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Self Regulatory Organizations; New York Stock Exchange, Inc.; Order Granting Approval to Proposed Rule Change and Amendment No. 1 Thereto Amending Exchange Rule 351 Concerning the Reporting of Criminal Offenses by Members and Member Organizations to the Exchange

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Start Preamble May 3, 2002.

On January 9, 2002, 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 NYSE Rule 351 in order to narrow the scope of criminal offenses that must be reported by members and member organizations to incidents that are more germane to the conduct of a securities related business.

The proposed rule change was published for comment in the Federal Register on February 12, 2002.[3] The Commission received one comment letter on the proposal,[4] which supports the proposed rule change. On April 30, 2002, the Exchange filed Amendment No. 1 to the proposed rule change with the Commission.[5]

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 [6] and, in particular, the requirements of section 6 of the Act [7] and the rules and regulations thereunder. The Commission finds specifically that the proposed rule change is consistent with section 6(b)(5) of the Act [8] because narrowing the scope of criminal offenses that members and member organizations would be required to report to the Exchange is designed to foster cooperation and coordination with persons engaged in regulating, clearing, settling and facilitating transactions in securities. In particular, limiting the proposed misdemeanors that must be reported should minimize the number of immaterial filings and maximize the effective use of resources committed to fulfilling self-regulatory responsibilities at the Exchange. Moreover, the proposed rule change would continue to capture the reporting of arrests for which any subsequent conviction would subject the individual to a statutory disqualification under Section 3(a)(39) of the Act.[9]

It is therefore ordered, pursuant to Section 19(b)(2) of the Act [10] , that the proposed rule change and Amendment Start Printed Page 31399No. 1 thereto (File No. SR-NYSE-2002-06) are approved.

Start Signature

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[11]

J. Lynn Taylor,

Assistant Secretary.

End Signature End Preamble


3.  See Securities Exchange Act Release No. 45404 (February 6, 2002), 67 FR 6565.

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4.  See letter to Margaret H. McFarland, Deputy Secretary, Commission, from Selwyn J. Notelovitz, Senior Vice President, Global Compliance, Charles Schwab & Co., Inc., dated March 5, 2002 (“Schwab Letter”).

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5.  See letter to Katherine England, Assistant Director, Division of Market Regulation, Commission, from Susan Light, Vice President, Enforcement, NYSE, dated April 29, 2002 (“Amendment No. 1”). In Amendment No. 1, the Exchange amended the proposed rule change to require that an arrest, arraignment, or conviction before a military court of any of the enumerated crimes be reported to the Exchange. In addition, the Exchange added the conspiracy to commit any one of the enumerated misdemeanors under Exchange Rule 351 to the list of crimes that must be reported to the Exchange. This is a technical amendment and is not subject to notice and comment.

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

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[FR Doc. 02-11542 Filed 5-8-02; 8:45 am]