Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change and Amendment Nos. 1 and 2 Thereto To Establish a Public Disclosure Program, 32619-32622 [E6-8700]
Download as PDF
<![CDATA[
Federal Register / Vol. 71, No. 108 / Tuesday, June 6, 2006 / Notices
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.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.6
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6–8717 Filed 6–5–06; 8:45 am]
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:
SECURITIES AND EXCHANGE
COMMISSION
sroberts on PROD1PC70 with NOTICES
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–ISE–2005–49 on the subject
line.
BILLING CODE 8010–01–P
[Release No. 34–53879; File No. SR–
NYSEArca–2006–03]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and Order
Granting Accelerated Approval of
Proposed Rule Change and
Amendment Nos. 1 and 2 Thereto To
Establish a Public Disclosure Program
May 26, 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 April 6,
2006, NYSE Arca, Inc. (‘‘NYSE Arca’’ or
Paper Comments
‘‘Exchange’’) filed with the Securities
• Send paper comments in triplicate
and Exchange Commission
to Nancy M. Morris, Secretary,
(‘‘Commission’’) the proposed rule
Securities and Exchange Commission,
change as described in Items I and II
100 F Street, NE., Washington, DC
below, which Items have been prepared
20549–1090.
by the Exchange. On May 9, 2006, NYSE
All submissions should refer to File
Arca filed Amendment No. 1 to the
Number SR–ISE–2005–49. This file
proposed rule change. On May 17, 2006,
number should be included on the
NYSE Arca filed Amendment No. 2 to
subject line if e-mail is used. To help the the proposed rule change. The
Commission process and review your
Commission is publishing this notice to
comments more efficiently, please use
solicit comments on the proposed rule
only one method. The Commission will change, as amended, from interested
post all comments on the Commission’s persons and is approving the proposal
Internet Web site (https://www.sec.gov/
on an accelerated basis.
rules/sro.shtml). Copies of the
I. Self-Regulatory Organization’s
submission, all subsequent
Statement of the Terms of Substance of
amendments, all written statements
the Proposed Rule Change
with respect to the proposed rule
change that are filed with the
NYSE Arca proposes to implement a
Commission, and all written
new rule, NYSE Arca Rule 10.17, that
communications relating to the
would institute and govern a program
proposed rule change between the
(‘‘Public Disclosure Program’’) in which
Commission and any person, other than certain disciplinary actions involving
those that may be withheld from the
Option Trading Permit Holders (‘‘OTP
public in accordance with the
Holders’’), Option Trading Permit Firms
provisions of 5 U.S.C. 552, will be
(‘‘OTP Firms’’), and associated persons
available for inspection and copying in
thereof would be publicized. The text of
the Commission’s Public Reference
the proposed rule change is below.
Room. Copies of the filing also will be
Proposed new language is in italics.
available for inspection and copying at
Rules of the NYSE Arca, Inc.
the principal office of the ISE. All
comments received will be posted
*
*
*
*
*
without change; the Commission does
Rule 10 Disciplinary Proceedings and
not edit personal identifying
Appeals
information from submissions. You
should submit only information that
*
*
*
*
*
you wish to make available publicly. All
submissions should refer to File
6 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
Number SR–ISE–2005–49 and should be
2 17 CFR 240.19b–4.
submitted on or before June 27, 2006.
VerDate Aug<31>2005
17:06 Jun 05, 2006
Jkt 208001
PO 00000
Frm 00116
Fmt 4703
Sfmt 4703
32619
Release of Disciplinary Information
Through the Public Disclosure Program
Rule 10.17(a) The Exchange shall, in
response to a request, release a copy of
any identified disciplinary decision
issued by the Exchange or any
Committee thereof; provided, however,
that each copy of:
(1) A decision that is released prior to
the expiration of the time period
provided under NYSE Arca Rule 10.8
for appeal or while such an appeal is
pending shall be accompanied by a
statement that the findings and
sanctions imposed in the decision may
be increased, decreased, modified, or
reversed by the Exchange;
(2) A final decision of the Exchange
that is released prior to the time period
provided under the Securities Exchange
Act of 1934 for appeal to the Securities
and Exchange Commission or while
such an appeal is pending shall be
accompanied by a statement that the
findings and sanctions of the Exchange
are subject to review and modification
by the Securities and Exchange
Commission; and
(3) A final decision of the Exchange
that is released after the decision is
appealed to the Securities and
Exchange Commission shall be
accompanied by a statement as to
whether the effectiveness of the
sanctions has been stayed pending the
outcome of proceedings before the
Securities and Exchange Commission.
(b)(1) The Exchange shall release to
the public information with respect to
any disciplinary decision issued
pursuant to NYSE Arca Rule 10
imposing: (i) A suspension, cancellation
or expulsion upon an OTP Holder or
OTP Firm; or (ii) suspension or
revocation of the registration of an
associated person of an OTP Holder or
OTP Firm; or (iii) suspension or barring
of an OTP Holder or OTP Firm or
associated person from association with
all OTP Holders or OTP Firms; or (iv)
imposition of monetary sanctions of
$10,000 or more upon an OTP Holder or
OTP Firm or associated person; or (v)
containing an allegation of a violation
of a Designated Rule; and may also
release to the public such information
with respect to any disciplinary decision
or group of decisions that involve a
significant policy or enforcement
determination where the release of
information is deemed by the President
of the Exchange to be in the public
interest. The Exchange may, in its
discretion, determine to waive the
requirement to release information with
respect to a disciplinary decision under
those extraordinary circumstances
where the release of such information
E:\FR\FM\06JNN1.SGM
06JNN1
sroberts on PROD1PC70 with NOTICES
32620
Federal Register / Vol. 71, No. 108 / Tuesday, June 6, 2006 / Notices
would violate fundamental notions of
fairness or work as an injustice. The
Exchange may release to the public
information on any disciplinary or other
decision issued pursuant to NYSE Arca
Rule 10 not specifically enumerated in
this paragraph, regardless of sanctions
imposed, so long as the names of the
parties and other identifying
information is redacted.
A ‘‘Designated Rule’’ means (i) SEC
Rule 10b–5, (ii) NYSE Arca Rule 11.5, or
(iii) NYSE Arca Rule 11.2.
(A) The Exchange shall release to the
public, in unredacted form, information
with respect to any disciplinary decision
issued pursuant to NYSE Arca Rule 10.8
that does not meet one or more of the
criteria in section (b)(1) for the release
of information to the public, provided
that the underlying decision issued
pursuant to NYSE Arca Rule 10.7 meets
one or more of the criteria in section
(b)(1) for the release of information to
the public, and information regarding
such decision has been released to the
public in unredacted form.
(B) In the event there is more than one
respondent in a disciplinary decision
issued pursuant to NYSE Arca Rule 10
and sanctions imposed on one or more,
but not all, of the respondents meets one
or more of the criteria in section (b)(1)
for the release of information to the
public, the Exchange shall release to the
public, in unredacted form, information
with respect to the respondent(s) who
meet such criteria, and may release to
the public, in redacted form,
information with respect to the
respondent(s) who do not meet such
criteria. Notwithstanding the foregoing,
the Exchange shall release to the public,
in unredacted form, information with
respect to any respondent in a
disciplinary decision issued pursuant to
NYSE Arca Rule 10.8 if the sanctions
imposed on such respondent in the
underlying decision issued pursuant to
NYSE Arca Rule 10.7 meet one or more
of the criteria for release of information
to the public, and information with
respect to that respondent has been
released in unredacted form.
(2) Information released to the public
pursuant to subparagraph (b)(1) shall be
accompanied by a statement to the
extent required for that type of
information under subparagraphs
(a)(1)–(3).
(c) Information regarding any
sanctions imposed pursuant to NYSE
Arca Rule 10.6 shall be released to the
public pursuant to paragraph (b)
immediately upon such approval.
(d) If a decision of the Exchange
imposing monetary sanctions of $10,000
or more or a penalty of expulsion,
revocation, suspension and/or barring of
VerDate Aug<31>2005
17:06 Jun 05, 2006
Jkt 208001
an OTP Holder or OTP Firm from being
associated with all OTP Holders or OTP
Firms is appealed to the Securities and
Exchange Commission, notice thereof
shall be given to all OTP Holders and
OTP Firms and to the press as soon as
possible after receipt by the Exchange of
notice from the Securities and Exchange
Commission of such appeal and the
Exchange’s notice shall state whether
the effectiveness of the Exchange’s
decision has been stayed pending the
outcome of proceedings before the
Securities and Exchange Commission.
(e) In the event an appeal to the
Federal courts is filed from a decision
by the Securities and Exchange
Commission in a case previously
appealed to it from a decision of the
Exchange, involving the imposition of
monetary sanctions of $10,000 or more
or a penalty of expulsion, revocation,
suspension and/or barring of an OTP
Holder or OTP Firm from being
associated with all OTP Holders or OTP
Firms, notice thereof shall be given to
the OTP Holders or OTP Firms as soon
as possible after receipt by the Exchange
of a formal notice of appeal. Such
notice shall include a statement whether
the order of the Securities and Exchange
Commission has been stayed.
(f) Any order issued by the Securities
and Exchange Commission of (i)
revocation or suspension of an OTP
Holder’s or OTP Firm’s broker/dealer
registration with the Securities and
Exchange Commission; or (ii) the
suspension or expulsion of an OTP
Holder or OTP Firm from the Exchange;
or (iii) the suspension or barring of an
OTP Holder or OTP Firm or an
associated person from association with
all broker/dealers or OTP Holders or
OTP Firms; or (iv) the imposition of
monetary sanctions of $10,000 or more
shall be released to the public through
a notice containing the effective date
thereof sent as soon as possible after
receipt by the Exchange of the order of
the Securities and Exchange
Commission.
(g) Cancellations of Option Trading
Permits or registration pursuant to the
Exchange’s Rules and interpretative
material shall be released to the public
as soon after the effective date of the
cancellation as possible.
(h) Releases to the public referred to
in paragraph (b) above shall identify the
Exchange Rule(s) or the SEC Rule(s)
violated, and shall describe the conduct
constituting such violation. Releases
may also identify the OTP Holder or
OTP Firm with which an individual was
associated at the time the violations
occurred if such identification is
PO 00000
Frm 00117
Fmt 4703
Sfmt 4703
determined by the Exchange to be in the
public interest.
*
*
*
*
*
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
NYSE Arca 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 III below,
and is set forth in Sections A, B, and C
below.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Under the proposed Public Disclosure
Program, the Exchange would release to
the public certain information
concerning the disciplinary history of
OTP Holders, OTP Firms, and
associated persons. The Exchange is
instituting such procedures in order to
provide investors with information
regarding final disciplinary decisions
related to such OTP Holders, OTP
Firms, and associated persons. The
primary purpose of the Public
Disclosure Program is to help investors
make informed choices about the
individuals and firms with whom they
may wish to do business. Currently, the
Exchange does not have rules related to
the release of disciplinary decisions to
members of the public. Proposed NYSE
Arca Rule 10.17 would allow the
Exchange to release such information
upon request and when certain other
circumstances exist, as explained in
greater detail below.
Disciplinary Decisions. If a member of
the public requests a copy of an
identified disciplinary decision issued
by the Exchange or any committee
thereof, a copy of the decision will be
provided to the requesting member of
the public. The Exchange’s practice will
be to provide such information on a perOTP Holder, OTP Firm, or associated
person basis. The Exchange will not
charge the public for this service.
The Exchange will also release
information to the public with respect to
disciplinary decisions that: (i) Impose a
suspension, cancellation, or expulsion
of an OTP Holder or OTP Firm; (ii)
impose the suspension or revocation of
the registration of an associated person
of an OTP Holder or OTP Firm; (iii)
impose the suspension or barring of an
OTP Holder, OTP Firm, or associated
person from association with all OTP
E:\FR\FM\06JNN1.SGM
06JNN1
sroberts on PROD1PC70 with NOTICES
Federal Register / Vol. 71, No. 108 / Tuesday, June 6, 2006 / Notices
Holders or OTP Firms; (iv) impose
monetary sanctions of $10,000 or more
upon an OTP Holder, OTP Firm, or
associated person; or (v) contain an
allegation of a violation of a Designated
Rule.3 The Exchange will release
unredacted information concerning
decisions issued by the Board Appeals
Committee that do not meet one or more
of the criteria in proposed NYSE Arca
Rule 10.17(b)(1), provided that the
underlying decision meets one or more
of the criteria in proposed NYSE Arca
Rule 10.17(b)(1), and the information
regarding the underlying decision was
released to the public in unredacted
form.
In the event that there is more than
one respondent in a disciplinary
decision and sanctions are imposed on
one or more of the respondents, but not
all of the respondents meet one or more
of the criteria in proposed NYSE Arca
Rule 10.17(b)(1) for the release of
information, the Exchange will release
to the public unredacted information
with respect to the respondents who
meet such criteria. In addition, the
Exchange may release redacted
information to the public with respect to
the respondents who do not meet the
criteria in proposed NYSE Arca Rule
10.17(b)(1).
The Exchange may release
information to the public concerning
disciplinary decisions that involve
significant policy or enforcement
determinations where the release of
such information is deemed by the
President of the Exchange to be in the
public interest. In addition, the
Exchange may exercise its discretion
and waive the requirement to release
information with respect to a
disciplinary decision under
extraordinary circumstances where the
release of the information would violate
fundamental notions of fairness or work
as an injustice. Finally, the Exchange
may release public information
concerning any disciplinary or other
decision issued pursuant to NYSE Arca
Rule 10 that is not specifically
enumerated in proposed NYSE Arca
Rule 10.17(b)(1), regardless of the
sanctions imposed, so long as the names
of the parties and other identifying
information are redacted.
Notices. Decisions that are released to
a member of the public must include
certain notices. Decisions that are
released prior to the period in which a
respondent may request an appeal
pursuant to NYSE Arca Rule 10.8
3 A ‘‘Designated Rule’’ means (i) Commission
Rule 10b–5 under the Act, (ii) NYSE Arca Rule 11.5
(Manipulation), or (iii) NYSE Arca Rule 11.2
(Prohibited Acts). See proposed NYSE Arca Rule
10.17(b)(1).
VerDate Aug<31>2005
17:06 Jun 05, 2006
Jkt 208001
(Review) or while an appeal is pending
must include a statement that the
findings and sanctions imposed in the
decision may be increased, decreased,
modified, or reversed by the Exchange.
In addition, a final decision by the
Exchange that is released prior to the
period in which a respondent may
appeal to the Commission or while such
appeal is pending will include a
statement that the findings and
sanctions of the Exchange are subject to
review and modification by the
Commission. Lastly, a final decision of
the Exchange that is released after the
decision is appealed to the Commission
will include a statement as to whether
the effectiveness of the sanctions has
been stayed pending the outcome of
proceedings before the Commission.
Appeals. In the instance that the
Exchange’s decisions are appealed to
the Commission or the federal courts,
the Exchange will notify all OTP
Holders, OTP Firms, and the press. This
includes all Exchange decisions
imposing monetary sanctions of $10,000
or more or a penalty of expulsion,
revocation, suspension, and/or barring
of an OTP Holder or OTP Firm from
being associated with all OTP Holders
or OTP Firms.
Commission Orders. The Exchange
will release through a notice to the
public information with respect to any
order issued by the Commission: (i)
Revoking or suspending an OTP Firm’s
or OTP Holder’s broker-dealer
registration; (ii) suspending or expelling
an OTP Firm or OTP Holder from the
Exchange; (iii) suspending or barring an
OTP Holder, OTP Firm, or an associated
person from associating with all brokerdealers, OTP Holders, or OTP Firms; or
(iv) imposing monetary sanctions of
$10,000 or more.
Offers of Settlement. The Exchange
will release information regarding
sanctions imposed pursuant to NYSE
Arca Rule 10.6 (Offers of Settlement)
upon the approval of offers of
settlement.
Cancellation of Option Trading
Permits. In cases where the Exchange
cancels an Options Trading Permit or
registration, the Exchange will notify
the public as soon after the effective
date of the cancellation as possible.
While proposed NYSE Arca Rule
10.17 is based substantially on NASD
Rule 8310 (Sanctions for Violation of
the Rules) and IM–8310–2 (Release of
Disciplinary and Other Information
Through the Public Disclosure
Program), it does not incorporate all
aspects of such NASD Rule. For
example, proposed NYSE Arca Rule
10.17 excludes public disclosure of
disciplinary complaints and
PO 00000
Frm 00118
Fmt 4703
Sfmt 4703
32621
arbitrations. The Exchange’s intention is
for public disclosure not to apply to
disciplinary complaints that involve
undecided issues or arbitrations
between parties. The Exchange plans to
notify OTP Holders, OTP Firms, and
associated persons of the effectiveness
of this proposed rule change through the
Exchange’s Internet Web site and a
regulatory bulletin.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
section 6(b) of the Act 4 in general, and
furthers the objectives of section
6(b)(5) 5 in particular, in that it is
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
regulating, clearing, settling, processing
information with respect to, and
facilitating transactions in securities, to
remove impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
public interest.
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
No written comments were solicited
or received with respect to the proposed
rule change.
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–NYSEArca–2006–03 on the
subject line.
4 15
5 15
E:\FR\FM\06JNN1.SGM
U.S.C. 78s(b).
U.S.C. 78s(b)(5).
06JNN1
32622
Federal Register / Vol. 71, No. 108 / Tuesday, June 6, 2006 / Notices
general to protect investors and the
public interest.
• Send paper comments in triplicate
The Commission believes that the
to Nancy M. Morris, Secretary,
proposal to institute the Public
Securities and Exchange Commission,
Disclosure Program, which is
Station Place, 100 F Street, NE.,
substantially based on NASD Rule 8310
Washington, DC 20549–1090.
and IM–8310–2,8 serves the interest of
investor protection because it allows
All submissions should refer to File
NYSE Arca members and the general
Number SR–NYSEArca–2006–03. This
public to promptly learn of final
file number should be included on the
disciplinary decisions involving its
subject line if e-mail is used. To help the
broker-dealer members or associated
Commission process and review your
persons of such members. By notifying
comments more efficiently, please use
the public of a final decision issued by
only one method. The Commission will
the Exchange or any committee of the
post all comments on the Commission’s Exchange that results in the suspension,
Internet Web site (https://www.sec.gov/
cancellation, expulsion, and/or barring
rules/sro.shtml). Copies of the
of an OTP Holder or OTP Firm or the
submission, all subsequent
imposition of monetary sanctions of
amendments, all written statements
$10,000 or more, for example, the
with respect to the proposed rule
Commission believes that the Public
change that are filed with the
Disclosure Program should provide
Commission, and all written
important information to the public,
communications relating to the
create additional incentives for
proposed rule change between the
members of the Exchange to comply
Commission and any person, other than with its rules, and help investors make
those that may be withheld from the
informed choices and decisions about
public in accordance with the
the individuals and firms with whom
provisions of 5 U.S.C. 552, will be
they may wish to conduct business. As
available for inspection and copying in
such, the Commission finds that the
the Commission’s Public Reference
proposed program promotes just and
Room. Copies of such filing also will be equitable principles of trade, encourages
available for inspection and copying at
the prevention of fraudulent and
the principal office of the Exchange. All manipulative acts and practices, and
comments received will be posted
seeks to perfect the mechanism of a free
without change; the Commission does
and open market.
not edit personal identifying
The Commission finds good cause for
approving this proposed rule change, as
information from submissions. You
amended, before the thirtieth day after
should submit only information that
you wish to make available publicly. All the publication of notice thereof in the
Federal Register. As noted earlier,
submissions should refer to File
prompt disclosure of final disciplinary
Number SR–NYSEArca–2006–03 and
decisions serves the interest of
should be submitted on or before June
protecting investors and the general
27, 2006.
public.9 Therefore, accelerating
IV. Commission’s Findings and Order
approval of the proposed rule change
Granting Accelerated Approval of
should benefit investors because they
Proposed Rule Change
will have access to the NYSE Arca
disciplinary information sooner. The
The Commission finds that the
Public Disclosure Program should foster
proposed rule change, as amended, is
compliance with NYSE Arca rules,
consistent with the requirements of the
heighten awareness of the public
Act and the rules and regulations
investor with respect to the conduct of
thereunder applicable to a national
business on the Exchange, and, in
securities exchange.6 In particular, the
general, improve the overall integrity of
Commission finds that the proposed
the market center.
rule change is consistent with section
7 which requires that
V. Conclusion
6(b)(5) of the Act,
an exchange have rules designed, among
It is therefore ordered, pursuant to
other things, to promote just and
section 19(b)(2) of the Act, that the
equitable principles of trade, to remove
proposed rule change (SR–NYSEArca–
impediments to and perfect the
2006–03), as amended, is hereby
mechanism of a free and open market
approved on an accelerated basis.10
and a national market system, and in
sroberts on PROD1PC70 with NOTICES
Paper Comments
8 See
6 In
approving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
7 15 U.S.C. 78f(b)(5).
VerDate Aug<31>2005
17:06 Jun 05, 2006
Jkt 208001
Securities Exchange Act Release No. 35138
(December 22, 1994), 59 FR 67362 (December 29,
1994) (approving the NASD program to publish
final disciplinary decisions involving its members).
9 See id.
10 15 U.S.C. 78s(b)(2).
PO 00000
Frm 00119
Fmt 4703
Sfmt 4703
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.11
Nancy M. Morris,
Secretary.
[FR Doc. E6–8700 Filed 6–5–06; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–53878; File No. SR–
NYSEArca–2006–02]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and Order
Granting Accelerated Approval of
Proposed Rule Change and
Amendment Nos. 1 and 2 Thereto To
Establish a Public Disclosure Program
May 26, 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 April 6,
2006, NYSE Arca, Inc. (‘‘NYSE Arca’’ or
‘‘Exchange’’), through its subsidiary,
NYSE Arca Equities, Inc. (‘‘NYSE Arca
Equities’’), 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.
On May 9, 2006, NYSE Arca filed
Amendment No. 1 to the proposed rule
change. On May 17, 2006, NYSE Arca
filed Amendment No. 2 to the proposed
rule change. The Commission is
publishing this notice to solicit
comments on the proposed rule change,
as amended, 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
NYSE Arca, through its subsidiary,
NYSE Arca Equities, proposes to
implement a new rule, NYSE Arca
Equities Rule 10.15, that would institute
and govern a program (‘‘Public
Disclosure Program’’) in which certain
disciplinary actions involving Equity
Trading Permit Holders (‘‘ETP Holders’’)
and associated persons thereof would be
publicized. The text of the proposed
rule change is below. Proposed new
language is in italics.
NYSE Arca Equities Rules
*
*
*
11 17
*
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
E:\FR\FM\06JNN1.SGM
06JNN1
*
]]>Agencies
[Federal Register Volume 71, Number 108 (Tuesday, June 6, 2006)]
[Notices]
[Pages 32619-32622]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-8700]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-53879; File No. SR-NYSEArca-2006-03]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Order Granting Accelerated Approval of Proposed Rule Change and
Amendment Nos. 1 and 2 Thereto To Establish a Public Disclosure Program
May 26, 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 April 6, 2006, NYSE Arca, Inc. (``NYSE Arca'' 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. On May 9, 2006, NYSE Arca filed
Amendment No. 1 to the proposed rule change. On May 17, 2006, NYSE Arca
filed Amendment No. 2 to the proposed rule change. The Commission is
publishing this notice to solicit comments on the proposed rule change,
as amended, 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
NYSE Arca proposes to implement a new rule, NYSE Arca Rule 10.17,
that would institute and govern a program (``Public Disclosure
Program'') in which certain disciplinary actions involving Option
Trading Permit Holders (``OTP Holders''), Option Trading Permit Firms
(``OTP Firms''), and associated persons thereof would be publicized.
The text of the proposed rule change is below. Proposed new language is
in italics.
Rules of the NYSE Arca, Inc.
* * * * *
Rule 10 Disciplinary Proceedings and Appeals
* * * * *
Release of Disciplinary Information Through the Public Disclosure
Program
Rule 10.17(a) The Exchange shall, in response to a request, release
a copy of any identified disciplinary decision issued by the Exchange
or any Committee thereof; provided, however, that each copy of:
(1) A decision that is released prior to the expiration of the time
period provided under NYSE Arca Rule 10.8 for appeal or while such an
appeal is pending shall be accompanied by a statement that the findings
and sanctions imposed in the decision may be increased, decreased,
modified, or reversed by the Exchange;
(2) A final decision of the Exchange that is released prior to the
time period provided under the Securities Exchange Act of 1934 for
appeal to the Securities and Exchange Commission or while such an
appeal is pending shall be accompanied by a statement that the findings
and sanctions of the Exchange are subject to review and modification by
the Securities and Exchange Commission; and
(3) A final decision of the Exchange that is released after the
decision is appealed to the Securities and Exchange Commission shall be
accompanied by a statement as to whether the effectiveness of the
sanctions has been stayed pending the outcome of proceedings before the
Securities and Exchange Commission.
(b)(1) The Exchange shall release to the public information with
respect to any disciplinary decision issued pursuant to NYSE Arca Rule
10 imposing: (i) A suspension, cancellation or expulsion upon an OTP
Holder or OTP Firm; or (ii) suspension or revocation of the
registration of an associated person of an OTP Holder or OTP Firm; or
(iii) suspension or barring of an OTP Holder or OTP Firm or associated
person from association with all OTP Holders or OTP Firms; or (iv)
imposition of monetary sanctions of $10,000 or more upon an OTP Holder
or OTP Firm or associated person; or (v) containing an allegation of a
violation of a Designated Rule; and may also release to the public such
information with respect to any disciplinary decision or group of
decisions that involve a significant policy or enforcement
determination where the release of information is deemed by the
President of the Exchange to be in the public interest. The Exchange
may, in its discretion, determine to waive the requirement to release
information with respect to a disciplinary decision under those
extraordinary circumstances where the release of such information
[[Page 32620]]
would violate fundamental notions of fairness or work as an injustice.
The Exchange may release to the public information on any disciplinary
or other decision issued pursuant to NYSE Arca Rule 10 not specifically
enumerated in this paragraph, regardless of sanctions imposed, so long
as the names of the parties and other identifying information is
redacted.
A ``Designated Rule'' means (i) SEC Rule 10b-5, (ii) NYSE Arca Rule
11.5, or (iii) NYSE Arca Rule 11.2.
(A) The Exchange shall release to the public, in unredacted form,
information with respect to any disciplinary decision issued pursuant
to NYSE Arca Rule 10.8 that does not meet one or more of the criteria
in section (b)(1) for the release of information to the public,
provided that the underlying decision issued pursuant to NYSE Arca Rule
10.7 meets one or more of the criteria in section (b)(1) for the
release of information to the public, and information regarding such
decision has been released to the public in unredacted form.
(B) In the event there is more than one respondent in a
disciplinary decision issued pursuant to NYSE Arca Rule 10 and
sanctions imposed on one or more, but not all, of the respondents meets
one or more of the criteria in section (b)(1) for the release of
information to the public, the Exchange shall release to the public, in
unredacted form, information with respect to the respondent(s) who meet
such criteria, and may release to the public, in redacted form,
information with respect to the respondent(s) who do not meet such
criteria. Notwithstanding the foregoing, the Exchange shall release to
the public, in unredacted form, information with respect to any
respondent in a disciplinary decision issued pursuant to NYSE Arca Rule
10.8 if the sanctions imposed on such respondent in the underlying
decision issued pursuant to NYSE Arca Rule 10.7 meet one or more of the
criteria for release of information to the public, and information with
respect to that respondent has been released in unredacted form.
(2) Information released to the public pursuant to subparagraph
(b)(1) shall be accompanied by a statement to the extent required for
that type of information under subparagraphs (a)(1)-(3).
(c) Information regarding any sanctions imposed pursuant to NYSE
Arca Rule 10.6 shall be released to the public pursuant to paragraph
(b) immediately upon such approval.
(d) If a decision of the Exchange imposing monetary sanctions of
$10,000 or more or a penalty of expulsion, revocation, suspension and/
or barring of an OTP Holder or OTP Firm from being associated with all
OTP Holders or OTP Firms is appealed to the Securities and Exchange
Commission, notice thereof shall be given to all OTP Holders and OTP
Firms and to the press as soon as possible after receipt by the
Exchange of notice from the Securities and Exchange Commission of such
appeal and the Exchange's notice shall state whether the effectiveness
of the Exchange's decision has been stayed pending the outcome of
proceedings before the Securities and Exchange Commission.
(e) In the event an appeal to the Federal courts is filed from a
decision by the Securities and Exchange Commission in a case previously
appealed to it from a decision of the Exchange, involving the
imposition of monetary sanctions of $10,000 or more or a penalty of
expulsion, revocation, suspension and/or barring of an OTP Holder or
OTP Firm from being associated with all OTP Holders or OTP Firms,
notice thereof shall be given to the OTP Holders or OTP Firms as soon
as possible after receipt by the Exchange of a formal notice of appeal.
Such notice shall include a statement whether the order of the
Securities and Exchange Commission has been stayed.
(f) Any order issued by the Securities and Exchange Commission of
(i) revocation or suspension of an OTP Holder's or OTP Firm's broker/
dealer registration with the Securities and Exchange Commission; or
(ii) the suspension or expulsion of an OTP Holder or OTP Firm from the
Exchange; or (iii) the suspension or barring of an OTP Holder or OTP
Firm or an associated person from association with all broker/dealers
or OTP Holders or OTP Firms; or (iv) the imposition of monetary
sanctions of $10,000 or more shall be released to the public through a
notice containing the effective date thereof sent as soon as possible
after receipt by the Exchange of the order of the Securities and
Exchange Commission.
(g) Cancellations of Option Trading Permits or registration
pursuant to the Exchange's Rules and interpretative material shall be
released to the public as soon after the effective date of the
cancellation as possible.
(h) Releases to the public referred to in paragraph (b) above shall
identify the Exchange Rule(s) or the SEC Rule(s) violated, and shall
describe the conduct constituting such violation. Releases may also
identify the OTP Holder or OTP Firm with which an individual was
associated at the time the violations occurred if such identification
is determined by the Exchange to be in the public interest.
* * * * *
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, NYSE Arca 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 III below, and is set forth in Sections A, B, and C below.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
Under the proposed Public Disclosure Program, the Exchange would
release to the public certain information concerning the disciplinary
history of OTP Holders, OTP Firms, and associated persons. The Exchange
is instituting such procedures in order to provide investors with
information regarding final disciplinary decisions related to such OTP
Holders, OTP Firms, and associated persons. The primary purpose of the
Public Disclosure Program is to help investors make informed choices
about the individuals and firms with whom they may wish to do business.
Currently, the Exchange does not have rules related to the release of
disciplinary decisions to members of the public. Proposed NYSE Arca
Rule 10.17 would allow the Exchange to release such information upon
request and when certain other circumstances exist, as explained in
greater detail below.
Disciplinary Decisions. If a member of the public requests a copy
of an identified disciplinary decision issued by the Exchange or any
committee thereof, a copy of the decision will be provided to the
requesting member of the public. The Exchange's practice will be to
provide such information on a per-OTP Holder, OTP Firm, or associated
person basis. The Exchange will not charge the public for this service.
The Exchange will also release information to the public with
respect to disciplinary decisions that: (i) Impose a suspension,
cancellation, or expulsion of an OTP Holder or OTP Firm; (ii) impose
the suspension or revocation of the registration of an associated
person of an OTP Holder or OTP Firm; (iii) impose the suspension or
barring of an OTP Holder, OTP Firm, or associated person from
association with all OTP
[[Page 32621]]
Holders or OTP Firms; (iv) impose monetary sanctions of $10,000 or more
upon an OTP Holder, OTP Firm, or associated person; or (v) contain an
allegation of a violation of a Designated Rule.\3\ The Exchange will
release unredacted information concerning decisions issued by the Board
Appeals Committee that do not meet one or more of the criteria in
proposed NYSE Arca Rule 10.17(b)(1), provided that the underlying
decision meets one or more of the criteria in proposed NYSE Arca Rule
10.17(b)(1), and the information regarding the underlying decision was
released to the public in unredacted form.
---------------------------------------------------------------------------
\3\ A ``Designated Rule'' means (i) Commission Rule 10b-5 under
the Act, (ii) NYSE Arca Rule 11.5 (Manipulation), or (iii) NYSE Arca
Rule 11.2 (Prohibited Acts). See proposed NYSE Arca Rule
10.17(b)(1).
---------------------------------------------------------------------------
In the event that there is more than one respondent in a
disciplinary decision and sanctions are imposed on one or more of the
respondents, but not all of the respondents meet one or more of the
criteria in proposed NYSE Arca Rule 10.17(b)(1) for the release of
information, the Exchange will release to the public unredacted
information with respect to the respondents who meet such criteria. In
addition, the Exchange may release redacted information to the public
with respect to the respondents who do not meet the criteria in
proposed NYSE Arca Rule 10.17(b)(1).
The Exchange may release information to the public concerning
disciplinary decisions that involve significant policy or enforcement
determinations where the release of such information is deemed by the
President of the Exchange to be in the public interest. In addition,
the Exchange may exercise its discretion and waive the requirement to
release information with respect to a disciplinary decision under
extraordinary circumstances where the release of the information would
violate fundamental notions of fairness or work as an injustice.
Finally, the Exchange may release public information concerning any
disciplinary or other decision issued pursuant to NYSE Arca Rule 10
that is not specifically enumerated in proposed NYSE Arca Rule
10.17(b)(1), regardless of the sanctions imposed, so long as the names
of the parties and other identifying information are redacted.
Notices. Decisions that are released to a member of the public must
include certain notices. Decisions that are released prior to the
period in which a respondent may request an appeal pursuant to NYSE
Arca Rule 10.8 (Review) or while an appeal is pending must include a
statement that the findings and sanctions imposed in the decision may
be increased, decreased, modified, or reversed by the Exchange. In
addition, a final decision by the Exchange that is released prior to
the period in which a respondent may appeal to the Commission or while
such appeal is pending will include a statement that the findings and
sanctions of the Exchange are subject to review and modification by the
Commission. Lastly, a final decision of the Exchange that is released
after the decision is appealed to the Commission will include a
statement as to whether the effectiveness of the sanctions has been
stayed pending the outcome of proceedings before the Commission.
Appeals. In the instance that the Exchange's decisions are appealed
to the Commission or the federal courts, the Exchange will notify all
OTP Holders, OTP Firms, and the press. This includes all Exchange
decisions imposing monetary sanctions of $10,000 or more or a penalty
of expulsion, revocation, suspension, and/or barring of an OTP Holder
or OTP Firm from being associated with all OTP Holders or OTP Firms.
Commission Orders. The Exchange will release through a notice to
the public information with respect to any order issued by the
Commission: (i) Revoking or suspending an OTP Firm's or OTP Holder's
broker-dealer registration; (ii) suspending or expelling an OTP Firm or
OTP Holder from the Exchange; (iii) suspending or barring an OTP
Holder, OTP Firm, or an associated person from associating with all
broker-dealers, OTP Holders, or OTP Firms; or (iv) imposing monetary
sanctions of $10,000 or more.
Offers of Settlement. The Exchange will release information
regarding sanctions imposed pursuant to NYSE Arca Rule 10.6 (Offers of
Settlement) upon the approval of offers of settlement.
Cancellation of Option Trading Permits. In cases where the Exchange
cancels an Options Trading Permit or registration, the Exchange will
notify the public as soon after the effective date of the cancellation
as possible.
While proposed NYSE Arca Rule 10.17 is based substantially on NASD
Rule 8310 (Sanctions for Violation of the Rules) and IM-8310-2 (Release
of Disciplinary and Other Information Through the Public Disclosure
Program), it does not incorporate all aspects of such NASD Rule. For
example, proposed NYSE Arca Rule 10.17 excludes public disclosure of
disciplinary complaints and arbitrations. The Exchange's intention is
for public disclosure not to apply to disciplinary complaints that
involve undecided issues or arbitrations between parties. The Exchange
plans to notify OTP Holders, OTP Firms, and associated persons of the
effectiveness of this proposed rule change through the Exchange's
Internet Web site and a regulatory bulletin.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with section 6(b) of the Act \4\ in general, and furthers the
objectives of section 6(b)(5) \5\ in particular, in that it is designed
to prevent fraudulent and manipulative acts and practices, to promote
just and equitable principles of trade, to foster cooperation and
coordination with persons engaged in regulating, clearing, settling,
processing information with respect to, and facilitating transactions
in securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general, to
protect investors and the public interest.
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78s(b).
\5\ 15 U.S.C. 78s(b)(5).
---------------------------------------------------------------------------
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
No written comments were solicited or received with respect to the
proposed rule change.
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-NYSEArca-2006-03 on the subject line.
[[Page 32622]]
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 SR-NYSEArca-2006-03. 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 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-NYSEArca-2006-03 and should be submitted on or before
June 27, 2006.
IV. Commission's Findings and Order Granting Accelerated Approval of
Proposed Rule Change
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 national securities exchange.\6\
In particular, the Commission finds that the proposed rule change is
consistent with section 6(b)(5) of the Act,\7\ which requires that an
exchange have rules designed, among other things, to promote just and
equitable principles of trade, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and
in general to protect investors and the public interest.
---------------------------------------------------------------------------
\6\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Commission believes that the proposal to institute the Public
Disclosure Program, which is substantially based on NASD Rule 8310 and
IM-8310-2,\8\ serves the interest of investor protection because it
allows NYSE Arca members and the general public to promptly learn of
final disciplinary decisions involving its broker-dealer members or
associated persons of such members. By notifying the public of a final
decision issued by the Exchange or any committee of the Exchange that
results in the suspension, cancellation, expulsion, and/or barring of
an OTP Holder or OTP Firm or the imposition of monetary sanctions of
$10,000 or more, for example, the Commission believes that the Public
Disclosure Program should provide important information to the public,
create additional incentives for members of the Exchange to comply with
its rules, and help investors make informed choices and decisions about
the individuals and firms with whom they may wish to conduct business.
As such, the Commission finds that the proposed program promotes just
and equitable principles of trade, encourages the prevention of
fraudulent and manipulative acts and practices, and seeks to perfect
the mechanism of a free and open market.
---------------------------------------------------------------------------
\8\ See Securities Exchange Act Release No. 35138 (December 22,
1994), 59 FR 67362 (December 29, 1994) (approving the NASD program
to publish final disciplinary decisions involving its members).
---------------------------------------------------------------------------
The Commission finds good cause for approving this proposed rule
change, as amended, before the thirtieth day after the publication of
notice thereof in the Federal Register. As noted earlier, prompt
disclosure of final disciplinary decisions serves the interest of
protecting investors and the general public.\9\ Therefore, accelerating
approval of the proposed rule change should benefit investors because
they will have access to the NYSE Arca disciplinary information sooner.
The Public Disclosure Program should foster compliance with NYSE Arca
rules, heighten awareness of the public investor with respect to the
conduct of business on the Exchange, and, in general, improve the
overall integrity of the market center.
---------------------------------------------------------------------------
\9\ See id.
---------------------------------------------------------------------------
V. Conclusion
It is therefore ordered, pursuant to section 19(b)(2) of the Act,
that the proposed rule change (SR-NYSEArca-2006-03), as amended, is
hereby approved on an accelerated basis.\10\
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\11\
---------------------------------------------------------------------------
\11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Nancy M. Morris,
Secretary.
[FR Doc. E6-8700 Filed 6-5-06; 8:45 am]
BILLING CODE 8010-01-P
