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Self-Regulatory Organizations; New York Stock Exchange Inc., Order Approving Proposed Rule Change and Amendment Nos. 1, 2, and 3 Relating to NYSE's Procedures for Delisting a Security and Related Issuer Appeals

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Information about this document as published in the Federal Register.

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Start Preamble Start Printed Page 36488 May 30, 2000.

I. Introduction

On June 23, 1999, the New York Stock Exchange, Inc. (“NYSE” or “Exchange”) filed with the Securities and Exchange Commission (“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 amend its procedures for delisting a security and the accompanying appeals process available to the issuer. The Exchange submitted Amendment No. 1 to its proposal on December 27, 1999,[3] Amendment No. 2 on March 9, 2000,[4] and Amendment No. 3 on March 26, 2000.[5]

The proposed rule change, as amended, was published for comment in the Federal Register on April 20, 2000.[6] No comments were received on the proposal. This order approves the proposal, as amended.

II. Description of the Proposal

The Exchange is proposing to modify the Exchange's procedures for delisting a security and related issuer appeals. The Exchange proposes to amend its process by changing the composition of the Committee for Review of the Exchange's Board of Directors, which hears delisting appeals by issuers, to consist of its Public Directors and one of its Industry Directors and by allowing the Committee to meet by telephone without seeking the permission of the Chairman of the Board.

The Exchange also proposes to issue a press release disclosing the status of a company that the Exchange has determined should be removed from the list, along with the rationale for that determination. In addition, the Exchange is proposing to append an identifier suffix to the ticker symbols of securities that have been determined by Exchange staff to warrant suspension and delisting. The Exchange would also append an identifier suffix during a transition by a listing company that falls below the continued listing criteria to another market.

Finally, in a change that the Exchange believes will address both timing and the anomaly of hearing an issuer's listing appeal after the suspension in trading, the appeal would also generally stay the suspension of trading. Reviews would be conducted on the next monthly review day, which is at least 25 business days from the date the issuer's request for review is filed with the Exchange.

Specifically, with regard to the changes to the appeal process and the implementation of a press release requirement, the Exchange proposes to amend its Listed Company Manual (“Manual”) and NYSE Rule 499 as follows:

1. Implement a press release process triggered by a staff decision to suspend and delist security;

2. Clarify that a request for appeal would stay the suspension unless the staff determines that a stay is contrary to the interest of the public and investors;

3. Specify that issuers can request to appear before the Committee for Review and that the Committee may grant or deny such request, provided that an explicit rationale for a denial is provided;

4. Shorten the time periods relating to the appeal process such that (a) the issuer must notify the Exchange of its intent to appeal within ten business days of receiving notice that the Exchange staff has determined that its security should be delisted and (b) written submissions must be served within seventeen business days from the date the issuer received notice of its right to a review; and

5. Clarify that counterparty service is the responsibility of each party (not the Exchange's Office of the General Counsel) and that such service must be made in the same manner as service on the Office of the General Counsel.

III. Discussion

The Commission finds that the proposed rule change, as amended, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.[7] Specifically, the Commission believes the proposal is consistent with the Section 6(b)(5) [8] requirements that the rules of an exchange be designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanisms of a free and open market and a national market system, and in general, to protect investors and the public.

The Commission believes that the proposal strikes a reasonable balance between the Exchange's obligation to protect investors and their confidence in the market, with its parallel obligation to perfect the mechanism of a free and open market, by providing investors with notice when a company is being considered for delisting by the Exchange by issuing a press release and appending a suffix to the security. The Commission believes that some investors may consider the NYSE's intent to delist a security from the Exchange an important factor in their investment decision. The proposed rule change allows investors to consider this factor while continuing to allow the securities to be traded on the Exchange pending the listed company's appeal.

The Commission also believes that the proposal provides fair procedures for issuers, while giving the Exchange the ability to delist an issuer that has failed to meet the Exchange's standards for continued listing. The Commission believes that the proposed appeals process is fair to issuers because it would allow companies to appeal suspension decisions, require written denials for oral appeals, and generally allow companies to trade on the NYSE pending their appeal. The Commission believes this process should ensure that the issuer's concerns are heard, yet eliminate unreasonable delays between the time that a company is identified as not meeting the continued listing requirements and the suspension of its securities from trading.

IV. Conclusion

It is therefore ordered, pursuant to Section 19(b)(2) of the Act,[9] that the proposed rule change (SR-NYSE-99-30) is approved, as amended.

Start Signature
Start Printed Page 36489

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[10]

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble

Footnotes

3.  See letter from James E. Buck, Senior Vice President and Secretary, NYSE, to Richard Strasser, Assistant Director, Division of Market Regulation (“Division”), Commission, dated December 21, 1999 (“Amendment No. 1”).

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4.  See letter from James E. Buck, Senior Vice President and Secretary, NYSE, to Richard Strasser, Assistant Director, Division, Commission, dated March 7, 2000 (“Amendment No. 2”).

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5.  See letter from James E. Buck, Senior Vice President and Secretary, NYSE, to Belinda Blaine, Associate Director, Division, Commission, dated March 23, 2000 (“Amendment No. 3”).

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6.  Securities Exchange Act Release No. 42689 (April 13, 2000), 65 FR 21230.

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

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[FR Doc. 00-14448 Filed 6-7-00; 8:45 am]

BILLING CODE 8010-01-M