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Notice

Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by the American Stock Exchange LLC Amending Its Rules To Require Companies to Publicly Disclose Receipt of a Delisting Notice

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Start Preamble September 27, 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 August 16, 2000, the American Stock Exchange LLC (“Amex” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) a proposed rule change to amend its rules to require companies to publicly disclose receipt of a written delisting notice frame the Exchange. On September 26, 2000, the Amex submitted Amendment No. 1 to the proposal to make certain technical modifications.[3] The proposal, as amended, is described in Items I, II, and III below, which Items have been prepared by the Exchange. 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

It is currently the policy of the Exchange whenever delivering a delisting notice to a company whose securities trade on the Exchange to require the company to disclose the receipt of such delisting notice in a public announcement. The Exchange proposes to codify the requirements of this policy in its rules. Below is the text of the proposed rule change. Proposed new language appears in italics; proposed deletions appear in brackets.

* * * * *

Sec. 401. OUTLINE OF EXCHANGE DISCLOSURE POLICIES

The Exchange considers that the conduct of a fair and orderly market requires every listed company to make available to the public information necessary for informed investing and to take reasonable steps to ensure that all who invest in its securities enjoy equal access to such information. In applying this fundamental principle, the Exchange has adopted the following [six]seven specific policies concerning disclosure, each of which is more fully discussed (in a Question and Answer format) in § 402:

(a)-(f) No change.

(g) Receipt of Written Delisting Notice—A company is required to publicly disclose that it has received a written notice indicating that the Exchange has determined to remove a company's securities from listing (or unlisted trading) as a result of non-compliance with the continued listing requirements. (See § 1010).

Sec. 402. EXPLANATION OF EXCHANGE DISCLOSURE POLICIES

(a)-(f) No change.

(g) Receipt of Written Delisting Notice.

Q. What kinds of information should be included in the public announcement?

A. The public announcement must indicate that the Exchange has determined to remove the company's securities from listing (or unlisted trading) and the reason(s) for the determination. In order to assist the company in the preparation of the public announcement, Exchange staff will provide the company with the Section(s) upon which its determination was based and a template for disclosure.

Q. When must the public announcement be made?

A. The public announcement must be made as promptly as possible, but no more than seven calendar days following the company's receipt of the written notice from the Exchange. The Exchange notes that companies should not construe the seven calendar day time frame as a safe harbor for disclosure.

Q. What steps must be taken before the public announcement is made?

A. The public announcement must be provided to Amex's StockWatch Department at (212) 306-8383 (phone), (212) 306-1488 (facsimile) and Listing Qualifications Department at (212) 858-5267 (phone), (212) 858-4780 (facsimile) prior to public dissemination.

Q. What action may the Exchange take if a company fails to make a public announcement indicating that the Exchange has determined to remove the company's securities from listing (or unlisted trading)?

A. Failure by a company to make the required public announcement will result in the institution of a trading halt in the company's securities until the announcement is made, even if the company appeals the determination as provided for under Section 1010. If the company fails to make the announcement by the time that the Adjudicatory Council issues its decision, that decision will also determine whether to delist the company's securities for failure to make the public announcement.

Q. Does Section 1010(b) relieve the company of its disclosure obligations under the federal securities laws?

A. No. Section 1010(b) does not relieve the company of its obligation to make a materiality assessment of the pending delisting action as it may relate to the disclosure requirements of the federal securities laws, nor should it be construed as providing a safe harbor under the federal securities laws. The Exchange suggests that the company consult with corporate/securities counsel in assessing its disclosure Start Printed Page 59477obligations under the federal securities laws.

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Sec. 1010. DELISTING PROCEDURES

Whenever the Exchange determines that it is appropriate to consider removing a security from listing (or from unlisted trading) for other than routine reasons (such as redemptions, maturities, etc.), it will follow, insofar as practicable, the following procedures:

(a) No change.

(b) If, after such conference, the Exchange determines that the security should be removed, it will notify the company in writing, indicating the basis for such decision and the specific delisting policies and guidelines under which action will be taken. Such notice will also inform the company that it may appeal to the Board of Governors of the Exchange, or such committee or committees as the Board may authorize, and request a hearing. A company shall make a public announcement through the news media that it has received such notice, including the specific policies and guidelines upon which the determination was based. Prior to the release of the public announcement, the company shall provide such disclosure to Amex's StockWatch and Listing Qualifications Departments.* The public announcement shall be made as promptly as possible, but not more than seven calendar days following receipt of the written notice from the Exchange.

(c)-(h) No change.

* * * * *

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 Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received regarding the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange 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 presently has a policy of requiring any company whose securities are listed on the Exchange (or trade on the Exchange pursuant to unlisted trading privileges) to publicly disclose its receipt from the Exchange of a written delisting notice for failure to comply with the Exchange's continued listing guidelines. The purpose of the proposed rule change is to codify this policy in order to protect present and potential investors in the securities of such a company.

In order to provide investors with the greatest protection possible, the Exchange believes that a company's public announcement of pending delisting should not only disclose the receipt of a written notice from the Exchange, but also indicate upon which section(s) of the Amex Company Guide the determination to delist has been based. The Exchange believes that requiring companies to disclose to investors which specific listing guideline(s) a company has failed to meet will better enable investors to make informed decisions regarding the advisability of making or maintaining investments in the securities of such company. The Exchange additionally proposes that a company be required to make public its announcement regarding the pending delisting as promptly as possible, but not more than seven calendar days following its receipt of the written delisting notice from the Exchange. The Amex believes that the proposed seven-day time frame is consistent with its current policy and that such time frame would provide the subject company with sufficient opportunity to prepare its public announcement and also ensure that investors receive the information in a timely manner. If a company fails to disclose the receipt of a written delisting notice under the proposed requirement, trading of its securities shall be halted until the announcement has been made, even if the company appeals the underlying delisting determination as provided for under Section 1010. In this regard, the Exchange proposes that, if the company has failed to make the required announcement before the Adjudicatory Council issues its decision with regard to the company's appeal, such decision by the Adjudicatory Council whether to delist the company's securities may also be based on the company's failure to make the public announcement.

2. Statutory Basis

The Exchange believes that the proposed rule change, whose purpose is to ensure that investors be notified when the Exchange has determined to delist a company's securities for non-compliance with the continued listing guidelines, is consistent with the provisions of Section 6(b)(5) of the Act [4] which requires that an exchange have rules that are, in general, designed to protect investors and the public interest.

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

The Amex believes that the proposed rule change will not 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 with respect to the proposed rule change.

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

Within 35 days of the date of 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 findingse 450 or (ii) as to which the self-regulatory organization consents, the Commission will:

A. By order approve such 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, 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 Start Printed Page 59478provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of the Amex. All submissions should refer to file number SR-Amex-00-43 and should be submitted by October 26, 2000.

Start Signature

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[5]

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble

Footnotes

3.  See letter from Michael J. Ryan, Senior Vice President, Chief of Staff, and Senior Legal Office, Amex, to Alton Harvey, Office Chief, Division of Market Regulation, Commission, dated September 20, 2000.

Back to Citation

*Notification may be provided to Amex's StockWatch Department at (212) 306-8383 (telephone), (212) 306-1488 (facsimile), and Listing Qualifications Department at (212) 858-5267 (telephone), (212) 858-4780 (facsimile).

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[FR Doc. 00-25594 Filed 10-04-00; 8:45 am]

BILLING CODE 8010-01-M