Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by NYSE Arca, Inc. To Amend the Bylaws of NYSE Euronext To Adopt a Majority Voting Standard in Uncontested Elections of Directors, 38576-38579 [2010-16106]

Download as PDF 38576 Federal Register / Vol. 75, No. 127 / Friday, July 2, 2010 / Notices to stockholders by means of a voting procedure leading to election results that more accurately reflect the views of stockholders on the qualifications and suitability of individual director nominees, even if there are no alternative director nominees to vote for on the ballot. 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. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action emcdonald on DSK2BSOYB1PROD with NOTICES Because the proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 13 and Rule 19b–4(f)(6) 14 thereunder. The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative on the date of its approval by the Euronext College of Regulators, which approval the Exchange believes is imminent. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest because such waiver will enable the Exchange to implement the proposed rule change immediately upon receiving the approval of the Euronext College of Regulators. In addition, as noted by the Exchange, the proposal is identical to the recently approved NYSE U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file 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 Exchange has satisfied this requirement. Rule Change.15 For these reasons, the Commission designates the proposed rule change as operative upon filing.16 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 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 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–NYSEAmex–2010–58 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–NYSEAmex–2010–58. 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 Web site viewing and printing in the Commission’s Public Reference Room, on official business 13 15 14 17 VerDate Mar<15>2010 18:27 Jul 01, 2010 Jkt 220001 15 See Securities Exchange Act Release No. 61947 (April 20, 2010), 75 FR 22169 (April 27, 2010) (SR– NYSE–2010–18) (order approving identical proposal submitted by NYSE). 16 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. See 15 U.S.C. 78c(f). PO 00000 Frm 00121 Fmt 4703 Sfmt 4703 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–NYSEAmex–2010–58 and should be submitted on or before July 23, 2010. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–16105 Filed 7–1–10; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–62377; File No. SR– NYSEArca–2010–55] Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by NYSE Arca, Inc. To Amend the Bylaws of NYSE Euronext To Adopt a Majority Voting Standard in Uncontested Elections of Directors June 25, 2010. 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 June 14, 2010, NYSE Arca, Inc. (‘‘NYSE Arca’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory 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 is submitting this rule filing in connection with the proposal of its ultimate parent, NYSE Euronext (the ‘‘Corporation’’),4 to amend its bylaws (‘‘Bylaws’’) to replace the plurality vote standard for election of directors in uncontested elections that is currently 17 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. 4 NYSE Arca, a Delaware corporation, is an indirect wholly-owned subsidiary of NYSE Euronext. 1 15 E:\FR\FM\02JYN1.SGM 02JYN1 Federal Register / Vol. 75, No. 127 / Friday, July 2, 2010 / Notices in the Bylaws with a majority vote standard for such elections. The existing plurality vote standard will be retained in connection with contested elections for directors. The proposed rule change is identical to a rule change filed by the New York Stock Exchange LLC (‘‘NYSE’’) that was recently approved by the Commission.5 The text of the proposed rule change is available at the Exchange, the Commission’s Web site at https://www.sec.gov, the Commission’s Public Reference Room, and https:// www.nyse.com. 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. emcdonald on DSK2BSOYB1PROD with NOTICES A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange is submitting this rule filing in connection with the Corporation’s proposal to amend its Bylaws to replace the plurality vote standard for election of directors in uncontested elections that is currently in the Bylaws with a majority vote standard for such elections. Specifically, the Bylaws currently provide that ‘‘directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors.’’ Under the Corporation’s corporate governance guidelines previously adopted by the Board of Directors of the Corporation (‘‘Board’’), however, any director nominee in an uncontested election (being an election in which the number of nominees equals the number of directors to be elected) who receives a greater number of ‘‘withheld’’ votes than ‘‘for’’ votes (including any ‘‘against’’ votes if that option were to be made available on the proxy card) must immediately tender his or her resignation from the Board. The Board 5 Securities Exchange Act Release No. 61947 (April 20, 2010), 75 FR 22169 (April 27, 2010) (SR– NYSE–2010–18). VerDate Mar<15>2010 18:27 Jul 01, 2010 Jkt 220001 will then decide, through a process managed by the Nominating and Governance Committee and excluding the nominee in question, whether to accept the resignation. In a contested election (being an election in which the number of nominees exceeds the number of directors to be elected), the unqualified plurality vote standard controls. Uncontested Election: The Corporation is proposing to add an explicit majority voting provision for uncontested director elections to the Bylaws, thereby replacing the plurality vote standard for election of directors in such elections that is currently in the Bylaws. The existing plurality vote standard will be retained in connection with contested elections for directors. Under the proposed amendment to the Bylaws, the proxy card would change for an uncontested election, and the stockholders would be given the choice to vote ‘‘for,’’ ‘‘against’’ or ‘‘abstain’’ with respect to each director nominee individually.6 In such an election, each director would be elected by the vote of the majority of the votes cast with respect to such director’s election, meaning that the number of votes cast ‘‘for’’ such director’s election exceeded the number of votes cast ‘‘against’’ that director’s election (with ‘‘abstentions’’ not counted as a vote cast either ‘‘for’’ or ‘‘against’’ such director’s election). In the event that any incumbent director fails to receive a majority of the votes cast, such director would be required to tender his or her resignation to the Nominating and Governance Committee of the Board (or another committee designated by the Board), and such committee would make a recommendation to the Board as to whether to accept or reject such resignation or whether other action should be taken. The Board would then act on the recommendation of such committee and publicly disclose its decision regarding the tendered resignation and the rationale behind the decision. The proposed amendment to the Bylaws also provides that a director who tenders his or her resignation as described above will not participate in the recommendation by the Nominating and Governance Committee or the Board of Directors action regarding whether to accept the tendered resignation. In the event that each member of the Nominating and Governance Committee fails to receive a majority of the votes 6 Stockholders are currently given three choices when voting for a slate of director nominees: They can vote (1) ‘‘for’’ all nominees, (2) ‘‘withheld’’ for all nominees or (3) ‘‘withheld’’ for certain nominees and ‘‘for’’ the remaining nominees. PO 00000 Frm 00122 Fmt 4703 Sfmt 4703 38577 cast in the same uncontested election, then the independent directors who received a majority of the votes cast in such election must appoint a committee among themselves to consider the tendered resignation and recommend to the Board whether to accept it. However, if the only directors who received a majority of the votes cast in such election constitute three or fewer directors, all directors may participate in the action regarding whether to accept the tendered resignation. Pursuant to the proposed amendment to the Bylaws, if the Board accepts a director’s resignation as part of the process described above for uncontested elections, or if a nominee for director is not elected and the nominee is not an incumbent director, the Board may (i) fill the remaining vacancy as provided in Section 3.6 of the Bylaws and Article VI, Section 6 of the Certificate of Incorporation (involving a majority vote of the remaining directors then in office, though less than a quorum, or by the sole remaining director) or (ii) decrease the size of the Board as provided in Section 3.1 of the Bylaws and Article VI, Section 3 of the Certificate of Incorporation (involving adoption of a resolution by two-thirds of the directors then in office). General Election Requirements: The following applies to elections of directors and is not being amended. Section 2.7 of the Bylaws provides that, unless otherwise provided in the Certificate of Incorporation of the Corporation, each stockholder entitled to vote at any meeting of stockholders shall be entitled to one vote for each share of stock held by such stockholder that has voting power upon the matter in question. This entitlement, however, is subject to the voting limitation in the Certificate of Incorporation that generally prohibits a beneficial owner, either alone or together with related parties, from voting or causing the voting of shares of stock of the corporation, in person or by proxy or through any voting agreement or other arrangement, to the extent that such shares represent in the aggregate more than 10% of the then outstanding votes entitled to be cast on such matter. Any votes purported to be cast in excess of this limitation will be disregarded.7 Relative to the foregoing, if any beneficial owner of the Corporation’s stock, either alone or together with related parties, is party to any agreement, plan or other arrangement with any other person or entity relating 7 See NYSE Euronext Amended and Restated Certificate of Incorporation at Article V, Section 1(A). E:\FR\FM\02JYN1.SGM 02JYN1 38578 Federal Register / Vol. 75, No. 127 / Friday, July 2, 2010 / Notices emcdonald on DSK2BSOYB1PROD with NOTICES to shares of stock of the Corporation entitled to vote on any matter under circumstances in which (i) the result would be that shares of stock of the Corporation that would be subject to such agreement, plan or other arrangement would not be voted on any matter, or any proxy relating thereto would be withheld and (ii) the effect of the agreement, plan or arrangement would be to enable a beneficial owner (but for these provisions), either alone or together with related parties, to vote, possess the right to vote or cause the voting of shares of the Corporation’s stock to exceed 10% of the then outstanding votes entitled to be cast (assuming that all shares of stock of the Corporation that are subject to the agreement, plan or other arrangement are not outstanding votes entitled to be cast on such matter), then this recalculated 10% voting limitation will be applicable. Any votes purported to be cast in excess of this recalculated voting limitation will be disregarded.8 At each meeting of stockholders of the Corporation, except as otherwise provided by law or the Certificate of Incorporation of the Corporation, the holders of a majority of the voting power of the outstanding shares of stock of the Corporation entitled to vote on a matter at the meeting, present in person or represented by proxy, will constitute a quorum (it being understood that any shares in excess of the applicable voting limitation discussed above will not be counted as present at the meeting and will not be counted as outstanding shares of stock of the Corporation for purposes of determining whether there is a quorum, unless and only to the extent that such voting limitation shall have been duly waived as provided in the Certificate of Incorporation).9 As noted above, the proposed rule change is identical to a rule change filed by the NYSE (the ‘‘NYSE Rule Change’’) that was recently approved by the Commission. 2. Statutory Basis The proposed rule change is consistent with Section 6(b) 10 of the Act, in general, and furthers the objectives of Section 6(b)(1) 11 of the Act, which requires a national securities exchange to be so organized and have the capacity to carry out the purposes of the Act and to comply, and to enforce compliance by its members and persons associated with its members, with the 8 See id. NYSE Euronext Amended and Restated Certificate of Incorporation at Article VIII, Section 2. 10 15 U.S.C. 78f(b). 11 15 U.S.C. 78f(b)(1). 9 See VerDate Mar<15>2010 18:27 Jul 01, 2010 Jkt 220001 provisions of the Act. The proposed rule change is also consistent with, and furthers the objectives of, Section 6(b)(5) 12 of the Act, 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 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. Specifically, the Exchange believes that the proposed rule change will protect investors and the public interest by codifying in the Bylaws the existing policy of the Corporation aimed at ensuring better corporate governance and accountability to stockholders by means of a voting procedure leading to election results that more accurately reflect the views of stockholders on the qualifications and suitability of individual director nominees, even if there are no alternative director nominees to vote for on the ballot. The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative on the date of its approval by the Euronext College of Regulators, which approval the Exchange believes is imminent. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest because such waiver will enable the Exchange to implement the proposed rule change immediately upon receiving the approval of the Euronext College of Regulators. In addition, as noted by the Exchange, the proposal is identical to the recently approved NYSE Rule Change.15 For these reasons, the Commission designates the proposed rule change as operative upon filing.16 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 Act. 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. 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 Act. Comments may be submitted by any of the following methods: 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. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 13 and Rule 19b–4(f)(6) 14 thereunder. U.S.C. 78f(b)(5). U.S.C. 78s(b)(3)(A). 14 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change at least five business days PO 00000 12 15 13 15 Frm 00123 Fmt 4703 Sfmt 4703 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–2010–55 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–NYSEArca–2010–55. This file number should be included on the subject line if e-mail is used. To help the prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 15 See Securities Exchange Act Release No. 61947 (April 20, 2010), 75 FR 22169 (April 27, 2010) (SR– NYSE–2010–18) (order approving identical proposal submitted by NYSE). 16 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. See 15 U.S.C. 78c(f). E:\FR\FM\02JYN1.SGM 02JYN1 Federal Register / Vol. 75, No. 127 / Friday, July 2, 2010 / Notices 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 Web site viewing and printing 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–NYSEArca–2010–55 and should be submitted on or before June 23, 2010. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–16106 Filed 7–1–10; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–62385; File No. SR–NSCC– 2010–05] Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing of Proposed Rule Change To Enhance the Process for Transfers Through the Automated Customer Account Transfer Service emcdonald on DSK2BSOYB1PROD with NOTICES June 25, 2010. 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 June 4, 2010, National Securities Clearing Corporation (‘‘NSCC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule 17 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Mar<15>2010 18:27 Jul 01, 2010 Jkt 220001 change as described in Items I, II, and III below, which Items have been substantially prepared by NSCC. 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 the Substance of the Proposed Rule Change The purpose of this proposed rule change is to enhance NSCC’s process for transfers through the Automated Customer Account Transfer Service (‘‘ACATS’’). II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, NSCC 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. NSCC has prepared summaries, set forth in sections (A), (B), and (C) below, of the most significant aspects of these statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 38579 allocated to long Members’ accounts by book-entry. NSCC is proposing changes to its ACATS system in connection with a concurrent rule change proposed by DTC.5 NSCC is proposing these changes for two general reasons. First, NSCC would like to enhance protection for customer securities in ACATS transfers so that customer account transfers to new firms would be maximized in the event of a Member failure. Accordingly, NSCC would modify its ACATS processing and its Rules so that deliveries or receives processed through CNS would satisfy a Member’s ACATS receive or deliver obligation prior to satisfying another CNS-related obligation of that Member in the same security. NSCC would also track CNS ACATS items to prevent reversal of completed items in the event of a Member’s failure. Second, NSCC would like to facilitate compliance by its Members with their securities possession and control requirements.6 To that end, NSCC proposes modifying its Rules to clarify that in no event does NSCC have a lien on securities carried by a Member for the account of its customers that are delivered through the CNS ACATS service.7 1. ACATS Transfers Through the CNS System NSCC’s ACATS system enables Members to effect automated transfers of customer accounts among themselves.3 For ACATS transfers processed through NSCC’s Continuous Net Settlement (‘‘CNS’’) system,4 long and short positions are passed against Members’ positions at The Depository Trust Company (‘‘DTC’’) and available securities are delivered from short Members’ accounts at DTC and Through ACATS, an NSCC Member to which a customer’s securities account is to be transferred (‘‘Receiving Member’’) may submit a Transfer Initiation Request to initiate the account transfer process. When a Receiving Member accepts a customer account transfer, NSCC causes all CNS-eligible items in that customer account to enter NSCC’s CNS accounting operation on the day before settlement date unless the Receiving Member notifies NSCC that 3 ACATS complements a Financial Industry Regulatory Authority (‘‘FINRA’’) rule requiring FINRA members to use automated clearing agency customer account transfer services and to effect customer account transfers within specified time frames. 4 CNS is an ongoing accounting system which nets today’s settling trades with yesterday’s closing positions to produce a net short or long position for a particular security for a particular Member. NSCC is the counter party for all positions. The positions are then passed against the Member’s designated depository positions and available securities are allocated by book-entry. This allocation of securities is accomplished through an evening cycle followed by a day cycle. Positions which remain open after the evening cycle may be changed as a result of trades accepted for settlement that day. CNS allocates deliveries in both the night and day cycles using an algorithm based on priority groups in descending order, age of position within a priority group, and random numbers within age groups. 5 DTC is proposing its concurrent rule change with the Commission in filing SR–DTC–2010–09. 6 Commission Rule 15c3–3 provides that a brokerdealer shall promptly obtain and shall thereafter maintain the physical possession or control of all fully paid securities and excess margin securities carried for the account of customers. 7 DTC’s Settlement Service Guide currently provides that securities delivered to a receiving DTC Participant’s account from CNS are classified as collateral which may otherwise be made available to NSCC in the event that the DTC Participant fails to meet its NSCC settlement obligation. Pursuant to a separate rule filing, DTC is proposing revisions to its service guide so that ACAT deliveries from CNS would be designated by the DTC Participant as ‘‘Minimum Amount Securities’’ when credited to the Participant’s account. This designation would prevent the securities from being designated as collateral for either this purpose or for purposes of DTC’s Rules. DTC Rule 1 for the definition of Minimum Amount Securities. PO 00000 Frm 00124 Fmt 4703 Sfmt 4703 E:\FR\FM\02JYN1.SGM 02JYN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 75, Number 127 (Friday, July 2, 2010)]
[Notices]
[Pages 38576-38579]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-16106]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62377; File No. SR-NYSEArca-2010-55]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by NYSE Arca, Inc. To Amend the Bylaws of NYSE Euronext To Adopt 
a Majority Voting Standard in Uncontested Elections of Directors

June 25, 2010.
    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 June 14, 2010, NYSE Arca, Inc. (``NYSE Arca'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is submitting this rule filing in connection with the 
proposal of its ultimate parent, NYSE Euronext (the 
``Corporation''),\4\ to amend its bylaws (``Bylaws'') to replace the 
plurality vote standard for election of directors in uncontested 
elections that is currently

[[Page 38577]]

in the Bylaws with a majority vote standard for such elections. The 
existing plurality vote standard will be retained in connection with 
contested elections for directors. The proposed rule change is 
identical to a rule change filed by the New York Stock Exchange LLC 
(``NYSE'') that was recently approved by the Commission.\5\ The text of 
the proposed rule change is available at the Exchange, the Commission's 
Web site at https://www.sec.gov, the Commission's Public Reference Room, 
and https://www.nyse.com.
---------------------------------------------------------------------------

    \4\ NYSE Arca, a Delaware corporation, is an indirect wholly-
owned subsidiary of NYSE Euronext.
    \5\ Securities Exchange Act Release No. 61947 (April 20, 2010), 
75 FR 22169 (April 27, 2010) (SR-NYSE-2010-18).
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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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange is submitting this rule filing in connection with the 
Corporation's proposal to amend its Bylaws to replace the plurality 
vote standard for election of directors in uncontested elections that 
is currently in the Bylaws with a majority vote standard for such 
elections. Specifically, the Bylaws currently provide that ``directors 
shall be elected by a plurality of the votes of the shares present in 
person or represented by proxy at the meeting and entitled to vote on 
the election of directors.'' Under the Corporation's corporate 
governance guidelines previously adopted by the Board of Directors of 
the Corporation (``Board''), however, any director nominee in an 
uncontested election (being an election in which the number of nominees 
equals the number of directors to be elected) who receives a greater 
number of ``withheld'' votes than ``for'' votes (including any 
``against'' votes if that option were to be made available on the proxy 
card) must immediately tender his or her resignation from the Board. 
The Board will then decide, through a process managed by the Nominating 
and Governance Committee and excluding the nominee in question, whether 
to accept the resignation. In a contested election (being an election 
in which the number of nominees exceeds the number of directors to be 
elected), the unqualified plurality vote standard controls.
    Uncontested Election:
    The Corporation is proposing to add an explicit majority voting 
provision for uncontested director elections to the Bylaws, thereby 
replacing the plurality vote standard for election of directors in such 
elections that is currently in the Bylaws. The existing plurality vote 
standard will be retained in connection with contested elections for 
directors. Under the proposed amendment to the Bylaws, the proxy card 
would change for an uncontested election, and the stockholders would be 
given the choice to vote ``for,'' ``against'' or ``abstain'' with 
respect to each director nominee individually.\6\ In such an election, 
each director would be elected by the vote of the majority of the votes 
cast with respect to such director's election, meaning that the number 
of votes cast ``for'' such director's election exceeded the number of 
votes cast ``against'' that director's election (with ``abstentions'' 
not counted as a vote cast either ``for'' or ``against'' such 
director's election). In the event that any incumbent director fails to 
receive a majority of the votes cast, such director would be required 
to tender his or her resignation to the Nominating and Governance 
Committee of the Board (or another committee designated by the Board), 
and such committee would make a recommendation to the Board as to 
whether to accept or reject such resignation or whether other action 
should be taken. The Board would then act on the recommendation of such 
committee and publicly disclose its decision regarding the tendered 
resignation and the rationale behind the decision.
---------------------------------------------------------------------------

    \6\ Stockholders are currently given three choices when voting 
for a slate of director nominees: They can vote (1) ``for'' all 
nominees, (2) ``withheld'' for all nominees or (3) ``withheld'' for 
certain nominees and ``for'' the remaining nominees.
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    The proposed amendment to the Bylaws also provides that a director 
who tenders his or her resignation as described above will not 
participate in the recommendation by the Nominating and Governance 
Committee or the Board of Directors action regarding whether to accept 
the tendered resignation. In the event that each member of the 
Nominating and Governance Committee fails to receive a majority of the 
votes cast in the same uncontested election, then the independent 
directors who received a majority of the votes cast in such election 
must appoint a committee among themselves to consider the tendered 
resignation and recommend to the Board whether to accept it. However, 
if the only directors who received a majority of the votes cast in such 
election constitute three or fewer directors, all directors may 
participate in the action regarding whether to accept the tendered 
resignation.
    Pursuant to the proposed amendment to the Bylaws, if the Board 
accepts a director's resignation as part of the process described above 
for uncontested elections, or if a nominee for director is not elected 
and the nominee is not an incumbent director, the Board may (i) fill 
the remaining vacancy as provided in Section 3.6 of the Bylaws and 
Article VI, Section 6 of the Certificate of Incorporation (involving a 
majority vote of the remaining directors then in office, though less 
than a quorum, or by the sole remaining director) or (ii) decrease the 
size of the Board as provided in Section 3.1 of the Bylaws and Article 
VI, Section 3 of the Certificate of Incorporation (involving adoption 
of a resolution by two-thirds of the directors then in office).
    General Election Requirements:
    The following applies to elections of directors and is not being 
amended. Section 2.7 of the Bylaws provides that, unless otherwise 
provided in the Certificate of Incorporation of the Corporation, each 
stockholder entitled to vote at any meeting of stockholders shall be 
entitled to one vote for each share of stock held by such stockholder 
that has voting power upon the matter in question. This entitlement, 
however, is subject to the voting limitation in the Certificate of 
Incorporation that generally prohibits a beneficial owner, either alone 
or together with related parties, from voting or causing the voting of 
shares of stock of the corporation, in person or by proxy or through 
any voting agreement or other arrangement, to the extent that such 
shares represent in the aggregate more than 10% of the then outstanding 
votes entitled to be cast on such matter. Any votes purported to be 
cast in excess of this limitation will be disregarded.\7\
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    \7\ See NYSE Euronext Amended and Restated Certificate of 
Incorporation at Article V, Section 1(A).
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    Relative to the foregoing, if any beneficial owner of the 
Corporation's stock, either alone or together with related parties, is 
party to any agreement, plan or other arrangement with any other person 
or entity relating

[[Page 38578]]

to shares of stock of the Corporation entitled to vote on any matter 
under circumstances in which (i) the result would be that shares of 
stock of the Corporation that would be subject to such agreement, plan 
or other arrangement would not be voted on any matter, or any proxy 
relating thereto would be withheld and (ii) the effect of the 
agreement, plan or arrangement would be to enable a beneficial owner 
(but for these provisions), either alone or together with related 
parties, to vote, possess the right to vote or cause the voting of 
shares of the Corporation's stock to exceed 10% of the then outstanding 
votes entitled to be cast (assuming that all shares of stock of the 
Corporation that are subject to the agreement, plan or other 
arrangement are not outstanding votes entitled to be cast on such 
matter), then this recalculated 10% voting limitation will be 
applicable. Any votes purported to be cast in excess of this 
recalculated voting limitation will be disregarded.\8\
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    \8\ See id.
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    At each meeting of stockholders of the Corporation, except as 
otherwise provided by law or the Certificate of Incorporation of the 
Corporation, the holders of a majority of the voting power of the 
outstanding shares of stock of the Corporation entitled to vote on a 
matter at the meeting, present in person or represented by proxy, will 
constitute a quorum (it being understood that any shares in excess of 
the applicable voting limitation discussed above will not be counted as 
present at the meeting and will not be counted as outstanding shares of 
stock of the Corporation for purposes of determining whether there is a 
quorum, unless and only to the extent that such voting limitation shall 
have been duly waived as provided in the Certificate of 
Incorporation).\9\
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    \9\ See NYSE Euronext Amended and Restated Certificate of 
Incorporation at Article VIII, Section 2.
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    As noted above, the proposed rule change is identical to a rule 
change filed by the NYSE (the ``NYSE Rule Change'') that was recently 
approved by the Commission.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) \10\ of 
the Act, in general, and furthers the objectives of Section 6(b)(1) 
\11\ of the Act, which requires a national securities exchange to be so 
organized and have the capacity to carry out the purposes of the Act 
and to comply, and to enforce compliance by its members and persons 
associated with its members, with the provisions of the Act. The 
proposed rule change is also consistent with, and furthers the 
objectives of, Section 6(b)(5) \12\ of the Act, 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 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. Specifically, the Exchange 
believes that the proposed rule change will protect investors and the 
public interest by codifying in the Bylaws the existing policy of the 
Corporation aimed at ensuring better corporate governance and 
accountability to stockholders by means of a voting procedure leading 
to election results that more accurately reflect the views of 
stockholders on the qualifications and suitability of individual 
director nominees, even if there are no alternative director nominees 
to vote for on the ballot.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(1).
    \12\ 15 U.S.C. 78f(b)(5).
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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. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the proposed rule change does not: (i) Significantly affect 
the protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \13\ and Rule 19b-
4(f)(6) \14\ thereunder.
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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 Exchange has satisfied this requirement.
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    The Exchange has asked the Commission to waive the 30-day operative 
delay so that the proposal may become operative on the date of its 
approval by the Euronext College of Regulators, which approval the 
Exchange believes is imminent. The Commission believes that waiving the 
30-day operative delay is consistent with the protection of investors 
and the public interest because such waiver will enable the Exchange to 
implement the proposed rule change immediately upon receiving the 
approval of the Euronext College of Regulators. In addition, as noted 
by the Exchange, the proposal is identical to the recently approved 
NYSE Rule Change.\15\ For these reasons, the Commission designates the 
proposed rule change as operative upon filing.\16\
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    \15\ See Securities Exchange Act Release No. 61947 (April 20, 
2010), 75 FR 22169 (April 27, 2010) (SR-NYSE-2010-18) (order 
approving identical proposal submitted by NYSE).
    \16\ 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. See 15 U.S.C. 
78c(f).
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    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 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 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-2010-55 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-NYSEArca-2010-55. This 
file number should be included on the subject line if e-mail is used. 
To help the

[[Page 38579]]

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 Web site viewing and printing 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-
NYSEArca-2010-55 and should be submitted on or before June 23, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-16106 Filed 7-1-10; 8:45 am]
BILLING CODE 8011-01-P

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