[Federal Register Volume 59, Number 197 (Thursday, October 13, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-25279]
[[Page Unknown]]
[Federal Register: October 13, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34792; File No. SR-CBOE-94-33]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the Chicago Board Options Exchange, Inc. Relating to the
Reporting by the Exchange to the Central Registration Depository
(``CRD'') of Information Concerning Pending Formal Exchange
Disciplinary Proceedings
October 5, 1994.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on September 15, 1994, the Chicago Board Options Exchange (``CBOE'' 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 CBOE. 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) (1988).
\2\17 CFR 240.19b-4 (1991).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The CBOE proposes to add Rule 17.14 to the CBOE's rules to provide
for the reporting by the CBOE to the Central Registration Depository
(``CRD''), for disclosure to the public, of information concerning
pending formal CBOE disciplinary proceedings. In addition, the CBOE
proposes to renumber the provisions which are currently contained in
CBOE Rule 17.12 without affecting the substance of these provisions.
The text of the proposed rule change is available at the Office of the
Secretary, CBOE, and at the Commission.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange 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 CBOE 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
The purpose of the proposed rule change is to add Rule 17.14 to the
exchange's rules to provide for the reporting by the Exchange to the
CRD,\3\ for disclosure to the public, of information concerning pending
formal Exchange disciplinary proceedings.\4\ Currently, the Exchange
discloses to the CRD information with respect to formal Exchange
disciplinary proceedings only upon the conclusion of such proceedings.
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\3\The CRD is an automated industry database containing
employment and disciplinary history of members and associated
persons registered with self-regulatory organizations (``SROs'') and
state securities agencies. The CRD is operated by the National
Association of Securities Dealers, Inc. (``NASD'') with input on
policy and other matters from federal and state agencies and other
SROs including the Exchange.
\4\The CBOE represents that information concerning final
disciplinary actions taken by the Exchange, the NASD, and other
SROs, as well as information concerning certain criminal convictions
contained in the CRD, has been disclosed to the public pursuant to
the NASD's 800 number service since October 1991. On July 1, 1993,
the Commission approved an NASD rule change to make more information
available to the public regarding pending disciplinary proceedings
or actions taken by federal or state agencies and SROs that relate
to securities and commodities transactions, and regarding criminal
indictments and information. See Securities Exchange Act Release No.
32568 (July 1, 1993), 58 FR 36723 (July 8, 1993). In addition, the
Commission recently approved rule changes by both the New York Stock
Exchange, Inc. and the Chicago Stock Exchange, Inc. to provide
information to the CRD concerning their pending formal disciplinary
proceedings. See Securities Exchange Act Release Nos. 33844 (March
31, 1994), 59 FR 16669 (April 7, 1994), and 34516 (August 10, 1994),
59 FR 42317 (August 7, 1994), and 34516 (August 10, 1994), 59 FR
42317 (August 17, 1994).
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Under the proposed rule change, the amount of information
concerning formal Exchange disciplinary proceedings\5\ reported by the
Exchange to the CRD would be expanded to include the issuance of a
statement of charges in such proceedings and all significant changes in
the status of such proceedings while such proceedings are pending. For
the purposes of Rule 17.14, a formal Exchange disciplinary proceeding
would be considered to be pending from the time that a statement of
charges is issued in the proceeding\6\ until the outcome of the
proceeding becomes final. In addition, under Rule 17.14, significant
changes in the status of a formal Exchange disciplinary proceeding
would be deemed to include, but not be limited to, the scheduling of a
disciplinary hearing, the issuance of a decision by the BCC, the filing
of an appeal to the Exchange's Board of Directors, and the issuance of
a decision by the Exchange's Board of Directors.
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\5\According to the Exchange, for the purposes of Rule 17.14, an
Exchange disciplinary proceeding would be considered to be a formal
disciplinary proceeding if it is initiated by the Exchange pursuant
to Exchange Rule 17.2, et seq.
\6\The Exchange states that CBOE Rule 17.4(b) provides, in part,
that whenever it shall appear to the Exchange's Business Conduct
Committee (``BCC'') from the report of the staff of the Exchange
that there is probable cause for finding a violation within the
disciplinary jurisdiction of the Exchange and that further
proceedings are warranted, the BCC shall direct the staff of the
Exchange to prepare a statement of charges against the person or
organization alleged to have committed a violation (the
``Respondent'') specifying the acts in which the Respondent is
charged to have engaged and setting forth the specific provisions of
the Act, as amended, the rules and regulations promulgated
thereunder, and the constitutional provisions, by-laws, rules,
interpretations, or resolutions of which such acts are in violation.
In addition, Rule 17.4(b) further provides that a copy of the
charges shall be served upon the Respondent.
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According to the Exchange, information on pending formal Exchange
disciplinary proceedings, among other events, is currently in the CRD,
but only to the extent that reports are made by Exchange members,
member organizations, and associated persons pursuant to their
reporting obligations on the Uniform Application for Securities
Industry Registration or Transfer (Form U-4) and Form BD, the uniform
application form for broker-dealer registration. The proposed rule
change would expand the information available to the public concerning
pending formal Exchange disciplinary proceedings by requiring the
Exchange to report information concerning such pending proceedings to
the CRD.
In addition to the foregoing, the proposed rule change would
renumber the provisions which are currently contained in Rule 17.12
(Miscellaneous Provisions) without affecting the substance of these
provisions. Specifically, under the proposed rule change, the current
provisions of Rule 17.12 would be separated into two rules, Rule 17.12
and Rule 17.13.
The Exchange believes that the proposed rule change is consistent
with Section 6 of the Act, in general, and furthers the objectives of
Section 6(b)(5) of the Act,\7\ in particular, in that it will protect
investors and the public interest by enhancing the public's access to
information regarding disciplinary proceedings involving Exchange
members, member organizations, and associated persons.
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\7\15 U.S.C. Sec. 78f(b)(5) (1988).
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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 inappropriate burden on competition.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants, or Others
Written comments on the proposed rule change were neither solicited
nor received.
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 Exchange 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. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549.
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 Section, 450 Fifth Street, NW.,
Washington, DC. Copies of such filing will also be available for
inspection and copying at the principal office of the CBOE. All
submissions should refer to File No. SR-CBOE. All submissions should
refer to File No. SR-CBOE-94-33 and should be submitted by November 3,
1994.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\8\
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\8\17 CFR 200.30-3(a)(12 (1993)
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[FR Doc. 94-25279 Filed 10-12-94; 8:45 am]
BILLING CODE 8010-01-M
