[Federal Register Volume 62, Number 218 (Wednesday, November 12, 1997)]
[Notices]
[Pages 60739-60740]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-29747]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-39295; File No. SR-PCX-97-38]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Pacific Exchange, Inc.
Relating to Charges and Recommended Fines for Late SIPC Reports
November 4, 1997.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\, notice is hereby given that on October 14, 1997, the
Pacific Exchange, Inc. (``PCX'' or ``Exchange'') filed with the
Securities and Exchange Commission (``Commission'' or ``SEC'') the
proposed rule change as described in Items, I II and III below, which
Items have been prepared by the PCX. 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)(1994).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is proposing to modify the late charges and
recommended fines applicable to members' late filing of forms and
assessments with the Exchange pursuant to the Securities Investor
Protection Act of 1970 (``SIPA'').\2\ The text of the proposed rule
change is below. Additions are italicized; deletions are bracketed.
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\2\ 15 U.S.C. 78aaa-78111(1994).
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Text of the Proposed Rule Change
Financial Reports
para.3405
Rule 2.12(a)--(b)(1)--No change.
Rule 2.12(b)(2). Each member organization for which the Exchange is
the designated collection agent must [shall] file with the Exchange
such forms and assessments as are required pursuant to the Securities
Investor Protection Act of 1970. Any member organization that fails to
file such form or assessment in a timely manner will [shall] be subject
to a late filing charge as follows:
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Number of days late Amount of charge
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1-30................................................. [$200] $100
31-60................................................ [400] 200
61-90................................................ [800] 300
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Provided however: (A) If a member organization files its SIPC form and
assessment after its receipt of SIPC's final late notice, but files
within five business days after its receipt of SIPC's final late
notice, such member organization will [shall] be subject to a fine
pursuant to Rule 10.13; and (B) if a member organization fails to file
its SIPC form and assessment within five business days after its
receipt of SIPC's final late notice, such member organization will
[shall] be subject to formal disciplinary action pursuant to Rule 10.3.
Commentary:
.01-.02--No change.
* * * * *
[[Page 60740]]
Minor Rule Plan
para.6133
Rule 10.13(a)--(j)--No change.
(k) Minor Rule Plan: Recommended Fine Schedule
(i)-(ii)--No change.
(iii) Record Keeping and Other Minor Rule Violations
1. No change.
2. Failure to file a Securities Investors Protection Corporation
form and assessment in a timely manner. (Rule 2.12(b))
[$1,200.00] [$1,800.00] [$2,400.00]
$500 $1,000 $1,500
3.-6. No change.
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 PCX 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
(a) Purpose
PCX Rule 2.12(b)(2) provides that each member organization is
required to file with the Exchange such forms and assessments as are
required pursuant to SIPA. Rule 2.12(b)(2) further provides that any
member organization that fails to file such form or assessment will be
subject to a late charge of $200 if 1-30 days late; $400 if 31-60 days
late; and $800 if 61-90 days late. The Exchange is proposing to reduce
these charges to $100, $200 and $300, respectively.
PCX Rule 2.12(b)(2) further provides that, if a member organization
files its form and assessment after its receipt of the final late
notice from the Securities Investor Protection Corporation (``SIPC''),
but files within five business days after its receipt of SIPC's final
late notice, such member organization will be subject to a fine
pursuant to the Exchange's Minor Rule Plan.\3\ The current recommended
fines for such violations are $1,200 for a first violation, $1,800 for
a second violation and $2,400 for a third violation.\4\ The Exchange is
proposing to reduce these recommended fines to $500, $1,000 and $1,500
for first, second and third violations, respectively.
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\3\ PCX rule 10.13(j)(2).
\4\ PCX Rule 10.13(k)(iii)(2).
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(b) Basis
The Exchange believes that the proposal is consistent with Section
6(b) of the Act, in general, and Section 6(b)(5) of the Act, in
particular, in that it is designed to promote just and equitable
principles of trade and to protect investors and the public interest.
The Exchange notes that the amounts of the charges and fines were
originally based upon proposed fines and charges for late FOCUS
Reports.\5\ However, after reconsidering the levels of these fines, the
Exchange believes that the filing of late FOCUS reports raises more
serious investor protection concerns and warrants a higher fine than
the filing of late SIPC reports.
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\5\ Securities Exchange Act Release No. 32510 (June 24, 1993) 58
FR 35491 (July 1, 1993) (order approving File No. SR-PSE-92-15).
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The Exchange also believes that the proposal is consistent with
Section 6(b)(4) in that it provides for the equitable allocation of
reasonable charges among its members and it is consistent with Section
6(b)(7) in that it provides a fair procedure for the disciplining of
members. The late charges and fines applicable to late SIPC reports
were adopted originally in 1992 and 1993, respectively.\6\ Since that
time, the Exchange has reconsidered the levels of these recommended
fines and has determined that the penalties are too severe for the
violations at issue. The Exchange notes that SIPC has determined, for
the years 1996 and 1997, to assess all of its members a flat minimum
assessment of $150 (rather than a percentage of net revenues). In that
regard, the Exchange believes that a reduction in charges and
recommended fines for lateness is warranted.
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\6\ Securities Exchange Act Release Nos. 33347 (December 15,
1993) 58 FR 67888 (December 22, 1993) (order approving File No. SR-
PSE-93-21)(adopting late charges); and 32510 (June 24, 1993) 58 FR
35491 (July 1, 1993) (order approving File No. SR-PSE-92-
15)(amending the Exchange's Minor Rule Plan and adopting recommended
fines).
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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
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
The proposed rule change establishes or changes a due, fee, or
other charge imposed by the Exchange and therefore, has become
effective on October 14, 1997, pursuant to Section 19(b)(3)(A)(ii) \7\
of the Act and Rule 19b-4(e)(2) \8\ thereunder. At any time within 60
days of the filing of such proposed rule change, the Commission may
summarily abrogate 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.
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\7\ 15 U.S.C. 78s(b)(3)(A)(ii) (1994).
\8\ 17 CFR 240.19b-4(e)(2) (1997).
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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, N.W., Washington, D.C. 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 Room, 450 Fifth Street, N.W., Washington,
D.C. 20549. Copies of such filing will also be available for copying at
the principal office of the PCX. All submissions should refer to File
No. SR-PCX-97-38 and should be submitted by December 3, 1997.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12) (1997).
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Margaret H.McFarland,
Deputy Secretary.
[FR Doc. 97-29747 Filed 11-10-97; 8:45 am]
BILLING CODE 8010-01-M
