[Federal Register Volume 60, Number 54 (Tuesday, March 21, 1995)]
[Notices]
[Pages 14991-14993]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-6937]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35497; File No. SR-PSE-95-2]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the Pacific Stock Exchange Incorporated Relating to
Obligations for Regulatory Cooperation
March 15, 1995.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on February
8, 1995, the Pacific Stock Exchange, Incorporated (``PSE'' 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 self-regulatory
organization. On March 3, 1995, the Exchange submitted to the
Commission Amendment No. 1 to the proposed rule change, which is also
described below.\1\ The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
\1\See letter from Michael D. Pierson, Senior Attorney, PSE, to
Jennifer S. Choi, Attorney, Division of Market Regulation, SEC,
dated March 2, 1995. Amendment No. 1 adds .02 of the Commentary to
the proposed rule change.
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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 amend its rules to require regulatory
cooperation by members, member organizations, and others over whom the
Exchange has jurisdiction pursuant to Rule 10.1(b) in connection with
certain investigations and proceedings that are initiated by other
exchanges or self-regulatory organizations. The text of the proposed
rule change is as follow [new text is italicized]:
Rule 10.2
Regulatory Cooperation
(d) No member, member organization, person associated with a number
or member organization, or other person or entity over whom the
Exchange has jurisdiction pursuant to Rule 10.1(b), shall refuse to
appear and testify before another exchange or self-regulatory
organization in connection with a regulatory investigation,
examination, or disciplinary proceeding or refuse to furnish
documentary materials or other information or otherwise impede or delay
such investigation, examination or disciplinary proceeding if the
Exchange requests such information or testimony in connection with an
inquiry resulting from an agreement entered [[Page 14992]] into by the
Exchange pursuant to Rule 14.1. The requirements of this Rule 10.2(d)
shall apply regardless of whether the Exchange has initiated an
investigation pursuant to Rule 10.2(a) or a disciplinary proceeding
pursuant to Rule 10.3.
Commentary
.01 The terms ``exchange'' and ``self-regulatory organization,''
as used in Rule 10.2(d), shall include, but are not limited to, any
member of affiliate member of the Intermarket Surveillance Group.
.02 Any person or entity required to furnish information or
testimony pursuant to Rule 10.2(d) shall be afforded the same rights
and procedural protections as that person or entity would have if the
Exchange had initiated the request for information or testimony.
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 these statements may be examined at
the places specified in Item IV below. The self-regulatory organization
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
The Exchange is proposing to amend its Rule 10.2, relating to
Exchange investigations. The proposed amendment would provide the
Exchange with the authority to compel its members, member
organizations, and others over whom the Exchange has jurisdiction
pursuant to Rule 10.1(b) to testify or furnish documentary materials in
connection with regulatory investigations or examinations by other
exchanges or self-regulatory organizations under certain circumstances.
Specifically, the Exchange is proposing to adopt new Rule 10.2(d)
to provide that no member, member organization, person associated with
a member or member organization, or other person or entity over whom
the Exchange has jurisdiction, shall refuse to appear and testify
before another exchange or self-regulatory organization in connection
with a regulatory investigation, examination, or disciplinary
proceeding or refuse to furnish documentary materials or other
information or otherwise impede or delay such investigation or
examination. Under the proposed rule change, this requirement would
apply whenever the Exchange requests such information or testimony in
connection with an inquiry resulting from an agreement entered into by
the Exchange pursuant to Rule 14.1\2\ The proposal further provides
that the requirements of Rule 10.2(d) shall apply regardless of whether
the Exchange has initiated an investigation pursuant to Rule 10.2(a) or
a disciplinary proceeding pursuant to Rule 10.3.\3\
\2\Rule 14.1 provides that the Exchange may enter into
agreements with domestic and foreign self-regulatory organizations
providing for the exchange of information and other forms of mutual
assistance for market surveillance, investigative, enforcement, and
other regulatory purposes.
\3\Under the proposed rule, the Exchange would always act as an
intermediary between another SRO and the Exchange member, member
organization, or other designated person from whom information or
testimony is being sought, for any inquiry made pursuant to an
agreement under Rule 14.1. See letter from Michael D. Pierson,
Senior Attorney, PSE, to Jennifer S. Choi, Attorney, Division of
Market Regulation, SEC, dated March 2, 1995.
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Under the proposed rule change, the Exchange defines in the
Commentary the terms ``exchange'' and ``self-regulatory organization,''
for purposes of Rule 10.2(d), to include, but not be limited to, any
member or affiliate member of the Intermarket Surveillance Group.\4\
Moreover, the Exchange in .02 of the Commentary makes explicit that
persons or entities, required to furnish information or testimony
pursuant to a regulatory agreement, will be afforded the same rights
and procedural protections that such persons or entities would have if
the Exchange had initiated the request for information or testimony.
\4\On July 14, 1983, the Intermarket Surveillance Group
(``ISG'') was formed to, among other things, coordinate more
effectively surveillance and investigative information sharing
arrangements in the stock and options markets. See Intermarket
Surveillance Sharing Group Agreement, July 14, 1983. The members of
ISG are the American Stock Exchange, Inc., the Boston Stock
Exchange, Inc., the Chicago Board Options Exchange, Inc., the
Chicago Stock Exchange, Incorporated, the Cincinnati Stock Exchange,
Inc., the National Association of Securities Dealers, Inc., the New
York Stock Exchange, Inc., the Pacific Stock Exchange, Inc., and the
Philadelphia Stock Exchange, Inc.
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2. Statutory Basis
The proposed rule change is consistent with Section 6(b)(5) of the
Act in that it is designed to prevent fraudulent and manipulative acts
and practices and to perfect the mechanism of a free and open market.
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
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the publication of this notice in the Federal
Register or within such other 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 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. 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 at the
Commission's Public Reference Section, 450 Fifth Street, NW.,
Washington, DC 20549. Copies of such filing will also be available for
inspection and copying at the principal office of the Exchange. All
submissions should refer to File No. SR-PSE-95-2 and should be
submitted by April 11, 1995.
[[Page 14993]] For the Commission, by the Division of Market
Regulation, pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-6937 Filed 3-20-95; 8:45 am]
BILLING CODE 8010-01-M
