Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Order Approving Proposed Rule Change and Amendment No. 1 Thereto and Notice of Filing and Order Granting Accelerated Approval to Amendment No. 3 Relating to Its Audit Committee, 10741-10742 [E6-2961]
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Federal Register / Vol. 71, No. 41 / Thursday, March 2, 2006 / Notices
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
the Commission’s Public Reference
Room. Copies of such filing will also be
available for inspection and copying at
the principal office of the PCX. 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 No.
SR–PCX–2006–13 and should be
submitted on or before March 23, 2006.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.9
Nancy M. Morris,
Secretary.
[FR Doc. E6–2958 Filed 3–1–06; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–53356; File No. SR–Phlx–
2004–37]
Self-Regulatory Organizations;
Philadelphia Stock Exchange, Inc.;
Order Approving Proposed Rule
Change and Amendment No. 1 Thereto
and Notice of Filing and Order
Granting Accelerated Approval to
Amendment No. 3 Relating to Its Audit
Committee
February 23, 2006.
wwhite on PROD1PC61 with NOTICES
I. Introduction
On May 20, 2004, the Philadelphia
Stock Exchange, Inc. (‘‘Phlx’’ or
‘‘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
amend the audit committee provisions
of the Phlx By-Laws.3 On October 20,
2005, the Exchange filed Amendment
No. 1 to the proposed rule change.4 The
9 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Phlx By-Laws Article X, Sections 10–9(a)–
(b).
4 In Amendment No. 1, the Exchange added a
definition of ‘‘independent director’’ and made
1 15
VerDate Aug<31>2005
17:54 Mar 01, 2006
Jkt 208001
Exchange has proposed: (i) To allow the
Exchange’s Board of Governors
(‘‘Board’’) to increase the size of its
audit committee (‘‘Audit Committee’’)
up to a number to be determined by its
Board from time to time; (ii) to require
the members of the Audit Committee to
be ‘‘Independent Governors;’’ and (iii) to
modify and enhance the responsibilities
of the Audit Committee.
The proposed rule change, as
amended, was published for comment
in the Federal Register on November 28,
2005.5 The Commission received no
comments on the proposal. The
Exchange filed Amendment No. 2 to the
proposed rule change on February 10,
2006, and submitted its notification of
withdrawal of Amendment No. 2 on
February 14, 2006. On February 15,
2006, the Exchange filed Amendment
No. 3 to the proposed rule change.6 This
order approves the proposed rule
change as modified by Amendment No.
1. Simultaneously, the Commission
provides notice of filing of, and grants
accelerated approval to, Amendment
No. 3.
II. Description
The Exchange proposes to amend the
Phlx By-Laws, Article X, Section 10–9
to: (i) Permit, but not mandate, the
Board to increase the size of the Audit
Committee; (ii) require all Audit
Committee members to be ‘‘Independent
Governors’’ as defined under the
proposal; and (iii) modify and enhance
the responsibilities of the Audit
Committee. Currently, the Audit
Committee is required to consist of three
members. The Exchange proposes to
require that the Audit Committee be
composed of at least three members, and
to have the Board establish the exact
size of the Audit Committee from time
to time.
The Exchange also proposes to require
all Audit Committee members to be
‘‘Independent Governors.’’ The
Exchange proposes to define
‘‘Independent Governor’’ as a member of
the Board who has no material
relationship with the Exchange or any
affiliate of the Exchange, any member of
the Exchange or any affiliate of such
member, or any issuer of securities that
technical changes to the proposed rule text, and
revised the filing’s purpose section to reflect the
addition of the definition of ‘‘independent
director.’’
5 See Securities Exchange Act Release No. 52777
(November 16, 2005), 70 FR 71360.
6 In Amendment No. 3, the Exchange replaced the
term ‘‘independent director’’ in the proposed rule
text with ‘‘Independent Governor,’’ deleted
references to a maximum five person Audit
Committee in the description of the proposal, and
made clarifying corrections to the proposed rule
text.
PO 00000
Frm 00108
Fmt 4703
Sfmt 4703
10741
are listed or traded on the Exchange or
a facility of the Exchange.7 The proposal
would define the term ‘‘material
relationship’’ as a relationship, whether
compensatory or otherwise, that
reasonably could affect the independent
judgment or decision-making of the
Governor. The Exchange has
represented that the Board would
determine whether each Audit
Committee member is an Independent
Governor upon that Governor’s
nomination to the Audit Committee and
thereafter no less frequently than
annually and as often as necessary in
light of the Governor’s circumstances.
The Exchange also proposes to
incorporate into the Phlx’s By-Laws
enhanced Audit Committee duties and
responsibilities, including: (i) Sole
responsibility for appointing, retaining,
and replacing its external auditors; (ii)
direct oversight over such auditors; (iii)
reviewing at least annually the
qualification and performance of such
auditors; (iv) direct authority to resolve
disagreements between management
and such auditors regarding financial
reporting; (v) responsibility to ensure
the rotation of the lead and concurrent
auditors every five years and certain
other auditors every seven years, with
time-out periods; (vi) evaluation of the
independence of external auditors,
including ensuring that, other than
deferred tax and compliance services,
external auditors do not engage in
certain non-audit services when they
conduct audits for the Exchange and
approval of non-audit services where
appropriate; (vii) establishing
procedures for the receipt, retention,
and treatment of complaints received by
the Exchange regarding accounting,
internal accounting controls, or other
auditing matters and confidential
anonymous submissions by Exchange
employees regarding questionable
accounting practices; and (viii)
determining the appropriate amount of
funding to be provided by the Exchange
for the purpose of paying compensation
to external auditors to prepare or issue
an audit report, compensation to
advisers to the Audit Committee
necessary for it to carry out its duties,
and ordinary administrative expenses of
the Audit Committee.
The Exchange also proposes to
remove the phrase ‘‘independent public
accountants’’ from Article X, Section
7 The Exchange has cited to the Commission’s
proposed rulemaking on the fair administration and
governance of self-regulatory organizations for its
proposed definitions of ‘‘Independent Governor’’
and ‘‘material relationship.’’ See Securities
Exchange Act Release No. 50699 (November 18,
2004), 69 FR 71126 (December 8, 2004) (‘‘SRO
Governance Proposal’’).
E:\FR\FM\02MRN1.SGM
02MRN1
10742
Federal Register / Vol. 71, No. 41 / Thursday, March 2, 2006 / Notices
10–9(b) of the Phlx By-Laws and replace
it with the phrase ‘‘external auditors,’’
which would broaden the scope of the
Audit Committee’s oversight.
wwhite on PROD1PC61 with NOTICES
III. Discussion and Commission
Findings
After careful review, 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 self-regulatory organization.8 In
particular, the Commission believes that
the proposed rule change, as amended,
is consistent with Section 6(b)(5) of the
Act 9 in that it is designed to perfect the
mechanism of a free and open market
and a national market system and, in
general, to protect investors and the
public interest.
The Commission notes that the
proposed rule change would require
every member of the Audit Committee
to be an ‘‘Independent Governor,’’ as
such term is defined in the proposal,
and also would require the Exchange’s
Board to determine the independence of
such Governor upon his or her
nomination to the Audit Committee and
thereafter no less frequently than
annually and as often as necessary in
light of the Governor’s circumstances.
The Commission believes that the
Exchange’s proposed definition of
Independent Governor is designed to
provide parameters for ensuring that
disinterested, objective Governors serve
on the Audit Committee.10 Moreover,
the definition of Independent Governor
and the requirement that the Exchange
periodically assess the independence of
Audit Committee members should help
enhance the independence and integrity
of the Audit Committee. The
Commission also believes that the
Phlx’s proposed revisions to the Audit
Committee’s functions should help
strengthen the Audit Committee’s
oversight of the Exchange’s audit
matters.
The Commission finds good cause for
approving proposed Amendment No. 3
before the 30th day after the date of
publication of notice of filing hereof in
8 The Commission has considered the proposed
rule’s impact on efficiency, competition and capital
formation. 15 U.S.C. 78c(f).
9 15 U.S.C. 78f(b)(5).
10 The Commission notes that the SRO
Governance Proposal also proposed specific
circumstances that would preclude a determination
that a director is independent, which the Exchange
has not incorporated in this proposal. The
Commission notes, however, that the Exchange
would be required to conform its definition of
‘‘Independent Governor,’’ as well as any other
related rules, to any rules that the Commission may
adopt in the future with respect to the governance
of national securities exchanges and the
independence of their directors.
VerDate Aug<31>2005
19:56 Mar 01, 2006
Jkt 208001
the Federal Register. Phlx filed
Amendment No. 3 to replace the term
‘‘independent director’’ in the proposed
rule text with the term ‘‘Independent
Governor,’’ to delete references in the
description section of the proposal to an
increase in the size of the Audit
Committee to a maximum of five
persons, and to make clarifying changes
and corrections to the proposed rule’s
text. The Commission believes that the
proposed changes in Amendment No. 3
clarify the composition of the Audit
Committee and make minor, clarifying
corrections to the proposal’s rule text,
but raise no new issues of regulatory
concern. For these reasons, the
Commission finds good cause for
accelerating approval of Amendment
No. 3.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether Amendment No. 3 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–Phlx–2004–37 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–Phlx–2004–37. 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. Copies of such filing also will be
PO 00000
Frm 00109
Fmt 4703
Sfmt 4703
available for inspection and copying at
the principal office of Phlx. 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–Phlx–2004–37 and should
be submitted on or before March 23,
2006.
V. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,11 that the
proposed rule change (File No. SR–
Phlx–2004–37), as amended by
Amendment No. 1, be, and it hereby is,
approved, and that Amendment No. 3 to
the proposed rule change be, and hereby
is, approved on an accelerated basis.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.12
Nancy M. Morris,
Secretary.
[FR Doc. E6–2961 Filed 3–1–06; 8:45 am]
BILLING CODE 8010–01–P
DEPARTMENT OF STATE
[Public Notice 5334]
Bureau of Educational and Cultural
Affairs (ECA) Request for Grant
Proposals: Youth Leadership Program:
Linking Individuals, Knowledge and
Culture (LINC)
Announcement Type: New Grant.
Funding Opportunity Number: ECA/
PE/C/PY–06–25.
Catalog of Federal Domestic
Assistance Number: 00.000.
Key Dates: Application Deadline:
April 27, 2006.
Executive Summary: The Youth
Programs Division, Office of Citizen
Exchanges of the Bureau of Educational
and Cultural Affairs, announces an open
competition for LINC projects under the
Youth Leadership Program. Public and
private non-profit organizations meeting
the provisions described in Internal
Revenue Code section 26 U.S.C.
501(c)(3) may submit proposals to
implement projects for youth in the
United States and specified countries
around the world. These projects will
involve an educational and cultural
exploration of one of three themes and
will promote mutual understanding
through reciprocal exchanges of threeto six-weeks each.
11 15
12 17
E:\FR\FM\02MRN1.SGM
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
02MRN1
]]>Agencies
[Federal Register Volume 71, Number 41 (Thursday, March 2, 2006)]
[Notices]
[Pages 10741-10742]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-2961]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-53356; File No. SR-Phlx-2004-37]
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.;
Order Approving Proposed Rule Change and Amendment No. 1 Thereto and
Notice of Filing and Order Granting Accelerated Approval to Amendment
No. 3 Relating to Its Audit Committee
February 23, 2006.
I. Introduction
On May 20, 2004, the Philadelphia Stock Exchange, Inc. (``Phlx'' or
``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 amend the audit committee provisions of the
Phlx By-Laws.\3\ On October 20, 2005, the Exchange filed Amendment No.
1 to the proposed rule change.\4\ The Exchange has proposed: (i) To
allow the Exchange's Board of Governors (``Board'') to increase the
size of its audit committee (``Audit Committee'') up to a number to be
determined by its Board from time to time; (ii) to require the members
of the Audit Committee to be ``Independent Governors;'' and (iii) to
modify and enhance the responsibilities of the Audit Committee.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Phlx By-Laws Article X, Sections 10-9(a)-(b).
\4\ In Amendment No. 1, the Exchange added a definition of
``independent director'' and made technical changes to the proposed
rule text, and revised the filing's purpose section to reflect the
addition of the definition of ``independent director.''
---------------------------------------------------------------------------
The proposed rule change, as amended, was published for comment in
the Federal Register on November 28, 2005.\5\ The Commission received
no comments on the proposal. The Exchange filed Amendment No. 2 to the
proposed rule change on February 10, 2006, and submitted its
notification of withdrawal of Amendment No. 2 on February 14, 2006. On
February 15, 2006, the Exchange filed Amendment No. 3 to the proposed
rule change.\6\ This order approves the proposed rule change as
modified by Amendment No. 1. Simultaneously, the Commission provides
notice of filing of, and grants accelerated approval to, Amendment No.
3.
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 52777 (November 16,
2005), 70 FR 71360.
\6\ In Amendment No. 3, the Exchange replaced the term
``independent director'' in the proposed rule text with
``Independent Governor,'' deleted references to a maximum five
person Audit Committee in the description of the proposal, and made
clarifying corrections to the proposed rule text.
---------------------------------------------------------------------------
II. Description
The Exchange proposes to amend the Phlx By-Laws, Article X, Section
10-9 to: (i) Permit, but not mandate, the Board to increase the size of
the Audit Committee; (ii) require all Audit Committee members to be
``Independent Governors'' as defined under the proposal; and (iii)
modify and enhance the responsibilities of the Audit Committee.
Currently, the Audit Committee is required to consist of three members.
The Exchange proposes to require that the Audit Committee be composed
of at least three members, and to have the Board establish the exact
size of the Audit Committee from time to time.
The Exchange also proposes to require all Audit Committee members
to be ``Independent Governors.'' The Exchange proposes to define
``Independent Governor'' as a member of the Board who has no material
relationship with the Exchange or any affiliate of the Exchange, any
member of the Exchange or any affiliate of such member, or any issuer
of securities that are listed or traded on the Exchange or a facility
of the Exchange.\7\ The proposal would define the term ``material
relationship'' as a relationship, whether compensatory or otherwise,
that reasonably could affect the independent judgment or decision-
making of the Governor. The Exchange has represented that the Board
would determine whether each Audit Committee member is an Independent
Governor upon that Governor's nomination to the Audit Committee and
thereafter no less frequently than annually and as often as necessary
in light of the Governor's circumstances.
---------------------------------------------------------------------------
\7\ The Exchange has cited to the Commission's proposed
rulemaking on the fair administration and governance of self-
regulatory organizations for its proposed definitions of
``Independent Governor'' and ``material relationship.'' See
Securities Exchange Act Release No. 50699 (November 18, 2004), 69 FR
71126 (December 8, 2004) (``SRO Governance Proposal'').
---------------------------------------------------------------------------
The Exchange also proposes to incorporate into the Phlx's By-Laws
enhanced Audit Committee duties and responsibilities, including: (i)
Sole responsibility for appointing, retaining, and replacing its
external auditors; (ii) direct oversight over such auditors; (iii)
reviewing at least annually the qualification and performance of such
auditors; (iv) direct authority to resolve disagreements between
management and such auditors regarding financial reporting; (v)
responsibility to ensure the rotation of the lead and concurrent
auditors every five years and certain other auditors every seven years,
with time-out periods; (vi) evaluation of the independence of external
auditors, including ensuring that, other than deferred tax and
compliance services, external auditors do not engage in certain non-
audit services when they conduct audits for the Exchange and approval
of non-audit services where appropriate; (vii) establishing procedures
for the receipt, retention, and treatment of complaints received by the
Exchange regarding accounting, internal accounting controls, or other
auditing matters and confidential anonymous submissions by Exchange
employees regarding questionable accounting practices; and (viii)
determining the appropriate amount of funding to be provided by the
Exchange for the purpose of paying compensation to external auditors to
prepare or issue an audit report, compensation to advisers to the Audit
Committee necessary for it to carry out its duties, and ordinary
administrative expenses of the Audit Committee.
The Exchange also proposes to remove the phrase ``independent
public accountants'' from Article X, Section
[[Page 10742]]
10-9(b) of the Phlx By-Laws and replace it with the phrase ``external
auditors,'' which would broaden the scope of the Audit Committee's
oversight.
III. Discussion and Commission Findings
After careful review, 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 self-regulatory
organization.\8\ In particular, the Commission believes that the
proposed rule change, as amended, is consistent with Section 6(b)(5) of
the Act \9\ in that it is designed to perfect the mechanism of a free
and open market and a national market system and, in general, to
protect investors and the public interest.
---------------------------------------------------------------------------
\8\ The Commission has considered the proposed rule's impact on
efficiency, competition and capital formation. 15 U.S.C. 78c(f).
\9\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Commission notes that the proposed rule change would require
every member of the Audit Committee to be an ``Independent Governor,''
as such term is defined in the proposal, and also would require the
Exchange's Board to determine the independence of such Governor upon
his or her nomination to the Audit Committee and thereafter no less
frequently than annually and as often as necessary in light of the
Governor's circumstances. The Commission believes that the Exchange's
proposed definition of Independent Governor is designed to provide
parameters for ensuring that disinterested, objective Governors serve
on the Audit Committee.\10\ Moreover, the definition of Independent
Governor and the requirement that the Exchange periodically assess the
independence of Audit Committee members should help enhance the
independence and integrity of the Audit Committee. The Commission also
believes that the Phlx's proposed revisions to the Audit Committee's
functions should help strengthen the Audit Committee's oversight of the
Exchange's audit matters.
---------------------------------------------------------------------------
\10\ The Commission notes that the SRO Governance Proposal also
proposed specific circumstances that would preclude a determination
that a director is independent, which the Exchange has not
incorporated in this proposal. The Commission notes, however, that
the Exchange would be required to conform its definition of
``Independent Governor,'' as well as any other related rules, to any
rules that the Commission may adopt in the future with respect to
the governance of national securities exchanges and the independence
of their directors.
---------------------------------------------------------------------------
The Commission finds good cause for approving proposed Amendment
No. 3 before the 30th day after the date of publication of notice of
filing hereof in the Federal Register. Phlx filed Amendment No. 3 to
replace the term ``independent director'' in the proposed rule text
with the term ``Independent Governor,'' to delete references in the
description section of the proposal to an increase in the size of the
Audit Committee to a maximum of five persons, and to make clarifying
changes and corrections to the proposed rule's text. The Commission
believes that the proposed changes in Amendment No. 3 clarify the
composition of the Audit Committee and make minor, clarifying
corrections to the proposal's rule text, but raise no new issues of
regulatory concern. For these reasons, the Commission finds good cause
for accelerating approval of Amendment No. 3.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether Amendment No. 3
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-Phlx-2004-37 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-Phlx-2004-37. 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. Copies of such
filing also will be available for inspection and copying at the
principal office of Phlx. 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-Phlx-2004-37 and should be submitted on or before March 23, 2006.
V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\11\ that the proposed rule change (File No. SR-Phlx-2004-37), as
amended by Amendment No. 1, be, and it hereby is, approved, and that
Amendment No. 3 to the proposed rule change be, and hereby is, approved
on an accelerated basis.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78s(b)(2).
\12\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\12\
Nancy M. Morris,
Secretary.
[FR Doc. E6-2961 Filed 3-1-06; 8:45 am]
BILLING CODE 8010-01-P
