Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by New York Stock Exchange LLC To Memorialize an Interpretation of the Listed Company Manual Concerning Shareholder Approval Requirements and To Describe a Certain Application of its Audit Committee Rule, 3117-3119 [E9-881]
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Federal Register / Vol. 74, No. 11 / Friday, January 16, 2009 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59225; File No. 4–533]
Joint Industry Plan; Notice of Filing
and Immediate Effectiveness of
Amendment No. 1 to the National
Market System Plan for the Selection
and Reservation of Securities Symbols
To Modify Certain Effective Dates in
Plan, Submitted by NASDAQ OMX BX,
Inc., the Chicago Stock Exchange, Inc.,
the Chicago Board Options Exchange,
Incorporated, the International
Securities Exchange, LLC, the
Financial Industry Regulatory
Authority, Inc., the National Stock
Exchange, Inc., The NASDAQ Stock
Market LLC, the New York Stock
Exchange LLC, NYSE Alternext
Exchange US LLC, NYSE Arca, Inc.,
and the NASDAQ OMX PHLX, Inc.
January 9, 2009.
I. Introduction
Pursuant to Section 11A(a)(3) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 608 thereunder,2
notice is hereby given that on January 5,
2009, NASDAQ OMX BX, Inc., the
Chicago Stock Exchange, Inc. (‘‘CHX’’),
the Chicago Board Options Exchange,
Incorporated, the International
Securities Exchange, LLC, the Financial
Industry Regulatory Authority, Inc.
(‘‘FINRA’’), the National Stock
Exchange, Inc. (‘‘NSX’’), The NASDAQ
Stock Market LLC (‘‘Nasdaq’’), the New
York Stock Exchange LLC, NYSE
Alternext Exchange US LLC, NYSE
Arca, Inc., and the NASDAQ OMX
PHLX, Inc. (‘‘Phlx’’) (together, the
‘‘Parties’’) filed with the Securities and
Exchange Commission (‘‘Commission’’)
Amendment No. 1 to the National
Market System Plan for the Selection
and Reservation of Securities Symbols
(‘‘Symbology Plan’’ or ‘‘Plan’’).3 The
amendment modifies certain effective
dates in the Symbology Plan. The
Commission is publishing this notice of
filing and immediate effectiveness to
solicit comments on the amendment
from interested persons.
mstockstill on PROD1PC66 with NOTICES
II. Description and Purpose of the
Amendment
The purpose of Amendment No. 1 is
to: (i) Delay the start of the 30-day initial
symbol reservation period until 120
1 15
U.S.C. 78k–1(a)(3).
2 17 CFR 242.608.
3 On November 6, 2008, the Commission
approved the Symbology Plan that was originally
proposed by the CHX, Nasdaq, FINRA, NSX, and
Phlx, subject to certain changes. See Securities
Exchange Act Release No. 58904, 73 FR 67218
(November 13, 2008) (File No. 4–533).
VerDate Nov<24>2008
19:02 Jan 15, 2009
Jkt 217001
days after the Commission’s approval of
the Plan; and (ii) delay the
establishment of the Plan as the
exclusive method of allocating symbols
of one-, two-, three-, four-, and fivecharacters in length until 150 days after
the Commission approval of the Plan.
Through the amendment, the initial
symbol reservation period would now
commence on March 6, 2009 and the
Plan would become the exclusive
method of allocating symbols of one-,
two-, three-, four-, and five-characters in
length on April 5, 2009. The purpose of
the amendment is to give the parties
adequate time to properly evaluate and
select the Plan processor and to
implement the Plan in an organized
fashion.
III. Effectiveness of the Proposed
Symbology Plan Amendment
Pursuant to paragraph to (b)(3)(ii) of
Rule 608 under the Act,4 the Parties
have designated this amendment as one
concerned solely with the
administration of the Plan, thereby
qualifying the amendment to be put into
effect upon filing with the Commission.
The Commission may summarily
abrogate the amendment within sixty
days of its filing and require refiling and
approval of the amendment by
Commission order pursuant to Rule
608(b)(2) under the Act 5 if it appears to
the Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or the maintenance of fair and orderly
markets, to remove impediments to, and
perfect the mechanisms of, a national
market system, or otherwise in
furtherance of the purposes of the Act.
3117
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number 4–533. 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, on official business days between
the hours of 10 a.m. and 3 p.m. 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 4–533 and should be submitted
on or before February 6, 2009.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–882 Filed 1–15–09; 8:45 am]
BILLING CODE 8011–01–P
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether Amendment No. 1 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 4–533 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59217; File No. SR–NYSE–
2008–138]
Self-Regulatory Organizations; Notice
of Filing of Proposed Rule Change by
New York Stock Exchange LLC To
Memorialize an Interpretation of the
Listed Company Manual Concerning
Shareholder Approval Requirements
and To Describe a Certain Application
of its Audit Committee Rule
January 8, 2009.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Exchange Act’’),2 and Rule 19b–4
thereunder,3 notice is hereby given that,
6 17
CFR 200.30–3(a)(29).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
4 17
5 17
PO 00000
CFR 242.608(b)(3)(ii).
CFR 242.608(b)(2).
Frm 00127
Fmt 4703
Sfmt 4703
E:\FR\FM\16JAN1.SGM
16JAN1
3118
Federal Register / Vol. 74, No. 11 / Friday, January 16, 2009 / Notices
on December 22, 2008, New York Stock
Exchange LLC (the ‘‘NYSE’’ or the
‘‘Exchange’’) filed with the Securities
and Exchange Commission the proposed
rule change as described in Items I, II
and III below, which items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
changes from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to
memorialize an interpretation of the
Listed Company Manual. The text of the
proposed rule change is available on the
Exchange’s Web site (https://
www.nyse.com), at the Exchange’s
Office of the Secretary and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of
and basis for the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of these statements may be examined at
the places specified in Item IV below.
The NYSE has prepared summaries, set
forth in Sections A, B and C below, of
the most significant aspects of such
statements.
mstockstill on PROD1PC66 with NOTICES
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for the Proposed Rule
Change
1. Purpose
On September 7, 2008 the Secretary of
the Treasury of the United States and
the Director of the FHFA jointly
announced that on September 6, 2008,
pursuant to authority previously granted
by Congress, FNM and FRE were placed
into conservatorship with the FHFA,
and Treasury entered into a Senior
Preferred Stock Purchase Agreement
with each company providing for,
among other things, the issuance by
each company to Treasury of senior
preferred stock, and common stock
warrants representing an ownership
stake of 79.9% in each company.4
The issuance of a security convertible
into common stock equal to or in excess
of 20% of the then outstanding common
stock of a listed company generally
4 The Commission notes that the terms ‘‘FHFA,’’
‘‘FNM,’’ and ‘‘FRE’’ refer to the Federal Housing
Finance Agency, Fannie Mae, and Freddie Mac,
respectively.
VerDate Nov<24>2008
19:02 Jan 15, 2009
Jkt 217001
requires shareholder approval under
Section 312.03 of the NYSE Listed
Company Manual. The NYSE has for
many years taken the position that a
listed company which is a debtor-inpossession under the U.S. bankruptcy
laws satisfies the stockholder approval
that might otherwise be required in
connection with an issuance of common
stock or a security convertible into
common stock by obtaining bankruptcy
court approval of the issuance of such
stock. Such an interpretation is the only
practical approach given that in such a
circumstance the court, not the
stockholders, has the authority to
authorize or refuse to authorize the
issuance of the security. Consequently,
this rule filing codifies the Exchange’s
longstanding position that a listed
company which is a debtor-inpossession satisfies any applicable
stockholder approval requirement under
Section 312.03 by obtaining bankruptcy
court approval of the proposed issuance.
The FHFA has specified that ‘‘the
powers of the stockholders [of FNM and
FRE] are suspended until the
conservatorship is terminated.’’5 Based
on this, the NYSE has concluded that
for purposes of its rules requiring
stockholder approval of the issuance of
securities, i.e., Sections 312.03 and
303A.08 of the Listed Company Manual,
it is appropriate to treat FNM and FRE
while they are in conservatorship in the
same manner as if they were each a
debtor-in-possession under the
bankruptcy law. Accordingly, the NYSE
takes the position that the requirement
of Section 312.03 has been satisfied in
connection with the issuance to the
Department of the Treasury (the
‘‘Treasury’’) by each of FNM and FRE of
the warrants exercisable for common
stock.
Following the establishment of the
conservatorship, the independent
directors serving on the audit
committees of the boards of directors of
each of the companies left the board.
Each of FNM and FRE are currently
engaged in obtaining replacement
directors and arranging the appropriate
delegation from FHFA to the boards and
the audit committees to allow the audit
committees to function. In keeping with
its normal procedures under the
provisions of Listed Company Manual
Section 303A.06, NYSE is allowing the
companies an appropriate period of
time in which to fill the vacancies on
5 See Questions and Answers of Conservatorship,
available on the Web site of the FHFA. (https://
www.ofheo.gov/media/pdf/FHFACONSERVQA.pdf)
Note that FHFA in the same paragraph stated that
‘‘Stockholders will continue to retain all rights in
the stock’s financial worth; as such worth is
determined by the market.’’
PO 00000
Frm 00128
Fmt 4703
Sfmt 4703
the audit committee. The NYSE was
informed that in connection with the
quarterly financial reports on Form 10–
Q which were filed in November for the
companies’ third quarter, each company
arranged for its staff and independent
auditor to make a presentation regarding
the quarterly report to appropriate
departments of the FHFA that was
intended to replicate the kind of review
that an audit committee would normally
conduct with respect to a company’s
quarterly financials. The NYSE believes
that this action is appropriate in light of
the fact that neither company had an
audit committee that was able to
conduct that review. The Exchange
notes that this filing does not seek to
interpret Rule 10A–3 under the
Sarbanes-Oxley Act. Rather, the
Exchange is simply describing its
application of the requirements of
Section 303A.06 of the Manual to FNM
and FRE during the period that they do
not have independent audit committees.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) 6 of the Exchange Act in
general and furthers the objectives of
Section 6(b)(5) of the Exchange Act 7 in
particular in that it is 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. The Exchange believes
its proposed interpretations of Sections
312.03 and 303A.06 are reasonable in
light of the policies underlying those
rules and constitute a suitable
application of its rules to this unique
and unprecedented situation. In
particular, the Exchange notes that (i) it
is in the public interest that the issuance
of securities to the Treasury should not
be subject to shareholder approval in
light of the scale of Treasury’s provision
of capital to the two companies and (ii)
the oversight of the companies’ financial
reporting by FHFA provides a
reasonable level of protection to
investors while the companies are
repopulating their independent audit
committees required by Section
303A.06.
6 15
7 15
E:\FR\FM\16JAN1.SGM
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
16JAN1
Federal Register / Vol. 74, No. 11 / Friday, January 16, 2009 / Notices
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 Exchange Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The proposed rule change is effective
upon filing pursuant to Section
19(b)(3)(A) of the Exchange Act 8 and
paragraph (f)(1) of Rule 19b–4
thereunder 9 as constituting a stated
policy, practice, or interpretation with
respect to the meaning, administration,
or enforcement of an existing Exchange
rule. At any time within 60 days of the
filing of the proposed rule change, the
Commission may summarily abrogate
such rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Exchange Act.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Exchange
Act. Comments may be submitted by
any of the following methods:
mstockstill on PROD1PC66 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–NYSE–2008–138 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–NYSE–2008–138. 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, on official business days between
the hours of 10 a.m. and 3 p.m. Copies
of the filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–NYSE–
2008–138 and should be submitted on
or before February 6, 2009.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–881 Filed 1–15–09; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59229; File No. SR–NYSE–
2009–01]
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change by New York
Stock Exchange LLC Adopting a
Temporary Equity Transaction Fee for
Shares Executed on the NYSE
MatchPointSM System, Effective Upon
Filing With the Securities and
Exchange Commission Until February
28, 2009
January 12, 2009.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on January
7, 2009, New York Stock Exchange LLC
(‘‘NYSE’’ or the ‘‘Exchange’’) filed with
the Securities and Exchange
10 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
8 17
9 17
CFR 240.19b–4(f)(1).
CFR 240.19b–4(f)(1).
VerDate Nov<24>2008
21:14 Jan 15, 2009
Jkt 217001
PO 00000
Frm 00129
Fmt 4703
Sfmt 4703
3119
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the selfregulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to adopt a
temporary equity transaction fee for
shares executed on the NYSE
MatchPointSM (‘‘NYSE MatchPoint’’ or
‘‘MatchPoint’’) system, effective upon
filing with the Securities Exchange
Commission [sic] (‘‘SEC’’) until
February 28, 2009. The Exchange will
charge each member organization using
the MatchPoint system a per share fee
scaled to the average daily volume of
shares it executes on the MatchPoint
system.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Through this filing, the Exchange
proposes to amend its equity transaction
fee schedule on the NYSE MatchPoint
system effective upon filing with the
SEC until February 28, 2009. The
current equity transaction fee is $.0015
per share executed on the MatchPoint
system. The Exchange proposes to adopt
a scaled fee for MatchPoint users based
on the average daily volume of shares
executed during a calendar month
through the MatchPoint system as
follows:
Average daily volume of
shares executed
50,000 shares or less .............
Over 50,000 to 499,999 .........
500,000 and greater ...............
E:\FR\FM\16JAN1.SGM
16JAN1
Rate
(per share)
$.0015
.0010
.0005
]]>Agencies
[Federal Register Volume 74, Number 11 (Friday, January 16, 2009)]
[Notices]
[Pages 3117-3119]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-881]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-59217; File No. SR-NYSE-2008-138]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by New York Stock Exchange LLC To Memorialize an Interpretation
of the Listed Company Manual Concerning Shareholder Approval
Requirements and To Describe a Certain Application of its Audit
Committee Rule
January 8, 2009.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Exchange Act''),\2\ and Rule 19b-4 thereunder,\3\ notice is
hereby given that,
[[Page 3118]]
on December 22, 2008, New York Stock Exchange LLC (the ``NYSE'' or the
``Exchange'') filed with the Securities and Exchange Commission the
proposed rule change as described in Items I, II and III below, which
items have been prepared by the Exchange. The Commission is publishing
this notice to solicit comments on the proposed rule changes from
interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to memorialize an interpretation of the
Listed Company Manual. The text of the proposed rule change is
available on the Exchange's Web site (https://www.nyse.com), at the
Exchange's Office of the Secretary and at the Commission's Public
Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of and basis for the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of these statements may be examined at
the places specified in Item IV below. The NYSE has prepared summaries,
set forth in Sections A, B and C below, of the most significant aspects
of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for the Proposed Rule Change
1. Purpose
On September 7, 2008 the Secretary of the Treasury of the United
States and the Director of the FHFA jointly announced that on September
6, 2008, pursuant to authority previously granted by Congress, FNM and
FRE were placed into conservatorship with the FHFA, and Treasury
entered into a Senior Preferred Stock Purchase Agreement with each
company providing for, among other things, the issuance by each company
to Treasury of senior preferred stock, and common stock warrants
representing an ownership stake of 79.9% in each company.\4\
---------------------------------------------------------------------------
\4\ The Commission notes that the terms ``FHFA,'' ``FNM,'' and
``FRE'' refer to the Federal Housing Finance Agency, Fannie Mae, and
Freddie Mac, respectively.
---------------------------------------------------------------------------
The issuance of a security convertible into common stock equal to
or in excess of 20% of the then outstanding common stock of a listed
company generally requires shareholder approval under Section 312.03 of
the NYSE Listed Company Manual. The NYSE has for many years taken the
position that a listed company which is a debtor-in-possession under
the U.S. bankruptcy laws satisfies the stockholder approval that might
otherwise be required in connection with an issuance of common stock or
a security convertible into common stock by obtaining bankruptcy court
approval of the issuance of such stock. Such an interpretation is the
only practical approach given that in such a circumstance the court,
not the stockholders, has the authority to authorize or refuse to
authorize the issuance of the security. Consequently, this rule filing
codifies the Exchange's longstanding position that a listed company
which is a debtor-in-possession satisfies any applicable stockholder
approval requirement under Section 312.03 by obtaining bankruptcy court
approval of the proposed issuance.
The FHFA has specified that ``the powers of the stockholders [of
FNM and FRE] are suspended until the conservatorship is
terminated.''\5\ Based on this, the NYSE has concluded that for
purposes of its rules requiring stockholder approval of the issuance of
securities, i.e., Sections 312.03 and 303A.08 of the Listed Company
Manual, it is appropriate to treat FNM and FRE while they are in
conservatorship in the same manner as if they were each a debtor-in-
possession under the bankruptcy law. Accordingly, the NYSE takes the
position that the requirement of Section 312.03 has been satisfied in
connection with the issuance to the Department of the Treasury (the
``Treasury'') by each of FNM and FRE of the warrants exercisable for
common stock.
---------------------------------------------------------------------------
\5\ See Questions and Answers of Conservatorship, available on
the Web site of the FHFA. (https://www.ofheo.gov/media/pdf/FHFACONSERVQA.pdf) Note that FHFA in the same paragraph stated that
``Stockholders will continue to retain all rights in the stock's
financial worth; as such worth is determined by the market.''
---------------------------------------------------------------------------
Following the establishment of the conservatorship, the independent
directors serving on the audit committees of the boards of directors of
each of the companies left the board. Each of FNM and FRE are currently
engaged in obtaining replacement directors and arranging the
appropriate delegation from FHFA to the boards and the audit committees
to allow the audit committees to function. In keeping with its normal
procedures under the provisions of Listed Company Manual Section
303A.06, NYSE is allowing the companies an appropriate period of time
in which to fill the vacancies on the audit committee. The NYSE was
informed that in connection with the quarterly financial reports on
Form 10-Q which were filed in November for the companies' third
quarter, each company arranged for its staff and independent auditor to
make a presentation regarding the quarterly report to appropriate
departments of the FHFA that was intended to replicate the kind of
review that an audit committee would normally conduct with respect to a
company's quarterly financials. The NYSE believes that this action is
appropriate in light of the fact that neither company had an audit
committee that was able to conduct that review. The Exchange notes that
this filing does not seek to interpret Rule 10A-3 under the Sarbanes-
Oxley Act. Rather, the Exchange is simply describing its application of
the requirements of Section 303A.06 of the Manual to FNM and FRE during
the period that they do not have independent audit committees.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) \6\ of the Exchange Act in general and furthers the
objectives of Section 6(b)(5) of the Exchange Act \7\ in particular in
that it is 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. The Exchange believes its proposed interpretations of
Sections 312.03 and 303A.06 are reasonable in light of the policies
underlying those rules and constitute a suitable application of its
rules to this unique and unprecedented situation. In particular, the
Exchange notes that (i) it is in the public interest that the issuance
of securities to the Treasury should not be subject to shareholder
approval in light of the scale of Treasury's provision of capital to
the two companies and (ii) the oversight of the companies' financial
reporting by FHFA provides a reasonable level of protection to
investors while the companies are repopulating their independent audit
committees required by Section 303A.06.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
[[Page 3119]]
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 Exchange Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The proposed rule change is effective upon filing pursuant to
Section 19(b)(3)(A) of the Exchange Act \8\ and paragraph (f)(1) of
Rule 19b-4 thereunder \9\ as constituting a stated policy, practice, or
interpretation with respect to the meaning, administration, or
enforcement of an existing Exchange rule. At any time within 60 days of
the filing of the proposed rule change, the Commission may summarily
abrogate such rule change if it appears to the Commission that such
action is necessary or appropriate in the public interest, for the
protection of investors, or otherwise in furtherance of the purposes of
the Exchange Act.
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\8\ 17 CFR 240.19b-4(f)(1).
\9\ 17 CFR 240.19b-4(f)(1).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Exchange Act. Comments may be submitted
by any of the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NYSE-2008-138 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSE-2008-138. 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, on official business
days between the hours of 10 a.m. and 3 p.m. Copies of the filing also
will be available for inspection and copying at the principal office of
the Exchange. All comments received will be posted without change; the
Commission does not edit personal identifying information from
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File Number SR-
NYSE-2008-138 and should be submitted on or before February 6, 2009.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-881 Filed 1-15-09; 8:45 am]
BILLING CODE 8011-01-P
