Self-Regulatory Organizations; New York Stock Exchange LLC; Order Approving Proposed Rule Change To Make Permanent a Pilot Program Under Which the Exchange Excludes From Its Earnings Standard Gains or Losses From Extinguishment of Debt Prior to Maturity, 53469-53470 [E8-21543]
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Federal Register / Vol. 73, No. 180 / Tuesday, September 16, 2008 / Notices
be submitted by any of the following
methods:
Electronic Comments
• 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
No. 4–568 on the subject line.
ebenthall on PROD1PC60 with NOTICES
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street, NE.,
Washington, DC 20549.
All submissions should refer to File No.
4–568. 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/other.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 changes 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, 100 F Street, NE., Washington,
DC 20549–1090. All comments received
will be posted without change; the
Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File No. 4–568 and
should be submitted on or before
October 16, 2008.
II. Date of Effectiveness of the Proposed
Minor Rule Violation Plan and Timing
for Commission Action
Pursuant to section 19d–1 of the Act
and Rule 19d–1(c)(2) thereunder,7 after
October 16, 2008, the Commission may,
by order, declare BATS Exchange’s
proposed Minor Rule Violation Plan
effective if the plan is consistent with
the public interest, the protection of
investors, or otherwise in furtherance of
the purposes of the Act. The
Commission in its order may restrict the
categories of violations to be designated
as minor rule violations and may
impose any other terms or conditions to
the proposed Minor Rule Violation Plan,
7 15
U.S.C. 78s(d)(1) and 17 CFR 240.19d–1(c)(2).
VerDate Aug<31>2005
13:43 Sep 15, 2008
Jkt 214001
File No. 4–568, and to the period of its
effectiveness which the Commission
deems necessary or appropriate in the
public interest, for the protection of
investors or otherwise in furtherance of
the purposes of this Act.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.8
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8–21616 Filed 9–15–08; 8:45 am]
BILLING CODE 8010–01–P
53469
Accession. For these reasons, the
Commission designates the proposal to
be operative upon filing with the
Commission.20
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8–21485 Filed 9–15–08; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–58499; File No. SR–NYSE–
2008–58]
[Release No. 34–58445A; File No. SR–BSE–
2008–43]
Self-Regulatory Organizations; Boston
Stock Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change Regarding
Transfer of Ownership of MX US 2,
Inc.; Correction
Self-Regulatory Organizations; New
York Stock Exchange LLC; Order
Approving Proposed Rule Change To
Make Permanent a Pilot Program
Under Which the Exchange Excludes
From Its Earnings Standard Gains or
Losses From Extinguishment of Debt
Prior to Maturity
September 10, 2008.
September 9, 2008.
In FR Doc. No. E8–20869, for
Tuesday, September 9, 2008, beginning
on page 52434, make the following
correction. On page 52436, first column,
the first full paragraph is revised to read
as follows:
A proposed rule change filed under
Rule 19b–4(f)(6) normally may not
become operative prior to 30 days after
the date of filing.17 However, Rule 19b–
4(f)(6)(iii) permits the Commission to
designate a shorter time if such action
is consistent with the protection of
investors and the public interest.18 The
Exchange has requested that the
Commission waive the 30-day operative
delay.19 The Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest
because BSE has represented that the
Instruments of Accession will be
executed on August 29, 2008, and there
is no reason to delay implementation of
the changes to the BOX LLC Agreement
pursuant to the Instruments of
I. Introduction
On July 22, 2008, the New York Stock
Exchange LLC (‘‘NYSE’’ 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 enable the Exchange to adjust
the earnings of companies for purposes
of the Exchange’s pre-tax earnings
standard by excluding gains or losses
recognized in connection with the
extinguishment of debt prior to its
maturity. The proposed rule change was
published for comment in the Federal
Register on August 5, 2008.3 The
Commission received no comments on
the proposal. This order approves the
proposed rule change.
8 17
CFR 200.30–3(a)(44).
CFR 240.19b–4(f)(6)(iii). In addition, Rule
19b–4(f)(6)(iii) requires the self-regulatory
organization to give the Commission notice of its
intent to file the proposed rule change, along with
a brief description and text of the proposed rule
change, at least five business days prior to the date
of filing of the proposed rule change, or such
shorter time as designated by the Commission. The
Commission has determined to waive the five-day
prefiling period in this case.
18 17 CFR 240.19b–4(f)(6)(iii).
19 See E-mail from Lisa J. Fall, General Counsel
and Corporate Secretary, BOX, to Molly Kim,
Special Counsel, Division of Trading and Markets,
Commission, on August 29, 2008.
17 17
PO 00000
Frm 00064
Fmt 4703
Sfmt 4703
II. Description of the Proposal
The Exchange proposes to amend the
earnings standard of section 102.01C(I)
of the Exchange’s Listed Company
Manual (‘‘Manual’’) to enable the
Exchange to adjust the earnings of
companies for purposes of its pre-tax
earnings standard by excluding gains or
losses recognized in connection with
the extinguishment of debt prior to its
maturity. The adjustment would relate
20 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. 15 U.S.C. 78c(f).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 58254
(July 30, 2008), 73 FR 45511.
E:\FR\FM\16SEN1.SGM
16SEN1
53470
Federal Register / Vol. 73, No. 180 / Tuesday, September 16, 2008 / Notices
ebenthall on PROD1PC60 with NOTICES
only to gains or losses incurred in the
three-year period under examination for
purposes of the earnings standard. The
proposed amendment was originally
implemented for a six-month period as
a Pilot Program.4 The Pilot Program
expired and was subsequently renewed
for an additional three months, expiring
on September 2, 2008.5
Prior to the promulgation of
Statement of Financial Accounting
Standards No. 145 (‘‘SFAS No. 145’’) in
2002, Financial Accounting Standards
Board Statement No. 4 (‘‘FASB No. 4’’)
required that gains and losses from the
extinguishment of debt prior to its
maturity that were included in the
determination of net income be
aggregated and, if material, classified as
an extraordinary item, net of related
income tax effect. SFAS No. 145
rescinded FASB No. 4 and, as a result,
gains or losses in connection with the
extinguishment of debt prior to its
maturity are now generally included in
the calculation of operating earnings
under generally accepted accounting
principles (‘‘GAAP’’). As a result, the
Exchange has stated that some
companies that would not otherwise be
qualified to list may qualify as a result
of the inclusion in pre-tax income of
gains from the extinguishment of debt
prior to its maturity. In addition,
according to the Exchange, some
prospective listed companies whose
operating earnings would have met the
requirements of the Exchange’s pre-tax
earnings test prior to 2002 are now not
qualified to list as they are required to
include losses from the extinguishment
of debt prior to its maturity in pre-tax
income. In its proposal, the Exchange
stated that in its experience, these gains
and losses are primarily noncash in
nature and that the gains generally
represent the accelerated accrual of
original issue discount, while the losses
generally represent the remaining
unamortized portion of costs incurred at
the time of initial borrowing.
The Exchange believes that it is
appropriate to return to its pre-2002
approach of excluding gains and losses
from debt extinguishment from pre-tax
earnings as calculated for purposes of its
earnings standard. In its proposal, the
Exchange stated that the purpose of the
earnings standard is to determine the
suitability for listing of companies on a
forward-looking basis in light of a
sustained demonstration of strong
earnings. The Exchange does not believe
4 See Exchange Act Release No. 56195 (August 2,
2007), 72 FR 44904 (August 9, 2007) (SR–NYSE–
2007–71).
5 See Exchange Act Release No. 57903 (June 2,
2008), 73 FR 32610 (June 9, 2008) (SR–NYSE–2008–
43).
VerDate Aug<31>2005
13:43 Sep 15, 2008
Jkt 214001
that it is relevant to include in pre-tax
earnings gains and losses from the
extinguishment of debt prior to its
maturity that are principally
nonrecurring in nature. Additionally,
the Exchange believes that the analyst
community routinely excludes these
gains and losses from their analyses in
making recommendations as to the
desirability of investing in companies’
publicly-traded equity securities. The
Exchange believes that adjusting
company earnings for gains and losses
from the extinguishment of debt prior to
its maturity is consistent with the
adjustments that are currently permitted
under section 102.01C for a number of
other nonrecurring charges to earnings
that are included in net income as
recorded under GAAP, such as the
exclusion of impairment charges on
long-lived assets, the exclusion of gains
and losses on sales of a subsidiary’s or
investee’s stock and the exclusion of inprocess purchased research and
development charges. The Exchange
also believes that this adjustment is
reasonable given the purpose of the
earnings standard, which is to
determine the suitability for listing of
companies on a forward-looking basis.
The Exchange has stated that, as with
all companies listed on the Exchange,
the Financial Compliance staff of NYSE
Regulation, Inc. will monitor on an
ongoing basis the compliance with the
Exchange’s continued listing standards
of any companies listed in reliance
upon the proposed amendment. The
Exchange represents that such
companies will be subject to delisting if
they are found at any time to be below
the Exchange’s continued listing
standards.
In its proposal, the Exchange stated
that as it gains experience in listing
companies in reliance upon the
proposed amendment, it will continue
to carefully reevaluate the
appropriateness of the amendment. If
the Exchange becomes aware that
companies listed pursuant to the
proposed amendment have difficulty
complying with the Exchange’s
continued listing standards, it will
inform the Commission and discuss
with the Commission the desirability of
the continued use of the provision.
III. Discussion and Commission
Findings
After careful review, the Commission
finds that the proposed rule change is
consistent with the requirements of the
Act and the rules and regulations
thereunder applicable to a national
securities exchange and, in particular,
PO 00000
Frm 00065
Fmt 4703
Sfmt 4703
with section 6(b)(5) of the Act,6 which
requires, among other things, that the
rules of a national securities exchange
be designed 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.7
The Commission believes that the
proposed rule change is consistent with
other adjustments the Exchange makes
when evaluating applicants on a
forward-looking, post-IPO basis under
the existing earnings standard in section
102.01C(I) of the Manual and is
reasonable given the purpose of the
earnings standard, which is to
determine the suitability for listing of
companies on a forward-looking basis.
The Commission notes that these
changes to the earnings standards will
allow the Exchange to adjust the
earnings of companies for purposes of
satisfying the Exchange’s pre-tax
earnings standard, by excluding gains or
losses recognized in connection with
the extinguishment of debt prior to its
maturity, and will not impact the
preparation of financial statements by
the company listing on the Exchange. In
addition, the Commission notes that the
Exchange will monitor companies
listing using this new adjustment and
notes that the Exchange has agreed to
discuss the standard with the
Commission should it prove difficult for
such companies to comply with the
Exchange’s continued listing standards.
IV. Conclusion
It is therefore ordered, pursuant to
section 19(b)(2) of the Act,8 that the
proposed rule change (SR–NYSE–2008–
58) be, and hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.9
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8–21543 Filed 9–15–08; 8:45 am]
BILLING CODE 8010–01–P
6 15
U.S.C. 78f(b)(5).
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).
8 15 U.S.C. 78s(b)(2).
9 17 CFR 200.30–3(a)(12).
7 In
E:\FR\FM\16SEN1.SGM
16SEN1
]]>Agencies
[Federal Register Volume 73, Number 180 (Tuesday, September 16, 2008)]
[Notices]
[Pages 53469-53470]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-21543]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-58499; File No. SR-NYSE-2008-58]
Self-Regulatory Organizations; New York Stock Exchange LLC; Order
Approving Proposed Rule Change To Make Permanent a Pilot Program Under
Which the Exchange Excludes From Its Earnings Standard Gains or Losses
From Extinguishment of Debt Prior to Maturity
September 9, 2008.
I. Introduction
On July 22, 2008, the New York Stock Exchange LLC (``NYSE'' 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 enable the Exchange to adjust the earnings of
companies for purposes of the Exchange's pre-tax earnings standard by
excluding gains or losses recognized in connection with the
extinguishment of debt prior to its maturity. The proposed rule change
was published for comment in the Federal Register on August 5, 2008.\3\
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\ See Securities Exchange Act Release No. 58254 (July 30,
2008), 73 FR 45511.
---------------------------------------------------------------------------
II. Description of the Proposal
The Exchange proposes to amend the earnings standard of section
102.01C(I) of the Exchange's Listed Company Manual (``Manual'') to
enable the Exchange to adjust the earnings of companies for purposes of
its pre-tax earnings standard by excluding gains or losses recognized
in connection with the extinguishment of debt prior to its maturity.
The adjustment would relate
[[Page 53470]]
only to gains or losses incurred in the three-year period under
examination for purposes of the earnings standard. The proposed
amendment was originally implemented for a six-month period as a Pilot
Program.\4\ The Pilot Program expired and was subsequently renewed for
an additional three months, expiring on September 2, 2008.\5\
---------------------------------------------------------------------------
\4\ See Exchange Act Release No. 56195 (August 2, 2007), 72 FR
44904 (August 9, 2007) (SR-NYSE-2007-71).
\5\ See Exchange Act Release No. 57903 (June 2, 2008), 73 FR
32610 (June 9, 2008) (SR-NYSE-2008-43).
---------------------------------------------------------------------------
Prior to the promulgation of Statement of Financial Accounting
Standards No. 145 (``SFAS No. 145'') in 2002, Financial Accounting
Standards Board Statement No. 4 (``FASB No. 4'') required that gains
and losses from the extinguishment of debt prior to its maturity that
were included in the determination of net income be aggregated and, if
material, classified as an extraordinary item, net of related income
tax effect. SFAS No. 145 rescinded FASB No. 4 and, as a result, gains
or losses in connection with the extinguishment of debt prior to its
maturity are now generally included in the calculation of operating
earnings under generally accepted accounting principles (``GAAP''). As
a result, the Exchange has stated that some companies that would not
otherwise be qualified to list may qualify as a result of the inclusion
in pre-tax income of gains from the extinguishment of debt prior to its
maturity. In addition, according to the Exchange, some prospective
listed companies whose operating earnings would have met the
requirements of the Exchange's pre-tax earnings test prior to 2002 are
now not qualified to list as they are required to include losses from
the extinguishment of debt prior to its maturity in pre-tax income. In
its proposal, the Exchange stated that in its experience, these gains
and losses are primarily noncash in nature and that the gains generally
represent the accelerated accrual of original issue discount, while the
losses generally represent the remaining unamortized portion of costs
incurred at the time of initial borrowing.
The Exchange believes that it is appropriate to return to its pre-
2002 approach of excluding gains and losses from debt extinguishment
from pre-tax earnings as calculated for purposes of its earnings
standard. In its proposal, the Exchange stated that the purpose of the
earnings standard is to determine the suitability for listing of
companies on a forward-looking basis in light of a sustained
demonstration of strong earnings. The Exchange does not believe that it
is relevant to include in pre-tax earnings gains and losses from the
extinguishment of debt prior to its maturity that are principally
nonrecurring in nature. Additionally, the Exchange believes that the
analyst community routinely excludes these gains and losses from their
analyses in making recommendations as to the desirability of investing
in companies' publicly-traded equity securities. The Exchange believes
that adjusting company earnings for gains and losses from the
extinguishment of debt prior to its maturity is consistent with the
adjustments that are currently permitted under section 102.01C for a
number of other nonrecurring charges to earnings that are included in
net income as recorded under GAAP, such as the exclusion of impairment
charges on long-lived assets, the exclusion of gains and losses on
sales of a subsidiary's or investee's stock and the exclusion of in-
process purchased research and development charges. The Exchange also
believes that this adjustment is reasonable given the purpose of the
earnings standard, which is to determine the suitability for listing of
companies on a forward-looking basis.
The Exchange has stated that, as with all companies listed on the
Exchange, the Financial Compliance staff of NYSE Regulation, Inc. will
monitor on an ongoing basis the compliance with the Exchange's
continued listing standards of any companies listed in reliance upon
the proposed amendment. The Exchange represents that such companies
will be subject to delisting if they are found at any time to be below
the Exchange's continued listing standards.
In its proposal, the Exchange stated that as it gains experience in
listing companies in reliance upon the proposed amendment, it will
continue to carefully reevaluate the appropriateness of the amendment.
If the Exchange becomes aware that companies listed pursuant to the
proposed amendment have difficulty complying with the Exchange's
continued listing standards, it will inform the Commission and discuss
with the Commission the desirability of the continued use of the
provision.
III. Discussion and Commission Findings
After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities exchange
and, in particular, with section 6(b)(5) of the Act,\6\ which requires,
among other things, that the rules of a national securities exchange be
designed 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.\7\
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78f(b)(5).
\7\ 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).
---------------------------------------------------------------------------
The Commission believes that the proposed rule change is consistent
with other adjustments the Exchange makes when evaluating applicants on
a forward-looking, post-IPO basis under the existing earnings standard
in section 102.01C(I) of the Manual and is reasonable given the purpose
of the earnings standard, which is to determine the suitability for
listing of companies on a forward-looking basis. The Commission notes
that these changes to the earnings standards will allow the Exchange to
adjust the earnings of companies for purposes of satisfying the
Exchange's pre-tax earnings standard, by excluding gains or losses
recognized in connection with the extinguishment of debt prior to its
maturity, and will not impact the preparation of financial statements
by the company listing on the Exchange. In addition, the Commission
notes that the Exchange will monitor companies listing using this new
adjustment and notes that the Exchange has agreed to discuss the
standard with the Commission should it prove difficult for such
companies to comply with the Exchange's continued listing standards.
IV. Conclusion
It is therefore ordered, pursuant to section 19(b)(2) of the
Act,\8\ that the proposed rule change (SR-NYSE-2008-58) be, and hereby
is, approved.
---------------------------------------------------------------------------
\8\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
---------------------------------------------------------------------------
\9\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-21543 Filed 9-15-08; 8:45 am]
BILLING CODE 8010-01-P
