Self-Regulatory Organizations; New York Stock Exchange, Inc.; Notice of Filing of Proposed Rule Change and Amendments Nos. 1 and 2 Thereto To Amend NYSE Rule 619 To Clarify That Failure To Appear or Produce Documents in Arbitration May Be Deemed Conduct Inconsistent With Just and Equitable Principles of Trade, 18401-18402 [E6-5244]

Download as PDF Federal Register / Vol. 71, No. 69 / Tuesday, April 11, 2006 / Notices For the Commission, by the Division of Market Regulation, pursuant to delegated authority.16 Nancy M. Morris, Secretary. [FR Doc. E6–5237 Filed 4–10–06; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–53599; File No. SR–NYSE– 2005–18] Self-Regulatory Organizations; New York Stock Exchange, Inc.; Notice of Filing of Proposed Rule Change and Amendments Nos. 1 and 2 Thereto To Amend NYSE Rule 619 To Clarify That Failure To Appear or Produce Documents in Arbitration May Be Deemed Conduct Inconsistent With Just and Equitable Principles of Trade April 4, 2006. 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 17, 2005, the New York Stock Exchange, Inc. (‘‘NYSE’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. On July 27, 2005, the Exchange filed Amendment No. 1 to the proposed rule change.3 On February 15, 2006, 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 from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The proposed rule change would add a new paragraph (h) to NYSE Rule 619 to clarify that the failure of a member, member organization, allied member, approved person, registered or nonregistered employee of a member or member organization or person otherwise subject to the jurisdiction of the Exchange (each, a ‘‘responsible party’’) to appear or to produce any 16 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 In Amendment No. 1, which replaced the original filing, the Exchange clarified that Rule 619 also applies to a ‘‘person otherwise subject to the jurisdiction of the Exchange.’’ 4 Amendment No. 2, which replaced the first amended rule filing, conformed the proposed rule to reflect the list of persons subject to disciplinary action under NYSE Rule 476. wwhite on PROD1PC61 with NOTICES 1 15 VerDate Aug<31>2005 19:37 Apr 10, 2006 Jkt 208001 document in their possession or control, as directed pursuant to provisions of the NYSE Arbitration Rules, may be deemed conduct or proceeding inconsistent with just and equitable principles of trade for purposes of NYSE Rule 476(a)(6). Below is the text of the proposed rule change. Proposed new language is in italics. * * * * * General Provision Governing Subpoenas, Production of Documents, etc. Rule 619. (a) through (g) No Change. (h) It may be deemed conduct or proceeding inconsistent with just and equitable principles of trade for purposes of Rule 476(a)(6) for a member, member organization, allied member, approved person, registered or non-registered employee of a member or member organization or person otherwise subject to the jurisdiction of the Exchange to fail to appear or to produce any document in their possession or control as directed pursuant to provisions of the NYSE Arbitration Rules. * * * * * 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. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The proposed rule change would add a new paragraph (h) to NYSE Rule 619 (‘‘General Provision Governing Subpoenas, Production of Documents, etc.’’) to clarify that the failure of a responsible party to appear or to produce any document in its possession or control, as directed pursuant to provisions of the NYSE Arbitration Rules, may be deemed conduct or proceeding inconsistent with just and equitable principles of trade for purposes of NYSE Rule 476(a)(6). Background NYSE Rule 619 provides that the parties to an arbitration proceeding shall cooperate to the fullest extent PO 00000 Frm 00134 Fmt 4703 Sfmt 4703 18401 practicable in the voluntary exchange of documents and information in order to expedite the arbitration process. Rule 619 also sets forth specific procedures and timetables with respect to the exchange of documents and information.5 Arbitrators may, in the decision rendered by the panel, refer to the NYSE Enforcement Division a failure to cooperate in the voluntary exchange of documents and information by a responsible party. Proposal The Exchange is aware of allegations that member organizations have not fulfilled their discovery obligations as prescribed by NYSE Arbitration Rules. In order to address such situations more effectively, and to reinforce adequately the quasi-judicial functions of the arbitration process, the NYSE is proposing to amend Rule 619 to make clear that it may be deemed conduct or proceeding inconsistent with just and equitable principles of trade for purposes of NYSE Rule 476(a)(6) for a responsible party to fail to appear or fail to produce any document in their possession or control as directed pursuant to provisions of the NYSE Arbitration Rules. NYSE Rule 476 allows disciplinary sanctions to be imposed upon a responsible party who is adjudged guilty of certain enumerated offenses, including ‘‘conduct or proceeding inconsistent with just and equitable principles of trade.’’ By explicitly providing that the failure to appear or to produce documents in one’s possession or control may be deemed conduct or proceeding inconsistent with just and equitable principles of trade, the proposed amendment would provide the Exchange with a clear mechanism to pursue disciplinary action pursuant to NYSE Rule 476 in response to such conduct. 5 For example, Rule 619(b) requires, in part, that: ‘‘(1) Any party may serve a written request for information or documents (‘‘information request’’) upon another party twenty (20) business days or more after service of the Statement of Claim by the Director of Arbitration or upon filing of the Answer, whichever is earlier. The requesting party shall serve the information request on all parties. The parties shall endeavor to resolve disputes regarding an information request prior to serving any objection to the request. Such efforts shall be set forth in the objection. (2) Unless a greater time is allowed by the requesting party, information requests shall be satisfied or objected to within thirty (30) calendar days from the date of service. Any objection to an information request shall be served by the objecting party on all parties. (3) Any reponse to objections to an information request shall be served on all parties within ten (10) calendar days of receipt to the objection.’’ E:\FR\FM\11APN1.SGM 11APN1 18402 Federal Register / Vol. 71, No. 69 / Tuesday, April 11, 2006 / Notices The specific authority to bring a disciplinary action under NYSE Rule 476(a)(6) should improve the efficacy of the arbitration process by facilitating the Exchange’s ability to ensure more fully and forcefully the cooperation of a responsible party who is a party to an arbitration proceeding. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the requirements of Section 6(b)(5) of the Act,6 which requires, among other things, that the rules of an 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. NYSE believes that the proposed amendments to Rule 619 are consistent with Section 6(b)(5) in that they should help to ensure that the public has a fair and expeditious forum for the resolution of disputes. The NYSE believes that a further statutory basis for this proposed rule change is also found in Section 6(b)(6) of the Act,7 which requires that the rules of an exchange provide that members and persons associated with its members shall be appropriately disciplined for violation of the provisions of the Act, the rules or regulations thereunder, or the rules of the exchange, by expulsion, suspension, limitation of activities, functions, and operations, fine, censure, being suspended or barred from being associated with a member, or any other fitting sanction. The Exchange believes that the proposed amendments to Rule 619 are consistent with Section 6(b)(6) in that they would facilitate appropriate disciplinary action for violation of a rule of the Exchange. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change, as amended will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. wwhite on PROD1PC61 with NOTICES C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received from Members, Participants or Others Written comments were neither solicited nor received. 6 15 7 15 U.S.C. 78f(b)(5). U.S.C. 78f(b)(6). VerDate Aug<31>2005 19:37 Apr 10, 2006 Jkt 208001 III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the Exchange consents, the Commission will: (A) By order approve such proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be disapproved. 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–2005–18 and should be submitted on or before May 2, 2006. IV. 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: SMALL BUSINESS ADMINISTRATION For the Commission, by the Division of Market Regulation, pursuant to delegated authority.8 Nancy M. Morris, Secretary. [FR Doc. E6–5244 Filed 4–10–06; 8:45 am] BILLING CODE 8010–01–P Data Collection Available for Public Comments and Recommendations Notice and request for comments. ACTION: SUMMARY: In accordance with the Paperwork Reduction Act of 1995, this Electronic Comments notice announces the Small Business • Use the Commission’s Internet Administration’s intentions to request comment form (https://www.sec.gov/ approval on a new and/or currently rules/sro.shtml); or approved information collection. • Send an e-mail to ruleDATES: Submit comments on or before comments@sec.gov. Please include File June 12, 2006. Number SR–NYSE–2005–18 on the ADDRESSES: Send all comments subject line. regarding whether these information Paper Comments collections are necessary for the proper performance of the function of the • Send paper comments in triplicate agency, whether the burden estimates to Nancy M. Morris, Secretary, are accurate, and if there are ways to Securities and Exchange Commission, minimize the estimated burden and 100 F Street, NE., Washington, DC enhance the quality of the collections, to 20549–1090. Carol Fendler, Director, Office of All submissions should refer to File Licensing and Program Standards, Small Number SR–NYSE–2005–18. This file Business Administration, 409 3rd Street number should be included on the subject line if e-mail is used. To help the SW., Suite 8300, Washington, DC 20416. Commission process and review your FOR FURTHER INFORMATION CONTACT: comments more efficiently, please use Carol Fendler, Director, Office of only one method. The Commission will Licensing and Program Standards 202– post all comments on the Commission’s 205–7559 carol.fendler@sba.gov Curtis Internet Web site (https://www.sec.gov/ B. Rich, Management Analyst, 202–205– rules/sro/shtml). Copies of the 7030 curtis.rich@sba.gov. submission, all subsequent SUPPLEMENTARY INFORMATION: amendments, all written statements Title: ‘‘Request for Information with respect to the proposed rule Concerning Portfolio Financing’’. change that are filed with the Description of Respondents: SBIC Commission, and all written Investment Companies. communications relating to the Form No: 857. proposed rule change between the Annual Responses: 2,160. Commission and any person, other than Annual Burden: 2,160. those that may be withheld from the SUPPLEMENTARY INFORMATION: public in accordance with the Title: ‘‘Financing Institution provisions of 5 U.S.C. 552, will be Confirmation Form’’. available for inspection and copying in Description of Respondents: SBIC the Commission’s Public Reference Investment Companies. Room. Copies of the filing also will be Form No: 860. available for inspection and copying at Annual Responses: 1,500. the principal office of the Exchange. All 8 17 CFR 200.30–3(a)(12). comments received will be posted PO 00000 Frm 00135 Fmt 4703 Sfmt 4703 E:\FR\FM\11APN1.SGM 11APN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 71, Number 69 (Tuesday, April 11, 2006)]
[Notices]
[Pages 18401-18402]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-5244]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53599; File No. SR-NYSE-2005-18]


Self-Regulatory Organizations; New York Stock Exchange, Inc.; 
Notice of Filing of Proposed Rule Change and Amendments Nos. 1 and 2 
Thereto To Amend NYSE Rule 619 To Clarify That Failure To Appear or 
Produce Documents in Arbitration May Be Deemed Conduct Inconsistent 
With Just and Equitable Principles of Trade

April 4, 2006.

    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 17, 2005, the New York Stock Exchange, Inc. (``NYSE'' or 
the ``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by the 
Exchange. On July 27, 2005, the Exchange filed Amendment No. 1 to the 
proposed rule change.\3\ On February 15, 2006, 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 
from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, which replaced the original filing, the 
Exchange clarified that Rule 619 also applies to a ``person 
otherwise subject to the jurisdiction of the Exchange.''
    \4\ Amendment No. 2, which replaced the first amended rule 
filing, conformed the proposed rule to reflect the list of persons 
subject to disciplinary action under NYSE Rule 476.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change would add a new paragraph (h) to NYSE Rule 
619 to clarify that the failure of a member, member organization, 
allied member, approved person, registered or non-registered employee 
of a member or member organization or person otherwise subject to the 
jurisdiction of the Exchange (each, a ``responsible party'') to appear 
or to produce any document in their possession or control, as directed 
pursuant to provisions of the NYSE Arbitration Rules, may be deemed 
conduct or proceeding inconsistent with just and equitable principles 
of trade for purposes of NYSE Rule 476(a)(6).
    Below is the text of the proposed rule change. Proposed new 
language is in italics.
* * * * *
    General Provision Governing Subpoenas, Production of Documents, 
etc.
    Rule 619. (a) through (g) No Change.
    (h) It may be deemed conduct or proceeding inconsistent with just 
and equitable principles of trade for purposes of Rule 476(a)(6) for a 
member, member organization, allied member, approved person, registered 
or non-registered employee of a member or member organization or person 
otherwise subject to the jurisdiction of the Exchange to fail to appear 
or to produce any document in their possession or control as directed 
pursuant to provisions of the NYSE Arbitration Rules.
* * * * *

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. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The proposed rule change would add a new paragraph (h) to NYSE Rule 
619 (``General Provision Governing Subpoenas, Production of Documents, 
etc.'') to clarify that the failure of a responsible party to appear or 
to produce any document in its possession or control, as directed 
pursuant to provisions of the NYSE Arbitration Rules, may be deemed 
conduct or proceeding inconsistent with just and equitable principles 
of trade for purposes of NYSE Rule 476(a)(6).

Background

    NYSE Rule 619 provides that the parties to an arbitration 
proceeding shall cooperate to the fullest extent practicable in the 
voluntary exchange of documents and information in order to expedite 
the arbitration process. Rule 619 also sets forth specific procedures 
and timetables with respect to the exchange of documents and 
information.\5\
---------------------------------------------------------------------------

    \5\ For example, Rule 619(b) requires, in part, that:
    ``(1) Any party may serve a written request for information or 
documents (``information request'') upon another party twenty (20) 
business days or more after service of the Statement of Claim by the 
Director of Arbitration or upon filing of the Answer, whichever is 
earlier. The requesting party shall serve the information request on 
all parties. The parties shall endeavor to resolve disputes 
regarding an information request prior to serving any objection to 
the request. Such efforts shall be set forth in the objection.
    (2) Unless a greater time is allowed by the requesting party, 
information requests shall be satisfied or objected to within thirty 
(30) calendar days from the date of service. Any objection to an 
information request shall be served by the objecting party on all 
parties.
    (3) Any reponse to objections to an information request shall be 
served on all parties within ten (10) calendar days of receipt to 
the objection.''
---------------------------------------------------------------------------

    Arbitrators may, in the decision rendered by the panel, refer to 
the NYSE Enforcement Division a failure to cooperate in the voluntary 
exchange of documents and information by a responsible party.

Proposal

    The Exchange is aware of allegations that member organizations have 
not fulfilled their discovery obligations as prescribed by NYSE 
Arbitration Rules. In order to address such situations more 
effectively, and to reinforce adequately the quasi-judicial functions 
of the arbitration process, the NYSE is proposing to amend Rule 619 to 
make clear that it may be deemed conduct or proceeding inconsistent 
with just and equitable principles of trade for purposes of NYSE Rule 
476(a)(6) for a responsible party to fail to appear or fail to produce 
any document in their possession or control as directed pursuant to 
provisions of the NYSE Arbitration Rules.
    NYSE Rule 476 allows disciplinary sanctions to be imposed upon a 
responsible party who is adjudged guilty of certain enumerated 
offenses, including ``conduct or proceeding inconsistent with just and 
equitable principles of trade.'' By explicitly providing that the 
failure to appear or to produce documents in one's possession or 
control may be deemed conduct or proceeding inconsistent with just and 
equitable principles of trade, the proposed amendment would provide the 
Exchange with a clear mechanism to pursue disciplinary action pursuant 
to NYSE Rule 476 in response to such conduct.

[[Page 18402]]

    The specific authority to bring a disciplinary action under NYSE 
Rule 476(a)(6) should improve the efficacy of the arbitration process 
by facilitating the Exchange's ability to ensure more fully and 
forcefully the cooperation of a responsible party who is a party to an 
arbitration proceeding.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the requirements of Section 6(b)(5) of the Act,\6\ which requires, 
among other things, that the rules of an 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. NYSE believes that the proposed amendments to 
Rule 619 are consistent with Section 6(b)(5) in that they should help 
to ensure that the public has a fair and expeditious forum for the 
resolution of disputes. The NYSE believes that a further statutory 
basis for this proposed rule change is also found in Section 6(b)(6) of 
the Act,\7\ which requires that the rules of an exchange provide that 
members and persons associated with its members shall be appropriately 
disciplined for violation of the provisions of the Act, the rules or 
regulations thereunder, or the rules of the exchange, by expulsion, 
suspension, limitation of activities, functions, and operations, fine, 
censure, being suspended or barred from being associated with a member, 
or any other fitting sanction. The Exchange believes that the proposed 
amendments to Rule 619 are consistent with Section 6(b)(6) in that they 
would facilitate appropriate disciplinary action for violation of a 
rule of the Exchange.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b)(5).
    \7\ 15 U.S.C. 78f(b)(6).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change, as 
amended 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 were neither solicited nor received.

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. 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-2005-18 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-NYSE-2005-18. 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 the 
filing also will be available for inspection and copying at the 
principal office of the Exchange. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File number SR-NYSE-2005-18 and should be submitted on or before May 2, 
2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
---------------------------------------------------------------------------

    \8\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Nancy M. Morris,
Secretary.
[FR Doc. E6-5244 Filed 4-10-06; 8:45 am]
BILLING CODE 8010-01-P

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.