Self-Regulatory Organizations; Pacific Exchange, Inc.; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change Relating to a Pilot Rule Extension of a Waiver of California Arbitrator Disclosure Standards, 29371-29373 [E5-2525]
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Federal Register / Vol. 70, No. 97 / Friday, May 20, 2005 / Notices
The Commission will hear oral argument
on an appeal by Rita J. McConville from the
decision of an administrative law judge. The
administrative law judge found that
McConville, formerly the chief financial
officer of Akorn, Inc. (‘‘Akorn’’), had
significant responsibility for the financial
statements in the Form 10–K for the year
ended December 31, 2000 (the ‘‘2000 Form
10–K’’) filed by Akorn, which materially
inflated Akorn’s accounts receivable, net
sales, and assets; caused Akorn to maintain
inaccurate books and records; and falsely
assured Akorn’s auditors that the financial
statements in the 2000 Form 10–K complied
with Generally Accepted Accounting
Principles and that she did not know of any
events that would materially impact those
financial statements. In so doing, the law
judge found, McConville violated Sections
10(b) and 13(b)(5) of the Securities Exchange
Act of 1934 and Rules 10b–5, 13b2–1 and
13b2–2 thereunder, and caused Akorn to
violate Sections 13(a) and 13(b)(2) of the
Exchange Act and Rules 12b–20 and 13a–1
thereunder. The law judge ordered
McConville to cease and desist from violating
and causing violations of these provisions,
and to pay disgorgement in the amount of
$115,858, plus prejudgment interest.
Among the issues likely to be argued
are:
1. Whether McConville’s involvement
in the preparation and filing of the 2000
Form 10–K was sufficient to provide a
basis for liability;
2. Whether McConville knew that
Akorn did not have a system of internal
accounting controls for its accounts
receivable necessary for the preparation
of accurate financial statements and
knowingly failed to implement such a
system;
3. Whether the Order Instituting
Proceedings gave McConville adequate
notice of the claims lodged against her
and the grounds on which those claims
allegedly rested;
4. Whether a cease-and-desist order
against McConville is in the public
interest; and
5. Whether disgorgement should be
ordered, and if so, in what amount.
The subject matter of the closed
meeting scheduled for Wednesday, May
25, 2005, will be:
Formal orders of investigations;
Institution and settlement of
injunctive actions; and
Institution and settlement of
administrative proceedings of an
enforcement nature.
At times, changes in Commission
priorities require alterations in the
scheduling of meeting items.
For further information and to
ascertain what, if any, matters have been
added, deleted or postponed, please
contact: The Office of the Secretary at
(202) 942–7070.
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20:07 May 19, 2005
Jkt 205001
Dated: May 17, 2005.
Jonathan G. Katz,
Secretary.
[FR Doc. 05–10173 Filed 5–17–05; 4:20 pm]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–51696; File No. SR–PCX–
2005–50]
Self-Regulatory Organizations; Pacific
Exchange, Inc.; Notice of Filing and
Order Granting Accelerated Approval
of Proposed Rule Change Relating to
a Pilot Rule Extension of a Waiver of
California Arbitrator Disclosure
Standards
May 13, 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 12,
2005 and on May 13, 2005 (Amendment
No. 1), the Pacific Exchange, Inc.
(‘‘PCX’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
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 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 Exchange and its wholly owned
subsidiary PCX Equities, Inc. (‘‘PCXE’’)
are proposing to extend the pilot rule in
PCX Rule 12.1(i) and PCXE Rule 12.2(h),
which requires industry parties in
arbitration to waive application of
contested California arbitrator
disclosure standards, upon the request
of customers (and, in industry cases,
upon the request of associated persons
with claims of statutory employment
discrimination), for an additional sixmonth pilot period, until November 26,
2005.
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
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1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00103
Fmt 4703
Sfmt 4703
29371
proposed rule change. The text of these
statements may be examined at the
places specified in Item III 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
On November 21, 2002, the
Commission approved, for a six-month
pilot period, the Exchange’s proposal to
amend PCX and PCXE arbitration rules
to require industry parties in arbitration
to waive application of contested
California arbitrator disclosure
standards, upon the request of
customers or, in employment
discrimination cases, upon the request
of associated persons.3 The Commission
approved an extension of the pilot
period on May 15, 2003,4 November 19,
2003,5 May 24, 2004,6 and November
23, 2004.7 The pilot period is currently
set to expire on May 25, 2005.
On July 1, 2002, the Judicial Council
of the State of California adopted new
rules that mandated extensive
disclosure requirements for arbitrators
in California (the ‘‘California
Standards’’). The California Standards
are intended to address perceived
conflicts of interest in certain
commercial arbitration proceedings. As
a result of the imposition of the
California Standards on arbitrations
conducted under the auspices of selfregulatory organizations (‘‘SROs’’), the
National Association of Securities
Dealers, Inc. (‘‘NASD’’) and the New
York Stock Exchange (‘‘NYSE’’)
suspended the appointment of
arbitrators for cases pending in
California, and filed a joint complaint in
federal court for declaratory relief in
which they contend that the California
Standards cannot lawfully be applied to
NASD and NYSE because the California
Standards are preempted by federal law
and are inapplicable to SROs under
3 See Exchange Act Release No. 46881 (November
21, 2002), 67 FR 71224 (November 29, 2002) (Order
approving SR–PCX–2002–71).
4 See Exchange Act Release No. 47872 (May 15,
2003), 68 FR 28869 (May 27, 2003) (Order
approving SR–PCX–2003–22).
5 See Exchange Act Release No. 48806 (November
19, 2003), 68 FR 66521 (November 26, 2003) (Order
approving SR–PCX–2003–61).
6 See Exchange Act Release No. 49758 (May 24,
2004), 69 FR 30734 (May 28, 2004) (Order
approving SR–PCX–2004–25).
7 See Exchange Act Release No. 50731 (November
23, 2004), 69 FR 69660 (November 30, 2004) (Order
approving SR–PCX–2004–104).
E:\FR\FM\20MYN1.SGM
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29372
Federal Register / Vol. 70, No. 97 / Friday, May 20, 2005 / Notices
state law.8 Subsequently, in the interest
of continuing to provide investors with
an arbitral forum in California pending
the resolution of the applicability of the
California Standards, the NASD and
NYSE filed separate rule proposals with
the Commission that would temporarily
require their members to waive the
California Standards if all non-member
parties to arbitration have done so. The
Commission approved the NASD’s rule
proposal on September 26, 2002 9 and
the NYSE’s rule proposal on November
12, 2002.10 Both the NASD and the
NYSE filed rule proposals to further
extend the pilot period for additional
six-month periods.11
Since the NASD’s and NYSE’s lawsuit
relating to the application of the
California Standards has not been
resolved, PCX is now requesting an
extension of the pilot for an additional
six months (or until the pending
litigation has resolved the question of
whether or not the California Standards
apply to SROs). PCX requests that the
pilot be extended for six months
8 See Motion for Declaratory Judgment, NASD
Dispute Resolution, Inc. and New York Stock
Exchange, Inc., v. Judicial Council of California,
filed in the United States District Court for the
Northern District of California, No. C 02 3486 SBA
(July 22, 2002). For a more complete discussion of
the various pending cases related to the California
Standards, see Exchange Act Release No. 50971
(January 6, 2005), 70 FR 2685 (January 14, 2005)
(Notice regarding SR–NASD–2004–180), Exchange
Act Release No. 51213 (February 16, 2005), 70 FR
8862 (February 23, 2005) (Order approving SR–
NASD–2004–180) and Exchange Act Release No.
51395 (March 18, 2005), 70 FR 15137 (March 24,
2005) (Order approving SR–NYSE–2005–14).
9 See Exchange Act Release No. 46562 (September
26, 2002), 67 FR 62085 (October 3, 2002) (Order
approving SR–NASD–2002–126). Thereafter, the
pilot period was extended to September 30, 2003.
See Exchange Act Release No. 48187 (July 16,
2003), 68 FR 43553 (July 23, 2003) (Order approving
SR–NASD–2003–106).
10 See Exchange Act Release No. 46816
(November 12, 2002), 67 FR 69793 (November 19,
2002) (Order approving SR–NYSE–2002–56).
Thereafter, the pilot period was extended to
September 30, 2003. See Exchange Act Release No.
47836 (May 12, 2003), 68 FR 27608 (May 20, 2003)
(Order approving SR–NYSE–2003–16).
11 See Exchange Act Release No. 48553
(September 26, 2003), 68 FR 57494 (October 3,
2003) (Order approving SR–NASD–2003–144);
Exchange Act Release No. 49452 (March 19, 2004)
69 FR 17010 (March 31, 2004) (Order approving
SR–NASD–2004–40); Exchange Act Release No.
48552 (September 26, 2003), 68 FR 57496 (October
3, 2003) (Order approving SR–NYSE–2003–28);
Exchange Act Release No. 49521 (April 2, 2004), 69
FR 18661 (April 8, 2004) (Order approving SR–
NYSE–2004–18); Exchange Act Release No. 50447
(September 24, 2004), 69 FR 58567 (September 30,
2004) (Order approving SR–NASD–2004–126);
Exchange Act Release No. 50449 (September 24,
2004), 69 FR 58985 (October 1, 2004) (Order
approving SR–NYSE–2004–50; Exchange Act
Release No. 51213 (February 16, 2005), 70 FR 8862
(Order approving SR–NASD–2004–180); and
Exchange Act Release No. 51395 (March 18, 2005),
70 FR 15137 (March 24, 2005) (Order approving
SR–NYSE–2005–14).
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20:07 May 19, 2005
Jkt 205001
beginning on May 26, 2005. The
extension of time permits the Exchange
to continue the arbitration process using
PCX rules regarding arbitration
disclosures and not the California
Standards. No substantive changes are
being made to the pilot program, other
than extending the operation of pilot
program.
2. Statutory Basis
The Exchange believes that the
proposal is consistent with Section 6(b)
of the Act,12 in general, and Section
6(b)(5) of the Act,13 in particular, in that
it is designed to promote just and
equitable principles of trade by ensuring
that OTP Holders, OTP Firms, ETP
Holders 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
Written comments on the proposed
rule change were neither solicited nor
received.
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 rulecomments@sec.gov. Please include File
Number SR–PCX–2005–50 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–PCX–2005–50. This file
number should be included on the
subject line if e-mail is used. To help the
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12 15
13 15
U.S.C. 78s(b).
U.S.C. 78s(b)(5).
Frm 00104
Fmt 4703
Sfmt 4703
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
offices 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–PCX–
2005–50 and should be submitted on or
before June 10, 2005.
IV. Commission’s Findings and Order
Granting Accelerated Approval of
Proposed Rule Change
The Commission finds that the
proposed rule change is consistent with
the requirements of the Act and the
rules and regulations thereunder,
applicable to a national securities
exchange.14 In particular, the
Commission finds that the proposed
rule change is consistent with Section
6(b)(5) of the Act 15 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.
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 PCX and PCXE adopted the pilot
program under PCX Rule 12.1(i) and
PCXE Rule 12.2(h), respectively, in
14 In approving this proposal, the Commission has
considered its impact on efficiency, competition,
and capital formation. 15 U.S.C. 78c(f).
15 15 U.S.C. 78f(b)(5).
E:\FR\FM\20MYN1.SGM
20MYN1
Federal Register / Vol. 70, No. 97 / Friday, May 20, 2005 / Notices
response to the purported imposition of
the California Standards on Exchange
arbitrations and arbitrators. The pilot
rules are currently set to expire on May
25, 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
Exchange will continue to monitor the
status of the pending litigation.
After careful consideration, the
Commission finds good cause, pursuant
to Section 19(b)(2) of the Act,16 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 PCX Rule 12.1(i) and PCXE Rule
12.2(h), expires on May 25, 2005.
Accordingly, the Commission believes
that there is good cause, consistent with
Section 6(b)(5) of the Act,17 to approve
the proposal on an accelerated basis.
V. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,18 that the
proposed rule change (SR–PCX–2005–
50) is hereby approved on an
accelerated basis, and that PCX Rule
12.1(i) and PCXE Rule 12.2(h) are
extended until November 26, 2005.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.19
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5–2525 Filed 5–19–05; 8:45 am]
BILLING CODE 8010–01–P
DEPARTMENT OF TRANSPORTATION
Office of the Secretary
Aviation Proceedings, Agreements
Filed the Week Ending May 6, 2005
The following Agreements were filed
with the Department of Transportation
under the provisions of 49 U.S.C. 412
and 414. Answers may be filed within
21 days after the filing of the
application.
Docket Number: OST–2005–21122.
Date Filed: May 2, 2005.
Parties: Members of the International
Air Transport Association.
Subject: PTC COMP 1230 dated 2 May
2005, Mail Vote 447—Resolution
024d—Currency Names, Codes,
Rounding Units and Acceptability of
16 15
U.S.C. 78s(b)(2).
U.S.C. 78f(b)(5).
18 15 U.S.C. 78s(b)(2).
19 17 CFR 200.30–3(a)(12).
17 15
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20:07 May 19, 2005
Jkt 205001
Currencies. Intended effective date: 1
May 2005.
Docket Number: OST–2005–21172.
Date Filed: May 4, 2005.
Parties: Members of the International
Air Transport Association.
Subject: PTC COMP 1231 dated 2 May
2005, Resolution 002aa—General
Increase Resolution except within
Europe, between USA/US Territories
and Austria, Belgium, Chile, Czech
Republic, Finland, France, Germany,
Iceland, Italy, Jordan, Korea (Rep. of),
Malaysia, Netherlands, New Zealand,
Panama, Scandinavia, Switzerland; PTC
COMP 1232 dated 2 May 2005
Resolution 002a—General Increase
Resolution between USA/US Territories
and Austria, Belgium, Chile, Czech
Republic, Finland, France, Germany,
Iceland, Italy, Jordan, Korea (Rep. of),
Malaysia, Netherlands, New Zealand,
Panama, Scandinavia, Switzerland;
Minutes: PTC COMP 1233 dated 4 May
2005 Intended effective date: 30 May
2005.
Andrea M. Jenkins,
Program Manager, Docket Operations,
Federal Register Liaison.
[FR Doc. 05–10090 Filed 5–19–05; 8:45 am]
BILLING CODE 4910–62–P
DEPARTMENT OF TRANSPORTATION
Office of the Secretary
Notice of Applications for Certificates
of Public Convenience and Necessity
and Foreign Air Carrier Permits Filed
Under Subpart B (Formerly Subpart Q)
During the Week Ending May 6, 2005
The following Applications for
Certificates of Public Convenience and
Necessity and Foreign Air Carrier
Permits were filed under subpart B
(formerly subpart Q) of the Department
of Transportation’s Procedural
Regulations (see 14 CFR 301.201 et
seq.). The due date for Answers,
Conforming Applications, or Motions to
Modify Scope are set forth below for
each application. Following the Answer
period DOT may process the application
by expedited procedures. Such
procedures may consist of the adoption
of a show-cause order, a tentative order,
or in appropriate cases a final order
without further proceedings.
Docket Number: OST–2005–21130.
Date Filed: May 2, 2005.
Due Date for Answers, Conforming
Applications, or Motion to Modify
Scope: May 23, 2005.
Description: Application of
Transportes Aereos de Cabo Verde d/b/
a TACV, requesting a foreign air carrier
permit to engage in: (a) Scheduled
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Fmt 4703
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29373
foreign air transportation of persons,
property and mail without frequency
and capacity limitation, on all routes
authorized in Annex I of the Bilateral
Agreement for carriers designated by the
Government of Cape Verde, namely: (i)
From points behind Cape Verde via
Cape Verde and intermediate points to
a point or points in the United States
and beyond; (ii) all-cargo service or
services, between the United States and
any point or points; (b) international
charter traffic of passengers (and their
accompanying baggage) and/or cargo
(including, but not limited to, freight
forwarder, split, and combination
(passenger/cargo) charters): (i) Between
any point or points in Cape Verde and
any point or points in the United States;
and (ii) between any point or points in
the United States and any point or
points in a third country or countries,
provided that, except with respect to
cargo charters, such service constitutes
part of a continuous operation, with or
without a change of aircraft, that
includes service to Cape Verde for the
purpose of carrying local traffic between
Cape Verde and the United States.
Docket Number: OST–2005–21135.
Date Filed: May 2, 2005.
Due Date for Answers, Conforming
Applications, or Motion to Modify
Scope: May 23, 2005.
Description: Application of Jet
Airways (India) Ltd., requesting a
foreign air carrier permit authorizing it
to engage in scheduled foreign air
transportation of persons, property, and
mail as follows: From points behind
India, via India and intermediate points,
to a point or points in the United States,
and beyond. Jet Airways also requests
that its foreign air carrier permit include
authority to engage in charter foreign air
transportation of persons, property, and
mail between India and the United
States and between the United States
and third countries (provided that such
charter traffic is carried on a flight that
serves India for purposes of carrying
traffic between India and the United
States), without prior Department
approval; and other charter trips.
Docket Number: OST–2005–21157.
Date Filed: May 3, 2005.
Due Date for Answers, Conforming
Applications, or Motion to Modify
Scope: May 24, 2005.
Description: Application of Executive
Airlines, S.L., requesting a foreign air
carrier permit authorizing it to engage in
charter foreign air transportation of
persons, property and mail between
Spain and the United States and other
E:\FR\FM\20MYN1.SGM
20MYN1
]]>Agencies
[Federal Register Volume 70, Number 97 (Friday, May 20, 2005)]
[Notices]
[Pages 29371-29373]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-2525]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-51696; File No. SR-PCX-2005-50]
Self-Regulatory Organizations; Pacific Exchange, Inc.; Notice of
Filing and Order Granting Accelerated Approval of Proposed Rule Change
Relating to a Pilot Rule Extension of a Waiver of California Arbitrator
Disclosure Standards
May 13, 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 12, 2005 and on May 13, 2005 (Amendment No. 1), the Pacific
Exchange, Inc. (``PCX'' or ``Exchange'') filed with the Securities and
Exchange Commission (``Commission'') the proposed rule change as
described in Items I and II 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 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 Exchange and its wholly owned subsidiary PCX Equities, Inc.
(``PCXE'') are proposing to extend the pilot rule in PCX Rule 12.1(i)
and PCXE Rule 12.2(h), which requires industry parties in arbitration
to waive application of contested California arbitrator disclosure
standards, upon the request of customers (and, in industry cases, upon
the request of associated persons with claims of statutory employment
discrimination), for an additional six-month pilot period, until
November 26, 2005.
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. 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
On November 21, 2002, the Commission approved, for a six-month
pilot period, the Exchange's proposal to amend PCX and PCXE arbitration
rules to require industry parties in arbitration to waive application
of contested California arbitrator disclosure standards, upon the
request of customers or, in employment discrimination cases, upon the
request of associated persons.\3\ The Commission approved an extension
of the pilot period on May 15, 2003,\4\ November 19, 2003,\5\ May 24,
2004,\6\ and November 23, 2004.\7\ The pilot period is currently set to
expire on May 25, 2005.
---------------------------------------------------------------------------
\3\ See Exchange Act Release No. 46881 (November 21, 2002), 67
FR 71224 (November 29, 2002) (Order approving SR-PCX-2002-71).
\4\ See Exchange Act Release No. 47872 (May 15, 2003), 68 FR
28869 (May 27, 2003) (Order approving SR-PCX-2003-22).
\5\ See Exchange Act Release No. 48806 (November 19, 2003), 68
FR 66521 (November 26, 2003) (Order approving SR-PCX-2003-61).
\6\ See Exchange Act Release No. 49758 (May 24, 2004), 69 FR
30734 (May 28, 2004) (Order approving SR-PCX-2004-25).
\7\ See Exchange Act Release No. 50731 (November 23, 2004), 69
FR 69660 (November 30, 2004) (Order approving SR-PCX-2004-104).
---------------------------------------------------------------------------
On July 1, 2002, the Judicial Council of the State of California
adopted new rules that mandated extensive disclosure requirements for
arbitrators in California (the ``California Standards''). The
California Standards are intended to address perceived conflicts of
interest in certain commercial arbitration proceedings. As a result of
the imposition of the California Standards on arbitrations conducted
under the auspices of self-regulatory organizations (``SROs''), the
National Association of Securities Dealers, Inc. (``NASD'') and the New
York Stock Exchange (``NYSE'') suspended the appointment of arbitrators
for cases pending in California, and filed a joint complaint in federal
court for declaratory relief in which they contend that the California
Standards cannot lawfully be applied to NASD and NYSE because the
California Standards are preempted by federal law and are inapplicable
to SROs under
[[Page 29372]]
state law.\8\ Subsequently, in the interest of continuing to provide
investors with an arbitral forum in California pending the resolution
of the applicability of the California Standards, the NASD and NYSE
filed separate rule proposals with the Commission that would
temporarily require their members to waive the California Standards if
all non-member parties to arbitration have done so. The Commission
approved the NASD's rule proposal on September 26, 2002 \9\ and the
NYSE's rule proposal on November 12, 2002.\10\ Both the NASD and the
NYSE filed rule proposals to further extend the pilot period for
additional six-month periods.\11\
---------------------------------------------------------------------------
\8\ See Motion for Declaratory Judgment, NASD Dispute
Resolution, Inc. and New York Stock Exchange, Inc., v. Judicial
Council of California, filed in the United States District Court for
the Northern District of California, No. C 02 3486 SBA (July 22,
2002). For a more complete discussion of the various pending cases
related to the California Standards, see Exchange Act Release No.
50971 (January 6, 2005), 70 FR 2685 (January 14, 2005) (Notice
regarding SR-NASD-2004-180), Exchange Act Release No. 51213
(February 16, 2005), 70 FR 8862 (February 23, 2005) (Order approving
SR-NASD-2004-180) and Exchange Act Release No. 51395 (March 18,
2005), 70 FR 15137 (March 24, 2005) (Order approving SR-NYSE-2005-
14).
\9\ See Exchange Act Release No. 46562 (September 26, 2002), 67
FR 62085 (October 3, 2002) (Order approving SR-NASD-2002-126).
Thereafter, the pilot period was extended to September 30, 2003. See
Exchange Act Release No. 48187 (July 16, 2003), 68 FR 43553 (July
23, 2003) (Order approving SR-NASD-2003-106).
\10\ See Exchange Act Release No. 46816 (November 12, 2002), 67
FR 69793 (November 19, 2002) (Order approving SR-NYSE-2002-56).
Thereafter, the pilot period was extended to September 30, 2003. See
Exchange Act Release No. 47836 (May 12, 2003), 68 FR 27608 (May 20,
2003) (Order approving SR-NYSE-2003-16).
\11\ See Exchange Act Release No. 48553 (September 26, 2003), 68
FR 57494 (October 3, 2003) (Order approving SR-NASD-2003-144);
Exchange Act Release No. 49452 (March 19, 2004) 69 FR 17010 (March
31, 2004) (Order approving SR-NASD-2004-40); Exchange Act Release
No. 48552 (September 26, 2003), 68 FR 57496 (October 3, 2003) (Order
approving SR-NYSE-2003-28); Exchange Act Release No. 49521 (April 2,
2004), 69 FR 18661 (April 8, 2004) (Order approving SR-NYSE-2004-
18); Exchange Act Release No. 50447 (September 24, 2004), 69 FR
58567 (September 30, 2004) (Order approving SR-NASD-2004-126);
Exchange Act Release No. 50449 (September 24, 2004), 69 FR 58985
(October 1, 2004) (Order approving SR-NYSE-2004-50; Exchange Act
Release No. 51213 (February 16, 2005), 70 FR 8862 (Order approving
SR-NASD-2004-180); and Exchange Act Release No. 51395 (March 18,
2005), 70 FR 15137 (March 24, 2005) (Order approving SR-NYSE-2005-
14).
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Since the NASD's and NYSE's lawsuit relating to the application of
the California Standards has not been resolved, PCX is now requesting
an extension of the pilot for an additional six months (or until the
pending litigation has resolved the question of whether or not the
California Standards apply to SROs). PCX requests that the pilot be
extended for six months beginning on May 26, 2005. The extension of
time permits the Exchange to continue the arbitration process using PCX
rules regarding arbitration disclosures and not the California
Standards. No substantive changes are being made to the pilot program,
other than extending the operation of pilot program.
2. Statutory Basis
The Exchange believes that the proposal is consistent with Section
6(b) of the Act,\12\ in general, and Section 6(b)(5) of the Act,\13\ in
particular, in that it is designed to promote just and equitable
principles of trade by ensuring that OTP Holders, OTP Firms, ETP
Holders and the public have a fair and impartial forum for the
resolution of their disputes.
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\12\ 15 U.S.C. 78s(b).
\13\ 15 U.S.C. 78s(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
Written comments on the proposed rule change were neither solicited
nor received.
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-PCX-2005-50 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-PCX-2005-50. 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 offices 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-PCX-
2005-50 and should be submitted on or before June 10, 2005.
IV. Commission's Findings and Order Granting Accelerated Approval of
Proposed Rule Change
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder, applicable to a national securities exchange.\14\ In
particular, the Commission finds that the proposed rule change is
consistent with Section 6(b)(5) of the Act \15\ 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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\14\ In approving this proposal, the Commission has considered
its impact on efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
\15\ 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 PCX and PCXE adopted the pilot program under PCX
Rule 12.1(i) and PCXE Rule 12.2(h), respectively, in
[[Page 29373]]
response to the purported imposition of the California Standards on
Exchange arbitrations and arbitrators. The pilot rules are currently
set to expire on May 25, 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 Exchange will continue to monitor the status of the
pending litigation.
After careful consideration, the Commission finds good cause,
pursuant to Section 19(b)(2) of the Act,\16\ 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 PCX Rule 12.1(i) and PCXE Rule
12.2(h), expires on May 25, 2005. Accordingly, the Commission believes
that there is good cause, consistent with Section 6(b)(5) of the
Act,\17\ to approve the proposal on an accelerated basis.
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\16\ 15 U.S.C. 78s(b)(2).
\17\ 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,\18\ that the proposed rule change (SR-PCX-2005-50) is hereby
approved on an accelerated basis, and that PCX Rule 12.1(i) and PCXE
Rule 12.2(h) are extended until November 26, 2005.
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\18\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-2525 Filed 5-19-05; 8:45 am]
BILLING CODE 8010-01-P
