[Federal Register Volume 65, Number 5 (Friday, January 7, 2000)]
[Notices]
[Pages 1206-1208]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-387]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-42307; File No. SR-Amex-99-25]
Self-Regulatory Organizations; Notice of Filing of Proposed
Amendments to the Amex Constitution by the American Stock Exchange LLC
Eliminating the Requirement That the Chairman Also Be the CEO
January 3, 2000.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
[[Page 1207]]
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on July 16, 1999, the American Stock Exchange LLC (``Amex'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. On
November 9, 1999, the Amex filed Amendment No. 1 to the proposed rule
change.\3\ On November 23, 1999, the Amex filed Amendment No. 2 to the
proposed rule change.\4\ The Commission is publishing this notice to
solicit comments on the proposed rule change, as amended, from
interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ In Amendment No. 1, the Amex clarified certain aspects of
the proposal and amended the proposed rule language to provide for
the election of the Chairman by a majority of the members of the
Board of Governors. See letter from J. Bruce Ferguson, Associate
General Counsel, Legal & Regulatory Policy, Amex, to Joseph
Corcoran, Attorney, Division of Market Regulation (``Division''),
Commission, dated November 8, 1999 (``Amendment No. 1'').
\4\ In Amendment No. 2, the Amex amended the proposed rule
language to provide for the election of the Chief Executive Officer
(``CEO'') by a majority of the members of the Board of Governors.
See letter from J. Bruce Ferguson, Associate General Counsel, Legal
& Regulatory Policy, Amex, to Joseph Corcoran, Attorney, Division,
Commission, dated November 22, 1999 (``Amendment No. 2'').
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The Amex proposes to amend Article II, Section 4(a) of the Amex
Constitution to eliminate the requirement that the Chairman of the
Board also act as the Chief Executive Officer of the Exchange.
Conforming changes to other provisions of the Constitution and rules
are also being made.
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 Amex included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Amex has prepared summaries, set forth in Sections
A, B, and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Article II, Section 4(a) of the Amex Constitution currently
requires that the Chairman of the Board also act as the CEO of the
Exchange. The Chairman thus performs the standard functions of a Board
Chairman, as well as being responsible to the Board for the management
and administration of the affairs of the Exchange as CEO.
The Exchange is proposing to amend Article II, Section 4(a) of the
Constitution to eliminate the requirement that the Chairman also act as
the CEO of the Exchange. The NASD's two other subsidiaries (the Nasdaq
Stock Market and NASD Regulation), both have non-executive Chairmen.
Eliminating this requirement from the Amex Constitution would give the
Amex the flexibility to have a non-executive Chairman if desired.
Having a non-executive Chairman attend to the functions of a Chairman
would allow the CEO to focus on the operations of the Exchange. The
Exchange would, of course, always have the ability to continue the dual
role of Chairman and Chief Executive Officer if that was thought to be
more advantageous.\5\
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\5\ The Commission notes that as a result of dividing the
Chairman/CEO position into two separate positions, the proposed
language now permits the Chairman to be affiliated with a member of
the Exchange.
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As a result of the amendment to Article II, Section 4(a) of the
Constitution decoupling the Chairman and CEO roles, it is necessary to
make a number of conforming changes to other provisions of the
Constitution and rules. Because the Chairman and CEO roles may now be
held by separate persons, the Amex has attempted to clarify the
separate functions of the Chairman and the CEO. Article II, Section 3
(Chairman) and Article II, Section 4(a) (Chief Executive Officer),
discussing the selection and authority of the Chairman and CEO
respectively, have been appropriately rearranged. In each instance in
other provisions of the Constitution and rules where the Chairman
functions in his role as CEO, the term Chairman has been changed to
CEO. In certain cases, the function may properly be performed by either
the Chairman or the CEO, if delegated by the Chairman. Other than de-
coupling the Chairman and CEO roles and making the above mentioned
conforming changes, the Amex represents that there are no substantive
changes being made.
The following examples of conforming changes being made are set
forth for purposes of illustration.
a. Article II, Section 4(a) of the Constitution (Officers of the
Exchange)
Describes the authority of the Chairman to appoint
officers, determine the salaries of Exchange employees, and make
periodic reports to the Board.
As this is normally a function of a CEO, the term Chairman
is being changed to CEO.
b. Article II, Sections 4(c) and (d) of the Constitution (Officers of
the Exchange)
States that the Treasurer and Corporate Secretary report
to the Chairman.
As these two corporate positions normally report to the
CEO of a company, the term Chairman is being changed to CEO.
c. Article V, Sections 1(b)(2) and (3) of the Constitution (Discipline
of Members)
Section 1(b)(2) authorizes the Chairman, subject to Board
approval, to designate Exchange Officials and other persons to serve on
the Hearing Board, a pool of persons who can be asked to serve as
members of disciplinary panels in Exchange disciplinary proceedings.
Section 1(b)(3) authorizes the Chairman, subject to Board
approval, to designate one or more hearing officers, who have no
Exchange duties or functions relating to the investigation or
preparation of disciplinary matters, to act as Chairmen of Amex
disciplinary panels.
As these functions are more appropriately exercised by the
CEO as the senior officer of the Exchange, the term Chairman is being
changed to CEO.
d. Article V, Sections 3(a) and (b) of the Constitution (Discipline of
Members)
Section 3(a) states that a member or member firm failing
to meet its commitments or in financial or operating difficulty putting
investors and others at risk shall inform the Chairman of the Exchange
and upon such notice be automatically suspended from the Exchange.
Section 3(b) states that whenever it shall appear to the
Chairman of the Exchange that a member or member firm is failing to
meet its commitments or in financial or operating difficulty putting
investors and others at risk, the Chairman shall announce to the
Exchange the suspension of such member or member firm.
Again, as these functions are more appropriately exercised
by the CEO as
[[Page 1208]]
the senior officer of the Exchange, the term Chairman is being changed
to CEO.
2. Statutory Basis
The Exchange believes that the rule change is consistent with
Section 6(b) of the Act in general and furthers the objectives of
Section 6(b)(3) \6\ in particular in that it is intended to assure fair
representation in the selection of its directors and administration of
its affairs.
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\6\ 15 U.S.C. 78f(b)(3).
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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.
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
rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing
for Commission Action
Within 35 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 such 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
is consistent with the Act. Persons making written submissions should
file six copies thereof with the Secretary, Securities and Exchange
Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. Copies of
the submission, all subsequent amendments, all written statements with
respect to the proposed rule change that are filed with the Commission,
and all written communications relating to the proposed rule change
between the Commission and any person, other than those that may be
withheld from the public in accordance with the provisions of 5 U.S.C.
552, will be available for inspection and copying in the Commission's
Public Reference Room. Copies of such filing will also be available for
inspection and copying at the principal office of the Amex. All
submissions should refer to File No. SR-Amex-99-25 and should be
submitted by January 28, 2000.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\7\
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\7\ 17 CFR 200.30-3(as)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-387 Filed 1-6-00; 8:45 am]
BILLING CODE 8010-01-M
