Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule Change To Amend an Exchange Rule Relating to Giving Proxies, 10078-10081 [2011-3982]
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10078
Federal Register / Vol. 76, No. 36 / Wednesday, February 23, 2011 / Notices
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investor protection and the public
interest.
The Commission believes that
proposed Supplemental Rule (a)(2) is
consistent with Section 6(b)(10) 13 of the
Act, which requires that national
securities exchanges adopt rules
prohibiting members that are not
beneficial holders of a security from
voting uninstructed proxies with respect
to the election of a member of the board
of directors of an issuer (except for
uncontested elections of directors for
companies registered under the
Investment Company Act), executive
compensation, or any other significant
matter, as determined by the
Commission by rule.
The Commission believes that
proposed Supplemental Rule (a)(2) is
consistent with Section 6(b)(10) of the
Act because it adopts revisions that
comply with that section. As noted in
the accompanying Senate Report,
Section 957, which enacted Section
6(b)(10), reflects the principle that ‘‘final
vote tallies should reflect the wishes of
the beneficial owners of the stock and
not be affected by the wishes of the
broker that holds the shares.’’ 14 The
proposed rule change will make C2
compliant with the new requirements of
Section 6(b)(10) by specifically
prohibiting, in C2’s rule language,
broker-dealers, who are not beneficial
owners of a security, from voting
uninstructed shares in connection with
a shareholder vote on the election of a
member of the board of directors of an
issuer (except for a vote with respect to
the uncontested election of a member of
the board of directors of any investment
company registered under the
Investment Company Act of 1940),
executive compensation, or any other
significant matter, as determined by the
Commission by rule, unless the member
receives voting instructions from the
beneficial owner of the shares.15
The Commission also believes that
proposed Supplemental Rule (a)(2) is
consistent with Section 6(b)(5) 16 of the
Act, which provides, among other
things, that the rules of the Exchange
must be designed to promote just and
equitable principles of trade, remove
impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
13 15
U.S.C. 78f(b)(10).
S. Rep. No. 111–176, at 136 (2010).
15 The Commission has not, to date, adopted rules
concerning other significant matters where
uninstructed broker votes should be prohibited,
although it may do so in the future. Should the
Commission adopt such rules, we would expect C2
to adopt coordinating rules promptly to comply
with the statute.
16 15 U.S.C. 78f(b)(5).
14 See
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18:50 Feb 22, 2011
Jkt 223001
general, to protect investors and the
public interest, and are not designed to
permit unfair discrimination between
customers, issuers, brokers, or dealers.
The Commission believes that the rule
assures that shareholder votes on the
election of the board of directors of an
issuer (except for a vote with respect to
the uncontested election of a member of
the board of directors of any investment
company registered under the
Investment Company Act of 1940) and
on executive compensation matters are
made by those with an economic
interest in the company, rather than by
a broker that has no such economic
interest, which should enhance
corporate governance and accountability
to shareholders.17
Based on the above, the Commission
finds that the C2 proposal will further
the purposes of Sections 6(b)(5) and
6(b)(10) of the Act because it should
enhance corporate accountability to
shareholders while also serving to fulfill
the Congressional intent in adopting
Section 6(b)(10) of the Act.
The Commission also finds good
cause, pursuant to Section 19(b)(2) of
the Act,18 for approving the proposed
rule change prior to the 30th day after
the date of publication of notice in the
Federal Register. The Commission
believes that good cause exists to grant
accelerated approval to proposed
Supplemental Rule (a)(1), because this
proposed rule will conform the C2 rule
to ISE Rule 421, NYSE Arca Rule 9.4
and FINRA Rule 2251, which were
published for public comment in the
Federal Register and approved by the
Commission, and for which no
comments were received.19 Because
proposed Supplemental Rule (a)(1) is
substantially similar to the ISE, NYSE
Arca and FINRA rules, it raises no new
regulatory issues.
The Commission also believes that
good cause exists to grant accelerated
approval to proposed Supplemental
Rule (a)(2), which conforms the C2 rules
to the requirements of Section 6(b)(10)
of the Act. Section 6(b)(10) of the Act,
enacted under Section 957 of the DoddFrank Act, does not provide for a
transition phase, and requires rules of
national securities exchanges to prohibit
broker voting on the election of a
member of the board of directors of an
17 As the Commission stated in approving NYSE
rules prohibiting broker voting in the election of
directors, having those with an economic interest in
the company vote the shares, rather than the broker
who has no such economic interest, furthers the
goal of enfranchising shareholders. See Securities
Exchange Act Release No. 60215 (July 1, 2009), 74
FR 33293 (July 10, 2009) (SR–NYSE–2006–92).
18 15 U.S.C. 78s(b)(2).
19 See supra notes 9 and 12.
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issuer (except for a vote with respect to
the uncontested election of a member of
the board of directors of any investment
company registered under the
Investment Company Act of 1940),
executive compensation, or any other
significant matter, as determined by the
Commission by rule. The Commission
believes that good cause exists to grant
accelerated approval to proposed
Supplemental Rule (a)(2), because it
will conform the C2 rule to the
requirements of Section 6(b)(10) of the
Act.
V. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,20 that the
proposed rule change (SR–C2–2011–
005) be, and it hereby is, approved on
an accelerated basis.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.21
Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011–3983 Filed 2–22–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–63917; File No. SR–CBOE–
2011–017]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Order Granting Accelerated Approval
of a Proposed Rule Change To Amend
an Exchange Rule Relating to Giving
Proxies
February 16, 2011.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on February
10, 2011 the Chicago Board Options
Exchange, Incorporated (‘‘Exchange’’ or
‘‘CBOE’’) filed with the Securities and
Exchange Commission (‘‘Commission’’)
the proposed rule change as described
in Items I and II below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons and is approving the proposed
rule change on an accelerated basis.
20 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
21 17
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Federal Register / Vol. 76, No. 36 / Wednesday, February 23, 2011 / Notices
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
proxy voting rules in accordance with
provisions of Section 957 of the DoddFrank Wall Street Reform and Consumer
Protection Act (the ‘‘Dodd-Frank Act’’).
The text of the rule proposal is available
on the Exchange’s Web site (https://
www.cboe.org/legal), at the Exchange’s
Office of the Secretary and at the
Commission.
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.
mstockstill on DSKH9S0YB1PROD with NOTICES
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Section 957 of the Dodd-Frank Act
adopted new Section 6(b)(10) of the
Act,3 which requires the rules of each
national securities exchange to prohibit
any member that is not the beneficial
owner of a security registered under
Section 12 of the Act 4 from granting a
proxy to vote the security in connection
with certain shareholder votes, unless
the beneficial owner of the security has
instructed the member to vote the proxy
in accordance with the voting
instructions of the beneficial owner. The
shareholder votes covered by Section
957 include any vote with respect to (i)
the election of a member of the board of
directors of an issuer (except for a vote
with respect to the uncontested election
of a member of the board of directors of
any investment company registered
under the Investment Company Act of
1940 (the ‘‘Investment Company Act’’),
(ii) executive compensation, or (iii) any
other significant matter, as determined
by the Commission, by rule.5
Accordingly, in order to carry out the
requirements of Section 957 of the
Dodd-Frank Act, the Exchange is
U.S.C. 78f(b)(10).
U.S.C. 78l.
5 15 U.S.C. 78f(b)(10)(B).
4 15
18:50 Feb 22, 2011
6 See
15 U.S.C. 78f(b)(10)(B).
Exchange is also proposing to add crossreferencing commentary related to new Item 21 in
Items 12 and 13. The Exchange is also proposing
a non-substantive change to include a heading for
7 The
3 15
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proposing to amend CBOE Rule 31.85,
Giving Proxies by TPH Organizations,
which governs when Trading Permit
Holder Organizations (‘‘TPH
Organizations’’) may and may not give a
proxy to vote stock without instructions
from the beneficial owner of the shares.
First, Item 19 of CBOE Rule 31.85(b)
already prohibits TPH Organizations
from giving a proxy to vote shares
without instructions from beneficial
owners when the matter to be voted
upon is the election of directors (other
than in the case of an issuer registered
under the Investment Company Act,
provided the matter is not the subject of
a counter-solicitation). Therefore the
Exchange is proposing to simply amend
Item 19 so that the text is consistent
with the language in Section 6(b)(10)(B)
of the Act.6
Second, the Exchange proposes to add
new Item 21 (and related commentary)
to CBOE Rule 31.85(b) to provide that a
TPH Organization may not give a proxy
or authorize a proxy to vote without
instructions from beneficial owners
when the matter to be voted upon
relates to executive compensation. The
proposed commentary to Item 21 would
clarify that a matter relating to executive
compensation would include, among
other things, the items referred to in
Section 14A of the Act (added by
Section 951 of the Dodd-Frank Act),
including (i) an advisory vote to
approve the compensation of
executives, (ii) a vote on whether to
hold such an advisory vote every one,
two or three years, and (iii) an advisory
vote to approve any type of
compensation (whether present,
deferred, or contingent) that is based on
or otherwise relates to an acquisition,
merger, consolidation, sale or other
disposition of all or substantially all of
the assets of an issuer and the aggregate
total of all such compensation that may
(and the conditions upon which it may)
be paid or become payable to or on
behalf of an executive officer. In
addition, a TPH Organization may not
give or authorize a proxy to vote
without instructions on a matter relating
to executive compensation, even if such
matter would otherwise qualify for an
exception from the requirements of Item
12, Item 13 or any other Item under
CBOE Rule 31.85. Any vote on these or
similar executive compensation-related
matters would be subject to the
requirements of CBOE Rule 31.85, as
amended.7
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10079
Third, the Exchange proposes to add
new Item 22 to Rule 31.85(b) to provide
that a TPH Organization may not give a
proxy or authorize a proxy to vote
without instructions from beneficial
owners when the matter to be voted
upon involves any other significant
matter, as determined by the
Commission, by rule.8
Fourth, the Exchange is proposing to
add the words ‘‘or authorize’’ in certain
places throughout CBOE Rule 31.85 to
clarify that the rule includes not only
the giving of a proxy but also the
authorization of such proxy.
Finally, the Exchange is proposing to
amend Appendix A to the rules of the
CBOE Stock Exchange, LLC (‘‘CBSX,’’
the CBOE’s stock trading facility).
Appendix A lists the rules contained in
Chapters 1 through 29 of the Exchange
Rules that are applicable to the trading
of equity securities on CBSX. The
Exchange is proposing to amend
Appendix A to include a cross reference
to CBOE Rule 31.85 in order to make
clear that CBOE Rule 31.85 regarding
the giving of proxies by TPH
Organizations applies to CBSX TPH
Organizations as well as CBOE TPH
Organizations.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the Act 9
and the rules and regulations
thereunder and, in particular, the
requirements of Section 6(b) of the
Act.10 Specifically, the Exchange
believes the proposed rule change is
consistent with the Section 6(b)(10) 11
requirements that all national securities
exchanges adopt rules prohibiting
members from voting, without receiving
instructions from the beneficial owner
of shares, on the election of a member
of a board of directors of an issuer
(except for a vote with respect to the
uncontested election of a member of the
board of directors of any investment
company registered under the
Investment Company Act of 1940),
executive compensation, or any other
significant matter, as determined by the
Commission, by rule. The Exchange also
believes the proposed rule change is
consistent with the Section 6(b)(5) 12
requirements that an exchange have
the commentary to Item 20 so there is consistent
formatting of the various commentaries that appear
throughout the rule.
8 The Exchange notes that the Commission has
not at this time identified other significant matters
with respect to which TPH Organizations should be
prohibited from voting uninstructed shares.
9 15 U.S.C. 78a et seq.
10 15 U.S.C. 78f(b).
11 15 U.S.C. 78f(b)(10).
12 15 U.S.C. 78f(b)(5).
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10080
Federal Register / Vol. 76, No. 36 / Wednesday, February 23, 2011 / Notices
rules that are designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to remove
impediments to, and perfect the
mechanism of a free and open market
and, in general, to protect investors and
the public interest. The Exchange is
adopting the proposed rule changes to
comply with the requirements of
Section 957 of the Dodd-Frank Act, and
therefore believes the proposed rule
changes to be consistent with Section
6(b)(5) of the Act, particularly with
respect to the protection of investors
and the public interest. Finally, the
Exchange believes the proposed changes
to Appendix A of the CBSX Rules to
incorporate a cross reference to CBOE
Rule 31.85 is consistent with Section
6(b)(5) of the Act, particularly with
respect to the protection of investors
and the public interest, because the
changes would make it clear that CBOE
Rule 31.85 (regarding the giving of
proxies by TPH Organizations) applies
to CBSX TPH Organizations as well as
CBOE TPH Organizations.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
CBOE does not believe that the
proposed rule change will impose any
burden on competition 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
IV. Commission’s Findings and Order
Granting Accelerated Approval of the
Proposed Rule Change
The Exchange neither solicited nor
received comments on the proposal.
III. 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:
mstockstill on DSKH9S0YB1PROD 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–CBOE–2011–017 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.
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18:50 Feb 22, 2011
Jkt 223001
All submissions should refer to File
Number SR–CBOE–2011–017. 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, 100 F Street, NE.,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of such filing
also will be available for inspection and
copying at the principal office of the
CBOE. 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–CBOE–2011–017 and
should be submitted on or before March
16, 2011.
In its filing, the Exchange requested
that the Commission approve the
proposal on an accelerated basis. The
Exchange stated that it believed good
cause existed to grant accelerated
approval because Section 957 of the
Dodd-Frank Act does not provide for a
transition period and because the
proposed rule text is based upon New
York Stock Exchange (‘‘NYSE’’) Rule
452.13
After careful consideration, 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.14 The
Commission believes that the proposal
13 See Securities Exchange Act Release 62874
(September 9, 2010), 75 FR 56152 (September 15,
2010).
14 In approving this rule change, the Commission
notes that it has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
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is consistent with Section 6(b)(10) 15 of
the Act, which requires that national
securities exchanges adopt rules
prohibiting members that are not
beneficial holders of a security from
voting uninstructed proxies with respect
to the election of a member of the board
of directors of an issuer (except for
uncontested elections of directors for
companies registered under the
Investment Company Act), executive
compensation, or any other significant
matter, as determined by the
Commission, by rule. The Commission
also believes that the proposal is
consistent with Section 6(b)(5) 16 of the
Act, which provides, among other
things, that the rules of the Exchange
must be designed to promote just and
equitable principles of trade, 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, and are not designed to
permit unfair discrimination between
customers, issuers, brokers, or dealers.
The Commission believes that the
proposal is consistent with Section
6(b)(10) of the Act because it adopts
revisions that comply with that section.
As noted in the accompanying Senate
Report, Section 957, which adopts
Section 6(b)(10), reflects the principle
that ‘‘final vote tallies should reflect the
wishes of the beneficial owners of the
stock and not be affected by the wishes
of the broker that holds the shares.’’ 17
The proposed rule change will make
CBOE rules compliant with the new
requirements of Section 6(b)(10) by
prohibiting broker-dealers, who are not
beneficial owners of a security, from
voting uninstructed shares with respect
to any matter on executive
compensation or any other significant
matter, as determined by the
Commission, by rule.18
The Commission believes that the
proposal is consistent with Section
15 15
U.S.C. 78f(b)(10).
U.S.C. 78f(b)(5).
17 See S. Rep. No. 111–176, at 136 (2010).
18 As noted above, Section 6(b)(10) also prohibits
broker voting for director elections, except for
uncontested director elections of registered
investment companies. The Commission notes that
the Exchange already prohibits broker voting in
director elections except for uncontested director
elections for registered investment companies and
is merely proposing to amend Item 19 so that the
text is consistent with the language in Section
6(b)(10) of the Act. See CBOE Rule 31.85(b)(19). As
to other matters, as determined by the Commission,
by rule, the Commission has not, to date, adopted
rules concerning other significant matters where
uninstructed broker votes should be prohibited,
although it may do so in the future. Should the
Commission adopt such rules, we would expect the
Exchange to adopt coordinating rules promptly to
comply with the statute.
16 15
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Federal Register / Vol. 76, No. 36 / Wednesday, February 23, 2011 / Notices
10081
Section 6(b)(10) of the Act, enacted
under Section 957 of the Dodd-Frank
Act, does not provide for a transition
phase, and requires rules of national
securities exchanges to prohibit, among
other things, broker voting on executive
compensation. The Commission
believes that good cause exists to grant
accelerated approval to the Exchange’s
proposal, because it will conform CBOE
Rule 31.85 to the requirements of
Section 6(b)(10) of the Act. Moreover,
the Commission notes that the proposed
changes are based on NYSE Rule 452.21
President’s major disaster declaration on
02/11/2011, Private Non-Profit
organizations that provide essential
services of governmental nature may file
disaster loan applications at the address
listed above or other locally announced
locations.
The following areas have been
determined to be adversely affected by
the disaster:
Primary Counties: Kane, Washington.
The Interest Rates are:
Percent
V. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,22 that the
proposed rule change (SR–CBOE–2011–
017) be, and it hereby is, approved on
an accelerated basis.
For Physical Damage:
Non-Profit Organizations With
Credit Available Elsewhere ..
Non-Profit Organizations Without Credit Available Elsewhere ...................................
For Economic Injury:
Non-Profit Organizations Without Credit Available Elsewhere ...................................
mstockstill on DSKH9S0YB1PROD with NOTICES
6(b)(5) of the Act because the proposal
will further investor protection and the
public interest by assuring that
shareholder votes on executive
compensation matters are made by those
with an economic interest in the
company, rather than by a broker that
has no such economic interest, which
should enhance corporate governance
and accountability to shareholders.19
The Commission notes that the
CBOE’s new rule prohibiting
uninstructed broker votes on executive
compensation covers the specific items
identified in Section 951 of the DoddFrank Act, as well as any other matter
concerning executive compensation,
and has been drafted broadly to reflect
the requirements of Section 6(b)(10) of
the Act. The proposed rule language
also specifically states that a broker vote
on any executive compensation matter
would not be permitted even if it would
otherwise qualify for an exception from
any item under Rule 31.85. The
Commission believes this provision will
make clear that any past practice or
interpretation that may have permitted
a broker vote on an executive
compensation matter, under existing
rules, will no longer be applicable and
is superseded by the newly adopted
provisions.
Finally, the Commission notes that
the changes to reflect (i) that the CBOE
rules prohibit not only the giving of a
proxy, but also the authorization of the
proxy and (ii) that CBOE Rule 31.85
regarding the giving of proxies by TPH
Organizations applies to CBSX TPH
Organizations as well as CBOE TPH
Organization, should help to clarify the
intent of the CBOE proxy rules and is
consistent with the requirements of
Section 6 of the Act.
Based on the above, the Commission
believes that the Exchange’s proposal
will further the purposes of Sections
6(b)(5) and 6(b)(10) of the Act because
it should enhance corporate
accountability to shareholders. The rule
filing should also serve to fulfill the
Congressional intent in adopting
Section 6(b)(10) of the Act.
The Commission also finds good
cause, pursuant to Section 19(b)(2) of
the Act,20 for approving the proposed
rule change prior to the 30th day after
the date of publication of notice in the
Federal Register. As noted above,
19 As the Commission stated in approving NYSE
rules prohibiting broker voting in the election of
directors, having those with an economic interest in
the company vote the shares, rather than the broker
who has no such economic interest, furthers the
goal of enfranchising shareholders. See Securities
Exchange Act Release No. 60215 (July 1, 2009), 74
FR 33293 (July 10, 2009) (SR–NYSE–2006–92).
20 15 U.S.C. 78s(b)(2).
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18:50 Feb 22, 2011
Jkt 223001
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011–3982 Filed 2–22–11; 8:45 am]
BILLING CODE 8011–01–P
3.250
3.000
3.000
The number assigned to this disaster
for physical damage is 12468B and for
economic injury is 12469B.
(Catalog of Federal Domestic Assistance
Numbers 59002 and 59008)
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #12468 and #12469]
Roger B. Garland,
Acting Associate Administrator for Disaster
Assistance.
Utah Disaster #UT–00009
[FR Doc. 2011–3947 Filed 2–22–11; 8:45 am]
U.S. Small Business
Administration.
ACTION: Notice.
BILLING CODE 8025–01–P
This is a Notice of the
Presidential declaration of a major
disaster for Public Assistance Only for
the State of Utah (FEMA–1955–DR),
dated 02/11/2011.
Incident: Severe Winter Storms and
Flooding.
Incident Period: 12/20/2010 through
12/24/2010.
Effective Date: 02/11/2011.
Physical Loan Application Deadline
Date: 04/12/2011.
Economic Injury (EIDL) Loan
Application Deadline Date: 11/14/2011.
ADDRESSES: Submit completed loan
applications to: U.S. Small Business
Administration, Processing and
Disbursement Center, 14925 Kingsport
Road, Fort Worth, TX 76155.
FOR FURTHER INFORMATION CONTACT: A.
Escobar, Office of Disaster Assistance,
U.S. Small Business Administration,
409 3rd Street, SW., Suite 6050,
Washington, DC 20416.
SUPPLEMENTARY INFORMATION: Notice is
hereby given that as a result of the
[Disaster Declaration #12465 and #12466]
AGENCY:
SUMMARY:
21 See
note 13, supra.
U.S.C. 78s(b)(2).
23 17 CFR 200.30–3(a)(12).
22 15
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SMALL BUSINESS ADMINISTRATION
New Jersey Disaster Number NJ–00019
U.S. Small Business
Administration.
ACTION: Amendment 1.
AGENCY:
This is an amendment of the
Presidential declaration of a major
disaster for Public Assistance Only for
the State of NEW JERSEY (FEMA—
1954—DR), dated 02/04/2011.
Incident: Severe Winter Storm and
Snowstorm.
Incident Period: 12/26/2010 through
12/27/2010.
Effective Date: 02/11/2011.
Physical Loan Application Deadline
Date: 04/05/2011.
Economic Injury (EIDL) Loan
Application Deadline Date: 11/04/2011.
ADDRESSES: Submit completed loan
applications to: U.S. Small Business
Administration, Processing and
Disbursement Center, 14925 Kingsport
Road, Fort Worth, TX 76155.
FOR FURTHER INFORMATION CONTACT: A.
Escobar, Office of Disaster Assistance,
U.S. Small Business Administration,
SUMMARY:
E:\FR\FM\23FEN1.SGM
23FEN1
]]>Agencies
[Federal Register Volume 76, Number 36 (Wednesday, February 23, 2011)]
[Notices]
[Pages 10078-10081]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-3982]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63917; File No. SR-CBOE-2011-017]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Order Granting Accelerated Approval
of a Proposed Rule Change To Amend an Exchange Rule Relating to Giving
Proxies
February 16, 2011.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on February 10, 2011 the Chicago Board Options Exchange,
Incorporated (``Exchange'' or ``CBOE'') filed with the Securities and
Exchange Commission (``Commission'') the proposed rule change as
described in Items I and II below, which Items have been prepared by
the Exchange. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons and is
approving the proposed rule change on an accelerated basis.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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[[Page 10079]]
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its proxy voting rules in accordance
with provisions of Section 957 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act (the ``Dodd-Frank Act''). The text of the rule
proposal is available on the Exchange's Web site (https://www.cboe.org/legal), at the Exchange's Office of the Secretary and at the
Commission.
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
Section 957 of the Dodd-Frank Act adopted new Section 6(b)(10) of
the Act,\3\ which requires the rules of each national securities
exchange to prohibit any member that is not the beneficial owner of a
security registered under Section 12 of the Act \4\ from granting a
proxy to vote the security in connection with certain shareholder
votes, unless the beneficial owner of the security has instructed the
member to vote the proxy in accordance with the voting instructions of
the beneficial owner. The shareholder votes covered by Section 957
include any vote with respect to (i) the election of a member of the
board of directors of an issuer (except for a vote with respect to the
uncontested election of a member of the board of directors of any
investment company registered under the Investment Company Act of 1940
(the ``Investment Company Act''), (ii) executive compensation, or (iii)
any other significant matter, as determined by the Commission, by
rule.\5\
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\3\ 15 U.S.C. 78f(b)(10).
\4\ 15 U.S.C. 78l.
\5\ 15 U.S.C. 78f(b)(10)(B).
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Accordingly, in order to carry out the requirements of Section 957
of the Dodd-Frank Act, the Exchange is proposing to amend CBOE Rule
31.85, Giving Proxies by TPH Organizations, which governs when Trading
Permit Holder Organizations (``TPH Organizations'') may and may not
give a proxy to vote stock without instructions from the beneficial
owner of the shares. First, Item 19 of CBOE Rule 31.85(b) already
prohibits TPH Organizations from giving a proxy to vote shares without
instructions from beneficial owners when the matter to be voted upon is
the election of directors (other than in the case of an issuer
registered under the Investment Company Act, provided the matter is not
the subject of a counter-solicitation). Therefore the Exchange is
proposing to simply amend Item 19 so that the text is consistent with
the language in Section 6(b)(10)(B) of the Act.\6\
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\6\ See 15 U.S.C. 78f(b)(10)(B).
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Second, the Exchange proposes to add new Item 21 (and related
commentary) to CBOE Rule 31.85(b) to provide that a TPH Organization
may not give a proxy or authorize a proxy to vote without instructions
from beneficial owners when the matter to be voted upon relates to
executive compensation. The proposed commentary to Item 21 would
clarify that a matter relating to executive compensation would include,
among other things, the items referred to in Section 14A of the Act
(added by Section 951 of the Dodd-Frank Act), including (i) an advisory
vote to approve the compensation of executives, (ii) a vote on whether
to hold such an advisory vote every one, two or three years, and (iii)
an advisory vote to approve any type of compensation (whether present,
deferred, or contingent) that is based on or otherwise relates to an
acquisition, merger, consolidation, sale or other disposition of all or
substantially all of the assets of an issuer and the aggregate total of
all such compensation that may (and the conditions upon which it may)
be paid or become payable to or on behalf of an executive officer. In
addition, a TPH Organization may not give or authorize a proxy to vote
without instructions on a matter relating to executive compensation,
even if such matter would otherwise qualify for an exception from the
requirements of Item 12, Item 13 or any other Item under CBOE Rule
31.85. Any vote on these or similar executive compensation-related
matters would be subject to the requirements of CBOE Rule 31.85, as
amended.\7\
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\7\ The Exchange is also proposing to add cross-referencing
commentary related to new Item 21 in Items 12 and 13. The Exchange
is also proposing a non-substantive change to include a heading for
the commentary to Item 20 so there is consistent formatting of the
various commentaries that appear throughout the rule.
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Third, the Exchange proposes to add new Item 22 to Rule 31.85(b) to
provide that a TPH Organization may not give a proxy or authorize a
proxy to vote without instructions from beneficial owners when the
matter to be voted upon involves any other significant matter, as
determined by the Commission, by rule.\8\
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\8\ The Exchange notes that the Commission has not at this time
identified other significant matters with respect to which TPH
Organizations should be prohibited from voting uninstructed shares.
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Fourth, the Exchange is proposing to add the words ``or authorize''
in certain places throughout CBOE Rule 31.85 to clarify that the rule
includes not only the giving of a proxy but also the authorization of
such proxy.
Finally, the Exchange is proposing to amend Appendix A to the rules
of the CBOE Stock Exchange, LLC (``CBSX,'' the CBOE's stock trading
facility). Appendix A lists the rules contained in Chapters 1 through
29 of the Exchange Rules that are applicable to the trading of equity
securities on CBSX. The Exchange is proposing to amend Appendix A to
include a cross reference to CBOE Rule 31.85 in order to make clear
that CBOE Rule 31.85 regarding the giving of proxies by TPH
Organizations applies to CBSX TPH Organizations as well as CBOE TPH
Organizations.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act \9\ and the rules and regulations thereunder and, in
particular, the requirements of Section 6(b) of the Act.\10\
Specifically, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(10) \11\ requirements that all
national securities exchanges adopt rules prohibiting members from
voting, without receiving instructions from the beneficial owner of
shares, on the election of a member of a board of directors of an
issuer (except for a vote with respect to the uncontested election of a
member of the board of directors of any investment company registered
under the Investment Company Act of 1940), executive compensation, or
any other significant matter, as determined by the Commission, by rule.
The Exchange also believes the proposed rule change is consistent with
the Section 6(b)(5) \12\ requirements that an exchange have
[[Page 10080]]
rules that are designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to remove
impediments to, and perfect the mechanism of a free and open market
and, in general, to protect investors and the public interest. The
Exchange is adopting the proposed rule changes to comply with the
requirements of Section 957 of the Dodd-Frank Act, and therefore
believes the proposed rule changes to be consistent with Section
6(b)(5) of the Act, particularly with respect to the protection of
investors and the public interest. Finally, the Exchange believes the
proposed changes to Appendix A of the CBSX Rules to incorporate a cross
reference to CBOE Rule 31.85 is consistent with Section 6(b)(5) of the
Act, particularly with respect to the protection of investors and the
public interest, because the changes would make it clear that CBOE Rule
31.85 (regarding the giving of proxies by TPH Organizations) applies to
CBSX TPH Organizations as well as CBOE TPH Organizations.
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\9\ 15 U.S.C. 78a et seq.
\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(10).
\12\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
CBOE does not believe that the proposed rule change will impose any
burden on competition 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
The Exchange neither solicited nor received comments on the
proposal.
III. 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-CBOE-2011-017 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-CBOE-2011-017. 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, 100 F
Street, NE., Washington, DC 20549, on official business days between
the hours of 10 a.m. and 3 p.m. Copies of such filing also will be
available for inspection and copying at the principal office of the
CBOE. 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-
CBOE-2011-017 and should be submitted on or before March 16, 2011.
IV. Commission's Findings and Order Granting Accelerated Approval of
the Proposed Rule Change
In its filing, the Exchange requested that the Commission approve
the proposal on an accelerated basis. The Exchange stated that it
believed good cause existed to grant accelerated approval because
Section 957 of the Dodd-Frank Act does not provide for a transition
period and because the proposed rule text is based upon New York Stock
Exchange (``NYSE'') Rule 452.\13\
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\13\ See Securities Exchange Act Release 62874 (September 9,
2010), 75 FR 56152 (September 15, 2010).
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After careful consideration, 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.\14\ The Commission believes that the proposal is consistent
with Section 6(b)(10) \15\ of the Act, which requires that national
securities exchanges adopt rules prohibiting members that are not
beneficial holders of a security from voting uninstructed proxies with
respect to the election of a member of the board of directors of an
issuer (except for uncontested elections of directors for companies
registered under the Investment Company Act), executive compensation,
or any other significant matter, as determined by the Commission, by
rule. The Commission also believes that the proposal is consistent with
Section 6(b)(5) \16\ of the Act, which provides, among other things,
that the rules of the Exchange must be designed to promote just and
equitable principles of trade, 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, and are not
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\14\ In approving this rule change, the Commission notes that it
has considered the proposed rule's impact on efficiency,
competition, and capital formation. See 15 U.S.C. 78c(f).
\15\ 15 U.S.C. 78f(b)(10).
\16\ 15 U.S.C. 78f(b)(5).
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The Commission believes that the proposal is consistent with
Section 6(b)(10) of the Act because it adopts revisions that comply
with that section. As noted in the accompanying Senate Report, Section
957, which adopts Section 6(b)(10), reflects the principle that ``final
vote tallies should reflect the wishes of the beneficial owners of the
stock and not be affected by the wishes of the broker that holds the
shares.'' \17\ The proposed rule change will make CBOE rules compliant
with the new requirements of Section 6(b)(10) by prohibiting broker-
dealers, who are not beneficial owners of a security, from voting
uninstructed shares with respect to any matter on executive
compensation or any other significant matter, as determined by the
Commission, by rule.\18\
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\17\ See S. Rep. No. 111-176, at 136 (2010).
\18\ As noted above, Section 6(b)(10) also prohibits broker
voting for director elections, except for uncontested director
elections of registered investment companies. The Commission notes
that the Exchange already prohibits broker voting in director
elections except for uncontested director elections for registered
investment companies and is merely proposing to amend Item 19 so
that the text is consistent with the language in Section 6(b)(10) of
the Act. See CBOE Rule 31.85(b)(19). As to other matters, as
determined by the Commission, by rule, the Commission has not, to
date, adopted rules concerning other significant matters where
uninstructed broker votes should be prohibited, although it may do
so in the future. Should the Commission adopt such rules, we would
expect the Exchange to adopt coordinating rules promptly to comply
with the statute.
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The Commission believes that the proposal is consistent with
Section
[[Page 10081]]
6(b)(5) of the Act because the proposal will further investor
protection and the public interest by assuring that shareholder votes
on executive compensation matters are made by those with an economic
interest in the company, rather than by a broker that has no such
economic interest, which should enhance corporate governance and
accountability to shareholders.\19\
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\19\ As the Commission stated in approving NYSE rules
prohibiting broker voting in the election of directors, having those
with an economic interest in the company vote the shares, rather
than the broker who has no such economic interest, furthers the goal
of enfranchising shareholders. See Securities Exchange Act Release
No. 60215 (July 1, 2009), 74 FR 33293 (July 10, 2009) (SR-NYSE-2006-
92).
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The Commission notes that the CBOE's new rule prohibiting
uninstructed broker votes on executive compensation covers the specific
items identified in Section 951 of the Dodd-Frank Act, as well as any
other matter concerning executive compensation, and has been drafted
broadly to reflect the requirements of Section 6(b)(10) of the Act. The
proposed rule language also specifically states that a broker vote on
any executive compensation matter would not be permitted even if it
would otherwise qualify for an exception from any item under Rule
31.85. The Commission believes this provision will make clear that any
past practice or interpretation that may have permitted a broker vote
on an executive compensation matter, under existing rules, will no
longer be applicable and is superseded by the newly adopted provisions.
Finally, the Commission notes that the changes to reflect (i) that
the CBOE rules prohibit not only the giving of a proxy, but also the
authorization of the proxy and (ii) that CBOE Rule 31.85 regarding the
giving of proxies by TPH Organizations applies to CBSX TPH
Organizations as well as CBOE TPH Organization, should help to clarify
the intent of the CBOE proxy rules and is consistent with the
requirements of Section 6 of the Act.
Based on the above, the Commission believes that the Exchange's
proposal will further the purposes of Sections 6(b)(5) and 6(b)(10) of
the Act because it should enhance corporate accountability to
shareholders. The rule filing should also serve to fulfill the
Congressional intent in adopting Section 6(b)(10) of the Act.
The Commission also finds good cause, pursuant to Section 19(b)(2)
of the Act,\20\ for approving the proposed rule change prior to the
30th day after the date of publication of notice in the Federal
Register. As noted above, Section 6(b)(10) of the Act, enacted under
Section 957 of the Dodd-Frank Act, does not provide for a transition
phase, and requires rules of national securities exchanges to prohibit,
among other things, broker voting on executive compensation. The
Commission believes that good cause exists to grant accelerated
approval to the Exchange's proposal, because it will conform CBOE Rule
31.85 to the requirements of Section 6(b)(10) of the Act. Moreover, the
Commission notes that the proposed changes are based on NYSE Rule
452.\21\
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\20\ 15 U.S.C. 78s(b)(2).
\21\ See note 13, supra.
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V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\22\ that the proposed rule change (SR-CBOE-2011-017) be, and it
hereby is, approved on an accelerated basis.
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\22\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
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\23\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-3982 Filed 2-22-11; 8:45 am]
BILLING CODE 8011-01-P
