00-15619. Self-Regulatory Organizations; American Stock Exchange LLC; Order Approving Proposed Rule Change and Amendments Nos. 1 and 2 Thereto Amending Exchange Rule 18; Withdrawal From Listing

June 13, 2000.

I. Introduction

On August 13, 1999, the American Stock Exchange LLC (“Amex” or “Exchange”) submitted to the Securities and Exchange Commission (“SEC” or “Commission”) pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),^[1] and Rule 19b-4 thereunder,^[2] a proposed rule change to rescind Exchange Rule 18. On September 28, 1999, the Amex submitted Amendment No. 1 to the proposed rule change.^[3] On February 3, 2000, the Amex submitted Amendment No. 2 to the proposed rule change.^[4] The proposed rule change, as amended by Amendments Nos. 1 and 2, was published for comment in the Federal Register on February 23, 2000.^[5] The Commission did not receive any comment letters with respect to the proposal. This order approves the Exchange's proposal, as amended.

II. Description of the Proposal

Amex Rule 18 currently requires an issuer, prior to withdrawing a security from listing on the Exchange, to file with the Exchange a certified copy of a resolution adopted by the board of directors authorizing withdrawal from listing and registration and explaining the reasons for such withdrawal. The Amex rule also provides that the Exchange may require the issuer to send to all registered holders of such security a statement of the reasons for such application, together with facts in support thereof within at least fifteen days prior to the filing of a delisting application with the Commission.^[6] These Exchange Rule 18 requirements must be met before an application for delisting can be filed with the Commission.

According to the Amex, Exchange Rule 18 has not been applied in many years with respect to issuers seeking to voluntarily withdraw their securities from the listing on the Exchange. The Exchange believes Amex Rule 18 represents a needless restriction imposing burdensome delays on an issuer's decision to delist. The Amex stated that the proposed amendment to Exchange Rule 18 will implement its decision to eliminate obstacles and delays for issuers seeking to voluntarily withdraw their common stock from listing on the Exchange. Under the proposed amendments to Amex Rule 18, an issuer will be able to voluntarily withdraw a security from listing on the Exchange upon written notice to the Exchange, provided the issuer complies with all applicable state laws in effect in the state in which it is incorporated.^[7]

III. Discussion

The Commission finds that the proposed rule change, as amended, is consistent with the requirements of Section 6 of the Act ^[8] and the rules and regulations thereunder applicable to a national securities exchange.^[9] In particular, the Commission finds the proposed rule change is consistent with Section 6(b)(5) of the Act ^[10] and which requires, among other things, that the rules of an exchange be designed to prevent fraudulent and manipulative acts and practices, to promote impediments to and perfect the mechanism of a free and open market, and to protect investors and the public interest.

Over the last several years, Commission staff has express concerns regarding the potentially anti-competitive effects of certain rules adopted by self-regulatory organizations (“SROs”), such as Amex Rule 18.^[11] The Commission encouraged the Amex to revise the standards a company must comply with prior to voluntarily delisting its securities from the Amex.^[12] The Commission believes that the exchanges should provide a listed company with a reasonable opportunity to move to another market if it so desires, thereby increasing competition among the markets. For example, on July 21, 1999, the Commission approved a proposed rule change to revise New York Stock Exchange's (“NYSE”) Rule 500 to simplify the procedures a NYSE-listed company must follow to voluntarily delist its securities from the NYSE.^[13] The Commission believes that the proposed amendments to Amex Rule 18 should similarly eliminate obstacles and delays for issuers seeking to delist their securities voluntarily from the Amex.

Furthermore, the voluntary delisting procedures proposed by the Amex in the amended proposal represent a significant and positive change over the current delisting process and requirements in the Amex's rules. Specifically, the Commission believes that the proposed requirement that a listed company simply submit written notice to the Amex that it wants to delist provided that it has followed all applicable state laws in effect in the state in which it is incorporated should ensure compliance with investor protections codified in relevant state statutes while still significantly streamlining the delisting process on the Amex.^[14] As a result, because the proposed amendments to Amex Rule 18 ease the existing restrictions on Amex-listed companies that wish to voluntarily delist their securities from the Exchange while continuing to ensure compliance with applicable state laws, the Commission believes that the Amex's proposed revisions to Amex Rule 18, as amended, are consistent with the requirements of Section 6(b)(5) of the Act ^[15] that requires the rules of the Exchange to further the protection of investors and public interest.

IV. Conclusion

It is therefore ordered, pursuant to Section 19(b)(2) of the Act,^[16] that the proposed rule change (SR-Amex-99-30), including amendments Nos. 1 and 2, is approved.

By the Commission, for the Division of Market Regulation, pursuant to delegated authority.^[17]

Margaret H. McFarland,

Deputy Secretary.

Footnotes

1.  15 U.S.C. 78s(b)(1).

2.  17 CFR 240.19b-4.

3.  See Letter to Michael Walinskas, Deputy Associate Director, Division of Market Regulation (“Division”), Commission, from Michael J. Ryan, Chief of Staff, Amex, dated September 24, 1999 (“Amendment No. 1”). In Amendment No. 1, Amex proposes to amend Exchange Rule 18 instead of rescinding the rule in its entirety, as proposed in its initial filing, to provide that an issuer may voluntarily withdraw a security from listing on the Exchange upon written notice to the Exchange.

4.  See Letter to Marla Chidsey, Attorney, Division, Commission, from Ivonne Lugo, Associate General Counsel, Amex, dated February 2, 2000 (“Amendment No. 2”). In Amendment No. 2, Amex proposes to require the issuer to comply with all applicable state laws in effect in the state in which it is incorporated prior to filing to delist from the Amex. Amendment No. 2 also proposes to make conforming amendments to the Amex Company Guide Sections 1010 and 1011.

5.  Securities Exchange Act Release No. 42427 (February 15, 2000), 65 FR 9024.

6.  See 15 U.S.C. 781(d) and 17 CFR 240.12d2-2 describing how an issuer may delist from a national securities exchange.

7.  The rule further states that the requirement of written notice that must be met before an application for delisting can be filed with the Commission.

8.  15 U.S.C. 78f.

9.  In approving this rule, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).

10.  15 U.S.C. 78f(b)(5).

11.  See Market 2000 Report: An Examination of Current Equity Market Developments, Division, Commission, January, 1994, at 30.

12.  Id. at 31.

13.  Securities Exchange Act Release No. 41634, 64 FR 40633 (July 27, 1999).

14.  As discussed above, the revision of Amex Rule 18 eliminates requirements for Amex issuers that were imposed by Amex Rule 18. Issuers wanting to voluntarily delist would still be required to comply with Section 12 of the Act, which provides notice and an opportunity for public comment. See supra note 6.

15.  15 U.S.C. 78f(b)(5).

16.  15 U.S.C. 78s(b)(2).

17.  17 CFR 200.30-3(a)(12).