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Self-Regulatory Organizations; Order Approving 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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Information about this document as published in the Federal Register.

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Start Preamble November 14, 2000.

I. Introduction

On August 16, 2000, the American Stock Exchange LLC (“Amex” 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 rules to require companies to publicly disclose receipt of a written delisting notice from the Exchange. On September 26, 2000, the Amex submitted Amendment No. 1 to the proposal to make certain technical modifications.[3]

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The proposed rule change was published for comment in the Federal Register on October 5, 2000.[4] No comments were received. This order approves the proposed rule change.

II. Description of the Proposal

The Exchange has had a policy of requiring a company whose securities are listed on the Exchange (or trade on the Exchange pursuant to unlisted trading privileges) to publicly disclose 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 a company in receipt of such notice.

In order to provide investors with the greatest protection possible, the Exchange believes that a company's public announcement of its pending delisting should disclose not only the fact of the company's having received a written notice from the Exchange, but also indicate on which of the Amex continued listing guidelines 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 about whether to make or maintain investments in the securities of such company.

The Exchange has proposed that a company make public its announcement regarding its 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 should fail to disclose the receipt of a written delisting notice under the Exchange's proposal, trading of its securities would be halted until the announcement has been made, even if the company elects to appeal the underlying delisting determination as provided for under Section 1010 of the Exchange's Listing Standards, Policies and Requirements.

The Exchange has also proposed that, where a company has elected to appeal the Exchange's delisting determination but fails 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 or not to delist the company's securities may also be based on the company's failure to make the required public announcement.

III. Discussion

After careful review, the Commission finds that the proposed rule change is consistent with the Act and the rules and regulations thereunder governing national securities exchanges.[5] In particular, the Commission finds that the proposal is consistent with the provisions of Section 6(b)(5) of the Act [6] which requires, among other things, that an exchange have rules that are, in general, designed to protect investors and the public interest. The Commission finds that it is appropriate for the Amex to codify in its rules its current policy requiring a listed company (or a company whose securities trade on the Exchange pursuant to unlisted trading privileges) to promptly disclose to the public that it has received a written delisting notice from the Exchange, and to set forth in its public disclosure the continued listing guidelines cited by the Exchange in making its delisting determination. The proposed rule change will better enable the Exchange to ensure that investors in the securities traded on the Exchange have as much information as possible about the issuers of such securities.

It is Therefore Ordered, pursuant to Section 19(b)(2) of the Act,[7] that the proposed rule change (SR-Amex-00-43) is hereby approved.

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

Start Signature

Margaret H. McFarland,

Deputy Secretary.

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

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4.  Securities Exchange Act Release No. 43371 (Sept. 27, 2000), 65 FR 59476.

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

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[FR Doc. 00-29710 Filed 11-20-00; 8:45 am]