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Notice

Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the American Stock Exchange LLC Relating to Its Policy Prohibiting Harassment, Intimidation, “Refusals To Deal” and Retaliation

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Start Preamble September 6, 2000.

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“ACT”)[1] and Rule 19b-4 thereunder,[2] notice is hereby given that on September 5, 2000, the American Stock Exchange LLC (“Amex” 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 Exchange. The proposed rule change has been filed by the Amex as a “non-controversial” rule change under Rule 19b-4(f)(6) of the Act.[3] 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 Exchange proposes to codify in Commentary to Amex Rule 16, its long standing policy prohibiting harassment, Start Printed Page 55654intimidation, “refusals to deal” and retaliation.

The text of the proposed rule change is available at the AMEX 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 Amex 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 Amex 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 Exchange has long interpreted Article V, Section 4 of the Amex Constitution and Rule 16 to prohibit harassment, intimidation, “refusals to deal” and retaliation by and against members and their employees. Rule 16 and Article V, Section 4 of the Amex Constitution require members to observe the principles of good business practices and just and equitable principles of trade. Pursuant to this interpretation, the Exchange issued a Floor Member Circular on August 24, 1998 regarding the appropriate interaction of specialists, registered options traders and floor brokers on the trading floor.[4] The Circular concluded “* * * any attempts to harass, intimidate or unduly influence members of a trading crowd by any Exchange member will not be tolerated and will be referred to the Exchange's Enforcement Division for appropriate disciplinary action.” The Exchange has brought disciplinary actions against members pursuant to this Circular. However, although such conduct is already prohibited and the Exchange will continue to bring disciplinary actions against members pursuant to the Circular, the Exchange has determined to codify this interpretation in Commentary .01 to Amex Rule 16 in order to emphasize the importance placed by the Exchange on the enforcement of the prohibition.

The interpretation codified in new Commentary .01 to Amex Rule 16 states that it is conduct inconsistent with just and equitable principles of trade for any member or employee of a member to engage, directly, or indirectly, in any conduct that threatens, harasses, intimidates, constitutes a “refusal to deal” or retaliates against any member or employee of a member because: (i) Such member or employee has made a proposal to any exchange or other market to list or trade any option class; (ii) of such member's or employee's advocacy of or proposals concerning the listing or trading of an option class on any exchange or other market; (iii) such member or employee has commenced making a market in or trading any option class on any exchange or other market; (iv) such member or employee seeks to increase the capacity of any options exchange or the options industry to disseminate quote or trade data; (v) such member or employee seeks to introduce new option products; or (vi) such member or employee acts, or seeks to act, competitively.

The Exchange believes the prohibited conduct discussed in this new interpretation is fundamentally inconsistent with the obligations of members to their customers and is inimical to the public interest in fair and efficient options markets.[5]

2. Statutory Basis

The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,[6] in general, and furthers the objectives of Section 6(b)(5) [7] in particular, in that it is designed to prevent fraudulent and manipulative acts and practices and to promote just and equitable principles of trade.

B. Self-Regulatory Organization's Statement on Burden on Competition

The Exchange does not believe that the proposed rule change will impose any burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others

Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action

The proposed rule change has been filed by the Exchange as a “non-controversial” rule change pursuant to Section 19(b)(3)(A) of the Act [8] and Rule 19b-4(f)(6) thereunder. [9] Because the foregoing proposed rule change: (1) Does not significantly affect the protection of investors or the public interest, (2) does not impose any significant burden on competition, and (3) by its terms does not become operative for 30 days after the date of this filing, or such shorter time as the Commission may designate,[10] it has become effective pursuant to Section 19(b)(3)(A) [11] of the Act and Rule 19b-4(f)(6) [12] thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act.

IV. Solicitation of Comments

Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. 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. Copies of such filing will also be available for inspection and copying at the principal office of the Exchange. All Start Printed Page 55655submissions should refer to the File No. SR-AMEX-00-50 and should be submitted by October 5, 2000.

Start Signature

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[13]

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble

Footnotes

3.  17 CFR 240.19b-4(f)(6). At the Exchange's request, the original filing, received by the Commission on August 24, 2000, will be treated as the pre-filing required under this paragraph of the rules. Telephone conversation between Claire McGrath, Vice President and Special Counsel, Derivative Securities, Amex, and Deborah Flynn, Senior Special Counsel, Division of Market Regulation, Commission, on September 6, 2000.

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4.  See Floor Member Circular #98-760.

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5.  According to the Amex, it has also been Exchange policy that its employees, Governors, committee members, agents and other officials are also prohibited from harassing, intimidating, refusing to deal and retaliating against members or other market participants. Since the proposed Commentary to Amex Rule 16 will apply only to those persons and organizations under Exchange jurisdiction (i.e. members and their employees), the Exchange has revised its employee Code of Conduct and Statements of Fiduciary Responsibilities for Governors and Committee Members to include the same interpretation.

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10.  The Commission hereby waives the requirement that the proposed rule change not become operative for 30 days and the rule is, therefore, immediately effective and operative. For purposes only of accelerating the operative date of this proposal, the Commission has considered has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).

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12.  CFR 240.19b-4(f)(6).

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[FR Doc. 00-23565 Filed 9-13-00; 8:45 am]

BILLING CODE 8010-01-M