[Federal Register Volume 61, Number 178 (Thursday, September 12, 1996)]
[Notices]
[Pages 48180-48181]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-23315]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37646; File No. SR-CBOE-96-47]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the Chicago Board Options Exchange, Incorporated Relating To
Permitting a Subject of an Exchange Investigation To Submit a
Videotaped Response in Lieu of or in Addition to a Written Response
September 5, 1996.
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 July 10,
1996, the Chicago Board Options Exchange, Incorporated (``CBOE'' 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. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
[[Page 48181]]
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The CBOE proposes to permit the subject of an Exchange
investigation (``Subject'') to submit a videotaped presentation to the
Exchange's Business Conduct Committee (``BCC'') in response to Exchange
staff's notice given pursuant to Rule 17.2(d). That notice describes
the general nature of allegations and specific rules that appear to
have been violated by the Subject. This videotaped presentation could
be submitted by the Subject to the BCC in lieu of, or in addition to,
submitting a written statement as permitted by Rule 17.2(d).
The text of the proposed rule change is available at the Office of
the Secretary, CBOE and at the Commission.
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 CBOE 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 CBOE 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 purpose of the proposed rule change is to permit subjects of
Exchange investigations to submit a videotaped presentation to the BCC
in response to Exchange staff's notice given pursuant to Rule 17.2(d).
That notice describes the general nature of allegations against, and of
specific rules that appear to have been violated by, the Subject of the
Exchange investigation. This videotaped presentation could be submitted
to the BCC in lieu of, or in addition to, submitting a written
statement as permitted by Rule 17.2(d).
Under existing Rule 17.2, if, after conducting an investigation,
Exchange staff finds that there are reasonable grounds to believe that
a rule violation has been committed, the Exchange staff submits a
written report to the BCC.1 Prior to submitting the report to the
BCC, the Exchange staff notifies the Subject of the general nature of
the allegations and the specific provisions of the rules or regulations
that appear to have been violated. Pursuant to Rule 17.2(d), except
when the BCC determines that expeditious action is required, the
Subject then has fifteen (15) days from the date of the Exchange
staff's notice to submit a written statement to the BCC explaining why
no disciplinary action should be taken.
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\1\ Exchange staff may draft and submit a report to the BCC if
it finds that there are not reasonable grounds to believe a
violation has been committed; however, such a report is not required
under Exchange rules.
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The proposed rule change would permit the Subject's statement to be
made in a videotaped format instead of, or in addition to, submitting a
written response. The Exchange decided to propose this change because a
number of members have indicated that they would be more comfortable
presenting their position orally, rather than attempting to draft a
persuasive response letter. The Exchange believes that permitting a
Subject of an investigation to respond on videotape, which could then
be viewed by BCC members at their convenience, would be beneficial to
the BCC and the Subject.
The proposal grants the Exchange the discretion to set a time limit
on the videotaped response. Initially, the Exchange will set a time
limit of fifteen minutes on a videotaped response. The videotaped
response would also have to be submitted in a format approved by the
Exchange. Initially, the Exchange will require that a videotaped
response be in a VHS format. The Exchange may change the foregoing time
limit and format requirements from time to time, and will publish the
applicable time limit and format requirements in a regulatory circular
to the Exchange membership.
2. Statutory Basis
By permitting Subjects of Exchange investigations to submit a
response in a videotaped format, the Exchange believes the disciplinary
process can be enhanced by giving Subjects more flexibility in
responding to a Rule 17.2(d) notice. For this reason, this policy
furthers the objectives of Section 6(b)(7) of the Act in that it is
designed to provide a fair procedure for the disciplining of members
and persons associated with members.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes the proposed rule change will impose no
burden on competition.
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
Within 35 days of the publication of this notice in the Federal
Register or within such longer 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, N.W., Washington, D.C. 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, N.W.,
Washington, D.C. 20549. Copies of such filing will also be available
for inspection and copying at the principal office of the CBOE. All
submissions should refer to File No. SR-CBOE-96-47 and should be
submitted by October 3, 1996.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\2\
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\2\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-23315 Filed 9-11-96; 8:45 am]
BILLING CODE 8010-01-M
