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Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the American Stock Exchange LLC Relating to Minimum Size of Listing Qualifications Panels

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Start Preamble December 16, 2002.

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 December 10, 2002, the American Stock Exchange LLC (“Amex” or “Exchange”) filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change.

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

The Amex proposes to amend Section 1204 (a) of the Amex Company Guide to provide that listing and delisting hearings may be conducted before a Listing Qualifications Panel comprised of a minimum of two rather than three members of the Amex Committee on Securities. Proposed new language is italicized; proposed deletions are in [brackets].

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Section 1204. The Listing Qualifications Panel

(a) All hearings will be conducted before a Listing Qualifications Panel (“Panel”) comprised of at least [three] two members of the Committee on Securities. No person shall serve as a Panel member for a matter if his or her interest or the interests of any person in whom he or she is directly or indirectly interested will be substantially affected by the outcome of the matter. In the event of a tie vote among the panel members, the matter will be forwarded to the full Committee on Securities for review pursuant to Section 1205.

* * * * *

(b) Not applicable.

(c) Not applicable.

* * * * *

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 on 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. Start Printed Page 78530

A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change

1. Purpose

In May 2002, the Exchange implemented significant changes to the appeal process applicable to the review of initial and continued listing determinations.[3] The revised procedures, which are contained in Part 12 of the Amex Company Guide, provide issuers with the right to appeal a staff determination to a Listing Qualifications Panel (“Panel”) comprised of at least three members of the Amex Committee on Securities (the “Committee”). The issuer also has the right to appeal an adverse Panel decision to the full Committee.

The new procedures have operated relatively smoothly, and provided increased transparency and efficiency to the process. However, the Amex believes that the requirement that each Panel be comprised of at least three-members of the Committee is potentially problematic, in that on occasion last-minute scheduling conflicts have developed for Panel members who had agreed to participate on a particular hearing date. Although in each case that has arisen so far, the Panel member was ultimately able to participate, the Exchange is concerned that unanticipated conflicts or illness could potentially force the rescheduling of a hearing date under circumstances that could be disruptive to issuers and to the appeal process. While the Exchange's hearings staff does contact additional Committee members to serve as “alternates,” typically these members are released from this obligation two or three days prior to the hearing date in order to avoid the burden on such members of reviewing the written materials if their services will not be needed. The Amex believes it is also not optimal to increase the size of Panels to more than three members, in that larger Panel sizes would result in appeals to the full Committee being decreasingly meaningful.

Accordingly, the Exchange is proposing that the minimum Panel size be reduced from three members of the Committee to two. Because the Amex continues to believe that a three-member Panel size is optimal—in order to avoid a “tie” vote and to provide a broader range of views—the Exchange's hearings staff will continue to schedule three Committee members for each hearing date. Prior to holding a hearing with only two Panel members, the hearings staff will consult with the two members, and if such Panel members feel that the particular facts and circumstances of the appeal in question are such that a two-member Panel is not appropriate, then the hearings staff will postpone the hearing to a later date.

While the Amex anticipates that two-member Panels will be used infrequently (if ever), the reduction in the minimum Panel size will permit hearings to be held in the event of a last-minute scheduling conflict or illness. In the event that a two-member Panel was unable to agree on a decision, the matter would be forwarded to the full Committee for review. The Amex contends that Nasdaq listing qualifications panels consist of only two panel members and their process appears to operate relatively smoothly.[4]

2. Statutory Basis

The Exchange believes that the proposal is consistent with Section 6(b) of the Act [5] in general and furthers the objectives of Section 6(b)(5)[6] in particular in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, to protect investors and the public interest and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers.

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 that is not necessary or appropriate in furtherance of the purposes of the Exchange Act.

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

The Exchange has neither solicited nor received comments on the proposed rule change.

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

The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act [7] and Rule 19b-4(f)(6)[8] thereunder because the proposal: (i) Does not significantly affect the protection of investors or the public interest; (ii) does not impose any significant burden on competition; and (iii) does not become operative prior to 30 days after the date of filing or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest. In addition, the Exchange provided the Commission with written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of the filing the proposed rule change as required by Rule 19b-4(f)(6). At any time within 60 days of the filing of such 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 submissions should refer to File No. SR-Amex-2002-103 and should be submitted by January 14, 2003.

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For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[9]

Start Signature

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble


3.  See Securities Exchange Act Release No. 45898, (May 8, 2002), 67 GT 34502 (May 14, 2002) (approving File No. SR-Amex-2001-47).

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4.  See NASD Rule 4830(a).

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[FR Doc. 02-32313 Filed 12-23-02; 8:45 am]