Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Shorten the Time Period Before a Letter of Acceptance, Waiver, and Consent Under Rule 9216 and an Uncontested Offer of Settlement Under Rule 9270(f), 75388-75391 [2020-26011]
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Federal Register / Vol. 85, No. 228 / Wednesday, November 25, 2020 / Notices
IV. Conclusion
On the basis of the foregoing, the
Commission finds that the Proposed
Rule Change is consistent with the
requirements of the Exchange Act, and
in particular, the requirements of
Section 17A of the Exchange Act 22 and
the rules and regulations thereunder.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Exchange Act,23
that the Proposed Rule Change (SR–
OCC–2020–011) be, and hereby is,
approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.24
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–26012 Filed 11–24–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–90458; File No. SR–NYSE–
2020–97]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Shorten the
Time Period Before a Letter of
Acceptance, Waiver, and Consent
Under Rule 9216 and an Uncontested
Offer of Settlement Under Rule 9270(f)
November 19, 2020.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that on November
16, 2020, New York Stock Exchange
LLC (‘‘NYSE’’ or the ‘‘Exchange’’) 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 self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to shorten the
time period before a letter of acceptance,
waiver, and consent under Rule 9216
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22 In
approving this Proposed Rule Change, the
Commission has considered the proposed rules’
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
23 15 U.S.C. 78s(b)(2).
24 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
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and an uncontested offer of settlement
under Rule 9270(f) becomes final and
the corresponding time period to
request review of these settlements
under Rule 9310 from 25 days to 10
days. The proposed rule change is
available on the Exchange’s website at
www.nyse.com, at the principal office of
the Exchange, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of 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 Hearing Panel or Extended Hearing
Panel. In 2015, the Exchange amended
Rules 9216, 9270 and 9310 to permit a
Director and any member of the
Committee for Review (‘‘CFR’’) to
require a review by the Board of any
AWC letter under Rule 9216 and any
offer of settlement under Rule 9270
within 25 days after the AWC letter or
offer of settlement was sent to each
Director and each member of the CFR.7
1. Purpose
The Exchange proposes to shorten the
time period before a letter of acceptance,
waiver, and consent (‘‘AWC’’) under
Rule 9216 and an uncontested offer of
settlement under Rule 9270(f) becomes
final and the corresponding time period
to request review of these settlements
under Rule 9310 from 25 days to 10
days.
In 2013, the NYSE adopted
disciplinary rules that are, with certain
exceptions, substantially the same as the
FINRA Rule 8000 Series and Rule 9000
Series, and which set forth rules for
conducting investigations and
enforcement actions.4 The NYSE
disciplinary rules were implemented on
July 1, 2013.5
In adopting disciplinary rules
modeled on FINRA’s rules, the NYSE
established processes for settling
disciplinary matters both before and
after issuance of a complaint.6 At the
time, the Exchange retained a 25 day
call for review process only for
determinations or penalties imposed by
Proposed Rule Change
Rule 9216 (Acceptance, Waiver, and
Consent; Procedure for Imposition of
Fines for Minor Violation(s) of Rules)
establishes AWC procedures by which a
member organization or covered person,
prior to the issuance of a complaint,
may execute a letter accepting a finding
of violation, consenting to the
imposition of sanctions, and agreeing to
waive such member organization’s or
covered person’s right to a hearing,
appeal and certain other procedures.
The rule also establishes procedures for
executing a minor rule violation plan
letter.
Under Rule 9216(a)(4), an AWC
accepted by the Chief Regulatory Officer
(‘‘CRO’’) must be sent to each Director
and each member of the CFR and would
be deemed final and constitute the
complaint, answer, and decision in the
matter 25 days after being sent to each
Director and each member of the CFR,
unless review by the Exchange Board of
Directors is requested pursuant to Rule
9310(a)(1)(B).8
The Exchange proposes that an AWC
accepted by the CRO would be deemed
final and constitute the complaint,
answer, and decision in a matter 10
days after being sent to each Director
and each member of the CFR, unless
review is requested pursuant to Rule
9310(a)(1)(B)(i). As described below, the
time period to request review under
Rule 9310(a)(1)(B)(i) would also be
shortened to 10 days.
Rule 9270 (Settlement Procedure)
provides a settlement procedure for a
Respondent who has been notified of
the initiation of a proceeding.
Specifically, Rule 9270(f) provides that
uncontested settlement offers accepted
by the CRO, the Hearing Panel or, if
applicable, Extended Hearing Panel
must be issued and sent to each Director
and each member of the CFR and
4 See Securities Exchange Act Release Nos. 68678
(January 16, 2013), 78 FR 5213 (January 24, 2013)
(SR–NYSE–2013–02) (‘‘2013 Notice’’), 69045
(March 5, 2013), 78 FR 15394 (March 11, 2013) (SR–
NYSE–2013–02) (‘‘2013 Approval Order’’), and
69963 (July 10, 2013), 78 FR 42573 (July 16, 2013)
(SR–NYSE–2013–49).
5 See NYSE Information Memorandum 13–8 (May
24, 2013).
6 See 2013 Approval Order, 78 FR at 15396–98.
7 See Securities Exchange Act Release Nos. 76436
(November 13, 2015), 80 FR 72460, 72462–63
(November 19, 2015) (SR–NYSE–2015–35).
8 Requests for review of an AWC accepted by the
CRO are governed by Rule 9310(a)(1)(B)(i). For the
sake of clarity and transparency, the Exchange
proposes the non-substantive change of including
the omitted reference to subsection (B)(i) of Rule
9310(a)(1) in both in the current and proposed text
of Rule 9216(a)(4).
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
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Federal Register / Vol. 85, No. 228 / Wednesday, November 25, 2020 / Notices
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becomes final 25 days after being sent
to each Director and each member of the
CFR, unless review by the Exchange
Board of Directors is requested pursuant
to Rule 9310(a)(1).
The Exchange proposes that
uncontested settlement offers accepted
by the CRO, the Hearing Panel or, if
applicable, Extended Hearing Panel
(together, a ‘‘Panel’’) under Rule 9270(f)
would become final 10 days after being
sent to each Director and each member
of the CFR, unless review by the
Exchange Board of Directors is
requested pursuant to Rule 9310(a)(1).
As noted, the time to request review of
an uncontested settlement under Rule
9310(a)(1) would also be shortened to 10
days.
Finally, under Rule 9310(a)(1)(B)(i),
any Director and any member of the
CFR may require a review by the Board
of any determination or penalty, or both,
imposed in connection with an AWC
letter under Rule 9216 or an offer of
settlement determined to be
uncontested before a hearing on the
merits has begun under Rule 9270(f),
except that none of those persons could
request Board review of a determination
or penalty concerning an affiliate of the
Exchange as such term is defined in
Rule 12b–2 under the Exchange Act. A
request for review under this provision
is made by filing with the Secretary of
the Exchange a written request stating
the basis and reasons for such review,
within 25 days after an AWC letter or an
offer of settlement has been sent to each
Director and each member of the CFR
pursuant to Rule 9216(a)(4) or Rule
9270(f)(3).
To permit AWC letters and
uncontested settlements to become final
within 10 days as proposed, the
Exchange would amend Rule
9310(a)(1)(B)(i) to provide that a request
for review of these settlements as
permitted by the rule must be made by
filing the requisite written request with
the Secretary of the Exchange within 10
days after the AWC letter or an offer of
settlement is sent to each Director and
each member of the CFR pursuant to
Rule 9216(a)(4) or Rule 9270(f)(3).9
9 The time period for requesting review pursuant
to Rule 9310(a)(1)(B)(ii) of any rejection by the CRO
of any AWC letter under Rule 9216 or of an
uncontested offer of settlement under Rule 9270(f),
would remain unchanged as would the time period
to request for review of any determination or
penalty, or both, imposed by a Panel under the Rule
9310(a)(1)(A) other than an offer of settlement
determined to be uncontested after a hearing on the
merits have begun under Rule 9270(f). For the
avoidance of doubt, the Exchange would add text
to Rule 9310(a)(1)(A) providing that any request for
review of an offer of settlement determined to be
uncontested after a hearing on the merits has begun
under Rule 9270(f) that has been accepted by a
Panel shall be governed by Rule 9310((a)(1)(B)(i).
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The Exchange believes maintaining a
25 day waiting period for negotiated
settlements under Rule 9216 and
uncontested settlements pursuant to
9270(f) unnecessarily delays final
resolution of matters that have been
resolved by the parties and accepted by
the CRO or a Panel. Shortening the
waiting period to 10 days, and requiring
requests for Board of Directors review to
be made within that same 10 day
period, would significantly expedite the
settlement process in situations where
member organizations, covered persons
and Respondents have entered into a
consensual, negotiated settlement with
Enforcement or made settlement offers
that Enforcement does not oppose,
while continuing to ensure the
independence and integrity of the
regulatory process by preserving the
ability of Directors and CFR members to
call those settlements for review.
Further, the Exchange believes that
the proposed 10 day period to call a
settlement for review under Rule
9310(a)(1)(B)(i) is reasonable and
sufficient. Like the current 25 day
period, the time to call a settlement for
review would begin when the AWC or
uncontested settlement is sent to each
Director and member of the CFR. Rules
9216 and 9270 specify that an AWC or
uncontested settlement accepted by the
CRO or a Panel can be sent to each
Director and each CFR member via
courier, express delivery or electronic
means. As a practical matter, AWCs and
settlements are sent to the Directors and
CFR members by email, which ensures
prompt and instantaneous
communication. As a result, the
Directors and members of the CFR will
have the full 10 day period to determine
whether to call these settlements for
review. Moreover, the requirement in
Rule 9310(a)(1)(B)(i) that a request for
review be in writing and state the basis
and reasons for such review can
similarly be satisfied by a Director or
CFR member sending an email to the
Secretary of the Exchange requesting
that a specific matter be reviewed
within the proposed 10 day period. The
Director or CFR member would need to
take no additional steps nor include any
additional information in order to call a
matter for review under Rule
9310(a)(1)(B)(i). In light of these facts,
and the relative infrequency of calls for
review of AWCs and uncontested
settlements,10 the Exchange believes
that 10 days are more than sufficient for
a Director or member of the CFR to
determine whether to call a settlement
10 For example, no AWC letter or uncontested
settlement has been called for review in the past
year.
PO 00000
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75389
for review. Once accepted by the CRO
or Panel, the proposed 10 day period for
negotiated settlements to be called for
review or become final would expedite
disciplinary proceedings and provide
finality to the disciplinary process
sooner, to the benefit of the parties and
the investing public.
Finally, the Exchange also believes
that shortening these time periods
would further promote efficiency in
connection with cross-market
settlements involving multiple selfregulatory organizations (‘‘SROs’’).
Often such settlements are contingent
upon the acceptance of a settlement by
all of the SROs involved in the matter.
In these situations, a settlement with the
Exchange would not be final until the
end of the time period specified in
Rules 9216 and 9270 while a settlement
with other SROs could be final once
accepted.11 Thus by reducing the
amount of time these settlements are
outstanding at the Exchange, the
proposed change could speed up the
settlement process for cross-market
settlements involving multiple SROs, to
the benefit of the parties and the
investing public.
The Exchange intends to announce
the operative date of the amended time
periods in Rules 9216(a)(4), 9270(f)(3)
and 9310(a)(1) at least 30 days in
advance via regulatory notice to its
members and member organizations.12
To further facilitate an orderly transition
from the current rules to the new rules,
the Exchange proposes that matters
already initiated under the current rules
would be completed under such rules.
Specifically, the Exchange proposes to
apply the current 25 day period for
AWCs prepared and submitted to a
member organization or covered persons
under Rule 9216(a)(1) prior to the
operative date and to uncontested
settlement offers in proceedings where a
Party was served with a complaint by
Enforcement pursuant to Rule 9131
prior to the operative date. Rules
11 See, e.g., FINRA Rule 9216(a)(4) (‘‘If the [AWC]
letter is accepted by the National Adjudicatory
Council, the Review Subcommittee, or the Office of
Disciplinary Affairs, it shall be deemed final and
shall constitute the complaint, answer, and decision
in the matter.’’); FINRA Rule 9270(e)(3) (‘‘If the offer
of settlement and order of acceptance are accepted
by the National Adjudicatory Council, the Review
Subcommittee, or the Office of Disciplinary Affairs,
they shall become final and the Director of the
Office of Disciplinary Affairs shall issue the order
and notify the Office of Hearing Officers. The
Department of Enforcement shall provide a copy of
an issued order of acceptance to each FINRA
member with which a Respondent is associated.’’).
See also e.g., Nasdaq Rule 9216(a)(4) & 9270(e)(3);
Cboe BZX Exchange, Inc. Rule 8.8(a); Cboe EDGA
Exchange, Inc. Rule 8.8(a).
12 The effective date of the new time periods
would be simultaneously communicated to the
Directors and to the members of the CFR.
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9216(a)(4), 9270(f)(3) and
9310(a)(1)(B)(i) would be amended to
reflect the transition process. When the
transition is complete, the Exchange
intends to submit a proposed rule
change that would delete the
unnecessary transition provisions of
9216(a)(4), 9270(f)(3) and
9310(a)(1)(B)(i).
2. Statutory Basis
The proposed rule change is
consistent with Section 6(b) of the
Act,13 in general, and furthers the
objectives of Section 6(b)(5),14 in
particular, because 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. Additionally, the
Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 15 requirement that the rules of
an exchange not be designed to permit
unfair discrimination between
customers, issuers, brokers, or dealers.
Specifically, the Exchange believes
that shortening the waiting period for
negotiated settlements and uncontested
offers of settlement would serve to
expedite the final resolution of both
Exchange and cross-market matters that
have been resolved by the parties and
accepted by the CRO or Panel, thereby
protecting investors and the public
interest by addressing rule violations
and achieving finality in disciplinary
matters sooner. The proposed rule
change to shorten the waiting period
before an AWC letter and offer of
settlement becomes final and the
member of CFR or Board’s time to call
such settlements for review will
therefore provide for a more efficient,
streamlined disciplinary process.
The Exchange further believes that the
proposed amendments are consistent
with Section 6(b)(6) of the Act,16 which
provides that members and persons
associated with members shall be
appropriately disciplined for violation
of the provisions of the rules of an
exchange by expulsion, suspension,
limitation of activities, functions, and
operations, fine, censure, being
suspended or barred from being
associated with a member, or any other
13 15
14 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
fitting sanction. As noted, the proposed
changes will not affect the ability of
Enforcement to enter into negotiated
settlements or accepting uncontested
settlement offers when appropriate, and
will not alter the requirement that
settlements be scrutinized by the CRO
or Panel, who will continue to approve
them, or the Directors and members of
the CFR, whose right to call both types
of voluntary settlements for review will
not change.
For the same reasons, the Exchange
believes that the proposed changes are
designed to provide a fair procedure for
the disciplining of members and
persons associated with members,
consistent with Sections 6(b)(7) and 6(d)
of the Act.17 Moreover, as noted, the
Exchange believes that the proposed 10
day period to call a settlement for
review under Rules 9310(a)(1)(B)(i) is
reasonable and sufficient, and provides
an appropriate balance between the
procedural safeguards of the call for
review process and the benefits of
expediting the resolution of disciplinary
matters and providing finality to the
disciplinary process sooner. Reducing
the period for review would also mean
that AWCs and uncontested settlements
would be published two weeks earlier,
thereby allowing members and the
investing public to be educated about
the issues they addressed sooner.
Finally, the Exchange believes that the
proposed transition plan is designed to
provide a fair procedure for the
disciplining of members and persons
associated with members by providing
for a clearly demarcated and orderly
transition from the current 25 day
period to the proposed 10 day period.
Finally, the Exchange believes that
the non-substantive changes to clarify
the cross-reference to Rule 9310 in
Rules 9216 would remove impediments
to and perfect the mechanism of a free
and open market and a national market
system and, in general, protect investors
and the public interest because the
proposed non-substantive changes
would add clarity, transparency and
consistency to the Exchange’s
disciplinary rules. The Exchange
believes that market participants would
benefit from the increased clarity,
thereby reducing potential confusion
and ensuring that persons subject to the
Exchange’s jurisdiction, regulators, and
the investing public can more easily
navigate and understand the Exchange’s
rules.
15 Id.
16 15
U.S.C. 78f(b)(6).
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U.S.C. 78f(b)(7) and 78f(d).
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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. The
proposed rule change is not intended to
address competitive issues but is rather
concerned with facilitating less
burdensome regulatory compliance and
processes and enhancing the quality of
the regulatory process. The Exchange
believes the proposed rule changes
would reduce the burdens within the
disciplinary process, as well as move
matters through the process
expeditiously by providing for more
efficient finality of negotiated
settlements and offers of settlement, to
the benefit of all members and member
organizations and the investing public.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A)(iii) of the Act 18 and
subparagraph (f)(6) of Rule 19b–4
thereunder.19
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.
18 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
the proposed rule change at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Exchange has satisfied this
requirement.
19 17
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IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the 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–
NYSE–2020–97 on the subject line.
Paper Comments
jbell on DSKJLSW7X2PROD with NOTICES
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSE–2020–97. 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 website (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 website 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
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–NYSE–2020–97, and
should be submitted on or before
December 16, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–26011 Filed 11–24–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Sunshine Act Meetings
Notice is hereby given,
pursuant to the provisions of the
Government in the Sunshine Act, Public
Law 94–409, that the Securities and
Exchange Commission Investor
Advisory Committee will hold a public
meeting on Thursday, December 3,
2020.
TIME AND DATE:
The meeting will begin at 10:00
a.m. (ET) and will be open to the public.
The meeting will be conducted by
remote means and/or at the
Commission’s headquarters, 100 F St.
NE, Washington, DC 20549. Members of
the public may watch the webcast of the
meeting on the Commission’s website at
www.sec.gov.
PLACE:
This Sunshine Act notice is
being issued because a majority of the
Commission may attend the meeting.
On November 4, 2020, the Commission
published notice of the Committee
meeting (Release Nos. 33–10885; 34–
90338), indicating that the meeting is
open to the public and inviting the
public to submit written comments to
the Committee.
STATUS:
The agenda
for the meeting includes: Welcome
remarks; announcement of results of
officers election; approval of previous
meeting minutes; a panel discussion
regarding corporate disclosure during
COVID–19; a panel discussion regarding
COVID–19 implications for next proxy
season; subcommittee reports; and a
non-public administrative session.
MATTER TO BE CONSIDERED:
CONTACT PERSON FOR MORE INFORMATION:
For further information and to ascertain
what, if any, matters have been added,
deleted or postponed; please contact
Vanessa A. Countryman from the Office
of the Secretary at (202) 551–5400.
Dated: November 23, 2020.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2020–26196 Filed 11–23–20; 11:15 am]
BILLING CODE 8011–01–P
20 17
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. IA–5633]
Notice of Intention To Cancel
Registration Pursuant to Section
203(H) of the Investment Advisers Act
of 1940
November 20, 2020.
Notice is given that the Securities and
Exchange Commission (the
‘‘Commission’’) intends to issue an
order, pursuant to section 203(h) of the
Investment Advisers Act of 1940 (the
‘‘Act’’), cancelling the registration of
Trevor Stewart Burton & Jacobsen Inc
[File No. 801–10369], hereinafter
referred to as the ‘‘registrant.’’
Section 203(h) provides, in pertinent
part, that if the Commission finds that
any person registered under section 203,
or who has pending an application for
registration filed under that section, is
no longer in existence, is not engaged in
business as an investment adviser, or is
prohibited from registering as an
investment adviser under section 203A,
the Commission shall, by order, cancel
the registration of such person.
The registrant has not filed a Form
ADV amendment with the Commission
as required by rule 204–1 under the Act
and appears to be no longer in business
as an investment adviser or is otherwise
not engaged in business as an
investment adviser.1 Accordingly, the
Commission believes that reasonable
grounds exist for a finding that this
registrant is no longer eligible to be
registered with the Commission as an
investment adviser and that the
registration should be cancelled
pursuant to section 203(h) of the Act.
Notice is also given that any
interested person may, by December 15,
2020, at 5:30 p.m., submit to the
Commission in writing a request for a
hearing on the cancellation,
accompanied by a statement as to the
nature of his or her interest, the reason
for such request, and the issues, if any,
of fact or law proposed to be
controverted, and he or she may request
that he or she be notified if the
Commission should order a hearing
thereon. Any such communication
should be emailed to the Commission’s
Secretary at Secretarys-Office@sec.gov.
At any time after December 15, 2020,
the Commission may issue an order
cancelling the registration, upon the
basis of the information stated above,
1 Rule 204–1 under the Act requires any adviser
that is required to complete Form ADV to amend
the form at least annually and to submit the
amendments electronically through the Investment
Adviser Registration Depository.
E:\FR\FM\25NON1.SGM
25NON1
]]>Agencies
[Federal Register Volume 85, Number 228 (Wednesday, November 25, 2020)]
[Notices]
[Pages 75388-75391]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-26011]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-90458; File No. SR-NYSE-2020-97]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Shorten the Time Period Before a Letter of Acceptance, Waiver, and
Consent Under Rule 9216 and an Uncontested Offer of Settlement Under
Rule 9270(f)
November 19, 2020.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that on November 16, 2020, New York Stock Exchange LLC (``NYSE'' or the
``Exchange'') 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 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 shorten the time period before a letter of
acceptance, waiver, and consent under Rule 9216 and an uncontested
offer of settlement under Rule 9270(f) becomes final and the
corresponding time period to request review of these settlements under
Rule 9310 from 25 days to 10 days. The proposed rule change is
available on the Exchange's website at www.nyse.com, at the principal
office of the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of 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 shorten the time period before a letter of
acceptance, waiver, and consent (``AWC'') under Rule 9216 and an
uncontested offer of settlement under Rule 9270(f) becomes final and
the corresponding time period to request review of these settlements
under Rule 9310 from 25 days to 10 days.
In 2013, the NYSE adopted disciplinary rules that are, with certain
exceptions, substantially the same as the FINRA Rule 8000 Series and
Rule 9000 Series, and which set forth rules for conducting
investigations and enforcement actions.\4\ The NYSE disciplinary rules
were implemented on July 1, 2013.\5\
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\4\ See Securities Exchange Act Release Nos. 68678 (January 16,
2013), 78 FR 5213 (January 24, 2013) (SR-NYSE-2013-02) (``2013
Notice''), 69045 (March 5, 2013), 78 FR 15394 (March 11, 2013) (SR-
NYSE-2013-02) (``2013 Approval Order''), and 69963 (July 10, 2013),
78 FR 42573 (July 16, 2013) (SR-NYSE-2013-49).
\5\ See NYSE Information Memorandum 13-8 (May 24, 2013).
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In adopting disciplinary rules modeled on FINRA's rules, the NYSE
established processes for settling disciplinary matters both before and
after issuance of a complaint.\6\ At the time, the Exchange retained a
25 day call for review process only for determinations or penalties
imposed by a Hearing Panel or Extended Hearing Panel. In 2015, the
Exchange amended Rules 9216, 9270 and 9310 to permit a Director and any
member of the Committee for Review (``CFR'') to require a review by the
Board of any AWC letter under Rule 9216 and any offer of settlement
under Rule 9270 within 25 days after the AWC letter or offer of
settlement was sent to each Director and each member of the CFR.\7\
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\6\ See 2013 Approval Order, 78 FR at 15396-98.
\7\ See Securities Exchange Act Release Nos. 76436 (November 13,
2015), 80 FR 72460, 72462-63 (November 19, 2015) (SR-NYSE-2015-35).
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Proposed Rule Change
Rule 9216 (Acceptance, Waiver, and Consent; Procedure for
Imposition of Fines for Minor Violation(s) of Rules) establishes AWC
procedures by which a member organization or covered person, prior to
the issuance of a complaint, may execute a letter accepting a finding
of violation, consenting to the imposition of sanctions, and agreeing
to waive such member organization's or covered person's right to a
hearing, appeal and certain other procedures. The rule also establishes
procedures for executing a minor rule violation plan letter.
Under Rule 9216(a)(4), an AWC accepted by the Chief Regulatory
Officer (``CRO'') must be sent to each Director and each member of the
CFR and would be deemed final and constitute the complaint, answer, and
decision in the matter 25 days after being sent to each Director and
each member of the CFR, unless review by the Exchange Board of
Directors is requested pursuant to Rule 9310(a)(1)(B).\8\
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\8\ Requests for review of an AWC accepted by the CRO are
governed by Rule 9310(a)(1)(B)(i). For the sake of clarity and
transparency, the Exchange proposes the non-substantive change of
including the omitted reference to subsection (B)(i) of Rule
9310(a)(1) in both in the current and proposed text of Rule
9216(a)(4).
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The Exchange proposes that an AWC accepted by the CRO would be
deemed final and constitute the complaint, answer, and decision in a
matter 10 days after being sent to each Director and each member of the
CFR, unless review is requested pursuant to Rule 9310(a)(1)(B)(i). As
described below, the time period to request review under Rule
9310(a)(1)(B)(i) would also be shortened to 10 days.
Rule 9270 (Settlement Procedure) provides a settlement procedure
for a Respondent who has been notified of the initiation of a
proceeding. Specifically, Rule 9270(f) provides that uncontested
settlement offers accepted by the CRO, the Hearing Panel or, if
applicable, Extended Hearing Panel must be issued and sent to each
Director and each member of the CFR and
[[Page 75389]]
becomes final 25 days after being sent to each Director and each member
of the CFR, unless review by the Exchange Board of Directors is
requested pursuant to Rule 9310(a)(1).
The Exchange proposes that uncontested settlement offers accepted
by the CRO, the Hearing Panel or, if applicable, Extended Hearing Panel
(together, a ``Panel'') under Rule 9270(f) would become final 10 days
after being sent to each Director and each member of the CFR, unless
review by the Exchange Board of Directors is requested pursuant to Rule
9310(a)(1). As noted, the time to request review of an uncontested
settlement under Rule 9310(a)(1) would also be shortened to 10 days.
Finally, under Rule 9310(a)(1)(B)(i), any Director and any member
of the CFR may require a review by the Board of any determination or
penalty, or both, imposed in connection with an AWC letter under Rule
9216 or an offer of settlement determined to be uncontested before a
hearing on the merits has begun under Rule 9270(f), except that none of
those persons could request Board review of a determination or penalty
concerning an affiliate of the Exchange as such term is defined in Rule
12b-2 under the Exchange Act. A request for review under this provision
is made by filing with the Secretary of the Exchange a written request
stating the basis and reasons for such review, within 25 days after an
AWC letter or an offer of settlement has been sent to each Director and
each member of the CFR pursuant to Rule 9216(a)(4) or Rule 9270(f)(3).
To permit AWC letters and uncontested settlements to become final
within 10 days as proposed, the Exchange would amend Rule
9310(a)(1)(B)(i) to provide that a request for review of these
settlements as permitted by the rule must be made by filing the
requisite written request with the Secretary of the Exchange within 10
days after the AWC letter or an offer of settlement is sent to each
Director and each member of the CFR pursuant to Rule 9216(a)(4) or Rule
9270(f)(3).\9\
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\9\ The time period for requesting review pursuant to Rule
9310(a)(1)(B)(ii) of any rejection by the CRO of any AWC letter
under Rule 9216 or of an uncontested offer of settlement under Rule
9270(f), would remain unchanged as would the time period to request
for review of any determination or penalty, or both, imposed by a
Panel under the Rule 9310(a)(1)(A) other than an offer of settlement
determined to be uncontested after a hearing on the merits have
begun under Rule 9270(f). For the avoidance of doubt, the Exchange
would add text to Rule 9310(a)(1)(A) providing that any request for
review of an offer of settlement determined to be uncontested after
a hearing on the merits has begun under Rule 9270(f) that has been
accepted by a Panel shall be governed by Rule 9310((a)(1)(B)(i).
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The Exchange believes maintaining a 25 day waiting period for
negotiated settlements under Rule 9216 and uncontested settlements
pursuant to 9270(f) unnecessarily delays final resolution of matters
that have been resolved by the parties and accepted by the CRO or a
Panel. Shortening the waiting period to 10 days, and requiring requests
for Board of Directors review to be made within that same 10 day
period, would significantly expedite the settlement process in
situations where member organizations, covered persons and Respondents
have entered into a consensual, negotiated settlement with Enforcement
or made settlement offers that Enforcement does not oppose, while
continuing to ensure the independence and integrity of the regulatory
process by preserving the ability of Directors and CFR members to call
those settlements for review.
Further, the Exchange believes that the proposed 10 day period to
call a settlement for review under Rule 9310(a)(1)(B)(i) is reasonable
and sufficient. Like the current 25 day period, the time to call a
settlement for review would begin when the AWC or uncontested
settlement is sent to each Director and member of the CFR. Rules 9216
and 9270 specify that an AWC or uncontested settlement accepted by the
CRO or a Panel can be sent to each Director and each CFR member via
courier, express delivery or electronic means. As a practical matter,
AWCs and settlements are sent to the Directors and CFR members by
email, which ensures prompt and instantaneous communication. As a
result, the Directors and members of the CFR will have the full 10 day
period to determine whether to call these settlements for review.
Moreover, the requirement in Rule 9310(a)(1)(B)(i) that a request for
review be in writing and state the basis and reasons for such review
can similarly be satisfied by a Director or CFR member sending an email
to the Secretary of the Exchange requesting that a specific matter be
reviewed within the proposed 10 day period. The Director or CFR member
would need to take no additional steps nor include any additional
information in order to call a matter for review under Rule
9310(a)(1)(B)(i). In light of these facts, and the relative infrequency
of calls for review of AWCs and uncontested settlements,\10\ the
Exchange believes that 10 days are more than sufficient for a Director
or member of the CFR to determine whether to call a settlement for
review. Once accepted by the CRO or Panel, the proposed 10 day period
for negotiated settlements to be called for review or become final
would expedite disciplinary proceedings and provide finality to the
disciplinary process sooner, to the benefit of the parties and the
investing public.
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\10\ For example, no AWC letter or uncontested settlement has
been called for review in the past year.
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Finally, the Exchange also believes that shortening these time
periods would further promote efficiency in connection with cross-
market settlements involving multiple self-regulatory organizations
(``SROs''). Often such settlements are contingent upon the acceptance
of a settlement by all of the SROs involved in the matter. In these
situations, a settlement with the Exchange would not be final until the
end of the time period specified in Rules 9216 and 9270 while a
settlement with other SROs could be final once accepted.\11\ Thus by
reducing the amount of time these settlements are outstanding at the
Exchange, the proposed change could speed up the settlement process for
cross-market settlements involving multiple SROs, to the benefit of the
parties and the investing public.
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\11\ See, e.g., FINRA Rule 9216(a)(4) (``If the [AWC] letter is
accepted by the National Adjudicatory Council, the Review
Subcommittee, or the Office of Disciplinary Affairs, it shall be
deemed final and shall constitute the complaint, answer, and
decision in the matter.''); FINRA Rule 9270(e)(3) (``If the offer of
settlement and order of acceptance are accepted by the National
Adjudicatory Council, the Review Subcommittee, or the Office of
Disciplinary Affairs, they shall become final and the Director of
the Office of Disciplinary Affairs shall issue the order and notify
the Office of Hearing Officers. The Department of Enforcement shall
provide a copy of an issued order of acceptance to each FINRA member
with which a Respondent is associated.''). See also e.g., Nasdaq
Rule 9216(a)(4) & 9270(e)(3); Cboe BZX Exchange, Inc. Rule 8.8(a);
Cboe EDGA Exchange, Inc. Rule 8.8(a).
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The Exchange intends to announce the operative date of the amended
time periods in Rules 9216(a)(4), 9270(f)(3) and 9310(a)(1) at least 30
days in advance via regulatory notice to its members and member
organizations.\12\ To further facilitate an orderly transition from the
current rules to the new rules, the Exchange proposes that matters
already initiated under the current rules would be completed under such
rules. Specifically, the Exchange proposes to apply the current 25 day
period for AWCs prepared and submitted to a member organization or
covered persons under Rule 9216(a)(1) prior to the operative date and
to uncontested settlement offers in proceedings where a Party was
served with a complaint by Enforcement pursuant to Rule 9131 prior to
the operative date. Rules
[[Page 75390]]
9216(a)(4), 9270(f)(3) and 9310(a)(1)(B)(i) would be amended to reflect
the transition process. When the transition is complete, the Exchange
intends to submit a proposed rule change that would delete the
unnecessary transition provisions of 9216(a)(4), 9270(f)(3) and
9310(a)(1)(B)(i).
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\12\ The effective date of the new time periods would be
simultaneously communicated to the Directors and to the members of
the CFR.
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2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Act,\13\ in general, and furthers the objectives of Section
6(b)(5),\14\ in particular, because 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. Additionally, the Exchange believes
the proposed rule change is consistent with the Section 6(b)(5) \15\
requirement that the rules of an exchange not be designed to permit
unfair discrimination between customers, issuers, brokers, or dealers.
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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
\15\ Id.
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Specifically, the Exchange believes that shortening the waiting
period for negotiated settlements and uncontested offers of settlement
would serve to expedite the final resolution of both Exchange and
cross-market matters that have been resolved by the parties and
accepted by the CRO or Panel, thereby protecting investors and the
public interest by addressing rule violations and achieving finality in
disciplinary matters sooner. The proposed rule change to shorten the
waiting period before an AWC letter and offer of settlement becomes
final and the member of CFR or Board's time to call such settlements
for review will therefore provide for a more efficient, streamlined
disciplinary process.
The Exchange further believes that the proposed amendments are
consistent with Section 6(b)(6) of the Act,\16\ which provides that
members and persons associated with members shall be appropriately
disciplined for violation of the provisions of the rules of an exchange
by expulsion, suspension, limitation of activities, functions, and
operations, fine, censure, being suspended or barred from being
associated with a member, or any other fitting sanction. As noted, the
proposed changes will not affect the ability of Enforcement to enter
into negotiated settlements or accepting uncontested settlement offers
when appropriate, and will not alter the requirement that settlements
be scrutinized by the CRO or Panel, who will continue to approve them,
or the Directors and members of the CFR, whose right to call both types
of voluntary settlements for review will not change.
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\16\ 15 U.S.C. 78f(b)(6).
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For the same reasons, the Exchange believes that the proposed
changes are designed to provide a fair procedure for the disciplining
of members and persons associated with members, consistent with
Sections 6(b)(7) and 6(d) of the Act.\17\ Moreover, as noted, the
Exchange believes that the proposed 10 day period to call a settlement
for review under Rules 9310(a)(1)(B)(i) is reasonable and sufficient,
and provides an appropriate balance between the procedural safeguards
of the call for review process and the benefits of expediting the
resolution of disciplinary matters and providing finality to the
disciplinary process sooner. Reducing the period for review would also
mean that AWCs and uncontested settlements would be published two weeks
earlier, thereby allowing members and the investing public to be
educated about the issues they addressed sooner. Finally, the Exchange
believes that the proposed transition plan is designed to provide a
fair procedure for the disciplining of members and persons associated
with members by providing for a clearly demarcated and orderly
transition from the current 25 day period to the proposed 10 day
period.
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\17\ 15 U.S.C. 78f(b)(7) and 78f(d).
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Finally, the Exchange believes that the non-substantive changes to
clarify the cross-reference to Rule 9310 in Rules 9216 would remove
impediments to and perfect the mechanism of a free and open market and
a national market system and, in general, protect investors and the
public interest because the proposed non-substantive changes would add
clarity, transparency and consistency to the Exchange's disciplinary
rules. The Exchange believes that market participants would benefit
from the increased clarity, thereby reducing potential confusion and
ensuring that persons subject to the Exchange's jurisdiction,
regulators, and the investing public can more easily navigate and
understand the Exchange's rules.
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. The proposed rule change is
not intended to address competitive issues but is rather concerned with
facilitating less burdensome regulatory compliance and processes and
enhancing the quality of the regulatory process. The Exchange believes
the proposed rule changes would reduce the burdens within the
disciplinary process, as well as move matters through the process
expeditiously by providing for more efficient finality of negotiated
settlements and offers of settlement, to the benefit of all members and
member organizations and the investing public.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \18\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\19\
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\18\ 15 U.S.C. 78s(b)(3)(A)(iii).
\19\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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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.
[[Page 75391]]
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 [email protected]. Please include
File Number SR-NYSE-2020-97 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSE-2020-97. 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 website (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 website 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 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NYSE-2020-97, and should be submitted on
or before December 16, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-26011 Filed 11-24-20; 8:45 am]
BILLING CODE 8011-01-P
