Self-Regulatory Organizations; The Chicago Stock Exchange, Inc.; Order Granting Approval of Proposed Rule Change as Modified by Amendment No. 1 Thereto To Amend Its Bylaws to Confirm That an Exchange Director Cannot Participate in the Determination of Any Matter Involving an Issuer of a Security Listed or To Be Listed on the Exchange, if the Director is a Director, Officer, or Employee of the Issuer, 56816 [E7-19559]

Download as PDF 56816 Federal Register / Vol. 72, No. 192 / Thursday, October 4, 2007 / Notices SECURITIES AND EXCHANGE COMMISSION [Release No. 34–56573; File No. SR–CHX– 2007–16] Self-Regulatory Organizations; The Chicago Stock Exchange, Inc.; Order Granting Approval of Proposed Rule Change as Modified by Amendment No. 1 Thereto To Amend Its Bylaws to Confirm That an Exchange Director Cannot Participate in the Determination of Any Matter Involving an Issuer of a Security Listed or To Be Listed on the Exchange, if the Director is a Director, Officer, or Employee of the Issuer September 28, 2007. I. Introduction On July 27, 2007, the Chicago Stock Exchange, Inc. (‘‘CHX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b-4 thereunder,2 a proposed rule change to amend Article II, Section 7 of its bylaws to confirm that, a CHX director cannot participate in the determination of any matter involving an issuer of a security listed or to be listed on the Exchange, if the CHX director is a director, officer, or employee of the issuer. On August 10, 2007, CHX filed an amendment to the proposed rule change.3 The proposed rule change, as modified by Amendment No. 1, was published for comment in the Federal Register on August 24, 2007.4 The Commission received no comments on the proposal. This order approves the proposed rule change. II. Description of the Proposal CHX bylaws currently prohibit a CHX director from participating in the determination of any matter in which the CHX director is personally interested. In its filing, CHX stated that the proposal would add a clarification to its bylaws by confirming certain situations when a CHX director would be deemed ‘‘personally interested’’ in a matter involving an issuer of a security listed or to be listed on the Exchange. Specifically, under the proposal a CHX director is deemed ‘‘personally 1 15 U.S.C. 78s(b)(1). CFR 240.19b-4. 3 In Partial Amendment No. 1, the Exchange stated when a director recuses himself or herself from a decision, the Exchange would reflect that recusal in the minutes of the meeting at which the recusal occurred, in accordance with its internal written policies. 4 See Securities Exchange Act Release No. 56281 (August 17, 2007), 72 FR 48708. pwalker on PROD1PC71 with NOTICES 2 17 VerDate Aug<31>2005 16:20 Oct 03, 2007 Jkt 214001 interested’’ when the CHX director is a director, officer, or employee of the issuer of the security listed or to be listed on the Exchange. Further, this proposed provision is non-exclusive and the proposed changes to the bylaws specifically state that CHX would evaluate other relationships between the CHX director and the issuer on a caseby-case basis. III. Discussion After a careful review of the proposed rule change, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the regulations thereunder applicable to a national securities exchange.5 In particular, the Commission believes that the proposed rule change is consistent with Section 6(b)(5) of the Act,6 which requires that the rules of an exchange be designed 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. The Commission notes that CHX’s bylaws currently prohibit a CHX director from participating in the determination of any matter in which the CHX director is personally interested. However, in a matter involving an issuer of a security listed or to be listed on the Exchange, CHX’s bylaws do not specify under what situations the CHX director would be deemed personally interested. The proposal would specifically state that a CHX director could not participate in a matter involving an issuer listed or to be listed on the Exchange if the CHX director is a director, officer, or employee of the issuer. As noted above, this is not an exclusive list defining all situations involving an issuer and a CHX director in which a CHX director would be deemed ‘‘personally interested’’ and shall not participate in a matter pursuant to CHX bylaws. Under the proposal, CHX would evaluate other relationships between a CHX director and an issuer on a case-by-case basis. Examples of other situations the Commission would expect to involve a personal interest would include, among others, when a CHX director is serving as a consultant to an issuer, is a significant shareholder of the issuer or has some other relationship with the issuer. Moreover, CHX represented that when CHX directors recuse themselves 5 In approving the proposed rule change, the Commission notes that it has considered the proposed rule’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 6 15 U.S.C. 78f(b)(4). PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 from a decision, CHX would reflect such recusals in the minutes of the meeting in which the recusal occurs, consistent with CHX’s internal written policies. The Commission believes that it is good corporate practice for CHX to confirm in its bylaws certain situations when an Exchange director is deemed personally interested in a matter involving an issuer of a security listed or to be listed on CHX and to reflect recusals in the minutes of the meetings in which the recusal occurs. This will help to ensure that matters involving the listing and delisting of issuer’s securities on CHX is considered in a fair and impartial manner which furthers the protection of investors and the public interest consistent with Section (6)(b)(5) of the Act. Based on the above, the Commission believes that the proposal is consistent with the requirements of the Act. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,7 that the proposed rule change (SR–CHX–2007– 16) as modified by Amendment No. 1, be, and hereby is, approved. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.8 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–19559 Filed 10–3–07; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–56571; File No. SR–FINRA– 2007–001] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Approving Proposed Rule Change Relating to the Reporting of Foreign Equity Securities to the Order Audit Trail System September 28, 2007. I. Introduction On July 31, 2007, the Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) (f/k/a the National Association of Securities Dealers, Inc. (‘‘NASD’’)) filed with the Securities and Exchange Commission (‘‘Commission’’) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change relating to 7 15 U.S.C. 78s(b)(2). CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 8 17 E:\FR\FM\04OCN1.SGM 04OCN1

Agencies

[Federal Register Volume 72, Number 192 (Thursday, October 4, 2007)]
[Notices]
[Page 56816]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-19559]



[[Page 56816]]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56573; File No. SR-CHX-2007-16]


Self-Regulatory Organizations; The Chicago Stock Exchange, Inc.; 
Order Granting Approval of Proposed Rule Change as Modified by 
Amendment No. 1 Thereto To Amend Its Bylaws to Confirm That an Exchange 
Director Cannot Participate in the Determination of Any Matter 
Involving an Issuer of a Security Listed or To Be Listed on the 
Exchange, if the Director is a Director, Officer, or Employee of the 
Issuer

September 28, 2007.

I. Introduction

    On July 27, 2007, the Chicago Stock Exchange, Inc. (``CHX'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to amend Article II, Section 7 of its bylaws to 
confirm that, a CHX director cannot participate in the determination of 
any matter involving an issuer of a security listed or to be listed on 
the Exchange, if the CHX director is a director, officer, or employee 
of the issuer. On August 10, 2007, CHX filed an amendment to the 
proposed rule change.\3\ The proposed rule change, as modified by 
Amendment No. 1, was published for comment in the Federal Register on 
August 24, 2007.\4\ The Commission received no comments on the 
proposal. This order approves the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Partial Amendment No. 1, the Exchange stated when a 
director recuses himself or herself from a decision, the Exchange 
would reflect that recusal in the minutes of the meeting at which 
the recusal occurred, in accordance with its internal written 
policies.
    \4\ See Securities Exchange Act Release No. 56281 (August 17, 
2007), 72 FR 48708.
---------------------------------------------------------------------------

II. Description of the Proposal

    CHX bylaws currently prohibit a CHX director from participating in 
the determination of any matter in which the CHX director is personally 
interested. In its filing, CHX stated that the proposal would add a 
clarification to its bylaws by confirming certain situations when a CHX 
director would be deemed ``personally interested'' in a matter 
involving an issuer of a security listed or to be listed on the 
Exchange. Specifically, under the proposal a CHX director is deemed 
``personally interested'' when the CHX director is a director, officer, 
or employee of the issuer of the security listed or to be listed on the 
Exchange. Further, this proposed provision is non-exclusive and the 
proposed changes to the bylaws specifically state that CHX would 
evaluate other relationships between the CHX director and the issuer on 
a case-by-case basis.

III. Discussion

    After a careful review of the proposed rule change, the Commission 
finds that the proposed rule change is consistent with the requirements 
of the Act and the regulations thereunder applicable to a national 
securities exchange.\5\ In particular, the Commission believes that the 
proposed rule change is consistent with Section 6(b)(5) of the Act,\6\ 
which requires that the rules of an exchange be designed 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.
---------------------------------------------------------------------------

    \5\ In approving the proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78c(f).
    \6\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Commission notes that CHX's bylaws currently prohibit a CHX 
director from participating in the determination of any matter in which 
the CHX director is personally interested. However, in a matter 
involving an issuer of a security listed or to be listed on the 
Exchange, CHX's bylaws do not specify under what situations the CHX 
director would be deemed personally interested. The proposal would 
specifically state that a CHX director could not participate in a 
matter involving an issuer listed or to be listed on the Exchange if 
the CHX director is a director, officer, or employee of the issuer. As 
noted above, this is not an exclusive list defining all situations 
involving an issuer and a CHX director in which a CHX director would be 
deemed ``personally interested'' and shall not participate in a matter 
pursuant to CHX bylaws. Under the proposal, CHX would evaluate other 
relationships between a CHX director and an issuer on a case-by-case 
basis. Examples of other situations the Commission would expect to 
involve a personal interest would include, among others, when a CHX 
director is serving as a consultant to an issuer, is a significant 
shareholder of the issuer or has some other relationship with the 
issuer. Moreover, CHX represented that when CHX directors recuse 
themselves from a decision, CHX would reflect such recusals in the 
minutes of the meeting in which the recusal occurs, consistent with 
CHX's internal written policies.
    The Commission believes that it is good corporate practice for CHX 
to confirm in its bylaws certain situations when an Exchange director 
is deemed personally interested in a matter involving an issuer of a 
security listed or to be listed on CHX and to reflect recusals in the 
minutes of the meetings in which the recusal occurs. This will help to 
ensure that matters involving the listing and delisting of issuer's 
securities on CHX is considered in a fair and impartial manner which 
furthers the protection of investors and the public interest consistent 
with Section (6)(b)(5) of the Act. Based on the above, the Commission 
believes that the proposal is consistent with the requirements of the 
Act.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\7\ that the proposed rule change (SR-CHX-2007-16) as modified by 
Amendment No. 1, be, and hereby is, approved.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78s(b)(2).

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

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

Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-19559 Filed 10-3-07; 8:45 am]
BILLING CODE 8011-01-P