiring records to be kept with respect to such
actions, the Rule should encourage NYSE members to attend to complaints
that may alert them to potential abuses and to take corrective action,
where appropriate.
---------------------------------------------------------------------------
\9\ Notice at 11041.
---------------------------------------------------------------------------
The Commission also believes that the new required procedures
should foster an awareness within NYSE member firms of the volume and
specific types of complaints they receive, thereby promoting
appropriate preventive or supervisory action by the member's compliance
personnel. Specifically, requiring firms to review and respond to
customer complaints should enhance a member's ability to supervise its
personnel by drawing attention to any that may require additional
training or monitoring. Exposure to an aggregation of complaints should
also alert NYSE members to systemic problems with registered
representatives, products, and services and should allow the member to
identify areas where it, or its personnel, could improve compliance.
Further, the Commission believes that the proposed new Rule should
serve to protect investors because it will require NYSE members to
notify them when
[[Page 20411]]
their complaints are received, and to notify them of any action (or
refusal to act) with respect to their complaints. In cases where an
investor and member are unable to resolve a dispute, records of
complaints and responses will document the sequence of correspondence
and/or actions for use in any potential formal resolution proceedings.
The Commission believes that the Exchange's proposed requirements
relating to the timing and method of delivery of acknowledgements and
responses are also reasonably 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, consistent with section 6(b)(5) of the Act.\10\ The
Commission notes that written, mailed acknowledgements and responses
will always be sufficient, but that e-mail or verbal correspondence
will be permitted where the complaint is transmitted by such means.
These requirements should minimize any confusion regarding how a
complaint is to be processed, and limit administrative burdens on NYSE
members. Likewise, the Commission believes that requiring
acknowledgements to be delivered within 15 business days of receipt of
a complaint, and responses to be delivered ``within a reasonable period
of time'' should promote prompt and effective resolution of customer
complaints, while allowing NYSE members the flexibility to tailor
specific responses.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
Proposed Rule 401A(c) would require retention of records of
acknowledgements and responses in accordance with NYSE Rule 440. The
Commission believes that this record-keeping requirement should assist
the Exchange in monitoring and enforcing compliance with proposed Rule
401A, as well as Rule 351(d), by allowing it to compare the number of a
member's reported complaints to the number of acknowledgements and
responses. Finally, the acknowledgements, responses, and logs required
by new Rule 401A(c) may contain useful information for the member's
compliance personnel insofar as it may relate to other obligations of
the member, such as the preparation of its annual report on supervision
and compliance efforts during the preceding year. See e.g., NYSE Rule
342 (``Offices--Approval, Supervision and Control'').
The proposed rule change is also consistent with section 6(b)(6)
\11\ of the 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, and with Rule 19d-1(c)(2)
under the Act \12\ which governs minor rule violation plans. Rule 476A
allows the NYSE to impose sanctions for rule violations that do not
rise to the level of requiring formal disciplinary proceedings. Because
of the possible range of severity of a member's failure to satisfy the
acknowledgement provisions of the proposed new rule, Rule 476A would be
amended in order to allow the NYSE to sanction less serious failures
with minor fines. The Commission notes that this proposal will render
violations of the acknowledgement provisions of new Rule 401A eligible
for treatment as minor violations, but will not require it in all
cases. Thus, the Exchange will remain able to determine, on a case-by-
case basis, whether a particular violation requires formal disciplinary
action. Therefore, the Commission believes that this change will not
compromise the Exchange's ability to bring formal disciplinary actions
for more serious violations of Rule 401A, but will augment its ability
to enforce its rules in cases where full disciplinary proceedings are
not warranted.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78f(b)(6).
\12\ 17 CFR 240.19d-1(c)(2).
---------------------------------------------------------------------------
IV. Conclusion
It is therefore ordered, pursuant to section 19(b)(2) of the
Act,\13\ and Rule 19d-1(c)(2) under the Act,\14\ that the proposed rule
change (SR-NYSE-2004-59) be, and hereby is, approved.\15\
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78s(b)(2).
\14\ 17 CFR 240.19d-1(c)(2).
\15\ In approving this proposed rule change, the Commission
notes that it has considered the proposed rule's impact on
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\16\
---------------------------------------------------------------------------
\16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-1817 Filed 4-18-05; 8:45 am]
BILLING CODE 8010-01-P
