[Federal Register Volume 61, Number 45 (Wednesday, March 6, 1996)]
[Notices]
[Pages 8989-8991]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5154]
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SECURITIES AND EXCHANGE COMMISSION
[Release NO. 34-36905; File No. SR-CSE-96-02]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by The Cincinnati Stock Exchange
Relating To Including Within the Exchange's Minor Rule Plan Rule 4.1
Which Deals With the Maintenance of Records
February 28, 1996.
Pursuant to Section 19(b)(1) of the Secretary Exchange Act of 1934
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(``Act''),\1\ notice is hereby given that on February 8, 1996 The
Cincinnati Stock Exchange (``CSE'' 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 February 27,
1996, the Exchange submitted Amendment No. 1 to the proposed rule
change to the Commission.\2\ The Commission is publishing this notice
to solicit comments on the proposed rule change from interested
persons.
\1\ 15 U.S.C. 78s(b)(1).
\2\ Amendment No. 1 corrected the CSE's filing to reference
Section 6(b)(6) of the Act rather than Section 6(b)(5) thereof as
the statutory basis for the proposal. Amendment No. 1 also
redesignated the proposed rule change as a ``noncontroversial''
filing under Section 19(b)(3)(A) and Rule 19b-4(e)(6) thereunder.
See Letter dated February 27, 1996, from Robert Ackermann, Vice
President Regulatory Service, CSE, to Glen Barrentine, Senior
Counsel/Team Leader, SEC.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange hereby corrects and amends Rule 8.14 regarding the
imposition of fines for minor violations.
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
Rule 8.14 \3\ authorizes the Exchange, in lieu of commencing a
disciplinary proceeding before a hearing panel, to impose a fine not to
exceed $2,500, on any member, member organization, or registered or
non-registered employee of a member organization for a minor violation
of certain specified Exchange Rules.\4\
\3\ Rule 8.14 was approved by the Commission on September 1,
1988. See Securities Exchange Act Release No. 26053 (September 1,
1988), 53 FR 34851 (September 8, 1988) (order approving File No. SR-
CSE-88-1). A subsequent addition of a rule to the Rule 8.14
Violations List was made in Securities Exchange Act Release No.
27609 (January 11, 1990), 55 FR 1758 (January 18, 1990) (ordering
approving File No. SR-CSE-89-60.
\4\ CSE Rule 8.14, entitled Imposition of Fines for Minor
Violation(s) of Rules, contains a list of minor rule violations as
to which the Exchange may impose such fines. Although the CSE's
Board of Trustees makes the initial determination of whether a CSE
rule violation is ``minor'' for purposes of CSE Rule 8.14, this
determination is subject to Commission approval pursuant to Section
19(d)(1) of the Act and paragraph (c)(2) of Rule 19d-1 under the
Act. See Release No. 26053 n.5, supra note 2.
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The purpose of the Rule 8.14 procedure is to improve the Exchange's
ability to efficiently meet its statutory enforcement responsibilities
by establishing a program for the imposition of fines for minor
violations of Exchange Rules and by designating certain specified Rule
violations as minor Rule violations.\5\ In File No. SR-CSE-88-1 \6\,
which initially set forth the provisions and procedures of Rule 8.14,
the Exchange indicated that it would periodically prepare and announce
to its members and member organizations a revised list of Exchange
Rules for violation of which the Exchange may impose fines pursuant to
Rule 8.14, as well as the fines that may be imposed for such violation.
\5\ Id.
\6\ Id.
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The purpose of the proposed Rule change is to add Exchange Rule 4.1
\7\ to, and correct, Exchange Rule 8.14. Due to a typographical error,
Exchange Rule 8.14, which includes a list of Rules to which the minor
rule plan applies, referenced Rule 4.1 instead of Rule 4.2, which was
added to the Exchange's minor rule plan in 1990.\8\ At this time, the
Exchange is correcting this reference and adding Rule 4.1, which
relates to the maintenance of books and records, to such list. As a
result, the list of Rules to which the minor rule plan applies will now
reference both Rules 4.1 and 4.2
\7\ CSE Rule 4.1 provides that ``each member shall make and keep
books, accounts, records, memoranda and correspondence in conformity
with Section 17 of the Act and the rules thereunder, with all other
applicable laws and the rules, regulations and statements of policy
promulgated thereunder, and with Exchange Rules.''
\8\ CSE Rule 4.2 provides that ``every member shall furnish to
the Exchange, upon request and in a time and manner required by the
Exchange, current copies of any financial information filed with the
Commission, as well as any records, files or financial information
pertaining to transactions executed on or through the Exchange.
Further, the Exchange shall be allowed access, at any time, to the
books and records of the member in order to obtain or verify
information related to transactions executed on or through the
Exchange or activities relating to the Exchange.'' See Release No.
34-27609, supra note 3.
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2. Statutory Basis
The Proposed rule change is consistent with Section 6(b)(6) of the
Act \9\ in that it will provide a procedure whereby member
organizations can be ``appropriately disciplined'' in those instances
when a rule violation is minor in nature, but a sanction more serious
than a warning or cautionary letter is appropriate. The rule change
provides a fair procedure for imposing such sanctions, in accordance
with the requirements of Sections 6(b)(7) and 6(d)(1) of the Act.\10\
\9\ 15 U.S.C. 78(b)(6).
\10\ 15 U.S.C. 78f(b)(7) and 78f(d)(1).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The proposed rule change does not 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
The Exchange has neither solicited nor received written comments on
the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change: (1) does not
significantly affect the protection of investors or the public
interest; (2) does not impose any significant burden on competition;
and (3) does not become operative for 30 days from February 8, 1996,
the date on which it was filed, and the Exchange provided the
Commission with written notice of its intent to file the rule change at
least five business days prior to the filing date, it has become
effective pursuant to Section 19(b)(3)(A) of the Act\11\ and
subparagraph (e)(6) of Rule 19b-4 thereunder.\12\
\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4.
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At any time within 60 days of the filing of such 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.
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
[[Page 8991]]
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, N.W., Washington, D.C.
20549. Copies of such filing also will be available for inspection and
copying at the principal office of The Cincinnati Stock Exchange. All
submissions should refer to File No. SR-CSE-96-02 and should be
submitted by March 27, 1996.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\13\
\13\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-5154 Filed 3-5-96; 8:45 am]
BILLING CODE 8010-01-M
