Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing of Proposed Rule Change Amending the NYSE Amex Equities Definition of Approved Person To Exclude Foreign Affiliates, Eliminating the Application Process for Approved Persons, and Making Related Technical and Conforming Changes, 12637-12640 [2012-4912]
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Federal Register / Vol. 77, No. 41 / Thursday, March 1, 2012 / Notices
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maintenance of the PROCTOR system
have increased and, based on current
information, will continue to increase
over the next few years. Specifically,
FINRA has recently completed a
significant technological upgrade of the
PROCTOR system and is working on
considerable enhancements to the
software used to deliver examinations at
testing centers, which is scheduled for
operational release in 2013. These
increased costs, coupled with the
significant decrease in the number of
examinations taken during the past
three years,12 has caused a divergence in
the fees and costs associated with the
examination programs.
To better align the fees and costs
associated with the examination
programs, FINRA is proposing a modest
increase in examination fees. In this
regard, FINRA notes that no
examination fee will increase by more
than $25 and the majority of
examination fees will increase by only
$10. Furthermore, to help control the
overall costs of the qualification
examination and Regulatory Element
programs and thereby minimize fee
increases, FINRA earlier this year
instituted a fee for individuals who
cancel or reschedule a qualification
examination or Regulatory Element
session three to 10 business days prior
to the appointment date.13 This
cancellation/rescheduling fee has
helped to limit the amount of the
proposed examination fee increases by
allowing FINRA to (1) receive a lower
examination delivery rate from one of
its vendors, and (2) apply the revenue
from the fee to help offset the expenses
of the qualification examination
programs.
With respect to the proposed service
charge for foreign test center Regulatory
Element sessions, FINRA believes that
the service charge is reasonable because
it helps to offset the higher delivery
costs associated with such sessions.
Specifically, vendors charge FINRA
higher fees for delivering Regulatory
Element sessions in a foreign test center
than they do for delivering such
sessions in a U.S. test center.
Accordingly, FINRA believes that the
proposed qualification examination fee
changes and the service charge for
foreign test center Regulatory Element
12 In 2009, the number of examinations
administered and delivered by FINRA decreased by
approximately 27 percent. Although examination
volumes have increased modestly since that time,
they have not returned to 2008 levels.
13 See Securities Exchange Act Release No. 64961
(July 26, 2011), 76 FR 45883 (August 1, 2011)
(Notice of Filing and Immediate Effectiveness of
Proposed Rule Change; File No. SR–FINRA–2011–
026).
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sessions are equitably allocated and
reasonable.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
FINRA does not believe that the
proposed rule change will result in 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
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 14 and paragraph (f)(2) of Rule
19b–4 thereunder.15 At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend 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. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
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:
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
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 offices 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–FINRA–2012–009, and
should be submitted on or before March
22, 2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–4914 Filed 2–29–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–66463; File No. SR–
NYSEAMEX–2012–12]
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
Number SR–FINRA–21012–009 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–FINRA–2012–009. This file
number should be included on the
subject line if email is used.
Self-Regulatory Organizations; NYSE
Amex LLC; Notice of Filing of
Proposed Rule Change Amending the
NYSE Amex Equities Definition of
Approved Person To Exclude Foreign
Affiliates, Eliminating the Application
Process for Approved Persons, and
Making Related Technical and
Conforming Changes
February 24, 2012.
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 February
14, 2012, NYSE Amex LLC (the
16 17
CFR 200.30–3(a)(12).
U.S.C.78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
14 15
15 17
PO 00000
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
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Federal Register / Vol. 77, No. 41 / Thursday, March 1, 2012 / Notices
‘‘Exchange’’ or ‘‘NYSE Amex’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the selfregulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
NYSE Amex equities [sic] definition of
approved person to exclude foreign
affiliates, eliminate the application
process for approved persons, and make
related technical and conforming
changes. The text of the proposed rule
change is available at the Exchange, the
Commission’s Public Reference Room,
and 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.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
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1. Purpose
The Exchange proposes to amend the
NYSE Amex equities [sic] definition of
approved person to exclude foreign
affiliates, eliminate the application
process for approved persons, and make
related technical and conforming
changes. Following approval of the
proposed rule change, the Exchange will
advise member organizations of the
implementation date of the rule change
via Information Memo.
Background
The current rules governing the
definition of and application process for
an approved person are NYSE Amex
Equities Rules 2 and 304. If the
definition requirements under NYSE
Amex Equities Rule 2 are met, then the
person or entity has to apply to the
Exchange for approval to register as an
approved person. This requirement is
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intended to bring certain affiliates of
Exchange member organizations within
the Exchange’s jurisdiction and to
subject such affiliates’ activities to
Exchange rules to the extent their
activities are related to the activities of
the member organization.
NYSE Amex Equities Rule 2(c)
defines the term ‘‘approved person’’ as
‘‘a person, other than a member,
principal executive or employee of a
member organization, who controls a
member organization or is engaged in a
securities or kindred business that is
controlled by or under common control
with a member or member organization
who has been approved by the Exchange
as an approved person.’’ NYSE Amex
Equities Rule 2(d) further defines
‘‘person’’ to include not only natural
persons, but also corporations, limited
liability companies, partnerships,
associations and other organized groups
of persons. NYSE Amex Equities Rule
2(e) defines the term ‘‘control’’ to mean
the power to direct or cause the
direction of management or policies,
whether through ownership of
securities, by contract or otherwise, and
creates a rebuttable presumption of
control if the person has a right to vote
25 percent or more of the voting
securities, is entitled to receive 25
percent or more of the net profits, or is
a director, general partner, or principal
executive of the member organization.
NYSE Amex Equities Rule 2(f) defines
‘‘engage in a securities or kindred
business’’ to mean transacting business
as a broker or dealer in securities. Thus,
the current definition of approved
person includes a foreign affiliate of a
member organization that is engaged in
a broker-dealer business, but does not
include, for example, a registered
investment company. NYSE Amex
Equities Rules 2A(e) and (f) further
provide that the Exchange has
jurisdiction after notice and a hearing to
discipline approved persons in
connection with the member
organization’s business and has
jurisdiction over any and all other
functions of approved persons in
connection with the member
organization’s business in order for the
Exchange to comply with its statutory
obligation as a self-regulatory
organization (‘‘SRO’’).
NYSE Amex Equities Rules 304 and
311(a) require, with limited exceptions,
that persons who meet the NYSE Amex
Equities Rule 2(c) definition of an
approved person must apply for
approval by the Exchange as an
approved person. NYSE Amex Equities
Rule 304 further provides that no person
may become or remain an approved
person unless such person meets the
PO 00000
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standards prescribed in the Exchange’s
rules, and it prescribes the process that
an applicant must follow to become an
approved person. Among other things,
this process involves submission to the
Exchange of a completed Form AP–1 (in
the case of a corporation or other legal
entity) or Forms AD–G 2 and AD–G 3
(in the case of a natural person,
collectively referred to as ‘‘AD–G’’), and
other pertinent information regarding
the candidate for approval. By executing
the Form AP–1 or AD–G, as applicable,
the approved person affirmatively
consents to the Exchange’s jurisdiction.
Proposed Rule Change
The Exchange proposes to amend the
definition of approved person in NYSE
Amex Equities Rule 2 to revise the
definition of which entities are deemed
to be under ‘‘common control’’ with a
member organization. The Exchange
believes that the current definition,
which includes certain foreign affiliates,
is overbroad and it is unnecessary to
assert jurisdiction over a foreign affiliate
of a member organization that does not
control a member organization. The
Exchange notes that excluding such
foreign affiliates from its jurisdiction
would be consistent with Rule 19g2–1
under the Securities Exchange Act of
1934, as amended (the ‘‘Act’’), which
provides that an exchange is not
required to enforce compliance with its
rules against certain persons; 4 the
Exchange has not identified a rule of
any other SRO that asserts jurisdiction
over a foreign affiliate under common
control with a member of that SRO. As
such, the Exchange proposes to amend
the definition of approved person so
that it would include any person, other
than a member, principal executive or
employee of a member organization,
who controls a member organization, is
engaged in a securities or kindred
4 See 17 CFR 240.19g2–1. Under Rule 19g2–1, a
national securities exchange is not required to
enforce compliance, within the meaning of Section
19(g) of the Act, with the Act and the rules and
regulations thereunder, to [sic] with respect to
persons associated with a member, other than
securities persons or persons who control a
member. Under Rule 19g2–1(b)(1), a ‘‘securities
person’’ is defined as a ‘‘person who is a general
partner or officer (or person occupying a similar
status or performing similar functions) or employee
of a member; provided, however, that a registered
broker or dealer which controls, is controlled by, or
is under common control with, the member and the
general partners and officers (and persons
occupying similar status or performing similar
functions) and employees of such a registered
broker or dealer shall be securities persons if they
effect, directly or indirectly, transactions in
securities through the member by use of facilities
maintained or supervised by such exchange or
association.’’ A foreign broker-dealer not registered
in the United States that is under common control
with an NYSE Amex member organization falls
outside of the definition of ‘‘securities person.’’
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Federal Register / Vol. 77, No. 41 / Thursday, March 1, 2012 / Notices
business that is controlled by a member
or member organization, or is a U.S.
registered broker-dealer under common
control with a member organization.
By changing the definition of
approved person to exclude certain
foreign affiliates, the Exchange does not
intend to eliminate certain controls in
Exchange rules related to potential
conflicts of interest associated with
having a foreign affiliate under common
control with a member organization.
Accordingly, the Exchange proposes
several amendments to its Rules. First,
the Exchange proposes to amend NYSE
Amex Equities Rule 22 to provide that
a member of certain NYSE boards and
committees may not participate in the
consideration of any matter if there are
certain types of indebtedness between
the board or committee member and a
member organization’s affiliate or other
related parties. Second, the Exchange
proposes to amend NYSE Amex Equities
Rule 98A, which provides that no
issuer, or partner or subsidiary thereof,
may become an approved person of a
Designated Market Maker (‘‘DMM’’) unit
that is registered in the stock of that
issuer, to provide instead that a DMM
unit may not be registered in a stock of
an issuer, or a partner or subsidiary
thereof, if such entity is either an
approved person or an affiliate of the
DMM unit’s member organization.
Finally, the Exchange proposes to
amend Supplementary Material .30(c) of
Rule 402 to provide that when securities
are callable in part under the Rule, a
member organization may not allocate
any called securities to the account of
an affiliate until all customer positions
have been satisfied.5
The Exchange also proposes to amend
its rules to remove the requirement that
the Exchange affirmatively approve each
application to become an approved
person. If a person meets the definition
of an approved person, as proposed, the
Exchange will obtain jurisdiction by
consent as described below. The
Exchange believes that the current
application process requires the
submission of a substantial amount of
information and documents related to
member organization affiliates that is
unnecessary to carry out the Exchange’s
regulatory responsibilities. In particular,
because the Exchange is no longer the
Designated Examining Authority
(‘‘DEA’’) for Exchange member
5 The Exchange does not believe any amendment
to NYSE Amex Equities Rules 22, 91, 96, 112, 422,
410A, or 460 is necessary as a result of the proposed
rule change; the Exchange believes such Rules
would continue to be consistent with the
requirements of the Exchange Act and the manner
in which such they address potential conflicts of
interest is appropriate under the circumstances.
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organizations,6 the Exchange does not
believe that it needs to engage in a
detailed financial review of approved
persons of its member organization
applicants. The Exchange further notes
that other SROs do not require that such
persons undergo such an application
and approval process.7 The Exchange,
therefore, proposes to remove all
references to an approval process and
the submission of an application for
such approval from NYSE Amex
Equities Rules 304, 308, and 311. The
Exchange also would eliminate use of
the Forms AP–1 and AD–G.
Nevertheless, the Exchange’s
jurisdiction over approved persons in
accordance with the revised definition
would remain. Thus, the Exchange
proposes to amend NYSE Amex Equities
Rule 304 to provide specifically that a
member organization would be required
to identify all of its approved persons to
the Exchange and each such approved
person would continue to be required to
consent to the Exchange’s jurisdiction.
Specifically, an approved person would
continue to have to agree to (i) inform
the Exchange of any statutory
disqualification of the approved person
under Section 3(a)(39) of the Act, (ii)
abide by the Rules of the Exchange
relating to approved persons, and (iii)
permit examination by the Exchange, or
any person designated by it, of its books
and records to verify the accuracy of the
information required to be supplied
under Exchange Rules.8
The focus on identification of
approved persons by each member
organization and consent to jurisdiction
by each approved person, instead of
review and approval of applications by
the Exchange, would make the entire
process more efficient while
maintaining appropriate regulatory
6 Prospective member organization applicants
must be either a member of FINRA or, if the
applicant does not transact business with public
customers or conduct business on the Floor of the
Exchange, a member of another registered securities
exchange, before being approved as an Exchange
member organization. See NYSE Amex Equities
Rule 2(b)(i). Generally, FINRA or the other
exchange already is, or will be, designated as the
DEA under SEC Rule 17d–1 and the Exchange will
not be designated as such. Currently, the Exchange
is not the DEA for any of its member organizations,
but if it were designated as the DEA, the Exchange
has retained FINRA to perform services related to
meeting the Exchange’s DEA responsibilities for a
member organization.
7 For example, the rules of FINRA and The
NASDAQ Stock Market, Inc. do not impose
application and approval requirements on member
affiliates. See also note 9, infra.
8 The Exchange proposes to eliminate the text in
current Rule 304(e)(1), which requires an approved
person to supply information concerning its
relationship with the member organization. This
provision relates to information required to be
submitted on Form AP–1 or AD–G, and as such it
is not necessary to retain it in proposed Rule 304.
PO 00000
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12639
standards. The proposed rule change
would remove unnecessary paperwork
in the process while holding each
member organization accountable for
identifying to the Exchange its affiliates
and approved persons. The remaining
jurisdictional requirements for approved
persons would enable the Exchange to
continue to pursue matters involving or
affecting its member organizations.9
The Exchange also proposes to make
technical and conforming changes to
other rules that reference the approved
person application process. The
Exchange further proposes to make
technical amendments to correct an
error in the spelling of ‘‘principal
executive,’’ which is spelled ‘‘principle
executive’’ in NYSE Amex Rule 476A
and NYSE Amex Equities Rules 308,
410A, 422, and 460. In addition,
because the Exchange does not have an
approval process or qualification
examination requirements for principal
executives, the Exchange proposes to
delete references to ‘‘principle
executive’’ from NYSE Amex Equities
Rules 304 and 304A. The Exchange
notes that these proposed changes are
consistent with similar amendments to
NYSE Rules 304 and 304A.10
The focus on identification of
approved persons by each member
organization and consent to jurisdiction
by each approved person, instead of
review and approval of applications by
the Exchange, would make the entire
process more efficient while
maintaining appropriate regulatory
standards. The proposed rule change
would remove unnecessary paperwork
in the process while holding each
member organization accountable for
identifying to the Exchange its affiliates
and approved persons. The remaining
jurisdictional requirements for approved
persons would enable the Exchange to
9 The Exchange notes that FINRA is in the process
of harmonizing legacy NASD and NYSE Rules, and
has published a proposal to harmonize membership
rules. See FINRA Regulatory Notice 10–01. While
FINRA has proposed that a member firm be
required to provide certain information about
affiliates, FINRA has not proposed to adopt the
approved person definition or application process,
or assert jurisdiction over such persons. When
FINRA completes that harmonization process for
the membership rules, the Exchange will consider
whether further amendments to its approved person
rules are advisable. Until such time, the Exchange
believes that the narrowing of the approved person
definition and the elimination of the approved
person application process will remove
unnecessary complexities and excessive
informational requirements and thereby reduce
burdens on membership applicants and member
organizations while still maintaining high
regulatory standards consistent with the Act.
10 See SR–NYSE–2012–06.
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Federal Register / Vol. 77, No. 41 / Thursday, March 1, 2012 / Notices
continue to pursue matters involving or
affecting its member organizations.11
The Exchange also proposes to make
technical and conforming changes to
other rules that reference the approved
person application process. The
Exchange further proposes to make
technical amendments to correct an
error in the spelling of ‘‘principal
executive,’’ which is spelled ‘‘principle
executive’’ in NYSE Amex Rule 476A
and NYSE Amex Equities Rules 308,
410A, 422, and 460. In addition, the
Exchange proposes to delete ‘‘principle
executive’’ from NYSE Amex Equities
Rules 304 and 304A for consistency
with similar amendments to NYSE
Rules 304 and 304A.12
mechanism of a free and open market
and a national market system.
2. Statutory Basis
The proposed rule change is
consistent with Section 6(b) 13 of the
Act, in general, and furthers the
objectives of Section 6(b)(5) 14 in
particular 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. More specifically, the
Exchange believes that the proposed
approved person definition and consent
to jurisdiction process would remove
unnecessary complexities and excessive
informational requirements and create a
more efficient and less burdensome
process for membership applicants and
member organizations while
maintaining appropriate regulatory
standards. As such, the proposed rule
change would contribute to removing
impediments to and perfecting the
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
mstockstill on DSK4VPTVN1PROD with NOTICES
11 The
Exchange notes that FINRA is in the
process of harmonizing legacy NASD and NYSE
Rules, and has published a proposal to harmonize
membership rules. See FINRA Regulatory Notice
10–01. While FINRA has proposed that a member
firm be required to provide certain information
about affiliates, FINRA has not proposed to adopt
the approved person definition or application
process, or assert jurisdiction over such persons.
When FINRA completes that harmonization process
for the membership rules, the Exchange will
consider whether further amendments to its
approved person rules are advisable. Until such
time, the Exchange believes that the narrowing of
the approved person definition and the elimination
of the approved person application process will
remove unnecessary complexities and excessive
informational requirements and thereby reduce
burdens on membership applicants and member
organizations while still maintaining high
regulatory standards consistent with the Act.
12 See SR–NYSE–2011–02.
13 15 U.S.C. 78f(b).
14 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.
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the self-regulatory
organization consents, the Commission
will:
(A) By order approve or disapprove
the proposed rule change, or
(B) Institute proceedings to determine
whether the proposed rule change
should be disapproved.
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 email to rulecomments@sec.gov. Please include File
Number SR–NYSEAmex–2012–12 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–2012–12. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
PO 00000
Frm 00088
Fmt 4703
Sfmt 4703
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 20549–1090, on official
business days between the hours of
10 a.m. and 3 p.m. Copies of the filing
will also be available for inspection and
copying at the NYSE’s principal office
and on its Internet Web site at
www.nyse.com. 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–2012–12 and should be
submitted on or before March 22, 2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–4912 Filed 2–29–12; 8:45 am]
BILLING CODE 8011–01–P
SMALL BUSINESS ADMINISTRATION
Revocation of License of Small
Business Investment Company
Pursuant to the authority granted to
the United States Small Business
Administration by the Wind-Up Order
of the United States District Court of the
Western District of Kentucky, Louisville
Division, dated July 11, 2011, the
United States Small Business
Administration hereby revokes the
license of Prosperitas Investment
Partners, L.P. a Kentucky limited
partnership, to function as a small
business investment company under the
Small Business Investment Company
License No. 04/74–0283 issued to
Prosperitas Investment Partner, L.P., on
June 29, 2000 and said license is hereby
declared null and void as of July 11,
2011.
15 17
E:\FR\FM\01MRN1.SGM
CFR 200.30–3(a)(12).
01MRN1
]]>Agencies
[Federal Register Volume 77, Number 41 (Thursday, March 1, 2012)]
[Notices]
[Pages 12637-12640]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-4912]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-66463; File No. SR-NYSEAMEX-2012-12]
Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing of
Proposed Rule Change Amending the NYSE Amex Equities Definition of
Approved Person To Exclude Foreign Affiliates, Eliminating the
Application Process for Approved Persons, and Making Related Technical
and Conforming Changes
February 24, 2012.
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 February 14, 2012, NYSE Amex LLC (the
[[Page 12638]]
``Exchange'' or ``NYSE Amex'') filed with the Securities and Exchange
Commission (the ``Commission'') the proposed rule change as described
in Items I, II, and III 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.
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\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 proposes to amend the NYSE Amex equities [sic]
definition of approved person to exclude foreign affiliates, eliminate
the application process for approved persons, and make related
technical and conforming changes. The text of the proposed rule change
is available at the Exchange, the Commission's Public Reference Room,
and 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.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend the NYSE Amex equities [sic]
definition of approved person to exclude foreign affiliates, eliminate
the application process for approved persons, and make related
technical and conforming changes. Following approval of the proposed
rule change, the Exchange will advise member organizations of the
implementation date of the rule change via Information Memo.
Background
The current rules governing the definition of and application
process for an approved person are NYSE Amex Equities Rules 2 and 304.
If the definition requirements under NYSE Amex Equities Rule 2 are met,
then the person or entity has to apply to the Exchange for approval to
register as an approved person. This requirement is intended to bring
certain affiliates of Exchange member organizations within the
Exchange's jurisdiction and to subject such affiliates' activities to
Exchange rules to the extent their activities are related to the
activities of the member organization.
NYSE Amex Equities Rule 2(c) defines the term ``approved person''
as ``a person, other than a member, principal executive or employee of
a member organization, who controls a member organization or is engaged
in a securities or kindred business that is controlled by or under
common control with a member or member organization who has been
approved by the Exchange as an approved person.'' NYSE Amex Equities
Rule 2(d) further defines ``person'' to include not only natural
persons, but also corporations, limited liability companies,
partnerships, associations and other organized groups of persons. NYSE
Amex Equities Rule 2(e) defines the term ``control'' to mean the power
to direct or cause the direction of management or policies, whether
through ownership of securities, by contract or otherwise, and creates
a rebuttable presumption of control if the person has a right to vote
25 percent or more of the voting securities, is entitled to receive 25
percent or more of the net profits, or is a director, general partner,
or principal executive of the member organization. NYSE Amex Equities
Rule 2(f) defines ``engage in a securities or kindred business'' to
mean transacting business as a broker or dealer in securities. Thus,
the current definition of approved person includes a foreign affiliate
of a member organization that is engaged in a broker-dealer business,
but does not include, for example, a registered investment company.
NYSE Amex Equities Rules 2A(e) and (f) further provide that the
Exchange has jurisdiction after notice and a hearing to discipline
approved persons in connection with the member organization's business
and has jurisdiction over any and all other functions of approved
persons in connection with the member organization's business in order
for the Exchange to comply with its statutory obligation as a self-
regulatory organization (``SRO'').
NYSE Amex Equities Rules 304 and 311(a) require, with limited
exceptions, that persons who meet the NYSE Amex Equities Rule 2(c)
definition of an approved person must apply for approval by the
Exchange as an approved person. NYSE Amex Equities Rule 304 further
provides that no person may become or remain an approved person unless
such person meets the standards prescribed in the Exchange's rules, and
it prescribes the process that an applicant must follow to become an
approved person. Among other things, this process involves submission
to the Exchange of a completed Form AP-1 (in the case of a corporation
or other legal entity) or Forms AD-G 2 and AD-G 3 (in the case of a
natural person, collectively referred to as ``AD-G''), and other
pertinent information regarding the candidate for approval. By
executing the Form AP-1 or AD-G, as applicable, the approved person
affirmatively consents to the Exchange's jurisdiction.
Proposed Rule Change
The Exchange proposes to amend the definition of approved person in
NYSE Amex Equities Rule 2 to revise the definition of which entities
are deemed to be under ``common control'' with a member organization.
The Exchange believes that the current definition, which includes
certain foreign affiliates, is overbroad and it is unnecessary to
assert jurisdiction over a foreign affiliate of a member organization
that does not control a member organization. The Exchange notes that
excluding such foreign affiliates from its jurisdiction would be
consistent with Rule 19g2-1 under the Securities Exchange Act of 1934,
as amended (the ``Act''), which provides that an exchange is not
required to enforce compliance with its rules against certain persons;
\4\ the Exchange has not identified a rule of any other SRO that
asserts jurisdiction over a foreign affiliate under common control with
a member of that SRO. As such, the Exchange proposes to amend the
definition of approved person so that it would include any person,
other than a member, principal executive or employee of a member
organization, who controls a member organization, is engaged in a
securities or kindred
[[Page 12639]]
business that is controlled by a member or member organization, or is a
U.S. registered broker-dealer under common control with a member
organization.
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\4\ See 17 CFR 240.19g2-1. Under Rule 19g2-1, a national
securities exchange is not required to enforce compliance, within
the meaning of Section 19(g) of the Act, with the Act and the rules
and regulations thereunder, to [sic] with respect to persons
associated with a member, other than securities persons or persons
who control a member. Under Rule 19g2-1(b)(1), a ``securities
person'' is defined as a ``person who is a general partner or
officer (or person occupying a similar status or performing similar
functions) or employee of a member; provided, however, that a
registered broker or dealer which controls, is controlled by, or is
under common control with, the member and the general partners and
officers (and persons occupying similar status or performing similar
functions) and employees of such a registered broker or dealer shall
be securities persons if they effect, directly or indirectly,
transactions in securities through the member by use of facilities
maintained or supervised by such exchange or association.'' A
foreign broker-dealer not registered in the United States that is
under common control with an NYSE Amex member organization falls
outside of the definition of ``securities person.''
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By changing the definition of approved person to exclude certain
foreign affiliates, the Exchange does not intend to eliminate certain
controls in Exchange rules related to potential conflicts of interest
associated with having a foreign affiliate under common control with a
member organization. Accordingly, the Exchange proposes several
amendments to its Rules. First, the Exchange proposes to amend NYSE
Amex Equities Rule 22 to provide that a member of certain NYSE boards
and committees may not participate in the consideration of any matter
if there are certain types of indebtedness between the board or
committee member and a member organization's affiliate or other related
parties. Second, the Exchange proposes to amend NYSE Amex Equities Rule
98A, which provides that no issuer, or partner or subsidiary thereof,
may become an approved person of a Designated Market Maker (``DMM'')
unit that is registered in the stock of that issuer, to provide instead
that a DMM unit may not be registered in a stock of an issuer, or a
partner or subsidiary thereof, if such entity is either an approved
person or an affiliate of the DMM unit's member organization. Finally,
the Exchange proposes to amend Supplementary Material .30(c) of Rule
402 to provide that when securities are callable in part under the
Rule, a member organization may not allocate any called securities to
the account of an affiliate until all customer positions have been
satisfied.\5\
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\5\ The Exchange does not believe any amendment to NYSE Amex
Equities Rules 22, 91, 96, 112, 422, 410A, or 460 is necessary as a
result of the proposed rule change; the Exchange believes such Rules
would continue to be consistent with the requirements of the
Exchange Act and the manner in which such they address potential
conflicts of interest is appropriate under the circumstances.
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The Exchange also proposes to amend its rules to remove the
requirement that the Exchange affirmatively approve each application to
become an approved person. If a person meets the definition of an
approved person, as proposed, the Exchange will obtain jurisdiction by
consent as described below. The Exchange believes that the current
application process requires the submission of a substantial amount of
information and documents related to member organization affiliates
that is unnecessary to carry out the Exchange's regulatory
responsibilities. In particular, because the Exchange is no longer the
Designated Examining Authority (``DEA'') for Exchange member
organizations,\6\ the Exchange does not believe that it needs to engage
in a detailed financial review of approved persons of its member
organization applicants. The Exchange further notes that other SROs do
not require that such persons undergo such an application and approval
process.\7\ The Exchange, therefore, proposes to remove all references
to an approval process and the submission of an application for such
approval from NYSE Amex Equities Rules 304, 308, and 311. The Exchange
also would eliminate use of the Forms AP-1 and AD-G.
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\6\ Prospective member organization applicants must be either a
member of FINRA or, if the applicant does not transact business with
public customers or conduct business on the Floor of the Exchange, a
member of another registered securities exchange, before being
approved as an Exchange member organization. See NYSE Amex Equities
Rule 2(b)(i). Generally, FINRA or the other exchange already is, or
will be, designated as the DEA under SEC Rule 17d-1 and the Exchange
will not be designated as such. Currently, the Exchange is not the
DEA for any of its member organizations, but if it were designated
as the DEA, the Exchange has retained FINRA to perform services
related to meeting the Exchange's DEA responsibilities for a member
organization.
\7\ For example, the rules of FINRA and The NASDAQ Stock Market,
Inc. do not impose application and approval requirements on member
affiliates. See also note 9, infra.
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Nevertheless, the Exchange's jurisdiction over approved persons in
accordance with the revised definition would remain. Thus, the Exchange
proposes to amend NYSE Amex Equities Rule 304 to provide specifically
that a member organization would be required to identify all of its
approved persons to the Exchange and each such approved person would
continue to be required to consent to the Exchange's jurisdiction.
Specifically, an approved person would continue to have to agree to (i)
inform the Exchange of any statutory disqualification of the approved
person under Section 3(a)(39) of the Act, (ii) abide by the Rules of
the Exchange relating to approved persons, and (iii) permit examination
by the Exchange, or any person designated by it, of its books and
records to verify the accuracy of the information required to be
supplied under Exchange Rules.\8\
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\8\ The Exchange proposes to eliminate the text in current Rule
304(e)(1), which requires an approved person to supply information
concerning its relationship with the member organization. This
provision relates to information required to be submitted on Form
AP-1 or AD-G, and as such it is not necessary to retain it in
proposed Rule 304.
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The focus on identification of approved persons by each member
organization and consent to jurisdiction by each approved person,
instead of review and approval of applications by the Exchange, would
make the entire process more efficient while maintaining appropriate
regulatory standards. The proposed rule change would remove unnecessary
paperwork in the process while holding each member organization
accountable for identifying to the Exchange its affiliates and approved
persons. The remaining jurisdictional requirements for approved persons
would enable the Exchange to continue to pursue matters involving or
affecting its member organizations.\9\
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\9\ The Exchange notes that FINRA is in the process of
harmonizing legacy NASD and NYSE Rules, and has published a proposal
to harmonize membership rules. See FINRA Regulatory Notice 10-01.
While FINRA has proposed that a member firm be required to provide
certain information about affiliates, FINRA has not proposed to
adopt the approved person definition or application process, or
assert jurisdiction over such persons. When FINRA completes that
harmonization process for the membership rules, the Exchange will
consider whether further amendments to its approved person rules are
advisable. Until such time, the Exchange believes that the narrowing
of the approved person definition and the elimination of the
approved person application process will remove unnecessary
complexities and excessive informational requirements and thereby
reduce burdens on membership applicants and member organizations
while still maintaining high regulatory standards consistent with
the Act.
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The Exchange also proposes to make technical and conforming changes
to other rules that reference the approved person application process.
The Exchange further proposes to make technical amendments to correct
an error in the spelling of ``principal executive,'' which is spelled
``principle executive'' in NYSE Amex Rule 476A and NYSE Amex Equities
Rules 308, 410A, 422, and 460. In addition, because the Exchange does
not have an approval process or qualification examination requirements
for principal executives, the Exchange proposes to delete references to
``principle executive'' from NYSE Amex Equities Rules 304 and 304A. The
Exchange notes that these proposed changes are consistent with similar
amendments to NYSE Rules 304 and 304A.\10\
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\10\ See SR-NYSE-2012-06.
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The focus on identification of approved persons by each member
organization and consent to jurisdiction by each approved person,
instead of review and approval of applications by the Exchange, would
make the entire process more efficient while maintaining appropriate
regulatory standards. The proposed rule change would remove unnecessary
paperwork in the process while holding each member organization
accountable for identifying to the Exchange its affiliates and approved
persons. The remaining jurisdictional requirements for approved persons
would enable the Exchange to
[[Page 12640]]
continue to pursue matters involving or affecting its member
organizations.\11\
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\11\ The Exchange notes that FINRA is in the process of
harmonizing legacy NASD and NYSE Rules, and has published a proposal
to harmonize membership rules. See FINRA Regulatory Notice 10-01.
While FINRA has proposed that a member firm be required to provide
certain information about affiliates, FINRA has not proposed to
adopt the approved person definition or application process, or
assert jurisdiction over such persons. When FINRA completes that
harmonization process for the membership rules, the Exchange will
consider whether further amendments to its approved person rules are
advisable. Until such time, the Exchange believes that the narrowing
of the approved person definition and the elimination of the
approved person application process will remove unnecessary
complexities and excessive informational requirements and thereby
reduce burdens on membership applicants and member organizations
while still maintaining high regulatory standards consistent with
the Act.
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The Exchange also proposes to make technical and conforming changes
to other rules that reference the approved person application process.
The Exchange further proposes to make technical amendments to correct
an error in the spelling of ``principal executive,'' which is spelled
``principle executive'' in NYSE Amex Rule 476A and NYSE Amex Equities
Rules 308, 410A, 422, and 460. In addition, the Exchange proposes to
delete ``principle executive'' from NYSE Amex Equities Rules 304 and
304A for consistency with similar amendments to NYSE Rules 304 and
304A.\12\
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\12\ See SR-NYSE-2011-02.
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2. Statutory Basis
The proposed rule change is consistent with Section 6(b) \13\ of
the Act, in general, and furthers the objectives of Section 6(b)(5)
\14\ in particular 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. More specifically, the Exchange believes that the
proposed approved person definition and consent to jurisdiction process
would remove unnecessary complexities and excessive informational
requirements and create a more efficient and less burdensome process
for membership applicants and member organizations while maintaining
appropriate regulatory standards. As such, the proposed rule change
would contribute to removing impediments to and perfecting the
mechanism of a free and open market and a national market system.
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\13\ 15 U.S.C. 78f(b).
\14\ 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
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve or disapprove the proposed rule change, or
(B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
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 email to rule-comments@sec.gov. Please include
File Number SR-NYSEAmex-2012-12 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-2012-12. This
file number should be included on the subject line if email 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 20549-1090, on official business days between the hours
of 10 a.m. and 3 p.m. Copies of the filing will also be available for
inspection and copying at the NYSE's principal office and on its
Internet Web site at www.nyse.com. 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-2012-12 and should be submitted on or before
March 22, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-4912 Filed 2-29-12; 8:45 am]
BILLING CODE 8011-01-P
