[Federal Register Volume 60, Number 157 (Tuesday, August 15, 1995)]
[Notices]
[Pages 42203-42204]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-20154]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36066; File Nos. SR-MCC-94-01 and SR-MSTC-95-04]
Self-Regulatory Organizations; Midwest Clearing Corporation and
Midwest Securities Trust Company; Order Approving Proposed Rule Changes
Relating to Indemnification of Committee Members
August 7, 1995.
On February 8, 1995, and on February 14, 1995, the Midwest Clearing
Corporation (``MCC'') and the Midwest Securities Trust Company
(``MSTC''), respectively, filed proposed rule changes (File Nos. SR-
MCC-95-01 and SR-MSTC-95-04) with the Securities and Exchange
Commission (``Commission'') pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act'').\1\ Notice of the proposed
rule changes appeared in the Federal Register on April 13, 1995.\2\ No
comments on the proposals have been received by the Commission.
\1\ 15 U.S.C. Sec. 78s(b)(1) (1988).
\2\ Securities Exchange Act Release No. 35569 (April 5, 1995),
60 FR 18864.
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I. Description of the Proposals
The rule changes amended MCC's and MSTC's mandatory
indemnifications requirements, which are forth in Article 6, Section
6.1 of MCC's By-Laws and in Article VI, Section 1 of MSTC's By-Laws.
Pursuant to the amendments, MCC and MSTC shall indemnify to the fullest
extent permitted by the General Corporation Law of Delaware \3\ and the
Business Corporation Act of the State of Illinois,\4\ respectfully, any
person who was or who is threatened to be made a party to any
threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative by reason of the fact
that the person is or was a member of a committee of MCC or MSTC or is
or was serving at MCC's or MSTC's request as a member of a committee of
another corporation, partnership, joint venture, trust, or other
enterprise. The rule changes provide members of MCC's and MSTC's
committees, including members of their Risk Assessment Committees,\5\
with the same indemnification that previously has been provided only to
MCC's and MSTC's officers and directors.
\3\ MCC is incorporated under the laws of the State of Delaware.
\4\ MSTC is incorporated under the laws of the State of
Illinois.
\5\ Under MCC's and MSTC's rules, their Risk Assessment
Committees have substantial authority. This includes, among other
things, the authority to determine: (1) whether a participant that
has failed to make timely payment to MCC or MSTC should continue as
a participant, (2) whether a participant has been responsible for
fraudulent or dishonest conduct, and (3) whether a participant poses
a financial risk to MCC or MSTC.
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II. Discussion
The Commission believes that the proposals are consistent with the
Act and particularly with Section 17A of the Act.\6\ Section
17A(b)(3)(H) of the Act \7\ requires that the rules of a clearing
agency provide fair disciplinary procedures with respect to the
disciplining of participants, the denial of participation, and the
prohibition or limitation by the clearing agency of any person
regarding access to its services. Under the rules of MCC and MSTC, much
of the determinations involved in such decisions has been delegated to
committees, especially to the two Risk Management Committees.
\6\ 15 U.S.C. Sec. 78q-1 (1988).
\7\ 15 U.S.C. Sec. 78q-1(b)(3)(H) (1988).
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The Commission believes that by affording appropriate protections
to committee members, MCC and MSTC will remove impediments to
attracting competent persons to serve on their committees, including
the two Risk Assessment Committees. Accordingly, the Commission
believes that these rule changes will, among other things, help MCC and
MSTC to provide fair procedures, as required under the Act, with
respect to the disciplining of their participants, the denial of
participation to persons seeking participation in MCC or MSTC, and the
prohibition or limitation of services to persons seeking access to MCC
or MSTC.
III. Conclusion
For the reasons discussed above, the Commission believes that the
proposals are consistent with the requirements of the Act, and
particularly with Section 17A of the Act and the rules and regulations
thereunder.
It Is Therefore Ordered, pursuant to Section 19(b)(2) of the
Act,\8\ that the
[[Page 42204]]
above-mentioned proposed rule changes (File Nos. SR-MCC-95-01 and SR-
MSTC-95-04) be, and hereby are, approved.
\8\ 15 U.S.C. Sec. 78s(b)(2) (1988).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\9\
\9\ 17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-20154 Filed 8-14-95; 8:45 am]
BILLING CODE 8010-01-M
