Self-Regulatory Organizations; Order Approving Minor Rule Violation Plan for The NASDAQ Stock Market LLC, 19769-19770 [E6-5653]

Download as PDF dsatterwhite on PROD1PC76 with NOTICES Federal Register / Vol. 71, No. 73 / Monday, April 17, 2006 / Notices Form 11361. Units of Delivery—Stocks 11362. Units of Delivery—Bonds 11363. Units of Delivery—Unit Investment Trust Securities 11364. Units of Delivery—Certificates of Deposit for Bonds IM–11364. Trading Securities As ‘‘Units’’ or Bonds ‘‘With Stock’’ 11400. DELIVERY OF SECURITIES WITH DRAFT ATTACHED 11410. Acceptance of Draft 11500. DELIVERY OF SECURITIES WITH RESTRICTIONS 11510. Delivery of Temporary Certificates 11520. Delivery of Mutilated Securities 11530. Delivery of Securities Called for Redemption or Which Are Deemed Worthless 11540. Delivery Under Government Regulations 11550. Assignments and Powers of Substitution; Delivery of Registered Securities IM–11550. Uniform Transfer Instructions Form 11560. Certificate of Company Whose Transfer Books Are Closed IM–11560. Sample Ownership Transfer Indemnification Stamp 11570. Certificates in Various Names 11571. Certificate in Name of Corporation IM–11571. Sample Certificate and Authorizing Resolution/Certificate of Incumbency 11572. Certificate in Name of Firm 11573. Certificate in Name of Dissolved Firm Succeeded by New Firm 11574. Certificate in Name of Deceased Person, Trustee, etc. IM–11574. Sample Limited Partnership Change of Trustee Form 11600. DELIVERY OF BONDS AND OTHER EVIDENCES OF INDEBTEDNESS 11610. Liability for Expenses 11620. Computation of Interest 11630. Due-Bills and Due-Bill Checks IM–11630. Sample Due-Bill Forms 11640. Claims for Dividends, Rights, Interest, etc. 11650. Transfer Fees 11700. RECLAMATIONS AND REJECTIONS 11710. General Provisions IM–11710. Uniform Reclamation Form 11720. Irregular Delivery—Transfer Refused—Lost or Stolen Securities IM–11720. Obligations of Members Who Discover Securities in Their Possession to Which They Are Not Entitled 11730. Called Securities 11740. Marking to the Market VerDate Aug<31>2005 15:16 Apr 14, 2006 Jkt 208001 800. CLOSE-OUT PROCEDURES 11810. Buying-In IM–11810. Sample Buy-In Forms 11820. Selling-Out 11840. Rights and Warrants IM–11840. Sample Letter of Indemnity 11860. Acceptance and Settlement of COD Orders 11870. Customer Account Transfer Contracts IM–11870. Sample Transfer Instruction Forms 11880. Settlement of Syndicate Accounts III. Date of Effectiveness of the Proposed Plan and Timing for Commission Action Pursuant to Section 17(d)(1) of the Act 9 and Rule 17d–2 thereunder,10 after May 8, 2006, the Commission may, by written notice, declare the plan submitted by Nasdaq and NASD, File No. 4–517, effective if the Commission finds that the plan is necessary or appropriate in the public interest and for the protection of investors, to foster cooperation and coordination among self-regulatory organizations, or to remove impediments to and foster the development of the national market system and a national system for the clearance and settlement of securities transactions and in conformity with the factors set forth in Section 17(d) of the Act. In order to assist the Commission in determining whether to approve this plan and to relieve Nasdaq of those responsibilities designated to NASD, interested persons are invited to submit written data, views, and arguments concerning the foregoing. Comments may be submitted by any of the following methods: • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/other.shtml), or • Send an e-mail to rulecomments@sec.gov. Please include File Number 4–517 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number 4–517. This file number should be included on the subject line if e-mail U.S.C. 78q(d)(1). CFR 240.17d–2. 10 17 Frm 00088 Fmt 4703 For the Commission, by the Division of Market Regulation, pursuant to delegated authority.11 Nancy M. Morris, Secretary. [FR Doc. E6–5693 Filed 4–14–06; 8:45 am] SECURITIES AND EXCHANGE COMMISSION [Release No. 34–53623; File No. 4–514] Self-Regulatory Organizations; Order Approving Minor Rule Violation Plan for The NASDAQ Stock Market LLC April 10, 2006. Electronic Comments PO 00000 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/ other.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed plan that are filed with the Commission, and all written communications relating to the proposed plan 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 plan 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 4–517 and should be submitted on or before May 8, 2006. BILLING CODE 8010–01–P IV. Solicitation of Comments 9 15 19769 Sfmt 4703 On February 22, 2006, The NASDAQ Stock Market LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) a proposed minor rule violation plan (‘‘MRVP’’) pursuant to Section 19(d)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19d–1(c)(2) thereunder.2 The proposed MRVP was published for public comment on March 16, 2006.3 The Commission received no comments on the proposal. This order approves Nasdaq’s proposed MRVP. 11 17 CFR 200.30–3(a)(34). U.S.C. 78s(d)(1). 2 17 CFR 240.19d–1(c)(2). 3 See Securities Exchange Act Release No. 53428 (March 7, 2006), 71 FR 13645. 1 15 E:\FR\FM\17APN1.SGM 17APN1 19770 Federal Register / Vol. 71, No. 73 / Monday, April 17, 2006 / Notices Nasdaq’s MRVP specifies those uncontested minor rule violations with sanctions not exceeding $2,500 which would not be subject to the provisions of Rule 19d–1(c)(1) under the Act 4 requiring that a self-regulatory organization promptly file notice with the Commission of any final disciplinary action taken with respect to any person or organization.5 In accordance with paragraph (c)(2) of Rule 19d–1 of the Act, Nasdaq proposes to designate certain specified rule violations as minor rule violations, and requests that it be relieved of the reporting requirements regarding such violations, provided it gives notice of such violations to the Commission on a quarterly basis. Nasdaq proposes to include in its proposed MRVP the policies and procedures currently included in Nasdaq Rule 9216(b) (‘‘Procedure for Violations Under Plan Pursuant to SEC Rule 19d–1(c)(2)’’) and the rule violations currently included in Nasdaq Rule IM–9216 (‘‘Violations Appropriate for Disposition Under Plan Pursuant to SEC Rule 19d–1(c)(2)’’).6 Pursuant to Nasdaq’s proposed MRVP, under Rule 9216(b) and IM– 9216, Nasdaq or the Nasdaq Review Counsel may impose a fine (not to exceed $2,500) and/or a censure on a member or an associated person with respect to any rule listed in IM–9216. If the person against whom the fine or censure is imposed does not dispute the violation, the Department of 4 17 CFR 240.19d–1(c)(1). Commission adopted amendments to paragraph (c) of Rule 19d–1 to allow self-regulatory organizations (‘‘SROs’’) to submit for Commission approval plans for the abbreviated reporting of minor disciplinary infractions. See Securities Exchange Act Release No. 21013 (June 1, 1984), 49 FR 23828 (June 8, 1984). Any disciplinary action taken by an SRO against any person for violation of a rule of the SRO which has been designated as a minor rule violation pursuant to such a plan filed with the Commission shall not be considered ‘‘final’’ for purposes of Section 19(d)(1) of the Act if the sanction imposed consists of a fine not exceeding $2,500 and the sanctioned person has not sought an adjudication, including a hearing, or otherwise exhausted his administrative remedies. 6 On January 13, 2006, the Commission approved Nasdaq’s application for registration as a national securities exchange, including the rules governing the Nasdaq exchange. Securities Exchange Act Release No. 53128, 71 FR 3550 (January 23, 2006). In the approval order, the Commission noted that Nasdaq Rule 9216(b) and IM–9216 provided for the imposition of fines for minor rule violations pursuant to a minor rule violation plan. Accordingly, the Commission noted that as a condition to the operation of the Nasdaq Exchange, Nasdaq must file a minor rule violation plan with the Commission. Nasdaq represented that modifications may be made to IM–9216 in the future. Nasdaq proposed that when amendments to IM–9216 are made pursuant to a rule filing submitted under Rule 19b–4 of the Act, such a filing would automatically be deemed a request by Nasdaq for Commission approval of a modification to its MRVP. dsatterwhite on PROD1PC76 with NOTICES 5 The VerDate Aug<31>2005 15:16 Apr 14, 2006 Jkt 208001 Enforcement or the Department of Market Regulation may prepare and request that such person execute a minor rule violation plan letter. In such a letter, the member or associated person accepts a finding of violation, consents to the imposition of sanctions, and agrees to waive the right to a hearing before a Hearing Panel (or, if applicable, an Extended Hearing Panel); any right of appeal to the Nasdaq Review Council, the Commission, or the courts; and any other challenge to the validity of the letter. The letter will describe the act or practice engaged in or omitted; the rule, regulation, or statutory provision violated; and the sanction or sanctions to be imposed. If a member or associated person executes the minor rule violation plan letter, the letter is submitted to the Nasdaq Review Council. The Office of Disciplinary Affairs may accept the letter or refer it to the Nasdaq Review Council for acceptance or rejection. Similarly, the Review Subcommittee of the Nasdaq Review Council may accept or reject the letter or refer it to the Nasdaq Review Council for acceptance or rejection. If the letter is rejected, Nasdaq may take any other appropriate disciplinary action with respect to the alleged violation or violations. Nasdaq proposed that the quarterly report of actions taken on minor rule violations under Rule 9216(b) and IM– 9216 would list for each violation: Nasdaq’s internal file number for the case, the name of the individual and/or organization, the nature of the violation, the specific rule provision(s) violated, the sanction imposed, the number of times the rule violation has occurred, and the date of disposition. The Commission finds that the proposed MRVP is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange. In particular, the Commission believes that the proposal is consistent with Section 6(b)(5) of the Act,7 which requires that the rules of an exchange be designed to promote just and equitable principles of trade, to remove impediments and 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 also believes that that proposal is consistent with Sections 6(b)(1) and 6(b)(6) of the Act 8 which require that the rules of an exchange enforce compliance with, and provide appropriate discipline for, violations of the Commission and Exchange rules. In addition, because the MRVP offer procedural rights to a person sanctioned under Rule 9216(b), the Commission believes that Rule 9216(b) provides a fair procedure for the disciplining of members and persons associated with members, consistent with Sections 6(b)(7) and 6(d)(1) of the Act.9 Finally, the Commission finds that the proposal is consistent with the public interest, the protection of investors, or otherwise in furtherance of the purposes of the Act, as required by Rule 19d– 1(c)(2) under the Act,10 because the MRVP strengthens Nasdaq’s ability to carry out its oversight and enforcement responsibilities as a self-regulatory organization in cases where full disciplinary proceedings are unsuitable in view of the minor nature of the particular violation. In approving this proposal, the Commission in no way minimizes the importance of compliance with Exchange rules and all other rules subject to the imposition of sanctions under Rule 9216(b). The Commission believes that the violation of any selfregulatory organization’s rules, as well as Commission rules, is a serious matter. However, Rule 9216(b) provides a reasonable means of addressing violations that do not rise to the level of requiring formal disciplinary proceedings, while providing greater flexibility in handling certain violations. The Commission expects that Nasdaq will continue to conduct surveillance with due diligence and make a determination based on its findings, on a case-by-case basis, whether a sanction under the MRVP is appropriate, or whether a violation requires formal disciplinary action. It is therefore ordered, pursuant to Rule 19d–1(c)(2) under the Act,11 that the proposed MRVP for Nasdaq, File No. 4–514, be, and hereby is, approved. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.12 Nancy M. Morris, Secretary. [FR Doc. E6–5653 Filed 4–14–06; 8:45 am] BILLING CODE 8010–01–P 9 15 U.S.C. 78f(b)(7) and 78f(d)(1). CFR 240.19d–1(c)(2). 11 Id. 12 17 CFR 200.30–3(a)(44). 10 17 7 15 8 15 PO 00000 U.S.C. 78f(b)(5). U.S.C. 78f(b)(1) and 78f(b)(6). Frm 00089 Fmt 4703 Sfmt 4703 E:\FR\FM\17APN1.SGM 17APN1

Agencies

[Federal Register Volume 71, Number 73 (Monday, April 17, 2006)]
[Notices]
[Pages 19769-19770]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-5653]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53623; File No. 4-514]


Self-Regulatory Organizations; Order Approving Minor Rule 
Violation Plan for The NASDAQ Stock Market LLC

April 10, 2006.
    On February 22, 2006, The NASDAQ Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed minor rule violation plan (``MRVP'') 
pursuant to Section 19(d)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19d-1(c)(2) thereunder.\2\ The proposed MRVP was 
published for public comment on March 16, 2006.\3\ The Commission 
received no comments on the proposal. This order approves Nasdaq's 
proposed MRVP.
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    \1\ 15 U.S.C. 78s(d)(1).
    \2\ 17 CFR 240.19d-1(c)(2).
    \3\ See Securities Exchange Act Release No. 53428 (March 7, 
2006), 71 FR 13645.

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[[Page 19770]]

    Nasdaq's MRVP specifies those uncontested minor rule violations 
with sanctions not exceeding $2,500 which would not be subject to the 
provisions of Rule 19d-1(c)(1) under the Act \4\ requiring that a self-
regulatory organization promptly file notice with the Commission of any 
final disciplinary action taken with respect to any person or 
organization.\5\ In accordance with paragraph (c)(2) of Rule 19d-1 of 
the Act, Nasdaq proposes to designate certain specified rule violations 
as minor rule violations, and requests that it be relieved of the 
reporting requirements regarding such violations, provided it gives 
notice of such violations to the Commission on a quarterly basis. 
Nasdaq proposes to include in its proposed MRVP the policies and 
procedures currently included in Nasdaq Rule 9216(b) (``Procedure for 
Violations Under Plan Pursuant to SEC Rule 19d-1(c)(2)'') and the rule 
violations currently included in Nasdaq Rule IM-9216 (``Violations 
Appropriate for Disposition Under Plan Pursuant to SEC Rule 19d-
1(c)(2)'').\6\
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    \4\ 17 CFR 240.19d-1(c)(1).
    \5\ The Commission adopted amendments to paragraph (c) of Rule 
19d-1 to allow self-regulatory organizations (``SROs'') to submit 
for Commission approval plans for the abbreviated reporting of minor 
disciplinary infractions. See Securities Exchange Act Release No. 
21013 (June 1, 1984), 49 FR 23828 (June 8, 1984). Any disciplinary 
action taken by an SRO against any person for violation of a rule of 
the SRO which has been designated as a minor rule violation pursuant 
to such a plan filed with the Commission shall not be considered 
``final'' for purposes of Section 19(d)(1) of the Act if the 
sanction imposed consists of a fine not exceeding $2,500 and the 
sanctioned person has not sought an adjudication, including a 
hearing, or otherwise exhausted his administrative remedies.
    \6\ On January 13, 2006, the Commission approved Nasdaq's 
application for registration as a national securities exchange, 
including the rules governing the Nasdaq exchange. Securities 
Exchange Act Release No. 53128, 71 FR 3550 (January 23, 2006). In 
the approval order, the Commission noted that Nasdaq Rule 9216(b) 
and IM-9216 provided for the imposition of fines for minor rule 
violations pursuant to a minor rule violation plan. Accordingly, the 
Commission noted that as a condition to the operation of the Nasdaq 
Exchange, Nasdaq must file a minor rule violation plan with the 
Commission. Nasdaq represented that modifications may be made to IM-
9216 in the future. Nasdaq proposed that when amendments to IM-9216 
are made pursuant to a rule filing submitted under Rule 19b-4 of the 
Act, such a filing would automatically be deemed a request by Nasdaq 
for Commission approval of a modification to its MRVP.
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    Pursuant to Nasdaq's proposed MRVP, under Rule 9216(b) and IM-9216, 
Nasdaq or the Nasdaq Review Counsel may impose a fine (not to exceed 
$2,500) and/or a censure on a member or an associated person with 
respect to any rule listed in IM-9216. If the person against whom the 
fine or censure is imposed does not dispute the violation, the 
Department of Enforcement or the Department of Market Regulation may 
prepare and request that such person execute a minor rule violation 
plan letter. In such a letter, the member or associated person accepts 
a finding of violation, consents to the imposition of sanctions, and 
agrees to waive the right to a hearing before a Hearing Panel (or, if 
applicable, an Extended Hearing Panel); any right of appeal to the 
Nasdaq Review Council, the Commission, or the courts; and any other 
challenge to the validity of the letter. The letter will describe the 
act or practice engaged in or omitted; the rule, regulation, or 
statutory provision violated; and the sanction or sanctions to be 
imposed.
    If a member or associated person executes the minor rule violation 
plan letter, the letter is submitted to the Nasdaq Review Council. The 
Office of Disciplinary Affairs may accept the letter or refer it to the 
Nasdaq Review Council for acceptance or rejection. Similarly, the 
Review Subcommittee of the Nasdaq Review Council may accept or reject 
the letter or refer it to the Nasdaq Review Council for acceptance or 
rejection. If the letter is rejected, Nasdaq may take any other 
appropriate disciplinary action with respect to the alleged violation 
or violations.
    Nasdaq proposed that the quarterly report of actions taken on minor 
rule violations under Rule 9216(b) and IM-9216 would list for each 
violation: Nasdaq's internal file number for the case, the name of the 
individual and/or organization, the nature of the violation, the 
specific rule provision(s) violated, the sanction imposed, the number 
of times the rule violation has occurred, and the date of disposition.
    The Commission finds that the proposed MRVP is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to a national securities exchange. In particular, the 
Commission believes that the proposal is consistent with Section 
6(b)(5) of the Act,\7\ which requires that the rules of an exchange be 
designed to promote just and equitable principles of trade, to remove 
impediments and 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 also believes that that proposal is 
consistent with Sections 6(b)(1) and 6(b)(6) of the Act \8\ which 
require that the rules of an exchange enforce compliance with, and 
provide appropriate discipline for, violations of the Commission and 
Exchange rules. In addition, because the MRVP offer procedural rights 
to a person sanctioned under Rule 9216(b), the Commission believes that 
Rule 9216(b) provides a fair procedure for the disciplining of members 
and persons associated with members, consistent with Sections 6(b)(7) 
and 6(d)(1) of the Act.\9\
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    \7\ 15 U.S.C. 78f(b)(5).
    \8\ 15 U.S.C. 78f(b)(1) and 78f(b)(6).
    \9\ 15 U.S.C. 78f(b)(7) and 78f(d)(1).
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    Finally, the Commission finds that the proposal is consistent with 
the public interest, the protection of investors, or otherwise in 
furtherance of the purposes of the Act, as required by Rule 19d-1(c)(2) 
under the Act,\10\ because the MRVP strengthens Nasdaq's ability to 
carry out its oversight and enforcement responsibilities as a self-
regulatory organization in cases where full disciplinary proceedings 
are unsuitable in view of the minor nature of the particular violation.
---------------------------------------------------------------------------

    \10\ 17 CFR 240.19d-1(c)(2).
---------------------------------------------------------------------------

    In approving this proposal, the Commission in no way minimizes the 
importance of compliance with Exchange rules and all other rules 
subject to the imposition of sanctions under Rule 9216(b). The 
Commission believes that the violation of any self-regulatory 
organization's rules, as well as Commission rules, is a serious matter. 
However, Rule 9216(b) provides a reasonable means of addressing 
violations that do not rise to the level of requiring formal 
disciplinary proceedings, while providing greater flexibility in 
handling certain violations. The Commission expects that Nasdaq will 
continue to conduct surveillance with due diligence and make a 
determination based on its findings, on a case-by-case basis, whether a 
sanction under the MRVP is appropriate, or whether a violation requires 
formal disciplinary action.
    It is therefore ordered, pursuant to Rule 19d-1(c)(2) under the 
Act,\11\ that the proposed MRVP for Nasdaq, File No. 4-514, be, and 
hereby is, approved.
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    \11\ Id.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
Nancy M. Morris,
Secretary.
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    \12\ 17 CFR 200.30-3(a)(44).
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 [FR Doc. E6-5653 Filed 4-14-06; 8:45 am]
BILLING CODE 8010-01-P
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