[Federal Register Volume 59, Number 127 (Tuesday, July 5, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-16189]
[[Page Unknown]]
[Federal Register: July 5, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34268; File No. SR-CHX-94-12]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the Chicago Stock Exchange, Inc., Relating to Disclosure of
Pending Formal Exchange Disciplinary Proceeding to the CRD
June 28, 1994.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''), 15 U.S.C. 78s(b)(1), notice if hereby given that on May 6,
1994, the Chicago Stock Exchange, Inc. (``CHX'') 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 self-regulatory organization. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The CHX proposes to add Rule 9 to Article XII of the Exchange's
Rules. Rule 9 to Article XII is proposed to be provided as follows:
The initiation of, and all significant changes in the status of,
a formal disciplinary proceeding brought by the Exchange shall be
reported by the Exchange to the Central Registration Depository
operated by the National Association of Securities Dealers, Inc. For
purposes of this Rule, significant changes in the status of a
pending formal disciplinary proceeding shall include, but are not
limited to, issuance of a decision by the President, the filing of
an appeal; to and/or the issuance of a decision by, a Judiciary
Committee, the Exchange's Executive Committee or Board of Governors.
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 governing 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 proposed rule change authorizes the Exchange to provide
information to the Central Registration Depository (``CRD'')\1\
concerning pending formal Exchange disciplinary proceedings for
disclosure to the public. A formal disciplinary proceeding is
considered to be pending from the time charges are issued\2\ until the
proceeding is completed.\3\ Currently, the Exchange discloses
information only on final Exchange disciplinary actions to the CRD.
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\1\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.
\2\CHX Article XII, Rule 1(b) provides, in part, that if in the
judgment of the President it shall appear that an accused has
committed a default or other offense in violation of the
Constitution or Rules of the Exchange the President shall, except as
hereinafter provided, direct the staff to prefer written charges
against the accused. A copy of such charges shall be served upon the
accused. The accused shall also be served with written notice of
when and where the charges will be heard.
\3\See CHX Article XII, Rule 7.
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Information concerning final disciplinary actions taken by the
Exchange and other SROs and regulatory organizations and certain
criminal convictions contained in the CRD has been disclosed to the
public pursuant to the NASD's 800 number service since October 1991.\4\
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\4\The Commission subsequently approved the NASD's procedures
for operating its 800 number service in Securities Exchange Act
Release No. 30629 (April 23, 1992), 57 FR 18535 (April 30, 1992)
(File No. SR-NASD-91-39) (``800 Number Service Plan Approval
Order'').
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On July 1, 1993, the SEC approved an NASD rule change to make more
information available to the general public regarding pending
disciplinary proceedings or actions taken by federal or state
securities agencies and SROs that relate to securities or commodities
transactions, and regarding criminal indictments and informations.\5\
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\5\See Securities Exchange Act Release No. 32568 (July 1, 1993),
59 FR 36723 (July 8, 1993) (File No. SR-NASD-93-26) (``Pending Event
Disclosure Approval Order'').
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Information on pending SRO disciplinary proceedings, among other
events, is currently also in the CRD, to the extent that reports are
made by 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 applications form for broker-dealer registration. However,
the Exchange does not currently report such pending events to the CRD.
The submission of information concerning pending formal
disciplinary proceedings directly by the Exchange would enhance the CRD
database since the CRD would not have to rely solely on reports from
members, member organizations and associated persons.
(2) Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b)(5) of the Act in that it is designed to promote just
and equitable principles of trade, to remove impediments and to perfect
the mechanism of a free and open market and a national market system,
and in general, to protect investors and the public interest.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose a burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
No comments were 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 Room, 450 Fifth Street NW., Washington,
DC 20549. Copies of the filing will also be available for inspection
and copying at the principal office of the CHX. All submissions should
refer to File No. SR-CHX-94-12 and should be submitted by July 26,
1994.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 94-16189 Filed 7-1-94; 8:45 am]
BILLING CODE 8010-01-M
